ID.t,?q :'~-~~-~:' ---.---~:-~CE sample of the rubber shoes was bought from the Appellant and was forwarded to the Quality Control Department of the Appellee which ascertained

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I INTELLECTUAL PROPERTY PHILIPPINES

OFFICE OF THE DIRECTOR GENERAL

I FILCON MANUFACTURING Appeal No.1 0-07-06 CORPORATION (FILCON),

Appellee, IPV No.1 0-2005-00003

For Violation of RA 8293 J i - versus ) i WESTON DEPARTMENT STORE,

ID.t,?q~ ~ -d- - _:'~-~~~~-~~~:'_---.---~:-~CE OF DECISION ~~~eiVeq_&-ot~n, ~..-=: ESTRE L1TA~~~~~~DO--j~~;SIATES LAW OFFICES

....... 1-_) 'Counsel for Appellant DirectorL..------·----- 2nd Floor, Puno Bldg. Bureau of Legal Affairs 336 Roosevelt Ave. Quezon City Intellectual Property Office, Makati City

ATTY. CESAR LOP IP PHILIPPINES LIBRARY aJl/1/1P1. ICounsel for Appell Documentation, Information & IJT 1!1t'J J NO.9 Cattleya Street. La Unica Technology Transfer Bureau Mayamot, Antipolo City Intellectual Property Office, Makati City

GREETINGS:

Please be informed that on 15 September 2008, the Office of the Director General rendered a DECISION in the above-titled case (copy attached).

Makati City, 15 September 2008.

Very truly yours,

~ ROBERT NEREO B. SAMSON Attorney IV

Republic of the Philippines INTELLECTUAL PROPERTY OFFICE

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INTELLECTUAL PROPERTY PHILIPPINES


FILCON MANUFACTURING Appeal No. 10-07-06 CORPORATION (FILCON),

Appellee, IPV No. 10-2005-00003

For Violation of RA 8293 - versus

WESTON DEPARTMENT STORE, Appellants.

X--------------------------------------------------X

NOTICE OF DECISION

~ PUNO & ASSOCIATES LAW OFFICES Counsel for Appellant 2nd Floor, Puno Bldg. 336 Roosevelt Ave. Quezon City

ATTY. CESAR LOPEZ IP PHILIPPINES LIBRARY Counsel for Appellee Documentation, Information & Technology NO.9 Cattleya Street. La Unica Hija Subd. Transfer Bureau Mayamot, Antipolo City Intellectual Property Office, Makati City

ESTRELLITA B. ABELARDO Director Bureau of Legal Affairs Intellectual Property Office, Makati City

GREETINGS:

Please be informed that on 15 September 2008, the Office of the Director General rendered a DECISION in the above-titled case (copy attached).

Makati City, 15 September 2008.

Very truly yours,

ROBERT NEREO B. SAMSON Attorney IV


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FILCON MANUFACTURING CORPORATION (FILCON),

Appellee,

- versus


tAppeal No. 10-07-06

[fIPV No. 10-2005-00003

For Violation of RA 8293 I t f

l I

X--------------------------------------------------X INOTICE OF DECISION f,

PUNO & ASSOCIATES LAW OFFICES Counsel for Appellant 2nd Floor, Puno Bldg. 336 Roosevelt Ave. Quezon City

ATTY. CESAR LOPEZ Counsel for Appellee NO.9 Cattleya Street. La Unica Hija Subd. Mayamot, Antipolo City

GREETINGS:

ESTRELLITA B. ABELARDO Director IBureau of Legal Affairs Intellectual Property Office, Makati City i IP PHILIPPINES LIBRARY i Documentation, Information & Technology Transfer Bureau Intellectual Property Office, Makati City I

f

Please be informed that on 15 September 2008, the Office of the Director General rendered a DECISION in the above-titled case (copy attached). I

IMakati City, 15 September 2008.

IVery truly yours, [

I I I~ !

ROBERT NEREO B. SAMSON Attorney IV


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FILCON MANUFACTURING Appeal No. 10-07-06

CORPORATION (FILCON),

J Appellee, IPV No. 10-2005-00003

II -versus- For: Violation of RA 8293


x-------------------------------------------------x

DECISION

WESTON DEPARTMENT STORE ("Appellant"), appeal Decision No. 2007

06, dated 30 March 2007, of the Director of the Bureau of Legal Affairs ("Director"). The Director held the Appellant liable for infringement of trademark and unfair competition for selling, offering for sale and/or distributing counterfeit Converse, All-Star, Converse All Star Chuck Taylor and Design.

Records show that FILCON MANUFACTURING CORPORATION ("Appellee") filed on 21 February 2005 a "COMPLAINT" against the Appellant for violation of Rep. Act No. 8293, also known as the Intellectual Property Code of the Philippines ("IP Code")' alleging the following:

1. It is a firm engaged in the business of manufacture, distribution, and sale of rubber shoes and other footwear products under the brand name "CONVERSE";

2. It has an exclusive licensing agreement with Converse Incorporated, a corporation engaged, among others, in the manufacture and distribution of rubbers shoes and other footwear, T-shirts and hosiery under the world-renowned brand name CONVERSE, and is authorized to institute before the proper court, agency or tribunal the appropriate action for unfair competition, infringement, damages and other violations of intellectual property rights in connection thereto;

3. Converse Incorporated is the owner of the famous "Chuck Taylor", "Converse", "Converse All Star", "Star and Chevron" and "All Star" trademarks and/or designs;

"Took effect on 01 January 1998.

filcon vs. kingston page 1 of 13


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4. During the last quarter ofyear 2004, the Appellee received numerous and alarming reports that Converse rubber shoes and other footwear

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products with substandard materials and poor quality are openly sold in the market; and on the basis thereof, it caused its field personnel to gather information and to conduct test buy on the establishments concerned;

5. One of the employees of the Appellee noticed that the Appellant is selling what appears to be counterfeit Converse rubber shoes;

6. A sample of the rubber shoes was bought from the Appellant and was forwarded to the Quality Control Department of the Appellee which ascertained that the shoes are counterfeit;

7. The Appellee incurred litigation expenses by reason of the Appellant's unlawful act of selling counterfeit rubber shoes;

8. On account of the well-established goodwill and reputation of the Appellee which was besmirched due to the Appellant's unlawful act, an award of damages, representing the loss of profit of the Appellee, equivalent to Php2,000,000 in favor of the Appellee is warranted;

9. In order to deter the commission of similar acts and to serve as example for public good, the Appellant should be assessed exemplary damages, the amount of which, though incapable of pecuniary estimation, should not be less than PhP500,000; and

10. The Appellee was constrained to engage the services of a legal counsel for a fee of10% of the amount recoverable.

The Appellant filed its ANSWER on 18 March 2005 alleging the following:

1. It bought some rubber shoes for sale in their store from the Appellee itself;

2. The tape receipt attached to the complaint did not show that the Appellee indeed purchase a pair of "converse" rubber shoes from the J Appellant;

3. The alleged "Converse" shoe that was purchased by the Appellee or even a picture of the same was not attached to the complaint;

4. The shoes allegedly purchased was kept by the Appellee, hence, the possibility of its being changed or substituted;


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5. The Appellee should have itself accompanied by a police officer when the purchase was made and that the shoes that was purchased should have been deposited for safekeeping at the police station; and

6. The affidavit of a certain Ronaldo Barros and the certificate of "Purchase of Counterfeit Converse Shoes" issued by Estelita Adriano are both self-serving coming as they were from biased personnel of the Appellee.

The Appellee's evidence consists of the testimonies of Randy Esguerra and Teresita Chan and of the following:

1. Secretary's Certificate issued by Ha Ling Chua, Corporate Secretary of the Appellee on 16 February 2005;2

2. Letter of Authority issued by Laura W. Kelley, Vice President, Legal and Secretary of CONVERSE, Inc. on 12 February 2004 in favor of the Appellee to institute legal actions for trademark infringement and unfair competition.'

3. Copies of Certificates of Registration for the marks Chuck Taylor, Converse, Converse All Star & Chuck Taylor & Design, Star and Chevron Design and All Star:"

4- Counterfeit Converse rubber shoes:"

5. "Proof of Purchase" (Tape Receipt), issued by the Appellant on 21 January 2005 with the entries: " QTY (1) DESC 542068MSH AMT 375.00", among other things:"

6. Certification of Purchase of Counterfeit Converse Shoes issued by Estelita Adriano on 21 January 2005;7

7. Sworn Statement (Judicial Affidavit) of Randy Esguerra, dated 29 April 2006;8

8. Genuine Converse Chuck Taylor:" and

Exhibit "A". Exhibit "B", inclusive of sub-markings. Exhibits "C" to "G", inclusive of sub-markings. Exhibit "H". Exhibit "I". Exhibit ''J''. Exhibit "K". Exhibit "L". t

ftlcon YS. king-ton page 3 of 13

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9. Judicial Affidavit ofTeresita Chan, dated 14June 2006. 10

On the other hand, the Appellant's evidence consists of the testimonies of witnesses Agapita Magpantay and Mercedes Marquez and of the following:

1. Filcon Sales Invoices No. 154553, 154799, 162914, and 162913;11

2. Affidavit of Mercedes Marquez, dated 30 August 2006;12

3. Weston Department Store Tape Receipt dated 1/21/05 with the entries "QTY (1) DESC 542068MSH AMT 375.00", among other things:"

4. Weston Identification Card of Sales Clerk Mercedes Marquez:"

5. Men's shoes price list:"

6. Affidavit of Agapita Magpantay, dated 08 September 2006;16

7. Certification from the Office of the City Treasurer, Manila, dated 13 June 2006, that the Jimmy Tan filed retirement of business which was approved on 20 March 2006;17 and

8. Certificate of No Outstanding Tax Liability issued by the Revenue District Office No. 032, Revenue Region No.6 of the Bureau of1

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Internal Revenue, on 24 January 2006 to Jimmy Tan:s

After the appropriate proceedings, the Director found the Appellant liable for trademark infringement and unfair competition and ordered it to cease and desist from selling, offering for sale and/or distributing counterfeit Converse, AlIStar, Converse All Star Chuck Taylor and Design and to pay the Appellee the amount of PhP500,000 as temperate damages and PhP50,000 as attorney's fees.

On 10 May 2007, the Appellant filed an APPEAL MEMORANDUM alleging that the Director erred:

1., J 10 Exhibit "M". Jj!!

11 Exhibits "1" to "4". 12 Exhibit "5". 13 Exhibit "6". H Exhibit "7".

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.~ 15 Exhibit "8". 16 Exhibit "9". >lJ

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,'1 17 Exhibit "10". Jimmy Tan is the proprietor of Weston Department Store. 1M Exhibit "11".


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1. in ruling that the Appellant is liable for violation of the IP Code despite the fact that the alleged buyer was never presented to testify on the alleged sale;

2. in completely disregarding the testimonies of witnesses of the Appellant that the item bought from the Appellant is not Converse shoes;

3. in ruling that the Appellant is liable for violation of the IP Code ( despite the fact that no barangay or police officer was present to witness the alleged sale;

4. in ruling that the Appellant is liable for violation of the IP Code despite the fact that no independent examination of the alleged Converse shoes was made;

5. in awarding the Appellee temperate damages and attorney's fees; and

! 6. in not awarding the Appellant damages and attorney's fees as a result

of the filing of this baseless and malicious complaint.

~The Appellant contends that Ronaldo Barros, the Appellee's employee who allegedly bought the counterfeit Converse rubber shoes from the Appellant was never presented by the Appellee. The Appellant maintains that the Director completely disregarded the testimony of its witness that the transaction covered by the tape receipt is for a pair of men's shoes, US Master brand and that the last time it sold Converse shoes was in 2001. According to the Appellant, the testimony of Randy Esguerra is questionable and biased and that there was no police officer or representative of the barangay who witnessed the alleged test buy of Converse shoes from the Appellant. It claims that there was no independent examination of the alleged counterfeit Converse shoes in the presence of the representatives of the Appellant or government agencies and that that the examination of the shoes was made by the Appellee's quality control employee in the office of the Appellee. Further, the Appellant alleges that the Director did not explain the basis for the award of temperate damages and attorney's fees and that as a result of the filing a baseless and malicious complaint, the Appellant is entitled to payment of damages and attorney's fees.

The Appellee adopted its "Memorandum on Record" filed during the proceedings in the Bureau of Legal Affairs as its comment to the appeal.

The principal issue to be resolved is whether or not the Appellant is liable for trademark infringement and/or unfair competition. Sec. 155 of the IP Code provides that:


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"SEC.155. Remedies; Infringement.- Any person who shall, without the consent ofthe owner of the registered mark:

"155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

"155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whatever there is actual sale of goods or services using the infringing material."

On the other hand, Sec. 168 of the IP Code provides:

"SEC.168. Unfair Competition, Rights, Regulations and Remedies.- 168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from those of others, whether or not a registered mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights.

''168.2.Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those ofthe one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefore.

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against unfair competition, the following shall be deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be ~ likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who I'

otherwise clothes the goods with such appearance as shall deceive the public and

''168.3. In particular, and without in any way limiting the scope of protection

~ defraud another of his legitimate trade, or any subsequent vendor of such goods or any J ~ agent of any vendor engaged in selling such goods with a like purpose; :~

~ b) Any person who by any artifice, or device, or who employs any other means

1 calculated to induce the false belief that such person is offering the services of another 1

I who has identified such services in the mind of the public; or

filcon vs. kingston page6of13 .~

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(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another.

"168+ The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis."

The Appellee filed this case on the ground that the Appellant was selling counterfeit Converse rubber shoes. To prove its case, the Appellee claims that one of its employees, as instructed, bought a counterfeit Converse rubber shoes from the Appellant's store located along Rizal Avenue, Quiapo, Manila on 21 January 2005. The Appellants, however, deny that there was such a sale arguing that the testimonial and documentary evidence submitted by the Appellee are dubious and without probative value.

Thus, a trademark infringement and unfair competition is committed in this instance if the alleged sale of counterfeit Converse shoes took place. If it did not, there is no case to speak of.

The evidence that the Appellee submitted to prove the alleged sale consists of the testimony of Randy Esguerra, the tape receipt allegedly issued by the Appellants; and the Converse rubber shoes allegedly bought by Barros.

This Office noticed that the Director relied heavily on the testimony of Esguerra. She should have been more circumspect in this regard considering that the Appellant disputes Esguerra's testimony. In his sworn statement (judicial affidavit), Esguerra claims, among other things, the following::

Q.: Where you able to proceed to Rizal Avenue as scheduled, Mr. Witness?

A.: Yes, the two of us, me and Mr. Barros, went to Rizal Avenue and looked for and inspected the establishments selling Converse Rubber shoes.

Q.: What happened next, Mr. Witness?

A.: On January 21, 2005, we arrived in the area at around 1:00 pm. To be able to cover as many establishments as we can, we decided to go inside each of the stores that we passed by. While pretending to be a prospective buyer at each establishment that sells rubber shoes, we were able to pass by, by chance, the establishments in the present case. On each of the respondent establishments, there was a display of Converse rubber shoes. So, on the basis of what we have seen, me and Mr. Barros decided to go inside the establishment.

Q.: Among the three (3) respondent establishments, which did you first visited?

A.: We first visited Kingstone Shoe Store.


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xxx "29· Q.: Will you be able to tell this Honorable Office, the name of the

establishment that you visited after Kingston Shoe Store?

A.: Yes Sir. It was Weston Department Store.

"30 . Q.: Why did you go to Weston Department Store?

A.: Sir we purposely went to Weston Department Store because based on our company records, Kimberly Shoe Store, Kingston and Weston Department Store are related to one another, so I thought that if Kingston is positive for selling counterfeit Converse rubber shoes, there is a big chance that Kimberly Store and Weston Department Store are also selling counterfeit Converse rubber shoes. What happened next, Mr. Witness?

A.: Mr. Barros and I went to Weston Department Store, which is also located in Rizal Avenue, Quiapo, Manila.

"32 . Q.: What happened, if any, when you went to Weston Department Store?

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A.: While inside the establishment. Mr. Barros and I looked around pretending to be prospective buyers. rust like what we did in Kingston Shoe Store. in order not to arouse any suspicion. we first looked for other rubber shoes with different brand. After looking for several items. a sales lady approached us and assisted us.

"33· Q.: What happened, if any, when the sales Mr. Barros?

lady approached you and

A.: I asked the sales lady if they have a Converse rubber shoes.

"34. Q.: What was the reply of the sales lady?

A.: The sales lady told us that they Converse Chuck Taylor colored red.

have and brought a pair of

"35· Q.: What happened next, Mr. Witness?

A.: I made an initial inspection ofthe rubber shoes shown to me.

What was the result of your initial inspection?

A.: Based on my initial inspection, the Converse rubber shoes shown to us is different from the one we manufacture and sell. Hence, counterfeit.

"37· Q.: What transpired next. if any?

A.: I called Mr. Barros and showed him the sample. After showing him the sample. he made an initial examination.

What was the result of Mr. Barros' initial examination?

filcon \"S. kingston page 8 of 13

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A.: Mr. Barros told me that the rubber shoes bearing the mark Converse is counterfeit.

" 39· Q.: What happened next, Mr. Witness?

A.: I gave instructions to Mr. Barros to buy the pair of Converse Chuck Taylor.

"40 . Q.: Did Mr. Barros comply with your instructions?

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A.: Yes." (Underscoring supplied)

The Appellant, however, points out that the records, including the crossexamination of Esguerra, reveal that he was not the person referred to in the Appellee's COMPLAINT as the one who allegedly purchased the counterfeit Converse rubber shoes. Scrutinizing the records, this Office finds merit to the Appellant's arguments. The pertinent portions of the Appellee's COMPLAINT are quoted below, to wit:

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"7. Acting pursuant to the instruction of the Executive Vice-President on 21

January 2005, one of the employees of FILCON MANUFACTURING CORPORATION noticed that WESTON DEPARTMENT STORE located along Rizal Avenue. Quiapo. Manila. is selling rubber shoes under the brand name "CONVERSE". Considering that there is an outstanding instruction from the Executive Vice-President of herein complainant FILCON MANUFACTURING CORPORATION to monitor establishments selling substandard rubber shoes under the brand name 'CONVERSE', the same made an initial examination ofthe rubber shoes bearing the mark 'CONVERSE' being sold at respondent establishment, WESTON DEPARTMENT STORE. Based in the initial inspection of the rubber shoes bearing the mark 'CONVERSE', the rubber shoes offered for sale is counterfeit.

"8. To verify the initial examination, the employee of FILCON MANUFACTURING CORPORATION purchased a pair of 'CONVERSE' rubber shoes.

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(Photocopy of the Affidavit of the buyer and the Tape Receipt issued respondent establishment is hereto attached to form part hereof as ANNEXES 'H' and T. respectively). For the sample rubber shoes bearing the counterfeit mark of 'CONVERSE', herein complainant reserves the right to present the same in the course of the proceedings and upon the instruction of this Honorable Office."

(Underscoring supplied) ~.

What was attached to the COMPLAINT is not the affidavit of Esguerra but the "AFFIDAVIT"19 of Ronaldo Barros, which reads, as follows:

"i. That on 21 January 2005, the undersigned affiant went to Rizal Avenue, Sta. Cruz, Manila to verify reports that counterfeit' Converse' rub ber shoes are being openly sold in the market;

19 Dated 18 February 2005. r

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2. That while at said area, I pass by a establishment under the name Weston Department Store that sells rubber shoes under the brand name' Converse';

"3. That pursuant to the instructions of our Executive Vice-President, I posed as a buyer and inspected the 'Converse' rubber shoes offered for sale by Weston Department Store;

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"4. That based on my initial assessment, the rubber shoes bearing the mark' Converse' displayed and offered for sale at Weston Department Store is counterfeit. Hence, I bought a pair of' Converse'; t "5. That after paying for the rubber shoes, I requested for a receipt, which was granted by the cashier. However, instead of an Official Receipt, the cashier a tape receipt;

"6. That after buying a pair of 'Converse' rubber shoes from Weston Department Store.. I immediately went back to our office at Filcon and turned over the samples to our Quality Control Department for appropriate examination;

"7. That as a result, I was informed that the sample is bought from Weston Department Store is counterfeit;"

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Obviously, the COMPLAINT and the Affidavit of Barros speak of only one employee of the Appellee that allegedly purchased the counterfeit CONVERSE from the Appellant and brought it to the office of the Appellee for examination. t That employee is no other than Barros. However, without explanation, the Appellee did not present Barros as witness. Neither did the Appellee offer as evidence the affidavit of Barros. It is further strange that Esguerra was not f mentioned in the COMPLAINT and in the affidavit of Barros. This "omission" is unusual, even illogical, if it is true that Esguerra was with Barros during the alleged sale by the Appellant of counterfeit CONVERSE on 21 January 2005.

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Compounding the difficulty in finding credibility in Esguerra's testimony is the fact that during the cross-examination, he backtracked from his statements in his Sworn Statement on very important and material points. In the Sworn Statement, Esguerra claimed to have gone inside the store and was the one who transacted with the saleslady. This is not the story that unfolded during the crossexaminatiorr'", to wit:

"ATTY. YAMBOT Now, how about for the Weston Department Store can you please describe the area where the Converse Shoe Store is located?

"WITNESS Well there are also shoe display of Converse in the window display area, but I cannot also recall where it is actually displayed on the shelves because Mr. Barros also was the first one who went to the shelving. So I was near at the entrance area.

20 Transcript of Stenographic Notes of the hearing conducted on 03 May 2006, pages 33,34, and 42 .

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"AnY. YAMBOT When you say you were at the entrance area. you're t referring to the entrance of the department store? f

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"WITNESS xxx "AnY. YAMBOT So you mean to tell me that for all the three

three Respondent Shoe stores they allowed this Mr. Barros to bring the Samples to you at the entrance?

"WITNESS

"AnY. YAMBOT

"WITNESS

And why did you not go with Mr. Barros when he was checking the display?

Well. because it was Mr. Barros' job to mainly do the purchase. do the initial ocular and my job was really not to go with Mr. Barros inside the store. My job was merely to examine products as if I was staging along with Mr. Barros. and just giving

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him a nod of approval. hey that's a nice shoe you buy it. So that was more of my job right there."

xxx "AnY. YAMBOT And let us go now to the tape receipt from the

Weston Department Store also marked as Exhibit ''1''. Again Mr. Barros is the one who bought the goods stated in this ....

"WITNESS Yes." (Underscoring supplied)

In this regard, this Office took note that the Appellants dispute the Appellee's claim that it sold a pair of "Converse" shoes to an employee of the Appellee. A scrutiny of the tape receipt submitted by both parties, shows that there is no reference to "Converse" shoes. Witness Mercedes Marquez, the sales clerk in the transaction covered by the tape receipt testified that the entry stock code "542068" refers to a pair of "US Master Shoes". This is consistent with the price list for men shoes submitted by the Appellant. Witness Agapita Magpantay, who was then the Assistant Manager of Weston Department Store, testified, among other things, that they no longer sell any Converse shoes as of 21 January 2005. The person who can refute Marquez's and Magpantay's claims is Barros as he was the one who allegedly purchased the counterfeit Converse shoes. Thus, even assuming in arguendo that Esguerra was with Barros on the 21 January 2005, it is clear that Esguerra is not competent to testify on the alleged sale of counterfeit Converse shoes.

There is reason therefore, to consider the claim of the Appellant that without any police officer or representative from the barangay to witness the alleged buying of Converse shoes from the Appellant, it is very easy for the Appellee to claim that Converse shoes were bought from the Appellant. As pointed out by the Appellant:


"...1 f it were even true that complainant Filcon has received reports prior to the alleged test buy that counterfeit Converse shoes were being sold at respondent Weston, then why did they not ask for the assistance of the police or the NBI during the test buy? Complainant Filcon could have even applied for a search warrant after the alleged test buy so that all the alleged counterfeit Converse products being sold at respondent Weston could have been seized and confiscated. But complainant Filcon did not do all of these things.

"It also bears mentioning that nowhere in the Complaint or the Affidavit of the alleged buyer, Ronaldo Barros, is it mentioned what kind of Converse shoes were allegedly purchased from respondent Kingston. Not even pictures of the shoes were attached to the Complaint. It was only during the testimony of Randy Esguerra before this Honorable Office that complainant Filcon categorically stated that a pair of Converse Chuck Taylor Shoes were purchased. These are very basic facts which were obviously omitted in the Complaint which surely cast serious doubt on the alleged item bought from respondent Weston.

"As a matter of fact, after the alleged Converse shoes were purchased from respondent Weston, the same were not even sealed or bought to the police authorities

to ensure that there would not be any switching and tampering of evidence... .',2\

Thus, without the testimony of Barros, the Appellee's complaint for has no firm ground to stand on. The basis of the complaint is the alleged sale of counterfeit Converse shoes by the Appellant to an employee of the Appellee, who is supposedly, Barros. It is Barros therefore, who could have competently testify with respect to the transaction with the sales clerk, including the issuance of the tape receipt and the entries therein. It is he who could have competently identify that the pair of rubber shoes presented as evidence by the Appellee was the same pair that he allegedly bought from the Appellant. Without the testimony of Barros, the link between the tape receipt and the pair of shoes in the possession of the Appellee cannot be established. There is nothing in the tape that would show that the pair of shoes allegedly sold by a sales clerk of the Appellant is a pair of "Converse" shoes. The other pieces of evidence submitted by the Appellee would only have value upon proof that Barros bought counterfeit Converse shoes from the Appellant. This Office even noticed that the Appellee did not bother to present as witness Estelita Adriano who issued or signed the document entitled "Certification of Purchase of Counterfeit Converse Shoes".

Aptly, the burden of proving that a trademark infringement and/or unfair competition had been committed is upon the Appellee. It is well-established that the standard of substantial evidence required in administrative proceedings is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. While rules of evidence prevailing in courts of law and equity shall not be controlling, the obvious purpose being to free administrative boards from the compulsion of technical rules so that

APPEAL MEMORANDUM/NOTICE OF APPEAL, pages 13-14.

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the mere admission of matter which would be deemed incompetent in judicial proceedings would not invalidate the administrative order, this assurance of a desirable flexibility in administrative procedure does not go so far as to justify orders without basis in evidence having rational probative force." It is also sacrosanct that for evidence to be believed it must not only proceed from the mouth of a credible witness but must be credible in itself such as the common experience and observation of mankind can approve as probable under the circumstances.? The test to determine the value of the testimony of a witness is whether such is in conformity with knowledge and consistent with the experience of mankind. Whatever is repugnant to these standards becomes incredible and lies outside of judicial cognizance."

Violation of intellectual property right is abominable, inimical to social and economic progress, and thus, should be condemned and the offender be punished in accordance with law. This Office, however, cannot sustain a complaint for violation of intellectual property rights absent the required quantum of evidence.

Finally, with respect to the Appellant's claim for an award of damages, there is no legal basis for the Intellectual Property Office of the Philippines to award damages in case the complaint is dismissed. The award of damages under the IP Code is a form or part of the penalty imposed on the offender or violator of Intellectual Property Rights.

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Wherefore, premises considered, the instant appeal is hereby GRANTED. fAccordingly, the Decision of the Director dated 30 March 2007 is hereby

REVERSED and SET ASIDE. The Appellant's prayer for award of damages, however, is DENIED for lack of basis.

Let a copy of this Decision and the records of this case be furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes.

SO ORDERED.

SEP 15 2008 Makati City.

See Spouses WilfTedo Boyboy and Lvdu Boyboy V. Atty. Victoruno R. Yabut, Jr., A.C. 5225, 29 Apr. 2003 (citing Ang Tibey v;

The Court oflndustrisl Relations. 69 Phil. 635 (1940).

'3 People v. LOTiega (326 SCRA 675)

People v, San Juan (326 SCRA 786)


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Documents

ID.t,?q :'~-~~~~-~~~:' ---.---~:-~CE sample of the rubber shoes was bought from the Appellant and was forwarded to the Quality Control Department of the Appellee which ascertained

ID.t,?q :'~-~~-~:' ---.---~:-~CE sample of the rubber shoes was bought from the Appellant and was forwarded to the Quality Control Department of the Appellee which ascertained