TWIN ACE HOLDINGS CORPORATION (TWIN ACE) is a manufacturer, distiller and bottler of distillery products, e.g., rhum, gin, brandy, whiskey, vodka, liquor and cordial under the name and style of Tanduay Distillers, Inc. (TANDUAY). Lorenzana Food Corporation (LORENZANA), on the other hand, manufactures and exports processed foods and other related products, e.g., patis, toyo, bagoong, vinegar and other food seasonings. On 16 January 1992 TWIN ACE filed a complaint for replevin 1 to recover three hundred eighty thousand (380,000) bottles of 350 ml., 375 ml. and 750 ml. allegedly owned by it but detained and used by LORENZANA as containers for native products without its express permission, in violation of RA No. 623. 2 This law prohibits the use of registered bottles and other containers for any purpose other than that for which they were registered without the express permission of the owner.chanroblesvirtuallawlibrary
LORENZANA moved to dismiss the complaint on the ground that RA No. 623 could not be invoked by TWIN ACE because the law contemplated containers of non-alcoholic beverages only. But, assuming arguendo that the law applied in TWIN ACE’s favor, the right of LORENZANA to use the bottles as containers for its patis and other native products was expressly sanctioned by Sec. 6 3 of the same law and upheld by this Court in Cagayan Valley Enterprises, Inc. v. Court of Appeals. 4
On 16 March 1992 the Regional Trial Court of Manila dismissed the complaint. 5 TWIN ACE appealed to respondent Court of Appeals which affirmed the action of the trial court. In its Decision dated 22 December 1995 6 respondent court ruled that while bottles and containers of alcoholic beverages were indeed covered within the protective mantle of RA No. 623, as correctly argued by TWIN ACE, nevertheless the Supreme Court in Cagayan Valley Enterprises, Inc. v. Court of Appeals expressly recognized the exception granted in Sec. 6 thereof to those who used the bottles as containers for sisi, bagoong, patis and other native products. Hence, no injunctive relief and damages could be obtained against LORENZANA for exercising what was precisely allowed by the law.
Petitioner TWIN ACE contends that Sec. 6 notwithstanding, respondent LORENZANA is obliged to pay just compensation for the use of the subject bottles because Sec. 6 exempts the user from criminal sanction only but does not shield him from civil liability arising from the use of the registered bottles without the express consent of the registered owner. Such civil liability arises from the fact that Sec. 5 of RA No 623 expressly reserves for the registered owner the ownership of the containers notwithstanding the sale of the beverage contained therein. Private respondent, on the other hand, contends that petitioner’s bottles used as containers for hard liquor are not protected by RA No. 623. But even assuming the applicability of the law, LORENZANA invokes the exemption granted in Sec. 6 thereof.
We deny the petition. The question of whether registered containers of hard liquor such as rhum, gin, brandy and the like are protected by RA No. 623 has already been settled in Cagayan Valley Enterprises, Inc. v. Court of Appeals. 7 In that case, the Court dealt squarely with the issue and ruled in the affirmative reasoning that hard liquor, although regulated, is not prohibited by law, hence, still within the purview of the phrase "other lawful beverages" protected by RA No. 623, as amended. Consequently petitioner therein Cagayan Valley Enterprises, Inc. was enjoined from using the 350 ml. white flint bottles of La Tondeña, Inc., with the marks of ownership "La Tondeña, Inc." and "Ginebra San Miguel" for its own liquor products.chanroblesvirtuallawlibrary
But while we adopt the foregoing precedent and rule in accordance therewith, we will not decide this case in favor of petitioner because it is quite clear that respondent falls within the exemption granted in Sec. 6 which states: "The provisions of this Act shall not be interpreted as prohibiting the use of bottles as containers for "sisi," "bagoong," " patis," and similar native products."cralaw virtua1aw library
Petitioner itself alleges that respondent LORENZANA uses the subject 350 ml., 375 ml. and 750 ml. bottles as containers for processed foods and other related products such as patis, toyo, bagoong, vinegar and other food seasonings. Hence, Sec. 6 squarely applies in private respondent’s favor. Obviously, the contention of TWIN ACE that the exemption refers only to criminal liability but not to civil liability is without merit. It is inconceivable that an act specifically allowed by law, in other words legal, can be the subject of injunctive relief and damages. Besides, the interpretation offered by petitioner defeats the very purpose for which the exemption was provided.
Republic Act No. 623, "An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers," as amended by RA No. 5700, 8 was meant to protect the intellectual property rights of the registrants of the containers and prevent unfair trade practices and fraud on the public. 9 However, the exemption granted in Sec. 6 thereof was deemed extremely necessary to provide assistance and incentive to the backyard, cottage and small-scale manufacturers of indigenous native products such as patis, sisi and toyo who do not have the capital to buy brand new bottles as containers nor afford to pass the added cost to the majority of poor Filipinos who use the products as their daily condiments or viands. 10 If the contention of petitioner is accepted, i.e., to construe the exemption as to apply to criminal liability only but not to civil liability, the very purpose for which the exemption was granted will be defeated. None of the small-scale manufacturers of the indigenous native products protected would possibly wish to use the registered bottles if they are vulnerable to civil suits. The effect is a virtual elimination of the clear and unqualified exemption embodied in Sec. 6. It is worthy to note that House Bill No. 20585 11 was completely rejected because it sought to expressly and directly eliminate that which petitioner indirectly proposes to do with this petition.
Petitioner cannot seek refuge in Sec. 5 12 of RA No. 623 to support its claim of continuing ownership over the subject bottles. In United States v. Manuel 13 we held that since the purchaser at his discretion could either retain or return the bottles, the transaction must be regarded as a sale of the bottles when the purchaser actually exercised that discretion and decided not to return them to the vendor. We also take judicial notice of the standard practice today that the cost of the container is included in the selling price of the product 14 such that the buyer of liquor or any such product from any store is not required to return the bottle nor is the liquor placed in a plastic container that possession of the bottle is retained by the store. 15
WHEREFORE, the questioned decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
Davide, Jr., Kapunan and Hermosisima, Jr., JJ.
, concurring:chanrob1es virtual 1aw library
Republic Act ("R.A.") No. 623 has been enacted not only to protect the intellectual property rights of the registrant of marked bottles or containers but to prevent unfair trade practices and fraud on the public. 1 While the ownership of such marked bottles could pass on to the consumer, the latter’s rights thereover, however, must be understood as being subject to the statutory limitations on the use of the registered article and to the trademark rights of the registrant, such as that imposed by R.A. No. 623 which prohibits the use of registered bottles or containers, without the written consent of the registrant, except, like in the instant case, for its filling-in of native products like "sisi," bagoong," and "patis."cralaw virtua1aw library
I agree, accordingly, that petitioner’s claim for just compensation for the marked bottles is untenable given the foregoing disquisition.
1. Civil Case No. 92-59863, RTC-Br. 27, Manila.
2. "An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and other Similar Containers."cralaw virtua1aw library
3. Sec. 6. The provisions of this Act shall not be interpreted as prohibiting the use of bottles as containers for "sisi," "bagoong, "patis" and similar native products.
4. G.R. No. 78413, 8 November 1989, 179 SCRA 218.
5. Order of dismissal issued by Judge Willelmo C. Fortun, RTC-Br. 27, Manila; Rollo, pp. 82-90.
6. Decision penned by Justice Salvador J. Valdez, Jr., concurred in by Justices Jesus M. Elbinias and Ramon U. Mabutas Jr.; Rollo, pp. 31-51.
7. See Note 4.
8. "An Act Amending Certain Sections of Republic Act Numbered Six Hundred Twenty-Three as to Include the Containers of Compressed Gases within the Purview of the said Act."cralaw virtua1aw library
9. Report on House Bill No. 30400, Committee on Trade and Industry, House of Representatives, p. 21.
11. "An Act Prohibiting the Use of Duly Registered and Marked Bottles of Liquor, Wines and Spirits as containers for "Sisi," "Bagoong," "Patis" and Similar Native Products, Amending for the Purpose Republic Act Numbered Six Hundred Twenty-Three, as Amended, and Increasing the Penalty for Violation Therefor" (Emphasis supplied).
12. "No action shall be brought under this Act against any person to whom the registered manufacturer, bottler, or seller, has transferred by way of sale, any of the containers herein referred to, but the sale of the beverage contained in the said containers shall not include the sale of the containers unless specifically so provided."cralaw virtua1aw library
13. 7 Phil. 221 (1906).
14. See Note 9, p. 20.
15. Id., p. 15.
VITUG, J., concurring:chanrob1es virtual 1aw library
1. See sections 2 and 3, Republic Act No. 623.