RULE 130, SEC. 26.
Privilege relating to trade secrets.
AIR PHILIPPINES CO. vs. PENNSWELL, INC., G.R.
No. 172835, December 13, 2007
P: CHICO-NAZARIO, J.
FACTS: Pennswell delivered and sold to Air Ph sundry goods in trade. Air
Ph failed to comply its obligation amounting to ₱449k. Pensswell filed a
Complaint for a Sum of Money. Air Ph alleged that it was defrauded in the
amount of ₱592k by Pennswell. Air Ph asserted that it was deceived by Pennswell
which merely altered the names and labels of such goods.
RTC directed Pennswell to give Air Ph a detailed list of the
ingredients or chemical components of the products. Pennswell contended that it
cannot be compelled to disclose the chemical components sought because the
matter is confidential and constituted a trade secret which they cannot be
forced to divulge. RTC reversed
itself and held that the chemical components are Pennswell’s trade secrets and
are privileged in character. CA
affirmed.
ISSUE: Whether or not Pennswell cannot be compelled to disclose the list
of ingredients of their products as it is a trade secret and are privileged in
character.
HELD: YES. To compel Pennswell to reveal in detail the list of
ingredients of its lubricants is to disregard its rights over its trade
secrets. The chemical formulation of the products and their ingredients are
embraced within the meaning of "trade secrets."
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. The chemical
composition, formulation, and ingredients of Pennswell’s special lubricants are
trade secrets within the contemplation of the law. The ingredients constitute
the very fabric of Pennswell’s production and business. To compel its
disclosure is to cripple Pennswell’s business, and to place it at an undue
disadvantage.
In the case at bar, Air Ph cannot rely
on the Consumer Act in order to compel Pennswell to reveal the chemical
components of its products. While it is true that all consumer products
domestically sold shall indicate their general make or active ingredients in
their respective labels of packaging, the law does not apply to Pennswell. Its
products are not consumer products and which are not intended for personal,
family, household or agricultural purposes. Rather, they are for industrial
use, specifically for the use of aircraft propellers and engines.
Indeed, the privilege is not absolute;
the trial court may compel disclosure where it is indispensable for doing
justice.
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