PROLINE SPORTS VS. CA (IPL) FACTS: By virtue of its merger with A.G. Spalding Bros., Inc.

, 1 petitioner QUESTOR, a US-based corporation, became the owner of the trademark "Spalding" appearing in sporting goods, implements and apparatuses. Co-petitioner PRO LINE, a domestic corporation, is the exclusive distributor of "Spalding" sports products in the Philippines. 2 Respondent UNIVERSAL, is a domestic corporation engaged in the sale and manufacture of sporting goods while co-respondent Monico Sehwani is the president of the corporation. Edwin Dy Buncio, General Manager of PRO LINE, sent a letter-complaint to the National Bureau of Investigation (NBI) regarding the alleged manufacture of fake "Spalding" balls by UNIVERSAL. In the course of the search, some 1,200 basketballs and volleyballs marked "Spalding" were seized and confiscated by the NBI. PRO LINE and QUESTOR filed a criminal complaint for unfair competition against respondent Monico Sehwani together with Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes. Sehwani pleaded not guilty to the charge. But, while he admitted to having manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed that this was only for the purpose of complying with the requirement of trademark registration with the Philippine Patent Office. After the prosecution rested its case, Sehwani filed a demurrer to evidence arguing that the act of selling the manufactured goods was an essential and constitutive element of the crime of unfair competition under Art. 189 of the Revised Penal Code, and the prosecution was not able to prove that he sold the products. In its Order the trial court granted the demurrer and dismissed the charge against Sehwani. PRO LINE and QUESTOR impugne the dismissal of the criminal case. ISSUE: Is the act of selling an indispensable element of the crime of unfair competition? RULING: respondents' act may constitute unfair competition even if the element of selling has not been proved. To hold that the act of selling is an indispensable element of the crime of unfair competition is illogical because if the law punishes the seller of imitation goods, then with more reason should the law penalize the manufacturer. In U.S. v. Manuel, 12 the Court ruled that the test of unfair competition is whether certain goods have been intentionally clothed with an appearance which is likely to deceive the ordinary purchasers exercising ordinary care. In this case, it was observed by the Minister of Justice that the manufacture of the "Spalding" balls was obviously done to deceive would-be buyers. The projected sale would have pushed through were it not for the timely seizure of the goods made by the NBI. That there was intent to sell or distribute the product to the public cannot also be disputed given the number of goods manufactured and the nature of the machinery and other equipment installed in the factory.