Fake shampoos and probable cause

By Atty. Rolex T. Suplico

 

It is rare, my dear Reader, when the Supreme Court decides a case based on the exception rather than the rule. It is even rarer when the Court conducts an analysis of the documents submitted in a preliminary investigation in order to determine the presence or absence of probable cause.

This happened in the case of UNILEVER PHILIPPINES INC., Petitioner, vs. MICHAEL TAN a. k. a. PAUL D. TAN, Respondent (G. R. No. 179367, Jan. 29, 2014), on the issue of probable cause on a case involving fake shampoos. Justice Arturo Brion penned the decision for the Court’s Second Division.

On Jan. 17, 2002, National Bureau of Investigation (NBI) agents, upon complaint of Unilever Philippines Inc. and armed with search warrants issued by the Regional Trial Court of Manila, raided a warehouse and an office located in Marikina City, allegedly owned by Michael Tan a.k.a. Paul D. Tan, who is the respondent. They recovered counterfeit Unilever products consisting of fake Creamsilk, Vaseline and Sunsilk shampoos. They then filed a complaint with the Department of Justice (DOJ) against Michael Tan for unfair competition punishable under Section 168 in relation to Section 170, R.A. No. 8293.

Tan, in his counter-affidavit, “claimed that he is “Paul D. Tan,” and not “Michael Tan” as alluded in the complaint; x x x; the sachets of Unilever shampoos seized from his office in Probest International Trading Building are genuine shampoo products which they use for personal consumption; he does not own and does not operate the warehouse located on Camia Street, Marikina City, where a substantial number of alleged counterfeit Unilever shampoo products were found; and he did not violate R.A. No. 8293 because there is no prima facie evidence that he committed the offense charged.”

On Dec. 18, 2002, State Prosecutor Melvin J. Abad dismissed the criminal complaint on insufficiency of evidence, which the Acting Secretary of Justice affirmed.

After its motion for rconsideration was denied, Uniliver filed a petition for certiorari under Rule 65 of the Rules of Court, with the Court of Appeals, alleging grave abuse of discretion. However, the CA dismissed the petition, and affirmed the finding of insuffiency of evidence to establish probable cause. Unilever filed a motion for reconsideration, but the CA denied the same, prompting it to file this petition for review with the Supreme Court under Rule 45 of the Rules of Court.

In its petition, Unilever “contends that the CA erred in dismissing its petition for certiorari and in affirming the DOJ’s rulings. It argues that while it may be possible that the respondent is not the owner of the warehouse, the overwhelming pieces of evidence nonetheless prove that he is the owner of the counterfeit shampoo products found therein. The petitioner also maintains that the voluminous counterfeit shampoo products seized from the respondent are more than sufficient evidence to indict him for unfair competition.”

The issue presented to the Court is “whether the CA committed a reversible error in upholding the Acting Secretary of Justice’s decision dismissing the information against the respondent. The resolution of this issue requires a determination of the existence of probable cause in order to indict the respondent (for) unfair competition.”

The Supreme Court granted the petition, annuled and set aside the decision and the denial of the motion for reconsideration of the CA, and ordered filing of the appropriate information against Michael Tan a. k. a. Paul D. Tan.

The Court first reiterated the rule that the determiation of probable cause is an executive function. Thus:

“The determination of probable cause for purposes of filing of information in court is essentially an executive function that is lodged, at the first instance, with the public prosecutor and, ultimately, to the Secretary of Justice.” x x x. Courts can neither override their determination nor substitute their own judgment for that of the latter. They cannot likewise order the prosecution of the accused when the prosecutor has not found a prima facie case.”

“Nevertheless,” the Court said, “this policy of non-interference is not without exception. The Constitution itself allows (and even directs) court action where executive discretion has been gravely abused. The term “grave abuse of discretion” means such capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction. To justify judicial intervention, the abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.”

The Court then examined the “decisions of the State Prosecutor and of the DOJ (which show) that the complaint’s dismissal was anchored on the insufficiency of evidence to establish the respondent’s direct, personal or actual participation in the offense charged. As the State Prosecutor found (and affirmed by the DOJ), the petitioner failed to prove the ownership of the warehouse where counterfeit shampoo products were found. This finding led to the conclusion that there was insufficient basis for an indictment for unfair competition as the petitioner failed to sufficiently prove that the respondent was the owner or manufacturer of the counterfeit shampoo products found in the warehouse.”

Then, the Court conducted a “careful analysis of the lower courts’ rulings and the records,” which it said, “reveals that substantial facts and circumstances that could affect the result of the case have been overlooked. While the ownership of the warehouse on Camia Street, Marikina City, was not proven, sufficient evidence to prove the existence of probable cause nevertheless exists. These pieces of evidence consist of: (1) the result of the NBI agents’ search of the office and of the warehouse; (2) Elmer Cadano’s complaint-affidavit; (3) Rene Baltazar’s affidavit; (4) Unilever’s representatives’ claim that all the laborers present at the warehouse confirmed that it was operated by Probest International Trading; (5) other object evidence found and seized at the respondent’s office and warehouse; (6) the NBI operatives’ Joint Affidavit; (7) the subsequent seizure of counterfeit Unilever products from the respondent’s warehouse in Antipolo City; and (8) other photographs and documents relative to the counterfeit products.”

“These pieces of evidence, to our mind,” the Court said, ”are sufficient to form a reasonable ground to believe that the crime of unfair competition was committed and that the respondent was its author.“

My dear Reader, I shall qoute in full the analysis conducted by the Court, which should be followed by the National Prosecution Service (NAPROS), where all public prosecuors are members of, and read by all lawyers and concerned laymen. Thus:

“First, a total of 1,238 assorted counterfeit Unilever products were found at, and seized from, the respondent’s office located on the 3rd floor of Probest International Trading Building, Katipunan Street, Concepcion, Marikina City. The huge volume and the location where these shampoos were found (inside a box under a pile of other boxes located inside the respondent’s office) belie the respondent’s claim of personal consumption. Human experience and common sense dictate that shampoo products (intended for personal consumption) will ordinarily and logically be found inside the house, specifically, inside the bathroom or in a private room, not in the consumer’s office.”

“Second, the failure to prove that the respondent is the owner of the warehouse located on Camia St., Marikina City, does not automatically free him from liability. Proof of the warehouse’s ownership is not crucial to the finding of probable cause. In fact, ownership of the establishment where the counterfeit products were found is not even an element of unfair competition. While the respondent may not be its owner, this does not foreclose the possibility that he was the manufacturer or distributor of the counterfeit shampoo products. Needless to say, what is material to a finding of probable cause is the commission of acts constituting unfair competition, the presence of all its elements and the reasonable belief, based on evidence, that the respondent had committed it.”

“Third, the result of the NBI’s search conducted on January 17, 2002 (yielding to several boxes of counterfeit shampoo sachets) and the NBI’s Joint Affidavits in support of the application for search warrants serve as corroborating evidence. The striking similarities between the genuine Unilever shampoo sachets and the counterfeit sachets seized by the NBI support the belief that the respondent had been engaged in dealing, manufacturing, selling and distributing counterfeit Unilever shampoo products.”

‘Fourth, there were also allegations that the respondent’s laborers and warehousemen who were present during the search had confirmed that the warehouse was being maintained and operated by Probest International Trading. The NBI investigators who served the search warrant also claimed that several persons, introducing themselves as the respondent’s relatives and friends, had requested them to seize only a portion of the counterfeit shampoo products. Whether these claims are admissible in evidence or whether they should be excluded as hearsay are matters that should be determined not in a preliminary investigation, but in a full-blown trial.”

x          x         x

“Finally, the subsequent events that occurred – after the filing of the petitioner’s complaint and the institution of its appeal to the CA – are too significant to be ignored.”

“In its motion to reconsider the CA’s decision, the petitioner pointed to the reports it received sometime in October 2005 that the respondent had resumed its operations involving counterfeit Unilever products. Notably, these significant reports, albeit supported by the subsequent seizure of large quantity of counterfeit Unilever shampoos in the respondent’s warehouse (located at No. 13 First Street Corner Sevilla Avenue, Virginia Summerville Subdivision, Barangay Mambugan, Antipolo City), were ignored by the CA. We, however, find that this development is significant, although they were not part of the mass of evidence considered below. Even without them and based solely on the evidentiary materials available below, we conclude that sufficient grounds exist to indict the respondent for unfair competition.”

Thereafter, Court defined probable cause “as the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. x x x. The term does not mean “actual or positive cause” nor does it import absolute certainty. It is merely based on opinion and reasonable belief. Thus, a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction. It is enough that it is believed that the act or omission complained of constitutes the offense charged. Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.”

“Guided by this ruling,” the Court said, “we find that the CA gravely erred in sustaining the Acting Secretary of Justice’s finding that there was no probable cause to indict the respondent for unfair competition. The dismissal of the complaint, despite ample evidence to support a finding of probable cause, clearly constitutes grave error that warrants judicial intervention and correction.”