THIRD
DIVISION
|
AIR PHILIPPINES CORPORATION, Petitioner, - versus - PENNSWELL, INC. Respondent. |
|
G.R. No. 172835 Present: YNARES-SANTIAGO, J. Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO,
NACHURA,
and REYES, JJ. Promulgated: December
13, 2007 |
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- -x
Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under
Rule 45 of the Rules of Court, the nullification of the 16 February 2006 Decision[1]
and the 25 May 2006 Resolution[2] of
the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the Order[3]
dated 30 June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64,
in Civil Case No. 00-561.
Petitioner
Air Philippines Corporation is a domestic corporation engaged in the business
of air transportation services. On the
other hand, respondent Pennswell, Inc. was organized to engage in the business of
manufacturing and selling industrial chemicals, solvents, and special
lubricants.
On
various dates, respondent delivered and sold to petitioner sundry goods in
trade, covered by Sales Invoices No. 8846,[4]
9105,[5]
8962,[6]
and 8963,[7]
which correspond to Purchase Orders No. 6433, 6684, 6634 and 6633,
respectively. Under the contracts,
petitioner’s total outstanding obligation amounted to P449,864.98 with
interest at 14% per annum until the amount would be fully paid. For failure of the petitioner to comply with
its obligation under said contracts, respondent filed a Complaint[8]
for a Sum of Money on
In
its Answer,[9]
petitioner contended that its refusal to pay was not without valid and
justifiable reasons. In particular,
petitioner alleged that it was defrauded in the amount of P592,000.00 by
respondent for its previous sale of four items, covered by Purchase Order No.
6626. Said items were misrepresented by
respondent as belonging to a new line, but were in truth and in fact, identical
with products petitioner had previously purchased from respondent. Petitioner asserted that it was deceived by
respondent which merely altered the names and labels of such goods. Petitioner specifically identified the items
in question, as follows:
|
Label/Description |
Item No. |
Amount |
P.O. |
Date |
|
1. a. Anti-Friction Fluid b. Excellent Rust Corrosion (fake) |
MPL-800 MPL-008 |
153,941.40 155,496.00 |
5714 5888 |
|
|
2. a. Contact
Grease b. Connector Grease (fake) |
COG #2 CG |
115,236.00 230,519.52 |
5540 6327 |
|
|
3. a. Trixohtropic
Grease b. Di-Electric
Strength Protective Coating
(fake) |
EPC EPC#2 |
81,876.96 81,876.96 |
4582 5446 |
|
|
4. a. Dry
Lubricant b. Anti-Seize Compound (fake) |
ASC-EP ASC-EP 2000 |
87,346.52 124,108.10 |
5712 4763 & 5890 |
|
According
to petitioner, respondent’s products, namely Excellent Rust Corrosion, Connector
Grease, Electric Strength Protective Coating, and Anti-Seize Compound, are identical
with its Anti-Friction Fluid, Contact Grease, Thixohtropic Grease, and Dry
Lubricant, respectively. Petitioner asseverated
that had respondent been forthright about the identical character of the products,
it would not have purchased the items complained of. Moreover, petitioner alleged that when the
purported fraud was discovered, a conference was held between petitioner and
respondent on P449,864.94,
which later became the subject of respondent’s Complaint for Collection of a
Sum of Money against petitioner.
During
the pendency of the trial, petitioner filed a Motion to Compel[10]
respondent to give a detailed list of the ingredients and chemical components
of the following products, to wit: (a) Contact Grease and Connector Grease; (b)
Thixohtropic Grease and Di-Electric Strength Protective Coating; and (c) Dry
Lubricant and Anti-Seize Compound.[11] It appears that petitioner had earlier
requested the Philippine Institute of Pure and Applied Chemistry (PIPAC) for
the latter to conduct a comparison of respondent’s goods.
On
The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air Philippines Corporation[,] a detailed list of the ingredients or chemical components of the following chemical products:
a. Contact Grease to be compared with Connector Grease;
b. Thixohtropic Grease to be compared with Di-Electric Strength Protective Coating; and
c. Dry Lubricant to be compared with Anti-Seize Compound[.]
[Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to submit to [petitioner] Air Philippines Corporation the chemical components of all the above-mentioned products for chemical comparison/analysis.[12]
Respondent
sought reconsideration of the foregoing Order, contending that it cannot be
compelled to disclose the chemical components sought because the matter is
confidential. It argued that what petitioner
endeavored to inquire upon constituted a trade secret which respondent cannot
be forced to divulge. Respondent
maintained that its products are specialized lubricants, and if their
components were revealed, its business competitors may easily imitate and
market the same types of products, in violation of its proprietary rights and
to its serious damage and prejudice.
The
RTC gave credence to respondent’s reasoning, and reversed itself. It issued an Order dated
The Supreme Court held in the case of Chavez vs. Presidential Commission on Good Government, 299 SCRA 744, p. 764, that “the drafters of the Constitution also unequivocally affirmed that aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposit Act) are also exempted from compulsory disclosure.”
Trade secrets may not be the subject of compulsory disclosure. By reason of [their] confidential and privileged character, ingredients or chemical components of the products ordered by this Court to be disclosed constitute trade secrets lest [herein respondent] would eventually be exposed to unwarranted business competition with others who may imitate and market the same kinds of products in violation of [respondent’s] proprietary rights. Being privileged, the detailed list of ingredients or chemical components may not be the subject of mode of discovery under Rule 27, Section 1 of the Rules of Court, which expressly makes privileged information an exception from its coverage.[13]
Alleging grave abuse of discretion on
the part of the RTC, petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals,
which denied the Petition and affirmed the Order dated
The Court of Appeals ruled that to
compel respondent to reveal in detail the list of ingredients of its lubricants
is to disregard respondent’s rights over its trade secrets. It was categorical in declaring that the
chemical formulation of respondent’s products and their ingredients are
embraced within the meaning of “trade secrets.” In disallowing the disclosure,
the Court of Appeals expounded, thus:
The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held that trade secrets and confidential, commercial and financial information are exempt from public scrutiny. This is reiterated in Chavez v. Presidential Commission on Good Government (299 SCRA 744 [1998]) where the Supreme Court enumerated the kinds of information and transactions that are recognized as restrictions on or privileges against compulsory disclosure. There, the Supreme Court explicitly stated that:
“The drafters of the Constitution also unequivocally affirmed that, aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposits Act) re also exempt from compulsory disclosure.”
It is thus clear from the foregoing that a party cannot be compelled to produce, release or disclose documents, papers, or any object which are considered trade secrets.
In the instant case, petitioner [Air Philippines Corporation] would have [respondent] Pennswell produce a detailed list of ingredients or composition of the latter’s lubricant products so that a chemical comparison and analysis thereof can be obtained. On this note, We believe and so hold that the ingredients or composition of [respondent] Pennswell’s lubricants are trade secrets which it cannot be compelled to disclose.
[Respondent] Pennswell has a proprietary or economic right over the ingredients or components of its lubricant products. The formulation thereof is not known to the general public and is peculiar only to [respondent] Pennswell. The legitimate and economic interests of business enterprises in protecting their manufacturing and business secrets are well-recognized in our system.
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information against the public. Otherwise, such information can be illegally and unfairly utilized by business competitors who, through their access to [respondent] Pennswell’s business secrets, may use the same for their own private gain and to the irreparable prejudice of the latter.
x x x x
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises of the ingredients and formulation of [respondent] Pennswell’s lubricant products which are unknown to the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent Judge in finding that the detailed list of ingredients or composition of the subject lubricant products which petitioner [Air Philippines Corporation] seeks to be disclosed are trade secrets of [respondent] Pennswell; hence, privileged against compulsory disclosure.[14]
Petitioner’s Motion for
Reconsideration was denied.
Unyielding, petitioner brought the instant Petition before us, on the sole issue of:
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH PREVAILING LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF THE TRIAL COURT THAT THE CHEMICAL COMPONENTS OR INGREDIENTS OF RESPONDENT’S PRODUCTS ARE TRADE SECRETS OR INDUSTRIAL SECRETS THAT ARE NOT SUBJECT TO COMPULSORY DISCLOSURE.[15]
Petitioner
seeks to convince this Court that it has a right to obtain the chemical
composition and ingredients of respondent’s products to conduct a comparative analysis
of its products. Petitioner assails the
conclusion reached by the Court of Appeals that the matters are trade secrets
which are protected by law and beyond public scrutiny. Relying on Section 1, Rule 27 of the Rules of
Court, petitioner argues that the use of modes of discovery operates with
desirable flexibility under the discretionary control of the trial court. Furthermore, petitioner posits that its
request is not done in bad faith or in any manner as to annoy, embarrass, or
oppress respondent.
A
trade secret is defined as a plan or process, tool, mechanism or compound known
only to its owner and those of his employees to whom it is necessary to confide
it.[16] The definition also extends to a secret
formula or process not patented, but known only to certain individuals using it
in compounding some article of trade having a commercial value.[17] A trade secret may consist of any formula, pattern, device, or compilation of
information that: (1) is used in one's business; and (2) gives the employer an
opportunity to obtain an advantage over competitors who do not possess the
information.[18] Generally, a trade secret is a process or
device intended for continuous use in the operation of the business, for
example, a machine or formula, but can be a price list or catalogue or
specialized customer list.[19] It is indubitable that trade secrets
constitute proprietary rights. The
inventor, discoverer, or possessor of a trade secret or similar innovation has
rights therein which may be treated as property, and ordinarily an injunction
will be granted to prevent the disclosure of the trade secret by one who
obtained the information "in confidence" or through a
"confidential relationship."[20] American jurisprudence has utilized the
following factors[21]
to determine if an information is a trade secret, to wit:
(1)
the
extent to which the information is known outside of the employer's business;
(2)
the
extent to which the information is known by employees and others involved in
the business;
(3)
the
extent of measures taken by the employer to guard the secrecy of the
information;
(4)
the value of
the information to the employer and to competitors;
(5)
the amount
of effort or money expended by the company in
developing the information;
and
(6) the extent to which the information could
be easily or readily obtained
through an independent source.[22]
In Cocoland Development Corporation v. National Labor Relations
Commission,[23] the issue was the legality of an
employee’s termination on the ground of unauthorized disclosure of trade
secrets. The Court laid down the rule
that any determination by management as to the confidential nature of
technologies, processes, formulae or other so-called trade secrets must have a
substantial factual basis which can pass judicial scrutiny. The Court rejected the employer’s naked
contention that its own determination as to what constitutes a trade secret
should be binding and conclusive upon the NLRC.
As a caveat, the Court said that to rule otherwise would be to permit an
employer to label almost anything a trade secret, and thereby create a weapon
with which he/it may arbitrarily dismiss an employee on the pretext that the
latter somehow disclosed a trade secret, even if in fact there be none at all
to speak of.[24] Hence, in Cocoland,
the parameters in the determination of trade secrets were set to be such substantial factual basis that can
withstand judicial scrutiny.
The chemical composition,
formulation, and ingredients of respondent’s special lubricants are trade
secrets within the contemplation of the law.
Respondent was established to
engage in the business of general manufacturing and selling of, and to deal in,
distribute, sell or otherwise dispose of goods, wares, merchandise, products,
including but not limited to industrial chemicals, solvents, lubricants, acids,
alkalies, salts, paints, oils, varnishes, colors, pigments and similar
preparations, among others. It is
unmistakable to our minds that the manufacture and production of respondent’s
products proceed from a formulation of a secret list of ingredients. In the creation of its lubricants, respondent
expended efforts, skills, research, and resources. What it had achieved by virtue of its investments
may not be wrested from respondent on the mere pretext that it is necessary for
petitioner’s defense against a collection for a sum of money. By and large, the value of the information to
respondent is crystal clear. The
ingredients constitute the very fabric of respondent’s production and
business. No doubt, the information is
also valuable to respondent’s competitors.
To compel its disclosure is to cripple respondent’s business, and to
place it at an undue disadvantage. If the chemical composition of respondent’s
lubricants are opened to public scrutiny, it will stand to lose the backbone on
which its business is founded. This
would result in nothing less than the probable demise of respondent’s
business. Respondent’s proprietary
interest over the ingredients which it had developed and expended money and
effort on is incontrovertible. Our conclusion is that the detailed
ingredients sought to be revealed have a commercial value to respondent. Not only do we acknowledge the fact that the
information grants it a competitive advantage; we also find that there is
clearly a glaring intent on the part of respondent to keep the information
confidential and not available to the prying public.
We
now take a look at Section 1, Rule 27 of the Rules of Court, which permits
parties to inspect documents or things upon a showing of good cause before the
court in which an action is pending. Its
entire provision reads:
SECTION
1. Motion for production or inspection
order. – Upon motion of any party showing good cause therefore, the court
in which an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving party,
of any designated documents, papers, books, accounts, letters, photographs,
objects or tangible things, not privileged, which constitute or contain
evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon
designated land or other property in his possession or control for the purpose
of inspecting, measuring, surveying, or photographing the property or any
designated relevant object or operation thereon. The order shall specify the time, place and
manner of making the inspection and taking copies and photographs, and may
prescribe such terms and conditions as are just.
A more than cursory glance at the
above text would show that the production or inspection of documents or things
as a mode of discovery sanctioned by the Rules of Court may be availed of by
any party upon a showing of good cause therefor before the court in which an
action is pending. The court may order
any party: a) to produce and permit the inspection and copying or photographing
of any designated documents, papers, books, accounts, letters, photographs,
objects or tangible things, which are not
privileged;[25] which
constitute or contain evidence material to any matter involved in the action;
and which are in his possession, custody or control; or b) to permit entry upon
designated land or other property in his possession or control for the purpose
of inspecting, measuring, surveying, or photographing the property or any
designated relevant object or operation thereon.
Rule 27 sets an unequivocal proviso
that the documents, papers, books, accounts, letters, photographs, objects or
tangible things that may be produced and inspected should not be privileged.[26] The documents must not be privileged against
disclosure.[27] On the ground of public policy, the rules
providing for production and inspection of books and papers do not authorize
the production or inspection of privileged matter; that is, books and papers
which, because of their confidential and privileged character, could not be
received in evidence.[28] Such
a condition is in addition to the requisite that the items be specifically
described, and must constitute or contain evidence material to any matter
involved in the action and which are in the party’s possession, custody or
control.
Section 24[29]
of Rule 130 draws the types of disqualification by reason of privileged
communication, to wit: (a) communication between husband and wife; (b)
communication between attorney and client; (c) communication between physician
and patient; (d) communication between priest and penitent; and (e) public
officers and public interest. There are, however, other privileged
matters that are not mentioned by Rule 130.
Among them are the following: (a) editors may not be compelled to
disclose the source of published news; (b) voters may not be compelled to
disclose for whom they voted; (c) trade
secrets; (d) information contained in tax census returns; and (d) bank
deposits. [30]
We,
thus, rule against the petitioner. We
affirm the ruling of the Court of Appeals which upheld the finding of the RTC
that there is substantial basis for respondent to seek protection of the law
for its proprietary rights over the detailed chemical composition of its
products.
That trade secrets are of a
privileged nature is beyond quibble. The
protection that this jurisdiction affords to trade secrets is evident in our laws. The Interim Rules of Procedure on Government
Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for
rehabilitation filed by corporations, partnerships, and associations pursuant
to Presidential Decree No. 902-A,[31]
as amended; and (2) cases for rehabilitation transferred from the Securities
and Exchange Commission to the RTCs pursuant to Republic Act No. 8799,
otherwise known as The Securities Regulation Code, expressly provides that the
court may issue an order to protect
trade secrets or other confidential research, development, or commercial
information belonging to the debtor.[32] Moreover, the Securities Regulation Code is
explicit that the Securities and Exchange Commission is not required or authorized to
require the revelation of trade secrets or processes in any application,
report or document filed with the Commission.[33] This confidentiality is made paramount as a
limitation to the right of any member of the general public, upon request, to
have access to all information filed with the Commission.[34]
Furthermore, the Revised
Penal Code endows a cloak of protection to trade secrets under the following
articles:
Art. 291. Revealing secrets with abuse of office. — The penalty of arresto mayor and a fine not exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in such capacity, shall learn the secrets of his principal or master and shall reveal such secrets.
Art.
292. Revelation of industrial secrets. — The penalty of prision correccional in its minimum and
medium periods and a fine not exceeding 500 pesos shall be imposed upon the
person in charge, employee or workman of any manufacturing or industrial
establishment who, to the prejudice of the owner thereof, shall reveal the
secrets of the industry of
the latter.
Similarly, Republic Act
No. 8424, otherwise known as the National Internal Revenue Code of 1997, has a restrictive
provision on trade secrets, penalizing the revelation thereof by internal
revenue officers or employees, to wit:
SECTION
278. Procuring Unlawful Divulgence of
Trade Secrets. - Any person who causes or procures an officer or employee
of the Bureau of Internal Revenue to divulge any confidential information
regarding the business, income or inheritance of any taxpayer, knowledge of
which was acquired by him in the discharge of his official duties, and
which it is unlawful for him to reveal, and any person who publishes or prints
in any manner whatever, not provided by law, any income, profit, loss or
expenditure appearing in any income tax return, shall be punished by a fine of
not more than two thousand pesos (P2,000), or suffer imprisonment of not
less than six (6) months nor more than five (5) years, or both.
Republic Act No. 6969, or the Toxic Substances
and Hazardous and Nuclear Wastes Control Act of 1990, enacted to implement the policy
of the state to regulate,
restrict or prohibit the importation, manufacture, processing, sale,
distribution, use and disposal of chemical substances and mixtures that present
unreasonable risk and/or injury to health or the environment, also contains a
provision that limits the right of the public to have access to records,
reports or information concerning chemical substances and mixtures including
safety data submitted and data on emission or discharge into the environment,
if the matter is confidential such that it would divulge trade secrets,
production or sales figures; or methods, production or processes unique to such
manufacturer, processor or distributor; or would otherwise tend to affect
adversely the competitive position of such manufacturer, processor or
distributor.[35]
Clearly, in accordance with our
statutory laws, this Court has declared that intellectual and industrial
property rights cases are not simple property cases.[36] Without limiting such industrial property
rights to trademarks and trade names, this Court has ruled that all agreements
concerning intellectual property are intimately connected with economic
development.[37] The protection of industrial property
encourages investments in new ideas and inventions and stimulates creative
efforts for the satisfaction of human needs. It speeds up transfer of technology and
industrialization, and thereby bring about social and economic progress.[38] Verily, the protection of industrial secrets is inextricably linked to the
advancement of our economy and fosters healthy competition in trade.
Jurisprudence
has consistently acknowledged the private character of trade secrets. There is a privilege not to disclose one’s
trade secrets.[39] Foremost, this Court has declared that trade
secrets and banking transactions are among the recognized restrictions to the
right of the people to information as embodied in the Constitution.[40] We said that the drafters of the Constitution
also unequivocally affirmed that, aside from national security matters and
intelligence information, trade or industrial secrets (pursuant to the
Intellectual Property Code and other related laws) as well as banking
transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted
from compulsory disclosure.[41]
Significantly, our cases on labor are
replete with examples of a protectionist stance towards the trade secrets of
employers. For instance, this Court
upheld the validity of the policy of a pharmaceutical company prohibiting its
employees from marrying employees of any competitor company, on the
rationalization that the company has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs
and information from competitors.[42] Notably, it was in a labor-related case that this
Court made a stark ruling on the proper determination of trade secrets.
In the
case at bar, petitioner cannot rely on Section 77[43]
of Republic Act 7394, or the Consumer Act of the
Petitioner’s argument
that Republic Act No. 8203, or the Special Law on Counterfeit Drugs, requires
the disclosure of the active ingredients of a drug is also on faulty ground.[45] Respondent’s products are outside the scope
of the cited law. They do not come
within the purview of a drug[46]
which, as defined therein, refers to any chemical compound or biological
substance, other than food, that is intended for use in the treatment,
prevention or diagnosis of disease in man or animals. Again, such are not the
characteristics of respondent’s products.
What is
clear from the factual findings of the RTC and the Court of Appeals is that the
chemical formulation of respondent’s products is not known to the general
public and is unique only to it. Both
courts uniformly ruled that these ingredients are not within the knowledge of
the public. Since such factual findings
are generally not reviewable by this Court, it is not duty-bound to analyze and
weigh all over again the evidence already considered in the proceedings below.[47] We need not delve into the factual bases of
such findings as questions of fact are beyond the pale of Rule 45 of the Rules
of Court. Factual findings of the trial
court when affirmed by the Court of Appeals, are binding and conclusive on the
Supreme Court.[48]
We do
not find merit or applicability in petitioner’s invocation of Section 12[49]
of the Toxic Substances and
Hazardous and Nuclear Wastes Control Act of 1990, which grants the public
access to records, reports or information concerning chemical substances and
mixtures, including safety data submitted, and data on emission or discharge
into the environment. To
reiterate, Section 12[50]
of said Act deems as confidential matters, which may not be made public, those
that would divulge trade secrets, including production or sales figures or
methods; production or processes unique to such manufacturer, processor or
distributor, or would otherwise tend to affect adversely the competitive
position of such manufacturer, processor or distributor. It is true that under the same Act, the
Department of Environment and Natural Resources may release information;
however, the clear import of the law is that said authority is limited by the
right to confidentiality of the manufacturer, processor or distributor, which information
may be released only to a medical research or scientific institution where the
information is needed for the purpose of medical diagnosis or treatment of a
person exposed to the chemical substance or mixture. The right to confidentiality is recognized by
said Act as primordial. Petitioner has
not made the slightest attempt to show that these circumstances are availing in
the case at bar.
Indeed, the privilege is not absolute; the trial
court may compel disclosure where it is indispensable for doing justice.[51] We
do not, however, find reason to except respondent’s trade secrets from the
application of the rule on privilege. The
revelation of respondent’s trade secrets serves no better purpose to the
disposition of the main case pending with the RTC, which is on the collection
of a sum of money. As can be gleaned
from the facts, petitioner received respondent’s goods in trade in the normal
course of business. To be sure, there
are defenses under the laws of contracts and sales available to
petitioner. On the other hand, the
greater interest of justice ought to favor respondent as the holder of trade
secrets. If we were to weigh the
conflicting interests between the parties, we rule in favor of the greater
interest of respondent. Trade secrets should receive greater
protection from discovery, because they derive economic value from being
generally unknown and not readily ascertainable by the public.[52] To the mind of this Court, petitioner was not
able to show a compelling reason for us to lift the veil of confidentiality
which shields respondent’s trade secrets.
WHEREFORE,
the Petition is
DENIED. The Decision dated
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice
Associate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
[1] Penned by Associate Justice Jose
C. Reyes, Jr. with Associate Justice Eliezer R. de los
[2]
[3] Penned by Judge Delia H. Panganiban. Records, p. 313-314.
[4] Corresponding to the sale of
Penns-Lube Graphite Grease.
[5] Corresponding to the sale of
Rectified Insulation and Carbon Remover.
[6] Corresponding to the sale of
Anti-Contaminant.
[7] Corresponding to the sale of Non-Toxic Ease Off with Product Code Penns-Chem CIR. Id. at 13.
[8]
[9]
[10]
[11]
[12]
[13]
[14] CA rollo, pp. 172-175.
[15] Rollo,
p. 26
[16] BLACK’S LAW DICTIONARY 1494 (1991), 6TH ed.
[17]
[18] AMJUR
EMPLOYMENT § 178, citing Saunders v. Florence Enameling Co.,
Inc., 540 So. 2d 651 (Ala. 1988); Air Products and Chemicals, Inc. v.
Johnson, 296 Pa. Super. 405, 442 A.2d 1114 (1982). The foregoing citation also expounded that
trade secrets need not be technical in nature. Market-related
information such as information on current and future projects, as well as
potential future opportunities for a firm, may constitute a trade secret.,
citing Air Products and Chemicals, Inc. v.
Johnson, 296 Pa. Super. 405, 442 A.2d 1114 (1982).
[19]
A former employee of an insurance company, who routinely received information
regarding the company's customer list and policy termination dates while
serving as vice-president, was barred from disclosing that information, even
though the company had partially disclosed the customer list in attempts to
secure new clients. Alexander & Alexander, Inc. v.
Drayton, 378 F. Supp. 824 (E.D. Pa. 1974), aff'd, 505 F.2d 729 (3d Cir. 1974).
[20] 9 A.L.R.3d 665,
citing Am
Jur, Injunctions (Rev ed § 72). The Restatement of the Law of Torts §
757, emphasizes that liability for the
disclosure of a trade secret learned under conditions giving no privilege of
disclosure or use is not based on the mere copying or use but on the improper
means by which the information was procured.
[21]
[22]
[23] 328 Phil. 351 (1996).
[24]
[25] “Privileged communications” are
communications which occur in a context of legal or other recognized
professional confidentiality. The fact
that a certain communication is termed privileged allows the speakers to resist
legal pressure to disclose its contents. (See
Barron’s Law Dictionary, 3rd ed., p. 373.) The term “privileged”
in Section 2, Rule 24, Rules of Court, on depositions and discovery, refers to
privileged confidential communications under Sec. 21, Rule 130, Rules of Court.
(See Philippine Law Dictionary, 1982
ed., p. 484.)
[26] Feria and Noche, Civil Procedure Annotated (2001 ed.), p. 553.
[27] Agpalo, Handbook on Civil Procedure (2001 ed.), p. 288.
[28]
[29] Sec. 24. Disqualification by reason of privileged communication. – The following persons cannot testify as to matters learned in confidence in the following cases:
(a) The husband or the wife, during or after the marriage cannot be examined without the consent of the other as to any communication received in confidence by one from the other during the marriage except in a civil case by one against the other, or in a criminal case for a crime committed by one against the other or the latter's direct descendants or ascendants;
(b) An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, nor can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity;
(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without the consent of the patient, be examined as to any advice or treatment given by him or any information which he may have acquired in attending such patient in a professional capacity, which information was necessary to enable him to act in capacity, and which would blacken the reputation of the patient;
(d) A minister or priest cannot, without the consent of the person making the confession, be examined as to any confession made to or any advice given by him in his professional character in the course of discipline enjoined by the church to which the minister or priest belongs;
(e) A public officer cannot be examined during his
term of office or afterwards, as to communications made to him in official
confidence, when the court finds that the public interest would suffer by the
disclosure.
[30] Francisco, Evidence (3rd
ed., 1996), pp. 171-173.
[31] SEC Reorganization Act.
[32] Section 4, Rule 3 of the Interim Rules of Procedure on Government Rehabilitation.
[33] Section
66.2 of the Securities Regulation Code of 2000 provides that, “66.2. Nothing in
this Code shall be construed to require, or to authorize the Commission to
require, the revealing of trade secrets or processes in any application,
report, or document filed with the Commission.
[34] SEC. 66. Revelation of Information Filed with the
Commission. – 66.1. All information filed with the Commission in
compliance with the requirements of this Code shall be made available to any
member of the general public, upon request, in the premises and during regular
office hours of the Commission, except as set forth in this Section.
[35] Section
12. - Public Access to Records, Reports
or Notification. The public shall have access to records, reports, or
information concerning chemical substances and mixtures including safety data
submitted, data on emission or discharge into the environment, and such
documents shall be available for inspection or reproduction during normal
business hours except that the Department of Environment and Natural Resources
may consider a record, report or information or particular portions thereof
confidential and may not be made public when such would divulge trade secrets,
production or sales figures or methods, production or processes unique to such
manufacturer, processor or distributor, or would otherwise tend to affect
adversely the competitive position of such manufacturer, processor or
distributor. The Department of Environment and Natural Resources, however, may
release information subject to claim of confidentiality to a medical research
or scientific institution where the information is needed for the purpose of
medical diagnosis or treatment of a person exposed to the chemical substance or
mixture.
[36] Mirpuri v. Court of Appeals, 376 Phil. 628 (1999).
[37]
[38]
The Intellectual Property Code of the
[39]
[40] The pertinent Constitutional
provisions on the right of the people to information are, to wit:
Sec.
7 [Article III]. The right of the people
to information on matters of public concern shall be recognized. Access to official records, and to documents,
and papers pertaining to official acts, transactions, or decisions, as well as
to government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by law.
Sec. 28 [Article II].
Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving
public interest.
[41] Chavez
v. Presidential Commission on Good Government and Magtanggol Gunigundo, 360
Phil. 133, 161 (1998).
[42] Duncan
Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R.
No. 162994, 17 September 2004, 438 SCRA 343, 352; See also Star Paper Corporation v. Simbol, G.R. No. 164774, 12
April 2006, 487 SCRA 228, 242.
[43] ARTICLE 77. Minimum Labeling
Requirements for Consumer Products. All consumer products domestically sold
whether manufactured locally or imported shall indicate the following in their
respective labels of packaging:
a)
its correct and registered trade name or brand name;
b) its duly registered trademark;
c) its duly registered business name;
d) the address of the manufacturer, importer, repacker of the
consumer product in the
e) its general make or active ingredients;
f) the net quantity of contents, in terms of weight, measure or
numerical count rounded off to at least the nearest tenths in the metric
system;
g) country of manufacture, if imported; and
h) if a consumer product is manufactured, refilled or repacked
under license from a principal, the label shall so state the fact.
The following
may be required by the concerned department in accordance with the rules and
regulations they will promulgate under authority of this Act:
a) whether it is flammable or inflammable;
b) directions for use, if necessary;
c) warning of toxicity;
d) wattage, voltage or amperage; or
e) process of manufacture used, if necessary.
Any word,
statement or other information required by or under authority of the preceding
paragraph shall appear on the label or labeling with such conspicuousness as
compared with other words, statements, designs, or devices therein, and in such
terms as to render it likely to be read and understood by the ordinary
individual under customary conditions of purchase or use.
The above requirements shall
form an integral part of the label without danger of being erased or detached
under ordinary handling of the product.
[44] ARTICLE 4. Definition
of Terms. For purposes of this Act, the term:
x
x x x
q) "Consumer products and services" means
goods, services and credits, debts or obligations which are primarily for
personal, family, household or agricultural purposes, which shall include but
not limited to, food, drugs, cosmetics, and devices.
[45] Petitioner cites the definition of a counterfeit drug/medicine in Republic Act 8203 or the Special Law on Counterfeit Drugs to buttress its argument, specifically Section 3(b)(4) thereof, to wit:
a drug which contains
no amount of, or a different active ingredient, or less than eighty percent
(80%) of the active ingredient it purports to possess, as distinguished from an
adulterated drug including reduction or loss or efficacy due to expiration.
[46] SECTION
3. Definition of Terms – For purposes of this Act, the terms:
(a) Drugs shall refer
to any chemical compound or biological substance, other than food, intended for
use in the treatment, prevention or diagnosis of disease in man or animals,
including but not limited to:
(1) any article
recognized in the official United States Pharmacopoeia – National Formulary
(USP-NF), official Homeopathic Pharmacopoeia of the United States, Philippines
National Drug Formulary, British Pharmacopoeia, any National Compendium or any
supplement to any of them;
(2) any article
intended for use in the diagnosis, cure mitigation, treatment, or prevention of
disease in man or animals;
(3) any article other
than food intended to affect the structure or any function of the body of man
or animals;
(4) any article
intended for use as a component of any articles specified in clauses (1), (2),
(3) not including devices or their components, parts, or accessories; and
(5) herbal and/or
traditional drugs which are articles of plant or animal origin
used in folk medicine
which are:
(a) recognized in the
Philippine National Drug Formulary; (b) intended for use in the treatment or
cure or mitigation of disease symptoms, injury or body defect in man; (c) other
than food, intended to affect the structure or any function of the body of man;
(d) in finished or ready-to-use dosage form; and (e)
intended for use as a component of any of the articles specified in clauses
(a), (b), (c) and (d).
[47] Ceballos
v. Intestate Estate of the Late Emigdio Mercado, G.R. No. 155856, 28 May
2004, 430 SCRA 323, 331.
[48] Filinvest
Land, Inc. v. Court of Appeals, G.R. No. 138980, 20 September 2005, 470
SCRA 260, 267-268.
[49] Section
12. - Public Access to Records, Reports
or Notification. The public shall have access to records, reports or
information concerning chemical substances and mixtures including safety data
submitted, data on emission or discharge into the environment, and such
documents shall be available for inspection or reproduction during normal
business hours except that the Department of Environment and Natural Resources
may consider a record, report or information or particular portions thereof
confidential and may not be made public when such would divulge trade secrets,
production or sales figures or methods, production or processes unique to such
manufacturer, processor or distributor, or would otherwise tend to affect
adversely the competitive position of such manufacturer, processor or
distributor. The Department of Environment and Natural Resources, however, may
release information subject to claim of confidentiality to a medical research
or scientific institution where the information is needed for the purpose of
medical diagnosis or treatment of a person exposed to the chemical substance or
mixture. (Republic Act No. 6969.)
[50] Republic Act No. 6969.
[51] Francisco, Evidence (3rd ed., 1996), pp.
171-173.
[52] AMJUR DEPOSITION §42 , citing Ex parte Miltope Corp., 823 So. 2d 640 (Ala. 2001).