Air Philippines V Pennswell

9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 540 9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 540
operation of the business, for example, a machine or

formula, but can be a price list or catalogue or
specialized customer list. 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
VOL. 540, DECEMBER 13, 2007 215
to prevent the disclosure of the trade secret by one
Air Philippines Corporation vs. Pennswell, Inc. who obtained the information “in confidence” or
through a “confidential relationship.” American
*
G.R. No. 172835. December 13, 2007. jurisprudence has utilized the following factors to
determine if an information is a trade secret, to wit:
AIR PHILIPPINES CORPORATION, petitioner, (1) the extent to which the information is known
vs. PENNSWELL, INC., respondent. 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
Intellectual Property Law; Trade Secrets; Words measures taken by the employer to guard the secrecy
and Phrases; A trade secret is defined as a plan or of the information; (4) the value of the information to
process, tool, mechanism or compound known only to the employer and to competitors; (5) the amount of
its owner and those of his employees to whom it is effort or money expended by the company in
necessary to confide it, which definition also extends to developing the informa-
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.—A
trade secret is defined as a plan or process, tool,
* THIRD DIVISION.
mechanism or compound known only to its owner and
those of his employees to whom it is necessary to
confide it. The definition also extends to a secret
216
formula or process not patented, but known only to
certain individuals using it in compounding some
article of trade having a commercial value. A trade
secret may consist of any formula, pattern, device, or 216 SUPREME COURT REPORTS ANNOTATED
compilation of information that: (1) is used in one’s
business; and (2) gives the employer an opportunity to Air Philippines Corporation vs. Pennswell, Inc.
obtain an advantage over competitors who do not
possess the information. Generally, a trade secret is a tion; and (6) the extent to which the information could
process or device intended for continuous use in the be easily or readily obtained through an independent
central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 1/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 2/49

source. cause therefor before the court in which an action is

pending.—We now take a look at Section 1, Rule 27 of
Same; Same; Any determination by management the Rules of Court, which permits parties to inspect
as to the confidential nature of technologies, processes, documents or things upon a showing of good cause
formulae, or other so-called trade secrets must have a before the court in which an action is pending. Its
substantial factual basis which can pass judicial entire provision reads: SECTION 1. Motion for
scrutiny; The parameters in the determination of trade production or inspection order.—Upon motion of any
secrets are such substantial factual basis that can party showing good cause therefore, the court in
withstand judicial scrutiny.—In Cocoland which an action is pending may (a) order any party to
Development Corporation v. National Labor Relations produce and permit the inspection and copying or
Commission, 259 SCRA 51 (1996), the issue was the photographing, by or on behalf of the moving party, of
legality of an employee’s termination on the ground of any designated documents, papers, books, accounts,
unauthorized disclosure of trade secrets. The Court letters, photographs, objects or tangible things, not
laid down the rule that any determination by privileged, which constitute or contain evidence
management as to the confidential nature of material to any matter involved in the action and
technologies, processes, formulae or other so-called which are in his possession, custody or control; or (b)
trade secrets must have a substantial factual basis
which can pass judicial scrutiny. The Court rejected 217
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
VOL. 540, DECEMBER 13, 2007 217
a caveat, the Court said that to rule otherwise would
be to permit an employer to label almost anything a Air Philippines Corporation vs. Pennswell, Inc.
trade secret, and thereby create a weapon with which
he/it may arbitrarily dismiss an employee on the
order any party to permit entry upon designated land
pretext that the latter somehow disclosed a trade
or other property in his possession or control for the
secret, even if in fact there be none at all to speak of.
purpose of inspecting, measuring, surveying, or
Hence, in Cocoland, the parameters in the
photographing the property or any designated
determination of trade secrets were set to be such
relevant object or operation thereon. The order shall
substantial factual basis that can withstand judicial
specify the time, place and manner of making the
scrutiny.
inspection and taking copies and photographs, and
may prescribe such terms and conditions as are just.
Actions; Pleadings and Practice; Modes of
A more than cursory glance at the above text would
Discovery; Production or Inspection of Documents; The
show that the production or inspection of documents
production or inspection of documents or things as a
or things as a mode of discovery sanctioned by the
mode of discovery sanctioned by the Rules of Court
Rules of Court may be availed of by any party upon a
may be availed of by any party upon a showing of good
showing of good cause therefor before the court in requisite that the items be specifically described, and
which an action is pending. The court may order any must constitute or contain evidence material to any
party: a) to produce and permit the inspection and matter involved in the action and which are in the
copying or photographing of any designated party’s possession, custody or control.
documents, papers, books, accounts, letters,
photographs, objects or tangible things, which are not
218
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) to 218 SUPREME COURT REPORTS ANNOTATED
permit entry upon designated land or other property
in his possession or control for the purpose of Air Philippines Corporation vs. Pennswell, Inc.
inspecting, measuring, surveying, or photographing
the property or any designated relevant object or Same; Same; Same; Same; Same; Privileged
operation thereon. Communication; Types of Disqualification by Reason
of Privileged Communication; There are other
Same; Same; Same; Same; Privileged Matters; privileged matters that are not mentioned by Rule 130,
Rule 27 of the Rules of Court sets an unequivocal among which are the following: (a) editors may not be
proviso that the documents, papers, books, accounts, compelled to disclose the source of published news, (b)
letters, photographs, objects or tangible things that voters may not be compelled to disclose for whom they
may be produced and inspected should not be voted, (c) trade secrets, (d) information contained in
privileged—not be privileged against disclosure; On tax census returns, and (d) bank deposits.—Section 24
the ground of public policy, the rules providing for of Rule 130 draws the types of disqualification by
production and inspection of privileged matters, that reason of privileged communication, to wit: (a)
is, books and papers which, because of their communication between husband and wife; (b)
confidential and privileged character, could not be communication between attorney and client; (c)
received in evidence.—Rule 27 sets an unequivocal communication between physician and patient; (d)
proviso that the documents, papers, books, accounts, communication between priest and penitent; and (e)
letters, photographs, objects or tangible things that public officers and public interest. There are, however,
may be produced and inspected should not be other privileged matters that are not mentioned by
privileged. The documents must not be privileged Rule 130. Among them are the following: (a) editors
against disclosure. On the ground of public policy, the may not be compelled to disclose the source of
rules providing for production and inspection of books published news; (b) voters may not be compelled to
and papers do not authorize the production or disclose for whom they voted; (c) trade secrets; (d)
inspection of privileged matter; that is, books and information contained in tax census returns; and (d)
papers which, because of their confidential and bank deposits. Intellectual Property Law; Trade
privileged character, could not be received in Secrets; That trade secrets are of a privileged nature is
evidence. Such a condition is in addition to the beyond quibble—the protection that this jurisdiction
affords to trade secrets is evident in our laws.—That intimately connected with economic development; The
trade secrets are of a privileged nature is beyond protection of industrial secrets is inextricably linked to
quibble. The protection that this jurisdiction affords to the advancement of our economy and fosters healthy
trade secrets is evident in our laws. The Interim Rules competition in trade; Jurisprudence has consistently
of Procedure on Government Rehabilitation, effective acknowledged the private character of trade secrets—
15 December 2000, which applies to: (1) petitions for there is a privilege not to disclose one’s trade secrets.—
rehabilitation filed by corporations, partnerships, and In accordance with our statutory laws, this Court has
associations pursuant to Presidential Decree No. 902- declared that intellectual and industrial property
A, as amended; and (2) cases for rehabilitation rights cases are not simple property cases. Without
transferred from the Securities and Exchange limiting such industrial property rights to trademarks
Commission to the RTCs pursuant to Republic Act No. and trade names, this Court has ruled that all
8799, otherwise known as The Securities Regulation agreements concerning intellectual property are
Code, expressly provides that the court may issue an intimately connected with economic development. The
order to protect trade secrets or other confidential protection of industrial property encourages
research, development, or commercial information investments in new ideas and inventions and
belonging to the debtor. Moreover, the Securities stimulates creative efforts for the satisfaction of
Regulation Code is explicit that the Securities and human needs. It speeds up transfer of technology and
Exchange Commission is not required or authorized to industrialization, and thereby bring about social and
require the revelation of trade secrets or processes in economic progress. Verily, the protection of industrial
any application, report or document filed with the secrets is inextricably linked to the advancement of
Commission. This confidentiality is made paramount our economy and fosters healthy competition in trade.
as a limitation to the right of any member of the Jurisprudence has consistently acknowledged the
general public, upon request, to have access to all private character of trade secrets. There is a privilege
information filed with the Commission. not to disclose one’s trade secrets. Foremost, this
Court has declared that trade secrets and banking
transactions are among the recognized restrictions to
219
the right of the people to information as embodied in
the Constitution. We said that the drafters of the
VOL. 540, DECEMBER 13, 2007 219 Constitution also unequivocally affirmed that, aside
from national security matters and intelligence
Air Philippines Corporation vs. Pennswell, Inc. information, trade or industrial secrets (pursuant to
the Intellectual Property Code and other related laws)
Same; Same; Intellectual and industrial property as well as banking transactions (pursuant to the
rights are not simple property cases; Without limiting Secrecy of Bank Deposits Act), are also exempted from
such industrial property rights to trademarks and compulsory disclosure.
trade names, the Supreme Court has ruled that all
agreements concerning intellectual property are
Same; Same; Consumer Act of the Philippines “Consumer products,” as it is defined in Article 4(q),
(R.A. No. 7394); “Consumer Products,” Defined; Words refers to goods, services and credits, debts or
and Phrases; While it is true that all consumer obligations which are primarily for personal, family,
products domestically sold, whether manufactured household or agricultural purposes, which shall
locally or imported, shall indicate their general make include, but not be limited to, food, drugs, cosmetics,
or active ingredients in their respective labels of and devices. This is not the nature of respondent’s
packaging, the law does not apply to one engaged in products. Its products are not intended for personal,
manufacturing specialized lubricants since these are family, household or agricultural purposes. Rather,
not consumer products, i.e., products intended for they are for industrial use, specifically for the use of
personal, family, household or agricultural purposes; aircraft propellers and engines.
“Consumer products,” as it is defined in Article 4(q),
R.A. No. 7394, refers to goods, services and Same; Same; Special Law on Counterfeit Drugs
(R.A. No. 8203); The special lubricants produced by
220 respondent are outside the scope of R.A. No. 8203—
they do not come within the purview of a drug which,
as defined therein, refers to any chemical compound or
biological substance, other than food, that is intended
220 SUPREME COURT REPORTS ANNOTATED for use in the treatment, prevention or diagnosis of
disease in man and animals.—Petitioner’s argument
Air Philippines Corporation vs. Pennswell, Inc.
that Republic Act No. 8203, or the Special Law on
Counterfeit Drugs, requires the disclosure of the
credits, debts or obligations which are primarily for active ingredients of a drug is also on faulty ground.
personal, family, household or agricultural purposes, Respondent’s products are outside the scope of the
which shall include, but not be limited to, food, drugs, cited law. They do not come within the purview of a
cosmetics, and devices.—In the case at bar, petitioner drug which, as defined therein, refers to any chemical
cannot rely on Section 77 of Republic Act 7394, or the compound or biological substance, other than food,
Consumer Act of the Philippines, in order to compel that is intended for use in the treatment, prevention
respondent to reveal the chemical components of its or diagnosis of disease in man or animals. Again, such
products. While it is true that all consumer products are not the characteristics of respondent’s products.
domestically sold, whether manufactured locally or
imported, shall indicate their general make or active Same; Same; Toxic Substances and Hazardous
ingredients in their respective labels of packaging, the and Nuclear Wastes Control Act of 1990 (R.A. No.
law does not apply to respondent. Respondent’s 6969); Section 12 of R.A. No. 6969 deems as
specialized lubricants—namely, Contact Grease, confidential matters, which may not be made public,
Connector Grease, Thixohtropic Grease, Di-Electric those that would divulge trade secrets, including
Strength Protective Coating, Dry Lubricant and Anti- production or sales figures or methods, production or
Seize Com-pound—are not consumer products. processes unique to such manufac-
221 Petitioner has not made the slightest attempt to show

that these circumstances are availing in the case at
bar.
VOL. 540, DECEMBER 13, 2007 221 Same; Same; Same; Trade secrets should receive
Air Philippines Corporation vs. Pennswell, Inc. greater protection from discovery, because they derive
economic value from being generally unknown and not
readily ascertainable by the public; The party seeking
turer, processor or distributor, or would otherwise tend
disclosure of trade secrets should show a compelling
to affect adversely the competitive position of such
reason for the courts to lift the veil of confidentiality
manufacturer, processor or distributor—the right to
which shields the other party’s trade secrets.—The
confidentiality is recognized by said Act as primordial.
privilege is not absolute; the trial court may compel
—We do not find merit or applicability in petitioner’s
disclosure where it is indispensable for doing justice.
invocation of Section 12 of the Toxic Substances and
We do not, however, find reason to except
Hazardous and Nuclear Wastes Control Act of 1990,
respondent’s trade secrets from the application of the
which grants the public access to records, reports or
rule on privilege. The revelation of respondent’s trade
information concerning chemical substances and
secrets serves no better purpose to the disposition of
mixtures, including safety data submitted, and data
the main case pending with the RTC, which is on the
on emission or discharge into the environment. To
collection of a sum of money. As can be gleaned from
reiterate, Section 12 of said Act deems as confidential
the facts, petitioner received respondent’s goods in
matters, which may not be made public, those that
trade in the normal course of business. To be sure,
would divulge trade secrets, including production or
there are defenses under the laws of contracts and
sales figures or methods; production or processes
sales available to petitioner. On the other hand, the
unique to such manufacturer, processor or distributor,
greater interest of justice
or would otherwise tend to affect adversely the
competitive position of such manufacturer, processor 222
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 222 SUPREME COURT REPORTS ANNOTATED
confidentiality of the manufacturer, processor or
distributor, which information may be released only to Air Philippines Corporation vs. Pennswell, Inc.
a medical research or scientific institution where the
information is needed for the purpose of medical ought to favor respondent as the holder of trade
diagnosis or treatment of a person exposed to the secrets. If we were to weigh the conflicting interests
chemical substance or mixture. The right to between the parties, we rule in favor of the greater
confidentiality is recognized by said Act as primordial. interest of respondent. Trade secrets should receive

greater protection from discovery, because they derive Justice Arturo G. Tayag, concurring. CA Rollo, pp. 166-176.
economic value from being generally unknown and not 2 Id., at p. 206.
readily ascertainable by the public. To the mind of this 3 Penned by Judge Delia H. Panganiban. Records, pp. 313-
Court, petitioner was not able to show a compelling 314.
reason for us to lift the veil of confidentiality which
shields respondent’s trade secrets. 223
PETITION for review on certiorari of the

VOL. 540, DECEMBER 13, 2007 223
decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
The Legal Department for petitioner. On various dates, respondent delivered and sold
Fondevilla, Jasareno, Young, Rondario & to petitioner sundry goods in 5trade, 6 covered by7
Librojo Law Offices for respondent. 4
Sales Invoices No. 8846, 9105, 8962, and 8963,
which correspond to Purchase Orders No. 6433,
CHICO-NAZARIO, J.:
6684, 6634 and 6633, respectively. Under the
Petitioner Air Philippines Corporation seeks, via contracts, petitioner’s total outstanding
the instant Petition for Review under Rule 45 of obligation amounted to P449,864.98 with
the Rules of Court, the1 nullification of the 16 interest at 14% per annum until the amount
February 2006 Decision and the 25 May 2006 would be fully paid. For failure of the petitioner
2
Resolution of the Court of Appeals in CA-G.R. to comply with its obligation under8 said
3
SP No. 86329, which affirmed the Order dated contracts, respondent filed a Complaint for a
30 June 2004 of the Regional Trial Court (RTC), Sum of Money on 928 April 2000 with the RTC.
Makati City, Branch 64, in Civil Case No. 00- In its Answer, petitioner contended that its
561. refusal to pay was not without valid and
Petitioner Air Philippines Corporation is a justifiable reasons. In particular, petitioner
domestic corporation engaged in the business of alleged that it was defrauded in the amount of
air transportation services. On the other hand, P592,000.00 by respondent for its previous sale
respondent Pennswell, Inc. was organized to of four items, covered by Purchase Order No.
engage in the business of manufacturing and 6626. Said items were misrepresented by
selling industrial chemicals, solvents, and respondent as belonging to a new line, but were
special lubricants. 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
1 Penned by Associate Justice Jose C. Reyes, Jr. with names and labels of such goods. Petitioner
Associate Justice Eliezer R. De Los Santos and Associate

specifically identified the items in question, as 3. a. EPC 81,876.96 4582 01/29/99

follows: Trixohtropic
Grease
Label/Description Item Amount P.O. Date
b. Di- EPC#2 81,876.96 5446 04/21/99
No.
Electric
1. a. Anti-Friction MPL- 153,941.40 5714 05/20/99 Strength
Fluid 800 Protective
Coating
b. Excellent Rust MPL- 155,496.00 5888 06/20/99
(fake)
Corrosion 008
(fake) 4. a. Dry ASC- 87,346.52 5712 05/20/99
Lubricant EP
_______________ b. Anti-Seize ASC- 124,108.10 4763 02/16/99

Compound EP & &
4 Corresponding to the sale of Penns-Lube Graphite (fake) 2000 5890 06/24/99
Grease. Id., at p. 7.
5 Corresponding to the sale of Rectified Insulation and According to petitioner, respondent’s products,
Carbon Remover. Id., at p. 9. namely Excellent Rust Corrosion, Connector
6 Corresponding to the sale of Anti-Contaminant. Id., at p. Grease, Electric Strength Protective Coating,
11. and Anti-Seize Compound, are identical with its
7 Corresponding to the sale of Non-Toxic Ease Off with Anti-Friction Fluid, Contact Grease,
Product Code Penns-Chem CIR. Id., at p. 13. Thixohtropic Grease, and Dry Lubricant,
8 Id., at pp. 1-6. respectively. Petitioner asseverated that had
9 Id., at pp. 33-48. respondent been forthright about the identical
character of the products, it would not have
224 purchased the items complained of. Moreover,
petitioner alleged that when the purported fraud
224 SUPREME COURT REPORTS was discovered, a conference was held between
ANNOTATED petitioner and respondent on 13 January 2000,
whereby the parties agreed that respondent
would return to petitioner the amount it
previously paid. However, petitioner was
2. a. Contact COG 115,236.00 5540 04/26/99 surprised when it received a letter from the
Grease #2 respondent, demanding payment of the amount
b. Connector CG 230,519.52 6327 08/05/99 of P449,864.94, which later became the subject
Grease of respondent’s Complaint for Collection of a
(fake) Sum of Money against petitioner.

During the pendency 10of the trial, petitioner c. Dry Lubricant to be compared with Anti-Seize
filed a Motion to Compel respondent to give a Compound[.]
detailed list of the ingredients and chemical
components of the following products, to wit: (a) [Respondent] Pennswell, Inc. is given fifteen (15)
Contact Grease and Connector Grease; (b) days from receipt of this Order to submit to
Thixohtropic Grease and Di-Electric Strength [petitioner] Air Philippines Corporation the chemical
Protective Coating; and 11(c) Dry Lubricant and components of all the above-mentioned
12
products for
Anti-Seize Compound. It appears that chemical comparison/analysis.”
petitioner had earlier requested the Philippine
Institute of Pure and Applied Chemistry Respondent sought reconsideration of the
(PIPAC) for the latter to conduct a comparison of foregoing Order, contending that it cannot be
respondent’s goods. 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
10 Id., at pp. 291-294. respondent cannot be forced to divulge.
11 Id., at pp. 291-292. Respondent maintained that its products are
specialized lubricants, and if their components
225 were revealed, its business competitors may
easily imitate and market the same types of
products, in violation of its proprietary rights
VOL. 540, DECEMBER 13, 2007 225
and to its serious damage and prejudice.
Air Philippines Corporation vs. Pennswell, Inc. The RTC gave credence to respondent’s
reasoning, and reversed itself. It issued an Order
On 15 March 2004, the RTC rendered an Order dated 30 June 2004, finding that the chemical
granting the petitioner’s motion. It disposed, components are respondent’s trade secrets and
thus: are privileged in character. A priori, it
rationalized:
“The Court directs [herein respondent] Pennswell,
Inc. to give [herein petitioner] Air Philippines “The Supreme Court held in the case of Chavez vs.
Corporation[,] a detailed list of the ingredients or Presidential Commission on Good Government, 299
chemical components of the following chemical SCRA 744, p. 764, that “the drafters of the
products: Constitution also unequivocally affirmed that aside
a. Contact Grease to be compared with

_______________
Connector Grease;
b. Thixohtropic Grease to be compared with 12 Id., at p. 300.
DiElectric Strength Protective Coating; and
226 respondent’s rights over its trade secrets. It was

categorical in declaring that the chemical
formulation of re-spondent’s products and their
226 SUPREME COURT REPORTS
ingredients are embraced within the meaning of
ANNOTATED
“trade secrets.” In disallowing the disclosure, the
Air Philippines Corporation vs. Pennswell, Inc. Court of Appeals expounded, thus:
from national security matters and intelligence “The Supreme Court in Garcia v. Board of
information, trade or industrial secrets (pursuant to Investments (177 SCRA 374 [1989]) held that trade
the Intellectual Property Code and other related laws) secrets and confidential, commercial and financial
as well as banking transactions (pursuant to the information are exempt from public scrutiny. This is
Secrecy of Bank Deposit Act) are also exempted from reiterated in Chavez v. Presidential Commission on
compulsory disclosure.” Good Government (299 SCRA 744 [1998]) where the
Trade secrets may not be the subject of compulsory Supreme Court enumerated the kinds of information
disclosure. By reason of [their] confidential and and transactions that are recognized as
privileged character, ingredients or chemical
components of the products ordered by this Court to _______________
be disclosed constitute trade secrets lest [herein
13 Id., at pp. 313-314.
respondent] would eventually be exposed to
unwarranted business competition with others who 227
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 VOL. 540, DECEMBER 13, 2007 227
components may not be the subject of mode of Air Philippines Corporation vs. Pennswell, Inc.
discovery under Rule 27, Section 1 of the Rules of
Court, which expressly makes 13 privileged information restrictions on or privileges against compulsory
an exception from its coverage.” disclosure. There, the Supreme Court explicitly stated
that:
Alleging grave abuse of discretion on the part of
“The drafters of the Constitution also
the RTC, petitioner filed a Petition for Certiorari
unequivocally affirmed that, aside from national
under Rule 65 of the Rules of Court with the
security matters and intelligence information, trade or
Court of Appeals, which denied the Petition and
industrial secrets (pursuant to the Intellectual
affirmed the Order dated 30 June 2004 of the
Property Code and other related laws) as well as
RTC.
banking transactions (pursuant to the Secrecy of
The Court of Appeals ruled that to compel
Bank Deposits Act) are also exempt from compulsory
respondent to reveal in detail the list of
disclosure.”
ingredients of its lubricants is to disregard

It is thus clear from the foregoing that a party All told, We find no grave abuse of discretion
cannot be compelled to produce, release or disclose amounting to lack or excess of jurisdiction on the part
documents, papers, or any object which are considered of public respondent Judge in finding that the detailed
trade secrets. list of ingredients or composition of the
In the instant case, petitioner [Air Philippines
Corporation] would have [respondent] Pennswell 228
produce a detailed list of ingredients or composition of

the latter’s lubricant products so that a chemical 228 SUPREME COURT REPORTS
comparison and analysis thereof can be obtained. On ANNOTATED
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. subject lubricant products which petitioner [Air
[Respondent] Pennswell has a proprietary or Philippines Corporation] seeks to be disclosed are
economic right over the ingredients or components of trade secrets of [respondent] Pennswell; 14
hence,
its lubricant products. The formulation thereof is not privileged against compulsory disclosure.”
known to the general public and is peculiar only to
Petitioner’s Motion for Reconsideration was
[respondent] Pennswell. The legitimate and economic
denied. Unyielding, petitioner brought the
interests of business enterprises in protecting their
instant Petition before us, on the sole issue of:
manufacturing and business secrets are well-
recognized in our system. WHETHER THE COURT OF APPEALS RULED IN
[Respondent] Pennswell has a right to guard its ACCORDANCE WITH PREVAILING LAWS AND
trade secrets, manufacturing formulas, marketing JURISPRUDENCE WHEN IT UPHELD THE
strategies and other confidential programs and RULING OF THE TRIAL COURT THAT THE
information against the public. Otherwise, such CHEMICAL COMPONENTS OR INGREDIENTS OF
information can be illegally and unfairly utilized by RESPONDENT’S PRODUCTS ARE TRADE
business competitors who, through their access to SECRETS OR INDUSTRIAL SECRETS THAT ARE15
[respondent] Pennswell’s business secrets, may use NOT SUBJECT TO COMPULSORY DIS-CLOSURE.
the same for their own private gain and to the
irreparable prejudice of the latter. Petitioner seeks to convince this Court that it
xxxx has a right to obtain the chemical composition
In the case before Us, the alleged trade secrets and ingredients of respondent’s products to
have a factual basis, i.e., it comprises of the conduct a comparative analysis of its products.
ingredients and formulation of [respondent] Petitioner assails the conclusion reached by the
Pennswell’s lubricant products which are unknown to Court of Appeals that the matters are trade
the public and peculiar only to Pennswell. 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 price 19

list or catalogue or specialized customer
use of modes of discovery operates with desirable list. It is indubitable that trade secrets
flexibility under the discretionary control of the constitute proprietary rights. The inventor,
trial court. Furthermore, petitioner posits that discoverer, or possessor of a trade secret or
its request is not done in bad faith or in any similar innovation has rights therein which may
manner as to annoy, embarrass, or oppress be treated as property, and ordinarily an
respondent. injunction will be granted to prevent the
A trade secret is defined as a plan or process, disclosure of the trade secret by one who
tool, mechanism or compound known only to its obtained the information “in confi-dence”
20
or
owner and those of his employees
16
to whom it is through a “confidential relationship.” American
necessary to confide it. The definition also
extends to a secret formula or process not _______________
patented, but known only to certain individuals
using it in compounding 17 Id., citing Palin Mfg. Co., Inc. v. Water Technology, Inc.,
103 Ill.App.3d 926, 59 Ill.Dec. 553, 431
18 AMJUR EMPLOYMENT § 178, citing Saunders v.
_______________
Florence Enameling Co., Inc., 540 So. 2d 651 (Ala. 1988); Air
14 CA Rollo, pp. 172-175. Products and Chemicals, Inc. v. Johnson, 296 Pa. Super. 405,
15 Rollo, p. 26. 442 A.2d 1114 (1982). The foregoing citation also expounded
16 BLACK’SLAWDICTIONARY 1494 (1991), 6TH ed. that trade secrets need not be technical in nature. Market-
related information such as information on current and
229
future projects, as well as potential future opportunities for a
firm, may constitute a trade secret., citing Air Products and
VOL. 540, DECEMBER 13, 2007 229 Chemicals, Inc. v. Johnson, 296 Pa. Super. 405, 442 A.2d
1114 (1982).
19 Id., citing Saunders v. Florence Enameling Co., Inc.,
540 So. 2d 651 (Ala. 1988); Air Products and Chemicals, Inc.
some 17article of trade having a commercial
v. Johnson, 296 Pa. Super. 405, 442 A.2d 1114 (1982). A
value. A trade secret may consist of any
former employee of an insurance company, who routinely
formula, pattern, device, or compilation of
received information regarding the company’s customer list
information that: (1) is used in one’s business;
and policy termination dates while serving as vice-president,
and (2) gives the employer an opportunity to
was barred from disclosing that information, even though
obtain an advantage over competitors who do
18 the company had partially disclosed the customer list in
not possess the information. Generally, a trade
attempts to secure new clients. Alexander & Alexander, Inc.
secret is a process or device intended for
v. Drayton, 378 F. Supp. 824 (E.D. Pa. 1974), aff’d, 505 F.2d
continuous use in the operation of the business,
729 (3d Cir. 1974).
for example, a machine or formula, but can be a

20 9 A.L.R.3d 665, citing Am. Jur., Injunctions (Rev. ed. § disclosure of trade secrets. The Court laid down
72). The Restatement of the Law of Torts § 757, emphasizes the rule that any determination by management
that liability as to the confidential nature of technologies,
processes, formulae or other so-called trade
230
secrets must have a substantial factual basis
which can pass judicial scrutiny. The Court
230 SUPREME COURT REPORTS rejected the employer’s naked contention that its
ANNOTATED own determination as to what constitutes a
trade secret should be binding and conclusive
upon the NLRC. As a caveat, the Court said that
21 to rule otherwise would be to permit an
jurisprudence has utilized the following factors employer to label almost anything a trade secret,
to determine if an information is a trade secret, and thereby create a weapon with which he/it
to wit:
(1) the extent to which the information is _______________
known outside of the employer’s for the disclosure of a trade secret learned under
business; conditions giving no privilege of disclosure or use is not
(2) the extent to which the information is based on the mere copying or use but on the improper means
known by employees and others involved by which the information was procured.
in the business; 21 Id., as adopted from the Uniform Trade Secrets Act
(3) the extent of measures taken by the which is intended to provide states with a legal framework
employer to guard the secrecy of the for improved trade-secret protection.
information; 22 Id.
(4) the value of the information to the 23 328 Phil. 351; 259 SCRA 51 (1996).
employer and to competitors;
231
(5) the amount of effort or money expended
by the company in developing the
information; and VOL. 540, DECEMBER 13, 2007 231
(6) the extent to which the information could Air Philippines Corporation vs. Pennswell, Inc.
be easily or readily 22obtained through an
independent source. may arbitrarily dismiss an employee on the
pretext that the latter somehow disclosed a
In Cocoland Development Corporation 23
v. trade secret, even if in fact there be none at all
24
National Labor Relations Commission, the to speak of. Hence, in Cocoland, the parameters
issue was the legality of an employee’s in the determination of trade secrets were set to
termination on the ground of unauthorized
be such substantial factual basis that can expended money and effort on is
withstand judicial scrutiny. incontrovertible. Our conclusion is that the
The chemical composition, formulation, and detailed ingredients sought to be revealed have a
ingredients of respondent’s special lubricants are commercial
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 24 Id.
otherwise dispose of goods, wares, merchandise,
232
products, including but not limited to industrial
chemicals, solvents, lubricants, acids, alkalies,
salts, paints, oils, varnishes, colors, pigments 232 SUPREME COURT REPORTS
and similar preparations, among others. It is ANNOTATED
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 value to respondent. Not only do we
lubricants, respondent expended efforts, skills, acknowledge the fact that the information
research, and resources. What it had achieved by grants it a competitive advantage; we also find
virtue of its investments may not be wrested that there is clearly a glaring intent on the part
from respondent on the mere pretext that it is of respondent to keep the information
necessary for petitioner’s defense against a confidential and not available to the prying
collection for a sum of money. By and large, the public.
value of the information to respondent is crystal We now take a look at Section 1, Rule 27 of
clear. The ingredients constitute the very fabric the Rules of Court, which permits parties to
of respondent’s production and business. No inspect documents or things upon a showing of
doubt, the information is also valuable to good cause before the court in which an action is
respondent’s competitors. To compel its pending. Its entire provision reads:
disclosure is to cripple respondent’s business, “SECTION 1. Motion for production or inspection
and to place it at an undue disadvantage. If the order.—Upon motion of any party showing good cause
chemical composition of respondent’s lubricants therefore, the court in which an action is pending may
are opened to public scrutiny, it will stand to (a) order any party to produce and permit the
lose the backbone on which its business is inspection and copying or photographing, by or on
founded. This would result in nothing less than behalf of the moving party, of any designated
the probable demise of respondent’s business. documents, papers, books, accounts, letters,
Respondent’s proprietary interest over the photographs, objects or tangible things, not privileged,
ingredients which it had developed and which constitute or contain evidence material to any
matter involved in the action and which are in his tain evidence material to any matter involved in
possession, custody or control; or (b) order any party the action; and which are in his possession,
to permit entry upon designated land or other custody or control; or b) to permit entry upon
property in his possession or control for the purpose of designated land or other property in his
inspecting, measuring, surveying, or photographing possession or control for the purpose of
the property or any designated relevant object or inspecting, measuring, surveying, or
operation thereon. The order shall specify the time, photographing the property or any designated
place and manner of making the inspection and relevant object or operation thereon.
taking copies and photographs, and may prescribe Rule 27 sets an unequivocal proviso that the
such terms and conditions as are just.” documents, papers, books, accounts, letters,
photographs, objects or tangible things that may
A more than cursory glance at the above text be produced and inspected should not be
would show that the production or inspection of privileged.
26
The documents must not be
documents or things as a mode of discovery 27
privileged against disclosure. On the ground of
sanctioned by the Rules of Court may be availed public policy, the rules providing for production
of by any party upon a showing of good cause and inspection of books and papers do not
therefor before the court in which an action is authorize the production or inspection of
pending. The court may order any party: a) to privileged matter; that is, books and papers
produce and permit the inspection and copying which, because of their confidential and
or photographing of any designated documents, privileged28 character, could not be received in
papers, books, accounts, letters, photographs, evidence. Such a condition is in addition to the
objects or 25tangible things, which are not requisite that the items be specifically described,
privileged; which constitute or con- and must constitute or contain evidence material
to any matter involved in the action and which
_______________ are in the party’s
29
possession, custody or control.
Section 24 of Rule 130 draws the types of
25 “Privileged communications” are communications which
disqualification by reason of privileged
occur in a context of legal or other recognized professional
communication, to wit: (a) communication
confidentiality. The fact that a certain communication is
between husband and wife; (b) communication
termed privileged al-
between attorney and client; (c) communication
233 between physician and
_______________
VOL. 540, DECEMBER 13, 2007 233
Air Philippines Corporation vs. Pennswell, Inc. lows 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 criminal case for a crime committed by one against
communications under Sec. 21, Rule 130, Rules of Court. the other or the latter’s direct descendants or
(See Philippine Law Dictionary, 1982 ed., p. 484.) ascendants;
26 Feria and Noche, CIVIL PROCEDURE ANNOTATED (b) An attorney cannot, without the consent of his client,
(2001 ed.), p. 553. be examined as to any communication made by the
27 Agpalo, HANDBOOK ON CIVIL PROCEDURE (2001 client to him, or his advice given thereon in the
ed.), p. 288. course of, or with a view to, professional employment,
28 Id., at p. 289. nor can an attorney’s secretary, stenographer, or
29 Sec. 24. Disqualification by reason of privileged clerk be examined, without the consent of the client
communication.—The following persons cannot testify as to and his employer, concerning any fact the knowledge
matters learned in confidence in the following cases: of which has been acquired in such capacity;
(c) A person authorized to practice medicine, surgery or
234
obstetrics cannot in a civil case, without the consent
of the patient, be examined as to any advice or
234 SUPREME COURT REPORTS treatment given by him or any information which he
ANNOTATED 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;
patient; (d) communication between priest and
(d) A minister or priest cannot, without the consent of
penitent; and (e) public officers and public
the person making the confession, be examined as to
interest. There are, however, other
any confession made to or any advice given by him in
privileged matters that are not mentioned
his professional character in the course of discipline
by Rule 130. Among them are the following: (a)
enjoined by the church to which the minister or
editors may not be compelled to disclose the
priest belongs;
source of published news; (b) voters may not be
(e) A public officer cannot be examined during his term
compelled to disclose for whom they voted; (c)
of office or afterwards, as to communications made to
trade secrets; (d) information contained
30
in tax
him in official confidence, when the court finds that
census returns; and (d) bank deposits.
the public interest would suffer by the disclosure.
_______________ 30 Francisco, EVIDENCE (3rd ed., 1996), pp. 171-173.
(a) The husband or the wife, during or after the 235

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 VOL. 540, DECEMBER 13, 2007 235
except in a civil case by one against the other, or in a Air Philippines Corporation vs. Pennswell, Inc.
We, thus, rule against the petitioner. We affirm 31 SEC Reorganization Act.
the ruling of the Court of Appeals which upheld 32 Section 4, Rule 3 of the Interim Rules of Procedure on
the finding of the RTC that there is substantial Government Rehabilitation.
basis for respondent to seek protection of the law 33 Section 66.2 of the Securities Regulation Code of 2000
for its proprietary rights over the detailed provides that, “66.2. Nothing in this Code shall be construed
chemical composition of its products. to require, or to authorize the Commission to require, the
That trade secrets are of a privileged nature revealing of trade secrets or processes in any application,
is beyond quibble. The protection that this report, or document filed with the Commission.
jurisdiction affords to trade secrets is evident in 34 SEC. 66. Revelation of Information Filed with the
our laws. The Interim Rules of Procedure on Commission.—66.1. All information filed with the
Government Rehabilitation, effective 15 Commission in compli-
December 2000, which applies to: (1) petitions
for rehabilitation filed by corporations, 236
partnerships, and associations31 pursuant to

Presidential Decree No. 902-A, as amended; 236 SUPREME COURT REPORTS
and (2) cases for rehabilitation transferred from ANNOTATED
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 Furthermore, the Revised Penal Code endows a
issue an order to protect trade secrets or cloak of protection to trade secrets under the
other confidential research, development, following articles:
or commercial information belonging to the
32 “Art. 291. Revealing secrets with abuse of office.—The
debtor. Moreover, the Securities Regulation
penalty of arresto mayor and a fine not exceeding 500
Code is explicit that the Securities and
pesos shall be imposed upon any manager, employee
Exchange Commission is not required or
or servant who, in such capacity, shall learn the
authorized to require the revelation of
secrets of his principal or master and shall reveal such
trade secrets or processes in any
secrets.
application, report or document filed with
33 Art. 292. Revelation of industrial secrets.—The
the Commission. This confidentiality is made
penalty of prision correccional in its minimum and
paramount as a limitation to the right of any
medium periods and a fine not exceeding 500 pesos
member of the general public, upon request, to
shall be imposed upon the person in charge, employee
have access 34to all information filed with the
or workman of any manufacturing or industrial
Commission.
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 hibit the importation, manufacture, processing,
known as the National Internal Revenue Code of sale, distribution, use and disposal of chemical
1997, has a restrictive provision on trade secrets, substances and mixtures that present
penalizing the revelation thereof by internal unreasonable risk and/or injury to health or the
revenue officers or employees, to wit: environment, also contains a provision that
limits the right of the public to have access
“SECTION 278. Procuring Unlawful Divulgence of to records, reports or information
Trade Secrets.—Any person who causes or procures an concerning chemical substances and
officer or employee of the Bureau of Internal Revenue mixtures including safety data submitted
to divulge any confidential information regarding the and data on emission or discharge into the
business, income or inheritance of any taxpayer, environment, if the matter is confidential
knowledge of which was acquired by him in the such that it would divulge trade secrets,
discharge of his official duties, and which it is production or sales figures; or methods,
unlawful for him to reveal, and any person who production or processes unique to such
publishes or prints in any manner whatever, not manufacturer, processor or distributor; or
provided by law, any income, profit, loss or would otherwise tend to affect adversely
expenditure appearing in any income tax return, shall the competitive position of such
be punished by a fine of not more than two thousand manufacturer, processor or distributor.
35
pesos (P2,000), or suffer imprisonment of not less than Clearly, in accordance with our statutory
six (6) months nor more than five (5) years, or both.” laws, this Court has declared that intellectual
and industrial property rights cases are not
Republic Act No. 6969, or the Toxic Substances 36
simple property cases. Without limiting such
and Hazardous and Nuclear Wastes Control Act
of 1990, enacted to implement the policy of the
state to regulate, restrict or pro- _______________
35 Section 12.—Public Access to Records, Reports or

_______________ Notification.—The public shall have access to records,
reports, or information concerning chemical substances and
ance with the requirements of this Code shall be made
mixtures including safety data submitted, data on emission
available to any member of the general public, upon request,
or discharge into the environment, and such documents shall
in the premises and during regular office hours of the
be available for inspection or reproduction during normal
Commission, except as set forth in this Section.
business hours except that the Department of Environment
237 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
VOL. 540, DECEMBER 13, 2007 237
secrets, production or sales figures or methods, production or
Air Philippines Corporation vs. Pennswell, Inc. processes unique to such manufacturer, processor or

distributor, or would otherwise tend to affect adversely the recognized restrictions to the right of the people
competitive position of such manufacturer, processor or to information as
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 37 Id.
of medical diagnosis or treatment of a person exposed to the 38 Id. In Mirpuri (id., at p. 666; p. 553), the Court
chemical substance or mixture. acknowledges the Philippines’ respect for intellectual and
36 Mirpuri v. Court of Appeals, 376 Phil. 628; 318 SCRA industrial property, and held:
516 (1999).
The Intellectual Property Code of the Philippines declares that “an
238 effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of
technology, it attracts foreign investments, and ensures market
238 SUPREME COURT REPORTS access for our products.” The Intellectual Property Code took effect
ANNOTATED on January 1, 1998 and by its express provision, repealed the
Air Philippines Corporation vs. Pennswell, Inc. Trademark Law, the Patent Law, Articles 188 and 189 of the
Revised Penal Code, the Decree on Intellectual Property, and the
industrial property rights to trademarks and Decree on Compulsory Reprinting of Foreign Textbooks. The Code
trade names, this Court has ruled that all was enacted to strengthen the intellectual and industrial property
agreements concerning intellectual property are system in the Philippines as mandated by the country’s accession to
intimately 37 connected with economic the Agreement Establishing the World Trade Organization (WTO).
development. The protection of industrial 39 Id.

property encourages investments in new ideas
and inventions and stimulates creative efforts 239
for the satisfaction of human needs. It speeds up
transfer of technology and industrialization, and
VOL. 540, DECEMBER 13, 2007 239
thereby 38bring about social and economic
progress. Verily, the protection of industrial Air Philippines Corporation vs. Pennswell, Inc.
secrets is inextricably linked to the advancement
40
of our economy and fosters healthy competition embodied in the Constitution. We said that the
in trade. drafters of the Constitution also unequivocally
Jurisprudence has consistently acknowledged affirmed that, aside from national security
the private character of trade secrets. There is a39 matters and intelligence information, trade or
privilege not to disclose one’s trade secrets. industrial secrets (pursuant to the Intellectual
Foremost, this Court has declared that trade Property Code and other related laws) as well as
secrets and banking transactions are among the banking transactions (pursuant to the Secrecy of
Bank Deposits Act), 41are also exempted from 2004, 438 SCRA 343, 352; See also Star Paper Corporation v.
compulsory disclosure. Simbol, G.R. No. 164774, 12 April 2006, 487 SCRA 228, 242.
Significantly, our cases on labor are replete
with examples of a protectionist stance towards 240
the trade secrets of employers. For instance, this

Court upheld the validity of the policy of a 240 SUPREME COURT REPORTS
pharmaceutical company prohibiting its ANNOTATED
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 In the case43 at bar, petitioner cannot rely on
strategies and other confidential programs and Section 77 of Republic Act 7394, or the
42
information from competi-tors. Notably, it was Consumer Act of the Philippines, in order to
in a labor-related case that this Court made a compel respondent to reveal the chemical
stark ruling on the proper determination of components of its products. While it is true that
trade secrets. all consumer products
_______________ _______________
40 The pertinent Constitutional provisions on the right of 43 ARTICLE 77. Minimum Labeling Requirements for
the people to information are, to wit: Consumer Products.—All consumer products domestically
sold whether manufactured locally or imported shall indicate
Sec. 7 [Article III]. The right of the people to information on matters
the following in their respective labels of packaging:
of public concern shall be recognized. Access to official records, and
to documents, and papers pertaining to official acts, transactions, or a) its correct and registered trade name or brand name;
decisions, as well as to government research data used as basis for b) its duly registered trademark;
policy development, shall be afforded the citizen, subject to such
c) its duly registered business name;
limitations as may be provided by law.
d) the address of the manufacturer, importer, repacker
Sec. 28 [Article II]. Subject to reasonable conditions prescribed
of the consumer product in the Philippines;
by law, the State adopts and implements a policy of full public
e) its general make or active ingredients;
disclosure of all its transactions involving public interest.
f) the net quantity of contents, in terms of weight,
41 Chavez v. Presidential Commission on Good measure or numerical count rounded off to at least
Government and Magtanggol Gunigundo, 360 Phil. 133, 161; the nearest tenths in the metric system;
299 SCRA 744 (1998). g) country of manufacture, if imported; and
42 Duncan Association of Detailman-PTGWO v. Glaxo
h) if a consumer product is manufactured, refilled or re-
Wellcome Philippines, Inc., G.R. No. 162994, 17 September
packed under license from a principal, the label shall
so state the fact.
services and credits, debts or obligations which

The following may be required by the concerned are primarily for personal, family, household or
department in accordance with the rules and regulations agricultural purposes, which shall include, but
they will promulgate under authority of this Act: not be limited to, food, drugs, cosmetics, and
a) whether it is flammable or inflammable;
devices. This is not the nature of respondent’s
products. Its products are not intended for
b) directions for use, if necessary;
personal, family, household or agricultural
c) warning of toxicity;
purposes. Rather, they are for industrial use,
d) wattage, voltage or amperage; or specifically for the use of aircraft propellers and
e) process of manufacture used, if necessary. engines.
Petitioner’s argument that Republic Act No.
Any word, statement or other information required by or 8203, or the Special Law on Counterfeit Drugs,
under authority of the preceding paragraph shall appear on requires the disclosure of the active ingredients
45
the label or labeling with such conspicuousness as compared of a drug is also on faulty ground. Respondent’s
with other words, statements, designs, or devices therein, products are outside the scope of the cited law. 46
and in such terms as to render it likely to be read and They do not come within the purview of a drug
understood by the ordinary individual under customary which, as
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:
241
xxxx
q) “Consumer products and services” means goods,
VOL. 540, DECEMBER 13, 2007 241 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.
domestically sold, whether manufactured locally 45 Petitioner cites the definition of a counterfeit
or imported, shall indicate their general make or drug/medicine in Republic Act 8203 or the Special Law on
active ingredients in their respective labels of Counterfeit Drugs to buttress its argument, specifically
packaging, the law does not apply to respondent. Section 3(b)(4) thereof, to wit:
Respondent’s specialized lubricants—namely, a drug which contains no amount of, or a different active
Contact Grease, Connector Grease, Thixohtropic ingredient, or less than eighty percent (80%) of the active
Grease, DiElectric Strength Protective Coating, ingredient it purports to possess, as distinguished from an
Dry Lubricant and Anti-Seize Compound—are adulterated drug including reduction or loss or efficacy due
not consumer products. “Consumer
44
products,” as to expiration.
it is defined in Article 4(q), refers to goods,
46 SECTION 3. Definition of Terms—For purposes of this (2) any article intended for use in the diagnosis, cure
Act, the terms: mitigation, treatment, or prevention of disease in
man or animals;
242
(3) any article other than food intended to affect the
structure or any function of the body of man or
242 SUPREME COURT REPORTS animals;
ANNOTATED (4) any article intended for use as a component of any
Air Philippines Corporation vs. Pennswell, Inc. articles specified in clauses (1), (2), (3) not including
devices or their components, parts, or accessories;
and
defined therein, refers to any chemical
compound or biological substance, other than (5) herbal and/or traditional drugs which are articles of
food, that is intended for use in the treatment, plant or animal origin used in folk medicine which
prevention or diagnosis of disease in man or are:
animals. Again, such are not the characteristics

(a) recognized in the Philippine National Drug
of respondent’s products.
Formulary; (b) intended for use in the treatment or
What is clear from the factual findings of the
cure or mitigation of disease symptoms, injury or
RTC and the Court of Appeals is that the
body defect in man; (c) other than food, intended to
chemical formulation of respondent’s products is
affect the structure or any function of the body of
not known to the general public and is unique
man; (d) in finished or ready-to-use dosage form; and
only to it. Both courts uniformly ruled that these
(e) intended for use as a component of any of the
ingredients are not within the knowledge of the
articles specified in clauses (a), (b), (c) and (d).
public. Since
243
_______________
(a) Drugs shall refer to any chemical compound or VOL. 540, DECEMBER 13, 2007 243
biological substance, other than food, intended for use in the Air Philippines Corporation vs. Pennswell, Inc.
treatment, prevention or diagnosis of disease in man or
animals, including but not limited to:
such factual findings are generally not
(1) any article recognized in the official United States reviewable by this Court, it is not duty-bound to
Pharmacopoeia—National Formulary (USP-NF), analyze and weigh all over again the evidence 47
official Homeopathic Pharmacopoeia of the United already considered in the proceedings below.
States, Philippines National Drug Formulary, British We need not delve into the factual bases of such
Pharmacopoeia, any National Compendium or any findings as questions of fact are beyond the pale
supplement to any of them; of Rule 45 of the Rules of Court. Factual findings
of the trial court when affirmed by the Court of
Appeals, are binding

48
and conclusive on the of medical diagnosis or treatment of a person exposed to the
Supreme Court. chemical substance or mixture. (Republic Act No. 6969.)
We do not find merit or applicability
49
in 50 Republic Act No. 6969.
petitioner’s invocation of Section 12 of the Toxic
244
Substances and Hazardous and Nuclear Wastes
Control Act of 1990, which grants the public
access to records, reports or information 244 SUPREME COURT REPORTS
concerning chemical substances and mixtures, ANNOTATED
including safety data submitted, and data on
emission or discharge 50into the environment. To
reiterate, Section 12 of said Act deems as
confidential matters, which may not be
made public, those that would divulge
_______________
trade secrets, including production or sales
47 Ceballos v. Intestate Estate of the Late Emigdio figures or methods; production or
Mercado, G.R. No. 155856, 28 May 2004, 430 SCRA 323, 331. processes unique to such manufacturer,
48 Filinvest Land, Inc. v. Court of Appeals, G.R. No. processor or distributor, or would
138980, 20 September 2005, 470 SCRA 260, 267-268. otherwise tend to affect adversely the
49 Section 12.—Public Access to Records, Reports or competitive position of such manufacturer,
Notification.—The public shall have access to records,
processor or distributor. It is true that under
reports or information concerning chemical substances and
the same Act, the Department of Environment
mixtures including safety data submitted, data on emission
and Natural Resources may release information;
or discharge into the environment, and such documents shall
however, the clear import of the law is that said
be available for inspection or reproduction during normal
authority is limited by the right to
business hours except that the Department of Environment
confidentiality of the manufacturer, processor or
and Natural Resources may consider a record, report or
distributor, which information may be released
information or particular portions thereof confidential and
only to a medical research or scientific
may not be made public when such would divulge trade
institution where the information is needed for
secrets, production or sales figures or methods, production or
the purpose of medical diagnosis or treatment of
processes unique to such manufacturer, processor or
a person exposed to the chemical substance or
distributor, or would otherwise tend to affect adversely the
mixture. The right to confidentiality is
competitive position of such manufacturer, processor or
recognized by said Act as primordial. Petitioner
distributor. The Department of Environment and Natural
has not made the slightest attempt to show that
Resources, however, may release information subject to
these circumstances are availing in the case at
claim of confidentiality to a medical research or scientific
bar.
institution where the information is needed for the purpose
Indeed, the privilege is not absolute; the trial
court may compel disclosure where it is
51
51
indispensable for doing justice. We do not, WHEREFORE, the Petition is DENIED. The
however, find reason to except respondent’s Decision dated 16 February 2006, and the
trade secrets from the application of the rule on Resolution dated 25 May 2006, of the Court of
privilege. The revelation of respondent’s trade Appeals in CA-G.R. SP No. 86329 are
secrets serves no better purpose to the AFFIRMED. No costs.
disposition of the main case pending with the SO ORDERED.
RTC, which is on the collection of a sum of
money. As can be gleaned from the facts, Ynares-Santiago (Chairperson), Austria-
petitioner received respondent’s goods in trade Martinez, Nachura and Reyes, JJ., concur.
in the normal course of business. To be sure,
there are defenses under the laws of contracts Petition denied, judgment and resolution
and sales available to petitioner. On the other affirmed.
hand, the greater interest of justice ought to
Notes.—There are no specific laws
favor respondent as the holder of trade secrets.
prescribing the exact limitations within which
If we were to weigh the conflicting interests
the right to information may be exercised or the
between the parties, we rule in favor of the
correlative state duty may be obliged. However,
greater interest of respondent. Trade secrets
the following are some of the recognized
should receive greater protection from
restrictions: (1) national security matters and
discovery, because they derive economic
intelligence information, (2) trade secrets and
value from being
banking transactions, (3) criminal matters, and
(4) other confidential information. (Chavez vs.
_______________ Presidential Commission on Good Government,
299 SCRA 744 [1998])
51 Francisco, EVIDENCE (3rd ed., 1996), pp. 171-173.
Among far too many lawyers (and not a few
245 judges), there is, if not a regrettable
unfamiliarity and even outright ignorance about
the nature, purposes and operation of the modes
VOL. 540, DECEMBER 13, 2007 245 of discovery, at least a strong yet unreasoned
Air Philippines Corporation vs. Pennswell, Inc. and unreasonable disinclination to resort to
them. (Diman vs. Alumbres, 299 SCRA 459
generally unknown and 52 not readily [1998])
ascertainable by the public. To the mind of
——o0o——
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.

9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 540
52 AMJUR DEPOSITION §42, citing Ex parte Miltope

Corp., 823 So. 2d 640 (Ala. 2001).
246
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9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 540 9/20/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 540

operation of the business, for example, a machine or

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 1/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 2/49

source. cause therefor before the court in which an action is

221 Petitioner has not made the slightest attempt to show

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 11/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 12/49

PETITION for review on certiorari of the

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specifically identified the items in question, as 3. a. EPC 81,876.96 4582 01/29/99

_______________ b. Anti-Seize ASC- 124,108.10 4763 02/16/99

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 15/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 16/49

a. Contact Grease to be compared with

226 respondent’s rights over its trade secrets. It was

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 19/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 20/49

produce a detailed list of ingredients or composition of

the Rules of Court, petitioner argues that the price 19

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 23/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 24/49

(1) the extent to which the information is _______________

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_______________ 30 Francisco, EVIDENCE (3rd ed., 1996), pp. 171-173.

(a) The husband or the wife, during or after the 235

partnerships, and associations31 pursuant to

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 33/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 34/49

35 Section 12.—Public Access to Records, Reports or

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development. The protection of industrial 39 Id.

the trade secrets of employers. For instance, this

services and credits, debts or obligations which

prevention or diagnosis of disease in man or are:

animals. Again, such are not the characteristics

Appeals, are binding

central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 47/49 central.com.ph/sfsreader/session/00000174ab29a8652ed1962a003600fb002c009e/t/?o=False 48/49

52 AMJUR DEPOSITION §42, citing Ex parte Miltope

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