G.R. No. 188225 & G.R. No. 198728; November 28, 2012
SHIRLEY F. TORRES, Petitioner, vs. IMELDA PEREZ and RODRIGO PEREZ, Respondents.

FACTS

Petitioner Shirley Torres and respondents’ daughter, Sunshine, formed Sasay’s Closet Co. (SCC), a registered partnership supplying garments to SM under the trademark “Naturals.” The partnership used the facilities and business address of respondents’ company, RGP Footwear. In August 2003, Sunshine withdrew, and respondent Imelda Perez assumed her role. In December 2005, Imelda emailed Torres, expressing frustration and declaring her intent to dissolve the partnership. Torres was subsequently paid her share of partnership assets from January to April 2006. In March 2006, Torres discovered “Naturals” products being sold in SM under RGP’s vendor code. She filed a criminal complaint for unfair competition.
The Makati City Prosecutor found probable cause, but the Department of Justice (DOJ) reversed this, finding no unfair competition. The Regional Trial Court (RTC) initially denied respondents’ Motion to Dismiss based on the DOJ resolution. The Court of Appeals (CA) nullified this RTC order. Subsequently, the RTC, upon a motion to quash, dismissed the Information, a decision affirmed by the CA. Torres elevated both CA decisions to the Supreme Court via petitions for review.

ISSUE

Whether the CA correctly affirmed the quashal of the Information for unfair competition against respondents.

RULING

Yes, the Supreme Court affirmed the CA’s decision. The Court held that the essential element of “passing off” under Section 168 of the Intellectual Property Code was absent. Unfair competition requires that the accused, by deception or any other means contrary to good faith, passes off their goods as those of another. The evidence established that respondents, through their company RGP, were the ones actually manufacturing and supplying the “Naturals” products to SM since the partnership’s inception, using their own facilities and vendor code. The partnership SCC, which owned the trademark, never engaged in independent manufacturing.
Thus, respondents did not misrepresent the origin of the goods; they were the actual source. There was no fraud upon the public because the goods sold as “Naturals” were indeed produced by the entity (RGP/respondents) that the public associated with the brand through its continuous supply to SM. The dissolution of the partnership and the subsequent payments to Torres merely settled proprietary interests but did not alter the factual reality of who was manufacturing the goods. Consequently, the Information failed to allege facts constituting the offense of unfair competition, warranting its quashal.