G.R. No. 213400 , August 4, 2021
Elidad Kho and Violeta Kho, Petitioners, vs. Summerville General Merchandising & Co., Inc., Respondent.

FACTS

Petitioners Elidad Kho and Violeta Kho were charged with Unfair Competition before the Regional Trial Court (RTC) of Manila (Criminal Case No. 00-183261) based on an Information alleging that they, through their business KEC Cosmetic Laboratory, sold facial cream products using tools and labeling that depicted the general appearance of respondent Summerville’s “Chin Chun Su” facial cream products, likely to deceive the public. The City Prosecutor’s Office recommended the filing of the case. Petitioners filed a Petition for Review with the Department of Justice (DOJ), which initially affirmed the prosecutor but later, upon reconsideration, issued a Resolution dismissing the complaint. Based on this DOJ Resolution, the prosecution filed a Motion to Withdraw Information, which the RTC Branch 24 granted. Respondent Summerville moved for reconsideration and informed the court of a subsequent DOJ Resolution (dated September 17, 2002) which reversed the dismissal and ordered the filing of an Information. The RTC held that reviving the case was barred by double jeopardy.
Respondent Summerville elevated the matter to the Supreme Court ( G.R. No. 163741 ). In a Resolution dated August 7, 2007, the Supreme Court annulled the CA and RTC orders, ruled that double jeopardy had not set in, and remanded the case to the RTC to independently evaluate the merits and determine probable cause. The case was raffled to RTC Branch 46. In an Order dated July 21, 2010, RTC Branch 46 found no probable cause to hold petitioners for trial, reasoning that petitioners did not deceive the public and acted in good faith, as their product label included their manufacturer’s name. Respondent’s motion for reconsideration was denied.
Respondent Summerville filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 117835). The CA granted the petition, set aside the RTC Orders, and directed the reinstatement of the Information and a new trial. The CA found that the RTC committed grave abuse of discretion in finding no probable cause, holding that petitioners’ product was confusingly similar to respondent’s (both using the name “Chin Chun Su” on oval-shaped containers) and that the act of including the manufacturer’s name on the label did not exculpate them from a charge of unfair competition. Petitioners’ motion for reconsideration was denied. Petitioners then filed this Petition for Review on Certiorari before the Supreme Court, arguing that the CA erred in ruling that the RTC acted without jurisdiction, in correcting errors of judgment via certiorari, and in violating their right against double jeopardy.

ISSUE

Whether the Court of Appeals erred in finding that the Regional Trial Court committed grave abuse of discretion in determining there was no probable cause to indict petitioners for Unfair Competition.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA Decision and Resolution. The Court held that the CA did not err in finding that the RTC Branch 46 committed grave abuse of discretion in its determination of no probable cause.
1. On Probable Cause for Unfair Competition: The Court reiterated that probable cause is based on opinion and reasonable belief, not on evidence required for conviction. For unfair competition under Section 168 of the Intellectual Property Code, the test is whether the defendant’s conduct is likely to deceive the ordinary purchaser exercising ordinary care. The Court agreed with the CA’s finding that petitioners’ product (medicated facial cream in a pink oval-shaped container bearing the “Chin Chun Su” mark) was confusingly similar to respondent’s product. The inclusion of petitioners’ manufacturer name on the label does not negate the likelihood of confusion, as the ordinary purchaser would not normally make such an inquiry. The RTC’s finding of good faith involved a determination on the merits proper for trial, not for a probable cause determination. Thus, the RTC’s conclusion of no probable cause was a capricious and whimsical exercise of judgment, constituting grave abuse of discretion correctible by certiorari.
2. On the Propriety of Certiorari: The Court held that the CA correctly entertained the certiorari petition. The RTC’s error was not a mere error of judgment, but an error in the exercise of its jurisdiction amounting to grave abuse of discretion, as its finding of no probable cause was made arbitrarily and in disregard of the evidence on record.
3. On Double Jeopardy: The Court ruled that petitioners’ right against double jeopardy was not violated. The requisites for double jeopardy were not present. Crucially, this issue had already been resolved by the Supreme Court in its August 7, 2007 Resolution in G.R. No. 163741 , which explicitly held that double jeopardy had not set in and that reinstatement of the Information was not barred. The CA’s order for a trial de novo was a direct consequence of the Supreme Court’s prior remand order.