G.R. No. 195549 , September 3, 2014
WILLAWARE PRODUCTS CORPORATION, Petitioner, vs. JESICHRIS MANUFACTURING CORPORATION, Respondent.

FACTS

Respondent Jesichris Manufacturing Corporation, a registered partnership engaged in manufacturing plastic automotive parts since 1992, filed a complaint for damages and permanent injunction against petitioner Willaware Products Corporation. Respondent alleged that petitioner, whose office was physically proximate and which had hired some of respondent’s former employees, began manufacturing and distributing identical plastic automotive parts (e.g., spring eye bushings, stabilizer bushings) using the same design, material, and colors, and selling them at lower prices to respondent’s customers. Respondent claimed it originated the use of plastic to replace rubber for such automotive parts and that petitioner’s deliberate copying constituted unfair competition, causing actual damages in lost profits and litigation expenses. Petitioner, in its answer, admitted the proximity of offices, the transfer of employees, and its familiarity with respondent’s products but denied unfair competition. It argued that the parts were mere reproductions of original vehicle components, respondent had no patent over them, and other establishments were also selling similar plastic parts.
The Regional Trial Court (RTC) ruled in favor of respondent, finding petitioner liable for unfair competition, awarding actual damages, attorney’s fees, and exemplary damages, and issuing a permanent injunction. The Court of Appeals (CA) affirmed the finding of unfair competition but modified the damages, deleting the award of actual damages for lack of sufficient proof and replacing it with nominal damages, while maintaining the awards for attorney’s fees and exemplary damages. Petitioner elevated the case to the Supreme Court.

ISSUE

Whether or not petitioner committed acts amounting to unfair competition under Article 28 of the Civil Code.

RULING

Yes, the Supreme Court held that petitioner committed unfair competition under Article 28 of the Civil Code. The Court clarified that the case falls under the broader concept of unfair competition in human relations, not under intellectual property law ( Republic Act No. 8293 ), as the suit was for damages and the products were not patented. Article 28 prohibits competition through the use of force, intimidation, deceit, machination, or any other unjust, oppressive, or high-handed method.
The Court explained that for competition to be “unfair,” it must involve: (1) an injury to a competitor or trade rival, and (2) acts contrary to good conscience or characterized as unjust. Both characteristics were present. First, the parties were direct competitors in manufacturing plastic automotive parts. Second, petitioner’s acts were contrary to good conscience, as it admitted employing respondent’s former employees and deliberately copied respondent’s products after gaining familiarity through that proximity. The Court cited testimony indicating petitioner’s representative made threatening statements about undermining respondent’s business, demonstrating malicious intent.
However, the Supreme Court modified the CA’s decision regarding damages. It affirmed the deletion of the award of actual damages and the grant of nominal damages. Concomitantly, it reduced the award of attorney’s fees from One Hundred Thousand Pesos (₱100,000.00) to Fifty Thousand Pesos (₱50,000.00). The petition was denied, and the CA decision was affirmed with this modification.