Você está na página 1de 206

1

1. G.R. No. 114508 November 19, 1999


PRIBHDAS J. MIRPURI, petitioner,
vs.
COURT O APP!A"S, DIR!CTOR O PAT!NTS #$% &'e BARBI(ON
CORPORATION, respondents.

PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a
multi-lateral treaty which the Philippines bound itself to honor and
enforce in this country. As to whether or not the treaty afords
protection to a forein corporation aainst a Philippine applicant for the
reistration of a similar trademar! is the principal issue in this case.
"n #une 1$, 1%&', one (olita )scobar, the predecessor-in-interest of
petitioner Pribhdas #. *irpuri, +led an application with the ,ureau of
Patents for the reistration of the trademar! -,arbi.on- for use in
brassieres and ladies underarments. )scobar alleed that she had
been manufacturin and sellin these products under the +rm name -(
/ ,* Commercial- since *arch 0, 1%&'.
Private respondent ,arbi.on Corporation, a corporation orani.ed and
doin business under the laws of 1ew 2or!, 3.4.A., opposed the
application. It claimed that5
The mar! ,A6,I7"1 of respondent-applicant is
confusinly similar to the trademar! ,A6,I7"1 which
opposer owns and has not abandoned.
That opposer will be damaed by the reistration of the
mar! ,A6,I7"1 and its business reputation and oodwill
will sufer reat and irreparable in8ury.
That the respondent-applicant9s use of the said mar!
,A6,I7"1 which resembles the trademar! used and
owned by opposer, constitutes an unlawful appropriation
of a mar! previously used in the Philippines and not
abandoned and therefore a statutory violation of 4ection
: ;d< of 6epublic Act 1o. 1==, as amended.
1
This was doc!eted as Inter Partes Case 1o. =>= ;IPC 1o. =>=<.
After +lin of the pleadins, the parties submitted the case for
decision.
"n #une 1>, 1%&:, the ?irector of Patents rendered 8udment dismissin
the opposition and ivin due course to )scobar9s application, thus5
@A)6)B"6), the opposition should be, as it is hereby,
?I4*I44)?. Accordinly, Application 4erial 1o. 1%'1' for
the reistration of the trademar! ,A6,I7"1, of
respondent (olita 6. )scobar, is iven due course.
IT I4 4" "6?)6)?.
)
This decision became +nal and on 4eptember 11, 1%&:, (olita
)scobar was issued a certi+cate of reistration for the trademar!
-,arbi.on.- The trademar! was -for use in -brassieres and lady9s
underwear arments li!e panties.-
*
)scobar later assined all her rihts and interest over the trademar! to
petitioner Pribhdas #. *irpuri who, under his +rm name then, the -,onito
)nterprises,- was the sole and eCclusive distributor of )scobar9s
-,arbi.on- products.
In 1%&%, however, )scobar failed to +le with the ,ureau of Patents the
ADdavit of 3se of the trademar! reEuired under 4ection 1F of 6epublic
Act ;6.A.< 1o. 1==, the Philippine Trademar! (aw. ?ue to this failure, the
,ureau of Patents cancelled )scobar9s certi+cate of reistration.
"n *ay F&, 1%>1, )scobar reapplied for reistration of the cancelled
trademar!. *irpuri +led his own application for reistration of )scobar9s
trademar!. )scobar later assined her application to herein petitioner
and this application was opposed by private respondent. The case was
doc!eted as Inter Partes Case 1o. F':% ;IPC 1o. F':%<.
In its opposition, private respondent alleed that5
;a< The "pposer has adopted the trademar! ,A6,I7"1
;word<, sometime in #une 1%00 and has then used it on
various !inds of wearin apparel. "n Auust 1:, 1%0:,
"pposer obtained from the 3nited 4tates Patent "Dce a
more recent reistration of the said mar! under
Certi+cate of 6eistration 1o. 01=,1=1. "n *arch 1, 1%:%,
"pposer obtained from the 3nited 4tates Patent "Dce a
more recent reistration for the said trademar! under
F
Certi+cate of 6eistration 1o. $'&,F1:, a copy of which is
herewith attached as AnneC -A.- 4aid Certi+cate of
6eistration covers the followin oods G wearin
apparel5 robes, pa8amas, linerie, nihtowns and slipsH
;b< 4ometime in *arch 1%&=, "pposer further adopted
the trademar! ,A6,I7"1 and ,ee desin and used the
said mar! in various !inds of wearin apparel. "n *arch
1$, 1%&&, "pposer secured from the 3nited 4tates Patent
"Dce a reistration of the said mar! under Certi+cate of
6eistration 1o. 1,'=1,F&&, a copy of which is herein
enclosed as AnneC -,.- The said Certi+cate of
6eistration covers the followin oods5 robes, pa8amas,
linerie, nihtowns and slipsH
;c< 4till further, sometime in 1%=1, "pposer adopted the
trademar! ,A6,I7"1 and a 6epresentation of a @oman
and thereafter used the said trademar! on various !inds
of wearin apparel. "pposer obtained from the 3nited
4tates Patent "Dce reistration of the said mar! on April
$, 1%>0 under Certi+cate of 6eistration 1o. 1,F00,===
for the followin oods5 wearin apparel5 robes, pa8amas,
nihtowns and linerie. A copy of the said certi+cate of
reistration is herewith enclosed as AnneC -C.-
;d< All the above reistrations are subsistin and in force
and "pposer has not abandoned the use of the said
trademar!s. In fact, "pposer, throuh a wholly-owned
Philippine subsidiary, the Philippine (inerie Corporation,
has been manufacturin the oods covered by said
reistrations and sellin them to various countries,
thereby earnin valuable forein eCchane for the
country. As a result of respondent-applicant9s
misappropriation of "pposer9s ,A6,I7"1 trademar!,
Philippine (inerie Corporation is prevented from sellin
its oods in the local mar!et, to the damae and
pre8udice of "pposer and its wholly-owned subsidiary.
;e< The "pposer9s oods bearin the trademar!
,A6,I7"1 have been used in many countries, includin
the Philippines, for at least :' years and has en8oyed
international reputation and ood will for their Euality. To
protect its reistrations in countries where the oods
covered by the reistrations are bein sold, "pposer has
procured the reistration of the trademar! ,A6,I7"1 in
the followin countries5 Australia, Austria, Abu ?habi,
Arentina, ,elium, ,olivia, ,ahrain, Canada, Chile,
Colombia, ?enmar!, )cuador, Brance, @est Iermany,
Ireece, Iuatemala, Aon!on, Aonduras, Italy, #apan,
#ordan, (ebanon, *eCico, *orocco, Panama, 1ew
7ealand, 1orway, 4weden, 4wit.erland, 4yria, )l
4alvador, 4outh Africa, 7ambia, )ypt, and Iran, amon
othersH
;f< To enhance its international reputation for Euality
oods and to further promote oodwill over its name,
mar!s and products, "pposer has eCtensively advertised
its products, trademar!s and name in various
publications which are circulated in the 3nited 4tates and
many countries around the world, includin the
PhilippinesH
;< The trademar! ,A6,I7"1 was fraudulently reistered
in the Philippines by one (olita 6. )scobar under
6eistration 1o. F1%F', issued on 4eptember 11, 1%&:, in
violation of Article 1>% ;0< of the 6evised Penal Code and
4ection : ;d< of the Trademar! (aw. Aerein respondent
applicant acEuired by assinment the -rihts- to the said
mar! previously reistered by (olita )scobar, hence
respondent-applicant9s title is vitiated by the same fraud
and criminal act. ,esides, Certi+cate of 6eistration 1o.
F1%F' has been cancelled for failure of either (olita
)scobar or herein respondent-applicant, to seasonably
+le the statutory aDdavit of use. ,y applyin for a re-
reistration of the mar! ,A6,I7"1 sub8ect of this
opposition, respondent-applicant see!s to perpetuate the
fraud and criminal act committed by (olita )scobar.
;h< "pposer9s ,A6,I7"1 as well as its ,A6,I7"1 and ,ee
?esin and ,A6,I7"1 and 6epresentation of a @oman
trademar!s Eualify as well-!nown trademar!s entitled to
protection under Article =bis of the Convention of Paris
for the Protection of Industrial Property and further
ampli+ed by the *emorandum of the *inister of Trade to
the Aonorable ?irector of Patents dated "ctober F$, 1%>0
JsicK,
4
)Cecutive "rder 1o. %10 dated "ctober &, 1%=0
and the *emorandum of the *inister of Trade and
Industry to the Aonorable ?irector of Patents dated
"ctober F$, 1%>0.
;i< The trademar! applied for by respondent applicant is
identical to "pposer9s ,A6,I7"1 trademar! and
0
constitutes the dominant part of "pposer9s two other
mar!s namely, ,A6,I7"1 and ,ee desin and ,A6,I7"1
and a 6epresentation of a @oman. The continued use by
respondent-applicant of "pposer9s trademar! ,A6,I7"1
on oods belonin to Class F$ constitutes a clear case
of commercial and criminal piracy and if allowed
reistration will violate not only the Trademar! (aw but
also Article 1>% of the 6evised Penal Code and the
commitment of the Philippines to an international treaty.
5
6eplyin to private respondent9s opposition, petitioner raised the
defense of res judicata.
"n *arch F, 1%>F, )scobar assined to petitioner the use of the
business name -,arbi.on International.- Petitioner reistered the name
with the ?epartment of Trade and Industry ;?TI< for which a certi+cate
of reistration was issued in 1%>&.
Borthwith, private respondent +led before the "Dce of (eal Afairs of
the ?TI a petition for cancellation of petitioner9s business name.
"n 1ovember F=, 1%%1, the ?TI, "Dce of (eal Afairs, cancelled
petitioner9s certi+cate of reistration, and declared private respondent
the owner and prior user of the business name -,arbi.on International.-
Thus5
@A)6)B"6), the petition is hereby I6A1T)? and
petitioner is declared the owner and prior user of the
business name -,A6,I7"1 I1T)61ATI"1A(- under
Certi+cate of 6eistration 1o. >&-'%''' dated *arch 1',
1%>& and issued in the name of respondent, is JsicK
hereby ordered revo!ed and cancelled. . . . .
+
*eanwhile, in IPC 1o. F':%, the evidence of both parties were received
by the ?irector of Patents. "n #une 1>, 1%%F, the ?irector rendered a
decision declarin private respondent9s opposition barred by res
judicata and ivin due course to petitioner9s application for
reistration, to wit5
@A)6)B"6), the present "pposition in Inter Partes Case
1o. F':% is hereby ?)C(A6)? ,A66)? by res
judicata and is hereby ?I4*I44)?. Accordinly,
Application 4erial 1o. :$'11 for trademar! ,A6,I7"1
+led by Pribhdas #. *irpuri is IIL)1 ?3) C"364).
4" "6?)6)?.
,
Private respondent Euestioned this decision before the Court of Appeals
in CA-I.6. 4P 1o. F>:1$. "n April 0', 1%%0, the Court of Appeals
reversed the ?irector of Patents +ndin that IPC 1o. =>= was not barred
by 8udment in IPC 1o. F':% and ordered that the case be remanded to
the ,ureau of Patents for further proceedins, viz5
@A)6)B"6), the appealed ?ecision 1o. %F-10 dated #une
1>, 1%%F of the ?irector of Patents in Inter Partes Case
1o. F':% is hereby 4)T A4I?)H and the case is hereby
remanded to the ,ureau of Patents for further
proceedins, in accordance with this pronouncement. 1o
costs.
8
In a 6esolution dated *arch 1=, 1%%:, the Court of Appeals
denied reconsideration of its decision.
9
Aence, this recourse.
,efore us, petitioner raises the followin issues5
1. @A)TA)6 "6 1"T TA) ?)CI4I"1 "B TA) ?I6)CT"6
"B PAT)1T4 I1 I1T)6 PA6T)4 CA4) 1". =>= 6)1?)6)?
"1 #31) 1>, 1%&:, A11)M C A)6)"B, C"14TIT3T)? RES
JUDICATA I1 4" BA6 A4 TA) CA4) ,)B"6) TA) ?I6)CT"6
"B PAT)1T4 I4 C"1C)61)?H
F. @A)TA)6 "6 1"T TA) ?I6)CT"6 "B PAT)1T4
C"66)CT(2 APP(I)? TA) P6I1CIP() "BRES JUDICATA I1
?I4*I44I1I P6ILAT) 6)4P"1?)1T ,A6,I7"194
"PP"4ITI"1 T" P)TITI"1)694 APP(ICATI"1 B"6
6)II4T6ATI"1 B"6 TA) T6A?)*A6N ,A6,I7"1, @AICA
AA4 4I1C) 6IP)1)? T" C)6TIBICAT) "B 6)II4T6ATI"1
1". $0%F' "1 1"L)*,)6 1=, 1%%FH
0. @A)TA)6 "6 1"T TA) 6)O3I4IT) TAAT A -#3?I*)1T
"1 TA) *)6IT4- 6)O3I6)? A -A)A6I1I @A)6) ,"TA
PA6TI)4 A6) 43PP"4)? T" A??3C) )LI?)1C)- A1?
@A)TA)6 TA) #"I1T 43,*I44I"1 "B TA) PA6TI)4 T" A
CA4) "1 TA) ,A4I4 "B TA)I6 6)4P)CTIL) P()A?I1I4
@ITA"3T P6)4)1TI1I T)4TI*"1IA( "6 ?"C3*)1TA62
)LI?)1C) BA((4 @ITAI1 TA) *)A1I1I "B -#3?I*)1T
"1 TA) *)6IT4- A4 "1) "B TA) 6)O3I4IT)4 T"
C"14TIT3T)RES JUDICATAH
:
:. @A)TA)6 A ?)CI4I"1 "B TA) ?)PA6T*)1T "B T6A?)
A1? I1?34T62 CA1C)((I1I P)TITI"1)694 BI6* 1A*)
-,A6,I7"1 I1T)61ATI"1A(- A1? @AICA ?)CI4I"1 I4
4TI(( P)1?I1I 6)C"14I?)6ATI"1 1)L)6 "BB)6)? I1
)LI?)1C) ,)B"6) TA) ?I6)CT"6 "B PAT)1T4 I1 I1T)6
PA6T)4 CA4) 1". F':% AA4 TA) 6IIAT T" ?)CI?) 43CA
CA1C)((ATI"1 1"T "1 TA) ,A4I4 "B TA) ,34I1)44
1A*) (A@ ;A4 I*P()*)1T)? ,2 TA) ,36)A3 "B
?"*)4TIC T6A?)< ,3T "1 TA) ,A4I4 "B TA) PA6I4
C"1L)1TI"1 A1? TA) T6A?)*A6N (A@ ;6.A. 1==<
@AICA I4 @ITAI1 TA) "6III1A( A1? )MC(34IL)
#36I4?ICTI"1 "B TA) ?I6)CT"6 "B PAT)1T4.
10
,efore rulin on the issues of the case, there is need for a brief
bac!round on the function and historical development of trademar!s
and trademar! law.
A -trademar!- is de+ned under 6.A. 1==, the Trademar! (aw, as
includin -any word, name, symbol, emblem, sin or device or any
combination thereof adopted and used by a manufacturer or merchant
to identify his oods and distinuish them from those manufactured,
sold or dealt in by others.
11
This de+nition has been simpli+ed in 6.A.
1o. >F%0, the Intellectual Property Code of the Philippines, which
de+nes a -trademar!- as -any visible sin capable of distinuishin
oods.-
1)
In Philippine 8urisprudence, the function of a trademar! is to
point out distinctly the oriin or ownership of the oods to which it is
aDCedH to secure to him, who has been instrumental in brinin into
the mar!et a superior article of merchandise, the fruit of his industry
and s!illH to assure the public that they are procurin the enuine
articleH to prevent fraud and impositionH and to protect the
manufacturer aainst substitution and sale of an inferior and diferent
article as his product.
1*
*odern authorities on trademar! law view trademar!s as performin
three distinct functions5 ;1< they indicate oriin or ownership of the
articles to which they are attachedH ;F< they uarantee that those
articles come up to a certain standard of EualityH and ;0< they advertise
the articles they symboli.e.
14
4ymbols have been used to identify the ownership or oriin of articles
for several centuries.
15
As early as $,''' ,.C., mar!ins on pottery
have been found by archaeoloists. Cave drawins in southwestern
)urope show bison with symbols on their Pan!s.
1+
Archaeoloical
discoveries of ancient Iree! and 6oman inscriptions on sculptural
wor!s, paintins, vases, precious stones, lasswor!s, bric!s, etc. reveal
some features which are thouht to be mar!s or symbols. These mar!s
were aDCed by the creator or ma!er of the article, or by public
authorities as indicators for the payment of taC, for disclosin state
monopoly, or devices for the settlement of accounts between an
entrepreneur and his wor!men.
1,
In the *iddle Aes, the use of many !inds of mar!s on a variety of
oods was commonplace. Bifteenth century )nland saw the
compulsory use of identifyin mar!s in certain trades. There were the
ba!er9s mar! on bread, bottlema!er9s mar!s, smith9s mar!s, tanner9s
mar!s, watermar!s on paper, etc.
18
)very uild had its own mar! and
every master belonin to it had a special mar! of his own. The mar!s
were not trademar!s but police mar!s compulsorily imposed by the
soverein to let the public !now that the oods were not -forein-
oods smuled into an area where the uild had a monopoly, as well
as to aid in tracin defective wor! or poor craftsmanship to the
artisan.
19
Bor a similar reason, merchants also used merchants9 mar!s.
*erchants dealt in oods acEuired from many sources and the mar!s
enabled them to identify and reclaim their oods upon recovery after
shipwrec! or piracy.
)0
@ith constant use, the mar! acEuired popularity and became
voluntarily adopted. It was not intended to create or continue monopoly
but to ive the customer an indeC or uarantee of Euality.
)1
It was in
the late 1>th century when the industrial revolution ave rise to mass
production and distribution of consumer oods that the mar! became
an important instrumentality of trade and commerce.
))
,y this time,
trademar!s did not merely identify the oodsH they also indicated the
oods to be of satisfactory Euality, and thereby stimulated further
purchases by the consumin public.
)*
)ventually, they came to
symboli.e the oodwill and business reputation of the owner of the
product and became a property riht protected by law.
)4
The common
law developed the doctrine of trademar!s and tradenames -to prevent
a person from palmin of his oods as another9s, from ettin
another9s business or in8urin his reputation by unfair means, and, from
defraudin the public.-
)5
4ubseEuently, )nland and the 3nited 4tates
enacted national leislation on trademar!s as part of the law reulatin
unfair trade.
)+
It became the riht of the trademar! owner to eCclude
others from the use of his mar!, or of a confusinly similar mar! where
confusion resulted in diversion of trade or +nancial in8ury. At the same
time, the trademar! served as a warnin aainst the imitation or fa!in
of products to prevent the imposition of fraud upon the public.
),
Today, the trademar! is not merely a symbol of oriin and oodwillH it is
often the most efective aent for the actual creation and protection of
oodwill. It imprints upon the public mind an anonymous and
impersonal uaranty of satisfaction, creatin a desire for further
$
satisfaction. In other words, the mar! actually sells the oods.
)8
The
mar! has become the -silent salesman,- the conduit throuh which
direct contact between the trademar! owner and the consumer is
assured. It has invaded popular culture in ways never anticipated that it
has become a more convincin sellin point than even the Euality of
the article to which it refers.
)9
In the last half century, the unparalleled
rowth of industry and the rapid development of communications
technoloy have enabled trademar!s, tradenames and other distinctive
sins of a product to penetrate reions where the owner does not
actually manufacture or sell the product itself. Ioodwill is no loner
con+ned to the territory of actual mar!et penetrationH it eCtends to
.ones where the mar!ed article has been +Ced in the public mind
throuh advertisin.
*0
@hether in the print, broadcast or electronic
communications medium, particularly on the Internet,
*1
advertisin has
paved the way for rowth and eCpansion of the product by creatin and
earnin a reputation that crosses over borders, virtually turnin the
whole world into one vast mar!etplace.
This is the mise-en-scene of the present controversy. Petitioner brins
this action claimin that -,arbi.on- products have been sold in the
Philippines since 1%&'. Petitioner developed this mar!et by wor!in
lon hours and spendin considerable sums of money on
advertisements and promotion of the trademar! and its products. 1ow,
almost thirty years later, private respondent, a forein corporation,
-swaers into the country li!e a conEuerin hero,- usurps the
trademar! and invades petitioner9s mar!et.
*)
#ustice and fairness
dictate that private respondent be prevented from appropriatin what is
not its own. (eally, at the same time, private respondent is barred
from Euestionin petitioner9s ownership of the trademar! because
of res judicata.
**
(iterally, res judicata means a matter ad8uded, a thin 8udicially acted
upon or decidedH a thin or matter settled by 8udment.
*4
In res
judicata, the 8udment in the +rst action is considered conclusive as to
every matter ofered and received therein, as to any other admissible
matter which miht have been ofered for that purpose, and all other
matters that could have been ad8uded therein.
*5
Res judicata is an
absolute bar to a subseEuent action for the same causeH and its
reEuisites are5 ;a< the former 8udment or order must be +nalH ;b< the
8udment or order must be one on the meritsH ;c< it must have been
rendered by a court havin 8urisdiction over the sub8ect matter and
partiesH ;d< there must be between the +rst and second actions, identity
of parties, of sub8ect matter and of causes of action.
*+
The 4olicitor Ieneral, on behalf of respondent ?irector of Patents, has
8oined cause with petitioner. ,oth claim that all the four elements of res
judicata have been complied with5 that the 8udment in IPC 1o. =>= was
+nal and was rendered by the ?irector of Patents who had 8urisdiction
over the sub8ect matter and partiesH that the 8udment in IPC 1o. =>=
was on the meritsH and that the lac! of a hearin was immaterial
because substantial issues were raised by the parties and passed upon
by the ?irector of Patents.
*,
The decision in IPC 1o. =>= reads as follows5
CCC CCC CCC.
1either party too! testimony nor adduced documentary
evidence. They submitted the case for decision based on
the pleadins which, toether with the pertinent records,
have all been carefully considered.
Accordinly, the only issue for my disposition is whether
or not the herein opposer would probably be damaed by
the reistration of the trademar! ,A6,I7"1 souht by
the respondent-applicant on the round that it so
resembles the trademar! ,A6,I7"1 alleedly used and
owned by the former to be -li!ely to cause confusion,
mista!e or to deceive purchasers.-
"n record, there can be no doubt that respondent-
applicant9s souht-to-be-reistered trademar! ,A6,I7"1
is similar, in fact obviously identical, to opposer9s alleed
trademar! ,A6,I7"1, in spellin and pronunciation. The
only appreciable but very neliible diference lies in
their respective appearances or manner of presentation.
6espondent-applicant9s trademar! is in bold letters ;set
aainst a blac! bac!round<, while that of the opposer is
ofered in stylish script letters.
It is opposer9s assertion that its trademar! ,A6,I7"1 has
been used in trade or commerce in the Philippines prior
to the date of application for the reistration of the
identical mar! ,A6,I7"1 by the respondent-applicant.
Aowever, the alleation of facts in opposer9s veri+ed
notice of opposition is devoid of such material
information. In fact, a readin of the teCt of said veri+ed
opposition reveals an apparent, if not deliberate,
omission of the date ;or year< when opposer9s alleed
trademar! ,A6,I7"1 was +rst used in trade in the
Philippines ;see par. 1o. 1, p. F, Leri+ed 1otice of
"pposition, 6ec.<. Thus, it cannot here and now be
=
ascertained whether opposer9s alleed use of the
trademar! ,A6,I7"1 could be prior to the use of the
identical mar! by the herein respondent-applicant, since
the opposer attempted neither to substantiate its claim of
use in local commerce with any proof or evidence.
Instead, the opposer submitted the case for decision
based merely on the pleadins.
"n the other hand, respondent-applicant asserted in her
amended application for reistration that she +rst used
the trademar! ,A6,I7"1 for brassiere ;or -brasseire-<
and ladies underwear arments and panties as early as
*arch 0, 1%&'. ,e that as it may, there bein no
testimony ta!en as to said date of +rst use, respondent-
applicant will be limited to the +lin date, #une 1$, 1%&',
of her application as the date of +rst use ;6ule 1&0, 6ules
of Practice in Trademar! Cases<.
Brom the foreoin, I conclude that the opposer has not
made out a case of probable damae by the reistration
of the respondent-applicant9s mar! ,A6,I7"1.
@A)6)B"6), the opposition should be, as it is hereby,
?I4*I44)?. Accordinly, Application 4erial 1o. 1%'1', for
the reistration of the trademar! ,A6,I7"1 of
respondent (olita 6. )scobar, is iven due course.
*8
The decision in IPC 1o. =>= was a 8udment on the merits and it was
error for the Court of Appeals to rule that it was not. A 8udment is on
the merits when it determines the rihts and liabilities of the parties
based on the disclosed facts, irrespective of formal, technical or dilatory
ob8ections.
*9
It is not necessary that a trial should have been
conducted. If the court9s 8udment is eneral, and not based on any
technical defect or ob8ection, and the parties had a full leal
opportunity to be heard on their respective claims and contentions, it is
on the merits althouh there was no actual hearin or aruments on
the facts of the case.
40
In the case at bar, the ?irector of Patents did
not dismiss private respondent9s opposition on a sheer technicality.
Althouh no hearin was conducted, both parties +led their respective
pleadins and were iven opportunity to present evidence. They,
however, waived their riht to do so and submitted the case for
decision based on their pleadins. The lac! of evidence did not deter
the ?irector of Patents from rulin on the case, particularly on the issue
of prior use, which oes into the very substance of the relief souht by
the parties. 4ince private respondent failed to prove prior use of its
trademar!, )scobar9s claim of +rst use was upheld.
The 8udment in IPC 1o. =>= bein on the merits, petitioner and the
4olicitor Ieneral allee that IPC 1o. =>= and IPC 1o. F':% also comply
with the fourth reEuisite of res judicata, i.e., they involve the same
parties and the same sub8ect matter, and have identical causes of
action.
3ndisputedly, IPC 1o. =>= and IPC 1o. F':% involve the same parties
and the same sub8ect matter. Petitioner herein is the assinee of
)scobar while private respondent is the same American corporation in
the +rst case. The sub8ect matter of both cases is the trademar!
-,arbi.on.- Private respondent counter-arues, however, that the two
cases do not have identical causes of action. 1ew causes of action were
alleedly introduced in IPC 1o. F':%, such as the prior use and
reistration of the trademar! in the 3nited 4tates and other countries
worldwide, prior use in the Philippines, and the fraudulent reistration
of the mar! in violation of Article 1>% of the 6evised Penal Code. Private
respondent also cited protection of the trademar! under the Convention
of Paris for the Protection of Industrial Property, speci+cally Article
=bis thereof, and the implementation of Article =bis by two *emoranda
dated 1ovember F', 1%>' and "ctober F$, 1%>0 of the *inister of Trade
and Industry to the ?irector of Patents, as well as )Cecutive "rder ;).".<
1o. %10.
The Convention of Paris for the Protection of Industrial Property,
otherwise !nown as the Paris Convention, is a multilateral treaty that
see!s to protect industrial property consistin of patents, utility models,
industrial desins, trademar!s, service mar!s, trade names and
indications of source or appellations of oriin, and at the same time
aims to repress unfair competition.
41
The Convention is essentially a
compact amon various countries which, as members of the 3nion,
have pleded to accord to citi.ens of the other member countries
trademar! and other rihts comparable to those accorded their own
citi.ens by their domestic laws for an efective protection aainst unfair
competition.
4)
In short, forein nationals are to be iven the same
treatment in each of the member countries as that country ma!es
available to its own citi.ens.
4*
1ationals of the various member nations
are thus assured of a certain minimum of international protection of
their industrial property.
44
The Convention was +rst sined by eleven countries in Paris on *arch
F', 1>>0.
45
It underwent several revisions G at ,russels in 1%'', at
@ashinton in 1%11, at The Aaue in 1%F$, at (ondon in 1%0:, at (isbon
in 1%$>,
4+
and at 4toc!holm in 1%=&. ,oth the Philippines and the
3nited 4tates of America, herein private respondent9s country, are
sinatories to the Convention. The 3nited 4tates acceded on *ay 0',
1>>& while the Philippines, throuh its 4enate, concurred on *ay 1',
&
1%=$.
4,
The Philippines9 adhesion became efective on 4eptember F&,
1%=$,
48
and from this date, the country obliated itself to honor and
enforce the provisions of the Convention.
49
In the case at bar, private respondent anchors its cause of action on the
+rst pararaph of Article =bis of the Paris Convention which reads as
follows5
Article =bis
;1< The countries of the 3nion underta!e, either
administratively if their leislation so permits, or at the
reEuest of an interested party, to refuse or to cancel the
reistration and to prohibit the use, of a trademar! which
constitutes a reproduction, an imitation, or a translation,
liable to create confusion, of a mar! considered by the
competent authority of the country of reistration or use
to be well-!nown in that country as bein already the
mar! of a person entitled to the bene+ts of this
Convention and used for identical or similar oods. These
provisions shall also apply when the essential part of the
mar! constitutes a reproduction of any such well-!nown
mar! or an imitation liable to create confusion therewith.
;F< A period of at least +ve years from the date of
reistration shall be allowed for see!in the cancellation
of such a mar!. The countries of the 3nion may provide
for a period within which the prohibition of use must be
souht.
;0< 1o time limit shall be +Ced for see!in the
cancellation or the prohibition of the use of mar!s
reistered or used in bad faith.
50
This Article overns protection of well-known trademarks. 3nder
the +rst pararaph, each country of the 3nion bound itself to
underta!e to refuse or cancel the reistration, and prohibit the
use of a trademar! which is a reproduction, imitation or
translation, or any essential part of which trademar! constitutes
a reproduction, liable to create confusion, of a mar! considered
by the competent authority of the country where protection is
souht, to be well-!nown in the country as bein already the
mar! of a person entitled to the bene+ts of the Convention, and
used for identical or similar oods.
Art. =bis was +rst introduced at The Aaue in 1%F$ and amended in
(isbon in 1%$F.
51
It is a self-eCecutin provision and does not reEuire
leislative enactment to ive it efect in the member country.
5)
It may
be applied directly by the tribunals and oDcials of each member
country by the mere publication or proclamation of the Convention,
after its rati+cation accordin to the public law of each state and the
order for its eCecution.
5*
The essential reEuirement under Article =bis is that the trademar! to be
protected must be -well-!nown- in the country where protection is
souht. The power to determine whether a trademar! is well-!nown lies
in the -competent authority of the country of reistration or use.- This
competent authority would be either the reisterin authority if it has
the power to decide this, or the courts of the country in Euestion if the
issue comes before a court.
54
Pursuant to Article =bis, on 1ovember F', 1%>', then *inister (uis
Lillafuerte of the *inistry of Trade issued a *emorandum to the ?irector
of Patents. The *inister ordered the ?irector that5
Pursuant to the Paris Convention for the Protection of
Industrial Property to which the Philippines is a sinatory,
you are hereby directed to re8ect all pendin applications
for Philippine reistration of sinature and other world-
famous trademar!s by applicants other than its oriinal
owners or users.
The conPictin claims over internationally !nown
trademar!s involve such name brands as (acoste,
#ordache, Landerbilt, 4asson, Bila, Pierre Cardin, Iucci,
Christian ?ior, "scar de la 6enta, Calvin Nlein, Iivenchy,
6alph (auren, Ieofrey ,eene, (anvin and Ted (apidus.
It is further directed that, in cases where warranted,
Philippine reistrants of such trademar!s should be as!ed
to surrender their certi+cates of reistration, if any, to
avoid suits for damaes and other leal action by the
trademar!s9 forein or local owners or oriinal users.
2ou are also reEuired to submit to the undersined a
proress report on the matter.
Bor immediate compliance.
55
>
Three years later, on "ctober F$, 1%>0, then *inister 6oberto "npin
issued another *emorandum to the ?irector of Patents, viz5
Pursuant to )Cecutive "rder 1o. %10 dated & "ctober
1%>0 which strenthens the rule-ma!in and ad8udicatory
powers of the *inister of Trade and Industry and
provides inter alia, that -such rule-ma!in and
ad8udicatory powers should be revitali.ed in order that
the *inister of Trade and Industry can . . . apply more
swift and efective solutions and remedies to old and new
problems . . . such as infrinement of internationally-
!nown tradenames and trademar!s . . .- and in view of
the decision of the Intermediate Appellate Court in the
case of (A CA)*I4) (AC"4T), 4.A., versus 6A*
4A?@AA1I JAC-I.6. 4P 1". 100$% ;1&< #une
1%>0K
5+
which aDrms the validity of the *)*"6A1?3*
of then *inister (uis 6. Lillafuerte dated F' 1ovember
1%>' con+rmin our obliations under the PA6I4
C"1L)1TI"1 B"6 TA) P6"T)CTI"1 "B I1?34T6IA(
P6"P)6T2 to which the 6epublic of the Philippines is a
sinatory, you are hereby directed to implement
measures necessary to efect compliance with our
obliations under said Convention in eneral, and, more
seci!call", to #onor our commitment under
Section =bis
5,
t#ereo$% as follows5
1. @hether the trademar! under
consideration is well-!nown in the
Philippines or is a mar! already belonin
to a person entitled to the bene+ts of the
C"1L)1TI"1, this should be established,
pursuant to Philippine Patent "Dce
procedures in inter artesand e&
arte cases, accordin to any of the
followin criteria or any combination
thereof5
;a< a declaration by the
*inister of Trade and
Industry that the trademar!
bein considered is already
well-!nown in the Philippines
such that permission for its
use by other than its oriinal
owner will constitute a
reproduction, imitation,
translation or other
infrinementH
;b< that the trademar! is
used in commerce
internationally, supported by
proof that oods bearin the
trademar! are sold on an
international scale,
advertisements, the
establishment of factories,
sales oDces,
distributorships, and the li!e,
in diferent countries,
includin volume or other
measure of international
trade and commerceH
;c< that the trademar! is
duly reistered in the
industrial property oDce;s<
of another country or
countries, ta!in into
consideration the date of
such reistrationH
;d< that the trademar! has
lon been established and
obtained oodwill and
international consumer
reconition as belonin to
one owner or sourceH
;e< that the trademar!
actually belons to a party
claimin ownership and has
the riht to reistration
under the provisions of the
aforestated PA6I4
C"1L)1TI"1.
F. The word trademar!, as used in this
*)*"6A1?3*, shall include tradenames,
service mar!s, loos, sins, emblems,
insinia or other similar devices used for
%
identi+cation and reconition by
consumers.
0. The Philippine Patent "Dce shall refuse
all applications for, or cancel the
reistration of, trademar!s which
constitute a reproduction, translation or
imitation of a trademar! owned by a
person, natural or corporate, who is a
citi.en of a country sinatory to the PA6I4
C"1L)1TI"1 B"6 TA) P6"T)CTI"1 "B
I1?34T6IA( P6"P)6T2.
:. The Philippine Patent "Dce shall ive
due course to the "pposition in cases
already or hereafter +led aainst the
reistration of trademar!s entitled to
protection of 4ection =bis of said PA6I4
C"1L)1TI"1 as outlined above, by
remandin applications +led by one not
entitled to such protection for +nal
disallowance by the )Camination ?ivision.
$. All pendin applications for Philippine
reistration of sinature and other world-
famous trademar!s +led by applicants
other than their oriinal owners or users
shall be re8ected forthwith. @here such
applicants have already obtained
reistration contrary to the
abovementioned PA6I4 C"1L)1TI"1
andQor Philippine (aw, they shall be
directed to surrender their Certi+cates of
6eistration to the Philippine Patent "Dce
for immediate cancellation proceedins.
CCC CCC CCC.
58
In the Lillafuerte *emorandum, the *inister of Trade instructed the
?irector of Patents to re8ect all pendin applications for Philippine
reistration of sinature and other world-famous trademar!s by
applicants other than their oriinal owners or users. The *inister
enumerated several internationally-!nown trademar!s and ordered the
?irector of Patents to reEuire Philippine reistrants of such mar!s to
surrender their certi+cates of reistration.
In the "npin *emorandum, the *inister of Trade and Industry did not
enumerate well-!nown trademar!s but laid down uidelines for the
?irector of Patents to observe in determinin whether a trademar! is
entitled to protection as a well-!nown mar! in the Philippines under
Article =bis of the Paris Convention. This was to be established throuh
Philippine Patent "Dce procedures in inter artes and e& arte cases
pursuant to the criteria enumerated therein. The Philippine Patent
"Dce was ordered to refuse applications for, or cancel the reistration
of, trademar!s which constitute a reproduction, translation or imitation
of a trademar! owned by a person who is a citi.en of a member of the
3nion. All pendin applications for reistration of world-famous
trademar!s by persons other than their oriinal owners were to be
re8ected forthwith. The "npin *emorandum was issued pursuant to
)Cecutive "rder 1o. %10 dated "ctober &, 1%>0 of then President
*arcos which strenthened the rule-ma!in and ad8udicatory powers of
the *inister of Trade and Industry for the efective protection of
consumers and the application of swift solutions to problems in trade
and industry.
59
,oth the Lillafuerte and "npin *emoranda were sustained by the
4upreme Court in the 1%>: landmar! case of'a C#emise 'acoste, S(A(
v( )ernandez.
+0
This court ruled therein that under the provisions of
Article =bis of the Paris Convention, the *inister of Trade and Industry
was the -competent authority- to determine whether a trademar! is
well-!nown in this country.
+1
The Lillafuerte *emorandum was issued in 1%>', i.e., +fteen ;1$< years
after the adoption of the Paris Convention in 1%=$. In the case at bar,
the +rst inter artes case, IPC 1o. =>=, was +led in 1%&', be$ore the
Lillafuerte *emorandum but +ve ;$< years a$ter the efectivity of the
Paris Convention. Article =bis was already in efect +ve years before the
+rst case was instituted. Private respondent, however, did not cite the
protection of Article =bis, neither did it mention the Paris Convention at
all. It was only in 1%>1 when IPC 1o. F':% was instituted that the Paris
Convention and the Lillafuerte *emorandum, and, durin the pendency
of the case, the 1%>0 "npin *emorandum were invo!ed by private
respondent.
The 4olicitor Ieneral arues that the issue of whether the protection of
Article =bis of the Convention and the two *emoranda is barred by res
judicata has already been answered in *olverine
*orldwide, Inc. v. Court o$
Aeals.
+)
In this case, petitioner @olverine, a forein corporation, +led
with the Philippine Patent "Dce a petition for cancellation of the
reistration certi+cate of private respondent, a Bilipino citi.en, for the
trademar! -Aush Puppies- and -?o ?evice.- Petitioner alleed that it
1'
was the reistrant of the internationally-!nown trademar! in the 3nited
4tates and other countries, and cited protection under the Paris
Convention and the "npin *emorandum. The petition was dismissed
by the Patent "Dce on the round of res judicata. It was found that in
1%&0 petitioner9s predecessor-in-interest +led two petitions for
cancellation of the same trademar! aainst respondent9s predecessor-
in-interest. The Patent "Dce dismissed the petitions, ordered the
cancellation of reistration of petitioner9s trademar!, and ave due
course to respondent9s application for reistration. This decision was
sustained by the Court of Appeals, which decision was not elevated to
us and became +nal and
eCecutory.
+*
@olverine claimed that while its previous petitions were +led under 6.A.
1o. 1==, the Trademar! (aw, its subseEuent petition was based on a
new cause of action, i.e., the "npin *emorandum and ).". 1o. %10
issued in 1%>0, after +nality of the previous decision. @e held that the
said *emorandum and ).". did not rant a new cause of action
because it did -not amend the Trademar! (aw,- . . . -nor did it indicate a
new policy with respect to the reistration in the Philippines of world-
famous trademar!s.-
+4
This conclusion was based on the +ndin that
@olverine9s two previous petitions and subseEuent petition dealt with
the same issue of ownership of the trademar!.
+5
In other words, since
the +rst and second cases involved the same issue of ownership, then
the +rst case was a bar to the second case.
In the instant case, the issue of ownership of the trademar! -,arbi.on-
was not raised in IPC 1o. =>=. Private respondent9s opposition therein
was merely anchored on5
;a< -confusin similarity- of its trademar! with that of
)scobar9sH
;b< that the reistration of )scobar9s similar trademar!
will cause damae to private respondent9s business
reputation and oodwillH and
;c< that )scobar9s use of the trademar! amounts to an
unlawful appropriation of a mar! previously used in the
Philippines which act is penali.ed under 4ection : ;d< of
the Trademar! (aw.
In IPC 1o. F':%, private respondent9s opposition set forth several
issues summari.ed as follows5
;a< as early as 1%00, it adopted the word -,A6,I7"1- as
trademar! on its products such as robes, pa8amas,
linerie, nihtowns and slipsH
;b< that the trademar! -,A6,I7"1- was reistered with
the 3nited 4tates Patent "Dce in 1%0: and 1%:%H and
that variations of the same trademar!, i.e., -,A6,I7"1-
with ,ee desin and -,A6,I7"1- with the representation
of a woman were also reistered with the 3.4. Patent
"Dce in 1%=1 and 1%&=H
;c< that these mar!s have been in use in the Philippines
and in many countries all over the world for over forty
years. -,arbi.on- products have been advertised in
international publications and the mar!s reistered in 0=
countries worldwideH
;d< )scobar9s reistration of the similar trademar!
-,A6,I7"1- in 1%&: was based on fraudH and this
fraudulent reistration was cancelled in 1%&%, strippin
)scobar of whatsoever riht she had to the said mar!H
;e< Private respondent9s trademar! is entitled to
protection as a well-!nown mar! under Article =bis of the
Paris Convention, )Cecutive "rder 1o. %10, and the two
*emoranda dated 1ovember F', 1%>' and "ctober F$,
1%>0 of the *inister of Trade and Industry to the ?irector
of PatentsH
;f< )scobar9s trademar! is identical to private
respondent9s and its use on the same class of oods as
the latter9s amounts to a violation of the Trademar! (aw
and Article 1>% of the 6evised Penal Code.
IPC 1o. F':% raised the issue of ownership of the trademar!, the
+rst reistration and use of the trademar! in the 3nited 4tates
and other countries, and the international reconition and
reputation of the trademar! established by eCtensive use and
advertisement of private respondent9s products for over forty
years here and abroad. These are diferent from the issues of
confusin similarity and damae in IPC 1o. =>=. The issue of
prior use may have been raised in IPC 1o. =>= but this claim was
limited to prior use in the Philippines only. Prior use in IPC 1o.
F':% stems from private respondent9s claim as ori+inator of the
word and symbol -,arbi.on,-
++
as the +rst and reistered user of
the mar! attached to its products which have been sold and
11
advertised worldwide for a considerable number of years prior to
petitioner9s +rst application for reistration of her trademar! in
the Philippines. Indeed, these are substantial alleations that
raised new issues and necessarily ave private respondent a
new cause of action. Res judicata does not apply to rihts,
claims or demands, althouh rowin out of the same sub8ect
matter, which constitute separate or distinct causes of action
and were not put in issue in the former action.
+,
6espondent corporation also introduced in the second case a fact that
did not eCist at the time the +rst case was +led and terminated. The
cancellation of petitioner9s certi+cate of reistration for failure to +le the
aDdavit of use arose only after IPC 1o. =>=. It did not and could not
have occurred in the +rst case, and this ave respondent another cause
to oppose the second application. Res judicata eCtends only to facts
and conditions as they eCisted at the time 8udment was rendered and
to the leal rihts and relations of the parties +Ced by the facts so
determined.
+8
@hen new facts or conditions intervene before the
second suit, furnishin a new basis for the claims and defenses of the
parties, the issues are no loner the same, and the former 8udment
cannot be pleaded as a bar to the subseEuent action.
+9
It is also noted that the oppositions in the +rst and second cases are
based on diferent laws. The opposition in IPC 1o. =>= was based on
speci+c provisions of the Trademar! (aw, i.e., 4ection : ;d<
,0
on
confusin similarity of trademar!s and 4ection >
,1
on the reEuisite
damae to +le an opposition to a petition for reistration. The
opposition in IPC 1o. F':% invo!ed the Paris Convention, particularly
Article =bis thereof, ).". 1o. %10 and the two *emoranda of the
*inister of Trade and Industry. This opposition also invo!ed Article 1>%
of the 6evised Penal Code which is a statute totally diferent from the
Trademar! (aw.
,)
Causes of action which are distinct and independent
from each other, althouh arisin out of the same contract, transaction,
or state of facts, may be sued on separately, recovery on one bein no
bar to subseEuent actions on others.
,*
The mere fact that the same
relief is souht in the subseEuent action will not render the 8udment in
the prior action operative as res judicata, such as where the two actions
are based on diferent statutes.
,4
Res judicatatherefore does not apply
to the instant case and respondent Court of Appeals did not err in so
rulin.
Intellectual and industrial property rihts cases are not simple property
cases. Trademar!s deal with the psycholoical function of symbols and
the efect of these symbols on the public at lare.
,5
Trademar!s play a
sini+cant role in communication, commerce and trade, and serve
valuable and interrelated business functions, both nationally and
internationally. Bor this reason, all areements concernin industrial
property, li!e those on trademar!s and tradenames, are intimately
connected with economic development.
,+
Industrial property
encouraes investments in new ideas and inventions and stimulates
creative eforts for the satisfaction of human needs. They speed up
transfer of technoloy and industriali.ation, and thereby brin about
social and economic proress.
,,
These advantaes have been
ac!nowleded by the Philippine overnment itself. The Intellectual
Property Code of the Philippines declares that -an efective intellectual
and industrial property system is vital to the development of domestic
and creative activity, facilitates transfer of technoloy, it attracts
forein investments, and ensures mar!et access for our
products.-
,8
The Intellectual Property Code too! efect on #anuary 1,
1%%> and by its eCpress provision,
,9
repealed the Trademar! (aw,
80
the
Patent (aw,
81
Articles 1>> and 1>% of the 6evised Penal Code, the
?ecree on Intellectual Property,
8)
and the ?ecree on Compulsory
6eprintin of Borein TeCtboo!s.
8*
The Code was enacted to strenthen
the intellectual and industrial property system in the Philippines as
mandated by the country9s accession to the Areement )stablishin the
@orld Trade "rani.ation ;@T"<.
84
The @T" is a common institutional framewor! for the conduct of trade
relations amon its members in matters related to the multilateral and
plurilateral trade areements anneCed to the @T" Areement.
85
The
@T" framewor! ensures a -sinle underta!in approach- to the
administration and operation of all areements and arranements
attached to the @T" Areement. Amon those anneCed is the
Areement on Trade-6elated Aspects of Intellectual Property 6ihts or
T6IPs.
8+
*embers to this Areement -desire to reduce distortions and
impediments to international trade, ta!in into account the need to
promote efective and adeEuate protection of intellectual property
rihts, and to ensure that measures and procedures to enforce
intellectual property rihts do not themselves become barriers to
leitimate trade.- To ful+ll these ob8ectives, the members have areed
to adhere to minimum standards of protection set by several
Conventions.
8,
These Conventions are5 the ,erne Convention for the
Protection of (iterary and Artistic @or!s ;1%&1<, the 6ome Convention
or the International Convention for the Protection of Performers,
Producers of Phonorams and ,roadcastin "ranisations, the Treaty on
Intellectual Property in 6espect of Interated Circuits, and t#e ,aris
Convention -./012, as revised in 4toc!holm on #uly 1:, 1%=&.
88
A ma8or proportion of international trade depends on the protection of
intellectual property rihts.
89
4ince the late 1%&'9s, the unauthori.ed
counterfeitin of industrial property and trademar!ed products has had
a considerable adverse impact on domestic and international trade
revenues.
90
The T6IPs Areement see!s to rant adeEuate protection
1F
of intellectual property rihts by creatin a favorable economic
environment to encourae the inPow of forein investments, and
strenthenin the multi-lateral tradin system to brin about economic,
cultural and technoloical independence.
91
The Philippines and the 3nited 4tates of America have acceded to the
@T" Areement. This Areement has revolutioni.ed international
business and economic relations amon states, and has propelled the
world towards trade liberali.ation and economic
lobali.ation.
9)
Protectionism and isolationism belon to the past. Trade
is no loner con+ned to a bilateral system. There is now -a new era of
lobal economic cooperation, rePectin the widespread desire to
operate in a fairer and more open multilateral tradin
system.-
9*
Conformably, the 4tate must reaDrm its commitment to the
lobal community and ta!e part in evolvin a new international
economic order at the dawn of the new millenium.
I1 LI)@ @A)6)"B, the petition is denied and the ?ecision and
6esolution of the Court of Appeals in CA-I.6. 4P 1o. F>:1$ are aDrmed.
4" "6?)6)?.
). G.R. No. 154491 November 14, )008
COCA-CO"A BOTT"!RS, PHI"S., INC. .CCBPI/, N#0#
P1#$&, petitioner,
vs.
2UINTIN J. GOM!(, #.3.#. 45IT- GOM!( #$% DANI"O !. GA"ICIA,
#.3.#. 4DANN6 GA"ICIA4,respondents.
D ! C I S I O N
BRION, J.7
Is the hoardin of a competitor9s product containers punishable as
unfair competition under the Intellectual Property Code ;I, Code,
6epublic Act 1o. >F%0< that would entitle the arieved party to a
search warrant aainst the hoarderR This is the issue we rapple with in
this petition for review oncertiorari involvin two rival multinational
softdrin! iantsH petitioner Coca-Cola ,ottlers, Phils., Inc. ;Coca-Cola<
accuses Pepsi Cola Products Phils., Inc. ;,esi<, represented by the
respondents, of hoardin empty Co!e bottles in bad faith to discredit its
business and to sabotae its operation in ,icolandia.
BAC5GROUND
The facts, as culled from the records, are summari.ed below.
"n #uly F, F''1, Coca-Cola applied for a search warrant aainst Pepsi
for hoardin Co!e empty bottles in Pepsi9s yard in Concepcion Irande,
1aa City, an act alleedly penali.ed as unfair competition under the IP
Code. Coca-Cola claimed that the bottles must be con+scated to
preclude their illeal use, destruction or concealment by the
respondents.
1
In support of the application, Coca-Cola submitted the
sworn statements of three witnesses5 1aa plant representative Arnel
#ohn Ponce said he was informed that one of their plant security uards
had ained access into the Pepsi compound and had seen empty Co!e
bottlesH actin plant security oDcer 61#$o A. Re0#89: said he
investiated reports that Pepsi was hoardin lare Euantities of Co!e
bottles by reEuestin their security uard to enter the Pepsi plant and
he was informed by the security uard that Pepsi hoarded several Co!e
bottlesH security uard !%;:$ ":r:o stated that he entered Pepsi9s yard
on #uly F, F''1 at : p.m. and saw empty Co!e bottles inside Pepsi shells
or cases.
F
*unicipal Trial Court ;3TC< )Cecutive #ude #ulian C. "campo of 1aa
City, after ta!in the 8oint deposition of the witnesses, issued 4earch
@arrant 1o. F''1-'1
0
to sei.e F,$'' (itro and 0,''' eiht and 1F
ounces empty Co!e bottles at Pepsi9s 1aa yard for violation of 4ection
1=>.0 ;c< of the IP Code.
:
The local police sei.ed and brouht to the
*TC9s custody F,:=: (itro and :,'0= eiht and 1F ounces empty Co!e
bottles, F'$ Pepsi shells for (itro, and 1=> Pepsi shells for smaller ;eiht
and 1F ounces< empty Co!e bottles, and later +led with the "Dce of the
City Prosecutor of 1aa a complaint aainst two Pepsi oDcers for
violation of 4ection 1=>.0 ;c< in relation to 4ection 1&' of the IP
Code.
$
The named respondents, also the respondents in this petition,
were Pepsi reional sales manaerD#$:1o !. G#1:<:# ;4alicia< and its
1aa eneral manaer 2=:$&:$ J. Gome>, Jr. ;4omez<.
In their counter-aDdavits, Ialicia and Iome. claimed that the bottles
came from various Pepsi retailers and wholesalers who included them in
their return to ma!e up for shortaes of empty Pepsi bottlesH they had
no way of ascertainin beforehand the return of empty Co!e bottles as
they simply received what had been deliveredH the presence of the
bottles in their yard was not intentional nor deliberateH Ponce and
6easpi9s statements are hearsay as they had no personal !nowlede
of the alleed crimeH there is no mention in the IP Code of the crime of
possession of empty bottlesH and that the ambiuity of the law, which
has a penal nature, must be construed strictly aainst the 4tate and
liberally in their favor. Pepsi security uards )duardo ). *iral and 6ene
Acebuche eCecuted a 8oint aDdavit statin that per their loboo!, (irio
did not visit or enter the plant premises in the afternoon of #uly F, F''1.
10
The respondents also +led motions for the return of their shells and to
Euash the search warrant. They contended that no probable cause
eCisted to 8ustify the issuance of the search warrantH the facts chared
do not constitute an ofenseH and their 1aa plant was in urent need of
the shells.
Coca-Cola opposed the motions as the shells were part of the evidence
of the crime, aruin that Pepsi used the shells in hoardin the bottles.
It insisted that the issuance of warrant was based on probable cause for
unfair competition under the IP Code, and that the respondents violated
6.A. =F0, the law reulatin the use of stamped or mar!ed bottles,
boCes, and other similar containers.
TH! MTC RU"INGS
"n 4eptember 1%, F''1, the *TC issued the +rst assailed
order
=
denyin the twin motions. It eCplained there was an eChaustive
eCamination of the applicant and its witnesses throuh searchin
Euestions and that the Pepsi shells are prima facie evidence that the
bottles were placed there by the respondents.
In their motion for reconsideration, the respondents arued for the
Euashal of the warrant as the *TC did not conduct a probin and
eChaustive eCaminationH the applicant and its witnesses had no
personal !nowlede of facts surroundin the hoardinH the court failed
to order the return of the -borrowed- shellsH there was no crime
involvedH the warrant was issued based on hearsay evidenceH and the
sei.ure of the shells was illeal because they were not included in the
warrant.
"n 1ovember 1:, F''1, the *TC denied the motion for reconsideration
in the second assailed order,
&
eCplainin that the issue of whether there
was unfair competition can only be resolved durin trial.
The respondents responded by +lin a petition for certiorari under 6ule
=$ of the 6evised 6ules of Court before the 6eional Trial Court ;6TC< of
1aa City on the round that the sub8ect search warrant was issued
without probable cause and that the empty shells were neither
mentioned in the warrant nor the ob8ects of the perceived crime.
TH! RTC RU"INGS
"n *ay >, F''F, the 6TC voided the warrant for lac! of probable cause
and the non-commission of the crime of unfair competition, even as it
implied that other laws may have been violated by the respondents.
The 6TC, thouh, found no rave abuse of discretion on the part of the
issuin *TC 8ude.
>
Thus,
Accordinly, as prayed for, 4earch @arrant 1o. F''1-'F issued
by the Aonorable #ude #ulian C. "campo III on #uly F, F''1 is
A113(()? and 4)T A4I?). The "rders issued by the Pairin
#ude of ,r. 1, *TCC of 1aa City dated 4eptember 1%, F''1 and
1ovember 1:, F''1 are also declared L"I? and 4)T A4I?). The
City Prosecutor of 1aa City and 4P"1 )rnesto Paredes are
directed to return to the Petitioner the properties sei.ed by
virtue of 4earch @arrant 1o. F''1-'F. 1o costs.
4" "6?)6)?.
%
In a motion for reconsideration, which the 6TC denied on #uly 1F, F''F,
the petitioner stressed that the decision of the 6TC was contradictory
because it absolved #ude "campo of rave abuse of discretion in
issuin the search warrant, but at the same time nulli+ed the issued
warrant. The *TC should have dismissed the petition when it found out
that #ude "campo did not commit any rave abuse of discretion.
,ypassin the Court of Appeals, the petitioner as!s us throuh this
petition for review on certiorari under 6ule :$ of the 6ules of Court to
reverse the decision of the 6TC. )ssentially, the petition raises
Euestions aainst the 6TC9s nulli+cation of the warrant when it found no
rave abuse of discretion committed by the issuin 8ude.
TH! P!TITION #$%
TH! PARTI!S? POSITIONS
In its petition, the petitioner insists the 6TC should have dismissed the
respondents9 petition for certiorari because it found no rave abuse of
discretion by the *TC in issuin the search warrant. The petitioner
further arues that the IP Code was enacted into law to remedy various
forms of unfair competition accompanyin lobali.ation as well as to
replace the inutile provision of unfair competition under Article 1>% of
the 6evised Penal Code. 4ection 1=>.0;c< of the IP Code does not limit
the scope of protection on the particular acts enumerated as it eCpands
the meanin of unfair competition to include -other acts contrary to
ood faith of a nature calculated to discredit the oods, business or
services of another.- The inherent element of unfair competition is fraud
or deceit, and that hoardin of lare Euantities of a competitor9s empty
bottles is necessarily characteri.ed by bad faith. It claims that its ,icol
bottlin operation was pre8udiced by the respondents9 hoardin and
destruction of its empty bottles.
1:
The petitioner also arues that the Euashal of the search warrant was
improper because it complied with all the essential reEuisites of a valid
warrant. The empty bottles were concealed in Pepsi shells to prevent
discovery while they were systematically bein destroyed to hamper
the petitioner9s bottlin operation and to undermine the capability of its
bottlin operations in ,icol.
The respondents counter-arue that althouh #ude "campo conducted
his own eCamination, he ravely erred and abused his discretion when
he inored the rule on the need of suDcient evidence to establish
probable causeH satisfactory and convincin evidence is essential to
hold them uilty of unfair competitionH the hoardin of empty Co!e
bottles did not cause actual or probable deception and confusion on the
part of the eneral publicH the alleed criminal acts do not show
conduct aimed at deceivin the publicH there was no attempt to use the
empty bottles or pass them of as the respondents9 oods.
The respondents also arue that the IP Code does not criminali.e bottle
hoardin, as the acts penali.ed must always involve fraud and deceit.
The hoardin does not ma!e them liable for unfair competition as there
was no deception or fraud on the end-users.
TH! ISSU!
,ased on the parties9 positions, the basic issue submitted to us for
resolution is whether the 1aa *TC was correct in issuin 4earch
@arrant 1o. F''1-'1 for the sei.ure of the empty Co!e bottles from
Pepsi9s yard for probable violation of 4ection 1=>.0 ;c< of the IP Code.
This basic issue involves two sub-issues, namely, the substantive issue
of whether the application for search warrant efectively chared an
ofense, i.e., a violation of 4ection 1=>.0 ;c< of the IP CodeH and the
procedural issue of whether the *TC observed the procedures reEuired
by the 6ules of Court in the issuance of search warrants.
OUR RU"ING
@e resolve to deny the petition for lac! of merit.
@e clarify at the outset that while we aree with the 6TC decision, our
areement is more in the result than in the reasons that supported it.
The decision is correct in nullifyin the search warrant because it was
issued on an invalid substantive basis - the acts imputed on the
respondents do not violate 4ection 1=>.0 ;c< of the IP Code. Bor this
reason, we deny the present petition.
The issuance of a search warrant
1'
aainst a personal property
11
is
overned by 6ule 1F= of the 6evised 6ules of Court whose relevant
sections state5
4ection :. Re5uisites $or issuin+ searc# warrant. - A search
warrant shall not issue eCcept upon9rob#b1e <#=8e :$
<o$$e<&:o$ ;:&' o$e 89e<:@< oAe$8e to be determined
personally by the 8ude after eCamination under oath or
aDrmation of the complainant and the witnesses he may
produce, and particularly describin the place to be searched
and the thins to be sei.ed which may be anywhere in the
Philippines.
4ection $. E&amination o$ comlainant6 record. - The 8ude must,
before issuin the warrant,9er8o$#11B eC#m:$e :$ &'e Dorm oD
8e#r<':$0 E=e8&:o$8 #$% #$8;er8, :$ ;r:&:$0 #$% =$%er
o#&', &'e <om91#:$#$& #$% &'e ;:&$e88e8 he may produce
on facts personally !nown to them and attach to the record their
sworn statements toether with the aDdavits submitted.
4ection =. Issuance and $orm o$ searc# warrant. - If the 8ude is
satis+ed of the eCistence of facts upon which the application is
based or that there is probable cause to believe that they eCist,
he shall issue the warrant, which must be substantially in the
form prescribed by these 6ules. J)mphasis suppliedK
To paraphrase this rule, a search warrant may be issued onl" i$ t#ere is
robable cause in connection wit# a seci!c o7ense alle+ed in an
alication based on t#e ersonal knowled+e o$ t#e alicant and #is or
#er witnesses. This is the substantive reEuirement in the issuance of a
search warrant. Procedurally, the determination of probable cause is a
personal tas! of the 8ude before whom the application for search
warrant is +led, as he has to eCamine under oath or aDrmation the
applicant and his or her witnesses in the form of -searchin Euestions
and answers- in writin and under oath. The warrant, if issued, must
particularly describe the place to be searched and the thins to be
sei.ed.
@e paraphrase these reEuirements to stress that they have substantive
and procedural aspects. Apparently, the 6TC reconi.ed this dual nature
of the reEuirements and, hence, treated them separatelyH it approved of
the way the *TC handled the procedural aspects of the issuance of the
search warrant but found its action on the substantive aspect wantin.
It therefore resolved to nullify the warrant, without however eCpressly
declarin that the *TC ravely abused its discretion when it issued the
warrant applied for. The 6TC9s error, however, is in the form rather than
1$
the substance of the decision as the nulli+cation of the issued warrant
for the reason the 6TC ave was eEuivalent to the declaration that
rave abuse of discretion was committed. In fact, we so rule as the
discussions below will show.
#urisprudence teaches us that probable cause, as a condition for the
issuance of a search warrant, is such reasons supported by facts and
circumstances as will warrant a cautious man in the belief that his
action and the means ta!en in prosecutin it are leally 8ust and proper.
Probable cause reEuires facts and circumstances that would lead a
reasonably prudent man to believe that an ofense has been committed
and the ob8ects souht in connection with that ofense are in the place
to be searched.
1F
Implicit in this statement is the reconition that an
underlyin ofense must, in the +rst place, eCist. In other words, the
acts alleed, ta!en toether, must constitute an ofense and that these
acts are imputable to an ofender in relation with whom a search
warrant is applied for.
In the conteCt of the present case, the Euestion is whether the act
chared - alleed to be hoardin of empty Co!e bottles - constitutes an
ofense under 4ection 1=>.0 ;c< of the IP Code. 4ection 1=> in its
entirety states5
4)CTI"1 1=>. 3nfair Competition, 6ihts, 6eulation and
6emedies. -
1=>.1. A person who has identi+ed in the mind of the public the
oods he manufactures or deals in, his business or services from
those of others, whether or not a reistered mar! is employed,
has a property riht in the oodwill of the said oods, business
or services so identi+ed, which will be protected in the same
manner as other property rihts.
1=>.F. Any person who shall employ deception or any other
means contrary to ood faith by which he shall pass of the
oods manufactured by him or in which he deals, or his
business, or services for those of the one havin established
such oodwill, or who shall commit any acts calculated to
produce said result, shall be uilty of unfair competition, and
shall be sub8ect to an action therefor.
1=>.0. In particular, and without in any way limitin the scope of
protection aainst unfair competition, the followin shall be
deemed uilty of unfair competition5
;a< Any person, who is sellin his oods and ives them
the eneral appearance of oods of another
manufacturer or dealer, either as to the oods
themselves or in the wrappin of the pac!aes in which
they are contained, or the devices or words thereon, or in
any other feature of their appearance, which would be
li!ely to inPuence purchasers to believe that the oods
ofered are those of a manufacturer or dealer, other than
the actual manufacturer or dealer, or who otherwise
clothes the oods with such appearance as shall deceive
the public and defraud another of his leitimate trade, or
any subseEuent vendor of such oods or any aent of
any vendor enaed in sellin such oods with a li!e
purposeH
;b< Any person who by any arti+ce, or device, or who
employs any other means calculated to induce the false
belief that such person is oferin the services of another
who has identi+ed such services in the mind of the
publicH or
;c< Any person who shall ma!e any false statement in the
course of trade or who shall commit any other act
contrary to ood faith of a nature calculated to discredit
the oods, business or services of another.
1=>.:. The remedies provided by 4ections 1$=, 1$& and 1=1
shall apply mutatis mutandis. ;4ec. F%, 6.A. 1o. 1==a<
The petitioner theori.es that the above section does not limit the scope
of protection on the particular acts enumerated as it eCpands the
meanin of unfair competition to include -other acts contrary to ood
faith of a nature calculated to discredit the oods, business or services
of another.- Alleedly, the respondents9 hoardin of Coca Cola empty
bottles is one such act.
@e do not aree with the petitioner9s eCpansive interpretation of
4ection 1=>.0 ;c<.
-3nfair competition,- previously de+ned in Philippine 8urisprudence in
relation with 6.A. 1o. 1== and Articles 1>> and 1>% of the 6evised Penal
Code, is now covered by 4ection 1=> of the IP Code as this Code has
eCpressly repealed 6.A. 1o. 1=$ and 6.A. 1o. 1==, and Articles 1>> and
1>% of the 6evised Penal Code.
1=
Articles 1=>.1 and 1=>.F, as Euoted above, provide the concept and
eneral rule on the de+nition of unfair competition. The law does not
thereby cover ever" un$air act committed in t#e course o$ businessH it
covers only acts characteri.ed by -decetion or any other means
contrary to ood faith- in the assin+ o7 of oods and services as those
of another who has established oodwill in relation with these oods or
services, or any other act calculated to produce the same result.
@hat unfair competition is, is further particulari.ed under 4ection 1=>.0
when it provides speci+cs of what unfair competition is -without in any
way limitin the scope of protection aainst unfair competition.- Part of
these particulars is provided under 4ection 1=>.0;c< which provides the
eneral -catch-all- phrase that the petitioner cites. 3nder this phrase, a
person shall be uilty of unfair competition -who shall commit any other
act contrary to ood faith of a nature calculated to discredit the oods,
business or services of another.-
Brom 8urisprudence, unfair competition has been de+ned as the passin
of ;or palmin of< or attemptin to pass of upon the public the oods
or business of one person as the oods or business of another with the
end and probable efect of deceivin the public. It formulated the -true
test- of unfair competition5 whether the acts of defendant are such as
are calculated to deceive the ordinary buyer ma!in his purchases
under the ordinary conditions which prevail in the particular trade to
which the controversy relates.
10
"ne of the essential reEuisites in an
action to restrain unfair competition is proof of fraudH the intent to
deceive must be shown before the riht to recover can eCist.
1:
The
advent of the IP Code has not sini+cantly chaned these rulins as
they are fully in accord with what 4ection 1=> of the Code in its entirety
provides. Decetion% assin+ o7 and $raud uon t#e ublic are still the
!ey elements that must be present for unfair competition to eCist.
The act alleed to violate the petitioner9s rihts under 4ection 1=>.0 ;c<
is hoardin which we ather to be the collection of the petitioner9s
empty bottles so that they can be withdrawn from circulation and thus
impede the circulation of the petitioner9s bottled products. This,
accordin to the petitioner, is an act contrary to ood faith - a
conclusion that, if true, is indeed an unfair act on the part of the
respondents. The critical Euestion, however, is not t#e intrinsic
un$airness of the act of hoardinH what is critical for purposes of 4ection
1=>.0 ;c< is to determine if the hoardin, as chared, -is of a nature
calculated to discredit the oods, business or services- of the petitioner.
@e hold that it is not. Aoardin as de+ned by the petitioner is not even
an act within the contemplation of the IP Code.
The petitioner9s cited basis is a provision of the IP Code, a set of rules
that refer to a very speci+c sub8ect - intellectual property. Aside from
the IP Code9s actual substantive contents ;which relate speci+cally to
patents, licensin, trademar!s, trade names, service mar!s, copyrihts,
and the protection and infrinement of the intellectual properties that
these protective measures embody<, the coverae and intent of the
Code is eCpressly rePected in its -?eclaration of 4tate Policy- which
states5
4ection F. ?eclaration of 4tate Policy. - The 4tate reconi.es that
an efective intellectual and industrial roert" s"stem is vital to
the development of domestic and creative activity, facilitates
transfer of technoloy, attracts forein investments, and ensures
mar!et access for our products. It shall protect and secure
the e&clusive ri+#ts of scientists, inventors, artists and other
ifted citi.ensto t#eir intellectual roert" and creations,
particularly when bene+cial to the people, for such periods as
provided in this Act.
The use of intellectual property bears a social function. To this
end, the 4tate shall promote the difusion of !nowlede and
information for the promotion of national development and
proress and the common ood.
It is also the policy of the 4tate to streamline administrative
procedures of reisterin patents, trademar!s and copyriht, to
liberali.e the reistration on the transfer of technoloy, and to
enhance the enforcement of intellectual property rihts in the
Philippines. ;n<
-Intellectual property rihts- have furthermore been de+ned under
4ection : of the Code to consist of5 a< Copyriht and 6elated 6ihtsH b<
Trademar!s and 4ervice *ar!sH c< Ieoraphic IndicationsH d<
Industrial?esinsH e< PatentsH f< (ayout-?esins ;Toporaphies< of
Interated CircuitsH and <Protection of 3ndisclosed Information.
Iiven the IP Code9s speci+c focus, a +rst test that should be made when
a Euestion arises on whether a matter is covered by the Code is to as!
if it refers to an intellectual property as de+ned in the Code. If it does
not, then coverae by the Code may be neated.
A second test, if a disputed matter does not eCpressly refer to an
intellectual property riht as de+ned above, is whether it falls under the
eneral -unfair competition- concept and de+nition under 4ections
1=>.1 and 1=>.F of the Code. The Euestion then is whether there is
1&
-deception- or any other similar act in -passin of- of oods or services
to be those of another who en8oys established oodwill.
4eparately from these tests is the application of the principles of
statutory construction ivin particular attention, not so much to the
focus of the IP Code enerally, but to the terms of 4ection 1=> in
particular. 3nder the principle of -noscitur a sociis,- when a particular
word or phrase is ambiuous in itself or is eEually susceptible of various
meanins, its correct construction may be made clear and speci+c by
considerin the company of words in which it is found or with which it is
associated.
1$
As basis for this interpretative analysis, we note that Se<&:o$
1+8.1 spea!s of a person who has earned oodwill with respect to his
oods and services and who is entitled to protection under the Code,
with or without a reistered mar!. Se<&:o$ 1+8.), as previously
discussed, refers to the eneral de+nition of unfair
competition. Se<&:o$ 1+8.*, on the other hand, refers to the speci+c
instances of unfair competition, with Se<&:o$ 1+8.1 referrin to the
sale of oods iven the appearance of the oods of anotherH Se<&:o$
1+8.), to the inducement of belief that his or her oods or services are
that of another who has earned oodwillH while the disputed Se<&:o$
1+8.* bein a -catch all- clause whose coverae the parties now
dispute.
3nder all the above approaches, we conclude that the -hoardin- - as
de+ned and chared by the petitioner - does not fall within the
coverae of the IP Code and of 4ection 1=> in particular. It does not
relate to any patent, trademar!, trade name or service mar! that the
respondents have invaded, intruded into or used without proper
authority from the petitioner. 1or are the respondents alleed to be
fraudulently -passin of- their products or services as those of the
petitioner. The respondents are not also alleed to be underta!in any
representation or misrepresentation that would confuse or tend to
confuse the oods of the petitioner with those of the respondents,
or vice versa. @hat in fact the petitioner allees is an act forein to the
Code, to the concepts it embodies and to the acts it reulatesH as
alleed, hoardin inPicts unfairness by see!in to limit the opposition9s
sales by deprivin it of the bottles it can use for these sales.
In this liht, hoardin for purposes of destruction is closer to what
another law - 6.A. 1o. =F0 - covers, to wit5
4)CTI"1 1. Persons enaed or licensed to enae in the
manufacture, bottlin or sellin of soda water, mineral or
aerated waters, cider, mil!, cream, or other lawful beveraes in
bottles, boCes, cas!s, !es, or barrels, and other similar
containers, with their names or the names of their principals or
products, or other mar!s of ownership stamped or mar!ed
thereon, may reister with the Philippine Patent "Dce a
description of the names or are used by them, under the same
conditions, rules, and reulations, made applicable by law or
reulation to the issuance of trademar!s.
4)CTI"1 F. It shall be unlawful for any person, without the
written consent of the manufacturer, bottler or seller who has
successfully reistered the mar!s of ownership in accordance
with the provisions of the neCt precedin section, to fll such
bottles, boxes, kegs, barrels, or other similar containers
so marked or stamped, for the purpose of sale, or to sell,
dispose of, buy, or trafc in, or wantonly destroy the
same, whether flled or not, or to use the same for
drinking vessels or glasses or for any other purpose than
that registered by the manufacturer, bottler or seller. Any
violation of this section shall be punished by a +ne or not more
than one hundred pesos or imprisonment of not more than thirty
days or both.
As its coverae is de+ned under 4ection 1, the Act appears to be a
measure that may overlap or be afected by the provisions of Part II of
the IP Code on -The (aw on Trademar!s, 4ervice *ar!s and Trade
1ames.- @hat is certain is that the IP Code has not eCpressly repealed
this Act. The Act appears, too, to have speci+c reference to a special
type of reistrants - the manufacturers, bottlers or sellers of soda
water, mineral or aerated waters, cider, mil!, cream, or other lawful
beveraes in bottles, boCes, cas!s, !es, or barrels, and other similar
containers - who are iven special protection with respect to the
containers they use. In this sense, it is in fact a law of speci+c coverae
and application, compared with the eneral terms and application of
the IP Code. Thus, under its 4ection F, it spea!s speci+cally of unlawful
use of containers and even of the unlawfulness of their wanton
destruction - a matter that escapes the IP Code9s eneralities unless
lin!ed with the concepts of -deception- and -passin of- as discussed
above.
3nfortunately, the Act is not the law in issue in the present case and
one that the parties did not consider at all in the search warrant
application. The petitioner in fact could not have cited it in its search
warrant application since the -one speci+c ofense- that the law allows
and which the petitioner used was 4ection 1=>.0 ;c<. If it serves any
purpose at all in our discussions, it is to show that the underlyin
factual situation of the present case is in fact covered by another law,
1>
not by the IP Code that the petitioner cites. Liewed in this liht, the lac!
of probable cause to support the disputed search warrant at once
becomes apparent.
@here, as in this case, the imputed acts do not violate the cited
ofense, the rulin of this Court penned by *r. #ustice ,ellosillo is
particularly instructive5
In the issuance of search warrants, the 6ules of Court reEuires a
+ndin of probable cause in connection with one seci!c
o7ense to be determined personally by the 8ude after
eCamination of the complainant and the witnesses he may
produce, and particularly describin the place to be searched
and the thins to be sei.ed. Aence, 8:$<e &'ere :8 $o <r:me &o
89e#3 oD, &'e 8e#r<' ;#rr#$& %oe8 $o& eve$ be0:$ &o
D=1@11 &'e8e 8&r:$0e$& reE=:reme$&8 #$% :8 &'ereDore
%eDe<&:ve o$ :&8 D#<e. The nullity of the warrant renders moot
and academic the other issues raised in petitioners9 *otion to
Ouash and *otion for 6econsideration. 4ince the assailed search
warrant is null and void, all property sei.ed by virtue thereof
should be returned to petitioners in accordance with established
8urisprudence.
1=
,ased on the foreoin, we conclude that the 6TC correctly ruled that
the petitioner9s search warrant should properly be Euashed for the
petitioner9s failure to show that the acts imputed to the respondents do
not violate the cited ofense. There could not have been any probable
cause to support the issuance of a search warrant because no crime in
the +rst place was efectively chared. This conclusion renders
unnecessary any further discussion on whether the search warrant
application properly alleed that the imputed act of holdin Co!e
empties was in fact a -hoardin- in bad faith aimed to pre8udice the
petitioner9s operations, or whether the *TC duly complied with the
procedural reEuirements for the issuance of a search warrant under
6ule 1F= of the 6ules of Court.
FH!R!OR!, we hereby D!N6 the petition for lac! of merit.
Accordinly, we con+rm that 4earch @arrant 1o. F''1-'1, issued by the
*unicipal Trial Court, ,ranch 1, 1aa City, is NU"" and GOID. Costs
aainst the petitioner.
SO ORD!R!D.
*. G.R. No. 1,5,+9-,0 J#$=#rB 19, )009
ABS-CBN BROADCASTING CORPORATION, Petitioners,
vs.
PHI"IPPIN! MU"TI-M!DIA S6ST!M, INC., C!SAR G. R!6!S,
RANCIS CHUA .ANG BIAO/, MANU!" . AB!""ADA, RAU" B. D!
M!SA, AND A"O6SIUS M. CO"A6CO, 6espondents.
? ) C I 4 I " 1
6NAR!S-SANTIAGO, J(8
1%
This petition for review on certiorari
1
assails the #uly 1F, F''=
?ecision
F
of the Court of Appeals in CA-I.6. 4P 1os. >>'%F and %'&=F,
which aDrmed the ?ecember F', F'': ?ecision of the ?irector-Ieneral
of the Intellectual Property "Dce ;IP"< in Appeal 1o. 1'-F'':-'''F.
Also assailed is the ?ecember 11, F''= 6esolution
0
denyin the motion
for reconsideration.
Petitioner A,4-C,1 ,roadcastin Corporation ;A,4-C,1< is licensed
under the laws of the 6epublic of the Philippines to enae in television
and radio broadcastin.
:
It broadcasts television prorams by wireless
means to *etro *anila and nearby provinces, and by satellite to
provincial stations throuh Channel F on Lery Aih BreEuency ;LAB< and
Channel F0 on 3ltra Aih BreEuency ;3AB<. The prorams aired over
Channels F and F0 are either produced by A,4-C,1 or purchased from
or licensed by other producers.
A,4-C,1 also owns reional television stations which pattern their
prorammin in accordance with perceived demands of the reion.
Thus, television prorams shown in *etro *anila and nearby provinces
are not necessarily shown in other provinces.
6espondent Philippine *ulti-*edia 4ystem, Inc. ;P*4I< is the operator of
?ream ,roadcastin 4ystem. It delivers diital direct-to-home ;?TA<
television via satellite to its subscribers all over the Philippines. Aerein
individual respondents, Cesar I. 6eyes, Brancis Chua, *anuel B.
Abellada, 6aul ,. ?e *esa, and Aloysius *. Colayco, are members of
P*4ISs ,oard of ?irectors.
P*4I was ranted a leislative franchise under 6epublic Act 1o.
>=0'
$
on *ay &, 1%%> and was iven a Provisional Authority by the
1ational Telecommunications Commission ;1TC< on Bebruary 1, F''' to
install, operate and maintain a nationwide ?TA satellite service. @hen it
commenced operations, it ofered as part of its proram line-up A,4-
C,1 Channels F and F0, 1,1, Channel :, A,C Channel $, I*A Channel
&, 6P1 Channel %, and I,C Channel 10, toether with other paid
premium proram channels.
Aowever, on April F$, F''1,
=
A,4-C,1 demanded for P*4I to cease and
desist from rebroadcastin Channels F and F0. "n April F&, F''1,
&
P*4I
replied that the rebroadcastin was in accordance with the authority
ranted it by 1TC and its obliation under 1TC *emorandum Circular
1o. :-'>->>,
>
4ection =.F of which reEuires all cable television system
operators operatin in a community within Irade TAU or T,U contours to
carry the television sinals of the authori.ed television broadcast
stations.
%
Thereafter, neotiations ensued between the parties in an efort to
reach a settlementH however, the neotiations were terminated on April
:, F''F by A,4-C,1 alleedly due to P*4ISs inability to ensure the
prevention of illeal retransmission and further rebroadcast of its
sinals, as well as the adverse efect of the rebroadcasts on the
business operations of its reional television stations.
1'
"n *ay 10, F''F, A,4-C,1 +led with the IP" a complaint for TLiolation
of (aws Involvin Property 6ihts, with Prayer for the Issuance of a
Temporary 6estrainin "rder andQor @rit of Preliminary In8unction,U
which was doc!eted as IPL 1o. 1'-F''F-''':. It alleed that P*4ISs
unauthori.ed rebroadcastin of Channels F and F0 infrined on its
broadcastin rihts and copyriht.
"n #uly F, F''F, the ,ureau of (eal Afairs ;,(A< of the IP" ranted
A,4-C,1Ss application for a temporary restrainin order. "n #uly 1F,
F''F, P*4I suspended its retransmission of Channels F and F0 and
li!ewise +led a petition for certiorari with the Court of Appeals, which
was doc!eted as CA-I.6. 4P 1o. &1$%&.
4ubseEuently, P*4I +led with the ,(A a *anifestation reiteratin that it
is sub8ect to the must-carry rule under *emorandum Circular 1o. ':-'>-
>>. It also submitted a letter dated ?ecember F', F''F of then 1TC
Commissioner Armi #ane 6. ,or8e to P*4I statin as follows5
This refers to your letter dated ?ecember 1=, F''F reEuestin for
reulatory uidance from this Commission in connection with the
application and coverae of 1TC *emorandum Circular 1o. :-'>->>,
particularly 4ection = thereof, on mandatory carriae of television
broadcast sinals, to the direct-to-home ;?TA< pay television services of
Philippine *ulti-*edia 4ystem, Inc. ;P*4I<.
Preliminarily, both ?TA pay television and cable television services are
broadcast services, the only diference bein the medium of deliverin
such services ;i.e. the former by satellite and the latter by cable<. ,oth
can carry broadcast sinals to the remote areas, thus enrichin the
lives of the residents thereof throuh the dissemination of social,
economic, educational information and cultural prorams.
The ?TA pay television services of P*4I is eEuipped to provide
nationwide ?TA satellite services. Concededly, P*4ISs ?TA pay
television services covers very much wider areas in terms of carriae of
broadcast sinals, includin areas not reachable by cable television
services thereby providin a better medium of dissemination of
information to the public.
F'
I$ v:e; oD &'e Dore0o:$0 #$% &'e 89:r:& #$% :$&e$& oD NTC
memor#$%=m C:r<=1#r No. 4-08-88, 9#r&:<=1#r1B 8e<&:o$ +
&'ereoD, o$ m#$%#&orB <#rr:#0e oD &e1ev:8:o$ bro#%<#8& 8:0$#18,
DTH 9#B &e1ev:8:o$ 8erv:<e8 8'o=1% be %eeme% <overe% bB 8=<'
NTC Memor#$%=m C:r<=1#r.
Bor your uidance. ;)mphasis added<
11
"n Auust F=, F''0, P*4I +led another *anifestation with the ,(A that
it received a letter dated #uly F:, F''0 from the 1TC en8oinin strict and
immediate compliance with the must-carry rule under *emorandum
Circular 1o. ':-'>->>, to wit5
?ear *r. Abellada5
(ast #uly FF, F''0, the 1ational Telecommunications Commission ;1TC<
received a letter dated #uly 1&, F''0 from PresidentQC"" 6ene O. ,ello
of the International ,roadcastin Corporation ;I,C-Channel 10<
complainin that your company, ?ream ,roadcastin 4ystem, Inc., has
cut-of, without any notice or eCplanation whatsoever, to air the
prorams of I,C-10, a free-to-air television, to the detriment of the
public.
@e were told that, until now, this has been oin on.
P1e#8e be #%v:8e% &'#& #8 # %:re<& bro#%<#8& 8#&e11:&e o9er#&or,
o9er#&:$0 # %:re<&-&o-'ome .DTH/ bro#%<#8&:$0 8B8&em, ;:&' #
9rov:8:o$#1 #=&'or:&B .PA/ Drom &'e NTC, Bo=r <om9#$B, #1o$0
;:&' <#b1e &e1ev:8:o$ o9er#&or8, #re m#$%#&e% &o 8&r:<&1B <om91B
;:&' &'e eC:8&:$0 9o1:<B oD NTC o$ m#$%#&orB <#rr:#0e oD
&e1ev:8:o$ bro#%<#8& 8:0$#18 #8 9rov:%e% =$%er Memor#$%=m
C:r<=1#r No. 04-08-88, #18o 3$o;$ #8 &'e Rev:8e% R=1e8 #$%
Re0=1#&:o$8 Gover$:$0 C#b1e Te1ev:8:o$ SB8&em :$ &'e
P':1:99:$e8.
T':8 m#$%#&orB <over#0e 9rov:8:o$ =$%er Se<&:o$ +.) oD 8#:%
Memor#$%=m C:r<=1#r, reE=:re8 #11 <#b1e &e1ev:8:o$ 8B8&em
o9er#&or8, o9er#&:$0 :$ # <omm=$:&B ;:&':$ &'e Gr#%e HAI or
HBI <o$&o=r8 &o Hm=8&-<#rrBI &'e &e1ev:8:o$ 8:0$#18 oD &'e
#=&'or:>e% &e1ev:8:o$ bro#%<#8& 8&#&:o$8, o$e oD ;':<' :8 IBC-
1*. S#:% %:re<&:ve eE=#11B #991:e8 &o Bo=r <om9#$B #8 &'e
<:r<=1#r ;#8 :88=e% &o 0:ve <o$8=mer8 #$% &'e 9=b1:< # ;:%er
#<<e88 &o more 8o=r<e8 oD $e;8, :$Dorm#&:o$, e$&er&#:$me$&
#$% o&'er 9ro0r#m8J<o$&e$&8.
This Commission, as the overnin aency vested by laws with the
8urisdiction, supervision and control over all public services, which
includes direct broadcast satellite operators, and ta!in into
consideration the paramount interest of the public in eneral, hereby
directs you to immediately restore the sinal of I,C-10 in your networ!
prorams, pursuant to eCistin circulars and reulations of the
Commission.
Bor strict compliance. ;)mphasis added<
1F
*eanwhile, on "ctober 1', F''0, the 1TC issued *emorandum Circular
1o. 1'-1'-F''0, entitled TImplementin 6ules and 6eulations
Iovernin Community AntennaQCable Television ;CATL< and ?irect
,roadcast 4atellite ;?,4< 4ervices to Promote Competition in the
4ector.U Article =, 4ection > thereof states5
As a eneral rule, the reception, distribution andQor transmission by any
CATLQ?,4 operator of any television sinals without any areement
with or authori.ation from proramQcontent providers are prohibited.
"n whether *emorandum Circular 1o. 1'-1'-F''0 amended
*emorandum Circular 1o. ':-'>->>, the 1TC eCplained to P*4I in a
letter dated 1ovember 0, F''0 that5
To address your Euery on whether or not the provisions of *C 1'-1'-
F''0 would have the efect of amendin the provisions of *C :-'>->>
on mandatory carriae of television sinals, the answer is in the
neative.
C C C C
The Commission maintains that, *C :-'>->> remains valid, subsistin
and enforceable.
Please be advised, therefore, that as %=1B 1:<e$8e% %:re<&-&o-'ome
8#&e11:&e &e1ev:8:o$ 8erv:<e 9rov:%er #=&'or:>e% bB &':8
Comm:88:o$, Bo=r <om9#$B <o$&:$=e8 &o be bo=$% bB &'e
0=:%e1:$e8 9rov:%e% Dor =$%er MC 04-08-88, 89e<:@<#11B Bo=r
ob1:0#&:o$ =$%er :&8 m#$%#&orB <#rr:#0e 9rov:8:o$8, :$ #%%:&:o$
&o Bo=r ob1:0#&:o$8 =$%er MC 10-10-)00*. ;)mphasis added<
Please be uided accordinly.
10
"n ?ecember FF, F''0, the ,(A rendered a decision
1:
+ndin that P*4I
infrined the broadcastin rihts and copyriht of A,4-C,1 and
F1
orderin it to permanently cease and desist from rebroadcastin
Channels F and F0.
"n Bebruary =, F'':, P*4I +led an appeal with the "Dce of the
?irector-Ieneral of the IP" which was doc!eted as Appeal 1o. 1'-F'':-
'''F. "n ?ecember F0, F'':, it also +led with the Court of Appeals a
T*otion to @ithdraw PetitionH Alternatively, *emorandum of the Petition
for CertiorariU in CA-I.6. 4P 1o. &1$%&, which was ranted in a
resolution dated Bebruary 1&, F''$.
"n ?ecember F', F'':, the ?irector-Ieneral of the IP" rendered a
decision
1$
in favor of P*4I, the dispositive portion of which states5
@A)6)B"6), premises considered, the instant appeal is hereby
I6A1T)?. Accordinly, ?ecision 1o. F''0-'1 dated FF ?ecember F''0
of the ?irector of ,ureau of (eal Afairs is hereby 6)L)64)? and 4)T
A4I?).
(et a copy of this ?ecision be furnished the ?irector of the ,ureau of
(eal Afairs for appropriate action, and the records be returned to her
for proper disposition. The ?ocumentation, Information and Technoloy
Transfer ,ureau is also iven a copy for library and reference purposes.
4" "6?)6)?.
1=
Thus, A,4-C,1 +led a petition for review with prayer for issuance of a
temporary restrainin order and writ of preliminary in8unction with the
Court of Appeals, which was doc!eted as CA-I.6. 4P 1o. >>'%F.
"n #uly 1>, F''$, the Court of Appeals issued a temporary restrainin
order. Thereafter, A,4-C,1 +led a petition for contempt aainst P*4I for
continuin to rebroadcast Channels F and F0 despite the restrainin
order. The case was doc!eted as CA- I.6. 4P 1o. %'&=F.
"n 1ovember 1:, F''$, the Court of Appeals ordered the consolidation
of CA-I.6. 4P 1os. >>'%F and %'&=F.
In the assailed ?ecision dated #uly 1F, F''=, the Court of Appeals
sustained the +ndins of the ?irector-Ieneral of the IP" and dismissed
both petitions +led by A,4-C,1.
1&
A,4-C,1Ss motion for reconsideration was denied, hence, this petition.
A,4-C,1 contends that P*4ISs unauthori.ed rebroadcastin of Channels
F and F0 is an infrinement of its broadcastin rihts and copyriht
under the Intellectual Property Code ;IP Code<H
1>
that *emorandum
Circular 1o. ':-'>->> eCcludes ?TA satellite television operatorsH that
the Court of AppealsS interpretation of the must-carry rule violates
4ection % of Article III
1%
of the Constitution because it allows the ta!in
of property for public use without payment of 8ust compensationH that
the Court of Appeals erred in dismissin the petition for contempt
doc!eted as CA-I.6. 4P 1o. %'&=F without reEuirin respondents to +le
comment.
6espondents, on the other hand, arue that P*4ISs rebroadcastin of
Channels F and F0 is sanctioned by *emorandum Circular 1o. ':-'>-
>>H that the must-carry rule under the *emorandum Circular is a valid
eCercise of police powerH and that the Court of Appeals correctly
dismissed CA-I.6. 4P 1o. %'&=F since it found no need to eCercise its
power of contempt.
After a careful review of the facts and records of this case, we aDrm the
+ndins of the ?irector-Ieneral of the IP" and the Court of Appeals.
There is no merit in A,4-C,1Ss contention that P*4I violated its
broadcasterSs rihts under 4ection F11 of the IP Code which provides in
part5
Chapter MIL
,6"A?CA4TI1I "6IA1I7ATI"14
4ec. F11. 4cope of 6iht. - 4ub8ect to the provisions of 4ection F1F,
broadcastin orani.ations shall en8oy the eCclusive riht to carry out,
authori.e or prevent any of the followin acts5
F11.1. The rebroadcastin of their broadcastsH
C C C C
1either is P*4I uilty of infrinement of A,4-C,1Ss copyriht under
4ection 1&& of the IP Code which states that copyriht or economic
rihts shall consist of the eCclusive riht to carry out, authori.e or
prevent the public performance of the wor! ;4ection 1&&.=<, and other
communication to the public of the wor! ;4ection 1&&.&<.
F'
4ection F'F.& of the IP Code de+nes bro#%<#8&:$0 as Tthe
transmission by wireless means for the public reception of sounds or of
imaes or of representations thereofH such transmission by satellite is
also VbroadcastinS where the means for decryptin are provided to the
public by the broadcastin orani.ation or with its consent.U
FF
"n the other hand, rebro#%<#8&:$0 as de+ned in Article 0;< of the
International Convention for the Protection of Performers, Producers of
Phonorams and ,roadcastin "rani.ations, otherwise !nown as the
1%=1 6ome Convention, of which the 6epublic of the Philippines is a
sinatory,
F1
is Tthe simultaneous broadcastin by one broadcastin
orani.ation of the broadcast of another broadcastin orani.ation.U
The ?irector-Ieneral of the IP" correctly found that P*4I is not
enaed in rebroadcastin and thus cannot be considered to have
infrined A,4-C,1Ss broadcastin rihts and copyriht, thus5
That the AppellantSs Jherein respondent P*4IK subscribers are able to
view AppelleeSs Jherein petitioner A,4-C,1K prorams ;Channels F and
F0< at the same time that the latter is broadcastin the same is
undisputed. The Euestion however is, would the Appellant in doin so
be considered enaed in broadcastin. 4ection F'F.& of the IP Code
states that broadcastin means
Tthe transmission by wireless means for the public reception of sounds
or of imaes or of representations thereofH such transmission by
satellite is also VbroadcastinS where the means for decryptin are
provided to the public by the broadcastin orani.ation or with its
consent.U
4ection F'F.& of the IP Code, thus, provides two instances wherein
there is broadcastin, to wit5
1. The transmission by wireless means for the public reception of
sounds or of imaes or of representations thereofH and
F. The transmission by satellite for the public reception of
sounds or of imaes or of representations thereof where the
means for decryptin are provided to the public by the
broadcastin orani.ation or with its consent.
It is under the second cateory that AppellantSs ?TA satellite television
service must be eCamined since it is satellite-based. The elements of
such cateory are as follows5
1. There is transmission of sounds or imaes or of
representations thereofH
F. The transmission is throuh satelliteH
0. The transmission is for public receptionH and
:. The means for decryptin are provided to the public by the
broadcastin orani.ation or with its consent.
It is only the presence of all the above elements can a determination
that the ?TA is broadcastin and conseEuently, rebroadcastin
AppelleeSs sinals in violation of 4ections F11 and 1&& of the IP Code,
may be arrived at.
Accordinly, this "Dce is of the view that the transmission
contemplated under 4ection F'F.& of the IP Code presupposes that the
oriin of the sinals is the broadcaster. Aence, a proram that is
broadcasted is attributed to the broadcaster. In the same manner, the
rebroadcasted proram is attributed to the rebroadcaster.
In the case at hand, Appellant is not the oriin nor does it claim to be
the oriin of the prorams broadcasted by the Appellee. Appellant did
not ma!e and transmit on its own but merely carried the eCistin
sinals of the Appellee. @hen AppellantSs subscribers view AppelleeSs
prorams in Channels F and F0, they !now that the oriin thereof was
the Appellee.
Aptly, it is imperative to discern the nature of broadcastin. @hen a
broadcaster transmits, the sinals are scattered or dispersed in the air.
Anybody may pic!-up these sinals. There is no restriction as to its
number, type or class of recipients. To receive the sinals, one is not
reEuired to subscribe or to pay any fee. "ne only has to have a
receiver, and in case of television sinals, a television set, and to tune-
in to the riht channelQfreEuency. The de+nition of broadcastin,
wherein it is reEuired that the transmission is wireless, all the more
supports this discussion. Apparently, the undiscriminatin dispersal of
sinals in the air is possible only throuh wireless means. The use of
wire in transmittin sinals, such as cable television, limits the
recipients to those who are connected. 3nli!e wireless transmissions, in
wire-based transmissions, it is not enouh that one wants to be
connected and possesses the eEuipment. The service provider, such as
cable television companies may choose its subscribers.
The only limitation to such dispersal of sinals in the air is the technical
capacity of the transmitters and other eEuipment employed by the
broadcaster. @hile the broadcaster may use a less powerful transmitter
to limit its coverae, this is merely a business stratey or decision and
not an inherent limitation when transmission is throuh cable.
Accordinly, the nature of broadcastin is to scatter the sinals in its
widest area of coverae as possible. "n this score, it may be said that
ma!in public means that accessibility is undiscriminatin as lon as it
F0
JisK within the rane of the transmitter and eEuipment of the
broadcaster. That the medium throuh which the Appellant carries the
AppelleeSs sinal, that is via satellite, does not diminish the fact that it
operates and functions as a cable television. It remains that the
AppellantSs transmission of sinals via its ?TA satellite television
service cannot be considered within the purview of broadcastin. C C C
C C C C
This "Dce also +nds no evidence on record showin that the Appellant
has provided decryptin means to the public indiscriminately.
Considerin the nature of this case, which is punitive in fact, the burden
of provin the eCistence of the elements constitutin the acts
punishable rests on the shoulder of the complainant.
Accordinly, this "Dce +nds that there is no rebroadcastin on the part
of the Appellant of the AppelleeSs prorams on Channels F and F0, as
de+ned under the 6ome Convention.
FF
3nder the 6ome Convention, rebroadcastin is Tthe simultaneous
broadcastin by one broadcastin orani.ation of the broadcast of
another broadcastin orani.ation.U The @or!in Paper
F0
prepared by
the 4ecretariat of the 4tandin Committee on Copyriht and 6elated
6ihts de+nes broadcastin orani.ations as Tentities that ta!e the
+nancial and editorial responsibility for the selection and arranement
of, and investment in, the transmitted content.U
F:
)vidently, P*4I would
not Eualify as a broadcastin orani.ation because it does not have the
aforementioned responsibilities imposed upon broadcastin
orani.ations, such as A,4-C,1.
A,4-C,1 creates and transmits its own sinalsH P*4I merely carries
such sinals which the viewers receive in its unaltered form. P*4I does
not produce, select, or determine the prorams to be shown in
Channels F and F0. (i!ewise, it does not pass itself of as the oriin or
author of such prorams. Insofar as Channels F and F0 are concerned,
P*4I merely retransmits the same in accordance with *emorandum
Circular ':-'>->>. @ith reard to its premium channels, it buys the
channels from content providers and transmits on an as-is basis to its
viewers. Clearly, P*4I does not perform the functions of a broadcastin
orani.ationH thus, it cannot be said that it is enaed in rebroadcastin
Channels F and F0.
The ?irector-Ieneral of the IP" and the Court of Appeals also correctly
found that P*4ISs services are similar to a cable television system
because the services it renders fall under cable Tretransmission,U as
described in the @or!in Paper, to wit5
;I< Cable 6etransmission
:&. @hen a radio or television proram is bein broadcast, it can be
retransmitted to new audiences by means of cable or wire. In the early
days of cable television, it was mainly used to improve sinal reception,
particularly in so-called Tshadow .ones,U or to distribute the sinals in
lare buildins or buildin compleCes. @ith improvements in
technoloy, cable operators now often receive sinals from satellites
before retransmittin them in an unaltered form to their subscribers
throuh cable.
:>. In principle, cable retransmission can be either simultaneous with
the broadcast over-the-air or delayed ;deferred transmission< on the
basis of a +Cation or a reproduction of a +Cation. Burthermore, they
miht be unaltered or altered, for eCample throuh replacement of
commercials, etc. I$ 0e$er#1, 'o;ever, &'e &erm Hre&r#$8m:88:o$I
8eem8 &o be re8erve% Dor 8=<' &r#$8m:88:o$8 ;':<' #re bo&'
8:m=1&#$eo=8 #$% =$#1&ere%.
:%. The 6ome Convention does not rant rihts aainst unauthori.ed
cable retransmission. @ithout such a riht, cable operators can
retransmit both domestic and forein over the air broadcasts
simultaneously to their subscribers without permission from the
broadcastin orani.ations or other rihtholders and without obliation
to pay remuneration.
F$
;)mphasis added<
Thus, while the 6ome Convention ives broadcastin orani.ations the
riht to authori.e or prohibit the rebroadcastin of its broadcast,
however, this protection does not eCtend to cable retransmission. The
retransmission of A,4-C,1Ss sinals by P*4I W which functions
essentially as a cable television W does not therefore constitute
rebroadcastin in violation of the formerSs intellectual property rihts
under the IP Code.
It must be emphasi.ed that the law on copyriht is not absolute. The IP
Code provides that5
4ec. 1>:. (imitations on Copyriht. -
1>:.1. 1otwithstandin the provisions of Chapter L, the followin acts
shall not constitute infrinement of copyriht5
C C C C
F:
;h< The use made of a wor! by or under the direction or control of the
Iovernment, by the 1ational (ibrary or by educational, scienti+c or
professional institutions where such use is in the public interest and is
compatible with fair useH
The carriae of A,4-C,1Ss sinals by virtue of the must-carry rule in
*emorandum Circular 1o. ':-'>->> is under the direction and control of
the overnment thouh the 1TC which is vested with eCclusive
8urisdiction to supervise, reulate and control telecommunications and
broadcast servicesQfacilities in the Philippines.
F=
The imposition of the
must-carry rule is within the 1TCSs power to promulate rules and
reulations, as public safety and interest may reEuire, to encourae a
larer and more efective use of communications, radio and television
broadcastin facilities, and to maintain efective competition amon
private entities in these activities whenever the Commission +nds it
reasonably feasible.
F&
As correctly observed by the ?irector-Ieneral of
the IP"5
Accordinly, the T*ust-Carry 6uleU under 1TC Circular 1o. :-'>->> falls
under the foreoin cateory of limitations on copyriht. This "Dce
arees with the Appellant Jherein respondent P*4IK that the T*ust-
Carry 6uleU is in consonance with the principles and ob8ectives
underlyin )Cecutive "rder 1o. :0=,
F>
to wit5
The Bilipino people must be iven wider access to more sources of
news, information, education, sports event and entertainment prorams
other than those provided for by mass media and aforded television
prorams to attain a well informed, well-versed and culturally re+ned
citi.enry and enhance their socio-economic rowth5
@A)6)A4, cable television ;CATL< systems could support or
supplement the services provided by television broadcast facilities,
local and overseas, as the national information hihway to the
countryside.
F%
The Court of Appeals li!ewise correctly observed that5
JTKhe very intent and spirit of the 1TC Circular will prevent a situation
whereby station owners and a few networ!s would have unfettered
power to ma!e time available only to the hihest bidders, to
communicate only their own views on public issues, people, and to
permit on the air only those with whom they areed W contrary to the
state policy that the ;franchise< rantee li!e the petitioner, private
respondent and other TL station owners, shall provide at all times
sound and balanced prorammin and assist in the functions of public
information and education.
This is for the +rst time that we have a structure that wor!s to
accomplish eCplicit state policy oals.
0'
Indeed, intellectual property protection is merely a means towards the
end of ma!in society bene+t from the creation of its men and women
of talent and enius. This is the essence of intellectual property laws,
and it eCplains why certain products of inenuity that are concealed
from the public are outside the pale of protection aforded by the law. It
also eCplains why the author or the creator en8oys no more rihts than
are consistent with public welfare.
01
Burther, as correctly observed by the Court of Appeals, the must-carry
rule as well as the leislative franchises ranted to both A,4-C,1 and
P*4I are in consonance with state policies enshrined in the
Constitution, speci+cally 4ections %,
0F
1&,
00
and F:
0:
of Article II on the
?eclaration of Principles and 4tate Policies.
0$
A,4-C,1 was ranted a leislative franchise under 6epublic Act 1o.
&%==, 4ection 1 of which authori.es it Tto construct, operate and
maintain, for commercial purposes and in the public interest, television
and radio broadcastin in and throuhout the Philippines C C C.U 4ection
: thereof mandates that it Tshall provide adeEuate public service time
to enable the overnment, throuh the said broadcastin stations, to
reach the population on important public issuesH provide at all times
sound and balanced proramminH promote public participation such as
in community proramminH assist in the functions of public information
and education C C C.U
P*4I was li!ewise ranted a leislative franchise under 6epublic Act 1o.
>=0', 4ection : of which similarly states that it Tshall provide adeEuate
public service time to enable the overnment, throuh the said
broadcastin stations, to reach the population on important public
issuesH provide at all times sound and balanced proramminH promote
public participation such as in community proramminH assist in the
functions of public information and education C C C.U 4ection $,
pararaph F of the same law provides that Tthe radio spectrum is a
+nite resource that is a part of the national patrimony and the use
thereof is a privilee conferred upon the rantee by the 4tate and may
be withdrawn anytime, after due process.U
In Telecom( 9 :roadcast Att"s( o$ t#e ,#ils(% Inc( v( C;3E'EC%
0=
the
Court held that a franchise is a mere privilee which may be reasonably
burdened with some form of public service. Thus5
All broadcastin, whether by radio or by television stations, is licensed
by the overnment. Airwave freEuencies have to be allocated as there
F$
are more individuals who want to broadcast than there are freEuencies
to assin. A franchise is thus a privilee sub8ect, amon other thins, to
amendment by Conress in accordance with the constitutional provision
that Tany such franchise or riht ranted . . . shall be sub8ect to
amendment, alteration or repeal by the Conress when the common
ood so reEuires.U
C C C C
Indeed, provisions for C"*)()C Time have been made by amendment
of the franchises of radio and television broadcast stations and, until
the present case was brouht, such provisions had not been thouht of
as ta!in property without 8ust compensation. Art. MII, X11 of the
Constitution authori.es the amendment of franchises for Tthe common
ood.U @hat better measure can be conceived for the common ood
than one for free air time for the bene+t not only of candidates but even
more of the public, particularly the voters, so that they will be fully
informed of the issues in an electionR TJIKt is the riht of the viewers
and listeners, not the riht of the broadcasters, which is paramount.U
1or indeed can there be any constitutional ob8ection to the reEuirement
that broadcast stations ive free air time. )ven in the 3nited 4tates,
there are responsible scholars who believe that overnment controls on
broadcast media can constitutionally be instituted to ensure diversity of
views and attention to public afairs to further the system of free
eCpression. Bor this purpose, broadcast stations may be reEuired to ive
free air time to candidates in an election. Thus, Professor Cass 6.
4unstein of the 3niversity of Chicao (aw 4chool, in urin reforms in
reulations afectin the broadcast industry, writes5
C C C C
In truth, radio and television broadcastin companies, which are iven
franchises, do not own the airwaves and freEuencies throuh which
they transmit broadcast sinals and imaes. They are merely iven the
temporary privilee of usin them. 4ince a franchise is a mere privilee,
the eCercise of the privilee may reasonably be burdened with the
performance by the rantee of some form of public service. C C C
0&
There is li!ewise no merit to A,4-C,1Ss claim that P*4ISs carriae of its
sinals is for a commercial purposeH that its bein the countrySs top
broadcastin company, the availability of its sinals alleedly enhances
P*4ISs attractiveness to potential customersH
0>
or that the unauthori.ed
carriae of its sinals by P*4I has created competition between its
*etro *anila and reional stations.
A,4-C,1 presented no substantial evidence to prove that P*4I carried
its sinals for pro+tH or that such carriae adversely afected the
business operations of its reional stations. )Ccept for the testimonies
of its witnesses,J0%K no studies, statistical data or information have
been submitted in evidence.
Administrative chares cannot be based on mere speculation or
con8ecture. The complainant has the burden of provin by substantial
evidence the alleations in the complaint.
:'
*ere alleation is not
evidence, and is not eEuivalent to proof.
:1
Anyone in the country who owns a television set and antenna can
receive A,4-C,1Ss sinals for free. "ther broadcastin orani.ations
with free-to-air sinals such as I*A-&, 6P1-%, A,C-$, and I,C-10 can
li!ewise be accessed for free. 1o payment is reEuired to view the said
channels
:F
because these broadcastin networ!s do not enerate
revenue from subscription from their viewers but from airtime revenue
from contracts with commercial advertisers and producers, as well as
from direct sales.
In contrast, cable and ?TA television earn revenues from viewer
subscription. In the case of P*4I, it ofers its customers premium paid
channels from content providers li!e 4tar *ovies, 4tar @orld, #ac! TL,
and AM1, amon others, thus allowin its customers to o beyond the
limits of TBree TL and Cable TL.U
:0
It does not advertise itself as a local
channel carrier because these local channels can be viewed with or
without ?TA television.
6elevantly, P*4ISs carriae of Channels F and F0 is material in arrivin
at the ratins and audience share of A,4-C,1 and its prorams. These
ratins help commercial advertisers and producers decide whether to
buy airtime from the networ!. Thus, the must-carry rule is actually
advantaeous to the broadcastin networ!s because it provides them
with increased viewership which attracts commercial advertisers and
producers.
"n the other hand, the carriae of free-to-air sinals imposes a burden
to cable and ?TA television providers such as P*4I. P*4I uses none of
A,4-C,1Ss resources or eEuipment and carries the sinals and
shoulders the costs without any recourse of charin.
::
*oreover, such
carriae of sinals ta!es up channel space which can otherwise be
utili.ed for other premium paid channels.
There is no merit to A,4-C,1Ss arument that P*4ISs carriae of
Channels F and F0 resulted in competition between its *etro *anila
and reional stations. A,4-C,1 is free to decide to pattern its reional
F=
prorammin in accordance with perceived demands of the reionH
however, it cannot impose this !ind of prorammin on the reional
viewers who are also entitled to the free-to-air channels. It must be
emphasi.ed that, as a national broadcastin orani.ation, one of A,4-
C,1Ss responsibilities is to scatter its sinals to the widest area of
coverae as possible. That it should limit its sinal reach for the sole
purpose of ainin pro+t for its reional stations undermines public
interest and deprives the viewers of their riht to access to information.
Indeed, television is a businessH however, the welfare of the people
must not be sacri+ced in the pursuit of pro+t. The riht of the viewers
and listeners to the most diverse choice of prorams available is
paramount.
:$
The ?irector-Ieneral correctly observed, thus5
The T*ust-Carry 6uleU favors both broadcastin orani.ations and the
public. It prevents cable television companies from eCcludin
broadcastin orani.ation especially in those places not reached by
sinal. Also, the rule prevents cable television companies from
deprivin viewers in far-Pun areas the en8oyment of prorams
available to city viewers. In fact, this "Dce +nds the rule more
burdensome on the part of the cable television companies. The latter
carries the television sinals and shoulders the costs without any
recourse of charin. "n the other hand, the sinals that are carried by
cable television companies are dispersed and scattered by the
television stations and anybody with a television set is free to pic! them
up.
@ith its enormous resources and vaunted technoloical capabilities,
AppelleeSs Jherein petitioner A,4-C,1K broadcast sinals can reach
almost every corner of the archipelao. That in spite of such capacity, it
chooses to maintain reional stations, is a business decision. That the
T*ust-Carry 6uleU adversely afects the pro+tability of maintainin such
reional stations since there will be competition between them and its
*etro *anila station is speculative and an attempt to eCtrapolate the
efects of the rule. As discussed above, AppellantSs ?TA satellite
television services is of limited subscription. There was not even a
showin on part of the Appellee the number of AppellantSs subscribers
in one reion as compared to non-subscribin television owners. In any
event, if this "Dce is to enae in con8ecture, such competition
between the reional stations and the *etro *anila station will bene+t
the public as such competition will most li!ely result in the production of
better television prorams.U
:=
All told, we +nd that the Court of Appeals correctly upheld the decision
of the IP" ?irector-Ieneral that P*4I did not infrine on A,4-C,1Ss
intellectual property rihts under the IP Code. The +ndins of facts of
administrative bodies chared with their speci+c +eld of eCpertise, are
aforded reat weiht by the courts, and in the absence of substantial
showin that such +ndins are made from an erroneous estimation of
the evidence presented, they are conclusive, and in the interest of
stability of the overnmental structure, should not be disturbed.
:&
*oreover, the factual +ndins of the Court of Appeals are conclusive on
the parties and are not reviewable by the 4upreme Court. They carry
even more weiht when the Court of Appeals aDrms the factual
+ndins of a lower fact-+ndin body,
:>
as in the instant case.
There is li!ewise no merit to A,4-C,1Ss contention that the
*emorandum Circular eCcludes from its coverae ?TA television
services such as those provided by P*4I. 4ection =.F of the
*emorandum Circular reEuires all cable television system operators
operatin in a community within Irade TAU or T,U contours to carry the
television sinals of the authori.ed television broadcast stations.
:%
The
rationale behind its issuance can be found in the whereas clauses which
state5
@hereas, Cable Television 4ystems or Community Antenna Television
;CATL< have shown their ability to ofer additional prorammin and to
carry much improved broadcast sinals in the remote areas, thereby
enrichin the lives of the rest of the population throuh the
dissemination of social, economic, educational information and cultural
proramsH
@hereas, the national overnment supports the promotes the orderly
rowth of the Cable Television industry within the framewor! of a
reulated fee enterprise, which is a hallmar! of a democratic societyH
@hereas, public interest so reEuires that monopolies in commercial
mass media shall be reulated or prohibited, hence, to achieve the
same, the cable TL industry is made part of the broadcast mediaH
@hereas, pursuant to Act 0>:= as amended and )Cecutive "rder F'$
rantin the 1ational Telecommunications Commission the authority to
set down rules and reulations in order to protect the public and
promote the eneral welfare, the 1ational Telecommunications
Commission hereby promulates the followin rules and reulations on
Cable Television 4ystemsH
The policy of the *emorandum Circular is to carry improved sinals in
remote areas for the ood of the eneral public and to promote
dissemination of information. In line with this policy, it is clear that ?TA
television should be deemed covered by the *emorandum Circular.
F&
1otwithstandin the diferent technoloies employed, both ?TA and
cable television have the ability to carry improved sinals and promote
dissemination of information because they operate and function in the
same way.
In its ?ecember F', F''F letter,
$'
the 1TC eCplained that both ?TA and
cable television services are of a similar nature, the only diference
bein the medium of deliverin such services. They can carry broadcast
sinals to the remote areas and possess the capability to enrich the
lives of the residents thereof throuh the dissemination of social,
economic, educational information and cultural prorams.
ConseEuently, while the *emorandum Circular refers to cable
television, it should be understood as to include ?TA television which
provides essentially the same services.
In Eastern Telecommunications ,#iliines% Inc( v( International
Communication Cororation%
$1
we held5
The 1TC, bein the overnment aency entrusted with the reulation of
activities comin under its special and technical forte, and possessin
the necessary rule-ma!in power to implement its ob8ectives, is in the
best position to interpret its own rules, reulations and uidelines. The
Court has consistently yielded and accorded reat respect to the
interpretation by administrative aencies of their own rules unless there
is an error of law, abuse of power, lac! of 8urisdiction or rave abuse of
discretion clearly conPictin with the letter and spirit of the law.
$F
@ith reard to the issue of the constitutionality of the must-carry rule,
the Court +nds that its resolution is not necessary in the disposition of
the instant case. "ne of the essential reEuisites for a successful 8udicial
inEuiry into constitutional Euestions is that the resolution of the
constitutional Euestion must be necessary in decidin the
case.
$0
In Souses 3irasol v( Court o$ Aeals,
$:
we held5
As a rule, the courts will not resolve the constitutionality of a law, if the
controversy can be settled on other rounds. The policy of the courts is
to avoid rulin on constitutional Euestions and to presume that the acts
of the political departments are valid, absent a clear and unmista!able
showin to the contrary. To doubt is to sustain. This presumption is
based on the doctrine of separation of powers. This means that the
measure had +rst been carefully studied by the leislative and
eCecutive departments and found to be in accord with the Constitution
before it was +nally enacted and approved.
$$
The instant case was instituted for violation of the IP Code and
infrinement of A,4-C,1Ss broadcastin rihts and copyriht, which can
be resolved without oin into the constitutionality of *emorandum
Circular 1o. ':-'>->>. As held by the Court of Appeals, the only
relevance of the circular in this case is whether or not compliance
therewith should be considered manifestation of lac! of intent to
commit infrinement, and if it is, whether such lac! of intent is a valid
defense aainst the complaint of petitioner.
$=
The records show that petitioner assailed the constitutionality of
*emorandum Circular 1o. ':-'>->> by way of a collateral attac! before
the Court of Appeals. In ,#iliine <ational :ank v( ,alma%
$&
we ruled
that for reasons of public policy, the constitutionality of a law cannot be
collaterally attac!ed. A law is deemed valid unless declared null and
void by a competent courtH more so when the issue has not been duly
pleaded in the trial court.
$>
As a eneral rule, the Euestion of constitutionality must be raised at the
earliest opportunity so that if not raised in the pleadins, ordinarily it
may not be raised in the trial, and if not raised in the trial court, it will
not be considered on appeal.
$%
In Philippine Leterans ,an! v. Court of
Appeals,
='
we held5
@e decline to rule on the issue of constitutionality as all the reEuisites
for the eCercise of 8udicial review are not present herein. S9e<:@<#11B,
&'e E=e8&:o$ oD <o$8&:&=&:o$#1:&B ;:11 $o& be 9#88e% =9o$ bB &'e
Co=r& =$1e88, #& &'e @r8& o99or&=$:&B, :& :8 9ro9er1B r#:8e% #$%
9re8e$&e% :$ #$ #99ro9r:#&e <#8e, #%eE=#&e1B #r0=e%, #$% :8
$e<e88#rB &o # %e&erm:$#&:o$ oD &'e <#8e, 9#r&:<=1#r1B ;'ere
&'e :88=e oD <o$8&:&=&:o$#1:&B :8 &'e verB 1:8 mo&# 9re8e$&e%.C C
C
=1
Binally, we +nd that the dismissal of the petition for contempt +led by
A,4-C,1 is in order.
Indirect contempt may either be initiated ;1< motu rorio by the court
by issuin an order or any other formal chare reEuirin the respondent
to show cause why he should not be punished for contempt or ;F< by
the +lin of a veri+ed petition, complyin with the reEuirements for
+lin initiatory pleadins.
=F
A,4-C,1 +led a veri+ed petition before the Court of Appeals, which was
doc!eted CA I.6. 4P 1o. %'&=F, for P*4ISs alleed disobedience to the
6esolution and Temporary 6estrainin "rder, both dated #uly 1>, F''$,
issued in CA-I.6. 4P 1o. >>'%F. Aowever, after the cases were
consolidated, the Court of Appeals did not reEuire P*4I to comment on
the petition for contempt. It ruled on the merits of CA-I.6. 4P 1o. >>'%F
and ordered the dismissal of both petitions.
F>
A,4-C,1 arues that the Court of Appeals erred in dismissin the
petition for contempt without havin ordered respondents to comment
on the same. ConseEuently, it would have us reinstate CA-I.6. 1o.
%'&=F and order respondents to show cause why they should not be
held in contempt.
It bears stressin that the proceedins for punishment of indirect
contempt are criminal in nature. The modes of procedure and rules of
evidence adopted in contempt proceedins are similar in nature to
those used in criminal prosecutions.
=0
@hile it may be arued that the
Court of Appeals should have ordered respondents to comment, the
issue has been rendered moot in liht of our rulin on the merits. To
order respondents to comment and have the Court of Appeals conduct
a hearin on the contempt chare when the main case has already
been disposed of in favor of P*4I would be circuitous. @here the issues
have become moot, there is no 8usticiable controversy, thereby
renderin the resolution of the same of no practical use or value.
=:
FH!R!OR!, the petition is D!NI!D. The #uly 1F, F''= ?ecision of the
Court of Appeals in CA-I.6. 4P 1os. >>'%F and %'&=F, sustainin the
+ndins of the ?irector-Ieneral of the Intellectual Property "Dce and
dismissin the petitions +led by A,4-C,1 ,roadcastin Corporation, and
the ?ecember 11, F''= 6esolution denyin the motion for
reconsideration, are AIRM!D.
SO ORD!R!D.
4. G.R. No. 100098 De<ember )9, 1995
!M!RA"D GARM!NT MANUACTURING CORPORATION, petitioner,
vs.
HON. COURT O APP!A"S, BUR!AU O PAT!NTS, TRAD!MAR5S
AND T!CHNO"OG6 TRANS!R #$% H.D. "!! COMPAN6,
INC., respondents.

5APUNAN, J.:
In this petition for review on certiorari under 6ule :$ of the 6evised
6ules of Court, )merald Iarment *anufacturin Corporation see!s to
annul the decision of the Court of Appeals dated F% 1ovember 1%%' in
CA-I.6. 4P 1o. 1$F== declarin petitioner9s trademar! to be confusinly
similar to that of private respondent and the resolution dated 1& *ay
1%%1 denyin petitioner9s motion for reconsideration.
The record reveals the followin antecedent facts5
"n 1> 4eptember 1%>1, private respondent A.?. (ee Co., Inc., a forein
corporation orani.ed under the laws of ?elaware, 3.4.A., +led with the
,ureau of Patents, Trademar!s / Technoloy Transfer ;,PTTT< a Petition
for Cancellation of 6eistration 1o. 46 $'$: ;4upplemental 6eister< for
the trademar! -4T2(I4TIC *6. ())- used on s!irts, 8eans, blouses,
soc!s, briefs, 8ac!ets, 8oin suits, dresses, shorts, shirts and linerie
under Class F$, issued on F& "ctober 1%>' in the name of petitioner
F%
)merald Iarment *anufacturin Corporation, a domestic corporation
orani.ed and eCistin under Philippine laws. The petition was doc!eted
as Inter Partes Case 1o. 1$$>.
1
Private respondent, invo!in 4ec. 0& of 6.A. 1o. 1== ;Trademar! (aw<
and Art. LIII of the Paris Convention for the Protection of Industrial
Property, averred that petitioner9s trademar! -so closely resembled its
own trademar!, 9())9 as previously reistered and used in the
Philippines, and not abandoned, as to be li!ely, when applied to or used
in connection with petitioner9s oods, to cause confusion, mista!e and
deception on the part of the purchasin public as to the oriin of the
oods.-
)
In its answer dated F0 *arch 1%>F, petitioner contended that its
trademar! was entirely and unmista!ably diferent from that of private
respondent and that its certi+cate of reistration was leally and validly
ranted.
*
"n F' Bebruary 1%>:, petitioner caused the publication of its
application for reistration of the trademar! -4T2(I4TIC *6. ())- in the
Principal 6eister.-
4
"n F& #uly 1%>:, private respondent +led a notice of opposition to
petitioner9s application for reistration also on rounds that petitioner9s
trademar! was confusinly similar to its -())- trademar!.
5
The case
was doc!eted as Inter Partes Case 1o. 1>='.
"n F1 #une 1%>$, the ?irector of Patents, on motion +led by private
respondent dated 1$ *ay 1%>$, issued an order consolidatin Inter
Partes Cases 1os. 1$$> and 1>=' on rounds that a common Euestion
of law was involved.
+
"n 1% #uly 1%>>, the ?irector of Patents rendered a decision rantin
private respondent9s petition for cancellation and opposition to
reistration.
The ?irector of Patents found private respondent to be the prior
reistrant of the trademar! -())- in the Philippines and that it had been
usin said mar! in the Philippines.
,
*oreover, the ?irector of Patents, usin the test of dominancy, declared
that petitioner9s trademar! was confusinly similar to private
respondent9s mar! because -it is the word 9(ee9 which draws the
attention of the buyer and leads him to conclude that the oods
oriinated from the same manufacturer. It is undeniably the dominant
feature of the mar!.-
8
"n 0 Auust 1%>>, petitioner appealed to the Court of Appeals and on >
Auust 1%>>, it +led with the ,PTTT a *otion to 4tay )Cecution of the
1% #uly 1%>> decision of the ?irector of Patents on rounds that the
same would cause it reat and irreparable damae and in8ury. Private
respondent submitted its opposition on FF Auust 1%>>.
9
"n F0 4eptember 1%>>, the ,PTTT issued 6esolution 1o. >>-00 rantin
petitioner9s motion to stay eCecution sub8ect to the followin terms and
conditions5
1. That under this resolution, 6espondent-6eistrant is
authori.ed only to dispose of its current stoc! usin the
mar! -4T2(I4TIC *6. ())-H
F. That 6espondent-6eistrant is strictly prohibited from
further production, reardless of mode and source, of the
mar! in Euestion ;4T2(I4TIC *6. ())< in addition to its
current stoc!H
0. That this relief "rder shall automatically cease upon
resolution of the Appeal by the Court of Appeals and, if
the 6espondent9s appeal loses, all oods bearin the
mar! -4T2(I4TIC *6. ())- shall be removed from the
mar!et, otherwise such oods shall be sei.ed in
accordance with the law.
4" "6?)6)?.
10
"n F% 1ovember 1%%', the Court of Appeals promulated its decision
aDrmin the decision of the ?irector of Patents dated 1% #uly 1%>> in all
respects.
11
In said decision the Court of Appeals eCpounded, thus5
CCC CCC CCC
@hether or not a trademar! causes confusion and is
li!ely to deceive the public is a Euestion of fact which is
to be resolved by applyin the -test of dominancy-,
meanin, if the competin trademar! contains the main
or essential or dominant features of another by reason of
which confusion and deception are li!ely to result, then
0'
infrinement ta!es placeH that duplication or imitation is
not necessary, a similarity in the dominant features of
the trademar! would be suDcient.
The word -())- is the most prominent and distinctive
feature of the appellant9s trademar! and all of the
appellee9s -())- trademar!s. It is the mar! which draws
the attention of the buyer and leads him to conclude that
the oods oriinated from the same manufacturer. @hile
it is true that there are other words such as -4T2(I4TIC-,
printed in the appellant9s label, such word is printed in
such small letters over the word -())- that it is not
conspicuous enouh to draw the attention of ordinary
buyers whereas the word -())- is printed across the label
in bi, bold letters and of the same color, style, type and
si.e of letterin as that of the trademar! of the appellee.
The alleed diference is too insubstantial to be
noticeable. )ven rantin ar+uendo that the word
-4T2(I4TIC- is conspicuous enouh to draw attention, the
oods may easily be mista!en for 8ust another variation
or line of arments under the ap appelle9s -())-
trademar!s in view of the fact that the appellee has
reistered trademar!s which use other words in addition
to the principal mar! -())- such as -()) 6I?)64-,
-())436)4- and -()) ())14-. The li!elihood of confusion
is further made more probable by the fact that both
parties are enaed in the same line of business. It is well
to reiterate that the determinative factor in ascertainin
whether or not the mar!s are confusinly similar to each
other is not whether the challened mar! would actually
cause confusion or deception of the purchasers but
whether the use of such mar! would li!ely cause
confusion or mista!e on the part of the buyin public.
CCC CCC CCC
The appellee has suDciently established its riht to prior
use and reistration of the trademar! -())- in the
Philippines and is thus entitled to protection from any
infrinement upon the same. It is thus aCiomatic that one
who has identi+ed a peculiar symbol or mar! with his
oods thereby acEuires a property riht in such symbol or
mar!, and if another infrines the trademar!, he thereby
invo!es this property riht.
The merchandise or oods bein sold by the parties are
not that eCpensive as alleed to be by the appellant and
are Euite ordinary commodities purchased by the
averae person and at times, by the inorant and the
unlettered. "rdinary purchasers will not as a rule
eCamine the small letterins printed on the label but will
simply be uided by the presence of the stri!in mar!
-())-. @hatever diference there may be will pale in
insini+cance in the face of an evident similarity in the
dominant features and overall appearance of the labels of
the parties.
1)
CCC CCC CCC
"n 1% ?ecember 1%%', petitioner +led a motion for reconsideration of
the above-mentioned decision of the Court of Appeals.
Private respondent opposed said motion on > #anuary 1%%1 on rounds
that it involved an impermissible chane of theory on appeal. Petitioner
alleedly raised entirely new and unrelated aruments and defenses
not previously raised in the proceedins below such as laches and a
claim that private respondent appropriated the style and appearance of
petitioner9s trademar! when it reistered its -())- mar! under
6eistration 1o. ::FF'.
1*
"n 1& *ay 1%%1, the Court of Appeals issued a resolution re8ectin
petitioner9s motion for reconsideration and ruled thus5
CCC CCC CCC
A defense not raised in the trial court cannot be raised on
appeal for the +rst time. An issue raised for the +rst time
on appeal and not raised timely in the proceedins in the
lower court is barred by estoppel.
The ob8ect of reEuirin the parties to present all
Euestions and issues to the lower court before they can
be presented to this Court is to have the lower court rule
upon them, so that this Court on appeal may determine
whether or not such rulin was erroneous. The purpose is
also in furtherance of 8ustice to reEuire the party to +rst
present the Euestion he contends for in the lower court
so that the other party may not be ta!en by surprise and
may present evidence to properly meet the issues raised.
01
*oreover, for a Euestion to be raised on appeal, the same
must also be within the issues raised by the parties in
their pleadins. ConseEuently, when a party deliberately
adopts a certain theory, and the case is tried and decided
based upon such theory presented in the court below, he
will not be permitted to chane his theory on appeal. To
permit him to do so would be unfair to the adverse party.
A Euestion raised for the +rst time on appeal, there
havin opportunity to raise them in the court of oriin
constitutes a chane of theory which is not permissible
on appeal.
In the instant case, appellant9s main defense pleaded in
its answer dated *arch F0, 1%>F was that there was -no
confusin similarity between the competin trademar!
involved. "n appeal, the appellant raised a sinle issue,
to wit5
The only issue involved in this case is
whether or not respondent-reistrant9s
trademar! -4T2(I4TIC *6. ())- is
confusinly similar with the petitioner9s
trademar!s -()) or ())6I?)64, ())-())14
and ())-436)4.-
Appellant9s main arument in this motion for
reconsideration on the other hand is that the appellee is
estopped by laches from assertin its riht to its
trademar!. Appellant claims althouh belatedly that
appellee went to court with -unclean hands- by chanin
the appearance of its trademar! to ma!e it identical to
the appellant9s trademar!.
1either defenses were raised by the appellant in the
proceedins before the ,ureau of Patents. Appellant
cannot raise them now for the +rst time on appeal, let
alone on a mere motion for reconsideration of the
decision of this Court dismissin the appellant9s appeal.
@hile there may be instances and situations 8ustifyin
relaCation of this rule, the circumstance of the instant
case, eEuity would be better served by applyin the
settled rule it appearin that appellant has not iven any
reason at all as to why the defenses raised in its motion
for reconsideration was not invo!ed earlier.
14
CCC CCC CCC
Twice rebufed, petitioner presents its case before this Court on the
followin assinment of errors5
I. TA) C"36T "B APP)A(4 )66)? I1 1"T BI1?I1I TAAT
P6ILAT) 6)4P"1?)1T CA34)? TA) I443A1C) "B A
B"36TA -())- T6A?)*A6N I*ITATI1I TAAT "B TA)
P)TITI"1)694 "1 3A= >% ./?/ "6 *"6) TAA1 )IIAT
*"1TA4 ABT)6 TA) ,36)A3 "B PAT)1T94 ?)CI4I"1
?AT)? JU'= ./% ./??.
II. TA) C"36T "B APP)A(4 )66)? I1 63(I1I TAAT TA)
?)B)14) "B )4T"PP)( ,2 (ACA)4 *34T ,) 6AI4)? I1
TA) P6"C))?I1I4 ,)B"6) TA) ,36)A3 "B PAT)1T4,
T6A?)*A6N4 A1? T)CA1"("I2 T6A14B)6.
III. TA) C"36T "B APP)A(4 )66)? @A)1 IT C"14I?)6)?
P6ILAT) 6)4P"1?)1T94 P6I"6 6)II4T6ATI"1 "B IT4
T6A?)*A6N A1? ?I46)IA6?)? TA) BACT TAAT P6ILAT)
6)4P"1?)1T AA? BAI()? T" P6"L) C"**)6CIA(
34) TA)6)"B ,)B"6) BI(I1I "B APP(ICATI"1 B"6
6)II4T6ATI"1.
15
In addition, petitioner reiterates the issues it raised in the Court of
Appeals5
I. TA) I443) I1L"(L)? I1 TAI4 CA4) I4 @A)TA)6 "6
1"T P)TITI"1)694 T6A?)*A6N 42T(I4TIC *6. ()), I4
C"1B34I1I(2 4I*I(A6 @ITA TA) P6ILAT) 6)4P"1?)1T94
T6A?)*A6N ()) "6 ())-6I?)6, ())-())14 A1? ())-
436)4.
II. P)TITI"1)694 )LI?)1C)4 A6) C()A6 A1? 43BBICI)1T
T" 4A"@ TAAT IT I4 TA) P6I"6 34)6 A1? IT4
T6A?)*A6N I4 ?IBB)6)1T B6"* TAAT "B TA) P6ILAT)
6)4P"1?)1T.
III. P)TITI"1)694 T6A?)*A6N I4 )1TI6)(2 ?IBB)6)1T
B6"* TA) P6ILAT) 6)4P"1?)1T94 A1? TA)
6)II4T6ATI"1 "B IT4 T6A?)*A6N I4 ,RI3A
)ACIE )LI?)1C) "B I""? BAITA.
0F
IL. P)TITI"1)694 -4T2(I4TIC *6. ())- T6A?)*A6N
CA11"T ,) C"1B34)? @ITA P6ILAT) 6)4P"1?)1T94
()) T6A?)*A6N.
1+
Petitioner contends that private respondent is estopped from institutin
an action for infrinement before the ,PTTT under the eEuitable
principle of laches pursuant to 4ec. %-A of 6.A. 1o. 1==, otherwise
!nown as the (aw on Trade-mar!s, Trade-names and 3nfair
Competition5
4ec. %-A. )Euitable principles to overn proceedins. G In
opposition proceedins and in all other inter partes
proceedins in the patent oDce under this act, eEuitable
principles of laches, estoppel, and acEuiescence, where
applicable, may be considered and applied.
Petitioner allees that it has been usin its trademar! -4T2(I4TIC *6.
())- since 1 *ay 1%&$, yet, it was only on 1> 4eptember 1%>1 that
private respondent +led a petition for cancellation of petitioner9s
certi+cate of reistration for the said trademar!. 4imilarly, private
respondent9s notice of opposition to petitioner9s application for
reistration in the principal reister was belatedly +led on F& #uly
1%>:.
1,
Private respondent counters by maintainin that petitioner was barred
from raisin new issues on appeal, the only contention in the
proceedins below bein the presence or absence of confusin
similarity between the two trademar!s in Euestion.
18
@e re8ect petitioner9s contention.
Petitioner9s trademar! is reistered in the supplemental reister. The
Trademar! (aw ;6.A. 1o. 1==< provides that -mar!s and tradenames for
the supplemental reister shall not be published for or be sub8ect to
opposition, but shall be published on reistration in the "Dcial
Ia.ette.-
19
The rec!onin point, therefore, should not be 1 *ay 1%&$,
the date of alleed use by petitioner of its assailed trademar! but F&
"ctober 1%>',
)0
the date the certi+cate of reistration 46 1o. $'$: was
published in the "Dcial Ia.ette and issued to petitioner.
It was only on the date of publication and issuance of the reistration
certi+cate that private respondent may be considered -oDcially- put on
notice that petitioner has appropriated or is usin said mar!, which,
after all, is the function and purpose of reistration in the supplemental
reister.
)1
The record is bereft of evidence that private respondent was
aware of petitioner9s trademar! before the date of said publication and
issuance. Aence, when private respondent instituted cancellation
proceedins on 1> 4eptember 1%>1, less than a year had passed.
Corollarily, private respondent could hardly be accused of ineCcusable
delay in +lin its notice of opposition to petitioner9s application for
reistration in the principal reister since said application was published
only on F' Bebruary 1%>:.
))
Brom the time of publication to the time of
+lin the opposition on F& #uly 1%>: barely +ve ;$< months had elapsed.
To be barred from brinin suit on rounds of estoppel and laches, the
delay must be
lenthy.
)*
*ore crucial is the issue of confusin similarity between the two
trademar!s. Petitioner vehemently contends that its trademar!
-4T2(I4TIC *6. ())- is entirely diferent from and not confusinly
similar to private respondent9s -())- trademar!.
Private respondent maintains otherwise. It asserts that petitioner9s
trademar! tends to mislead and confuse the public and thus constitutes
an infrinement of its own mar!, since the dominant feature therein is
the word -()).-
The pertinent provision of 6.A. 1o. 1== ;Trademar! (aw< states thus5
4ec. FF. In$rin+ement, w#at constitutes. G Any person
who shall use, without the consent of the reistrant, any
reproduction, counterfeit, copy or colorable imitation of
any reistered mar! or trade-name in connection with the
sale, oferin for sale, or advertisin of any oods,
business or services on or in connection with which such
use is li!ely to cause confusion or mista!e or to deceive
purchasers or others as to the source or oriin of such
oods or services, or identity of such businessH or
reproduce, counterfeit, copy or colorably imitable any
such mar! or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, sins,
prints, pac!aes, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such oods, business or servicesH shall
be liable to a civil action by the reistrant for any or all of
the remedies herein provided.
Practical application, however, of the aforesaid provision is easier said
than done. In the history of trademar! cases in the Philippines,
particularly in ascertainin whether one trademar! is confusinly
00
similar to or is a colorable imitation of another, no set rules can be
deduced. )ach case must be decided on its own merits.
In Esso Standard Eastern% Inc. v. Court o$ Aeals,
)4
we held5
. . . ,ut li!elihood of confusion is a relative conceptH to be
determined only accordin to the particular, and
sometimes peculiar, circumstances of each case. It is
unEuestionably true that, as stated inCoburn vs. ,uritan
3ills% Inc.5 -In trademar! cases, even more than in other
litiation, precedent must be studied in the liht of the
facts of the particular case.-
CCC CCC CCC
(i!ewise, it has been observed that5
In determinin whether a particular name or mar! is a
-colorable imitation- of another, no all-embracin rule
seems possible in view of the reat number of factors
which must necessarily be considered in resolvin this
Euestion of fact, such as the class of product or business
to which the article belonsH the product9s Euality,
Euantity, or si.e, includin its wrapper or containerH the
dominant color, style, si.e, form, meanin of letters,
words, desins and emblems usedH the nature of the
pac!ae, wrapper or containerH the character of the
product9s purchasersH location of the businessH the
li!elihood of deception or the mar! or name9s tendency to
confuseH
etc.
)5
Proceedin to the tas! at hand, the essential element of infrinement is
colorable imitation. This term has been de+ned as -such a close or
inenious imitation as to be calculated to deceive ordinary purchasers,
or such resemblance of the infrinin mar! to the oriinal as to deceive
an ordinary purchaser ivin such attention as a purchaser usually
ives, and to cause him to purchase the one supposin it to be the
other.-
)+
Colorable imitation does not mean such similitude as
amounts to identity. 1or does it reEuire that all the details
be literally copied. Colorable imitation refers to such
similarity in form, content, words, sound, meanin,
special arranement, or eneral appearance of the
trademar! or tradename with that of the other mar! or
tradename in their over-all presentation or in their
essential, substantive and distinctive parts as would li!ely
mislead or confuse persons in the ordinary course of
purchasin the enuine article.
),
In determinin whether colorable imitation eCists, 8urisprudence has
developed two !inds of tests G the ?ominancy Test applied in Asia
:rewer"% Inc. v. Court o$ Aeals
)8
and other cases
)9
and the Aolistic
Test developed in Del 3onte Cororation v. Court o$ Aeals *0 and its
proponent cases.
*1
As its title implies, the test of dominancy focuses on the similarity of the
prevalent features of the competin trademar!s which miht cause
confusion or deception and thus constitutes infrinement.
CCC CCC CCC
. . . If the competin trademar! contains the main or
essential or dominant features of another, and confusion
and deception is li!ely to result, infrinement ta!es place.
?uplication or imitation is not necessaryH nor it is
necessary that the infrinin label should suest an
efort to imitate. JC. 1eilman ,rewin Co. v. Independent
,rewin Co., 1%1 B., :>%, :%$, citin+ )ale @hite (ead
Co., vs. PPuh ;CC< 1>' Bed. $&%K. The Euestion at issue
in cases of infrinement of trademar!s is whether the use
of the mar!s involved would be li!ely to cause con$usion
or mistakes in t#e mind o$ t#e ublic or deceive
urc#asers. ;Auburn 6ubber Corporation vs. Aonover
6ubber Co., 1'& B. Fd $>>H . . .<
*)
CCC CCC CCC
"n the other side of the spectrum, the holistic test mandates that the
entirety of the mar!s in Euestion must be considered in determinin
confusin similarity.
CCC CCC CCC
In determinin whether the trademar!s are confusinly
similar, a comparison of the words is not the only
determinant factor. The trademar!s in their entirety as
they appear in their respective labels or han tas must
also be considered in relation to the oods to which they
are attached. The discernin eye of the observer must
0:
focus not only on the predominant words but also on the
other features appearin in both labels in order that he
may draw his conclusion whether one is confusinly
similar to the other.
**
CCC CCC CCC
Applyin the foreoin tenets to the present controversy and ta!in
into account the factual circumstances of this case, we considered the
trademar!s involved as a whole and rule that petitioner9s -4T2(I4TIC
*6. ())- is not confusinly similar to private respondent9s -())-
trademar!.
Petitioner9s trademar! is the whole -4T2(I4TIC *6. ()).- Althouh on its
label the word -())- is prominent, the trademar! should be considered
as a whole and not piecemeal. The dissimilarities between the two
mar!s become conspicuous, noticeable and substantial enouh to
matter especially in the liht of the followin variables that must be
factored in.
Birst, the products involved in the case at bar are, in the main, various
!inds of 8eans. These are not your ordinary household items li!e catsup,
soysauce or soap which are of minimal cost. *aon pants or 8eans are
not ineCpensive. Accordinly, the casual buyer is predisposed to be
more cautious and discriminatin in and would prefer to mull over his
purchase. Confusion and deception, then, is less li!ely. In Del 3onte
Cororation v. Court o$ Aeals,
*4
we noted that5
. . . Amon these, what essentially determines the
attitudes of the purchaser, speci+cally his inclination to
be cautious, is the cost of the oods. To be sure, a person
who buys a boC of candies will not eCercise as much care
as one who buys an eCpensive watch. As a eneral rule,
an ordinary buyer does not eCercise as much prudence in
buyin an article for which he pays a few centavos as he
does in purchasin a more valuable thin. )Cpensive and
valuable items are normally bouht only after deliberate,
comparative and analytical investiation. ,ut mass
products, low priced articles in wide use, and matters of
everyday purchase reEuirin freEuent replacement are
bouht by the casual consumer without reat
care. . . .
4econd, li!e his beer, the averae Bilipino consumer enerally buys his
8eans by brand. Ae does not as! the sales cler! for eneric 8eans but
for, say, a (evis, Iuess, @ranler or even an Armani. Ae is, therefore,
more or less !nowledeable and familiar with his preference and will
not easily be distracted.
Binally, in line with the foreoin discussions, more credit should be
iven to the -ordinary purchaser.- Cast in this particular controversy,
the ordinary purchaser is not the -completely unwary consumer- but is
the -ordinarily intellient buyer- considerin the type of product
involved.
The de+nition laid down in D" :uncio v. Tan Tiao :ok
*5
is better suited
to the present case. There, the -ordinary purchaser- was de+ned as one
-accustomed to buy, and therefore to some eCtent familiar with, the
oods in Euestion. The test of fraudulent simulation is to be found in the
li!elihood of the deception of some persons in some measure
acEuainted with an established desin and desirous of purchasin the
commodity with which that desin has been associated. The test is not
found in the deception, or the possibility of deception, of the person
who !nows nothin about the desin which has been counterfeited, and
who must be indiferent between that and the other. The simulation, in
order to be ob8ectionable, must be such as appears li!ely to mislead the
ordinary intellient buyer who has a need to supply and is familiar with
the article that he see!s to purchase.-
There is no cause for the Court of Appeal9s apprehension that
petitioner9s products miht be mista!en as -another variation or line of
arments under private respondent9s 9())9 trademar!-.
*+
As one would
readily observe, private respondent9s variation follows a standard
format -'EE6I?)64,- -'EE436)4- and -'EE())14.- It is, therefore,
improbable that the public would immediately and naturally conclude
that petitioner9s -4T2(I4TIC *6. ())- is but another variation under
private respondent9s -())- mar!.
As we have previously intimated the issue of confusin similarity
between trademar!s is resolved by considerin the distinct
characteristics of each case. In the present controversy, ta!in into
account these uniEue factors, we conclude that the similarities in the
trademar!s in Euestion are not suDcient as to li!ely cause deception
and confusion tantamount to infrinement.
Another way of resolvin the conPict is to consider the mar!s involved
from the point of view of what mar!s are reistrable pursuant to 4ec. :
of 6.A. 1o. 1==, particularly pararaph : ;e<5
CAAPT)6 II-A.G T#e ,rincial Re+ister
;Inserted by 4ec. F, 6ep. Act 1o. =0>.<
0$
4ec. :. Re+istration o$ trade-marks% trade-names and
service-marks on t#e rincial re+ister. G There is hereby
established a reister of trade-mar!s, trade-names and
service-mar!s which shall be !nown as the principal
reister. The owner of a trade-mar!, trade-name or
service-mar! used to distinuish his oods, business or
services from the oods, business or services of others
shall have the riht to reister the same on the principal
reister, unless it5
CCC CCC CCC
;e< Consists of a mar! or trade-name which, when applied
to or used in connection with the oods, business or
services of the applicant is merely descriptive or
deceptively misdescriptive of them, or when applied to or
used in connection with the oods, business or services
of the applicant is primarily eoraphically descriptive or
deceptively misdescriptive of them, or is rimaril" merel"
a surnameH ;)mphasis ours.<
CCC CCC CCC
-())- is primarily a surname. Private respondent cannot, therefore,
acEuire eCclusive ownership over and sinular use of said term.
. . . It has been held that a personal name or surname
may not be monopoli.ed as a trademar! or tradename as
aainst others of the same name or surname. Bor in the
absence of contract, fraud, or estoppel, any man may use
his name or surname in all leitimate ways. Thus,
-@ellinton- is a surname, and its +rst user has no cause
of action aainst the 8unior user of -@ellinton- as it is
incapable of eCclusive appropriation.
*,
In addition to the foreoin, we are constrained to aree with
petitioner9s contention that private respondent failed to prove prior
actual commercial use of its -())- trademar! in the Philippines before
+lin its application for reistration with the ,PTTT and hence, has not
acEuired ownership over said mar!.
Actual use in commerce in the Philippines is an essential prereEuisite
for the acEuisition of ownership over a trademar! pursuant to 4ec. F
and F-A of the Philippine Trademar! (aw ;6.A. 1o. 1==< which eCplicitly
provides that5
CAAPT)6 II. 6eistration of *ar!s and Trade-names.
4ec. F. *#at are re+istrable. G Trade-mar!s, trade-
names, and service mar!s owned by persons,
corporations, partnerships or associations domiciled in
the Philippines and by persons, corporations,
partnerships, or associations domiciled in any forein
country may be reistered in accordance with the
provisions of this act5 ,rovided, T#at said trade-
marks, trade-names, or service marks are actuall" in use
in commerce and services not less t#an two mont#s in
t#e ,#iliines be$ore t#e time t#e alications $or
re+istration are !led5 And ,rovided% $urt#er, That the
country of which the applicant for reistration is a citi.en
rants by law substantially similar privilees to citi.ens of
the Philippines, and such fact is oDcially certi+ed, with a
certi+ed true copy of the forein law translated into the
)nlish lanuae, by the overnment of the forein
country to the Iovernment of the 6epublic of the
Philippines. ;As amended.< ;)mphasis ours.<
4ec. F-A. ;wners#i o$ trade-marks% trade-names and
service-marksH #ow ac5uired. G An"one w#o law$ull"
roduces or deals in merc#andise o$ an" kind or w#o
en+a+es in law$ul business% or w#o renders an" law$ul
service in commerce% b" actual use #ereo$ in
manu$acture or trade% in business% and in t#e service
renderedH may appropriate to his eCclusive use a trade-
mar!, a trade-name, or a service-mar! not so
appropriated by another, to distinuish his merchandise,
business or services from others. The ownership or
possession of trade-mar!, trade-name, service-mar!,
heretofore or hereafter appropriated, as in this section
provided, shall be reconi.ed and protected in the same
manner and to the same eCtent as are other property
rihts to the law. ;As amended.< ;)mphasis ours.<
The provisions of the 1%=$ Paris Convention for the Protection of
Industrial Property
*8
relied upon by private respondent and 4ec. F1-A of
the Trademar! (aw ;6.A. 1o. 1==<
*9
were suDciently eCpounded upon
and Euali+ed in the recent case of ,#ili 3orris% Inc. v. Court o$
Aeals5
40
CCC CCC CCC
0=
Bollowin universal acEuiescence and comity, our
municipal law on trademar!s reardin the reEuirement
of actual use in the Philippines must subordinate an
international areement inasmuch as the apparent clash
is bein decided by a municipal tribunal ;*ortisen vs.
Peters, Ireat ,ritain, Aih Court of #udiciary of 4cotland,
1%'=, > 4essions, %0H Paras, International (aw and @orld
"rani.ation, 1%&1 )d., p. F'<. @ithal, the fact that
international law has been made part of the law of the
land does not by any means imply the primacy of
international law over national law in the municipal
sphere. 3nder the doctrine of incorporation as applied in
most countries, rules of international law are iven a
standin eEual, not superior, to national leislative
enactments.
CCC CCC CCC
In other words, ;a forein corporation< may have the
capacity to sue for infrinement irrespective of lac! of
business activity in the Philippines on account of 4ection
F1-A of the Trademar! (aw but the Euestion of whether
they have an eCclusive riht over their symbol as to
8ustify issuance of the controversial writ will depend on
actual use of their trademar!s in the Philippines in line
with 4ections F and F-A of the same law. It is thus
inconruous for petitioners to claim that when a forein
corporation not licensed to do business in the Philippines
+les a complaint for infrinement, the entity need not be
actually usin its trademar! in commerce in the
Philippines. 4uch a forein corporation may have the
personality to +le a suit for infrinement but it may not
necessarily be entitled to protection due to absence of
actual use of the emblem in the local mar!et.
CCC CCC CCC
3ndisputably, private respondent is the senior reistrant, havin
obtained several reistration certi+cates for its various trademar!s
-()),- -())6I?)64,- and -())436)4- in both the supplemental and
principal reisters, as early as 1%=% to 1%&0.
41
Aowever, reistration
alone will not suDce. In Sterlin+ ,roducts
International, Inc. v.)arben$abriken :a"er Aktien+esellsc#a$t,
4)
we
declared5
CCC CCC CCC
A rule widely accepted and +rmly entrenched because it
has come down throuh the years is that actual use in
commerce or business is a prereEuisite in the acEuisition
of the riht of ownership over a trademar!.
CCC CCC CCC
It would seem Euite clear that adoption alone of a
trademar! would not ive eCclusive riht thereto. 4uch
riht -rows out of their actual use.- Adoption is not use.
"ne may ma!e advertisements, issue circulars, ive out
price lists on certain oodsH but these alone would not
ive eCclusive riht of use. Bor trademar! is a creation of
use. The underlyin reason for all these is that
purchasers have come to understand the mar! as
indicatin the oriin of the wares. Blowin from this is the
trader9s riht to protection in the trade he has built up
and the oodwill he has accumulated from use of the
trademar!. 6eistration of a trademar!, of course, has
value5 it is an administrative act declaratory of a pre-
eCistin riht. Re+istration does not% #owever% er$ect a
trademark ri+#t. ;)mphasis ours.<
CCC CCC CCC
To aument its aruments that it was, not only the prior reistrant, but
also the prior user, private respondent invo!es 4ec. F' of the Trademar!
(aw, thus5
4ec. F'. Certi+cate of reistration rima $acie evidence of
validity. G A certi+cate of reistration of a mar! or
tradename shall be a rima $acie evidence of the validity
of the reistration, the reistrant9s ownership of the mar!
or trade-name, and of the reistrant9s eCclusive riht to
use the same in connection with the oods, business or
services speci+ed in the certi+cate, sub8ect to any
conditions and limitations stated therein.
The credibility placed on a certi+cate of reistration of one9s trademar!,
or its weiht as evidence of validity, ownership and eCclusive use, is
Euali+ed. A reistration certi+cate serves merely as rima
$acie evidence. It is not conclusive but can and may be rebutted by
controvertin evidence.
*oreover, the aforeEuoted provision applies only to reistrations in the
principal reister.
4*
6eistrations in the supplemental reister do not
0&
en8oy a similar privilee. A supplemental reister was created precisely
for the reistration of mar!s which are not reistrable on the principal
reister due to some defects.
44
The determination as to who is the prior user of the trademar! is a
Euestion of fact and it is this Court9s wor!in principle not to disturb the
+ndins of the ?irector of Patents on this issue in the absence of any
showin of rave abuse of discretion. The +ndins of facts of the
?irector of Patents are conclusive upon the 4upreme
Courtrovided they are supported by substantial evidence.
45
In the case at bench, however, we reverse the +ndins of the ?irector
of Patents and the Court of Appeals. After a meticulous study of the
records, we observe that the ?irector of Patents and the Court of
Appeals relied mainly on the reistration certi+cates as proof of use by
private respondent of the trademar! -())- which, as we have
previously discussed are not suDcient. @e cannot ive credence to
private respondent9s claim that its -())- mar! +rst reached the
Philippines in the 1%='9s throuh local sales by the Post )Cchanes of
the 3.4. *ilitary ,ases in the Philippines
4+
based as it was solely on the
self-servin statements of *r. )dward Poste, Ieneral *anaer of (ee
;Phils.<, Inc., a wholly owned subsidiary of the A.?. (ee, Co., Inc., 3.4.A.,
herein private respondent.
4,
4imilarly, we ive little weiht to the
numerous
vouchers representin various advertisin eCpenses in the Philippines
for -())- products.
48
It is well to note that these eCpenses were
incurred only in 1%>1 and 1%>F by ()) ;Phils.<, Inc. after it entered into
a licensin areement with private respondent on 11 *ay 1%>1.
49
"n the other hand, petitioner has suDciently shown that it has been in
the business of sellin 8eans and other arments adoptin its
-4T2(I4TIC *6. ())- trademar! since 1%&$ as evidenced by appropriate
sales invoices to various stores and retailers.
50
"ur rulins in ,a+asa Industrial Cor. v. Court o$
Aeals 51 and Converse Rubber Cor. v. Universal Rubber
,roducts, Inc.,
5)
respectively, are instructive5
The Trademar! (aw is very clear. It reEuires actual
commercial use of the mar! prior to its reistration. There
is no dispute that respondent corporation was the +rst
reistrant, yet it failed to fully substantiate its claim that
it used in trade or business in the Philippines the sub8ect
mar!H it did not present proof to invest it with eCclusive,
continuous adoption of the trademar! which should
consist amon others, of considerable sales since its +rst
use. The invoices submitted by respondent which were
dated way bac! in 1%$& show that the .ippers sent to the
Philippines were to be used as -samples- and -of no
commercial value.- The evidence for respondent must be
clear, de+nite and free from inconsistencies. -4amples-
are not for sale and therefore, the fact of eCportin them
to the Philippines cannot be considered to be eEuivalent
to the -use- contemplated by law. 6espondent did not
eCpect income from such -samples.- There were no
receipts to establish sale, and no proof were presented to
show that they were subseEuently sold in the Philippines.
CCC CCC CCC
The sales invoices provide the best proof that there were
actual sales of petitioner9s product in the country and
that there was actual use for a protracted period of
petitioner9s trademar! or part thereof throuh these
sales.
Bor lac! of adeEuate proof of actual use of its trademar! in the
Philippines prior to petitioner9s use of its own mar! and for failure to
establish confusin similarity between said trademar!s, private
respondent9s action for infrinement must necessarily fail.
@A)6)B"6), premises considered, the Euestioned decision and
resolution are hereby 6)L)64)? and 4)T A4I?).
4" "6?)6)?.
0>
5. G.R. No. 115,58 M#r<' 19, )00)
!"IDAD C. 5HO, doin business under the name and style of 5!C
COSM!TICS "ABORATOR6, petitioner,
vs.
HON. COURT O APP!A"S, SUMM!RGI""! G!N!RA"
M!RCHANDISING #$% COMPAN6, and ANG TIAM
CHA6, respondents.
D! "!ON, JR., J.:
,efore us is a petition for review on certiorari of the ?ecision
1
dated
*ay F:, 1%%0 of the Court of Appeals settin aside and declarin as null
and void the "rders
F
dated Bebruary 1', 1%%F and *arch 1%, 1%%F of
the 6eional Trial Court, ,ranch %', of Oue.on City rantin the
issuance of a writ of preliminary in8unction.
The facts of the case are as follows5
"n ?ecember F', 1%%1, petitioner )lidad C. Nho +led a complaint for
in8unction and damaes with a prayer for the issuance of a writ of
preliminary in8unction, doc!eted as Civil Case 1o. O-%1-1'%F=, aainst
the respondents 4ummerville Ieneral *erchandisin and Company
;4ummerville, for brevity< and An Tiam Chay.
The petitioner9s complaint allees that petitioner, doin business under
the name and style of N)C Cosmetics (aboratory, is the reistered
owner of the copyrihts C#in C#un Su and ;val )acial Cream
Container@Case, as shown by Certi+cates of Copyriht 6eistration 1o.
'-10$> and 1o. '-0=&>H that she also has patent rihts onC#in C#un Su
9 Device and C#in C#un Su for medicated cream after purchasin the
same from Ouintin Chen, the reistered owner thereof in the
4upplemental 6eister of the Philippine Patent "Dce on Bebruary &,
1%>' under 6eistration Certi+cate 1o. :$F%H that respondent
4ummerville advertised and sold petitioner9s cream products under the
0%
brand name C#in C#un Su, in similar containers that petitioner uses,
thereby misleadin the public, and resultin in the decline in the
petitioner9s business sales and incomeH and, that the respondents
should be en8oined from alleedly infrinin on the copyrihts and
patents of the petitioner.
The respondents, on the other hand, alleed as their defense that
4ummerville is the eCclusive and authori.ed importer, re-pac!er and
distributor of C#in C#un Su products manufactured by 4hun 2i Bactory
of TaiwanH that the said Taiwanese manufacturin company authori.ed
4ummerville to reister its trade name C#in C#un Su 3edicated
Cream with the Philippine Patent "Dce and other appropriate
overnmental aenciesH that N)C Cosmetics (aboratory of the
petitioner obtained the copyrihts throuh misrepresentation and
falsi+cationH and, that the authority of Ouintin Chen, assinee of the
patent reistration certi+cate, to distribute and mar!et C#in C#un
Su products in the Philippines had already been terminated by the said
Taiwanese *anufacturin Company.
After due hearin on the application for preliminary in8unction, the trial
court ranted the same in an "rder dated Bebruary 1', 1%%F, the
dispositive portion of which reads5
ACC"6?I1I(2, the application of plaintif )lidad C. Nho, doin
business under the style of N)C Cosmetic (aboratory, for
preliminary in8unction, is hereby ranted. ConseEuentially,
plaintif is reEuired to +le with the Court a bond eCecuted to
defendants in the amount of +ve hundred thousand pesos
;P$'','''.''< to the efect that plaintif will pay to defendants
all damaes which defendants may sustain by reason of the
in8unction if the Court should +nally decide that plaintif is not
entitled thereto.
4" "6?)6)?.
0
The respondents moved for reconsideration but their motion for
reconsideration was denied by the trial court in an "rder dated *arch
1%, 1%%F.
:
"n April F:, 1%%F, the respondents +led a petition for certiorari with the
Court of Appeals, doc!eted as CA-I.6. 4P 1o. F&>'0, prayin for the
nulli+cation of the said writ of preliminary in8unction issued by the trial
court. After the respondents +led their reply and almost a month after
petitioner submitted her comment, or on Auust 1: 1%%F, the latter
moved to dismiss the petition for violation of 4upreme Court Circular
1o. F>-%1, a circular prohibitin forum shoppin. Accordin to the
petitioner, the respondents did not state the doc!et number of the civil
case in the caption of their petition and, more sini+cantly, they did not
include therein a certi+cate of non-forum shoppin. The respondents
opposed the petition and submitted to the appellate court a certi+cate
of non-forum shoppin for their petition.
"n *ay F:, 1%%0, the appellate court rendered a ?ecision in CA-I.6. 4P
1o. F&>'0 rulin in favor of the respondents, the dispositive portion of
which reads5
@A)6)B"6), the petition is hereby iven due course and the
orders of respondent court dated Bebruary 1', 1%%F and *arch
1%, 1%%F rantin the writ of preliminary in8unction and denyin
petitioners9 motion for reconsideration are hereby set aside and
declared null and void. 6espondent court is directed to forthwith
proceed with the trial of Civil Case 1o. O-%1-1'%F= and resolve
the issue raised by the parties on the merits.
4" "6?)6)?.
$
In rantin the petition, the appellate court ruled that5
The reistration of the trademar! or brandname -Chin Chun 4u-
by N)C with the supplemental reister of the ,ureau of Patents,
Trademar!s and Technoloy Transfer cannot be eEuated with
reistration in the principal reister, which is duly protected by
the Trademar! (aw..Aw#i.(nBt
CCC CCC CCC
As ratiocinated in (a Chemise (acoste, 4.4. vs. Bernande., 1F%
4C6A 0&0, 0%05
-6eistration in the 4upplemental 6eister, therefore,
serves as notice that the reistrant is usin or has
appropriated the trademar!. ,y the very fact that the
trademar! cannot as yet be on uard and there are
certain defects, some obstacles which the use must still
overcome before he can claim leal ownership of the
mar! or as! the courts to vindicate his claims of an
eCclusive riht to the use of the same. It would be
deceptive for a party with nothin more than a
reistration in the 4upplemental 6eister to posture
before courts of 8ustice as if the reistration is in the
Principal 6eister.
:'
The reliance of the private respondent on the last
sentence of the Patent oDce action on application 4erial
1o. 0'%$: that 9reistrants is presumed to be the owner
of the mar! until after the reistration is declared
cancelled9 is, therefore, misplaced and rounded on
sha!y foundation. The supposed presumption not only
runs counter to the precept embodied in 6ule 1F: of the
6evised 6ules of Practice before the Philippine Patent
"Dce in Trademar! Cases but considerin all the facts
ventilated before us in the four interrelated petitions
involvin the petitioner and the respondent, it is devoid
of factual basis. As even in cases where presumption and
precept may factually be reconciled, we have held that
the presumption is rebuttable, not conclusive, ;People v.
(im Aoa, I.6. 1o. (-1'=1F, *ay 0', 1%$>, 3nreported<.
"ne may be declared an unfair competitor even if his
competin trademar! is reistered ;Par!e, ?avis / Co. v.
Niu Boo / Co., et al., =' Phil %F>H (a 2ebana Co. v. chua
4eco / Co., 1: Phil $0:<.-
=
The petitioner +led a motion for reconsideration. This she followed with
several motions to declare respondents in contempt of court for
publishin advertisements notifyin the public of the promulation of
the assailed decision of the appellate court and statin that
enuine C#in C#un Su products could be obtained only from
4ummerville Ieneral *erchandisin and Co.
In the meantime, the trial court went on to hear petitioner9s complaint
for +nal in8unction and damaes. "n "ctober FF, 1%%0, the trial court
rendered a ?ecision
&
barrin the petitioner from usin the trademar!
Chin Chun 4u and upholdin the riht of the respondents to use the
same, but reconi.in the copyriht of the petitioner over the oval
shaped container of her beauty cream. The trial court did not award
damaes and costs to any of the parties but to their respective
counsels were awarded 4eventy-Bive Thousand Pesos ;P&$,'''.''< each
as attorney9s fees. The petitioner duly appealed the said decision to the
Court of Appeals.
"n #une 0, 1%%:, the Court of Appeals promulated a
6esolution
>
denyin the petitioner9s motions for reconsideration and for
contempt of court in CA-I.6. 4P 1o. F&>'0.
Aence, this petition anchored on the followin assinment of errors5
I
6)4P"1?)1T A"1"6A,() C"36T "B APP)A(4 C"**ITT)?
I6AL) A,34) "B ?I4C6)TI"1 A*"31TI1I T" (ACN "B
#36I4?ICTI"1 I1 BAI(I1I T" 63() "1 P)TITI"1)694 *"TI"1 T"
?I4*I44.
II
6)4P"1?)1T A"1"6A,() C"36T "B APP)A(4 C"**ITT)?
I6AL) A,34) "B ?I4C6)TI"1 A*"31TI1I T" (ACN "B
#36I4?ICTI"1 I1 6)B34I1I T" P6"*PT(2 6)4"(L)
P)TITI"1)694 *"TI"1 B"6 6)C"14I?)6ATI"1.
III
I1 ?)(A2I1I TA) 6)4"(3TI"1 "B P)TITI"1)694 *"TI"1 B"6
6)C"14I?)6ATI"1, TA) A"1"6A,() C"36T "B APP)A(4
?)1I)? P)TITI"1)694 6IIAT T" 4))N TI*)(2 APP)((AT) 6)(I)B
A1? LI"(AT)? P)TITI"1)694 6IIAT T" ?3) P6"C)44.
IL
6)4P"1?)1T A"1"6A,() C"36T "B APP)A(4 C"**ITT)?
I6AL) A,34) "B ?I4C6)TI"1 A*"31TI1I T" (ACN "B
#36I4?ICTI"1 I1 BAI(I1I T" CIT) TA) P6ILAT) 6)4P"1?)1T4 I1
C"1T)*PT.
%
The petitioner faults the appellate court for not dismissin the petition
on the round of violation of 4upreme Court Circular 1o. F>-%1. Also,
the petitioner contends that the appellate court violated 4ection =, 6ule
% of the 6evised Internal 6ules of the Court of Appeals when it failed to
rule on her motion for reconsideration within ninety ;%'< days from the
time it is submitted for resolution. The appellate court ruled only after
the lapse of three hundred +fty-four ;0$:< days, or on #une 0, 1%%:. In
delayin the resolution thereof, the appellate court denied the
petitioner9s riht to see! the timely appellate relief. Binally, petitioner
describes as arbitrary the denial of her motions for contempt of court
aainst the respondents.
@e rule in favor of the respondents.
Pursuant to 4ection 1, 6ule $> of the 6evised 6ules of Civil Procedure,
one of the rounds for the issuance of a writ of preliminary in8unction is
a proof that the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restrainin the commission or
continuance of the act or acts complained of, either for a limited period
:1
or perpetually. Thus, a preliminary in8unction order may be ranted only
when the application for the issuance of the same shows facts entitlin
the applicant to the relief demanded.
1'
This is the reason why we have
ruled that it must be shown that the invasion of the riht souht to be
protected is material and substantial, that the riht of complainant is
clear and unmista!able, and, that there is an urent and paramount
necessity for the writ to prevent serious damae.
11
In the case at bar, the petitioner applied for the issuance of a
preliminary in8unctive order on the round that she is entitled to the use
of the trademar! on C#in C#un Su and its container based on her
copyriht and patent over the same. @e +rst +nd it appropriate to rule
on whether the copyriht and patent over the name and container of a
beauty cream product would entitle the reistrant to the use and
ownership over the same to the eCclusion of others.
Trademar!, copyriht and patents are diferent intellectual property
rihts that cannot be interchaned with one another. A trademar! is
any visible sin capable of distinuishin the oods ;trademar!< or
services ;service mar!< of an enterprise and shall include a stamped or
mar!ed container of oods.
1F
In relation thereto, a trade name means
the name or desination identifyin or distinuishin an
enterprise.
10
*eanwhile, the scope of a copyriht is con+ned to literary
and artistic wor!s which are oriinal intellectual creations in the literary
and artistic domain protected from the moment of their
creation.
1:
Patentable inventions, on the other hand, refer to any
technical solution of a problem in any +eld of human activity which is
new, involves an inventive step and is industrially applicable.
1$
Petitioner has no riht to support her claim for the eCclusive use of the
sub8ect trade name and its container. The name and container of a
beauty cream product are proper sub8ects of a trademar! inasmuch as
the same falls sEuarely within its de+nition. In order to be entitled to
eCclusively use the same in the sale of the beauty cream product, the
user must suDciently prove that she reistered or used it before
anybody else did. The petitioner9s copyriht and patent reistration of
the name and container would not uarantee her the riht to the
eCclusive use of the same for the reason that they are not appropriate
sub8ects of the said intellectual rihts. ConseEuently, a preliminary
in8unction order cannot be issued for the reason that the petitioner has
not proven that she has a clear riht over the said name and container
to the eCclusion of others, not havin proven that she has reistered a
trademar! thereto or used the same before anyone did.
@e cannot li!ewise overloo! the decision of the trial court in the case
for +nal in8unction and damaes. The dispositive portion of said decision
held that the petitioner does not have trademar! rihts on the name
and container of the beauty cream product. The said decision on the
merits of the trial court rendered the issuance of the writ of a
preliminary in8unction moot and academic notwithstandin the fact that
the same has been appealed in the Court of Appeals. This is supported
by our rulin in La ista !ssociation, "nc. v. #ourt of !ppeals
1=
, to
wit5
Considerin+ t#at reliminar" injunction is a rovisional remed"
w#ic# ma" be +ranted at an" time a$ter t#e commencement o$
t#e action and be$ore jud+ment w#en it is establis#ed t#at t#e
lainti7 is entitled to t#e relie$ demanded and onl" w#en #is
comlaint s#ows $acts entitlin+ suc# relie$s &&& and it aearin+
t#at t#e trial court #ad alread" +ranted t#e issuance o$ a !nal
injunction in $avor o$ etitioner in its decision rendered a$ter trial
on t#e merits &&& t#e Court resolved to Dismiss t#e instant
etition #avin+ been rendered moot and academic( An
injunction issued b" t#e trial court a$ter it #as alread" made a
clear ronouncement as to t#e lainti7Cs ri+#t t#ereto% t#at is%
a$ter t#e same issue #as been decided on t#e merits% t#e trial
court #avin+ areciated t#e evidence resented% is roer%
notwit#standin+ t#e $act t#at t#e decision rendered is not "et
!nal CCC. ,ein an ancillary remedy, the proceedins for
preliminary in8unction cannot stand separately or proceed
independently of the decision rendered on the merit of the main
case for in8unction. The merit of the main case havin been
already determined in favor of the applicant, the preliminary
determination of its non-eCistence ceases to have any force and
efect. ;italics supplied<
'a Dista cateorically pronounced that the issuance of a +nal in8unction
renders any Euestion on the preliminary in8unctive order moot and
academic despite the fact that the decision rantin a +nal in8unction is
pendin appeal. Conversely, a decision denyin the applicant-plaintif9s
riht to a +nal in8unction, althouh appealed, renders moot and
academic any ob8ection to the prior dissolution of a writ of preliminary
in8unction.
The petitioner arues that the appellate court erred in not dismissin
the petition for certiorari for non-compliance with the rule on forum
shoppin. @e disaree. Birst, the petitioner improperly raised the
technical ob8ection of non-compliance with 4upreme Court Circular 1o.
F>-%1 by +lin a motion to dismiss the petition for certiorari +led in the
appellate court. This is prohibited by 4ection =, 6ule == of the 6evised
6ules of Civil Procedure which provides that -;I<n petitions
for certiorari before the 4upreme Court and the Court of Appeals, the
:F
provisions of 4ection F, 6ule $=, shall be observed. ,efore ivin due
course thereto, the court may reEuire the respondents to +le their
comment to, and not a motion to dismiss, the petition CCC ;italics
supplied<-. 4econdly, the issue was raised one month after petitioner
had +led her answerQcomment and after private respondent had replied
thereto. 3nder 4ection 1, 6ule 1= of the 6evised 6ules of Civil
Procedure, a motion to dismiss shall be +led within the time for but
before +lin the answer to the complaint or pleadin assertin a claim.
4he therefore could no loner submit a motion to dismiss nor raise
defenses and ob8ections not included in the answerQcomment she had
earlier tendered. Thirdly, substantial 8ustice and eEuity reEuire this
Court not to revive a dissolved writ of in8unction in favor of a party
without any leal riht thereto merely on a technical in+rmity. The
rantin of an in8unctive writ based on a technical round rather than
compliance with the reEuisites for the issuance of the same is contrary
to the primary ob8ective of leal procedure which is to serve as a means
to dispense 8ustice to the deservin party.
The petitioner li!ewise contends that the appellate court unduly
delayed the resolution of her motion for reconsideration. ,ut we +nd
that petitioner contributed to this delay when she +led successive
contentious motions in the same proceedin, the last of which was on
"ctober F&, 1%%0, necessitatin counter-manifestations from private
respondents with the last one bein +led on 1ovember %, 1%%0.
1onetheless, it is well-settled that non-observance of the period for
decidin cases or their incidents does not render such 8udments
inefective or void.
1&
@ith respect to the purported damaes she
sufered due to the alleed delay in resolvin her motion for
reconsideration, we +nd that the said issue has li!ewise been rendered
moot and academic by our rulin that she has no riht over the
trademar! and, conseEuently, to the issuance of a writ of preliminary
in8unction..Aw#i.(nBt
Binally, we rule that the Court of Appeals correctly denied the
petitioner9s several motions for contempt of court. There is nothin
contemptuous about the advertisements complained of which, as
reards the proceedins in CA-I.6. 4P 1o. F&>'0 merely announced in
plain and straihtforward lanuae the promulation of the assailed
?ecision of the appellate court. *oreover, pursuant to 4ection : of 6ule
0% of the 6evised 6ules of Civil Procedure, the said decision nullifyin
the in8unctive writ was immediately eCecutory.
@A)6)B"6), the petition is D!NI!D. The ?ecision and 6esolution of
the Court of Appeals dated *ay F:, 1%%0 and #une 0, 1%%:,
respectively, are hereby AIRM!D. @ith costs aainst the petitioner.
4" "6?)6)?.
:0
+. G.R. No. 1,)8*5 De<ember 1*, )00,
AIR PHI"IPPIN!S CORPORATION, Petitioner,
vs.
P!NNSF!"", INC. 6espondent.
? ) C I 4 I " 1
CHICO-NA(ARIO, J.:
Petitioner Air Philippines Corporation see!s, via the instant Petition for
6eview under 6ule :$ of the 6ules of Court, the nulli+cation of the 1=
Bebruary F''= ?ecision
1
and the F$ *ay F''= 6esolution
F
of the Court
of Appeals in CA-I.6. 4P 1o. >=0F%, which aDrmed the "rder
0
dated 0'
#une F'': of the 6eional Trial Court ;6TC<, *a!ati City, ,ranch =:, in
Civil Case 1o. ''-$=1.
Petitioner Air Philippines Corporation is a domestic corporation enaed
in the business of air transportation services. "n the other hand,
respondent Pennswell, Inc. was orani.ed to enae in the business of
manufacturin and sellin industrial chemicals, solvents, and special
lubricants.
"n various dates, respondent delivered and sold to petitioner sundry
oods in trade, covered by 4ales Invoices 1o. >>:=,
:
%1'$,
$
>%=F,
=
and
>%=0,
&
which correspond to Purchase "rders 1o. =:00, ==>:, ==0: and
==00, respectively. 3nder the contracts, petitionerSs total outstandin
obliation amounted to P::%,>=:.%> with interest at 1:Y per annum
until the amount would be fully paid. Bor failure of the petitioner to
comply with its obliation under said contracts, respondent +led a
Complaint
>
for a 4um of *oney on F> April F''' with the 6TC.
In its Answer,
%
petitioner contended that its refusal to pay was not
without valid and 8usti+able reasons. In particular, petitioner alleed
that it was defrauded in the amount of P$%F,'''.'' by respondent for
its previous sale of four items, covered by Purchase "rder 1o. ==F=.
4aid items were misrepresented by respondent as belonin 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 oods. Petitioner speci+cally identi+ed the items in Euestion, as
follows5
(abelQ?escription Item Amount P.". ?ate
1o.
1. a. Anti-Briction
Bluid
b. )Ccellent 6ust
Corrosion ;fa!e<
*P(-
>''
*P(-
''>
1$0,%:1.
:'
1$$,:%=.
''
$&1:
$>>>
'$QF'Q%%
'=QF'Q%%
F. a. Contact
Irease
b. Connector
Irease ;fa!e<
C"I
ZF
CI
11$,F0=.
''
F0',$1%.
$F
$$:'
=0F&
':QF=Q%%
'>Q'$Q%%
0. a. TriCohtropic
Irease
b. ?i-)lectric
4trenth
Protective
Coatin ;fa!e<
)PC
)PCZF
>1,>&=.%
=
>1,>&=.%
=
:$>F
$::=
'1QF%Q%%
':QF1Q%%
:. a. ?ry (ubricant
b. Anti-4ei.e
Compound ;fa!e<
A4C-)P
A4C-)P
F'''
>&,0:=.$
F
1F:,1'>.
1'
$&1F
:&=0
/
$>%'
'$QF'Q%%
'FQ1=Q%% /
'=QF:Q%%
Accordin to petitioner, respondentSs products, namely )Ccellent 6ust
Corrosion, Connector Irease, )lectric 4trenth Protective Coatin, and
Anti-4ei.e Compound, are identical with its Anti-Briction Bluid, Contact
Irease, ThiCohtropic Irease, and ?ry (ubricant, respectively. Petitioner
asseverated that had respondent been forthriht about the identical
character of the products, it would not have purchased the items
complained of. *oreover, petitioner alleed that when the purported
fraud was discovered, a conference was held between petitioner and
respondent on 10 #anuary F''', whereby the parties areed that
respondent would return to petitioner the amount it previously paid.
Aowever, petitioner was surprised when it received a letter from the
respondent, demandin payment of the amount of P::%,>=:.%:, which
later became the sub8ect of respondentSs Complaint for Collection of a
4um of *oney aainst petitioner.
?urin the pendency of the trial, petitioner +led a *otion to
Compel
1'
respondent to ive a detailed list of the inredients and
chemical components of the followin products, to wit5 ;a< Contact
Irease and Connector IreaseH ;b< ThiCohtropic Irease and ?i-)lectric
4trenth Protective CoatinH and ;c< ?ry (ubricant and Anti-4ei.e
Compound.
11
It appears that petitioner had earlier reEuested the
::
Philippine Institute of Pure and Applied Chemistry ;PIPAC< for the latter
to conduct a comparison of respondentSs oods.
"n 1$ *arch F'':, the 6TC rendered an "rder rantin the petitionerSs
motion. It disposed, thus5
The Court directs Jherein respondentK Pennswell, Inc. to ive Jherein
petitionerK Air Philippines CorporationJ,K a detailed list of the inredients
or chemical components of the followin chemical products5
a. Contact Irease to be compared with Connector IreaseH
b. ThiCohtropic Irease to be compared with ?i-)lectric 4trenth
Protective CoatinH and
c. ?ry (ubricant to be compared with Anti-4ei.e CompoundJ.K
J6espondentK Pennswell, Inc. is iven +fteen ;1$< days from receipt of
this "rder to submit to JpetitionerK Air Philippines Corporation the
chemical components of all the above-mentioned products for chemical
comparisonQanalysis.
1F
6espondent souht reconsideration of the foreoin "rder, contendin
that it cannot be compelled to disclose the chemical components
souht because the matter is con+dential. It arued that what
petitioner endeavored to inEuire upon constituted a trade secret which
respondent cannot be forced to divule. 6espondent maintained that its
products are speciali.ed lubricants, and if their components were
revealed, its business competitors may easily imitate and mar!et the
same types of products, in violation of its proprietary rihts and to its
serious damae and pre8udice.
The 6TC ave credence to respondentSs reasonin, and reversed itself.
It issued an "rder dated 0' #une F'':, +ndin that the chemical
components are respondentSs trade secrets and are privileed in
character. A priori, it rationali.ed5
The 4upreme Court held in the case of Chave. vs. Presidential
Commission on Iood Iovernment, F%% 4C6A &::, p. &=:, that -the
drafters of the Constitution also uneEuivocally aDrmed that aside from
national security matters and intellience information, trade or
industrial secrets ;pursuant to the Intellectual Property Code and other
related laws< as well as ban!in transactions ;pursuant to the 4ecrecy
of ,an! ?eposit Act< are also eCempted from compulsory disclosure.-
Trade secrets may not be the sub8ect of compulsory disclosure. ,y
reason of JtheirK con+dential and privileed character, inredients or
chemical components of the products ordered by this Court to be
disclosed constitute trade secrets lest Jherein respondentK would
eventually be eCposed to unwarranted business competition with others
who may imitate and mar!et the same !inds of products in violation of
JrespondentSsK proprietary rihts. ,ein privileed, the detailed list of
inredients or chemical components may not be the sub8ect of mode of
discovery under 6ule F&, 4ection 1 of the 6ules of Court, which
eCpressly ma!es privileed information an eCception from its
coverae.
10
Allein rave abuse of discretion on the part of the 6TC, petitioner +led
a Petition for Certiorari under 6ule =$ of the 6ules of Court with the
Court of Appeals, which denied the Petition and aDrmed the "rder
dated 0' #une F'': of the 6TC.
The Court of Appeals ruled that to compel respondent to reveal in detail
the list of inredients of its lubricants is to disreard respondentSs rihts
over its trade secrets. It was cateorical in declarin that the chemical
formulation of respondentSs products and their inredients are
embraced within the meanin of -trade secrets.- In disallowin the
disclosure, the Court of Appeals eCpounded, thus5
The 4upreme Court in Iarcia v. ,oard of Investments ;1&& 4C6A 0&:
J1%>%K< held that trade secrets and con+dential, commercial and
+nancial information are eCempt from public scrutiny. This is reiterated
in Chave. v. Presidential Commission on Iood Iovernment ;F%% 4C6A
&:: J1%%>K< where the 4upreme Court enumerated the !inds of
information and transactions that are reconi.ed as restrictions on or
privilees aainst compulsory disclosure. There, the 4upreme Court
eCplicitly stated that5
-The drafters of the Constitution also uneEuivocally aDrmed that, aside
from national security matters and intellience information, trade or
industrial secrets ;pursuant to the Intellectual Property Code and other
related laws< as well as ban!in transactions ;pursuant to the 4ecrecy
of ,an! ?eposits Act< re also eCempt from compulsory disclosure.-
It is thus clear from the foreoin that a party cannot be compelled to
produce, release or disclose documents, papers, or any ob8ect which are
considered trade secrets.
In the instant case, petitioner JAir Philippines CorporationK would have
JrespondentK Pennswell produce a detailed list of inredients or
composition of the latterSs lubricant products so that a chemical
:$
comparison and analysis thereof can be obtained. "n this note, @e
believe and so hold that the inredients or composition of JrespondentK
PennswellSs lubricants are trade secrets which it cannot be compelled to
disclose.
J6espondentK Pennswell has a proprietary or economic riht over the
inredients or components of its lubricant products. The formulation
thereof is not !nown to the eneral public and is peculiar only to
JrespondentK Pennswell. The leitimate and economic interests of
business enterprises in protectin their manufacturin and business
secrets are well-reconi.ed in our system.
J6espondentK Pennswell has a riht to uard its trade secrets,
manufacturin formulas, mar!etin strateies and other con+dential
prorams and information aainst the public. "therwise, such
information can be illeally and unfairly utili.ed by business
competitors who, throuh their access to JrespondentK PennswellSs
business secrets, may use the same for their own private ain and to
the irreparable pre8udice of the latter.
C C C C
In the case before 3s, the alleed trade secrets have a factual basis,
i.e., it comprises of the inredients and formulation of JrespondentK
PennswellSs lubricant products which are un!nown to the public and
peculiar only to Pennswell.
All told, @e +nd no rave abuse of discretion amountin to lac! or
eCcess of 8urisdiction on the part of public respondent #ude in +ndin
that the detailed list of inredients or composition of the sub8ect
lubricant products which petitioner JAir Philippines CorporationK see!s
to be disclosed are trade secrets of JrespondentK PennswellH hence,
privileed aainst compulsory disclosure.
1:
PetitionerSs *otion for 6econsideration was denied.
3nyieldin, petitioner brouht the instant Petition before us, on the sole
issue of5
@A)TA)6 TA) C"36T "B APP)A(4 63()? I1 ACC"6?A1C) @ITA
P6)LAI(I1I (A@4 A1? #36I4P63?)1C) @A)1 IT 3PA)(? TA) 63(I1I
"B TA) T6IA( C"36T TAAT TA) CA)*ICA( C"*P"1)1T4 "6
I1I6)?I)1T4 "B 6)4P"1?)1TS4 P6"?3CT4 A6) T6A?) 4)C6)T4 "6
I1?34T6IA( 4)C6)T4 TAAT A6) 1"T 43,#)CT T" C"*P3(4"62
?I4C("436).
1$
Petitioner see!s to convince this Court that it has a riht to obtain the
chemical composition and inredients of respondentSs 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. 6elyin
on 4ection 1, 6ule F& of the 6ules of Court, petitioner arues that the
use of modes of discovery operates with desirable PeCibility under the
discretionary control of the trial court. Burthermore, petitioner posits
that its reEuest is not done in bad faith or in any manner as to annoy,
embarrass, or oppress respondent.
A trade secret is de+ned as a plan or process, tool, mechanism or
compound !nown only to its owner and those of his employees to whom
it is necessary to con+de it.
1=
The de+nition also eCtends to a secret
formula or process not patented, but !nown only to certain individuals
usin it in compoundin some article of trade havin a commercial
value.
1&
A trade secret may consist of any formula, pattern, device, or
compilation of information that5 ;1< is used in one9s businessH and ;F<
ives the employer an opportunity to obtain an advantae over
competitors who do not possess the information.
1>
Ienerally, a trade
secret is a process or device intended for continuous use in the
operation of the business, for eCample, a machine or formula, but can
be a price list or cataloue or speciali.ed customer list.
1%
It is
indubitable that trade secrets constitute proprietary rihts. The
inventor, discoverer, or possessor of a trade secret or similar innovation
has rihts therein which may be treated as property, and ordinarily an
in8unction will be ranted to prevent the disclosure of the trade secret
by one who obtained the information -in con+dence- or throuh a
-con+dential relationship.-
F'
American 8urisprudence has utili.ed the
followin factors
F1
to determine if an information is a trade secret, to
wit5
;1< the eCtent to which the information is !nown outside of the
employer9s businessH
;F< the eCtent to which the information is !nown by employees
and others involved in the businessH
;0< the eCtent of measures ta!en by the employer to uard the
secrecy of the informationH
;:< the value of the information to the employer and to
competitorsH
;$< the amount of efort or money eCpended by the company in
developin the informationH and
:=
;=< the eCtent to which the information could be easily or readily
obtained throuh an independent source.
FF
In Cocoland ?evelopment Corporation v. 1ational (abor 6elations
Commission,
F0
the issue was the leality of an employeeSs termination
on the round of unauthori.ed disclosure of trade secrets. The Court
laid down the rule that any determination by manaement as to the
con+dential nature of technoloies, processes, formulae or other so-
called trade secrets must have a substantial factual basis which can
pass 8udicial scrutiny. The Court re8ected the employerSs na!ed
contention that its own determination as to what constitutes a trade
secret should be bindin and conclusive upon the 1(6C. As a caveat,
the Court said that to rule otherwise would be to permit an employer to
label almost anythin a trade secret, and thereby create a weapon with
which heQit may arbitrarily dismiss an employee on the preteCt that the
latter somehow disclosed a trade secret, even if in fact there be none at
all to spea! of.
F:
Aence, in Cocoland, the parameters in the
determination of trade secrets were set to be such substantial factual
basis that can withstand 8udicial scrutiny.
The chemical composition, formulation, and inredients of respondentSs
special lubricants are trade secrets within the contemplation of the law.
6espondent was established to enae in the business of eneral
manufacturin and sellin of, and to deal in, distribute, sell or otherwise
dispose of oods, wares, merchandise, products, includin but not
limited to industrial chemicals, solvents, lubricants, acids, al!alies,
salts, paints, oils, varnishes, colors, piments and similar preparations,
amon others. It is unmista!able to our minds that the manufacture and
production of respondentSs products proceed from a formulation of a
secret list of inredients. In the creation of its lubricants, respondent
eCpended eforts, s!ills, research, and resources. @hat it had achieved
by virtue of its investments may not be wrested from respondent on the
mere preteCt that it is necessary for petitionerSs defense aainst a
collection for a sum of money. ,y and lare, the value of the
information to respondent is crystal clear. The inredients constitute the
very fabric of respondentSs production and business. 1o doubt, the
information is also valuable to respondentSs competitors. To compel its
disclosure is to cripple respondentSs business, and to place it at an
undue disadvantae. If the chemical composition of respondentSs
lubricants are opened to public scrutiny, it will stand to lose the
bac!bone on which its business is founded. This would result in nothin
less than the probable demise of respondentSs business. 6espondentSs
proprietary interest over the inredients which it had developed and
eCpended money and efort on is incontrovertible. "ur conclusion is
that the detailed inredients souht to be revealed have a commercial
value to respondent. 1ot only do we ac!nowlede the fact that the
information rants it a competitive advantaeH we also +nd that there is
clearly a larin intent on the part of respondent to !eep the
information con+dential and not available to the pryin public.
@e now ta!e a loo! at 4ection 1, 6ule F& of the 6ules of Court, which
permits parties to inspect documents or thins upon a showin of ood
cause before the court in which an action is pendin. Its entire provision
reads5
4)CTI"1 1. *otion for production or inspection order. W 3pon motion of
any party showin ood cause therefore, the court in which an action is
pendin may ;a< order any party to produce and permit the inspection
and copyin or photoraphin, by or on behalf of the movin party, of
any desinated documents, papers, boo!s, accounts, letters,
photoraphs, ob8ects or tanible thins, not privileed, which constitute
or contain evidence material to any matter involved in the action and
which are in his possession, custody or controlH or ;b< order any party to
permit entry upon desinated land or other property in his possession
or control for the purpose of inspectin, measurin, surveyin, or
photoraphin the property or any desinated relevant ob8ect or
operation thereon. The order shall specify the time, place and manner
of ma!in the inspection and ta!in copies and photoraphs, and may
prescribe such terms and conditions as are 8ust.
A more than cursory lance at the above teCt would show that the
production or inspection of documents or thins as a mode of discovery
sanctioned by the 6ules of Court may be availed of by any party upon a
showin of ood cause therefor before the court in which an action is
pendin. The court may order any party5 a< to produce and permit the
inspection and copyin or photoraphin of any desinated documents,
papers, boo!s, accounts, letters, photoraphs, ob8ects or tanible
thins, which are not privileedH
F$
which constitute or contain evidence
material to any matter involved in the actionH and which are in his
possession, custody or controlH or b< to permit entry upon desinated
land or other property in his possession or control for the purpose of
inspectin, measurin, surveyin, or photoraphin the property or any
desinated relevant ob8ect or operation thereon.
6ule F& sets an uneEuivocal proviso that the documents, papers, boo!s,
accounts, letters, photoraphs, ob8ects or tanible thins that may be
produced and inspected should not be privileed.
F=
The documents
must not be privileed aainst disclosure.
F&
"n the round of public
policy, the rules providin for production and inspection of boo!s and
papers do not authori.e the production or inspection of privileed
matterH that is, boo!s and papers which, because of their con+dential
and privileed character, could not be received in evidence.
F>
4uch a
condition is in addition to the reEuisite that the items be speci+cally
:&
described, and must constitute or contain evidence material to any
matter involved in the action and which are in the partySs possession,
custody or control.
4ection F:
F%
of 6ule 10' draws the types of disEuali+cation by reason of
privileed communication, to wit5 ;a< communication between husband
and wifeH ;b< communication between attorney and clientH ;c<
communication between physician and patientH ;d< communication
between priest and penitentH and ;e< public oDcers and public interest.
There are, however, other privileed matters that are not mentioned by
6ule 10'. Amon them are the followin5 ;a< editors may not be
compelled to disclose the source of published newsH ;b< voters may not
be compelled to disclose for whom they votedH ;c< trade secretsH ;d<
information contained in taC census returnsH and ;d< ban! deposits.
0'
@e, thus, rule aainst the petitioner. @e aDrm the rulin of the Court of
Appeals which upheld the +ndin of the 6TC that there is substantial
basis for respondent to see! protection of the law for its proprietary
rihts over the detailed chemical composition of its products.
That trade secrets are of a privileed nature is beyond Euibble. The
protection that this 8urisdiction afords to trade secrets is evident in our
laws. The Interim 6ules of Procedure on Iovernment 6ehabilitation,
efective 1$ ?ecember F''', which applies to5 ;1< petitions for
rehabilitation +led by corporations, partnerships, and associations
pursuant to Presidential ?ecree 1o. %'F-A,
01
as amendedH and ;F< cases
for rehabilitation transferred from the 4ecurities and )Cchane
Commission to the 6TCs pursuant to 6epublic Act 1o. >&%%, otherwise
!nown as The 4ecurities 6eulation Code, eCpressly provides that the
court may issue an order to protect trade secrets or other con+dential
research, development, or commercial information belonin to the
debtor.
0F
*oreover, the 4ecurities 6eulation Code is eCplicit that the
4ecurities and )Cchane Commission is not reEuired or authori.ed to
reEuire the revelation of trade secrets or processes in any application,
report or document +led with the Commission.
00
This con+dentiality is
made paramount as a limitation to the riht of any member of the
eneral public, upon reEuest, to have access to all information +led with
the Commission.
0:
Burthermore, the 6evised Penal Code endows a cloa! of protection to
trade secrets under the followin articles5
Art. F%1. Revealin+ secrets wit# abuse o$ oEce. G The penalty of
arresto mayor and a +ne not eCceedin $'' pesos shall be imposed
upon any manaer, employee or servant who, in such capacity, shall
learn the secrets of his principal or master and shall reveal such
secrets.
Art. F%F. Revelation o$ industrial secrets( G The penalty of prision
correccional in its minimum and medium periods and a +ne not
eCceedin $'' pesos shall be imposed upon the person in chare,
employee or wor!man of any manufacturin or industrial establishment
who, to the pre8udice of the owner thereof, shall reveal the secrets of
the industry of
the latter.
4imilarly, 6epublic Act 1o. >:F:, otherwise !nown as the 1ational
Internal 6evenue Code of 1%%&, has a restrictive provision on trade
secrets, penali.in the revelation thereof by internal revenue oDcers or
employees, to wit5
4)CTI"1 F&>. Procurin 3nlawful ?ivulence of Trade 4ecrets. - Any
person who causes or procures an oDcer or employee of the ,ureau of
Internal 6evenue to divule any con+dential information reardin the
business, income or inheritance of any taCpayer, !nowlede of which
was acEuired by him in the dischare of his oDcial duties, and which it
is unlawful for him to reveal, and any person who publishes or prints in
any manner whatever, not provided by law, any income, pro+t, loss or
eCpenditure appearin in any income taC return, shall be punished by a
+ne of not more than two thousand pesos ;PF,'''<, or sufer
imprisonment of not less than siC ;=< months nor more than +ve ;$<
years, or both.
6epublic Act 1o. =%=%, or the ToCic 4ubstances and Aa.ardous and
1uclear @astes Control Act of 1%%', enacted to implement the policy of
the state to reulate, restrict or prohibit the importation, manufacture,
processin, sale, distribution, use and disposal of chemical substances
and miCtures that present unreasonable ris! andQor in8ury to health or
the environment, also contains a provision &'#& 1:m:&8 &'e r:0'& oD
&'e 9=b1:< &o '#ve #<<e88 &o re<or%8, re9or&8 or :$Dorm#&:o$
<o$<er$:$0 <'em:<#1 8=b8&#$<e8 #$% m:C&=re8 :$<1=%:$0 8#De&B
%#&# 8=bm:&&e% #$% %#&# o$ em:88:o$ or %:8<'#r0e :$&o &'e
e$v:ro$me$&, :D &'e m#&&er :8 <o$@%e$&:#1 8=<' &'#& :& ;o=1%
%:v=10e &r#%e 8e<re&8, 9ro%=<&:o$ or 8#1e8 @0=re8K or me&'o%8,
9ro%=<&:o$ or 9ro<e88e8 =$:E=e &o 8=<' m#$=D#<&=rer,
9ro<e88or or %:8&r:b=&orK or ;o=1% o&'er;:8e &e$% &o #Ae<&
#%ver8e1B &'e <om9e&:&:ve 9o8:&:o$ oD 8=<' m#$=D#<&=rer,
9ro<e88or or %:8&r:b=&or.
0$
Clearly, in accordance with our statutory laws, this Court has declared
that intellectual and industrial property rihts cases are not simple
:>
property cases.
0=
@ithout limitin such industrial property rihts to
trademar!s and trade names, this Court has ruled that all areements
concernin intellectual property are intimately connected with
economic development.
0&
The protection of industrial property
encouraes investments in new ideas and inventions and stimulates
creative eforts for the satisfaction of human needs. It speeds up
transfer of technoloy and industriali.ation, and thereby brin about
social and economic proress.
0>
Lerily, the protection of industrial
secrets is ineCtricably lin!ed to the advancement of our economy and
fosters healthy competition in trade.
#urisprudence has consistently ac!nowleded the private character of
trade secrets..Aw#i. There is a privilee not to disclose oneSs trade
secrets.
0%
Boremost, this Court has declared that trade secrets and
ban!in transactions are amon the reconi.ed restrictions to the riht
of the people to information as embodied in the Constitution.
:'
@e said
that the drafters of the Constitution also uneEuivocally aDrmed that,
aside from national security matters and intellience information, trade
or industrial secrets ;pursuant to the Intellectual Property Code and
other related laws< as well as ban!in transactions ;pursuant to the
4ecrecy of ,an! ?eposits Act<, are also eCempted from compulsory
disclosure.
:1
4ini+cantly, our cases on labor are replete with eCamples of a
protectionist stance towards the trade secrets of employers. Bor
instance, this Court upheld the validity of the policy of a pharmaceutical
company prohibitin its employees from marryin employees of any
competitor company, on the rationali.ation that the company has a
riht to uard its trade secrets, manufacturin formulas, mar!etin
strateies and other con+dential prorams and information from
competitors.
:F
1otably, it was in a labor-related case that this Court
made a star! rulin on the proper determination of trade secrets.
In the case at bar, petitioner cannot rely on 4ection &&
:0
of 6epublic Act
&0%:, or the Consumer Act of the Philippines, in order to compel
respondent to reveal the chemical components of its products. @hile it
is true that all consumer products domestically sold, whether
manufactured locally or imported, shall indicate their eneral ma!e or
active inredients in their respective labels of pac!ain, the law does
not apply to respondent. 6espondentSs speciali.ed lubricants -- namely,
Contact Irease, Connector Irease, ThiCohtropic Irease, ?i-)lectric
4trenth Protective Coatin, ?ry (ubricant and Anti-4ei.e Compound --
are not consumer products. -Consumer products,- as it is de+ned in
Article :;E<,
::
refers to oods, services and credits, debts or obliations
which are primarily for personal, family, household or aricultural
purposes, which shall include, but not be limited to, food, drus,
cosmetics, and devices. This is not the nature of respondentSs products.
Its products are not intended for personal, family, household or
aricultural purposes. 6ather, they are for industrial use, speci+cally for
the use of aircraft propellers and enines.
PetitionerSs arument that 6epublic Act 1o. >F'0, or the 4pecial (aw on
Counterfeit ?rus, reEuires the disclosure of the active inredients of a
dru is also on faulty round.
:$
6espondentSs products are outside the
scope of the cited law. They do not come within the purview of a
dru
:=
which, as de+ned therein, refers to any chemical compound or
bioloical substance, other than food, that is intended for use in the
treatment, prevention or dianosis of disease in man or animals. Aain,
such are not the characteristics of respondentSs products.
@hat is clear from the factual +ndins of the 6TC and the Court of
Appeals is that the chemical formulation of respondentSs products is not
!nown to the eneral public and is uniEue only to it. ,oth courts
uniformly ruled that these inredients are not within the !nowlede of
the public. 4ince such factual +ndins are enerally not reviewable by
this Court, it is not duty-bound to analy.e and weih all over aain the
evidence already considered in the proceedins below.
:&
@e need not
delve into the factual bases of such +ndins as Euestions of fact are
beyond the pale of 6ule :$ of the 6ules of Court. Bactual +ndins of the
trial court when aDrmed by the Court of Appeals, are bindin and
conclusive on the 4upreme Court.
:>
@e do not +nd merit or applicability in petitionerSs invocation of 4ection
1F
:%
of the ToCic 4ubstances and Aa.ardous and 1uclear @astes Control
Act of 1%%', which rants the public access to records, reports or
information concernin chemical substances and miCtures, includin
safety data submitted, and data on emission or dischare into the
environment( To re:&er#&e, Se<&:o$ 1)
$'
of said Act deems as
con+dential matters, which may not be made public, those that would
divule trade secrets, includin production or sales +ures or methodsH
production or processes uniEue to such manufacturer, processor or
distributor, or would otherwise tend to afect adversely the competitive
position of such manufacturer, processor or distributor. It is true that
under the same Act, the ?epartment of )nvironment and 1atural
6esources may release informationH however, the clear import of the
law is that said authority is limited by the riht to con+dentiality of the
manufacturer, processor or distributor, which information may be
released only to a medical research or scienti+c institution where the
information is needed for the purpose of medical dianosis or treatment
of a person eCposed to the chemical substance or miCture. The riht to
con+dentiality is reconi.ed by said Act as primordial. Petitioner has not
:%
made the slihtest attempt to show that these circumstances are
availin in the case at bar.
Indeed, the privilee is not absoluteH the trial court may compel
disclosure where it is indispensable for doin 8ustice.
$1
@e do not,
however, +nd reason to eCcept respondentSs trade secrets from the
application of the rule on privilee. The revelation of respondentSs trade
secrets serves no better purpose to the disposition of the main case
pendin with the 6TC, which is on the collection of a sum of money. As
can be leaned from the facts, petitioner received respondentSs oods
in trade in the normal course of business. To be sure, there are defenses
under the laws of contracts and sales available to petitioner. "n the
other hand, the reater interest of 8ustice ouht to favor respondent as
the holder of trade secrets. If we were to weih the conPictin interests
between the parties, we rule in favor of the reater interest of
respondent. Trade secrets should receive reater protection from
discovery, because they derive economic value from bein enerally
un!nown and not readily ascertainable by the public.
$F
To the mind of
this Court, petitioner was not able to show a compellin reason for us to
lift the veil of con+dentiality which shields respondentSs trade secrets.
FH!R!OR!, the Petition is D!NI!D. The ?ecision dated 1= Bebruary
F''=, and the 6esolution dated F$ *ay F''=, of the Court of Appeals in
CA-I.6. 4P 1o. >=0F% are ABBI6*)?. 1o costs.
4" "6?)6)?.
,. G.R. No8. 1+0054-55 J=1B )1, )004
MANO"O P. SAMSON, petitioner,
vs.
HON. R!6NA"DO B. DAFA6, :$ ':8 <#9#<:&B #8 Pre8:%:$0 J=%0e,
Re0:o$#1 Tr:#1 Co=r& oD 2=e>o$ C:&B, Br#$<' 90, P!OP"! O TH!
PHI"IPPIN!S #$% CAT!RPI""AR, INC., respondents.
? ) C I 4 I " 1
6NAR!S-SANTIAGO, J.7
Assailed in this petition for certiorari is the *arch F=, F''0 "rder
1
of the
6eional Trial Court of Oue.on City, ,ranch %', which denied
petitionerSs W ;1< motion to Euash the informationH and ;F< motion for
reconsideration of the Auust %, F''F "rder denyin his motion to
suspend the arrainment and other proceedins in Criminal Case 1os.
O-'F-1'>':0-::. Petitioner also Euestioned its Auust $, F''0
"rder
F
which denied his motion for reconsideration.
The undisputed facts show that on *arch &, F''F, two informations for
unfair competition under 4ection 1=>.0 ;a<, in relation to 4ection 1&', of
the Intellectual Property Code ;6epublic Act 1o. >F%0<, similarly worded
save for the dates and places of commission, were +led aainst
petitioner *anolo P. 4amson, the reistered owner of ITTI 4hoes. The
accusatory portion of said informations read5
$'
That on or about the +rst wee! of 1ovember 1%%% and sometime
prior or subseEuent thereto, in Oue.on City, Philippines, and
within the 8urisdiction of this Aonorable Court, above-named
accused, ownerQproprietor of ITTI 4hoesQ*ano 4hoes
*anufactuirn Corporation located at 6obinsonSs Ialleria, )?4A
corner "rtias Avenue, Oue.on City, did then and there willfully,
unlawfully and feloniously distribute, sell andQor ofer for sale
CAT)6PI((A6 products such as footwear, arments, clothin,
bas, accessories and paraphernalia which are closely identical
to andQor colorable imitations of the authentic Caterpillar
products and li!ewise usin trademar!s, symbols andQor desins
as would cause confusion, mista!e or deception on the part of
the buyin public to the damae and pre8udice of CAT)6PI((A6,
I1C., the prior adopter, user and owner of the followin
internationally5 -CAT)6PI((A6-, -CAT-, -CAT)6PI((A6 / ?)4II1-,
-CAT A1? ?)4II1-, -@A(NI1I *ACAI1)4- and -T6ACN-T2P)
T6ACT"6 / ?)4II1.-
C"1T6A62 T" (A@.
0
"n April 1%, F''F, petitioner +led a motion to suspend arrainment and
other proceedins in view of the eCistence of an alleed pre8udicial
Euestion involved in Civil Case 1o. O-''-:1::= for unfair competition
pendin with the same branchH and also in view of the pendency of a
petition for review +led with the 4ecretary of #ustice assailin the Chief
4tate ProsecutorSs resolution +ndin probable cause to chare
petitioner with unfair competition. In an "rder dated Auust %, F''F,
the trial court denied the motion to suspend arrainment and other
proceedins.
"n Auust F', F''F, petitioner +led a twin motion to Euash the
informations and motion for reconsideration of the order denyin
motion to suspend, this time challenin the 8urisdiction of the trial
court over the ofense chared. Ae contended that since under 4ection
1&' of 6.A. 1o. >F%0, the penalty: of imprisonment for unfair
competition does not eCceed siC years, the ofense is coni.able by the
*unicipal Trial Courts and not by the 6eional Trial Court, per 6.A. 1o.
&=%1.
In its assailed *arch F=, F''0 "rder, the trial court denied petitionerSs
twin motions.= A motion for reconsideration thereof was li!ewise denied
on Auust $, F''0.
Aence, the instant petition allein that respondent #ude ravely
abused its discretion in issuin the assailed orders.
The issues posed for resolution are W ;1< @hich court has 8urisdiction
over criminal and civil cases for violation of intellectual property rihtsR
;F< ?id the respondent #ude ravely abuse his discretion in refusin to
suspend the arrainment and other proceedins in Criminal Case 1os.
O-'F-1'>':0-:: on the round of W ;a< the eCistence of a pre8udicial
EuestionH and ;b< the pendency of a petition for review with the
4ecretary of #ustice on the +ndin of probable cause for unfair
competitionR
3nder 4ection 1&' of 6.A. 1o. >F%0, which too! efect on #anuary 1,
1%%>, the criminal penalty for infrinement of reistered mar!s, unfair
competition, false desination of oriin and false description or
representation, is imprisonment from F to $ years and a +ne ranin
from Bifty Thousand Pesos to Two Aundred Thousand Pesos, to wit5
4)C. 1&'. ,enalties. W Independent of the civil and administrative
sanctions imposed by law, a criminal penalty of imprisonment
from two ;F< years to +ve ;$< years and a +ne ranin from Bifty
thousand pesos ;P$','''.''< to Two hundred thousand pesos
;PF'','''.''<, shall be imposed on any person who is found
uilty of committin any of the acts mentioned in 4ection 1$$
JInfrinementK, 4ection 1=> J3nfair CompetitionK and 4ection
1=%.1 JBalse ?esination of "riin and Balse ?escription or
6epresentationK.
Corollarily, 4ection 1=0 of the same Code states that actions ;includin
criminal and civil< under 4ections 1$', 1$$, 1=:, 1==, 1=&, 1=> and 1=%
shall be brouht before the proper courts with appropriate 8urisdiction
under eCistin laws, thus W
4)C. 1=0. Jurisdiction o$ Court. W All actions under 4ections 1$',
1$$, 1=: and 1== to 1=% shall be brouht before the 9ro9er
<o=r&8 ;:&' #99ro9r:#&e L=r:8%:<&:o$ =$%er eC:8&:$0 1#;8.
;)mphasis supplied<
The eCistin law referred to in the foreoin provision is 4ection F& of
6.A. 1o. 1== ;The Trademar! (aw< which provides that 8urisdiction over
cases for infrinement of reistered mar!s, unfair competition, false
desination of oriin and false description or representation, is loded
with the Court of Birst Instance ;now 6eional Trial Court< W
4)C. F&. Jurisdiction o$ Court o$ )irst Instance. W All actions under
this Chapter JL W InfrinementK and Chapters LI J3nfair
CompetitionK and LII JBalse ?esination of "riin and Balse
?escription or 6epresentationK, hereof shall be brouht before
the Court of Birst Instance.
$1
@e +nd no merit in the claim of petitioner that 6.A. 1o. 1== was
eCpressly repealed by 6.A. 1o. >F%0. The repealin clause of 6.A. 1o.
>F%0, reads W
4)C. F0%. Reeals. W F0%.1. All Acts and 9#r&8 oD
A<&8 :$<o$8:8&e$& 'ere;:&', more particularly 6epublic Act
1o. 1=$, as amendedH Re9=b1:< A<& No. 1++, as amendedH and
Articles 1>> and 1>% of the 6evised Penal CodeH Presidential
?ecree 1o. :%, includin Presidential ?ecree 1o. F>$, as
amended, are hereby repealed. ;)mphasis added<
1otably, the aforeEuoted clause did not eCpressly repeal 6.A. 1o. 1== in
its entirety, otherwise, it would not have used the phrases -parts of
Acts- and -inconsistent herewithH- and it would have simply stated
-6epublic Act 1o. 1=$, as amendedH 6epublic Act 1o. 1==, as amendedH
and Articles 1>> and 1>% of the 6evised Penal CodeH Presidential ?ecree
1o. :%, includin Presidential ?ecree 1o. F>$, as amended are hereby
repealed.- It would have removed all doubts that said speci+c laws had
been rendered without force and efect. The use of the phrases -parts of
Acts- and -inconsistent herewith- only means that the repeal pertains
only to provisions which are repunant or not susceptible of
harmoni.ation with 6.A. 1o. >F%0.= 4ection F& of 6.A. 1o. 1==, however,
is consistent and in harmony with 4ection 1=0 of 6.A. 1o. >F%0. Aad
6.A. 1o. >F%0 intended to vest 8urisdiction over violations of intellectual
property rihts with the *etropolitan Trial Courts, it would have
eCpressly stated so under 4ection 1=0 thereof.
*oreover, the settled rule in statutory construction is that in case of
conPict between a eneral law and a special law, the latter must
prevail. #urisdiction conferred by a special law to 6eional Trial Courts
must prevail over that ranted by a eneral law to *unicipal Trial
Courts.&
In the case at bar, 6.A. 1o. >F%0 and 6.A. 1o. 1== are special
laws> conferrin 8urisdiction over violations of intellectual property
rihts to the 6eional Trial Court. They should therefore prevail over
6.A. 1o. &=%1, which is a eneral law.% Aence, 8urisdiction over the
instant criminal case for unfair competition is properly loded with the
6eional Trial Court even if the penalty therefor is imprisonment of less
than = years, or from F to $ years and a +ne ranin from P$','''.'' to
PF'','''.''.
In fact, to implement and ensure the speedy disposition of cases
involvin violations of intellectual property rihts under 6.A. 1o. >F%0,
the Court issued A.*. 1o. 'F-1-11-4C dated Bebruary 1%, F''F
desinatin certain 6eional Trial Courts as Intellectual Property Courts.
"n #une 1&, F''0, the Court further issued a 6esolution consolidatin
8urisdiction to hear and decide Intellectual Property Code and 4ecurities
and )Cchane Commission cases in speci+c 6eional Trial Courts
desinated as 4pecial Commercial Courts.
The case of 3iruri v( Court o$ Aeals,1' invo!ed by petitioner +nds no
application in the present case. 1owhere in 3iruri did we state
that Se<&:o$ ), of 6.A. 1o. 1== was repealed by 6.A. 1o. >F%0. 1either
did we ma!e a cateorical rulin therein that 8urisdiction over cases for
violation of intellectual property rihts is loded with the *unicipal Trial
Courts. The passin remar! in 3iruri on the repeal of 6.A. 1o. 1== by
6.A. 1o. >F%0 was merely a bac!rounder to the enactment of the
present Intellectual Property Code and cannot thus be construed as a
8urisdictional pronouncement in cases for violation of intellectual
property rihts.
Anent the second issue, petitioner failed to substantiate his claim that
there was a pre8udicial Euestion. In his petition, he prayed for the
reversal of the *arch F=, F''0 order which sustained the denial of his
motion to suspend arrainment and other proceedins in Criminal Case
1os. O-'F-1'>':0-::. Bor un!nown reasons, however, he made no
discussion in support of said prayer in his petition and reply to
comment. 1either did he attach a copy of the complaint in Civil Case
1o. O-''-:1::= nor Euote the pertinent portion thereof to prove the
eCistence of a pre8udicial Euestion.
At any rate, there is no pre8udicial Euestion if the civil and the criminal
action can, accordin to law, proceed independently of each
other.11 3nder 6ule 111, 4ection 0 of the 6evised 6ules on Criminal
Procedure, in the cases provided in Articles 0F, 00, 0: and F1&= of the
Civil Code, the independent civil action may be brouht by the ofended
party. It shall proceed independently of the criminal action and shall
reEuire only a preponderance of evidence.
In the case at bar, the common element in the acts constitutin unfair
competition under 4ection 1=> of 6.A. 1o. >F%0 is fraud.1F Pursuant to
Article 00 of the Civil Code, in cases of defamation, Dr#=%, and physical
in8uries, a civil action for damaes, entirely separate and distinct from
the criminal action, may be brouht by the in8ured party. Aence, Civil
Case 1o. O-''-:1::=, which as admitted10 by private respondent also
relate to unfair competition, is an independent civil action under Article
00 of the Civil Code. As such, it will not operate as a pre8udicial Euestion
that will 8ustify the suspension of the criminal cases at bar.
4ection 11 ;c<, 6ule 11= of the 6evised 6ules on Criminal Procedure
provides W
$F
4)C. 11. Susension o$ arrai+nment. W 3pon motion by the
proper party, the arrainment shall be suspended in the
followin cases W
C C C C C C C C C
;c< A petition for review of the resolution of the prosecutor is
pendin at either the ?epartment of #ustice, or the "Dce of the
PresidentH Provided, that the period of suspension shall not
eCceed siCty ;='< days counted from the +lin of the petition
with the reviewin oDce.
@hile the pendency of a petition for review is a round for suspension
of the arrainment, the aforecited provision limits the deferment of the
arrainment to a period of =' days rec!oned from the +lin of the
petition with the reviewin oDce. It follows, therefore, that after the
eCpiration of said period, the trial court is bound to arrain the accused
or to deny the motion to defer arrainment.
In the instant case, petitioner failed to establish that respondent #ude
abused his discretion in denyin his motion to suspend. Ais pleadins
and anneCes submitted before the Court do not show the date of +lin
of the petition for review with the 4ecretary of #ustice.1: *oreover, the
"rder dated Auust %, F''F denyin his motion to suspend was not
appended to the petition. Ae thus failed to dischare the burden of
provin that he was entitled to a suspension of his arrainment and
that the Euestioned orders are contrary to 4ection 11 ;c<, 6ule 11= of
the 6evised 6ules on Criminal Procedure. Indeed, the ae-old but
familiar rule is that he who allees must prove his alleations.
In sum, the dismissal of the petition is proper considerin that petitioner
has not established that the trial court committed rave abuse of
discretion. 4o also, his failure to attach documents relevant to his
alleations warrants the dismissal of the petition, pursuant to 4ection 0,
6ule := of the 6ules of Civil Procedure, which states5
4)C. 0. #ontents and fling of petition$ e%ect of non&
compliance with re'uirements. G The petition shall contain
the full names and actual addresses of all the petitioners and
respondents, a concise statement of the matters involved, the
factual bac!round of the case, and the rounds relied upon for
the relief prayed for.
It shall be +led in seven ;&< clearly leible copies toether with
proof of service thereof on the respondent with the oriinal copy
intended for the court indicated as such by the petitioner, #$%
8'#11 be #<<om9#$:e% bB # <1e#r1B 1e0:b1e %=91:<#&e
or:0:$#1 or <er&:@e% &r=e <o9B oD &'e L=%0me$&, or%er,
re8o1=&:o$, or r=1:$0 8=bLe<& &'ereoD, 8=<' m#&er:#1
9or&:o$8 oD &'e re<or% #8 #re reDerre% &o &'ere:$, #$%
o&'er %o<=me$&8 re1ev#$& or 9er&:$e$& &'ere&o.
C C C C C C C C C
T'e D#:1=re oD &'e 9e&:&:o$er &o <om91B ;:&' #$B oD &'e
Dore0o:$0 reE=:reme$&8 8'#11 be 8=M<:e$& 0ro=$% Dor &'e
%:8m:88#1 oD &'e 9e&:&:o$. ;)mphasis added<
FH!R!OR!, in view of all the foreoin, the petition is dismissed.
SO ORD!R!D.
8. G.R. No. 1+1)95 J=$e )9, )005
J!SSI! G. CHING, petitioner,
vs.
FI""IAM M. SA"INAS, SR., FI""IAM M. SA"INAS, JR., JOS!PHIN!
". SA"INAS, J!NNI!R 6. SA"INAS, A"ONTO SO"AIMAN SA""!,
$0
JOHN !RIC I. SA"INAS, NO!" M. 6ABUT .Bo#r% oD D:re<&or8 #$%
OM<er8 oD FI"AFAR! PRODUCT CORPORATION/, respondents.
? ) C I 4 I " 1
CA""!JO, SR., J.:
This petition for review on certiorari assails the ?ecision
1
and
6esolution
F
of the Court of Appeals ;CA< in CA-I.6. 4P 1o. &':11
aDrmin the #anuary 0, F''F and Bebruary 1:, F''F "rders
0
of the
6eional Trial Court ;6TC< of *anila, ,ranch 1, which Euashed and set
aside 4earch @arrant 1os. '1-F:'1 and '1-F:'F ranted in favor of
petitioner #essie I. Chin.
#essie I. Chin is the owner and eneral manaer of #eshicris
*anufacturin Co., the ma!er and manufacturer of a 3tility *odel,
described as -(eaf 4prin )ye ,ushin for Automobile- made up of
plastic.
"n 4eptember :, F''1, Chin and #oseph 2u were issued by the
1ational (ibrary Certi+cates of Copyriht 6eistration and ?eposit of
the said wor! described therein as -(eaf 4prin )ye ,ushin for
Automobile.-
:
"n 4eptember F', F''1, Chin reEuested the 1ational ,ureau of
Investiation ;1,I< for policeQinvestiative assistance for the
apprehension and prosecution of illeal manufacturers, producers
andQor distributors of the wor!s.
$
After due investiation, the 1,I +led applications for search warrants in
the 6TC of *anila aainst @illiam 4alinas, 4r. and the oDcers and
members of the ,oard of ?irectors of @ilaware Product Corporation. It
was alleed that the respondents therein reproduced and distributed
the said models penali.ed under 4ections 1&&.1 and 1&&.0 of 6epublic
Act ;6.A.< 1o. >F%0. The applications souht the sei.ure of the followin5
a.< 3ndetermined Euantity of (eaf sprin eye bushin for
automobile that are made up of plastic polypropyleneH
b.< 3ndetermined Euantity of (eaf sprin eye bushin for
automobile that are made up of polyvinyl chloride plasticH
c.< 3ndetermined Euantity of Lehicle bearin cushion that is
made up of polyvinyl chloride plasticH
d.< 3ndetermined Euantity of ?ies and 8is, patterns and Pas!s
used in the manufactureQfabrication of items a to dH
e.< )vidences of sale which include delivery receipts, invoices
and oDcial receipts.
=
The 6TC ranted the application and issued 4earch @arrant 1os. '1-
F:'1 and '1-F:'F for the sei.ure of the aforecited articles.
&
In the
inventory submitted by the 1,I aent, it appears that the followin
articlesQitems were sei.ed based on the search warrants5
(eaf 4prin eye bushin
a< Plastic Polypropylene
- C1%' F& [
- CF:' rear :' [
- CF:' front :1 [ ,AI 1
b< Polyvinyl Chloride Plastic
- C1%' 10 [
c< Lehicle bearin cushion
- center bearin cushion 11 [
,udder for C1%' mold > [
?iesel *old
a< *old for sprin eye bushin rear 1 set
b< *old for sprin eye bushin front 1 set
c< *old for sprin eye bushin for C1%' 1 set
d< *old for CF:' rear 1 piece of the set
e< *old for sprin eye bushin for (0'' F sets
$:
f< *old for leaf sprin eye bushin C1%' with metal 1 set
< *old for vehicle bearin cushion 1 set
>
The respondents +led a motion to Euash the search warrants on the
followin rounds5
F. The copyriht reistrations were issued in violation of the Intellectual
Property Code on the round that5
a< the sub8ect matter of the reistrations are not artistic or
literaryH
b< the sub8ect matter of the reistrations are spare parts of
automobiles meanin W there ;sic< are oriinal parts that they
are desined to replace. Aence, they are not oriinal.
%
The respondents averred that the wor!s covered by the certi+cates
issued by the 1ational (ibrary are not artistic in natureH they are
considered automotive spare parts and pertain to technoloy. They aver
that the models are not oriinal, and as such are the proper sub8ect of a
patent, not copyriht.
1'
In opposin the motion, the petitioner averred that the court which
issued the search warrants was not the proper forum in which to
articulate the issue of the validity of the copyrihts issued to him. Citin
the rulin of the Court in3alaloan v( Court o$ Aeals,
11
the petitioner
stated that a search warrant is merely a 8udicial process desined by
the 6ules of Court in anticipation of a criminal case. 3ntil his copyriht
was nulli+ed in a proper proceedin, he en8oys rihts of a reistered
ownerQholder thereof.
"n #anuary 0, F''F, the trial court issued an "rder
1F
rantin the
motion, and Euashed the search warrant on its +ndin that there was
no probable cause for its issuance. The court ruled that the wor!
covered by the certi+cates issued to the petitioner pertained to
solutions to technical problems, not literary and artistic as provided in
Article 1&F of the Intellectual Property Code.
Ais motion for reconsideration of the order havin been denied by the
trial courtSs "rder of Bebruary 1:, F''F, the petitioner +led a petition
for certiorari in the CA, contendin that the 6TC had no 8urisdiction to
delve into and resolve the validity of the copyriht certi+cates issued to
him by the 1ational (ibrary. Ae insisted that his wor!s are covered by
4ections 1&F.1 and 1&F.F of the Intellectual Property Code. The
petitioner averred that the copyriht certi+cates are rima
$acie evidence of its validity, citin the rulin of the 3nited 4tates Court
of Appeals in *ildli$e E&ress Cororation v( Carol *ri+#t Sales%
Inc(
10
The petitioner asserted that the respondents failed to adduce
evidence to support their motion to Euash the search warrants. The
petitioner noted that respondent @illiam 4alinas, #r. was not bein
honest, as he was able to secure a similar copyriht reistration of a
similar product from the 1ational (ibrary on #anuary 1:, F''F.
"n 4eptember F=, F''0, the CA rendered 8udment dismissin the
petition on its +ndin that the 6TC did not commit any rave abuse of
its discretion in issuin the assailed order, to wit5
It is settled that preliminarily, there must be a +ndin that a speci+c
ofense must have been committed to 8ustify the issuance of a search
warrant. In a number of cases decided by the 4upreme Court, the same
is eCplicitly provided, thus5
-The probable cause must be in connection with one speci+c ofense,
and the 8ude must, before issuin the warrant, personally eCamine in
the form of searchin Euestions and answers, in writin and under oath,
the complainant and any witness he may produce, on facts personally
!nown to them and attach to the record their sworn statements
toether with any aDdavit submitted.
-In the determination of probable cause, the court must necessarily
resolve whether or not an ofense eCists to 8ustify the issuance or
Euashal of the search warrant.-
In the instant case, the petitioner is prayin for the reinstatement of the
search warrants issued, but subseEuently Euashed, for the ofense
of Diolation o$ Class Desi+nation o$ Co"ri+#table *orks under Section
.11(. in relation to Section .11(F o$ Reublic Act ?G/F, when the
ob8ects sub8ect of the same, are patently not copyrihtable.
It is worthy to state that the wor!s protected under the (aw on
Copyriht are5 literary or artistic wor!s ;4ec. 1&F< and derivative wor!s
;4ec. 1&0<. The (eaf 4prin )ye ,ushin and Lehicle ,earin Cushion
fall on neither classi+cation. Accordinly, if, in the +rst place, the item
sub8ect of the petition is not entitled to be protected by the law on
copyriht, how can there be any violationR
1:
The petitionerSs motion for reconsideration of the said decision sufered
the same fate. The petitioner forthwith +led the present petition for
review on certiorari, contendin that the revocation of his copyriht
$$
certi+cates should be raised in a direct action and not in a search
warrant proceedin.
The petitioner posits that even assumin e& ar+umenti that the trial
court may resolve the validity of his copyriht in a proceedin to Euash
a search warrant for alleedly infrinin items, the 6TC committed a
rave abuse of its discretion when it declared that his wor!s are not
copyrihtable in the +rst place. Ae claims that 6.A. 1o. >F%0, otherwise
!nown as the Intellectual Property Code of the Philippines, which too!
efect on #anuary 1, 1%%>, provides in no uncertain terms that copyriht
protection automatically attaches to a wor! by the sole fact of its
creation, irrespective of its mode or form of eCpression, as well as of its
content, Euality or purpose.
1$
The law ives a non-inclusive de+nition of
-wor!- as referrin to oriinal intellectual creations in the literary and
artistic domain protected from the moment of their creationH and
includes oriinal ornamental desins or models $or articles o$
manu$acture, whether or not reistrable as an industrial desin and
other wor!s of applied art under 4ection 1&F.1;h< of 6.A. 1o.
>F%0.law#il(net
As such, the petitioner insists, notwithstandin the classi+cation of the
wor!s as either literary andQor artistic, the said law, li!ewise,
encompasses wor!s which may have a bearin on the utility aspect to
which the petitionerSs utility desins were classi+ed. *oreover,
accordin to the petitioner, what the Copyriht (aw protects is the
authorSs intellectual creation, reardless of whether it is one with
utilitarian functions or incorporated in a useful article produced on an
industrial scale.
The petitioner also maintains that the law does not provide that the
intended use or use in industry of an article eliible for patent bars or
invalidates its reistration under the (aw on Copyriht. The test of
protection for the aesthetic is not beauty and utility, but art for the
copyriht and invention of oriinal and ornamental desin for desin
patents.
1=
In li!e manner, the fact that his utility desins or models for
articles of manufacture have been eCpressed in the +eld of automotive
parts, or based on somethin already in the public domain does not
automatically remove them from the protection of the (aw on
Copyriht.
1&
The petitioner faults the CA for inorin 4ection F1> of 6.A. 1o. >F%0
which ives the same presumption to an aDdavit eCecuted by an
author who claims copyriht ownership of his wor!.
The petitioner adds that a +ndin of probable cause to 8ustify the
issuance of a search warrant means merely a reasonable suspicion of
the commission of the ofense. It is not eEuivalent to absolute certainty
or a +ndin of actual and positive cause.
1>
Ae assists that the
determination of probable cause does not concern the issue of whether
or not the alleed wor! is copyrihtable. Ae maintains that to 8ustify a
+ndin of probable cause in the issuance of a search warrant, it is
enouh that there eCists a reasonable suspicion of the commission of
the ofense.
The petitioner contends that he has in his favor the bene+t of the
presumption that his copyriht is validH hence, the burden of
overturnin this presumption is on the alleed infriners, the
respondents herein. ,ut this burden cannot be carried in a hearin on a
proceedin to Euash the search warrants, as the issue therein is
whether there was probable cause for the issuance of the search
warrant. The petitioner concludes that the issue of probable cause
should be resolved without invalidatin his copyriht.
In their comment on the petition, the respondents aver that the wor! of
the petitioner is essentially a technical solution to the problem of wear
and tear in automobiles, the substitution of materials, i(e(, from rubber
to plastic matter of polyvinyl chloride, an oil resistant soft teCture
plastic material stron enouh to endure pressure brouht about by the
vibration of the counter bearin and thus brins bushins. 4uch wor!,
the respondents assert, is the sub8ect of copyriht under 4ection 1&F.1
of 6.A. 1o. >F%0. The respondents posit that a technical solution in any
+eld of human activity which is novel may be the sub8ect of a patent,
and not of a copyriht. They insist that the certi+cates issued by the
1ational (ibrary are only certi+cations that, at a point in time, a certain
wor! was deposited in the said oDce. Burthermore, the reistration of
copyrihts does not provide for automatic protection. Citin 4ection
F1>.F;b< of 6.A. 1o. >F%0, the respondents aver that no copyriht is
said to eCist if a party cateorically Euestions its eCistence and leality.
*oreover, under 4ection F, 6ule & of the Implementin 6ules of 6.A. 1o.
>F%0, the reistration and deposit of wor! is not conclusive as to
copyriht outlay or the time of copyriht or the riht of the copyriht
owner. The respondents maintain that a copyriht eCists only when the
wor! is covered by the protection of 6.A. 1o. >F%0.
The petition has no merit.
The 6TC had 8urisdiction to delve into and resolve the issue whether the
petitionerSs utility models are copyrihtable and, if so, whether he is the
owner of a copyriht over the said models. It bears stressin that upon
the +lin of the application for search warrant, the 6TC was duty-bound
to determine whether probable cause eCisted, in accordance with
4ection :, 6ule 1F= of the 6ules of Criminal Procedure5
$=
4)C. :. Re5uisite $or issuin+ searc# warrant( W A search warrant shall
not issue but upon probable cause in connection with one speci+c
ofense to be determined personally by the 8ude after eCamination
under oath or aDrmation of the complainant and the witnesses he may
produce, and, particularly, describin the place to be searched and the
thins to be sei.ed.
In Solid Trian+le Sales Cororation v( T#e S#eri7 o$ RTC HC% :r( /F,
1%
the
Court held that in the determination of probable cause, the court must
necessarily resolve whether or not an ofense eCists to 8ustify the
issuance of a search warrant or the Euashal of one already issued by
the court. Indeed, probable cause is deemed to eCist only where facts
and circumstances eCist which could lead a reasonably cautious and
prudent man to believe that an ofense has been committed or is bein
committed. ,esides, in 4ection 0, 6ule 1F= of the 6ules of Criminal
Procedure, a search warrant may be issued for the search and sei.ure of
personal property ;a< sub8ect of the ofenseH ;b< stolen or embe..led
and other proceeds or fruits of the ofenseH or ;c< used or intended to be
used as the means of committin an ofense.
The 6TC is mandated under the Constitution and 6ules of Criminal
Procedure to determine probable cause. The court cannot abdicate its
constitutional obliation by refusin to determine whether an ofense
has been committed.
F'
The absence of probable cause will cause the
outriht nulli+cation of the search warrant.
F1
Bor the 6TC to determine whether the crime for infrinement under 6.A.
1o. >F%0 as alleed in an application is committed, the petitioner-
applicant was burdened to prove that ;a< respondents #essie Chin and
#oseph 2u were the owners of copyrihted materialH and ;b< the
copyrihted material was bein copied and distributed by the
respondents. Thus, the ownership of a valid copyriht is essential.
FF
"wnership of copyrihted material is shown by proof of oriinality and
copyrihtability. ,y oriinality is meant that the material was not
copied, and evidences at least minimal creativityH that it was
independently created by the author and that it possesses at least
same minimal deree of creativity.
F0
Copyin is shown by proof of
access to copyrihted material and substantial similarity between the
two wor!s.
F:
The applicant must thus demonstrate the eCistence and
the validity of his copyriht because in the absence of copyriht
protection, even oriinal creation may be freely copied.
F$
,y reEuestin the 1,I to investiate and, if feasible, +le an application
for a search warrant for infrinement under 6.A. 1o. >F%0 aainst the
respondents, the petitioner thereby authori.ed the 6TC ;in resolvin the
application<, to delve into and determine the validity of the copyriht
which he claimed he had over the utility models. The petitioner cannot
see! relief from the 6TC based on his claim that he was the copyriht
owner over the utility models and, at the same time, repudiate the
courtSs 8urisdiction to ascertain the validity of his claim without runnin
afoul to the doctrine of estoppel.
To dischare his burden, the applicant may present the certi+cate of
reistration coverin the wor! or, in its absence, other evidence.
F=
A
copyriht certi+cate provides rima $acie evidence of oriinality which
is one element of copyriht validity. It constitutes rima $acie evidence
of both validity and ownership
F&
and the validity of the facts stated in
the certi+cate.
F>
The presumption of validity to a certi+cate of copyriht
reistration merely orders the burden of proof. The applicant should not
ordinarily be forced, in the +rst instance, to prove all the multiple facts
that underline the validity of the copyriht unless the respondent,
efectively challenin them, shifts the burden of doin so to the
applicant.
F%
Indeed, 4ection F1>.F of 6.A. 1o. >F%0 provides5
F1>.F. In an action under this Chapter5
;a< Copyriht shall be presumed to subsist in the wor! or other
sub8ect matter to which the action relates if the defendant does
not put in issue the Euestion whether copyriht subsists in the
wor! or other sub8ect matterH and
;b< @here the subsistence of the copyriht is established, the
plaintif shall be presumed to be the owner of the copyriht if he
claims to be the owner of the copyriht and the defendant does
not put in issue the Euestion of his ownership.
A certi+cate of reistration creates no rebuttable presumption of
copyriht validity where other evidence in the record casts doubt on the
Euestion. In such a case, validity will not be presumed.
0'
To dischare his burden of probable cause for the issuance of a search
warrant for violation of 6.A. 1o. >F%0, the petitioner-applicant submitted
to the 6TC Certi+cate of Copyriht 6eistration 1os. F''1-1%& and
F''1-F': dated 4eptember 0, F''1 and 4eptember :, F''1,
respectively, issued by the 1ational (ibrary coverin wor! identi+ed as
(eaf 4prin )ye ,ushin for Automobile and Lehicle ,earin Cushion
both classi+ed under 4ection 1&F.1;h< of 6.A. 1o. >F%0, to wit5
4)C. 1&F. 'iterar" and Artistic *orks( W 1&F.1. (iterary and artistic
wor!s, hereinafter referred to as -wor!s,- are oriinal intellectual
$&
creations in the literary and artistic domain protected from the moment
of their creation and shall include in particular5
...
;h< "riinal ornamental desins or models for articles of manufacture,
whether or not reistrable as an industrial desin, and other wor!s of
applied art.
6elated to the provision is 4ection 1&1.1', which provides that a -wor!
of applied art- is an artistic creation with utilitarian functions or
incorporated in a useful article, whether made by hand or produced on
an industrial scale.
,ut, as leaned from the speci+cations appended to the application for
a copyriht certi+cate +led by the petitioner, the said (eaf 4prin )ye
,ushin for Automobile is merely a utility model described as
comprisin a enerally cylindrical body havin a co-aCial bore that is
centrally located and provided with a perpendicular Pane on one of its
ends and a cylindrical metal 8ac!et surroundin the peripheral walls of
said body, with the bushin made of plastic that is either polyvinyl
chloride or polypropylene.
01
(i!ewise, the Lehicle ,earin Cushion is
illustrated as a bearin cushion comprisin a enerally semi-circular
body havin a central hole to secure a conventional bearin and a
plurality of rides provided therefore, with said cushion bearin bein
made of the same plastic materials.
0F
Plainly, these are not literary or
artistic wor!s. They are not intellectual creations in the literary and
artistic domain, or wor!s of applied art. They are certainly not
ornamental desins or one havin decorative Euality or value.
It bears stressin that the focus of copyriht is the usefulness of the
artistic desin, and not its mar!etability. The central inEuiry is whether
the article is a wor! of art.
00
@or!s for applied art include all oriinal
pictorials, raphics, and sculptural wor!s that are intended to be or
have been embodied in useful article reardless of factors such as mass
production, commercial eCploitation, and the potential availability of
desin patent protection.
0:
As leaned from the description of the models and their ob8ectives,
these articles are useful articles which are de+ned as one havin an
intrinsic utilitarian function that is not merely to portray the appearance
of the article or to convey information. Indeed, while wor!s of applied
art, oriinal intellectual, literary and artistic wor!s are copyrihtable,
useful articles and wor!s of industrial desin are not.
0$
A useful article
may be copyrihtable only if and only to the eCtent that such desin
incorporates pictorial, raphic, or sculptural features that can be
identi+ed separately from, and are capable of eCistin independently of
the utilitarian aspects of the article.
@e aree with the contention of the petitioner ;citin 4ection 1&1.1' of
6.A. 1o. >F%0<, that the authorSs intellectual creation, reardless of
whether it is a creation with utilitarian functions or incorporated in a
useful article produced on an industrial scale, is protected by copyriht
law. Aowever, the law refers to a -wor! of applied art which is an artistic
creation.- It bears stressin that there is no copyriht protection for
wor!s of applied art or industrial desin which have aesthetic or artistic
features that cannot be identi+ed separately from the utilitarian aspects
of the article.
0=
Bunctional components of useful articles, no matter how
artistically desined, have enerally been denied copyriht protection
unless they are separable from the useful article.
0&
In this case, the petitionerSs models are not wor!s of applied art, nor
artistic wor!s. They are utility models, useful articles, albeit with no
artistic desin or value. Thus, the petitioner described the utility model
as follows5
()AB 4P6I1I )2) ,34AI1I B"6 A3T"*",I()
Nnown bushins inserted to leaf-sprin eye to hold leaf-sprins of
automobile are made of hard rubber. These rubber bushins after a
time, upon sub8ectin them to so much or intermittent pressure would
eventually wore ;sic< out that would cause the wobblin of the leaf
sprin.
The primary ob8ect of this utility model, therefore, is to provide a leaf-
sprin eye bushin for automobile that is made up of plastic.
Another ob8ect of this utility model is to provide a leaf-sprin eye
bushin for automobiles made of polyvinyl chloride, an oil resistant soft
teCture plastic or polypropylene, a hard plastic, yet both causes cushion
to the leaf sprin, yet stron enouh to endure pressure brouht about
by the up and down movement of said leaf sprin.
2et, an ob8ect of this utility model is to provide a leaf-sprin eye bushin
for automobiles that has a much loner life span than the rubber
bushins.
4till an ob8ect of this utility model is to provide a leaf-sprin eye bushin
for automobiles that has a very simple construction and can be made
usin simple and ordinary moldin eEuipment.
$>
A further ob8ect of this utility model is to provide a leaf-sprin eye
bushin for automobile that is supplied with a metal 8ac!et to reinforce
the plastic eye bushin when in enaed with the steel material of the
leaf sprin.
These and other ob8ects and advantaes will come to view and be
understood upon a readin of the detailed description when ta!en in
con8unction with the accompanyin drawins.
Biure 1 is an eCploded perspective of a leaf-sprin eye bushin
accordin to the present utility modelH
Biure F is a sectional view ta!en alon line F-F of Bi. 1H
Biure 0 is a lonitudinal sectional view of another embodiment of this
utility modelH
Biure : is a perspective view of a third embodimentH and
Biure $ is a sectional view thereof.
6eferrin now to the several views of the drawins wherein li!e
reference numerals desinated same parts throuhout, there is shown a
utility model for a leaf-sprin eye bushin for automobile enerally
desinated as reference numeral 1'.
4aid leaf-sprin eye bushin 1' comprises a enerally cylindrical body
11 havin a co-aCial bore 1F centrally provided thereof.
As shown in Bis. 1 and F, said leaf-sprin eye bushin 1' is provided
with a perpendicular Pane 10 on one of its ends and a cylindrical metal
8ac!et 1: surroundin the peripheral walls 1$ of said body 11. @hen
said leaf-sprin bushin 1' is installed, the metal 8ac!et 1: acts with the
leaf-sprin eye ;not shown<, which is also made of steel or cast steel. In
efect, the bushin 1' will not be directly in contact with steel, but
rather the metal 8ac!et, ma!in the life of the bushin 1' loner than
those without the metal 8ac!et.
In Biure F, the bushin 1' as shown is made of plastic, preferably
polyvinyl chloride, an oil resistant soft teCture plastic or a hard
polypropylene plastic, both are capable to endure the pressure applied
thereto, and, in efect, would lenthen the life and replacement
therefor.
Biure 0, on the other hand, shows the walls 1= of the co-aCial bore 1F
of said bushin 1' is insertably provided with a steel tube 1& to
reinforce the inner portion thereof. This steel tube 1& accommodates or
enaes with the leaf-sprin bolt ;not shown< connectin the leaf sprin
and the automobileSs chassis.
Biures : and $ show another embodiment wherein the leaf eye bushin
1' is elonated and cylindrical as to its construction. 4aid another
embodiment is also made of polypropylene or polyvinyl chloride plastic
material. The steel tube 1& and metal 8ac!et 1: may also be applied to
this embodiment as an option thereof.
0>
L)AIC() ,)A6I1I C34AI"1
Nnown bearin cushions inserted to bearin housins for vehicle
propeller shafts are made of hard rubber. These rubber bushins after a
time, upon sub8ectin them to so much or intermittent pressure would
eventually be worn out that would cause the wobblin of the center
bearin.
The primary ob8ect of this utility model therefore is to provide a vehicle-
bearin cushion that is made up of plastic.
Another ob8ect of this utility model is to provide a vehicle bearin
cushion made of polyvinyl chloride, an oil resistant soft teCture plastic
material which causes cushion to the propellerSs center bearin, yet
stron enouh to endure pressure brouht about by the vibration of the
center bearin.
2et, an ob8ect of this utility model is to provide a vehicle-bearin
cushion that has a much loner life span than rubber bushins.
4till an ob8ect of this utility model is to provide a vehicle bearin
cushion that has a very simple construction and can be made usin
simple and ordinary moldin eEuipment.
These and other ob8ects and advantaes will come to view and be
understood upon a readin of the detailed description when ta!en in
con8unction with the accompanyin drawins.
Biure 1 is a perspective view of the present utility model for a vehicle-
bearin cushionH and
Biure F is a sectional view thereof.
$%
6eferrin now to the several views of the drawin, wherein li!e
reference numeral desinate same parts throuhout, there is shown a
utility model for a vehicle-bearin cushion enerally desinated as
reference numeral 1'.
4aid bearin cushion 1' comprises of a enerally semi-circular body 11,
havin central hole 1F to house a conventional bearin ;not shown<. As
shown in Biure 1, said body 11 is provided with a plurality of rides 10
which serves reinforcin means thereof.
The sub8ect bearin cushion 1' is made of polyvinyl chloride, a soft
teCture oil and chemical resistant plastic material which is stron,
durable and capable of endurin severe pressure from the center
bearin brouht about by the rotatin movement of the propeller shaft
of the vehicle.
0%
A utility model is a technical solution to a problem in any +eld of human
activity which is new and industrially applicable. It may be, or may
relate to, a product, or process, or an improvement of any of the
aforesaid.
:'
)ssentially, a utility model refers to an invention in the
mechanical +eld. This is the reason why its ob8ect is sometimes
described as a device or useful ob8ect.
:1
A utility model varies from an
invention, for which a patent for invention is, li!ewise, available, on at
least three aspects5 +rst, the reEuisite of -inventive step-
:F
in a patent
for invention is not reEuiredH second, the maCimum term of protection is
only seven years
:0
compared to a patent which is twenty years,
::
both
rec!oned from the date of the applicationH and third, the provisions on
utility model dispense with its substantive eCamination
:$
and prefer for
a less complicated system.
,ein plain automotive spare parts that must conform to the oriinal
structural desin of the components they see! to replace, the (eaf
4prin )ye ,ushin and Lehicle ,earin Cushion are not ornamental.
They lac! the decorative Euality or value that must characteri.e
authentic wor!s of applied art. They are not even artistic creations with
incidental utilitarian functions or wor!s incorporated in a useful article.
In actuality, the personal properties described in the search warrants
are mechanical wor!s, the principal function of which is utility sans any
aesthetic embellishment.
1either are we to reard the (eaf 4prin )ye ,ushin and Lehicle
,earin Cushion as included in the catch-all phrase -other literary,
scholarly, scienti+c and artistic wor!s- in 4ection 1&F.1;a< of 6.A. 1o.
>F%0. Applyin the principle of ejusdem +eneris which states that
-where a statute describes thins of a particular class or !ind
accompanied by words of a eneric character, the eneric word will
usually be limited to thins of a similar nature with those particularly
enumerated, unless there be somethin in the conteCt of the state
which would repel such inference,-
:=
the (eaf 4prin )ye ,ushin and
Lehicle ,earin Cushion are not copyrihtable, bein not of the same
!ind and nature as the wor!s enumerated in 4ection 1&F of 6.A. 1o.
>F%0.
1o copyriht ranted by law can be said to arise in favor of the
petitioner despite the issuance of the certi+cates of copyriht
reistration and the deposit of the (eaf 4prin )ye ,ushin and Lehicle
,earin Cushion. Indeed, inJoa5uin% Jr( v( Drilon
:&
and ,earl 9 Dean
-,#il(2% Incororated v( S#oemart% Incororated,
:>
the Court ruled that5
Copyriht, in the strict sense of the term, is purely a statutory riht. It is
a new or independent riht ranted by the statute, and not simply a
pre-eCistin riht reulated by it. ,ein a statutory rant, the rihts are
only such as the statute confers, and may be obtained and en8oyed only
with respect to the sub8ects and by the persons, and on terms and
conditions speci+ed in the statute. Accordinly, it can cover only the
wor!s fallin within the statutory enumeration or description.
That the wor!s of the petitioner may be the proper sub8ect of a patent
does not entitle him to the issuance of a search warrant for violation of
copyriht laws. In I#o v( Court o$ Aeals
:%
and ,earl 9 Dean -,#il(2%
Incororated v( S#oemart% Incororated,
$'
the Court ruled that -these
copyriht and patent rihts are completely distinct and separate from
one another, and the protection aforded by one cannot be used
interchaneably to cover items or wor!s that e&clusivel" pertain to the
others.- The Court eCpounded further, thus5
Trademar!, copyriht and patents are diferent intellectual property
rihts that cannot be interchaned with one another. A trademar! is
any visible sin capable of distinuishin the oods ;trademar!< or
services ;service mar!< of an enterprise and shall include a stamped or
mar!ed container of oods. In relation thereto, a trade name means the
name or desination identifyin or distinuishin an enterprise.
*eanwhile, the scope of a copyriht is con+ned to literary and artistic
wor!s which are oriinal intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a
problem in any +eld of human activity which is new, involves an
inventive step and is industrially applicable.
The petitioner cannot +nd solace in the rulin of the 3nited 4tates
4upreme Court in 3azer v( Stein
$1
to buttress his petition. In that case,
the artifacts involved in that case were statuettes of dancin male and
='
female +ures made of semi-vitreous china. The controversy therein
centered on the fact that althouh copyrihted as -wor!s of art,- the
statuettes were intended for use and used as bases for table lamps,
with electric wirin, soc!ets and lampshades attached. The issue raised
was whether the statuettes were copyriht protected in the 3nited
4tates, considerin that the copyriht applicant intended primarily to
use them as lamp bases to be made and sold in Euantity, and carried
such intentions into efect. At that time, the Copyriht "Dce interpreted
the 1%'% Copyriht Act to cover wor!s of artistic craftsmanship insofar
as their form, but not the utilitarian aspects, were concerned. After
reviewin the history and intent of the 34 Conress on its copyriht
leislation and the interpretation of the copyriht oDce, the 34
4upreme Court declared that the statuettes were held copyrihtable
wor!s of art or models or desins for wor!s of art. The Aih Court ruled
that5
-@or!s of art ;Class I< W ;a< W In 4eneral( This class includes wor!s of
artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic 8ewelry, enamels,
lassware, and tapestries, as well as all wor!s belonin to the +ne
arts, such as paintins, drawins and sculpture. \-
4o we have a contemporaneous and lon-continued construction of the
statutes by the aency chared to administer them that would allow
the reistration of such a statuette as is in Euestion here.
$F
The Aih Court went on to state that -JtKhe dichotomy of protection for
the aesthetic is not beauty and utility but art for the copyriht and the
invention of oriinal and ornamental desin for desin patents.-
4ini+cantly, the copyriht oDce promulated a rule to implement
*a.er to wit5
\ JIKf -the sole intrinsic function of an article is its utility, the fact that
the wor! is uniEue and attractively shaped will not Eualify it as a wor!
of art.-
In this case, the bushin and cushion are not wor!s of art. They are, as
the petitioner himself admitted, utility models which may be the sub8ect
of a patent.
IN "IGHT O A"" TH! OR!GOING, the instant petition is hereby
?)1I)? for lac! of merit. The assailed ?ecision and 6esolution of the
Court of Appeals in CA-I.6. 4P 1o. &':11 are ABBI6*)?. 4earch
@arrant 1os. '1-F:'1 and '1-F:'F issued on "ctober 1$, F''1 are
A113(()? A1? 4)T A4I?). Costs aainst the petitioner.
4" "6?)6)?.
9. G.R. No. 148))) A=0=8& 15, )00*
P!AR" N D!AN .PHI"./, INCORPORAT!D, Petitioner,
vs.
SHO!MART, INCORPORAT!D, #$% NORTH !DSA MAR5!TING,
INCORPORAT!D, 6espondents.
? ) C I 4 I " 1
CORONA, J.:
In the instant petition for review on certiorari under 6ule :$ of the 6ules
of Court, petitioner Pearl / ?ean ;Phil.< Inc. ;P / ?< assails the *ay FF,
F''1 decision
1
of the Court of Appeals reversin the "ctober 01, 1%%=
decision
F
of the 6eional Trial Court of *a!ati, ,ranch 100, in Civil Case
1o. %F-$1= which declared private respondents 4hoemart Inc. ;4*I< and
1orth )dsa *ar!etin Inc. ;1)*I< liable for infrinement of trademar!
and copyriht, and unfair competition.
BACT3A( A1T)C)?)1T4
The *ay FF, F''1 decision of the Court of Appeals
0
contained a
summary of this dispute5
-Plaintif-appellant Pearl and ?ean ;Phil.<, Inc. is a corporation enaed
in the manufacture of advertisin display units simply referred to as
liht boCes. These units utili.e specially printed posters sandwiched
between plastic sheets and illuminated with bac! lihts. Pearl and ?ean
was able to secure a Certi+cate of Copyriht 6eistration dated #anuary
F', 1%>1 over these illuminated display units. The advertisin liht
boCes were mar!eted under the trademar! -Poster Ads-. The
application for reistration of the trademar! was +led with the ,ureau
of Patents, Trademar!s and Technoloy Transfer on #une F', 1%>0, but
was approved only on 4eptember 1F, 1%>>, per 6eistration 1o. :11=$.
Brom 1%>1 to about 1%>>, Pearl and ?ean employed the services of
*etro Industrial 4ervices to manufacture its advertisin displays.
4ometime in 1%>$, Pearl and ?ean neotiated with defendant-appellant
4hoemart, Inc. ;4*I< for the lease and installation of the liht boCes in
=1
4* City 1orth )dsa. 4ince 4* City 1orth )dsa was under construction at
that time, 4*I ofered as an alternative, 4* *a!ati and 4* Cubao, to
which Pearl and ?ean areed. "n 4eptember 11, 1%>$, Pearl and
?eanSs Ieneral *anaer, 6odolfo Lerara, submitted for sinature the
contracts coverin 4* Cubao and 4* *a!ati to 4*ISs Advertisin
Promotions and Publicity ?ivision *anaer, 6amonlito Abano. "nly the
contract for 4* *a!ati, however, was returned sined. "n "ctober :,
1%>$, Lerara wrote Abano inEuirin about the other contract and
remindin him that their areement for installation of liht boCes was
not only for its 4* *a!ati branch, but also for 4* Cubao. 4*I did not
bother to reply.
Instead, in a letter dated #anuary 1:, 1%>=, 4*ISs house counsel
informed Pearl and ?ean that it was rescindin the contract for 4*
*a!ati due to non-performance of the terms thereof. In his reply dated
Bebruary 1&, 1%>=, Lerara protested the unilateral action of 4*I,
sayin it was without basis. In the same letter, he pushed for the
sinin of the contract for 4* Cubao.
Two years later, *etro Industrial 4ervices, the company formerly
contracted by Pearl and ?ean to fabricate its display units, ofered to
construct liht boCes for 4hoemartSs chain of stores. 4*I approved the
proposal and ten ;1'< liht boCes were subseEuently fabricated by
*etro Industrial for 4*I. After its contract with *etro Industrial was
terminated, 4*I enaed the services of )2? 6ainbow Advertisin
Corporation to ma!e the liht boCes. 4ome 0'' units were fabricated in
1%%1. These were delivered on a staered basis and installed at 4*
*eamall and 4* City.
4ometime in 1%>%, Pearl and ?ean, received reports that eCact copies
of its liht boCes were installed at 4* City and in the fastfood section of
4* Cubao. 3pon investiation, Pearl and ?ean found out that aside
from the two ;F< reported 4* branches, liht boCes similar to those it
manufactures were also installed in two ;F< other 4* stores. It further
discovered that defendant-appellant 1orth )dsa *ar!etin Inc. ;1)*I<,
throuh its mar!etin arm, Prime 4pots *ar!etin 4ervices, was set up
primarily to sell advertisin space in lihted display units located in
4*ISs diferent branches. Pearl and ?ean noted that 1)*I is a sister
company of 4*I.
In the liht of its discoveries, Pearl and ?ean sent a letter dated
?ecember 11, 1%%1 to both 4*I and 1)*I en8oinin them to cease
usin the sub8ect liht boCes and to remove the same from 4*ISs
establishments. It also demanded the discontinued use of the
trademar! -Poster Ads,- and the payment to Pearl and ?ean of
compensatory damaes in the amount of Twenty *illion Pesos
;PF',''','''.''<.
3pon receipt of the demand letter, 4*I suspended the leasin of two
hundred twenty-four ;FF:< liht boCes and 1)*I too! down its
advertisements for -Poster Ads- from the lihted display units in 4*ISs
stores. Claimin that both 4*I and 1)*I failed to meet all its demands,
Pearl and ?ean +led this instant case for infrinement of trademar! and
copyriht, unfair competition and damaes.
In denyin the chares hurled aainst it, 4*I maintained that it
independently developed its poster panels usin commonly !nown
techniEues and available technoloy, without notice of or reference to
Pearl and ?eanSs copyriht. 4*I noted that the reistration of the mar!
-Poster Ads- was only for stationeries such as letterheads, envelopes,
and the li!e. ,esides, accordin to 4*I, the word -Poster Ads- is a
eneric term which cannot be appropriated as a trademar!, and, as
such, reistration of such mar! is invalid. It also stressed that Pearl and
?ean is not entitled to the reliefs prayed for in its complaint since its
advertisin display units contained no copyriht notice, in violation of
4ection F& of P.?. :%. 4*I alleed that Pearl and ?ean had no cause of
action aainst it and that the suit was purely intended to malin 4*ISs
ood name. "n this basis, 4*I, aside from prayin for the dismissal of
the case, also counterclaimed for moral, actual and eCemplary damaes
and for the cancellation of Pearl and ?eanSs Certi+cation of Copyriht
6eistration 1o. P?-6-F$$> dated #anuary F', 1%>1 and Certi+cate of
Trademar! 6eistration 1o. :1=$ dated 4eptember 1F, 1%>>.
1)*I, for its part, denied havin manufactured, installed or used any
advertisin display units, nor havin enaed in the business of
advertisin. It repleaded 4*ISs averments, admissions and denials and
prayed for similar reliefs and counterclaims as 4*I.-
The 6TC of *a!ati City decided in favor of P / ?5
@herefore, defendants 4*I and 1)*I are found 8ointly and severally
liable for infrinement of copyriht under 4ection F of P? :%, as
amended, and infrinement of trademar! under 4ection FF of 6A 1o.
1==, as amended, and are hereby penali.ed under 4ection F> of P? :%,
as amended, and 4ections F0 and F: of 6A 1==, as amended.
Accordinly, defendants are hereby directed5
;1< to pay plaintif the followin damaes5
;a< actual damaes - P1=,='','''.'',
representin pro+ts
=F
derived by defendants
as a result of infrine-
ment of plaintifSs copyriht
from 1%%1 to 1%%F
;b< moral damaes - P1,'''.'''.''
;c< eCemplary damaes - P1,''','''.''
;d< attorneySs fees - P1,''','''.''
plus
;e< costs of suitH
;F< to deliver, under oath, for impoundin in the 1ational (ibrary,
all liht boCes of 4*I which were fabricated by *etro Industrial
4ervices and )2? 6ainbow Advertisin CorporationH
;0< to deliver, under oath, to the 1ational (ibrary, all +ller-
posters usin the trademar! -Poster Ads-, for destructionH and
;:< to permanently refrain from infrinin the copyriht on
plaintifSs liht boCes and its trademar! -Poster Ads-.
?efendantsS counterclaims are hereby ordered dismissed for lac! of
merit.
4" "6?)6)?.
:
"n appeal, however, the Court of Appeals reversed the trial court5
4ince the liht boCes cannot, by any stretch of the imaination, be
considered as either prints, pictorial illustrations, advertisin copies,
labels, tas or boC wraps, to be properly classi+ed as a copyrihtable
class -"- wor!, we have to aree with 4*I when it posited that what
was copyrihted were the technical drawins only, and not the liht
boCes themselves, thus5
:F. @hen a drawin is technical and depicts a utilitarian ob8ect, a
copyriht over the drawins li!e plaintif-appellantSs will not eCtend to
the actual ob8ect. It has so been held under 8urisprudence, of which the
leadin case is ,a!er vs. 4elden ;1'1 3.4. >:1 ;1>&%<. In that case,
4elden had obtained a copyriht protection for a boo! entitled -4eldenSs
Condensed (eder or ,oo!!eepin 4impli+ed- which purported to
eCplain a new system of boo!!eepin. Included as part of the boo! were
blan! forms and illustrations consistin of ruled lines and headins,
specially desined for use in connection with the system eCplained in
the wor!. These forms showed the entire operation of a day or a wee!
or a month on a sinle pae, or on two paes followin each other. The
defendant ,a!er then produced forms which were similar to the forms
illustrated in 4eldenSs copyrihted boo!s. The Court held that
eCclusivity to the actual forms is not eCtended by a copyriht. The
reason was that -to rant a monopoly in the underlyin art when no
eCamination of its novelty has ever been made would be a surprise and
a fraud upon the publicH that is the province of letters patent, not of
copyriht.- And that is precisely the point. 1o doubt aware that its
alleed oriinal desin would never pass the riorous eCamination of a
patent application, plaintif-appellant fouht to foist a fraudulent
monopoly on the public by conveniently resortin to a copyriht
reistration which merely employs a recordal system without the
bene+t of an in-depth eCamination of novelty.
The principle in :aker vs( Selden was li!ewise applied in 3uller vs(
Triborou+# :rid+e Aut#orit" J:0 B. 4upp. F%> ;4.?.1.2. 1%:F<K. In this
case, *uller had obtained a copyriht over an unpublished drawin
entitled -,ride Approach W the drawin showed a novel bride
approach to unsnarl traDc conestion-. The defendant constructed a
bride approach which was alleed to be an infrinement of the new
desin illustrated in plaintifSs drawins. In this case it was held that
protection of the drawin does not eCtend to the unauthori.ed
duplication of the ob8ect drawn because copyriht eCtends only to the
description or eCpression of the ob8ect and not to the ob8ect itself. It
does not prevent one from usin the drawins to construct the ob8ect
portrayed in the drawin.
In two other cases, Imerial Jomes Cor( v( 'amont, :$> B. Fd >%$
and Sc#oltz Jomes% Inc( v( 3addo&, 0&% B. Fd >:, it was held that there
is no copyriht infrinement when one who, without bein authori.ed,
uses a copyrihted architectural plan to construct a structure. This is
because the copyriht does not eCtend to the structures themselves.
In +ne, we cannot +nd 4*I liable for infrinin Pearl and ?eanSs
copyriht over the technical drawins of the latterSs advertisin display
units.
CCC CCC CCC
The 4upreme Court trenchantly held in )aber+e% Incororated vs(
Intermediate Aellate Court that the protective mantle of the
=0
Trademar! (aw eCtends only to the oods used by the +rst user as
speci+ed in the certi+cate of reistration, followin the clear mandate
conveyed by 4ection F' of 6epublic Act 1==, as amended, otherwise
!nown as the Trademar! (aw, which reads5
4)C. F'. Certi!cation o$ re+istration rima $acie evidence o$ validit".- A
certi+cate of reistration of a mar! or trade-name shall be rima
$acie evidence of the validity of the reistration, the reistrantSs
ownership of the mar! or trade-name, and of the reistrantSs eCclusive
riht to use the same in connection with the oods, business or
services speci+ed in the certi+cate, sub8ect to any conditions and
limitations stated therein.- ;underscorin+ sulied<
The records show that on #une F', 1%>0, Pearl and ?ean applied for the
reistration of the trademar! -Poster Ads- with the ,ureau of Patents,
Trademar!s, and Technoloy Transfer. 4aid trademar! was recorded in
the Principal 6eister on 4eptember 1F, 1%>> under 6eistration 1o.
:11=$ coverin the followin products5 stationeries such as letterheads,
envelopes and callin cards and newsletters.
@ith this as factual bac!drop, we see no leal basis to the +ndin of
liability on the part of the defendants-appellants for their use of the
words -Poster Ads-, in the advertisin display units in suit.
#urisprudence has interpreted 4ection F' of the Trademar! (aw as -an
implicit permission to a manufacturer to venture into the production of
oods and allow that producer to appropriate the brand name of the
senior reistrant on oods other than those stated in the certi+cate of
reistration.- The 4upreme Court further emphasi.ed the restrictive
meanin of 4ection F' when it stated, throuh #ustice Conrado L.
4anche., that5
6eally, if the certi+cate of reistration were to be deemed as includin
oods not speci+ed therein, then a situation may arise whereby an
applicant may be tempted to reister a trademar! on any and all oods
which his mind may conceive even if he had never intended to use the
trademar! for the said oods. @e believe that such omnibus
reistration is not contemplated by our Trademar! (aw.
@hile we do not discount the stri!in similarity between Pearl and
?eanSs reistered trademar! and defendants-appellantsS -Poster Ads-
desin, as well as the parallel use by which said words were used in the
partiesS respective advertisin copies, we cannot +nd defendants-
appellants liable for infrinement of trademar!. -Poster Ads- was
reistered by Pearl and ?ean for speci+c use in its stationeries, in
contrast to defendants-appellants who used the same words in their
advertisin display units. @hy Pearl and ?ean limited the use of its
trademar! to stationeries is simply beyond us. ,ut, havin already done
so, it must stand by the conseEuence of the reistration which it had
caused.
CCC CCC CCC
@e are constrained to adopt the view of defendants-appellants that the
words -Poster Ads- are a simple contraction of the eneric term poster
advertisin. In the absence of any convincin proof that -Poster Ads-
has acEuired a secondary meanin in this 8urisdiction, we +nd that Pearl
and ?eanSs eCclusive riht to the use of -Poster Ads- is limited to what
is written in its certi+cate of reistration, namely, stationeries.
?efendants-appellants cannot thus be held liable for infrinement of
the trademar! -Poster Ads-.
There bein no +ndin of either copyriht or trademar! infrinement on
the part of 4*I and 1)*I, the monetary award ranted by the lower
court to Pearl and ?ean has no le to stand on.
CCC CCC CCC
@A)6)B"6), premises considered, the assailed decision is 6)L)64)?
and 4)T A4I?), and another is rendered ?I4*I44I1I the complaint and
counterclaims in the above-entitled case for lac! of merit.
$
?issatis+ed with the above decision, petitioner P / ? +led the instant
petition assinin the followin errors for the CourtSs consideration5
A. TA) A"1"6A,() C"36T "B APP)A(4 )66)? I1 63(I1I TAAT
1" C"P26IIAT I1B6I1I)*)1T @A4 C"**ITT)? ,2
6)4P"1?)1T4 4* A1? 1)*IH
,. TA) A"1"6A,() C"36T "B APP)A(4 )66)? I1 63(I1I TAAT
1" I1B6I1I)*)1T "B P)A6( / ?)A1S4 T6A?)*A6N -P"4T)6
A?4- @A4 C"**ITT)? ,2 6)4P"1?)1T4 4* A1? 1)*IH
C. TA) A"1"6A,() C"36T "B APP)A(4 )66)? I1 ?I4*I44I1I
TA) A@A6? "B TA) T6IA( C"36T, ?)4PIT) TA) (ATT)6S4
BI1?I1I, 1"T ?I4P3T)? ,2 TA) A"1"6A,() C"36T "B
APP)A(4, TAAT 4* @A4 I3I(T2 "B ,A? BAITA I1 IT4
1)I"TIATI"1 "B A?L)6TI4I1I C"1T6ACT4 @ITA P)A6( /
?)A1.
=:
?. TA) A"1"6A,() C"36T "B APP)A(4 )66)? I1 1"T A"(?I1I
6)4P"1?)1T4 4* A1? 1)*I (IA,() T" P)A6( / ?)A1 B"6
ACT3A(, *"6A( / )M)*P(A62 ?A*AI)4, ATT"61)2S4 B))4
A1? C"4T4 "B 43IT.
=
I443)4
In resolvin this very interestin case, we are challened once aain to
put into proper perspective four main concerns of intellectual property
law G patents, copyrihts, trademar!s and unfair competition arisin
from infrinement of any of the +rst three. @e shall focus then on the
followin issues5
;1< if the enineerin or technical drawins of an advertisin
display unit ;liht boC< are ranted copyriht protection
;copyriht certi+cate of reistration< by the 1ational (ibrary, is
the liht boC depicted in such enineerin drawins ipso facto
also protected by such copyrihtR
;F< or should the liht boC be reistered separately and
protected by a patent issued by the ,ureau of Patents
Trademar!s and Technoloy Transfer ;now Intellectual Property
"Dce< G in addition to the copyriht of the enineerin
drawinsR
;0< can the owner of a reistered trademar! leally prevent
others from usin such trademar! if it is a mere abbreviation of
a term descriptive of his oods, services or businessR
"1 TA) I443) "B C"P26IIAT I1B6I1I)*)1T
Petitioner P / ?Ss complaint was that 4*I infrined on its copyriht over
the liht boCes when 4*I had the units manufactured by *etro and )2?
6ainbow Advertisin for its own account. "bviously, petitionerSs position
was premised on its belief that its copyriht over the enineerin
drawins eCtended iso $acto to the liht boCes depicted or illustrated
in said drawins. In rulin that there was no copyriht infrinement, the
Court of Appeals held that the copyriht was limited to the drawins
alone and not to the liht boC itself. @e aree with the appellate court.
Birst, petitionerSs application for a copyriht certi+cate G as well as
Copyriht Certi+cate 1o. P?-6F$>> issued by the 1ational (ibrary on
#anuary F', 1%>1 G clearly stated that it was for a class -"- wor! under
4ection F ;"< of P? :% ;The Intellectual Property ?ecree< which was the
statute then prevailin. 4aid 4ection F eCpressly enumerated the wor!s
sub8ect to copyriht5
4)C. F. The rihts ranted by this ?ecree shall, from the moment of
creation, subsist with respect to any of the followin wor!s5
C C C C C C C C C
;"< Prints, pictorial illustrations, advertisin copies, labels, tas, and boC
wrapsH
C C C C C C C C C
Althouh petitionerSs copyriht certi+cate was entitled -Advertisin
?isplay 3nits- ;which depicted the boC-type electrical devices<, its claim
of copyriht infrinement cannot be sustained.
Copyriht, in the strict sense of the term, is purely a statutory riht.
,ein a mere statutory rant, the rihts are limited to what the statute
confers. It may be obtained and en8oyed only with respect to the
sub8ects and by the persons, and on terms and conditions speci+ed in
the statute.
&
Accordin+l"% it can cover onl" t#e works $allin+ wit#in t#e
statutor" enumeration or descrition(
>
P / ? secured its copyriht under the classi+cation class K;K work( This
bein so, petitionerSs copyriht protection eCtended only to the
technical drawins and not to the liht boC itself because the latter was
not at all in the cateory of -prints, pictorial illustrations, advertisin
copies, labels, tas and boC wraps.- 4tated otherwise, even as we +nd
that P / ? indeed owned a valid copyriht, the same could have
referred only to the technical drawins within the cateory of -pictorial
illustrations.- It could not have possibly stretched out to include the
underlyin liht boC. The strict application
%
of the lawSs enumeration in
4ection F prevents us from ivin petitioner even a little leeway, that is,
even if its copyriht certi+cate was entitled -Advertisin ?isplay 3nits.-
@hat the law does not include, it eCcludes, and for the ood reason5 the
liht boC was not a literary or artistic piece which could be copyrihted
under the copyriht law. And no less clearly, neither could the lac! of
statutory authority to ma!e the liht boC copyrihtable be remedied by
the simplistic act of entitlin the copyriht certi+cate issued by the
1ational (ibrary as -Advertisin ?isplay 3nits.-
In +ne, if 4*I and 1)*I reprinted P / ?Ss technical drawins for sale to
the public without license from P / ?, then no doubt they would have
been uilty of copyriht infrinement. ,ut this was not the case. 4*ISs
=$
and 1)*ISs acts complained of by P / ? were to have units similar or
identical to the liht boC illustrated in the technical drawins
manufactured by *etro and )2? 6ainbow Advertisin, for leasin out to
diferent advertisers. @as this an infrinement of petitionerSs copyriht
over the technical drawinsR @e do not thin! so.
?urin the trial, the president of P / ? himself admitted that the liht
boC was neither a literary not an artistic wor! but an -enineerin or
mar!etin invention.-
1'
"bviously, there appeared to be some confusion
reardin what ouht or ouht not to be the proper sub8ects of
copyrihts, patents and trademar!s. In the leadin case of Nho vs.
Court of Appeals,
11
we ruled that these three leal rihts are completely
distinct and separate from one another, and the protection aforded by
one cannot be used interchaneably to cover items or wor!s that
eCclusively pertain to the others5
Trademar!, copyriht and patents are diferent intellectual property
rihts that cannot be interchaned with one another. A trademark is
an" visible si+n caable o$ distin+uis#in+ t#e +oods -trademark2 or
services -service mark2 o$ an enterrise and s#all include a stamed or
marked container o$ +oods. In relation thereto, a trade name means the
name or desination identifyin or distinuishin an enterprise.
*eanwhile, t#e scoe o$ a co"ri+#t is con!ned to literar" and artistic
works which are oriinal intellectual creations in the literary and artistic
domain protected from the moment of their creation. ,atentable
inventions% on t#e ot#er #and% re$er to an" tec#nical solution o$ a
roblem in an" !eld o$ #uman activit" which is new, involves an
inventive step and is industrially applicable.
"1 TA) I443) "B PAT)1T I1B6I1I)*)1T
This brins us to the neCt point5 if, despite its manufacture and
commercial use of the li+#t bo&es without license from petitioner,
private respondents cannot be held leally liable for infrinement of P /
?Ss copyriht over itstec#nical drawin+s o$ t#e said li+#t bo&es, should
they be liable instead for infrinement of patentR @e do not thin! so
either.
Bor some reason or another, petitioner never secured a patent for the
liht boCes. It therefore acEuired no patent rihts which could have
protected its invention, if in fact it really was. And because it had no
patent, petitioner could not leally prevent anyone from manufacturin
or commercially usin the contraption. In Creser Precision 4ystems, Inc.
vs. Court of Appeals,
1F
we held that -there can be no infrinement of a
patent until a patent has been issued, since whatever riht one has to
the invention covered by the patent arises alone from the rant of
patent. C C C ;A<n inventor has no common law riht to a monopoly of
his invention. Ae has the riht to ma!e use of and vend his invention,
but if he voluntarily discloses it, such as by oferin it for sale, the world
is free to copy and use it with impunity. A patent, however, ives the
inventor the riht to eCclude all others. As a patentee, he has the
eCclusive riht of ma!in, sellin or usin the invention.
10
"n the
assumption that petitionerSs advertisin units were patentable
inventions, petitioner revealed them fully to the public by submittin
the enineerin drawins thereof to the 1ational (ibrary.
To be able to efectively and leally preclude others from copyin and
pro+tin from the invention, a patent is a primordial reEuirement. 1o
patent, no protection. The ultimate oal of a patent system is to brin
new desins and technoloies into the public domain throuh
disclosure.
1:
Ideas, once disclosed to the public without the protection
of a valid patent, are sub8ect to appropriation without sini+cant
restraint.
1$
"n one side of the coin is the public which will bene+t from new ideasH
on the other are the inventors who must be protected. As held in :auer
9 Cie vs( ;LDonnel,
1=
-The act secured to the inventor the eCclusive
riht to ma!e use, and vend the thin patented, and conseEuently to
prevent others from eCercisin li!e privilees without the consent of the
patentee. It was passed for the purpose of encourain useful invention
and promotin new and useful inventions by the protection and
stimulation iven to inventive enius, and was intended to secure to
the public, after the lapse of the eCclusive privilees ranted the bene+t
of such inventions and improvements.-
The law attempts to stri!e an ideal balance between the two interests5
-;The p<atent system thus embodies a carefully crafted barain for
encourain the creation and disclosure of new useful and non-obvious
advances in technoloy and desin, in return for the eCclusive riht to
practice the invention for a number of years. The inventor may !eep his
invention secret and reap its fruits inde+nitely. In consideration of its
disclosure and the conseEuent bene+t to the community, the patent is
ranted. An eCclusive en8oyment is uaranteed him for 1& years, but
upon the eCpiration of that period, the !nowlede of the invention
inures to the people, who are thus enabled to practice it and pro+t by
its use.-
1&
The patent law has a three-fold purpose5 -+rst, patent law see!s to
foster and reward inventionH second, it promotes disclosures of
inventions to stimulate further innovation and to permit the public to
practice the invention once the patent eCpiresH third, the strinent
==
reEuirements for patent protection see! to ensure that ideas in the
public domain remain there for the free use of the public.-
1>
It is only after an eChaustive eCamination by the patent oDce that a
patent is issued. 4uch an in-depth investiation is reEuired because -in
rewardin a useful invention, the rihts and welfare of the community
must be fairly dealt with and efectively uarded. To that end, the
prereEuisites to obtainin a patent are strictly observed and when a
patent is issued, the limitations on its eCercise are eEually strictly
enforced. To bein with, a enuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the
heavy hand of tribute be laid on each sliht technoloical advance in
art.-
1%
There is no such scrutiny in the case of copyrihts nor any notice
published before its rant to the efect that a person is claimin the
creation of a wor!. The law confers the copyriht from the moment of
creation
F'
and the copyriht certi+cate is issued upon reistration with
the 1ational (ibrary of a sworn eC-parte claim of creation.
Therefore, not havin one throuh the arduous eCamination for
patents, the petitioner cannot eCclude others from the manufacture,
sale or commercial use of the liht boCes on the sole basis of its
copyriht certi+cate over the technical drawins.
4tated otherwise, what petitioner see!s is eCclusivity without any
opportunity for the patent oDce ;IP"< to scrutini.e the liht boCSs
eliibility as a patentable invention. The irony here is that, had
petitioner secured a patent instead, its eCclusivity would have been for
1& years only. ,ut throuh the simpli+ed procedure of copyriht-
reistration with the 1ational (ibrary G without underoin the rior of
defendin the patentability of its invention before the IP" and the
public G the petitioner would be protected for $' years. This situation
could not have been the intention of the law.
In the oft-cited case of ,a!er vs. 4elden
F1
, the 3nited 4tates 4upreme
Court held that onl" t#e e&ression o$ an idea is rotected b" co"ri+#t%
not t#e idea itsel$. In that case, the plaintif held the copyriht of a boo!
which eCpounded on a new accountin system he had developed. The
publication illustrated blan! forms of leders utili.ed in such a system.
The defendant reproduced forms similar to those illustrated in the
plaintifSs copyrihted boo!. The 34 4upreme Court ruled that5
-There is no doubt that a wor! on the sub8ect of boo!-!eepin, thouh
only eCplanatory of well !nown systems, may be the sub8ect of a
copyrihtH but, then, it is claimed only as a boo!. C C C. ,ut there is a
clear distinction between the boo!s, as such, and the art, which it is,
intended to illustrate. The mere statement of the proposition is so
evident that it reEuires hardly any arument to support it. The same
distinction may be predicated of every other art as well as that of
boo!!eepin. A treatise on the composition and use of medicines, be
they old or newH on the construction and use of plouhs or watches or
churnsH or on the miCture and application of colors for paintin or
dyeinH or on the mode of drawin lines to produce the efect of
perspective, would be the sub8ect of copyrihtH but no one would
contend that the copyriht of the treatise would ive the eCclusive riht
to the art or manufacture described therein. The copyriht of the boo!,
if not pirated from other wor!s, would be valid without reard to the
novelty or want of novelty of its sub8ect matter. The novelty of the art or
thin described or eCplained has nothin to do with the validity of the
copyriht. To 0:ve &o &'e #=&'or oD &'e boo3 #$ eC<1=8:ve
9ro9er&B :$ &'e #r& %e8<r:be% &'ere:$, ;'e$ $o eC#m:$#&:o$ oD
:&8 $ove1&B '#8 ever bee$ oM<:#11B m#%e, ;o=1% be # 8=r9r:8e
#$% # Dr#=% =9o$ &'e 9=b1:<. T'#& :8 &'e 9rov:$<e oD 1e&&er8
9#&e$&, $o& oD <o9Br:0'&. T'e <1#:m &o #$ :$ve$&:o$ oD %:8<overB
oD #$ #r& or m#$=D#<&=re m=8& be 8=bLe<&e% &o &'e eC#m:$#&:o$
oD &'e P#&e$& OM<e beDore #$ eC<1=8:ve r:0'& &'ere:$ <#$ be
ob&#:$e%K #$% # 9#&e$& Drom &'e 0over$me$& <#$ o$1B 8e<=re :&.
The diference between the two thins, letters patent and copyriht,
may be illustrated by reference to the sub8ects 8ust enumerated. Ta!e
the case of medicines. Certain miCtures are found to be of reat value
in the healin art. ID &'e %:8<overer ;r:&e8 #$% 9=b1:8'e8 # boo3
o$ &'e 8=bLe<& .#8 re0=1#r 9'B8:<:#$8 0e$er#11B %o/, 'e 0#:$8 $o
eC<1=8:ve r:0'& &o &'e m#$=D#<&=re #$% 8#1e oD &'e me%:<:$eK 'e
0:ve8 &'#& &o &'e 9=b1:<. ID 'e %e8:re8 &o #<E=:re 8=<' eC<1=8:ve
r:0'&, 'e m=8& ob&#:$ # 9#&e$& Dor &'e m:C&=re #8 # $e; #r&,
m#$=D#<&=re or <om9o8:&:o$ oD m#&&er. He m#B <o9Br:0'& ':8
boo3, :D 'e 91e#8e8K b=& &'#& o$1B 8e<=re8 &o ':m &'e eC<1=8:ve
r:0'& oD 9r:$&:$0 #$% 9=b1:8':$0 ':8 boo3. So oD #11 o&'er
:$ve$&:o$8 or %:8<over:e8.
The copyriht of a boo! on perspective, no matter how many drawins
and illustrations it may contain, ives no eCclusive riht to the modes of
drawin described, thouh they may never have been !nown or used
before. ,y publishin the boo! without ettin a patent for the art, the
latter is iven to the public.
C C C
1ow, whilst no one has a riht to print or publish his boo!, or any
material part thereof, as a boo! intended to convey instruction in the
=&
art, any person may practice and use the art itself which he has
described and illustrated therein. T'e =8e oD &'e #r& :8 # &o&#11B
%:Aere$& &':$0 Drom # 9=b1:<#&:o$ oD &'e boo3 eC91#:$:$0 :&. The
copyriht of a boo! on boo!!eepin cannot secure the eCclusive riht to
ma!e, sell and use account boo!s prepared upon the plan set forth in
such boo!. @hether the art miht or miht not have been patented, is a
Euestion, which is not before us. It was not patented, and is open and
free to the use of the public. And, of course, in usin the art, the ruled
lines and headins of accounts must necessarily be used as incident to
it.
The plausibility of the claim put forward by the complainant in this case
arises from a confusion of ideas produced by the peculiar nature of the
art described in the boo!s, which have been made the sub8ect of
copyriht. In describin the art, the illustrations and diarams
employed happened to correspond more closely than usual with the
actual wor! performed by the operator who uses the art. C C C T'e
%e8<r:9&:o$ oD &'e #r& :$ # boo3, &'o=0' e$&:&1e% &o &'e be$e@&
oD <o9Br:0'&, 1#B8 $o Do=$%#&:o$ Dor #$ eC<1=8:ve <1#:m &o &'e
#r& :&8e1D. T'e obLe<& oD &'e o$e :8 eC91#$#&:o$K &'e obLe<& oD &'e
o&'er :8 =8e. T'e Dormer m#B be 8e<=re% bB <o9Br:0'&. T'e
1#&&er <#$ o$1B be 8e<=re%, :D :& <#$ be 8e<=re% #& #11, bB 1e&&er8
9#&e$&.4 ;underscorin supplied<
"1 TA) I443) "B T6A?)*A6N I1B6I1I)*)1T
This issue concerns the use by respondents of the mar! -Poster Ads-
which petitionerSs president said was a contraction of -poster
advertisin.- P / ? was able to secure a trademar! certi+cate for it, but
one where the oods speci+ed were -stationeries such as letterheads,
envelopes, callin cards and newsletters.-
FF
Petitioner admitted it did
not commercially enae in or mar!et these oods. "n the contrary, it
dealt in electrically operated bac!lit advertisin units and the sale of
advertisin spaces thereon, which, however, were not at all speci+ed in
the trademar! certi+cate.
3nder the circumstances, the Court of Appeals correctly cited )aber+e
Inc( vs( Intermediate Aellate Court,
F0
where we, invo!in 4ection F' of
the old Trademar! (aw, ruled that -the certi+cate of reistration issued
by the ?irector of Patents can confer ;upon petitioner< the eCclusive
riht to use its own symbol onl" to t#ose +oods seci!ed in t#e
certi!cate, sub8ect to any conditions and limitations speci+ed in the
certi+cate C C C. "ne who has adopted and used a trademar! on his
oods does not revent t#e adotion and use o$ t#e same trademark b"
ot#ers $or roducts w#ic# are o$ a di7erent descrition.-
F:
)aber+e%
Inc( was correct and was in fact recently reiterated in Canon Iabus#iki
Iais#a vs( Court o$ Aeals.
F$
Assumin ar+uendo that -Poster Ads- could validly Eualify as a
trademar!, the failure of P / ? to secure a trademar! reistration for
speci+c use on the liht boCes meant that there could not have been
any trademar! infrinement since reistration was an essential element
thereof..Aw#i.
"1 TA) I443) "B 31BAI6 C"*P)TITI"1
If at all, the cause of action should have been for unfair competition, a
situation which was possible even if P / ? had no
reistration.
F=
Aowever, while the petitionerSs complaint in the 6TC also
cited unfair competition, the trial court did not +nd private respondents
liable therefor. Petitioner did not appeal this particular pointH hence, it
cannot now revive its claim of unfair competition.
,ut even disreardin procedural issues, we nevertheless cannot hold
respondents uilty of unfair competition.
,y the nature of thins, there can be no unfair competition under the
law on copyrihts althouh it is applicable to disputes over the use of
trademar!s. )ven a name or phrase incapable of appropriation as a
trademar! or tradename may, by lon and eCclusive use by a business
;such that the name or phrase becomes associated with the business or
product in the mind of the purchasin public<, be entitled to protection
aainst unfair competition.
F&
In this case, there was no evidence that P
/ ?Ss use of -Poster Ads- was distinctive or well-!nown. As noted by the
Court of Appeals, petitionerSs eCpert witnesses himself had testi+ed
that - VPoster AdsS was too eneric a name. 4o it was diDcult to identify
it with any company, honestly spea!in.-
F>
This crucial admission by its
own eCpert witness that -Poster Ads- could not be associated with P / ?
showed that, in the mind of the public, the oods and services carryin
the trademar! -Poster Ads- could not be distinuished from the oods
and services of other entities.
This fact also prevented the application of the doctrine of secondary
meanin. -Poster Ads- was eneric and incapable of bein used as a
trademar! because it was used in the +eld of poster advertisin, the
very business enaed in by petitioner. -4econdary meanin- means
that a word or phrase oriinally incapable of eCclusive appropriation
with reference to an article in the mar!et ;because it is eoraphically
or otherwise descriptive< miht nevertheless have been used for so
lon and so eCclusively by one producer with reference to his article
that, in the trade and to that branch of the purchasin public, the word
=>
or phrase has come to mean that the article was his property.
F%
The
admission by petitionerSs own eCpert witness that he himself could not
associate -Poster Ads- with petitioner P / ? because it was -too
eneric- de+nitely precluded the application of this eCception.
Aavin discussed the most important and critical issues, we see no
need to belabor the rest.
All told, the Court +nds no reversible error committed by the Court of
Appeals when it reversed the 6eional Trial Court of *a!ati City.
FH!R!OR!, the petition is hereby ?)1I)? and the decision of the
Court of Appeals dated *ay FF, F''1 is ABBI6*)? in toto.
4" "6?)6)?.
10.G.R. No. 11**88 Se9&ember 5, 199,
ANG!"ITA MAN(ANO, petitioner,
vs.
COURT O APP!A"S, #$% M!"!CIA MADO"ARIA, #8 A88:0$or &o
N!F UNIT!D OUNDR6 MANUACTURING
CORPORATION, respondents.

B!""OSI""O, J.:
The primary purpose of the patent system is not the reward of the
individual but the advancement of the arts and sciences. The function
of a patent is to add to the sum of useful !nowlede and one of the
purposes of the patent system is to encourae dissemination of
information concernin discoveries and inventions. This is a matter
which is properly within the competence of the Patent "Dce the oDcial
action of which has the presumption of correctness and may not be
interfered with in the absence of new evidence carryin thorouh
conviction that the "Dce has erred. 4ince the Patent "Dce is an eCpert
body preeminently Euali+ed to determine Euestions of patentability, its
+ndins must be accepted if they are consistent with the evidence, with
doubts as to patentability resolved in favor of the Patent "Dce.
1
Petitioner Anelita *an.ano +led with the Philippine Patent "Dce on 1%
Bebruary 1%>F an action for the cancellation of (etters Patent 1o. 3*-
:='% for a as burner reistered in the name of respondent *elecia
*adolaria who subseEuently assined the letters patent to 1ew 3nited
Boundry and *anufacturin Corporation ;31IT)? B"31?62, for brevity<.
Petitioner alleed that ;a< the utility model covered by the letters
patent, in this case, an (PI as burner, was not inventive, new or
usefulH ;b< the speci+cation of the letters patent did not comply with the
reEuirements of 4ec. 1:, 6A 1o. 1=$, as amendedH ;c< respondent
*elecia *adolaria was not the oriinal, true and actual inventor nor did
she derive her rihts from the oriinal, true and actual inventor of the
utility model covered by the letters patentH and, ;d< the letters patent
was secured by means of fraud or misrepresentation. In support of her
petition for cancellation petitioner further alleed that ;a< the utility
model covered by the letters patent of respondent had been !nown or
used by others in the Philippines for more than one ;1< year before she
+led her application for letters patent on % ?ecember 1%&%H ;b< the
products which were produced in accordance with the utility model
covered by the letters patent had been in public use or on sale in the
Philippines for more than one ;1< year before the application for patent
therefor was +led.
Petitioner presented the followin documents which she
correspondinly mar!ed as eChibits5 ;a< aDdavit of petitioner allein
the eCistence of prior art, mar!ed )Ch. -AH- ;b< a brochure distributed by
*anila Ias Corporation disclosin a pictorial representation of 6ansome
,urner made by 6ansome Torch and ,urner Company, 34A, mar!ed
)Ch. -?H- and, ;c< a brochure distributed by )sso Iasul or )sso 4tandard
)astern, Inc., of the Philippines showin a picture of another similar
burner with top elevation view and another perspective view of the
same burner, mar!ed )Ch. -).-
Testifyin for herself petitioner narrated that her husband "n ,un Tua
wor!ed as a helper in the 31IT)? B"31?62 where respondent *elecia
*adolaria used to be aDliated with from 1%=$ to 1%&'H that "n helped
=%
in the castin of an (PI burner which was the same utility model of a
burner for which (etters Patent 1o. 3*-:='% was issued, and that after
her husband9s separation from the shop she orani.ed ,esco *etal
*anufacturin ;,)4C" *)TA(, for brevity< for the castin of (PI
burners one of which had the con+uration, form and component parts
similar to those bein manufactured by 31IT)? B"31?62. Petitioner
presented in evidence an alleed model of an (PI burner mar!ed )Ch.
-N- and covered by the (etters Patent of respondent, and testi+ed that
it was iven to her in #anuary 1%>F by one of her customers who
alleedly acEuired it from 31IT)? B"31?62. Petitioner also presented in
evidence her own model of an (PI burner called -6ansome- burner
mar!ed )Ch. -(,- which was alleedly manufactured in 1%&: or 1%&$
and sold by her in the course of her business operation in the name of
,)4C" *)TA(. Petitioner claimed that this -6ansome- burner ;)Ch. -(-<
had the same con+uration and mechanism as that of the model which
was patented in favor of private respondent *elecia *adolaria. Also
presented by petitioner was a burner cup of an imported -6ansome-
burner mar!ed )Ch -*- which was alleedly eCistin even before the
patent application of private respondent.
Petitioner presented two ;F< other witnesses, namely, her husband "n
,un Tua and Bidel Brancisco. "n testi+ed that he wor!ed as a helper in
the 31IT)? B"31?62 from 1%=$ to 1%&' where he helped in the
castin of (PI burners with the same form, con+uration and
mechanism as that of the model covered by the (etters Patent issued to
private respondent. Brancisco testi+ed that he had been employed with
the *anila Ias Corporation from 1%0' to 1%:1 and from 1%$F up to
1%=% where he retired as supervisor and that *anila Ias Corporation
imported -6ansome- burners way bac! in 1%=$ which were advertised
throuh brochures to promote their sale.
Private respondent, on the other hand, presented only one witness,
6olando *adolaria, who testi+ed, amon others, that he was the
Ieneral 4upervisor of the 31IT)? B"31?62 in the foundry, machine
and buDn sectionH that in his early years with the company, 31IT)?
B"31?62 was enaed in the manufacture of diferent !inds of as
stoves as well as burners based on s!etches and speci+cations
furnished by customersH that the company manufactured early models
of sinle-piece types of burners where the mouth and throat were not
detachableH that in the latter part of 1%&> respondent *elecia *adolaria
con+ded in him that complaints were bein brouht to her attention
concernin the early models bein manufacturedH that he was then
instructed by private respondent to cast several eCperimental models
based on revised s!etches and speci+cationsH that private respondent
aain made some innovationsH that after a few months, private
respondent discovered the solution to all the defects of the earlier
models and, based on her latest s!etches and speci+cations, he was
able to cast several models incorporatin the additions to the
innovations introduced in the models. Larious tests were conducted on
the latest model in the presence and under the supervision of *elecia
*adolaria and they obtained perfect results. 6olando *adolaria testi+ed
that private respondent decided to +le her application for utility model
patent in ?ecember 1%&%.
"n & #uly 1%>= the ?irector of Patents Cesar C. 4andieo issued
?ecision 1o. >=-$= denyin the petition for cancellation and holdin
that the evidence of petitioner was not able to establish convincinly
that the patented utility model of private respondent was anticipated.
1ot one of the various pictorial representations of business clearly and
convincinly showed that the devices presented by petitioner was
identical or substantially identical with the utility model of the
respondent. The decision also stated that even assumin that the
brochures depicted clearly each and every element of the patented as
burner device so that the prior art and patented device became
identical althouh in truth they were not, they could not serve as
anticipatory bars for the reason that they were undated. The dates
when they were distributed to the public were not indicated and,
therefore, were useless prior art references. The records and evidence
also do not support the petitioner9s contention that (etters Patent 1o.
3*-:='% was obtained by means of fraud andQor misrepresentation. 1o
evidence whatsoever was presented by petitioner to show that the then
applicant *elecia *adolaria withheld with intent to deceive material
facts which, if disclosed, would have resulted in the refusal by the
Philippine Patent "Dce to issue the (etters Patent under inEuiry.
Petitioner elevated the decision of the ?irector of Patents to the Court
of Appeals which on 1$ "ctober 1%%0 aDrmed the decision of the
?irector of Patents. Aence, this petition for review on certiorari allein
that the Court of Appeals erred ;a< in relyin on imainary diferences
which in actuality did not eCist between the model of private
respondent covered by (etters Patent 1o. 3*-:='% and the previously
!nown model of )sso 4tandard )astern, Inc., and *anila Ias
Corporation, ma!in such imainary diferences rounded entirely on
speculation, surmises and con8ecturesH ;b< in renderin 8udment based
on misapprehension of factsH ;c< in relyin mainly on the testimony of
private respondent9s sole witness 6olando *adolariaH and, ;d< in not
cancellin (etters Patent 1o. 3*-:='% in the name of private
respondent.
Petitioner submits that the diferences cited by the Court of Appeals
between the utility model of private respondent and the models of
*anila Ias Corporation and )sso 4tandard )astern, Inc., are more
imainary than real. 4he allees that based on )Chs. -),- -)-1,- -B- and
&'
-B-1- or the brochures of *anila Ias Corporation and )sso 4tandard
)astern, Inc., presented by petitioner, the cup-shaped burner mouth
and threaded hole on the side are shown to be similar to the utility
model of private respondent. The eChibits also show a detachable
burner mouth havin a plurality of upwardly eCistin undulations
adopted to act as as passae when the cover is attached to the top of
said cup-shaped mouth all of which are the same as those in the
patented model. Petitioner also denies as substantial diference the
short cylindrical tube of the burner mouth appearin in the brochures of
the burners bein sold by *anila Ias Corporation and the lon
cylindered tube of private respondent9s model of the as burner.
Petitioner arues that the actual demonstration made durin the
hearin disclosed the similarities in form, operation and mechanism and
parts between the utility model of private respondent and those
depicted in the brochures. The +ndins of the Patent "Dce and the
Court of Appeals that the brochures of *anila Ias Corporation and )sso
4tandard )astern, Inc., are undated cannot overcome the fact of their
circulation before private respondent +led her application for utility
model patent. Petitioner thus as!s this Court to ta!e 8udicial notice of
the fact that )sso 4tandard )astern, Inc., disappeared before 1%&% and
reappeared only durin the *artial (aw years as Petrophil Corporation.
Petitioner also emphasi.es that the brochures indicated the telephone
number of *anila Ias Corporation as $-&%->1 which is a +ve ;$<
numbered telephone number eCistin before 1%&$ because telephones
in *etro *anila started to have siC ;=< numbers only after that year.
Petitioner further contends that the utility model of private respondent
is absolutely similar to the (PI burner bein sold by petitioner in 1%&$
and 1%&=, and also to the -6ansome- burner depicted in the old
brochures of *anila Ias Corporation and )sso 4tandard )astern, Inc.,
fabricated by 6ansome Torch and ,urner Company of "a!land,
California, 34A, especially when considered throuh actual physical
eCamination, assembly and disassembly of the models of petitioner and
private respondent. Petitioner faults the Court of Appeals for
disreardin the testimonies of "n ,un Tua and Bidel Brancisco for
their failure to produce documents on the alleed importation by *anila
Ias Corporation of -6ansome- burners in 1%=$ which had the same
con+uration, form and mechanism as that of the private respondent9s
patented model.
Binally, it is arued that the testimony of private respondent9s lone
witness 6olando *adolaria should not have been iven weiht by the
Patent "Dce and the Court of Appeals because it contained mere after-
thouhts and pretensions.
@e cannot sustain petitioner. 4ection & of 6A 1o. 1=$, as amended,
which is the law on patents, eCpressly provides G
4ec. &. Inventians atentable. Any invention of a new and useful
machine, manufactured product or substance, process or an
improvement of any of the foreoin, shall be patentable.
Burther, 4ec. $$ of the same law provides G
4ec. $$. Desi+n atents and atents $or utilit" models. G ;a< Any
new, oriinal and ornamental desin for an article of
manufacture and ;b< any new model of implements or tools or of
any industrial product or of part of the same, which does not
possess the Euality of invention, but which is of practical utility
by reason of its form, con+uration, construction or composition,
may be protected by the author thereof, the former by a patent
for a desin and the latter by a patent for a utility model, in the
same manner and sub8ect to the same provisions and
reEuirements as relate to patents for inventions insofar as they
are applicable eCcept as otherwise herein provided.
The element of novelty is an essential reEuisite of the patentability of
an invention or discovery. If a device or process has been !nown or
used by others prior to its invention or discovery by the applicant, an
application for a patent therefor should be deniedH and if the application
has been ranted, the court, in a 8udicial proceedin in which the
validity of the patent is drawn in Euestion, will hold it void and
inefective.
)
It has been repeatedly held that an invention must possess
the essential elements of novelty, oriinality and precedence, and for
the patentee to be entitled to the protection the invention must be new
to the world.
*
In issuin (etters Patent 1o. 3*-:='% to *elecia *adolaria for an -(PI
,urner- on FF #uly 1%>1, the Philippine Patent "Dce found her invention
novel and patentable. The issuance of such patent creates a
presumption which yields only to clear and coent evidence that the
patentee was the oriinal and +rst inventor. The burden of provin want
of novelty is on him who avers it and the burden is a heavy one which is
met only by clear and satisfactory proof which overcomes every
reasonable doubt.
4
Aence, a utility model shall not be considered -new-
if before the application for a patent it has been publicly !nown or
publicly used in this country or has been described in a printed
publication or publications circulated within the country, or if it is
substantially similar to any other utility model so !nown, used or
described within the country.
5
&1
As found by the ?irector of Patents, the standard of evidence suDcient
to overcome the presumption of leality of the issuance of 3*-:='% to
respondent *adolaria was not leally met by petitioner in her action for
the cancellation of the patent. Thus the ?irector of Patents eCplained
his reasons for the denial of the petition to cancel private respondent9s
patent G
4crutiny of )Chs. -?- and -)- readily reveals that the utility
model ;(PI ,urner< is not anticipated. 1ot one of the various
pictorial representations of burners clearly and convincinly
show that the device presented therein is identical or
substantially identical in construction with the aforesaid utility
model. It is relevant and material to state that in determinin
whether novelty or newness is neatived by any prior art, only
one item of the prior art may be used at a time. Bor anticipation
to occur, the prior art must show that each element is found
either eCpressly or described or under principles of inherency in
a sinle prior art reference or that the claimed invention was
probably !nown in a sinle prior art device or practice. ;Nalman
v. Nimberly Clar!, F1> 34PO &>1, &>%<
)ven assumin +ratia ar+uendi that the aforesaid brochures do
depict clearly on all fours each and every element of the
patented as burner device so that the prior art and the said
patented device become identical, althouh in truth they are
not, they cannot serve as anticipatory bars for the reason that
they are undated. The dates when they were distributed to the
public were not indicated and, therefore, they are useless prior
art references.
CCC CCC CCC
Burthermore, and more sini+cantly, the model mar!ed )Ch. -N-
does not show whether or not it was manufactured andQor cast
before the application for the issuance of patent for the (PI
burner was +led by *elecia *adolaria.
@ith respect to )Ch. -(,- petitioner claimed it to be her own
model of (PI burner alleedly manufactured sometime in 1%&:
or 1%&$ and sold by her in the course of her business operation
in the name of ,esco *etal *anufacturin, which burner was
denominated as -6ansome- burner
CCC CCC CCC
,ut a careful eCamination of )Ch. -(- would show that it does not
bear the word -6ansome- which is the burner referred to as the
product bein sold by the Petitioner. This is not the way to prove
that )Ch. -(- anticipates (etters Patent 1o. 3*-:='% throuh
)Chs. -C- and -?.- Another factor wor!in aainst the
Petitioner9s claims is that an eCamination of )Ch. -(- would
disclose that there is no indication of the time or date it was
manufactured. This "Dce, thus has no way of determinin
whether )Ch. -(- was really manufactured before the +lin of the
aforesaid application which matured into (etters Patent 1o. 3*-
:='%, sub8ect matter of the cancellation proceedin.
At this 8uncture, it is worthwhile to point out that petitioner also
presented )Ch. -*- which is the alleed burner cup of an
imported -6ansome- burner. Aain, this "Dce +nds the same as
unreliable evidence to show anticipation. It observed that there
is no date indicated therein as to when it was manufactured
andQor imported before the +lin of the application for issuance
of patent of the sub8ect utility model. @hat is more, some
component parts of )Ch. -*- are missin, as only the cup was
presented so that the same could not be compared to the utility
model ;sub8ect matter of this case< which consists of several
other detachable parts in combination to form the complete (PI
burner.
CCC CCC CCC
It must li!ewise be pointed out that "n ,un Tua testi+ed on the
brochures alleedly of *anila Ias and of )sso Iasul mar!ed
)Chs. -)- and -B- and on the alleed fact that *anila Ias
Corporation was importin from the 3nited 4tates -6ansome-
burners. ,ut the same could not be iven credence since he
himself admitted durin cross-eCamination that he has never
been connected with *anila Ias Corporation. Ae could not even
present any importation papers relatin to the alleed imported
ransome burners. 1either did his wife.
+
The above +ndins and conclusions of the ?irector of Patent were
reiterated and aDrmed by the Court of Appeals.
,
The validity of the patent issued by the Philippine Patent "Dce in favor
of private respondent and the Euestion over the inventiveness, novelty
and usefulness of the improved model of the (PI burner are matters
which are better determined by the Patent "Dce. The technical staf of
the Philippine Patent "Dce composed of eCperts in their +eld has by the
issuance of the patent in Euestion accepted private respondent9s model
&F
of as burner as a discovery. There is a presumption that the "Dce has
correctly determined the patentability of the model
8
and such action
must not be interfered with in the absence of competent evidence to
the contrary.
The rule is settled that the +ndins of fact of the ?irector of Patents,
especially when aDrmed by the Court of Appeals, are conclusive on this
Court when supported by substantial evidence. Petitioner has failed to
show compellin rounds for a reversal of the +ndins and conclusions
of the Patent "Dce and the Court of Appeals.
The alleed failure of the ?irector of Patents and the Court of Appeals to
accord evidentiary weiht to the testimonies of the witnesses of
petitioner showin anticipation is not a 8usti+cation to rant the
petition. Pursuant to the reEuirement of clear and convincin evidence
to overthrow the presumption of validity of a patent, it has been held
that oral testimony to show anticipation is open to suspicion and if
uncorroborated by coent evidence, as what occurred in this case, it
may be held insuDcient.
9
Binally, petitioner would want this Court to review all over aain the
evidence she presented before the Patent "Dce. 4he arues that
contrary to the decision of the Patent "Dce and the Court of Appeals,
the evidence she presented clearly proves that the patented model of
private respondent is no loner new and, therefore, fraud attended the
acEuisition of patent by private respondent.
It has been held that the Euestion on priority of invention is one of fact.
1ovelty and utility are li!ewise Euestions of fact. The validity of patent
is decided on the basis of factual inEuiries. @hether evidence presented
comes within the scope of prior art is a factual issue to be resolved by
the Patent "Dce.
10
There is Euestion of fact when the doubt or
diference arises as to the truth or falsehood of alleed facts or when
the Euery necessarily invites calibration of the whole evidence
considerin mainly the credibility of witnesses, eCistence and relevance
of speci+c surroundin circumstances, their relation to each other and
to the whole and the probabilities of the situation.
11
Time and aain we have held that it is not the function of the 4upreme
Court to analy.e or weih all over aain the evidence and credibility of
witnesses presented before the lower tribunal or oDce. The 4upreme
Court is not a trier of facts. Its 8urisdiction is limited to reviewin and
revisin errors of law imputed to the lower court, its +ndins of fact
bein conclusive and not reviewable by this Court.
@A)6)B"6), the Petition is ?)1I)?. The ?ecision of the Court of
Appeals aDrmin that of the Philippine Patent "Dce is ABBI6*)?. Costs
aainst petitioner.
4" "6?)6)?.
11.G.R. "-45101 November )8, 198+
ROSARIO C. MAGUAN .Dormer1B ROSARIO C. TAN/, petitioner,
v8.
TH! HONORAB"! COURT O APP!A"S #$% SUSANA
"UCHAN, re89o$%e$&8.
!mbrosio (adilla Law )fces for petitioner.

PARAS, J.:p
&0
S=bm:&&e% o$ De<ember 9, 19,, Dor O=r %e<:8:o$ :8 &':8 9e&:&:o$
Dor rev:e; o$ <er&:or#r: oD &'e &;o Re8o1=&:o$8 oD &'e Co=r& oD
A99e#18, &'e @r8& %#&e% J=1B +, 19,+, 8e&&:$0 #8:%e :&8 De<:8:o$
oD ebr=#rB 1+, 19,+ :$ CA-G.R. No. SP-04,0+, &:&1e% *+,+!-!
L,#.!- v. .on. .)-/!0), et al.* ;'ere:$ :& r=1e% Dor &'e
%:8m:88#1 oD &'e 9e&:&:o$ Dor 1#<3 oD mer:& #$% #& &'e 8#me &:me
$=11:DB:$0 &'e ;r:& oD 9re1:m:$#rB :$L=$<&:o$ :& '#% 9rev:o=81B
:88=e%K #$% &'e 8e<o$%, %#&e% November 4, 19,+, %e$B:$0 &'e
mo&:o$ Dor re<o$8:%er#&:o$ oD &'e @r8& re8o1=&:o$ #bove-
me$&:o$e%.
Pe&:&:o$er :8 %o:$0 b=8:$e88 =$%er &'e @rm $#me #$% 8&B1e oD
SFAN MANUACTURING4 ;':1e 9r:v#&e re89o$%e$& :8 1:3e;:8e
%o:$0 b=8:$e88 =$%er &'e @rm $#me #$% 8&B1e oD 4SUSANA
"UCHAN POFD!R PU MANUACTURING.4
I& :8 =$%:89=&e% &'#& 9e&:&:o$er :8 # 9#&e$& 'o1%er oD 9o;%er
9=A $#me1B7
1. UM-4)* .eC&e$%e% #$%Jor re$e;e%
=$%er !C&e$8:o$ No. UM-109 Dor #
9er:o% oD 5 Be#r8 Drom O<&ober +,
19,1/
). UM-450 .eC&e$%e% #$%Jor re$e;e%
=$%er !C&e$8:o$ No. UM110 Dor #
9er:o% oD 5 Be#r8 Drom J#$=#rB )+,
19,)/
*. UM 1184, Dor # 9er:o% oD 5Be#r8
DromA9r:1 5, 19,4..Pe&:&:o$, Ro11o, 99.
+-,/.
I$ # 1e&&er %#&e% J=1B 10, 19,4 .A$$eC 4D4, Ro11o, 9. 8+/,
9e&:&:o$er :$Dorme% 9r:v#&e re89o$%e$& &'#& &'e 9o;%er 9=A8
&'e 1#&&er :8 m#$=D#<&=r:$0 #$% 8e11:$0 &o v#r:o=8 e$&er9r:8e8
9#r&:<=1#r1B &'o8e :$ &'e <o8me&:<8 :$%=8&rB, re8emb1e I%e$&:<#1
or 8=b8&#$&:#11B I%e$&:<#1 9o;%er 9=A8 oD ;':<' &'e Dormer :8 #
9#&e$& 'o1%er =$%er Re0:8&r#&:o$ Cer&:@<#&:o$ No8. !C&e$8:o$
UM-109, !C&e$8:o$ UM-110 #$% U&:1:&B Mo%e1 No. 1184K
9e&:&:o$er eC91#:$e% 8=<' 9ro%=<&:o$ #$% 8#1e <o$8&:&=&e
:$Dr:$0eme$& oD 8#:% 9#&e$&8 #$% &'ereDore :&8 :mme%:#&e
%:8<o$&:$=#$<e :8 %em#$%e%, o&'er;:8e :& ;:11 be <om9e11e% &o
&#3e L=%:<:#1 #<&:o$. .Ro11o, 99. ,-8/.
Pr:v#&e re89o$%e$& re91:e% 8&#&:$0 &'#& 'er 9ro%=<&8 #re
%:Aere$& #$% <o=$&ere% &'#& 9e&:&:o$er?8 9#&e$&8 #re vo:%
be<#=8e &'e =&:1:&B mo%e18 #991:e% Dor ;ere $o& $e; #$%
9#&e$&#b1e #$% &'e 9er8o$ &o ;'om &'e 9#&e$&8 ;ere :88=e%
;#8 $o& &'e &r=e #$% #<&=#1 #=&'or $or ;ere 'er r:0'&8 %er:ve%
Drom 8=<' #=&'or. .T#3e$ Drom #11e0#&:o$8 :$ &'e A$8;er, 9#r. 4,
Ro11o, 9. 9*/. A$% o$ J=1B )5, 19,4, 9r:v#&e re89o$%e$& #88#:1e%
&'e v#1:%:&B oD &'e 9#&e$&8 :$vo1ve% #$% @1e% ;:&' &'e P':1:99:$e
P#&e$& OM<e 9e&:&:o$8 Dor <#$<e11#&:o$ oD .1/ U&:1:&B Mo%e1
"e&&er P#&e$& !C&e$8:o$ No. UM-109 .I$&er P#r&e8 C#8e No. 8*8,
S=8#$# "=<'#$ v. Ro8#r:o C. T#$/, .)/ U&:1:&B Mo%e1 "e&&er8
P#&e$& No. UM-1184 .I$&er P#r&e8 C#8e No. 8*9, S=8#$# "=<'#$
v. Ro8#r:o C. T#$/, .*/ U&:1:&B Mo%e1 "e&&er8 P#&e$& !C&e$8:o$ No.
UM-110 .I$&er P#r&e8 C#8e No. 840, S=8#$# "=<'#$ v. Ro8#r:o C.
T#$. .T#3e$ Drom #11e0#&:o$8 :$ &'e A$8;er, 9#r. 10, Ro11o, 99.
94-95/.
I$ v:e; &'ereoD, 9e&:&:o$er, o$ A=0=8& )4, 19,4, @1e% #
<om91#:$& Dor %#m#0e8 ;:&' :$L=$<&:o$ #$% 9re1:m:$#rB
:$L=$<&:o$ #0#:$8& 9r:v#&e re89o$%e$& ;:&' &'e &'e$ Co=r& oD
:r8& I$8&#$<e oD R:>#1, P#8:0 Br#$<', %o<3e&e% #8 C:v:1 C#8e No.
19908, Dor :$Dr:$0:$0 &'e #Dore8#:% 1e&&er8 9#&e$&, #$% 9r#Be%,
#mo$0 o&'er8, &'#& # ;r:& oD 9re1:m:$#rB :$L=$<&:o$ be
:mme%:#&e1B :88=e% .Com91#:$&, Ro11o, 9. 90/.
I$ 'er #$8;er, 9r:v#&e re89o$%e$& #11e0e% &'#& &'e 9ro%=<&8 8'e
:8 m#$=D#<&=r:$0 #$% oAer:$0 Dor 8#1e #re $o& I%e$&:<#1, or eve$
o$1B 8=b8&#$&:#11B I%e$&:<#1 &o &'e 9ro%=<&8 <overe% bB
9e&:&:o$er?8 9#&e$&8 #$%, bB ;#B oD #Mrm#&:ve %eDe$8e8,
D=r&'er #11e0e% &'#& 9e&:&:o$er?8 9#&e$&8 :$ E=e8&:o$ #re vo:% o$
&'e Do11o;:$0 0ro=$%87
.1/ #& &'e &:me oD @1:$0 oD #991:<#&:o$
Dor &'e 9#&e$&8 :$vo1ve%, &'e =&:1:&B
mo%e18 #991:e% Dor ;ere $o& $e; #$%
9#&e$&#b1e =$%er Se<. 55 oD R.A. 1+5,
#8 #me$%e% bB R.A. 8+4K #$%
.)/ &'e 9er8o$ &o ;'om &'e 9#&e$&8
;ere :88=e% ;#8 $o& &'e &r=e #$%
#<&=#1 #=&'or oD &'e =&:1:&B mo%e18
#991:e% Dor, #$% $e:&'er %:% 8'e %er:ve
'er r:0'&8 Drom #$B &r=e #$% #<&=#1
#=&'or oD &'e8e =&:1:&B mo%e18.
Dor &'e Do11o;:$0 re#8o$87
&:
.#/ 8:$<e Be#r8 9r:or &o &'e @1:$0 oD
#991:<#&:o$8 Dor &'e 9#&e$&8 :$vo1ve%,
9o;%er 9=A8 oD &'e 3:$% #991:e% Dor
;ere &'e$ #1re#%B eC:8&:$0 #$%
9=b1:<1B be:$0 8o1% :$ &'e m#r3e&K bo&'
:$ &'e P':1:99:$e8 #$% #bro#%K #$%
.b/ #991:<#$&?8 <1#:m8 :$ 'er
#991:<#&:o$8, oD 4<o$8&r=<&:o$4 or
9ro<e88 oD m#$=D#<&=r:$0 &'e =&:1:&B
mo%e18 #991:e% Dor, ;:&' re89e<& &o
UM-4)* #$% UM-450, ;ere b=& #
<om91:<#&e% #$% :m9r#<&:<#1 ver8:o$ oD
#$ o1%, 8:m91e o$e ;':<' '#8 bee$
;e11 3$o;$ &o &'e <o8me&:<8 :$%=8&rB
8:$<e Be#r8 9rev:o=8 &o 'er @1:$0 oD
#991:<#&:o$8, #$% ;':<' be1o$0e% &o
$o o$e eC<e9& &o &'e 0e$er#1 9=b1:<K
#$% ;:&' re89e<& &o UM1184K 'er <1#:m
:$ 'er #991:<#&:o$ oD # =$:&#rB 9o;%er
9=A, ;#8 b=& #$ 1:m:&#&:o$ oD #
9ro%=<& ;e11 3$o;$ &o &'e <o8me&:<8
:$%=8&rB 8:$<e Be#r8 9rev:o=8 &o 'er
@r:$0 oD #991:<#&:o$, #$% ;':<'
be1o$0e% &o $o o$e eC<e9& &o &'e
0e$er#1 9=b1:<K .A$8;er, Ro11o, 99. 9*-
94/.
O$ Se9&ember 18, 19,4, &'e &r:#1 <o=r& :88=e% #$ Or%er .A$$eC
454, Ro11o, 9. 1)5/ 0r#$&:$0 &'e 9re1:m:$#rB :$L=$<&:o$ 9r#Be%
Dor bB 9e&:&:o$er. Co$8eE=e$&1B, &'e <orre89o$%:$0 ;r:& ;#8
8=b8eE=e$&1B :88=e% .A$$eC 45-14, Ro11o, 9. 1*1/ e$Lo:$:$0 &'e
'ere:$ 9r:v#&e re89o$%e$& .&'e$ %eDe$%#$&/ #$% #11 o&'er
9er8o$8 em91oBe% bB 'er, 'er #0e$&8, 8erv#$&8 #$% em91oBee8
Drom %:re<&1B or :$%:re<&1B m#$=D#<&=r:$0, m#3:$0 or <#=8:$0 &o
be m#%e, 8e11:$0 or <#=8:$0 &o be 8o1%, or =8:$0 or <#=8:$0 &o be
=8e% :$ #<<or%#$<e ;:&', or embo%B:$0 &'e =&:1:&B mo%e18 oD &'e
P':1:99:$e P#&e$& OM<e U&:1:&B Mo%e1 "e&&er8 P#&e$& No8. 4)*
.!C&e$8:o$ No. UM-109/, No. 450 .!C&e$8:o$ No. UM-110/, #$%
U&:1:&B Mo%e1 No. 1184 or Drom :$Dr:$0eme$& =9o$ or v:o1#&:$0
8#:% 1e&&er8 9#&e$& :$ #$B ;#B ;'#&8oever .A$$eC 4 5-1 4, Ro11o,
9. 1*1/.
Pr:v#&e re89o$%e$& E=e8&:o$e% &'e 9ro9r:e&B oD &'e &r:#1 <o=r&?8
:88=#$<e oD &'e Fr:& oD Pre1:m:$#rB I$L=$<&:o$ #r0=:$0 &'#& 8:$<e
&'ere :8 8&:11 # 9e$%:$0 <#$<e11#&:o$ 9ro<ee%:$08 beDore &'e
P':1:99:$e P#&e$& OM<e <o$<er$:$0 9e&:&:o$er?8 9#&e$&8, 8=<'
<#$$o& be &'e b#8:8 Dor 9re1:m:$#rB :$L=$<&:o$ .Mo&:o$ Dor
Re<o$8:%er#&:o$, Ro11o, 9. 1*)/.
I$ #$ Or%er %#&e% Se9&ember 11, 19,5, &'e &r:#1 <o=r& %e$:e%
9r:v#&e re89o$%e$&?8 mo&:o$ Dor re<o$8:%er#&:o$ .A$$eC 4N4,
Ro11o, 9. 14)/.
I$ <'#11e$0:$0 &'e8e Or%er8 9r:v#&e re89o$%e$& @1e% # 9e&:&:o$
Dor <er&:or#r: ;:&' &'e re89o$%e$& <o=r& o$ Se9&ember )9, 19,5
.A$$eC 4D4, Ro11o, 99. 148-1,1/ re:&er#&:$0 #mo$0 o&'er &':$08
&'e :$v#1:%:&B oD 9e&:&:o$er?8 9#&e$&8 #$% 9r#Be% &'#& &'e &r:#1
<o=r& be re8&r#:$e% Drom e$Dor<:$0 or <o$&:$=:$0 &o e$Dor<e &'e
Do11o;:$07
.1/ Or%er %#&e% Se9&ember 18, 19,4,
0r#$&:$0 &'e 9re1:m:$#rB :$L=$<&:o$K
.)/ Fr:& oD 9re1:m:$#rB :$L=$<&:o$
%#&e% Se9&ember 18, 19,4K #$%
.*/ Or%er %#&e% Se9&ember 11, 19,4
%e$B:$0 9e&:&:o$er?8 mo&:o$ 9e&:&:o$
Dor re<o$8:%er#&:o$.
O$ O<&ober 15, 19,5, &'e Fr:& oD Pre1:m:$#rB I$L=$<&:o$ ;#8
:88=e% bB &'e re89o$%e$& Co=r& oD A99e#18 #8 Do11o;87
NOF, TH!R!OR!, Bo=, re89o$%e$&8, #$%Jor #$B
9er8o$J9er8o$8 #<&:$0 o$ Bo=r 8&e#%, #re 'erebB
!NJOIN!D &o R!STRAIN Drom e$Dor<:$0 or
<o$&:$=:$0 &o e$Dor<e, &'e 9ro<ee%:$08 <om91#:$e%
oD :$ &'e 9e&:&:o$ &o ;:&7 1/ Or%er %#&e% Se9&ember
18, 19,4, 0r#$&:$0 &'e 9re1:m:$#rB :$L=$<&:o$K )/
Fr:& oD Pre1:m:$#rB I$L=$<&:o$ %#&e% Se9&ember 18,
19,4K #$% Or%er %#&e% Se9&ember 11, 19,5,
%e$B:$0 9e&:&:o$er?8 mo&:o$ Dor re<o$8:%er#&:o$, #11
:88=e% :$ <o$$e<&:o$ ;:&' C:v:1 C#8e No. 19908,
UNTI" URTH!R ORD!RS ROM THIS COURT.
.A$$eC 4P4, Ro11o, 9. 1.,*/
O$ ebr=#rB 1+, 19,+, re89o$%e$& <o=r& 9rom=10#&e% #
%e<:8:o$ &'e %:89o8:&:ve 9or&:o$ oD ;':<' re#%87
&$
FH!R!OR!, @$%:$0 $o mer:& :$ &'e 'ere:$
9e&:&:o$, &'e 8#me :8 'erebB %:8m:88e% #$% &'e
9re1:m:$#rB :$L=$<&:o$ 9rev:o=81B :88=e% bB &':8
Co=r& :8 'erebB 8e& #8:%e, ;:&' <o8&8.
SO ORD!R!D. .CA De<:8:o$, Ro11o, 9. 189/.
1$ 8#:% %e<:8:o$ re89o$%e$& <o=r& 8&#&e% &'#& :$ %:89o8:$0 oD
&'e 9e&:&:o$ :& &#<31e% o$1B &'e :88=e oD ;'e&'er &'e <o=r& a
'uo #<&e% ;:&' 0r#ve #b=8e oD %:8<re&:o$ :$ :88=:$0 &'e
<'#11e$0e% or%er8. I& m#%e <1e#r &'e E=e8&:o$ oD ;'e&'er &'e
9#&e$&8 '#ve bee$ :$Dr:$0e% or $o& ;#8 $o& %e&erm:$e%
<o$8:%er:$0 &'e <o=r& a 'uo '#8 Be& &o %e<:%e &'e <#8e o$ &'e
mer:&8 ."bid., 9. 18+/.
ee1:$0 #00r:eve%, 9r:v#&e re89o$%e$& move% &o re<o$8:%er &'e
#Dore-me$&:o$e% De<:8:o$ b#8e% o$ &'e Do11o;:$0 0ro=$%87
I
THAT THIS HONORAB"! COURT !RR!D
IN NOT APPR!CIATING TH! !OIST!NC!
O A AIR 2U!STION O INGA"IDIT6
O PRIGAT! R!SPOND!NT?S PAT!NTS.
II
THAT THIS HONORAB"! COURT !RR!D
IN NOT R!J!CTING TH! TH!OR6 O
R!SPOND!NT JUDG! THAT H! HAS NO
JURISDICTION TO INGA"IDAT! TH!
PAT!NTS UPON GROUND O "AC5 O
NOG!"T6 O TH! PRODUCTS
PAT!NT!D. .Mo&:o$ Dor
Re<o$8:%er#&:o$, Ro11o, 9. 190/.
Rev:e;:$0 o$ re<o$8:%er#&:o$, re89o$%e$& <o=r& 0#ve ;e:0'& &o
9r:v#&e re89o$%e$&?8 #11e0#&:o$ &'#& &'e 1#&&er?8 9ro%=<&8 #re
$o& :%e$&:<#1 or eve$ o$1B 8=b8&#$&:#11B :%e$&:<#1 &o &'e
9ro%=<&8 <overe% bB 9e&:&:o$er?8 9#&e$&8. S#:% <o=r& $o&:<e%
&'#& <o$&r#rB &o &'e 1o;er <o=r&8 9o8:&:o$ &'#& &'e <o=r& a
'uo'#% $o L=r:8%:<&:o$ &o %e&erm:$e &'e E=e8&:o$ oD :$v#1:%:&B
oD &'e 9#&e$&8, Se<&:o$ 45 #$% 4+ oD &'e P#&e$& "#; #11o; &'e
<o=r& &o m#3e # @$%:$0 o$ &'e v#1:%:&B or :$v#1:%:&B oD 9#&e$&8
#$% :$ &'e eve$& &'ere eC:8&8 # D#:r E=e8&:o$ oD :&8 :$v#1:%:&B, &'e
8:&=#&:o$ <#118 Dor # %e$:#1 oD &'e ;r:& oD 9re1:m:$#rB :$L=$<&:o$
9e$%:$0 &'e ev#1=#&:o$ oD &'e ev:%e$<e 9re8e$&e% .Ro11o, 99.
)18-))+/. T'=8, @$%:$0 &'e 1o;er <o=r&?8 9o8:&:o$ &o '#ve bee$
o99o8e% &o P#&e$& "#;, re89o$%e$& <o=r& <o$8:%ere% :& # 0r#ve
#b=8e oD %:8<re&:o$ ;'e$ &'e <o=r& a 'uo :88=e% &'e ;r:& be:$0
E=e8&:o$e% ;:&'o=& 1oo3:$0 :$&o &'e %eDe$8e8 #11e0e% bB 'ere:$
9r:v#&e re89o$%e$&. =r&'er, :& <o$8:%ere% &'e reme%B oD
#99e#1, =$%er &'e <:r<=m8&#$<e8, &o be :$#%eE=#&e.
T'=8, o$ J=1B +, 19,+, re89o$%e$& <o=r& m#%e # <om91e&e
&=r$#bo=& Drom :&8 or:0:$#1 %e<:8:o$ #$% 9rom=10#&e% #
Re8o1=&:o$, &'e %:89o8:&:ve 9or&:o$ oD ;':<' re#%87
FH!R!OR!, o=r %e<:8:o$ :8 'erebB 8e& #8:%e. T'e
;r:& oD <er&:or#r: :8 or%ere% :88=e%. A<<or%:$01B,
&'e <'#11e$0e% or%er8, !C':b:& H #$% H-1 #$% &'e
or%er %e$B:$0 &'e mo&:o$ Dor re<o$8:%er#&:o$
.A$$eC 454, Pe&:&:o$/, #re 'erebB 8e& #8:%e. T'e
;r:& oD 9re1:m:$#rB :$L=$<&:o$ 9rev:o=81B or%ere%
bB &':8 Co=r& #$% or%ere% 1:D&e% bB &'e De<:8:o$
$o; be:$0 8e& #8:%e :8 'erebB re:$8&#&e% #$% m#%e
9erm#$e$&. F:&'o=& 9ro$o=$<eme$& #8 &o <o8&8.
SO ORD!R!D. .CA Re8o1=&:o$, Ro11o, 9. ))+/.
I$ # Re8o1=&:o$ %#&e% November 4, 19,+, re89o$%e$& <o=r&, $o&
9er8=#%e% bB &'e 0ro=$%8 embo%:e% :$ &'e mo&:o$ Dor
re<o$8:%er#&:o$ @1e% bB 'ere:$ 9e&:&:o$er .A$$eC 4G 4, Ro11o, 9.
)),/, %e$:e% &'e 8#me Dor 1#<3 oD mer:&, &'erebB m#:$&#:$:$0
&'e 8#me 8&#$% :& &oo3 :$ :&8 J=1B +, 19,+ Re8o1=&:o$ .Ro11o, 9.
)81/. He$<e, &':8 9e&:&:o$.
O$ De<ember *, 19,+, ;:&'o=& 0:v:$0 %=e <o=r8e &o &'e
9e&:&:o$, &':8 Co=r& reE=:re% re89o$%e$& &o @1e 'er Comme$&
.Ro11o, 9. )90/ ;':<' ;#8 @1e% o$ De<ember 1+, 19,+ .Ro11o, 99.
)91-*1+/. T'ere#D&er, 9e&:&:o$er @1e% 'er Re91B .Ro11o, 9. *)*/
#$% o$ M#B *0, 19,,, &'e 9e&:&:o$ ;#8 0:ve$ %=e <o=r8e .Ro11o,
9. *45/. Pe&:&:o$er @1e% 'er br:eD o$ J=1B 14, 19,, .Ro11o, 9. *51/
;':1e 9r:v#&e re89o$%e$& @1e% 'er br:eD o$ A=0=8& )5, 19,,
.Ro11o, 9. *59/. T'ere#D&er, 9e&:&:o$er '#v:$0 D#:1e% &o @1e re91B
br:eD, &'e Co=r& re8o1ve% &o %e<1#re &'e <#8e 8=bm:&&e% Dor
%e<:8:o$ o$ De<ember 9, 19,, .Ro11o, 9. *59/.
T'e #88:0$me$& oD error8 r#:8e% bB &'e 9e&:&:o$er :$ &':8 <#8e
.Ro11o, 99. 15-1+/ m#B be re%=<e% &o &'ree m#:$ :88=e87
&=
.1/ F'e&'er or $o& :$ #$ #<&:o$ Dor
:$Dr:$0eme$& &'e Co=r& a 'uo '#%
L=r:8%:<&:o$ &o %e&erm:$e &'e :$v#1:%:&B
oD &'e 9#&e$&8 #& :88=e ;':<'
:$v#1:%:&B ;#8 8&:11 9e$%:$0
<o$8:%er#&:o$ :$ &'e 9#&e$& oM<e.
.)/ F'e&'er or $o& &'e Co=r& a
'uo <omm:&&e% 0r#ve #b=8e oD
%:8<re&:o$ :$ &'e :88=#$<e oD # ;r:& oD
9re1:m:$#rB :$L=$<&:o$.
.*/ F'e&'er or $o& <er&:or#r: :8 &'e
9ro9er reme%B.
T'e @r8& :88=e '#8 bee$ 1#:% &o re8& :$ # $=mber oD <#8e8 ;'ere
&'e Co=r& r=1e% &'#& 4F'e$ # 9#&e$& :8 8o=0'& &o be e$Dor<e%,
&'e E=e8&:o$8 oD :$ve$&:o$, $ove1&B or 9r:or =8e, #$% e#<' oD
&'em, #re o9e$ &o L=%:<:#1 eC#m:$#&:o$.4 .G#r0#8 v. .M. 6#9&:<o
N Co. 40 P':1. 199 P1919QK G#r0#8 v. C'=#, 5, P':1. ,90-,91
P19**QK r#$3 #$% Go'$ v. 5o8=B#$# 59 P':1. )0, P19**Q/.
U$%er &'e 9re8e$& P#&e$& "#;, &'ere :8 eve$ 1e88 re#8o$ &o
%o=b& &'#& &'e &r:#1 <o=r& '#8 L=r:8%:<&:o$ &o %e<1#re &'e 9#&e$&8
:$ E=e8&:o$ :$v#1:%. A 9#&e$&ee 8'#11 '#ve &'e eC<1=8:ve r:0'& &o
m#3e, =8e #$% 8e11 &'e 9#&e$&e% #r&:<1e or 9ro%=<& #$% &'e
m#3:$0, =8:$0, or 8e11:$0 bB #$B 9er8o$ ;:&'o=& &'e
#=&'or:>#&:o$ oD &'e 9#&e$&ee <o$8&:&=&e8 :$Dr:$0eme$& oD &'e
9#&e$& .Se<. *,, R.A. 1+5/. A$B 9#&e$&ee ;'o8e r:0'&8 '#ve
bee$ :$Dr:$0e% =9o$ m#B br:$0 #$ #<&:o$ beDore &'e 9ro9er CI
$o; .RTC/ #$% &o 8e<=re #$ :$L=$<&:o$ Dor &'e 9ro&e<&:o$ oD ':8
r:0'&8 .Se<. 4), R.A. 1+5/. DeDe$8e8 :$ #$ #<&:o$ Dor
:$Dr:$0eme$& #re 9rov:%e% Dor :$ Se<&:o$ 45 oD &'e 8#me 1#;
;':<' :$ D#<& ;ere #v#:1e% oD bB 9r:v#&e re89o$%e$& :$ &':8 <#8e.
T'e$, #8 <orre<&1B 8&#&e% bB re89o$%e$& Co=r& oD A99e#18, &':8
<o$<1=8:o$ :8 re:$Dor<e% bB Se<. 4+ oD &'e 8#me 1#; ;':<'
9rov:%e8 &'#& :D &'e Co=r& 8'#11 @$% &'e 9#&e$& or #$B <1#:m
&'ereoD :$v#1:%, &'e D:re<&or 8'#11 o$ <er&:@<#&:o$ oD &'e @$#1
L=%0me$& ... :88=e #$ or%er <#$<e11:$0 &'e 9#&e$& or &'e <1#:m8
Do=$% :$v#1:% #$% 8'#11 9=b1:8' # $o&:<e &'ereoD :$ &'e OM<:#1
G#>e&&e.4 U9o$ 8=<' <er&:@<#&:o$, :& :8 m:$:8&er:#1 o$ &'e 9#r& oD
&'e 9#&e$& oM<e &o eCe<=&e &'e L=%0me$&. .Ro11o, 99. ))1-)))/.
II.
T'e b=r%e$ oD 9rooD &o 8=b8&#$&:#&e # <'#r0e oD :$Dr:$0eme$& :8
;:&' &'e 91#:$&:A. B=& ;'ere &'e 91#:$&:A :$&ro%=<e8 &'e 9#&e$&
:$ ev:%e$<e, #$% &'e 8#me :8 :$ %=e Dorm, &'ere :8 <re#&e%
# prima facie9re8=m9&:o$ oD :&8 <orre<&$e88 #$% v#1:%:&B. T'e
%e<:8:o$ oD &'e Comm:88:o$er .$o; D:re<&or/ oD P#&e$& :$
0r#$&:$0 &'e 9#&e$& :8 9re8=me% &o be <orre<&. T'e b=r%e$ oD
0o:$0 Dor;#r% ;:&' &'e ev:%e$<e .b=r%e$ oD ev:%e$<e/ &'e$
8':D&8 &o &'e %eDe$%#$& &o over<ome bB <om9e&e$& ev:%e$<e
&':8 1e0#1 9re8=m9&:o$.
T'e E=e8&:o$ &'e$ :$ &'e :$8&#$& <#8e :8 ;'e&'er or $o& &'e
ev:%e$<e :$&ro%=<e% bB 9r:v#&e re89o$%e$& 'ere:$ :8 8=M<:e$&
&o over<ome 8#:% 9re8=m9&:o$.
AD&er # <#reD=1 rev:e; oD &'e ev:%e$<e <o$8:8&:$0 oD +4 eC':b:&8
#$% or#1 &e8&:mo$:e8 oD @ve ;:&$e88e8 9re8e$&e% bB 9r:v#&e
re89o$%e$&8 beDore &'e Co=r& oD :r8& I$8&#$<e beDore &'e Or%er
oD 9re1:m:$#rB :$L=$<&:o$ ;#8 :88=e% #8 ;e11 #8 &'o8e 9re8e$&e%
bB &'e 9e&:&:o$er, re89o$%e$& Co=r& oD A99e#18 ;#8 8#&:8@e%
&'#& &'ere :8 # prima facie 8'o;:$0 oD # D#:r E=e8&:o$ oD
:$v#1:%:&B oD 9e&:&:o$er?8 9#&e$&8 o$ &'e 0ro=$% oD 1#<3 oD
$ove1&B. A8 9o:$&e% o=& bB 8#:% #99e11#&e <o=r& 8#:% ev:%e$<e
#99e#re% $o& &o '#ve bee$ <o$8:%ere% #& #11 bB &'e <o=r& a
'uo Dor #11e0e% 1#<3 oD L=r:8%:<&:o$, o$ &'e m:8&#3e$ $o&:o$ &'#&
8=<' E=e8&:o$ :$ ;:&':$ &'e eC<1=8:ve L=r:8%:<&:o$ oD &'e 9#&e$&
oM<e.
I& '#8 bee$ re9e#&e%1B 'e1% &'#& #$ :$ve$&:o$ m=8& 9o88e88 &'e
e88e$&:#1 e1eme$&8 oD $ove1&B , or:0:$#1:&B #$% 9re<e%e$<e #$%
Dor &'e 9#&e$&ee &o be e$&:&1e% &o 9ro&e<&:o$, &'e :$ve$&:o$
m=8& be $e; &o &'e ;or1%. A<<or%:$01B, # 8:$01e :$8&#$<e oD
9=b1:< =8e oD &'e :$ve$&:o$ bB # 9#&e$&ee Dor more &'#$ &;o
Be#r8 .$o; Dor more &'#$ o$e Be#r o$1B =$%er Se<. 9 oD &'e
P#&e$& "#;/ beDore &'e %#&e oD ':8 #991:<#&:o$ Dor ':8 9#&e$&,
;:11 be D#&#1 &o, &'e v#1:%:&B oD &'e 9#&e$& ;'e$ :88=e%. .r#$3,
e& #1. v. 5o8=B#m# G#r0#8 v. .M. 6#9&:<o N Co. #$% G#r0#8 v.
C'=#, e& #1., supra/.
T'e 1#; 9rov:%e87
S!C. 9. "nvention not considered new or
patentable. R A$ :$ve$&:o$ 8'#11 $o& be <o$8:%ere%
$e; or <#9#b1e oD be:$0 9#&e$&e% :D :& ;#8 3$o;$
or =8e% bB o&'er8 :$ &'e P':1:99:$e8 beDore &'e
:$ve$&:o$ &'ereoD bB &'e :$ve$&or $#me% :$ #$
#991:<#&:o$ Dor 9#&e$& Dor &'e :$ve$&:o$K or :D :& ;#8
&&
9#&e$&e% or %e8<r:be% :$ #$B 9r:$&e% 9=b1:<#&:o$ :$
&'e P':1:99:$e8 or #$B Dore:0$ <o=$&rB more &'#$
o$e Be#r beDore &'e #991:<#&:o$ Dor # 9#&e$&
&'ereDorK or :D :& '#% bee$ :$ 9=b1:< =8e or o$ 8#1e
:$ &'e P':1:99:$e8 Dor more &'#$ o$e Be#r beDore
&'e #991:<#&:o$ Dor # 9#&e$& &'ereDorK or :D :& :8 &'e
8=bLe<& m#&&er oD # v#1:%:&B :88=e% 9#&e$& :$ &'e
P':1:99:$e8 0r#$&e% o$ #$ #991:<#&:o$ @1e% beDore
&'e @1:$0 oD &'e #991:<#&:o$ Dor 9#&e$& &'ereDor.
T'=8, more 89e<:@<#11B, =$%er Amer:<#$ "#; Drom ;':<' o=r
P#&e$& "#; ;#8 %er:ve% .G#r0#8 v. .M. 6#9&:<o N Co. supra/ :&
:8 0e$er#11B 'e1% &'#& :$ 9#&e$& <#8e8 # 9re1:m:$#rB :$L=$<&:o$
;:11 $o& :88=e Dor 9#&e$& :$Dr:$0eme$& =$1e88 &'e v#1:%:&B oD &'e
9#&e$& :8 <1e#r #$% beBo$% E=e8&:o$. T'e :88=#$<e oD 1e&&er8
9#&e$&, 8&#$%:$0 #1o$e, :8 $o& 8=M<:e$& &o 8=99or& 8=<' %r#8&:<
re1:eD .8 De11er?8 F#13er o$ P#&e$&8 9. 40+/. I$ <#8e8 oD
:$Dr:$0eme$& oD 9#&e$& $o 9re1:m:$#rB :$L=$<&:o$ ;:11 be 0r#$&e%
=$1e88 &'e 9#&e$& :8 v#1:% #$% :$Dr:$0e% beBo$% E=e8&:o$ #$%
&'e re<or% <o$<1=8:ve1B 9rove8 &'e %eDe$8e :8 8'#m. ."bid., 9.
40)/
I$ &'e 8#me m#$$er, =$%er o=r L=r:89r=%e$<e, #8 # 0e$er#1 r=1e
be<#=8e oD &'e :$L=r:o=8 <o$8eE=e$<e8 # ;r:& oD :$L=$<&:o$ m#B
br:$0, &'e r:0'& &o &'e re1:eD %em#$%e% m=8& be <1e#r #$%
=$m:8&#3#b1e. .S#$03: v. Come1e<, )1 SCRA 1*9)K De<ember )+,
19+,/ #$% &'e %:88o1=&:o$ oD &'e ;r:& :8 9ro9er ;'ere #991:<#$&
'#8 %o=b&D=1 &:&1e &o &'e %:89=&e% 9ro9er&B. .R#mo8 v. C.A., 95
SCRA *59/.
III.
I& ;:11 be $o&e% &'#& &'e v#1:%:&B oD 9e&:&:o$er?8 9#&e$&8 :8 :$
E=e8&:o$ Dor ;#$& oD $ove1&B. Pr:v#&e re89o$%e$& <o$&e$%8 &'#&
9o;%er 9=A8 I%e$&:<#1 :$ #99e#r#$<e ;:&' &'#& <overe% bB
9e&:&:o$er?8 9#&e$&8 eC:8&e% #$% ;ere 9=b1:<1B 3$o;$ #$% =8e%
#8 e#r1B #8 19+* 1o$0 beDore 9e&:&:o$er ;#8 :88=e% &'e 9#&e$&8
:$ E=e8&:o$. .":8& oD !C':b:&8, Ro11o, 99. 194-199/. A8 <orre<&1B
ob8erve% bB re89o$%e$& Co=r& oD A99e#18, 48:$<e 8=M<:e$&
9rooD8 '#ve bee$ :$&ro%=<e% :$ ev:%e$<e 8'o;:$0 # D#:r
E=e8&:o$ oD &'e :$v#1:%:&B oD &'e 9#&e$&8 :88=e% Dor 8=<' mo%e18,
:& :8 b=& r:0'& &'#& &'e ev:%e$<e be 1oo3e% :$&o, ev#1=#&e% #$%
%e&erm:$e% o$ &'e mer:&8 8o &'#& &'e m#&&er oD ;'e&'er &'e
9#&e$&8 :88=e% ;ere :$ D#<& v#1:% or $o& m#B be re8o1ve%.4
.Ro11o, 99. )8+-)8,/.
A11 &'e8e $o&;:&'8&#$%:$0, &'e &r:#1 <o=r& $o$e&'e1e88 :88=e%
&'e ;r:& oD 9re1:m:$#rB :$L=$<&:o$ ;':<' =$%er &'e
<:r<=m8&#$<e8 8'o=1% be %e$:e%.
or D#:1=re &o %e&erm:$e @r8& &'e v#1:%:&B oD &'e 9#&e$&8 beDore
#Dore8#:% :88=#$<e oD &'e ;r:&, &'e &r:#1 <o=r& D#:1e% &o 8#&:8DB
&'e &;o reE=:8:&e8 $e<e88#rB :D #$ :$L=$<&:o$ :8 &o :88=e,
$#me1B7 &'e eC:8&e$<e oD &'e r:0'& &o be 9ro&e<&e% #$% &'e
v:o1#&:o$ oD 8#:% r:0'&. .B=#B#$ C#&&1e Co., I$<. v. 2=:$&:11#$, 1)8
SCRA ),+/.
U$%er &'e #bove e8&#b1:8'e% 9r:$<:91e8, :& #99e#r8 obv:o=8 &'#&
&'e &r:#1 <o=r& <omm:&&e% # 0r#ve #b=8e oD %:8<re&:o$ ;':<'
m#3e8 <er&:or#r: &'e #99ro9r:#&e reme%B.
A8 Do=$% bB re89o$%e$& Co=r& oD A99e#18, &'e :$L=$<&:ve or%er
oD &'e &r:#1 <o=r& :8 oD 8o 0e$er#1 # &e$or &'#& 9e&:&:o$er m#B be
&o&#11B b#rre% Drom &'e 8#1e oD #$B 3:$% oD 9o;%er 9=A. U$%er
&'e <:r<=m8&#$<e8, re89o$%e$& #99e11#&e <o=r& :8 oD &'e v:e;
&'#& or%:$#rB #99e#1 :8 obv:o=81B :$#%eE=#&e. .Ro11o, 9. )88/. A
9#r#11e1 ;#8 %r#;$ Drom # %e<:8:o$ oD &'e S=9reme Co=r& :$ &'e
<#8e oD +anche1 v. .on. #ourt of !ppeals, +9 SCRA *)8 P19,+Q
;'ere &'e :r8& D:v:8:o$ oD &'e S=9reme Co=r& r=1e% &'#& 4T'e
9rero0#&:ve ;r:& oD <er&:or#r: m#B be #991:e% Dor bB 9ro9er
9e&:&:o$ $o&;:&'8&#$%:$0 &'e eC:8&e$<e oD &'e re0=1#r reme%B oD
#$ #99e#1 :$ %=e <#=8e ;'e$ #mo$0 o&'er re#8o$8, &'e bro#%er
:$&ere8&8 oD L=8&:<e 8o reE=:re or #$ or%:$#rB #99e#1 :8 $o& #$
#%eE=#&e reme%B.4
Pr:v#&e re89o$%e$& m#:$&#:$8 &'e 9o8:&:o$ &'#& &'e re8o1=&:o$8
8o=0'& &o be #99e#1e% Drom '#% 1o$0 be<ome @$#1 #$%
eCe<=&orB Dor D#:1=re oD Ho$. ReB$#1%o P. Ho$r#%o, &'e &r:#1
<o=r& L=%0e, &o #99e#1 bB <er&:or#r: Drom &'e re8o1=&:o$8 oD
re89o$%e$& Co=r& oD A99e#18. .Ro11o, 99. )91-)9)/.
S=<' <o$&e$&:o$ :8 =$&e$#b1e.
T'ere :8 $o %:89=&e &'#& 9e&:&:o$er '#8 8e#8o$#b1B 9e&:&:o$e%.
O$ &'e o&'er '#$%, :& :8 e1eme$&#rB &'#& &'e &r:#1 L=%0e :8 #
mere nominal party #8 <1e#r1B 9rov:%e% :$ Se<&:o$ 5, R=1e +5 oD
&'e Rev:8e% R=1e8 oD Co=r& ;'ere :& 8'#11 be &'e %=&B oD 8=<'
9er8o$ or 9er8o$8 :$&ere8&e% :$ 8=8&#:$:$0 &'e 9ro<ee%:$08 :$
<o=r&, 4&o #99e#r #$% %eDe$%, bo&' :$ ':8 or &'e:r o;$ be'#1D
#$% :$ be'#1D oD &'e <o=r& or L=%0e #Ae<&e% bB &'e
9ro<ee%:$08.4
&>
Re1#&:ve &'ere&o 4&'e L=%0e ;'o8e or%er :8 =$%er #&&#<3 :8
mere1B # $om:$#1 9#r&BK ;'ereDore, # L=%0e :$ ':8 oM<:#1
<#9#<:&B 8'o=1% $o& be m#%e &o #99e#r #8 # 9#r&B 8ee3:$0
rever8#1 oD # %e<:8:o$ &'#& :8 =$D#vor#b1e &o &'e #<&:o$ &#3e$ bB
':m.4 .Ho$. A1<#8:% v. S#m8o$, 10) P':1. ,*5-,*+K T#ro$# v.
S#Bo, +, SCRA 508, 5)4K ":m Se v. Ar0e1, ,0 SCRA *,8/.
A8 &o 9e&:&:o$er?8 <1#:m oD 9re8<r:9&:o$, 9r:v#&e re89o$%e$&?8
<o$&e$&:o$ &'#& 8=<' reDer8 &o &'e @1:$0 oD 9e&:&:o$8 Dor
<#$<e11#&:o$ :$ &'e P#&e$& OM<e =$%er Se<. )8 oD &'e P#&e$&
"#; #$% $o& &o # %eDe$8e #0#:$8& #$ #<&:o$ Dor :$Dr:$0eme$&
=$%er Se<. 45 &'ereoD ;':<' m#B be r#:8e% #$B&:me, :8 ev:%e$&
=$%er #Dore8#:% 1#;.
PR!MIS!S CONSID!R!D, &'e #88#:1e% re8o1=&:o$8 oD &'e Co=r& oD
A99e#18 #re 'erebB AIRM!D.
SO ORD!R!D.
G.R. No. 1++88+ J=1B *0, )008
12. MATT!", INC. Petitioner,
vs.
!MMA RANCISCO, D:re<&or-Ge$er#1 SoD &'e I$&e11e<&=#1
Pro9er&B OM<e, HON. !STR!""ITA B. AB!"ARDO, D:re<&or
oD &'e B=re#= oD "e0#1 AA#:r8 .IPO/, #$% JIMM6
U6, 6espondents.
]]
? ) C I 4 I " 1
AUSTRIA-MARTIN!(, J.:
,efore the Court is a Petition for 6eview on Certiorari under 6ule :$ of
the 6ules of Court assailin the ?ecision
1
dated #une 11, F'': of the
Court of Appeals ;CA< in CA-I.6. 4P 1o. >':>' and the CA
6esolution
F
dated #anuary 1%, F''$ which denied petitioner9s *otion for
6econsideration.
The factual bac!round of the case is as follows5
"n 1ovember 1:, 1%%1, #immy A. 3y ;3y< +led a trademar! application
4erial 1o. &>$:0
0
with the ,ureau of Patents, Trademar!s and
Technoloy Transfer ;,PTTT< for reistration of the trademar! -,A6,I)-
for use on confectionary products, such as mil!, chocolate, candies,
mil!bar and chocolate candies in Class 0' of the International
Classi+cation of Ioods. The trademar! application was published in the
*arch-April 1%%0 issue of the ,PTTT "Dcial Ia.ette, Lol. LI, 1o. F,
which was released for circulation on *ay 01, 1%%0.
&%
"n #uly 1%, 1%%0, *attel, Inc. ;*attel<, a corporation orani.ed under
the laws of the 4tate of ?elaware, 3nited 4tates of America, +led a
1otice of "pposition
:
aainst 3y9s -,arbie- trademar! as the latter was
confusinly similar to its trademar! on dolls, doll clothes and doll
accessories, toys and other similar commercial products. It was
doc!eted as Inter Partes Case 1o. 0>%>.
"n Auust F=, 1%%0, 3y +led his Answer
$
to the 1otice of "pposition,
denyin the alleations therein and claimin that there is no similarity
between the two oods.
@hile the case was pendin, 6epublic Act ;6.A.< 1o. >F%0, otherwise
!nown as the Intellectual Property Code of the Philippines was enacted
and too! efect on #anuary 1, 1%%>. The ,PTTT was abolished and its
functions transferred to the newly created Intellectual Property "Dce
;IP"<.
"n *ay 1>, F''', public respondent )strellita ,. Abelardo, the ?irector
of the ,ureau of (eal Afairs, IP", rendered a ?ecision
=
dismissin
*attel9s opposition and ivin due course to 3ySs application for the
reistration of the trademar! -,arbie- used on confectionary products.
The ?irector held that there was no confusin similarity between the
two competin mar!s because the oods were non-competin or
unrelated.
"n #une $, F''', *attel +led a *otion for 6econsideration.
&
"n *ay F&,
F''F, the ?irector of the ,ureau of (eal Afairs, IP" issued a
6esolution
>
denyin *attel9s *otion for 6econsideration.
"n #une F:, F''F, *attel +led an Appeal *emorandum
%
with the "Dce
of the ?irector Ieneral, IP". ?espite due notice, no comment was
submitted by 3y. Thus, in an "rder
1'
dated "ctober &, F''F, 3y was
deemed to have waived his riht to +le a comment on the appeal.
"n 4eptember 0, F''0, public respondent )mma C. Brancisco, the
?irector Ieneral, rendered a ?ecision
11
denyin the appeal on the
round that there was no proof on record that *attel had ventured into
the production of chocolates and confectionary products under the
trademar! -,arbie- to enable it to prevent 3y from usin an identical
-,arbie- trademar! on said oodsH that the records were bereft of the
fact that the ?irector of the ,ureau of Trademar!s ;,"T< had already
declared the sub8ect trademar! application abandoned due to the non-
+lin of the ?eclaration of Actual 3se ;?A3< by 3y.
"n 4eptember 1F, F''0, *attel +led a *otion for 1ew Trial
1F
on the
round of newly discovered evidence -- i(e., *attel9s Trademar!
Application 4erial 1o. :-1%%&-1F:0F& for reistration of the trademar!
-,arbie- for use on -confectionaries, sweets and chewin um, none
bein medicated, sweetmeats included in Class 0', chocolate, popcorn,
chocolate biscuits ;other than biscuits for animals<, pastries,
preparations for cereals for food for human consumption, ices, ice
creams- under Class 0' of the International Classi+cation of Ioods --
was unopposed after publication in Lol. LI 1o. 0 of the IP" "Dcial
Ia.ette which was released on #une F', F''0.
"n "ctober FF, F''0, the ?irector Ieneral issued an "rder
10
denyin
the motion for new trial.
"n 1ovember 1F, F''0, *attel +led a Petition for 6eview
1:
with the CA.
Aain, despite due notice, no comment on the petition was +led by 3y.
Thus, in a 6esolution
1$
dated April F', F'':, the CA resolved to
dispense with the +lin of the comment and considered the petition
submitted for resolutionQdecision sans comment.
"n #une 11, F'':, the CA rendered a ?ecision
1=
aDrmin the decision of
the ?irector Ieneral.
"n #uly 1$, F'':, *attel +led a *otion for 6econsideration
1&
but it was
denied by the CA in a 6esolution
1>
dated #anuary 1%, F''$.
Aence, the present petition raisin the followin issues5
I.
@A)TA)6 "6 1"T IT I4 I6AL) )66"6 "1 TA) PA6T "B TA) A"1.
C"36T "B APP)A(4 T" 63() TAAT -?olls, ?oll Clothes, and ?oll
Accessories, Costumes, Toys and other similar commercial products-
LI4-^-LI4 -Confectionery products, namely, mil! chocolate, candies,
mil!bar, and chocolate candies- A6) 316)(AT)? 43CA TAAT 34) "B
I?)1TICA( T6A?)*A6N4 I4 31(IN)(2 T" CA34) C"1B34I"1 I1 TA)
*I1?4 "B TA) P36CAA4I1I P3,(IC.
II.
@A)TA)6 "6 1"T IT I4 I6AL) )66"6 "1 TA) PA6T "B TA) A"1.
C"36T "B APP)A(4 T" 434TAI1 TA) BI1?I1I4 "B TA) ?I6)CT"6
I)1)6A( "B TA) I1T)(()CT3A( P6"P)6T2 "BBIC) ;IP"< TAAT IT I4
P6)*AT36) T" C"1C(3?) TAAT APP(ICATI"1 4)6IA( 1". &>$:0 ,)
?))*)? @ITA?6A@1 B"6 BAI(36) T" BI() TA) ?)C(A6ATI"1 "B
ACT3A( 34) ;?A3<, C"14I?)6I1I TAAT 43CA ?)C(A6ATI"1 I4 TA)
P6)6"IATIL) "B TA) ?I6)CT"6 "B T6A?)*A6N4.
>'
III.
@A)TA)6 "6 1"T P6ILAT)-6)4P"1?)1T 4A"3(? ,) P6)43*)? T"
AAL) I1T)1?)? T" CA4A-I1 A1? 6I?) "1 TA) I""?@I(( A1?
@I?)4P6)A? 6)C"I1ITI"1 "B TA) P)TITI"1)694 *A6N C"14I?)6I1I
TAAT P6ILAT) 6)4P"1?)1T A?"PT)? A *A6N TAAT I4 )MACT(2
I?)1TICA( T" P)TITI"1)694 *A6N I1 4P)((I1I A1? 4T2().
IL.
@A)TA)6 "6 1"T T6A?)*A6N APP(ICATI"1 1". :-1%%&-1F:0F&
4A"3(? ,) C"14I?)6)? -1)@(2-?I4C"L)6)? )LI?)1C).-
1%
*attel arues that its products are items related to 3y9s productsH
hence, identical trademar!s should not be used where the possibility of
confusion as to source or oriin of the product is certainH that the
?irector Ieneral of the IP" has the power to act on a pendin
trademar! application considered as -withdrawn- for failure to +le the
?A3H that by adoptin an eCactly identical mar!, in spellin and style,
3y should be presumed to have intended to cash in or ride on the
oodwill and widespread reconition en8oyed by *attel9s mar!H that
*attel should be allowed to introduce Trademar! Application 4erial 1o.
:-1%%&-1F:0F& as -newly discovered evidence.-
"n the other hand, 3y submits that the case has become moot and
academic since the records of the IP" will show that no ?A3 was +led
on or before ?ecember 1, F''1H thus, he is deemed to have abandoned
his trademar! application for failure to comply with the mandatory +lin
of the ?A3.
Bor its part, the "4I contends that the petition primarily raised factual
issues which are not proper sub8ect of a petition for review under 6ule
:$ of the 6ules of Court and that, at any rate, *attel failed to establish
any rave error on the part of respondent public oDcials which will
warrant the rant of the present petition. It submits that confectionary
products, namely5 mil! chocolate, candies, mil!bar and chocolate
candies, on the one handH and dolls, doll clothes and doll accessories,
costumes, toys and other similar commercial products, on the other
hand, are products which are completely unrelated to one anotherH that
withdrawal of pendin application for failure to +le a ?A3 must +rst be
the sub8ect of an administrative proceedin before the ?irector of
Trademar!sH that *attel9s Trademar! Application 4erial 1o. :-1%%&-
1F:0F& cannot be considered as newly discovered evidence since said
trademar! application was +led only on 4eptember 0, 1%%&, or more
than two years after the case had been deemed submitted for decision.
The instant case has been rendered moot and academic.
3y9s declaration in his Comment and *emorandum before this Court
that he has not +led the ?A3 as mandated by pertinent provisions of
6.A. 1o. >F%0 is a 8udicial admission that he has efectively abandoned
or withdrawn any riht or interest in his trademar!.
4ection 1F:.F of 6.A. 1o. >F%0 provides5
The applicant or the reistrant shall +le a declaration of actual use of
the mar! with evidence to that efect, as prescribed by the 6eulations
within three ;0< years from the +lin date of the
application. O&'er;:8e, &'e #991:<#$& 8'#11 be reD=8e% or &'e
m#r38 8'#11 be remove% Drom &'e Re0:8&er bB &'e D:re<&or.
;)mphasis supplied<
*oreover, 6ule F': of the 6ules and 6eulations on Trademar!s
provides5
?eclaration of Actual 3se. The "Dce will not reEuire any proof of use in
commerce in the processin of trademar!
applications..avv#i. Aowever, ;:&'o=& $ee% oD #$B $o&:<e Drom
&'e OM<e, all applicants or reistrants, shall +le a declaration of actual
use of the mar! with evidence to that efect within three years, without
possibility of eCtension,from the +lin date of the
application. O&'er;:8e, the application shall be refused or &'e m#r3
8'#11 be remove% Drom &'e re0:8&er bB &'e D:re<&or motu propio.
;)mphasis supplied<
*eanwhile, *emorandum Circular 1o. ,T FN1-0-': dated *arch F%,
F''1
F'
of the IP" provides5
F. Bor pendin applications prosecuted under 6.A. 1== we distinuish as
follows5
F.1. ,ased on use W m=8& 8=bm:& DAU #$% ev:%e$<e oD =8e o$ or
beDore De<ember 1, )001, sub8ect to a sinle siC ;=< month
eCtension. ;4ec. 0.F, Binal Provisions of the Trademar! 6eulations, 6.A.
>F%0, IP" Bee 4tructure and *C. 1o. ,T 2FN->-'F<
C C C C
F1
3y9s admission in his Comment and *emorandum of non-compliance
with the foreoin reEuirements is a 8udicial admission and an
admission aainst interest
FF
combined. A 8udicial admission binds the
>1
person who ma!es the same.
F0
In the same vein, an admission aainst
interest is the best evidence which afords the reatest certainty of the
facts in dispute.
F:
The rationale for the rule is based on the presumption
that no man would declare anythin aainst himself unless such
declaration is true.
F$
Thus, it is fair to presume that the declaration
corresponds with the truth, and it is his fault if it does not.
F=
In the present case, *attel is see!in a rulin on whether 3y9s -,arbie-
trademar! is confusinly similar to it9s ;*attel9s< -,arbie- trademar!.
Iiven 3y9s admission that he has efectively abandoned or withdrawn
any rihts or interest in his trademar! by his non-+lin of the reEuired
?A3, there is no more actual controversy, or no useful purpose will be
served in passin upon the merits of the case. It would be unnecessary
to rule on the trademar! conPict between the parties. A r=1:$0 o$ &'e
m#&&er ;o=1% 9r#<&:<#11B 9#r&#3e oD # mere #%v:8orB o9:$:o$,
;':<' D#118 beBo$% &'e re#1m oD L=%:<:#1 rev:e;. T'e eCer<:8e oD
&'e 9o;er oD L=%:<:#1 rev:e; :8 1:m:&e% &o #<&=#1 <#8e8 #$%
<o$&rover8:e8. Co=r&8 '#ve $o #=&'or:&B &o 9#88 =9o$ :88=e8
&'ro=0' #%v:8orB o9:$:o$8 or &o re8o1ve 'B9o&'e&:<#1 or De:0$e%
9rob1em8.
F&
law#i.
It cannot be ainsaid that for a court to eCercise its power of
ad8udication, there must be an actual case or controversy G one which
involves a conPict of leal rihts, an assertion of opposite leal claims
susceptible of 8udicial resolutionH the case must not be moot or
academic or based on eCtra-leal or other similar considerations not
coni.able by a court of 8ustice.
F>
@here the issue has become moot
and academic, there is no 8usticiable controversy, and an ad8udication
thereof would be of no practical use or value as courts do not sit to
ad8udicate mere academic Euestions to satisfy scholarly interest,
however intellectually challenin.
F%
Admittedly, there were occasions in the past when the Court passed
upon issues althouh supervenin events had rendered those petitions
moot and academic. After all, the -moot and academic- principle is not
a maical formula that can automatically dissuade the courts from
resolvin a case. Courts will decide cases, otherwise moot and
academic, if5 !rst, there is a rave violation of the ConstitutionH second,
the eCceptional character of the situation and the paramount public
interest is involvedH t#ird, when the constitutional issue raised reEuires
formulation of controllin principles to uide the bench, the bar, and the
publicH and $ourt#, the case is capable of repetition yet evadin
review.
0'
Thus, in Constantino v( Sandi+anba"an -)irst Division2,
01
Constantino, a
public oDcer, and his co-accused, (indon, a private citi.en, +led
separate appeals from their conviction by the Sandi+anba"an for
violation of 4ection 0;e< of 6epublic Act 1o. 0'1% or the Anti-Iraft and
Corrupt Practices Act. @hile Constantino died durin the pendency of
his appeal, the Court still ruled on the merits thereof, considerin the
eCceptional character of the appeals of Constantino and (indon in
relation to each otherH that is, the two petitions were so intertwined that
the absolution of the deceased Constantino was determinative of the
absolution of his co-accused (indon.
In ,ublic Interest Center% Inc( v( Elma,
0F
the petition souht to declare as
null and void the concurrent appointments of *adanal ,. )lma as
Chairman of the Presidential Commission on Iood Iovernment ;PCII<
and as Chief Presidential (eal Counsel ;CP(C< for bein contrary to
4ection 10, Article LII and 4ection &, par. F, Article IM-, of the 1%>&
Constitution. @hile )lma ceased to hold the two oDces durin the
pendency of the case, the Court still ruled on the merits thereof,
considerin that the Euestion of whether the PCII Chairman could
concurrently hold the position of CP(C was one capable of repetition.
In ?avid v. Arroyo,
00
seven petitions for certiorari and prohibition were
+led assailin the constitutionality of the declaration of a state of
national emerency by President Iloria *acapaal-Arroyo. @hile the
declaration of a state of national emerency was already lifted durin
the pendency of the suits, this Court still resolved the merits of the
petitions, considerin that the issues involved a rave violation of the
Constitution and afected the public interest. The Court also aDrmed its
duty to formulate uidin and controllin constitutional precepts,
doctrines or rules, and reconi.ed that the contested actions were
capable of repetition.
In Pimentel, #r. v. )rmita,
0:
the petition Euestioned the constitutionality
of President Iloria *acapaal-ArroyoSs appointment of actin
secretaries without the consent of the Commission on Appointments
while Conress was in session. @hile the President eCtended ad interim
appointments to her appointees immediately after the recess of
Conress, the Court still resolved the petition, notin that the Euestion
of the constitutionality of the PresidentSs appointment of department
secretaries in actin capacities while Conress was in session was one
capable of repetition.
In Atienza v( Dillarosa,
0$
the petitioners, as Iovernor and Lice-Iovernor,
souht for clari+cation of the scope of the powers of the Iovernor and
Lice-Iovernor under the pertinent provisions of the (ocal Iovernment
Code of 1%%1. @hile the terms of oDce of the petitioners eCpired durin
the pendency of the petition, the Court still resolved the issues
>F
presented to formulate controllin principles to uide the bench, bar
and the public.
In 4a"o v( Derceles,
0=
the petition assailin the dismissal of the petition
for 5uo warranto +led by Iayo to declare void the proclamation of
Lerceles as *ayor of the *unicipality of Tubao, (a 3nion durin the *ay
1:, F''1 elections, became moot upon the eCpiration on #une 0', F'':
of the contested term of oDce of Lerceles. 1onetheless, the Court
resolved the petition since the Euestion involvin the one-year
residency reEuirement for those runnin for public oDce was one
capable of repetition.
In Alba_a v. Commission on )lections,
0&
the petitioners therein assailed
the annulment by the Commission on )lections of their proclamation as
municipal oDcers in the *ay 1:, F''1 elections. @hen a new set of
municipal oDcers was elected and proclaimed after the *ay 1', F'':
elections, the petition was mooted but the Court resolved the issues
raised in the petition in order to prevent a repetition thereof and to
enhance free, orderly, and peaceful elections.
The instant case does not fall within the cateory of any of these
eCceptional cases in which the Court was persuaded to resolve moot
and academic issues to formulate uidin and controllin constitutional
principles, precepts, doctrines or rules for future uidance of both
bench and bar. The issues in the present case call for an appraisal of
factual considerations which are peculiar only to the transactions and
parties involved in this controversy. The issues raised in this petition do
not call for a clari+cation of any constitutional principle. Perforce, the
Court dispenses with the need to ad8udicate the instant case.
FH!R!OR!, the petition is DISMISS!D for bein moot and
academic.
1o pronouncement as to costs.
SO ORD!R!D.
1*.G. R. No. 1)++), A=0=8& 14, )00*
>0
SMITH 5"IN! B!C5MAN CORPORATION, Petitioner,
vs.
TH! HONORAB"! COURT O APP!A"S #$% TR6CO PHARMA
CORPORATION, 6espondents.
? ) C I 4 I " 1
CARPIO-MORA"!S, J.:
4mith Nline ,ec!man Corporation ;petitioner<, a corporation eCistin by
virtue of the laws of the state of Pennsylvania, 3nited 4tates of America
;3.4.< and licensed to do business in the Philippines, +led on "ctober >,
1%&=, as assinee, before the Philippine Patent "Dce ;now ,ureau of
Patents, Trademar!s and Technoloy Transfer< an application for patent
over an invention entitled -*ethods and Compositions for Producin
,iphasic Parasiticide Activity 3sin *ethyl $ Propylthio-F-,en.imida.ole
Carbamate.- The application bore 4erial 1o. 1>%>%.
"n 4eptember F:, 1%>1, (etters Patent 1o. 1:$=1
1
for the aforesaid
invention was issued to petitioner for a term of seventeen ;1&< years.
The letters patent provides in its claims
F
that the patented invention
consisted of a new compound named methyl $ propylthio-F-
ben.imida.ole carbamate and the methods or compositions utili.in the
compound as an active inredient in +htin infections caused by
astrointestinal parasites and lunworms in animals such as swine,
sheep, cattle, oats, horses, and even pet animals.
Tryco Pharma Corporation ;private respondent< is a domestic
corporation that manufactures, distributes and sells veterinary products
includin Impreon, a dru that has Albenda.ole for its active
inredient and is claimed to be efective aainst astro-intestinal
roundworms, lunworms, tapeworms and Pu!e infestation in carabaos,
cattle and oats.
Petitioner sued private respondent for infrinement of patent and unfair
competition before the Caloocan City 6eional Trial Court ;6TC<.
0
It
claimed that its patent covers or includes the substance Albenda.ole
such that private respondent, by manufacturin, sellin, usin, and
causin to be sold and used the dru Impreon without its
authori.ation, infrined Claims F, 0, :, &, > and % of (etters Patent 1o.
1:$=1
:
as well as committed unfair competition under Article 1>%,
pararaph 1 of the 6evised Penal Code and 4ection F% of 6epublic Act
1o. 1== ;The Trademar! (aw< for advertisin and sellin as its own the
dru Impreon althouh the same contained petitionerSs patented
Albenda.ole.
$
"n motion of petitioner, ,ranch 1F$ of the Caloocan 6TC issued a
temporary restrainin order aainst private respondent en8oinin it from
committin acts of patent infrinement and unfair competition.
=
A writ
of preliminary in8unction was subseEuently issued.
&
Private respondent in its Answer
>
averred that (etters Patent 1o. 1:$=1
does not cover the substance Albenda.ole for nowhere in it does that
word appearH that even if the patent were to include Albenda.ole, such
substance is unpatentableH that the ,ureau of Bood and ?rus allowed
it to manufacture and mar!et Impreon with Albenda.ole as its !nown
inredientH that there is no proof that it passed of in any way its
veterinary products as those of petitionerH that (etters Patent 1o. 1:$=1
is null and void, the application for the issuance thereof havin been
+led beyond the one year period from the +lin of an application abroad
for the same invention covered thereby, in violation of 4ection 1$ of
6epublic Act 1o. 1=$ ;The Patent (aw<H and that petitioner is not the
reistered patent holder.
Private respondent loded a Counterclaim aainst petitioner for such
amount of actual damaes as may be provenH P1,''','''.'' in moral
damaesH P0'','''.'' in eCemplary damaesH and P1$','''.'' in
attorneySs fees.
Bindin for private respondent, the trial court rendered a ?ecision dated
#uly F0, 1%%1,
%
the dispositive portion of which reads5
@A)6)B"6), in view of the foreoin, plaintifSs complaint should be,
as it is hereby, ?I4*I44)?. The @rit of in8unction issued in connection
with the case is hereby ordered ?I44"(L)?.
The (etters Patent 1o. 1:$=1 issued by the then Philippine Patents
"Dce is hereby declared null and void for bein in violation of 4ections
&, % and 1$ of the Patents (aw.
Pursuant to 4ec. := of the Patents (aw, the ?irector of ,ureau of
Patents is hereby directed to cancel (etters Patent 1o. 1:$=1 issued to
the plaintif and to publish such cancellation in the "Dcial Ia.ette.
?efendant Tryco Pharmaceutical Corporation is hereby awarded
P00','''.'' actual damaes and P1'','''.'' attorneySs fees as
prayed for in its counterclaim but said amount awarded to defendant is
sub8ect to the lien on correct payment of +lin fees.
4" "6?)6)?. ;3nderscorin supplied<
>:
"n appeal, the Court of Appeals, by ?ecision of April F1, 1%%$,
1'
upheld
the trial courtSs +ndin that private respondent was not liable for any
infrinement of the patent of petitioner in liht of the latterSs failure to
show that Albenda.ole is the same as the compound sub8ect of (etters
Patent 1o. 1:$=1. 1otin petitionerSs admission of the issuance by the
3.4. of a patent for Albenda.ole in the name of 4mith Nline and Brench
(aboratories which was petitionerSs former corporate name, the
appellate court considered the 3.4. patent as implyin that Albenda.ole
is diferent from methyl $ propylthio-F-ben.imida.ole carbamate. It
li!ewise found that private respondent was not uilty of deceivin the
public by misrepresentin that Impreon is its product.
The appellate court, however, declared that (etters Patent 1o. 1:$=1
was not void as it sustained petitionerSs eCplanation that Patent
Application 4erial 1o. 1>%>% which was +led on "ctober >, 1%&= was a
divisional application of Patent Application 4erial 1o. 1&F>' +led on
#une 1&, 1%&$ with the Philippine Patent "Dce, well within one year
from petitionerSs +lin on #une 1%, 1%&: of its Borein Application
Priority ?ata 1o. :>',=:= in the 3.4. coverin the same compound
sub8ect of Patent Application 4erial 1o. 1&F>'.
Applyin 4ection 1& of the Patent (aw, the Court of Appeals thus ruled
that Patent Application 4erial 1o. 1>%>% was deemed +led on #une 1&,
1%%$ or still within one year from the +lin of a patent application
abroad in compliance with the one-year rule under 4ection 1$ of the
Patent (aw. And it re8ected the submission that the compound in (etters
Patent 1o. 1:$=1 was not patentable, citin the 8urisprudentially
established presumption that the Patent "DceSs determination of
patentability is correct. Binally, it ruled that petitioner established itself
to be the one and the same assinee of the patent notwithstandin
chanes in its corporate name. Thus the appellate court disposed5
@A)6)B"6), the 8udment appealed from is ABBI6*)? with the
*"?IBICATI"1 that the orders for the nulli+cation of (etters Patent 1o.
1:$=1 and for its cancellation are deleted therefrom.
4" "6?)6)?.
PetitionerSs motion for reconsideration of the Court of AppealsS decision
havin been denied
11
the present petition for review on certiorari
1F
was
+led, assinin as errors the followin5
I. TA) C"36T "B APP)A(4 I6AL)(2 )66)? I1 1"T BI1?I1I
TAAT A(,)1?A7"(), TA) ACTIL) I1I6)?I)1T I1 T62C"S4
-I*P6)I"1- ?63I, I4 I1C(3?)? I1 P)TITI"1)6S4 ()TT)64
PAT)1T 1". 1:$=1, A1? TAAT C"14)O3)1T(2 T62C" I4
A14@)6A,() B"6 PAT)1T I1B6I1I)*)1T.
II. TA) C"36T "B APP)A(4 I6AL)(2 )66)? I1 A@A6?I1I T"
P6ILAT) 6)4P"1?)1T T62C" PAA6*A C"6P"6ATI"1
P00','''.'' ACT3A( ?A*AI)4 A1? P1'','''.'' ATT"61)2S4
B))4.
Petitioner arues that under the doctrine of eEuivalents for determinin
patent infrinement, Albenda.ole, the active inredient it allees was
appropriated by private respondent for its dru Impreon, is
substantially the same as methyl $ propylthio-F-ben.imida.ole
carbamate covered by its patent since both of them are meant to
combat worm or parasite infestation in animals. It cites the
-unrebutted- testimony of its witness ?r. Iodofredo C. "rinion ;?r.
"rinion< that the chemical formula in (etters Patent 1o. 1:$=1 refers to
the compound Albenda.ole. Petitioner adds that the two substances
substantially do the same function in substantially the same way to
achieve the same results, thereby ma!in them truly identical.
Petitioner thus submits that the appellate court should have one
beyond the literal wordins used in (etters Patent 1o. 1:$=1, beyond
merely applyin the literal infrinement test, for in spite of the fact that
the word Albenda.ole does not appear in petitionerSs letters patent, it
has ably shown by evidence its sameness with methyl $ propylthio-F-
ben.imida.ole carbamate.
Petitioner li!ewise points out that its application with the Philippine
Patent "Dce on account of which it was ranted (etters Patent 1o.
1:$=1 was merely a divisional application of a prior application in the 3.
4. which ranted a patent for Albenda.ole. Aence, petitioner concludes
that both methyl $ propylthio-F-ben.imida.ole carbamate and the 3.4.-
patented Albenda.ole are dependent on each other and mutually
contribute to produce a sinle result, thereby ma!in Albenda.ole as
much a part of (etters Patent 1o. 1:$=1 as the other substance is.
Petitioner concedes in its 4ur-6e8oinder
10
that althouh methyl $
propylthio-F-ben.imida.ole carbamate is not identical with Albenda.ole,
the former is an improvement or improved version of the latter thereby
ma!in both substances still substantially the same.
@ith respect to the award of actual damaes in favor of private
respondent in the amount of P00','''.'' representin lost pro+ts,
petitioner assails the same as hihly speculative and con8ectural,
hence, without basis. It assails too the award of P1'','''.'' in
attorneySs fees as not fallin under any of the instances enumerated by
law where recovery of attorneySs fees is allowed.
>$
In its Comment,
1:
private respondent contends that application of the
doctrine of eEuivalents would not alter the outcome of the case,
Albenda.ole and methyl $ propylthio-F-ben.imida.ole carbamate bein
two diferent compounds with diferent chemical and physical
properties. It stresses that the eCistence of a separate 3.4. patent for
Albenda.ole indicates that the same and the compound in (etters
Patent 1o. 1:$=1 are diferent from each otherH and that since it was on
account of a divisional application that the patent for methyl $
propylthio-F-ben.imida.ole carbamate was issued, then, by de+nition of
a divisional application, such a compound is 8ust one of several
independent inventions alonside Albenda.ole under petitionerSs
oriinal patent application.
As has repeatedly been held, only Euestions of law may be raised in a
petition for review on certiorari before this Court. 3nless the factual
+ndins of the appellate court are mista!en, absurd, speculative,
con8ectural, conPictin, tainted with rave abuse of discretion, or
contrary to the +ndins culled by the court of oriin,
1$
this Court does
not review them.
Brom an eCamination of the evidence on record, this Court +nds nothin
in+rm in the appellate courtSs conclusions with respect to the principal
issue of whether private respondent committed patent infrinement to
the pre8udice of petitioner.
The burden of proof to substantiate a chare for patent infrinement
rests on the plaintif.
1=
In the case at bar, petitionerSs evidence consists
primarily of its (etters Patent 1o. 1:$=1, and the testimony of ?r.
"rinion, its eneral manaer in the Philippines for its Animal Aealth
Products ?ivision, by which it souht to show that its patent for the
compound methyl $ propylthio-F-ben.imida.ole carbamate also covers
the substance Albenda.ole.
Brom a readin of the % claims of (etters Patent 1o. 1:$=1 in relation to
the other portions thereof, no mention is made of the compound
Albenda.ole. All that the claims disclose are5 the covered invention,
that is, the compound methyl $ propylthio-F-ben.imida.ole carbamateH
the compoundSs bein anthelmintic but nontoCic for animals or its
ability to destroy parasites without harmin the host animalsH and the
patented methods, compositions or preparations involvin the
compound to maCimi.e its eDcacy aainst certain !inds of parasites
infectin speci+ed animals.
@hen the lanuae of its claims is clear and distinct, the patentee is
bound thereby and may not claim anythin beyond them.
1&
And so are
the courts bound which may not add to or detract from the claims
matters not eCpressed or necessarily implied, nor may they enlare the
patent beyond the scope of that which the inventor claimed and the
patent oDce allowed, even if the patentee may have been entitled to
somethin more than the words it had chosen would include.
1>
It bears stressin that the mere absence of the word Albenda.ole in
(etters Patent 1o. 1:$=1 is not determinative of Albenda.oleSs non-
inclusion in the claims of the patent. @hile Albenda.ole is admittedly a
chemical compound that eCists by a name diferent from that covered
in petitionerSs letters patent, the lanuae of (etter Patent 1o. 1:$=1
fails to yield anythin at all reardin Albenda.ole. And no eCtrinsic
evidence had been adduced to prove that Albenda.ole inheres in
petitionerSs patent in spite of its omission therefrom or that the
meanin of the claims of the patent embraces the same.
@hile petitioner concedes that the mere literal wordins of its patent
cannot establish private respondentSs infrinement, it ures this Court
to apply the doctrine of eEuivalents.
The doctrine of eEuivalents provides that an infrinement also ta!es
place when a device appropriates a prior invention by incorporatin its
innovative concept and, althouh with some modi+cation and chane,
performs substantially the same function in substantially the same way
to achieve substantially the same result.
1%
2et aain, a scrutiny of
petitionerSs evidence fails to convince this Court of the substantial
sameness of petitionerSs patented compound and Albenda.ole. @hile
both compounds have the efect of neutrali.in parasites in
animals, identity of result does not amount to infrinement of patent
unless Albenda.ole operates in substantially the same way or by
substantially the same means as the patented compound, even thouh
it performs the same function and achieves the same result.
F'
In other
words, the 9r:$<:91e or mo%e oD o9er#&:o$ must be the same or
substantially the same.
F1
The doctrine of eEuivalents thus reEuires satisfaction of the function-
means-and-result test, the patentee havin the burden to show that all
three components of such eEuivalency test are met.
FF
As stated early on, petitionerSs evidence fails to eCplain how
Albenda.ole is in every essential detail identical to methyl $ propylthio-
F-ben.imida.ole carbamate. Apart from the fact that Albenda.ole is an
anthelmintic aent li!e methyl $ propylthio-F-ben.imida.ole carbamate,
nothin more is asserted and accordinly substantiated reardin the
method or means by which Albenda.ole weeds out parasites in animals,
thus ivin no information on whether that method is substantially the
same as the manner by which petitionerSs compound wor!s. The
>=
testimony of ?r. "rinion lends no support to petitionerSs cause, he not
havin been presented or Euali+ed as an eCpert witness who has the
!nowlede or eCpertise on the matter of chemical compounds.
As for the concept of divisional applications profered by petitioner, it
comes into play when two or more inventions are claimed in a sinle
application but are of such a nature that a sinle patent may not be
issued for them.
F0
The applicant thus is reEuired -to divide,- that is, to
limit the claims to whichever invention he may elect, whereas those
inventions not elected may be made the sub8ect of separate
applications which are called -divisional applications.-
F:
@hat this only
means is that petitionerSs methyl $ propylthio-F-ben.imida.ole
carbamate is an invention distinct from the other inventions claimed in
the oriinal application divided out, Albenda.ole bein one of those
other inventions. "therwise, methyl $ propylthio-F-ben.imida.ole
carbamate would not have been the sub8ect of a divisional application if
a sinle patent could have been issued for it as well as
Albenda.ole..Aw#i.
The foreoin discussions notwithstandin, this Court does not sustain
the award of actual damaes and attorneySs fees in favor of private
respondent. The claimed actual damaes of P00','''.'' representin
lost pro+ts or revenues incurred by private respondent as a result of the
issuance of the in8unction aainst it, computed at the rate of 0'Y of its
alleed P1'','''.'' monthly ross sales for eleven months, were
supported by the testimonies of private respondentSs President
F$
and
)Cecutive Lice-President that the averae monthly sale of Impreon
was P1'','''.'' and that sales plummeted to .ero after the issuance
of the in8unction.
F=
@hile indemni+cation for actual or compensatory
damaes covers not only the loss sufered ;damnum emerens< but
also pro+ts which the obliee failed to obtain ;lucrum cessans or
anacias frustradas<, it is necessary to prove the actual amount of
damaes with a reasonable deree of certainty based on competent
proof and on the best evidence obtainable by the in8ured party.
F&
The
testimonies of private respondentSs oDcers are not the competent proof
or best evidence obtainable to establish its riht to actual or
compensatory damaes for such damaes also reEuire presentation of
documentary evidence to substantiate a claim therefor.
F>
In the same vein, this Court does not sustain the rant by the appellate
court of attorneySs fees to private respondent anchored on Article FF'>
;F< of the Civil Code, private respondent havin been alleedly forced to
litiate as a result of petitionerSs suit. )ven if a claimant is compelled to
litiate with third persons or to incur eCpenses to protect its rihts, still
attorneySs fees may not be awarded where no suDcient showin of bad
faith could be rePected in a partySs persistence in a case other than an
erroneous conviction of the rihteousness of his cause.
F%
There eCists no
evidence on record indicatin that petitioner was moved by malice in
suin private respondent.
This Court, however, rants private respondent temperate or moderate
damaes in the amount of PF','''.'' which it +nds reasonable under
the circumstances, it havin sufered some pecuniary loss the amount
of which cannot, from the nature of the case, be established with
certainty.
0'
FH!R!OR!, the assailed decision of the Court of Appeals is hereby
ABBI6*)? with *"?IBICATI"1. The award of actual or compensatory
damaes and attorneySs fees to private respondent, Tryco Pharma
Corporation, is ?)()T)?H instead, it is hereby awarded the amount
of PF','''.'' as temperate or moderate damaes.
4" "6?)6)?.
>&
14.G.R. No. 118,08 ebr=#rB ), 1998
CR!S!R PR!CISION S6ST!MS, INC., petitioner,
vs.
COURT O APP!A"S AND "ORO INT!RNATIONA"
CORP., respondents.

MARTIN!(, J.:
This petition for review on certiorari assails the decision
1
of the Court
of Appeals dated 1ovember %, 1%%: in C.A.-I.6. 4P 1o. 0::F$ entitled
-Bloro International Corp. vs. Aon. Tirso ?.C Cru. and Creser Precision
4ystem, Inc.-, the dispositive portion of which reads5
@A)6)B"6), TA) P)TITI"1 I4 A)6),2 I6A1T)?. TA)
C"*P(AI1T B"6 I1#31CTI"1 A1? ?A*AI)4, CILI( CA4)
1". %0-1>$= ,)B"6) TA) 6)4P"1?)1T #3?I) I4 A)6),2
"6?)6)? ?I4*I44)? A1? AI4 "6?)64 TA)6)I1 "B
?)C)*,)6 F%, 1%%0 A1? *A2 11, 1%%: A6) "6?)6)?
4)T A4I?).
Private respondent is a domestic corporation enaed in the
manufacture, production, distribution and sale of military armaments,
munitions, airmunitions and other similar materials.
)
"n #anuary F0, 1%%', private respondent was ranted by the ,ureau of
Patents, Trademar!s and Technoloy Transfer ;,PTTT<, a (etters Patent
1o. 3*-=%0>
*
coverin an aerial $uze which was published in the
4eptember-"ctober-1%%', Lol. III, 1o. $ issue of the ,ureau of Patent9s
"Dcial Ia.ette.
4
4ometime in 1ovember 1%%0, private respondent, throuh its president,
*r. Ireory Bloro, #r., discovered that petitioner submitted samples of
its patented aerial $uze to the Armed Borces of the Philippines ;ABP< for
testin. Ae learned that petitioner was claimin the aforesaid aerial
$uze as its own and plannin to bid and manufacture the same
commercially without license or authority from private respondent. To
protect its riht, private respondent on ?ecember 0, 1%%0, sent a
letter
5
to petitioner advisin it of its eCistin patent and its rihts
thereunder, warnin petitioner of a possible court action andQor
application for in8unction, should it proceed with the scheduled testin
by the military on ?ecember &, 1%%0.
In response to private respondent9s demand, petitioner +led on
?ecember >, 1%%0 a complaint
+
for in8unction and damaes arisin
from the alleed infrinement before the 6eional Trial Court of Oue.on
City, ,ranch >>. The complaint alleed, amon others5 that petitioner is
the +rst, true and actual inventor of an aerial fu.e denominated as
-Bu.e, P?6 && C,:- which it developed as early as ?ecember 1%>1
under the 4elf-6eliance ?efense Posture Proram ;46?P< of the ABPH
that sometime in 1%>=, petitioner bean supplyin the ABP with the
said aerial $uzeH that private respondent9s aerial fu.e is identical in
every respect to the petitioner9s fu.eH and that the only diference
between the two fu.es are miniscule and merely cosmetic in nature.
Petitioner prayed that a temporary restrainin order andQor writ of
preliminary in8unction be issued en8oinin private respondent includin
any and all persons actin on its behalf from manufacturin, mar!etin
andQor pro+tin therefrom, andQor from performin any other act in
connection therewith or tendin to pre8udice and deprive it of any
>>
rihts, privilees and bene+ts to which it is duly entitled as the +rst,
true and actual inventor of the aerial $uze.
"n ?ecember 1', 1%%0, the trial court issued a temporary restrainin
order. Thereafter, hearins were held on the application of petitioner for
the issuance of a writ of preliminary in8unction, with both parties
presentin their evidence. After the hearins, the trial court directed
the parties to submit their respective memoranda in support of their
positions.
"n ?ecember F&, 1%%0, private respondent submitted its
memorandum
,
allein that petitioner has no cause of action to +le a
complaint for infrinement aainst it since it has no patent for
the aerial $uze which it claims to have inventedH that petitioner9s
available remedy is to +le a petition for cancellation of patent before
the ,ureau of PatentsH that private respondent as the patent holder
cannot be stripped of its property riht over the patented aerial
$uze consistin of the eCclusive riht to manufacture, use and sell the
same and that it stands to sufer irreparable damae and in8ury if it is
en8oined from the eCercise of its property rihts over its patent.
"n ?ecember F%, 1%%0, the trial court issued an "rder
8
rantin the
issuance of a writ of preliminary in8unction aainst private respondent
the dispositive portion of which reads5
@A)6)B"6), plaintifs application for the issuance of a
writ of preliminary in8unction is ranted and, upon
postin of the correspondin bond by plaintif in the
amount of PAP F'','''.'', let the writ of preliminary
in8unction be issued by the branch Cler! of this Court
en8oinin the defendant and any and all persons actin
on its behalf or by and under its authority, from
manufacturin, mar!etin andQor sellin aerial
$uzes identical, to those of plaintif, and from pro+tin
therefrom, andQor from performin any other act in
connection therewith until further orders from this Court.
Private respondent moved for reconsideration but this was denied by
the trial court in its "rder
9
of *ay 11, 1%%:, pertinent portions of which
read5
Bor resolution before this Court is the *otion for
6econsideration +led by the defendant and the plaintif9s
"pposition thereto. The Court +nds no suDcient cause to
reconsider its order dated ?ecember F%, 1%%0. ?urin
the hearin for the issuance of the preliminary in8unction,
the plaintif has amply proven its entitlement to the relief
prayed for. It is undisputed that the plaintif has
developed itsaerial $uze way bac! in 1%>1 while the
defendant bean manufacturin the same only in 1%>&.
Thus, it is only loical to conclude that it was the
plaintif9s aerial $uze that was copied or imitated which
ives the plaintif the riht to have the defendant
en8oined -from manufacturin, mar!etin andQor
sellinaerial $uzes identical to those of the plaintif, and
from pro+tin therefrom andQor performin any other act
in connection therewith until further orders from this
Court.- @ith reards to the defendant9s assertion that an
action for infrinement may only be brouht by -anyone
possessin riht, title or interest to the patented
invention,- ;4ection :F, 6A 1=$< Euali+ed by 4ec. 1', 6A
1=$ to include only -the +rst true and actual inventor, his
heirs, leal representatives or assinees, -this court +nds
the foreoin to be untenable. 4ec. 1' merely
enumerates the persons who may have an invention
patented which does not necessarily limit to these
persons the riht to institute an action for infrinement.
?efendant further contends that the order in issue is
disruptive of the status Euo. "n the contrary, the order
issued by the Court in efect maintained the status Euo.
The last actual, peaceable uncontested status eCistin
prior to this controversy was the plaintif manufacturin
and sellin its own aerial $uzes P?6 && C,: which was
ordered stopped throuh the defendant9s letter. @ith the
issuance of the order, the operations of the plaintif
continue. (astly, this court believes that the defendant
will not sufer irreparable in8ury by virtue of said order.
The defendant9s claim is primarily hined on its patent
;(etters Patent 1o. 3*-=%>0< the validity of which is
bein Euestioned in this case.
@A)6)B"6), premises considered, the *otion for
6econsideration is hereby denied for lac! of merit.
4" "6?)6)?.
Arieved, private respondent on #une F&, 1%%:, +led a petition
for certiorari% mandamus and prohibition
10
before respondent Court of
Appeals raisin as rounds the followin5
a. Petitioner has no cause of action for infrinement
aainst private respondent, the latter not havin any
>%
patent for the aerial $uze which it claims to have invented
and developed and alleedly infrined by private
respondentH
b. the case bein an action for cancellation or invalidation
of private respondent9s (etters Patent over its own aerial
$uze, the proper venue is the "Dce of the ?irector of
PatentsH
c. The trial court acted in rave abuse of discretion
andQor in eCcess of 8urisdiction in +ndin that petitioner
has fully established its clear title or riht to preliminary
in8unctionH
d. The trial court acted in rave abuse of discretion
andQor in eCcess of 8urisdiction in rantin the preliminary
in8unction, it bein disruptive of the status EuoH and
e. The trial court acted in rave abuse of discretion
andQor in eCcess of 8urisdiction in rantin the preliminary
in8unction thereby deprivin private respondent of its
property rihts over the patentedaerial $uze and cause it
irreparable damaes.
"n 1ovember %, 1%%:, the respondent court rendered the now assailed
decision reversin the trial court9s "rder of ?ecember F%, 1%%0 and
dismissin the complaint +led by petitioner.
The motion for reconsideration was also denied on #anuary 1&,
1%%$.
11
Aence, this present petition.
It is petitioner9s contention that it can +le, under 4ection :F of the
Patent (aw ;6.A. 1=$<, an action for infrinement not as a patentee but
as an entity in possession of a riht, title or interest in and to the
patented invention. It advances the theory that while the absence of a
patent may prevent one from lawfully suin another for infrinement of
said patent, such absence does not bar the +rst true and actual
inventor of the patented invention from suin another who was ranted
a patent in a suit for declaratory or in8unctive relief reconi.ed under
American patent laws. This remedy, petitioner points out, may be
li!ened to a civil action for infrinement under 4ection :F of the
Philippine Patent (aw.
@e +nd the above aruments untenable.
4ection :F of 6.A. 1=$, otherwise !nown as the Patent (aw, eCplicitly
provides5
4ec. :F. Civil action $or in$rin+ement. G Any patentee, or
anyone possessin any riht, title or interest in and to the
patented invention, whose rihts have been infrined,
may brin a civil action before the proper Court of Birst
Instance ;now 6eional Trial court<, to recover from the
infriner damaes sustained by reason of the
infrinement and to secure an in8unction for the
protection of his riht. . . .
3nder the aforeEuoted law, only the patentee or his successors-in-
interest may +le an action for infrinement. The phrase -an"one
ossessin+ an" ri+#t% title or interest in and to t#e atented invention-
upon which petitioner maintains its present suit, refers only to the
patentee9s successors-in-interest, assinees or rantees since actions
for infrinement of patent may be brouht in the name of the person or
persons interested, whether as patentee, assinees, or as rantees, of
the eCclusive riht.
1)
*oreover, there can be no infrinement of a
patent until a patent has been issued, since whatever riht one has to
the invention covered by the patent arises alone from the rant of
patent.
1*
In short, a person or entity who has not been ranted letters
patent over an invention and has not acEuired any liht or title thereto
either as assinee or as licensee, has no cause of action for
infrinement because the riht to maintain an infrinement suit
depends on the eCistence of the patent.
14
Petitioner admits it has no patent over its aerial $uze. Therefore, it has
no leal basis or cause of action to institute the petition for in8unction
and damaes arisin from the alleed infrinement by private
respondent. @hile petitioner claims to be the +rst inventor of the aerial
$uze, still it has no riht of property over the same upon which it can
maintain a suit unless it obtains a patent therefor. 3nder American
8urisprudence, an inventor has no common-law riht to a monopoly of
his invention. Ae has the riht to ma!e, use and vend his own invention,
but if he voluntarily discloses it, such as by oferin it for sale, the world
is free to copy and use it with impunity. A patent, however, ives the
inventor the riht to eCclude all others. As a patentee, he has the
eCclusive riht of ma!in, usin or sellin the invention.
15
Burther, the remedy of declaratory 8udment or in8unctive suit on patent
invalidity relied upon by petitioner cannot be li!ened to the civil action
for infrinement under 4ection :F of the Patent (aw. The reason for this
is that the said remedy is available only to the patent holder or his
successors-in-interest. Thus, anyone who has no patent over an
%'
invention but claims to have a riht or interest thereto can not +le an
action for declaratory 8udment or in8unctive suit which is not
reconi.ed in this 8urisdiction. 4aid person, however, is not left without
any remedy. Ae can, under 4ection F> of the aforementioned law, +le a
petition for cancellation of the patent within three ;0< years from the
publication of said patent with the ?irector of Patents and raise as
round therefor that the person to whom the patent was issued is not
the true and actual inventor. Aence, petitioner9s remedy is not to +le an
action for in8unction or infrinement but to +le a petition for
cancellation of private respondent9s patent. Petitioner however failed to
do so. As such, it can not now assail or impun the validity of the
private respondent9s letters patent by claimin that it is the true and
actual inventor of the aerial $uze.
Thus, as correctly ruled by the respondent Court of Appeals in its
assailed decision5 -since the petitioner ;private respondent herein< is
the patentee of the disputed invention embraced by letters of patent
3* 1o. =%0> issued to it on #anuary F0, 1%%' by the ,ureau of Patents,
it has in its favor not only the presumption of validity of its patent, but
that of a leal and factual +rst and true inventor of the invention.-
In the case of A+uas vs. De 'eon,
1+
we stated that5
The validity of the patent issued by the Philippine Patent
"Dce in favor of the private respondent and the Euestion
over the investments, novelty and usefulness of the
improved process therein speci+ed and described are
matters which are better determined by the Philippines
Patent "Dce. The technical 4taf of the Philippines Patent
"Dce, composed of eCperts in their +eld, have, by the
issuance of the patent in Euestion, accepted the thinness
of the private respondent9s new tiles as a discovery.
There is a presumption that the Philippine Patent "Dce
has correctly determined the patentability of the
improvement by the private respondent of the process in
Euestion.
In +ne, in the absence of error or abuse of power or lac! of 8urisdiction
or rave abuse of discretion, we sustain the assailed decision of the
respondent Court of Appeal.
@A)6)B"6), the decision of the Court of Appeals is hereby ABBI6*)?.
1o pronouncement as to costs.
4" "6?)6)?.
15.G.R. No. 1*)+04 M#r<' +, )00)
G!NANCIO SAMBAR, %o:$0 b=8:$e88 =$%er &'e $#me #$% 8&B1e
oD CGS G#rme$& !$&er9r:8e8, petitioner,
vs.
"!GI STRAUSS N CO., #$% "!GI STRAUSS .PHI"./,
INC., respondents.
? ) C I 4 I " 1
2UISUMBING, J.:
This petition for review on certiorari prays for the reversal of the
decision dated #anuary 0', 1%%>, of the Court of Appeals in CA-I.6. CL
1o. $1$$0. That decision aDrmed the decision in Civil Case 1o. >>-FFF'
of the 6eional Trial Court, ,ranch ==, *a!ati City, ma!in permanent
the writ of preliminary in8unction, orderin CL4 Iarment and Industrial
Company ;CL4IIC< and petitioner Lenancio 4ambar to pay private
respondents 8ointly and solidarily the sum of P$',''' as temperate and
nominal damaes, P1',''' as eCemplary damaes, and PF$,''' as
attorneySs fees and litiation costs, and orderin the ?irector of the
1ational (ibrary to cancel Copyriht 6eistration 1o. 1-1%%> in the
name of Lenancio 4ambar.
The facts are as follows5
"n 4eptember F>, 1%>&, private respondents, throuh a letter from
their leal oDcer, demanded that CL4 Iarment )nterprises ;CL4I)<
desist from usin their stitched arcuate desin on the )uropress 8eans
which CL4I) advertised in the 3anila :ulletin.
%1
Atty. ,en8amin Iruba, counsel of CL4I), replied that the arcuate desin
on the bac! poc!ets of )uropress 8eans was diferent from the desin on
the bac! poc!ets of (eviSs 8eans. Ae further asserted that his client had
a copyriht on the desin it was usin.
Thereafter, private respondents +led a complaint aainst 4ambar, doin
business under the name and style of CL4I). Private respondents also
impleaded the ?irector of the 1ational (ibrary. 4ummons was sent to
4ambar in his business address at 1=1-, Iria corner 6etiro, (a (oma,
Oue.on City.
Atty. Iruba claimed that he erroneously received the oriinal summons
as he mistoo! it as addressed to his client, CL4IIC. Ae returned the
summons and the pleadins and manifested in court that CL4I), which
was formerly doin business in the premises, already stopped operation
and CL4IIC too! over CL4I)Ss occupation of the premises. Ae also
claimed he did not !now the whereabouts of 4ambar, the alleed owner
of CL4I).
Thereafter, private respondents amended their complaint to include
CL4IIC. @hen private respondents learned the whereabouts of 4ambar
and CL4I), the case was revived.
Private respondents alleed in their complaint that (evi 4trauss and Co.
;(4/Co.<, an internationally !nown clothin manufacturer, owns the
arcuate desin trademar! which was reistered under 3.4. Trademar!
6eistration 1o. :':, F:> on 1ovember 1=, 1%:0, and in the Principal
6eister of trademar!s with the Philippine Patent "Dce under
Certi+cate of 6eistration 1o. F'F:' issued on "ctober >, 1%&0H that
throuh a Trademar! Technical ?ata and Technical Assistance
Areement with (evi 4trauss ;Phil.< Inc. ;(4PI< in 1%&F, (4/Co. ranted
(4PI a non-eCclusive license to use the arcuate trademar! in its
manufacture and sale of (eviSs pants, 8ac!ets and shirts in the
PhilippinesH that in 1%>0, (4/Co. also appointed (4PI as its aent and
attorney-in-fact to protect its trademar! in the PhilippinesH and that
sometime in 1%>&, CL4IIC and Lenancio 4ambar, without the consent
and authority of private respondents and in infrinement and unfair
competition, sold and advertised, and despite demands to cease and
desist, continued to manufacture, sell and advertise denim pants under
the brand name -)uropress- with bac! poc!ets bearin a desin similar
to the arcuate trademar! of private respondents, thereby causin
confusion on the buyin public, pre8udicial to private respondentsS
oodwill and property riht.
In its answer, CL4IIC admitted it manufactured, sold and advertised
and was still manufacturin and sellin denim pants under the brand
name of -)uropress-, bearin a bac! poc!et desin of two double arcs
meetin in the middle. Aowever, it denied that there was infrinement
or unfair competition because the display rooms of department stores
where (eviSs and )uropress 8eans were sold, were distinctively
sereated by billboards and other modes of advertisement. CL4IIC
avers that the public would not be confused on the ownership of such
!nown trademar! as (eviSs, #a, )uropress, etc.. Also, CL4IIC claimed
that it had its own oriinal arcuate desin, as evidenced by Copyriht
6eistration 1o. 1-1%%>, which was very diferent and distinct from
(eviSs desin. CL4IIC prayed for actual, moral and eCemplary damaes
by way of counterclaim.
Petitioner Lenancio 4ambar +led a separate answer. Ae denied he was
connected with CL4IIC. Ae admitted that Copyriht 6eistration 1o. 1-
1%%> was issued to him, but he denied usin it. Ae also said he did not
authori.e anyone to use the copyrihted desin. Ae counterclaimed for
moral and eCemplary damaes and payment of attorneySs fees.
After hearin, the trial court issued a writ of preliminary in8unction
en8oinin CL4IIC and petitioner from manufacturin, advertisin and
sellin pants with the arcuate desin on their bac! poc!ets. CL4IIC and
petitioner did not appear durin the "ctober 10 and F&, 1%%0 hearins,
when they were to present evidence. ConseEuently, the trial court ruled
that they waived their riht to present evidence.
"n *ay 0, 1%%$, the trial court rendered its decision. The dispositive
portion reads5
I1 LI)@ "B TA) B"6)I"I1I, 8udment is hereby rendered5
a< ma!in the writ of preliminary in8unction permanentH
b< orderin the defendants CL4 Iarment and Industrial
Company and Lenancio 4ambar to pay the plaintifs 8ointly and
solidarily the sum of P$','''.'' as temperate and nominal
damaes, the sum of P1','''.'' as eCemplary damaes, and
the sum of PF$,'''.'' as attorneySs fees and litiation eCpenses
and to pay the costs.
4" "6?)6)?.
1
Private respondents moved for a reconsideration prayin for the
cancellation of petitionerSs copyriht reistration. The trial court
ranted reconsideration in its #uly 1:, 1%%$ order, thus5
%F
I1 LI)@ "B TA) B"6)I"I1I, 8udment is hereby rendered5
a< ma!in the writ of preliminary in8unction permanentH
b< orderin the defendants CL4 Iarment and Industrial
Company and Lenancio 4ambar to pay the plaintifs 8ointly and
solidarily the sum of P$','''.'' as temperate and nominal
damaes, the sum of P1','''.'' as eCemplary damaes, and
the sum of PF$,'''.'' as attorneySs fees and litiation eCpenses
and to pay the costsH
c< orderin the ?irector of the 1ational (ibrary to cancel the
Copyriht 6eistration 1o. 1-1%%> issued in the name of
Lenancio 4ambar.
F
Petitioner appealed to the Court of Appeals which on #anuary 0', 1%%>
decided in favor of private respondents as follows5
@A)6)B"6), the 8udment appealed from is ABBI6*)? in toto.
4" "6?)6)?.
0
In this instant petition, petitioner avers that the Court of Appeals erred
in5
I. ...63(I1I TAAT TA)6) @A4 A1 I1B6I1I)*)1T "B
6)4P"1?)1TS4 A6C3AT) *A6N.
II. ...63(I1I TAAT P)TITI"1)6 I4 #"I1T(2 A1? 4"(I?A6I(2 (IA,()
@ITA CL4 IA6*)1T4 I1?34T6IA( C"6P"6ATI"1 B"6
I1B6I1I)*)1T "B 6)4P"1?)1TS4 A6C3AT) *A6N.
III. ...I1 "6?)6I1I, TA)6) ,)I1I 1" I1B6I1I)*)1T "6 31BAI6
C"*P)TITI"1, TA) A@A6? "B ?A*AI)4 A1? CA1C)((ATI"1 "B
C"P26IIAT 6)II4T6ATI"1 1". 1-1%%> I443)? I1 TA) 1A*) "B
P)TITI"1)6.
:
,riePy, we are as!ed to resolve the followin issues5
1. ?id petitioner infrine on private respondentsS arcuate
desinR
F. *ust we hold petitioner solidarily liable with CL4 Iarments
Industrial CorporationR
0. Are private respondents entitled to nominal, temperate and
eCemplary damaes and cancellation of petitionerSs copyrihtR
"n the +rst issue, petitioner claims that he did not infrine on private
respondentsS arcuate desin because there was no colorable imitation
which deceived or confused the public. Ae cites Emerald 4arment
3anu$acturin+ Cororation vs( Court o$ Aeals, I.6. 1o. 1'''%>, F$1
4C6A ='' ;1%%$<, as authority. Ae disareed with the Court of Appeals
that there were confusin similarities between (eviSs and )uropressS
arcuate desins, despite the trial courtSs observation of diferences in
them. Petitioner maintains that althouh the bac!poc!et desins had
similarities, the public was not confused because (eviSs 8eans had other
mar!s not found in )uropress 8eans. Burther, he says (eviSs lon history
and popularity made its trademar! easily identi+able by the public.
In its comment, private respondents aver that the Court of Appeals did
not err in rulin that there was infrinement in this case. The
bac!poc!et desin of )uropress 8eans, a double arc intersectin in the
middle was the same as (eviSsS mar!, also a double arc intersectin at
the center. Althouh the trial court found diferences in the two desins,
these diferences were not noticeable. Burther, private respondents
said, infrinement of trademar! did not reEuire eCact similarity.
Colorable imitation enouh to cause confusion amon the public, was
suDcient for a trademar! to be infrined. Private respondents eCplained
that in a mar!et research they conducted with ='' respondents, the
result showed that the public was confused by )uropress
trademar! vis the (eviSs trademar!.
@e +nd that the +rst issue raised by petitioner is factual. The basic rule
is that factual Euestions are beyond the province of this Court in a
petition for review. Althouh there are eCceptions to this rule, this case
is not one of them.
$
Aence, we +nd no reason to disturb the +ndins of
the Court of Appeals that )uropressS use of the arcuate desin was an
infrinement of the (eviSs desin.
"n the second issue, petitioner claims that private respondents did not
show that he was connected with CL4IIC, nor did they prove his
speci+c acts of infrinement to ma!e him liable for damaes. Aain,
this is a factual matter and factual +ndins of the trial court, concurred
in by the Court of Appeals, are +nal and bindin on this Court.
=
,oth the
courts below found that petitioner had a copyriht over )uropressS
arcuate desin and that he consented to the use of said desin by
CL4IIC. @e are bound by this +ndin, especially in the absence of a
showin that it was tainted with arbitrariness or palpable error.
&
It must
be stressed that it was immaterial whether or not petitioner was
connected with CL4IIC. @hat is relevant is that petitioner had a
%0
copyriht over the desin and that he allowed the use of the same by
CL4IIC.
Petitioner also contends that the Court of Appeals erred when it said
that he had the burden to prove that he was not connected with CL4IIC
and that he did not authori.e anyone to use his copyrihted desin.
Accordin to petitioner, these are important elements of private
respondentsS cause of action aainst him, hence, private respondents
had the ultimate burden of proof.
Pertinent is 4ection 1, 6ule 101 of the 6ules of Court
>
which provides
that the burden of proof is the duty of a party to prove the truth of his
claim or defense, or any fact in issue by the amount of evidence
reEuired by law. In civil cases, the burden of proof may be on either the
plaintif or the defendant. It is on the latter, if in his answer he allees
an aDrmative defense, which is not a denial of an essential inredient
in the plaintifSs cause of action, but is one which, if established, will be
a ood defense W i.e., an -avoidance- of the claim, which prima facie,
the plaintif already has because of the defendantSs own admissions in
the pleadins.
%
PetitionerSs defense in this case was an aDrmative defense..Aw#i. Ae
did not deny that private respondents owned the arcuate trademar! nor
that CL4IIC used on its products a similar arcuate desin. @hat he
averred was that althouh he owned the copyriht on the )uropress
arcuate desin, he did not allow CL4IIC to use it. Ae also said he was
not connected with CL4IIC. These were not alleed by private
respondents in their pleadins, and petitioner therefore had the burden
to prove these.
(astly, are private respondents entitled to nominal, temperate and
eCemplary damaes and cancellation of petitionerSs copyrihtR
Petitioner insists that he had not infrined on the arcuate trademar!,
hence, there was no basis for nominal and temperate damaes. Also,
an award of nominal damaes precludes an award of temperate
damaes. Ae citesDentanilla vs( Centeno, I.6. 1o. (-1:000, 1 4C6A F1$
;1%=1< on this. Thus, he contends, assumin ar+uendothat there was
infrinement, the Court of Appeals still erred in awardin both nominal
and temperate damaes.
Petitioner li!ewise said that the rant of eCemplary damaes was
inconsistent with the trial courtSs +ndin that the desin of )uropress
8eans was not similar to (eviSs desin and that no pecuniary loss was
sufered by respondents to entitle them to such damaes.
(astly, petitioner maintains that as )uropressS arcuate desin is not a
copy of that of (eviSs, citin the trial courtSs +ndins that althouh there
are similarities, there are also diferences in the two desins,
cancellation of his copyriht was not 8usti+ed.
"n this matter, private respondents assert that the lower courts found
that there was infrinement and (eviSs was entitled to damaes based
on 4ections FF and F0 of 6A 1o. 1== otherwise !nown as the Trade
*ar! (aw,
1'
as amended, which was the law then overnin. 4aid
sections de+ne infrinement and prescribe the remedies therefor.
Burther, private respondents aver it was misleadin for petitioner to
claim that the trial court ruled that private respondents did not sufer
pecuniary loss, suestin that the award of damaes was improper.
Accordin to the private respondents, the trial court did not ma!e any
such rulin. It simply stated that there was no evidence that (eviSs had
sufered decline in its sales because of the use of the arcuate desin by
)uropress 8eans. They ofer that while there may be no direct proof that
they sufered a decline in sales, damaes may still be measured based
on a reasonable percentae of the ross sales of the respondents,
pursuant to 4ection F0 of the Trademar! law.
11
Binally, reardin the cancellation of petitionerSs copyriht, private
respondents deny that the trial court ruled that the arcuate desin of
)uropress 8eans was not the same as (eviSs arcuate desin 8eans. "n
the contrary, the trial court eCpressly ruled that there was similarity.
The cancellation of petitionerSs copyriht was 8usti+ed because
petitionerSs copyriht can not prevail over respondentsS reistration in
the Principal 6eister of ,ureau of Patents, Trademar!s, and Technoloy
Transfer. Accordin to private respondents, the essence of copyriht
reistration is oriinality and a copied desin is inherently non-
copyrihtable. They insist that reistration does not confer oriinality
upon a copycat version of a prior desin.
Brom the foreoin discussion, it is clear that the matters raised by
petitioner in relation to the last issue are purely factual, eCcept the
matter of nominal and temperate damaes. Petitioner claims that
damaes are not due private respondents and his copyriht should not
be cancelled because he had not infrined on (eviSs trademar!. ,oth
the trial court and the Court of Appeals found there was infrinement.
Thus, the award of damaes and cancellation of petitionerSs copyriht
are appropriate.
1F
Award of damaes is clearly provided in 4ection
F0,
10
while cancellation of petitionerSs copyriht +nds basis on the fact
that the desin was a mere copy of that of private respondentsS
trademar!..Aw#i. To be entitled to copyriht, the thin bein
copyrihted must be oriinal, created by the author throuh his own
%:
s!ill, labor and 8udment, without directly copyin or evasively imitatin
the wor! of another.
1:
Aowever, we aree with petitioner that it was error for the Court of
Appeals to aDrm the award of nominal damaes combined with
temperate damaes
1$
by the 6eional Trial Court of *a!ati. @hat
respondents are entitled to is an award for temperate damaes, not
nominal damaes. Bor althouh the eCact amount of damae or loss
can not be determined with reasonable certainty, the fact that there
was infrinement means they sufered losses for which they are entitled
to moderate damaes.
1=
@e +nd that the award of P$','''.'' as
temperate damaes fair and reasonable, considerin the circumstances
herein as well as the lobal coverae and reputation of private
respondents (evi 4trauss / Company and (evi 4trauss ;Phil.<, Inc.
FH!R!OR!, the decision dated #anuary 0', 1%%>, of the Court of
Appeals, in CA-I.6. CL 1o. $1$$0 ABBI6*I1I the 8udment of the
6eional Trial Court of *a!ati, ,ranch ==, dated #uly 1:, 1%%$, is hereby
*"?IBI)? so that nominal damaes are deleted but the amount of
P$',''' is hereby awarded only as T)*P)6AT) ?A*AI)4. In all other
respects, said 8udment is hereby ABBI6*)?, to wit5
a< the writ of preliminary in8unction is made permanentH
b< the defendants CL4 Iarment and Industrial Company and
Lenancio 4ambar are ordered also to pay the plaintifs 8ointly
and solidarily the sum of P1','''.'' as eCemplary damaes,
and the sum of PF$,'''.'' as attorneySs fees and litiation
eCpenses, and to pay the costsH and
c< the ?irector of the 1ational (ibrary is ordered to cancel the
Copyriht 6eistration 1o. 1-1%%> issued in the name of
Lenancio 4ambar.
4" "6?)6)?
%$
.
1+.G.R. No. 11510+ M#r<' 15, 199+
ROB!RTO ". D!" ROSARIO, petitioner,
vs.
COURT O APP!A"S AND JANITO CORPORATION, respondents.

B!""OSI""O, J.:
6oberto del 6osario petitions this Court to review the decision of the
Court of Appeals
1
which set aside the order of the 6eional Trial Court
of *a!ati rantin a writ of preliminary in8unction in his favor.
The antecedents5 "n 1> #anuary 1%%0 petitioner +led a complaint for
patent infrinement aainst private respondent #anito
Corporation.
)
6oberto (. del 6osario alleed that he was a patentee of
an audio eEuipment and improved audio eEuipment commonly !nown
as the sin-alon 4ystem or karaoke under (etters Patent 1o. 3*-$F=%
dated F #une 1%>0 as well as (etters Patent 1o. 3*-=F0& dated 1:
1ovember 1%>= issued by the ?irector of Patents. The efectivity of
both (etters Patents was for +ve ;$< years and was eCtended for
another +ve ;$< years startin F #une 1%>> and 1: 1ovember 1%%1,
respectively. Ae described his sin-alon system as a handy multi-
purpose compact machine which incorporates an ampli+er spea!er, one
or two tape mechanisms, optional tuner or radio and microphone miCer
with features to enhance one9s voice, such as the echo or reverb to
stimulate an opera hall or a studio sound, with the whole system
enclosed in one cabinet casin.
In the early part of 1%%' petitioner learned that private respondent was
manufacturin a sin-alon system bearin the
trademar! mi"ata or mi"ata karaoke substantially similar if not identical
to the sin-alon system covered by the patents issued in his favor.
Thus he souht from .the trial court the issuance of a writ of preliminary
in8unction to en8oin private respondent, its oDcers and everybody
elsewhere actin on its behalf, from usin, sellin and advertisin
the mi"ata or mi"ata karaoke brand, the in8unction to be made
permanent after trial, and prayin for damaes, attorney9s fees and
costs of suit.
"n $ Bebruary 1%%0 the trial court temporarily restrained private
respondent from manufacturin, usin andQor sellin and advertisin
the mi"ata sin-alon system or any sin-alon system substantially
identical to the sin-alon system patented by petitioner until further
orders.
"n F: Bebruary 1%%0 the trial court issued a writ of preliminary
in8unction upon a bond on the basis of its +ndin that petitioner was a
holder of a utility model patent for a sin-alon system and that without
his approval and consent private respondent was admittedly
manufacturin and sellin its own sin-alon system under the brand
name mi"ata which was substantially similar to the patented utility
mode
*
of petitioner.
Private respondent assailed the order of F: Bebruary 1%%0 directin the
issuance of the writ by way of a petition for certiorari with prayer for the
issuance of a writ of preliminary in8unction and a temporary restrainin
order before respondent Court of Appeals.
"n 1$ 1ovember 1%%0 respondent appellate court ranted the writ and
set aside the Euestioned order of the trial court. It eCpressed the view
that there was no infrinement of the patents of petitioner by the fact
alone that private respondent had manufactured the mi"ata karaoke or
audio system, and that the karaoke system was a universal product
manufactured, advertised and mar!eted in most countries of the world
lon before the patents were issued to petitioner. The motion to
reconsider the rant of the writ was deniedH
4
hence, the instant petition
for review.
This petition allees that5 ;a< it was improper for the Court of Appeals to
consider Euestions of fact in a certiorariproceedinH ;b< the Court of
Appeals erred in ta!in 8udicial notice of private respondent9s self-
servin presentation of factsH ;c< the Court of Appeals erred in
disreardin the +ndins of fact of the trial courtH and, ;d< there was no
basis for the Court of Appeals to rant a writ of preliminary in8unction in
favor of private respondent.
5
Petitioner arues that in a certiorari proceedin Euestions of fact are
not enerally permitted the inEuiry bein limited essentially to whether
the tribunal has acted without or in eCcess of 8urisdiction or with rave
abuse of discretionH that respondent court should not have disturbed
but respected instead the factual +ndins of the trial courtH that the
movant has a clear leal riht to be protected and that there is a
violation of such riht by private respondent. Thus, petitioner herein
claims, he has satis+ed the leal reEuisites to 8ustify the order of the
trial court directin the issuance of the writ of in8unction. "n the other
hand, in the absence of a patent to 8ustify the manufacture and sale by
%=
private respondent of sin-alon systems, it is not entitled to the
in8unctive relief ranted by respondent appellate court.
The cruC of the controversy before us hines on whether respondent
Court of Appeals erred in +ndin the trial court to have committed
rave abuse of discretion in en8oinin private respondent from
manufacturin, sellin and advertisin the mi"ata karaoke brand sin-
alon system for bein substantially similar if not identical to the audio
eEuipment covered by letters patent issued to petitioner.
In8unction is a preservative remedy for the protection of substantive
rihts or interests. It is not a cause of action in itself but merely a
provisional remedy, an ad8unct to a main suit. The controllin reason for
the eCistence of the 8udicial power to issue the writ is that the court
may thereby prevent a threatened or continuous irremediable in8ury to
some of the parties before their claims can be thorouhly investiated
and advisedly ad8udicated. It is to be resorted to only when there is a
pressin necessity to avoid in8urious conseEuences which cannot be
remedied under any standard of compensation. The application of the
writ rests upon an alleed eCistence of an emerency or of a special
reason for such an order before the case can be reularly heard, and
the essential conditions for rantin such temporary in8unctive relief are
that the complaint allees facts which appear to be suDcient to
constitute a cause of action for in8unction and that on the entire
showin from both sides, it appears, in view of all the circumstances,
that the in8unction is reasonably necessary to protect the leal rihts of
plaintif pendin the litiation.
+
A preliminary in8unction may be ranted at any time after the
commencement of the action and before 8udment when it is
established that the defendant is doin, threatens, or is about to do, or
is procurin or suferin to be done, some act probably in violation of
the plaintif9s rihts. Thus, there are only two reEuisites to be satis+ed if
an in8unction is to issue, namely, the eCistence of the riht to be
protected, and that the facts aainst which the in8unction is to be
directed are violative of said riht.
,
Bor the writ to issue the interest of petitioner in the controversy or the
riht he see!s to be protected must be a present riht, a leal riht
which must be shown to be clear and positive.
In this reard 4ec. $$ of 6.A. 1=$ as amended, !nown as T#e ,atent
'aw, provides G
4ec. $$. Desi+n atents and atents $or utilit" models. G
;a< Any new, oriinal, and ornamental desin for an
article of manufacture and ;b< new model or implements
or tools or of any industrial product or of part of the
same, which does not possess the Euality of invention but
which is of practical utility by reason of its form,
con+uration, construction or composition, may be
protected by the author thereof, the former by a patent
for a desin and the latter by a patent for a utility model,
in the same manner and sub8ect to the same provisions
and reEuirements as relate to patents for inventions
insofar as they are applicable, eCcept as otherwise herein
provide . . . .
Admittedly, petitioner is a holder of (etters Patent 1o. 3*-$=F% dated F
#une 1%>$ issued for a term of +ve ;$< years from the rant of a 3tility
*odel herein described G
The construction of an audio eEuipment comprisin a
substantially cubical casin havin a window at its rear
and upper corner +tted with a slihtly inclined control
panel, said cubical ;casin< havin a vertical partition
wall therein de+nin a rear compartment and a front
compartment, and said front compartment servin as a
spea!er ba`eH a transistori.ed ampli+er circuit havin an
echo section and writhed in at least the printed circuit
boards placed inside said rear compartment of said
casin and attached to said vertical partition wall, said
transistori.ed ampli+er circuit capable of bein operated
from outside, throuh various controls mounted on said
control panel of such casinH a loud spea!er +tted inside
said front compartment of said casin and connected to
the output of the main audio ampli+er section of said
transistori.ed ampli+er circuit and a tape player mounted
on the top wall of said casin and said tape player bein
connected in conventional manner to said transistori.ed
ampli+er circuit.
8
Aain, on 1: 1ovember 1%>= petitioner was ranted (etters Patent 1o.
3*-=F0& for a term of +ve ;$< years from the rant of a 3tility *odel
described as G
In an audio eEuipment consistin of a +rst cubical casin
havin an openin at its rear and upper rear portion and
a partition therein formin a rear compartment and a
front compartment servin as a loud spea!er ba`e, a
control panel formed by vertical and hori.ontal sections,
a transistori.ed ampli+er circuit wired in at least two
%&
printed circuit boards attached at the bac! of said control
panel, a +rst loud spea!er +tted inside said +rst
compartment of such +rst casin and connected to the
output of said transistori.ed ampli+er circuitH the
improvement wherein said control panel bein removably
+tted to said +rst cubical casin and further comprises a
set of tape recorder and tape player mounted on the
vertical section of said control panel and said recorder
and player are li!ewise connected to said transistori.ed
ampli+er circuitH a second cubical casin havin an
openin at its rear, said second cubical casin havin
;beinR< provided with a vertical partition therein de+nin
a rear compartment and a front compartment, said rear
compartment bein provided with a door and enclosin
therein a set of tape rac!s and said front compartment
servin as loud spea!er ba`e, said second cubical casin
bein adapted to said +rst cubical casin so that said +rst
and second casins are secured toether in compact and
portable formH and a second loud spea!er +tted inside
said front compartment of said casin and connected to
the output of said ampli+er circuit.
9
The terms of both (etters Patents were eCtended for another +ve ;$<
years each, the +rst beinnin F #une 1%>> and the second, 1:
1ovember 1%%1.
The Patent (aw eCpressly ac!nowledes that any new model of
implements or tools of any industrial product even if not possessed of
the Euality of invention but which is of practical utility is entitled to a
patent for utility model.
10
Aere, there is no dispute that the letters
patent issued to petitioner are for utility models of audio eEuipment.
In issuin, reissuin or withholdin patents and eCtensions thereof, the
?irector of Patents determines whether the patent is new and whether
the machine or device is the proper sub8ect of patent. In passin on an
application, the ?irector decides not only Euestions of law but also
Euestions of fact, i.e. whether there has been a prior public use or sale
of the article souht to be patented.
11
@here petitioner introduces the
patent in evidence, if it is in due form, it afords a rima
$acie presumption of its correctness and validity. The decision of the
?irector of Patents in rantin the patent is always presumed to be
correct, and the burden then shifts to respondent to overcome this
presumption by competent evidence.
1)
3nder 4ec. $$ of The Patent (aw a utility model shall not be considered
-new- if before the application for a patent it has been publicly !nown
or publicly used in this country or has been described in a printed
publication or publications circulated within the country, or if it is
substantially similar to any other utility model so !nown, used or
described within the country. 6espondent corporation failed to present
before the trial court competent evidence that the utility models
covered by the (etters Patents issued to petitioner were not new. This is
evident from the testimony of #anito Cua, President of respondent #anito
Corporation, durin the hearin on the issuance of the in8unction, to wit
G
O. *r. Cua, you testi+ed that there are ;sic<
so many other companies which already
have ;sic< the sin-alon system even
before the patent application of *r. del
6osario and as a matter of fact you
mentioned 4anyo, 4ony and 4harp, is that
rihtR
A. *usicmate and Asahi.
O. 1ow do you recall that your lawyer +led
with this Aonorable Court an 3rent *otion
to (ift Temporary 6estrainin "rder of this
Aonorable Court. I am sure you were the
one who provided him with the information
about the many other companies sellin
the sin-alon system, is that rihtR These
1> which you enumerated here.
A. *ore than that because. . . .
O. 1ow you will aree with me that in your
statement 4harp you put the date as 1%>$
areedR
A. 1o.
O. 2ou mean your lawyer was wron when
he put the word 4harp 1%>$R
A. *aybe I informed him already.
CCC CCC CCC
%>
O. 2ou mean your lawyer was wron in
allein to this Court that 4harp
manufactured and sold ;in< 1%>$ as found
in the 3rent *otionR
A. 4ince it is urent it is more or less.
O. The same also with 4anyo 1%>$ which
you put, more or lessR
A. 4anyo is wron.
O. It is not 1%>$R
A. 4anyo is 1%&% I thin!.
O. 4o this is also wron. Panasonic 1%>= is
also wronR
A. Panasonic I thin!.
O. 4o you don9t thin! this is also correct.
A. The dateR
O. 4o you don9t thin! also that this
alleation here that they manufactured in
1%>= is correctR
A. @ron. )arlier.
O. 1ational by Precision )lectronic 1%>=
this is also wronR
A. I thin! earlier.
O. 4o that means all your alleations here
from F to $ are wronR "N. ,y Philipps
Philippines 1%>=, this is also correct or
wronR
A. *ore or less. @e said more or less.
O. 1a!abutshi by Asahi )lectronics that is
also wronR
A. 1o that is 1%&%.
O. )lectone by ?IC" 1%>% is this correct or
wronR
A. Correct. *ore or less.
O. 4!ylers 1%>$ is that correct or wronR
A. It is more or less because it is urent.
@e don9t have time to eCact the date.
O. *usicmate of I.A. 2upanco 1%>1 this is
more or lessR 2ou are not also sureR
A. %$Y sure.
O. 1ow you are sure 1%>1.
A. This one because. . . .
O. *r. @itness so you are now tryin to tell
this Aonorable Court that all your
alleations here of the dates in this 3rent
*otion eCcept for *usicmate which you are
only %$Y sure they are all wron or they
are also more or less or not sure, is that
rihtR
A. *ore or less.
O. 1ow do you have any proof, any
advertisement, anythin in writin that
would show that all these instruments are
in the mar!et, do you have it.
A. 1o I don9t have it because. . . .
O. 1o I am satis+ed with your answer. 1ow
*r. @itness, you don9t also have a proof
that A!ai instrument that you said was also
%%
in the mar!et before 1%>FR 2ou don9t have
any written proof, any advertisementR
A. I have the product.
O. ,ut you have not brouht the product in
;sic< this Aonorable Court, rihtR
A. 1o.
1*
As may be leaned herein, the rihts of petitioner as a patentee have
been suDciently established, contrary to the +ndins and conclusions
of respondent Court of Appeals. ConseEuently, under 4ec. 0& of The
Patent law, petitioner as a patentee shall have the eCclusive riht to
ma!e, use and sell the patented machine, article or product for the
purpose of industry or commerce, throuhout the territory of the
Philippines for the term of the patent, and such ma!in, usin or sellin
by any person without authori.ation of the patentee constitutes
infrinement of his patent.
Petitioner established before the trial court that respondent #anito
Corporation was manufacturin a similar sin-alon system bearin the
trademar! mi"ata which infrined his patented models. Ae also alleed
that both his own patented audio eEuipment and respondent9s sin-
alon system were constructed in a casin with a control panel, the
casin havin a vertical partition wall de+nin the rear compartment
from the front compartment, with the front compartment consistin of a
loud spea!er ba`e, both containin a transistori.ed ampli+er circuit
capable of bein operated from outside throuh various controls
mounted on the control panel, and that both had loud spea!ers +tted
inside the front compartment of the casin and connected to the output
of the main audio ampli+er section both havin a tape recorder and a
tape player mounted on the control panel with the tape recorder and
tape player bein both connected to the transistori.ed ampli+er
circuit.
14
6espondent #anito Corporation denied that there was any violation of
petitioner9s patent rihts, and cited the diferences between its mi"ata
e5uiment and petitioner9s audio eEuipment. ,ut, it must be
emphasi.ed, respondent only con+ned its comparison to the +rst
model, 3tility *odel 1o. $F=%, and completely disrearded 3tility *odel
1o. =F0& which improved on the +rst. As described by respondent
corporation,
15
these diferences are G
)irst. 3nder 3tility *odel $F=%, the unit is a substantially
cubical casin with a window at its rear and upper corner
+tted with slihtly inclined control panel, while
the mi"ata eEuipment is a substantially rectanular
casin with panel vertically positioned.
Second. 3nder 3tility *odel $F=%, the cubical casin has
a vertical partition wall de+nin a rear compartment and
a front compartment servin as a spea!er ba`e, while
the mi"ata eEuipment has no rear compartment and front
compartment in its rectanular casinH it has only a front
compartment hori.ontally divided into 0 compartments
li!e a 0-storey buildin, the 1st compartment bein a !it,
the Fnd also the spea!er, and the 0rd are !its.
T#ird. 3nder 3tility *odel 1o. $F=%, a transistori.ed
ampli+er circuit with an echo section wired in at least F
printed circuit boards is placed inside the rear
compartment of the casin and attached to the vertical
partition wall, the printed circuit board havin 1 ampli+er
and 1 echo, while in the mi"ataeEuipment the ampli+er is
mainly IC ;Interated Circuit< G powered with > printed
circuit boards almost all of which are IC controlled, with 1
ampli+er with power supply, 1 main tuner, 1 eEuali.er ;0-
band<, 1 IC controlled volume control, 1 echo IC, 1 tape
pream, 1 instrument and 1 wireless microphone.
)ourt#. 3nder 3tility *odel $F=%, : printed circuits are
placed inside the compartment of its casin attached to
the vertical partition wall, while in the mi"ata, the &
printed circuit boards ;PC,< are attached to the front
panel and 1 attached to the hori.ontal divider.
)i$t#. 3nder 3tility *odel $F=%, there are various controls
mounted on the control panel of the casin, while
in mi"ata, the various controls are all separated from the
printed circuit boards and the various controls are all
attached thereto.
Si&t#. 3nder 3tility *odel $F=%, a loud spea!er +tted
inside the front compartment of the casin is connected
to the output of the main audio ampli+er section of the
transistori.ed ampli+er circuit, while in mi"ata, there is
no other way but to use F loud spea!ers connected to the
ampli+er.
1''
Sevent#. 3nder 3tility *odel $F=%, a tape player is
mounted on the top wall of the casin, while inmi"ata, F
tape players are used mounted side by side at the front.
It is elementary that a patent may be infrined where the essential or
substantial features of the patented invention are ta!en or
appropriated, or the device, machine or other sub8ect matter alleed to
infrine is substantially identical with the patented invention. In order to
infrine a patent, a machine or device must perform the same function,
or accomplish the same result by identical or substantially identical
means and the principle or mode of operation must be substantially the
same.
1+
It may be noted that respondent corporation failed to present before
the trial court a clear, competent and reliable comparison between its
own model and that of petitioner, and disrearded completely
petitioner9s utility *odel 1o. =F0& which improved on his +rst patented
model. 1otwithstandin the diferences cited by respondent
corporation, it did not refute and disprove the alleations of petitioner
before the trial court that5 ;a< both are used by a siner to sin and
amplify his voiceH ;b< both are used to sin with a minus-one or
multipleC tapes, or that both are used to play minus-one or standard
cassette tapes for sinin or for listenin toH ;c< both are used to sin
with a minus-one tape and multipleC tape and to record the sinin and
the accompanimentH ;d< both are used to sin with live accompaniment
and to record the sameH ;e< both are used to enhance the voice of the
siner usin echo efect, treble, bass and other controlsH ;< both are
eEuipped with cassette tape dec!s which are installed with one bein
used for playbac! and the other, for recordin the siner and the
accompaniment, and both may also be used to record a spea!er9s voice
or instrumental playin, li!e the uitar and other instrumentsH ;h< both
are
encased in a boC-li!e cabinetsH and, ;i< both can be used with one or
more microphones.
1
,
Clearly, therefore, both petitioner9s and respondent9s models involve
substantially the same modes of operation and produce substantially
the same if not identical results when used.
In view thereof, we +nd that petitioner had established before the trial
court rima $acie proof of violation of his rihts as patentee to 8ustify
the issuance of a writ of preliminary in8unction in his favor durin the
pendency of the main suit for damaes resultin from the alleed
infrinement.
@A)6)B"6), the ?ecision of the Court of Appeals dated 1$ 1ovember
1%%0 is 6)L)64)? and 4)T A4I?) and the "rder of the trial court dated
F: Bebruary 1%%0 rantin petitioner the writ of in8unction is
6)I14TAT)?.
The trial court is directed to continue with the proceedins on the main
action pendin before it in order to resolve with dispatch the issues
therein presented.
4" "6?)6)?.
1,.G.R. No. 9,*4* Se9&ember 1*, 199*
PASCUA" GODIN!S, petitioner,
vs.
TH! HONORAB"! COURT O APP!A"S, SP!CIA" OURTH
DIGISION #$% SG-AGRO !NT!RPRIS!S, INC.,respondents.
Jesus S( Anonat $or etitioner(
Arturo 3( Alinio $or rivate resondent(
ROM!RO, J.:
Throuh this petition for review in certiorari of a decision of the Court of
Appeals aDrmin the decision of the trial court, petitioner Pascual
Iodines see!s to reverse the adverse decision of the Court a 5uo that
he was liable for infrinement of patent and unfair competition. The
dispositive portion of the assailed decision is hereby Euoted to wit5
@A)6)B"6), with the elimination of the award for
attorney9s fees, the 8udment appealed from is hereby
ABBI6*)?, with costs aainst appellant.
1
The patent involved in this case is (etters Patent 1o. 3*-FF0= issued by
the Philippine Patent "Dce to one *adalena 4. Lillaru. on #uly 1$,
1%&=. It covers a utility model for a hand tractor or power tiller, the
main components of which are the followin5 -;1< a vacuumatic house
PoatH ;F< a harrow with ad8ustable operatin handleH ;0< a pair of paddy
wheelsH ;:< a protective water coverin for the enine main driveH ;$< a
transmission caseH ;=< an operatin handleH ;&< an enine foundation on
the top midportion of the vacuumatic housin Poat to which the main
enine drive is detachedly installedH ;>< a frontal frame eCtension above
the Euarter G circularly shaped water coverin hold ;sic< in place the
transmission caseH ;%< a L-belt connection to the enine main drive with
1'1
transmission ear throuh the pulley, and ;1'< an idler pulley installed
on the enine foundation.-
)
The patented hand tractor wor!s in the
followin manner5 -the enine drives the transmission ear thru the L-
belt, a driven pulley and a transmission shaft. The enine drives the
transmission ear by tensionin of the L-belt which is controlled by the
idler pulley. The L-belt drives the pulley attached to the transmission
ear which in turn drives the shaft where the paddy wheels are
attached. The operator handles the hand tractor throuh a handle
which is inclined upwardly and supported by a pair of substandin pipes
and reinforced by a 3-shaped I.I. pipe at the L-shaped end.-
*
The above mentioned patent was acEuired by 4L-Aro Industries
)nterprises, Inc., herein private respondent, from *adalena Lillaru., its
chairman and president, by virtue of a ?eed of Assinment eCecuted by
the latter in its favor. "n "ctober 01, 1%&%, 4L-Aro Industries caused
the publication of the patent in ,ulletin Today, a newspaper of eneral
circulation.
In accordance with the patent, private respondent manufactured and
sold the patented power tillers with the patent imprinted on them. In
1%&%, 4L-Aro Industries sufered a decline of more than $'Y in sales in
its *olave, 7amboana del 4ur branch. 3pon investiation, it
discovered that power tillers similar to those patented by private
respondent were bein manufactured and sold by petitioner herein.
ConseEuently, private respondent noti+ed Pascual Iodines about the
eCistin patent and demanded that the latter stop sellin and
manufacturin similar power tillers. 3pon petitioner9s failure to comply
with the demand, 4L-Aro Industries +led before the 6eional Trial Court
a complaint for infrinement of patent and unfair competition.
After trial, the court held Pascual Iodines liable for infrinement of
patent and unfair competition. The dispositive portion of the decision
reads as follows5
@A)6)B"6), premises considered, #3?I*)1T is hereby
rendered in favor of the plaintif 4L-Aro Industries
)nterprises, Inc., and aainst defendant Pascual Iodines5
1. ?eclarin the writ of preliminary in8unction issued by
this Court aainst defendant as permanentH
F. "rderin defendant Pascual Iodines to pay plaintif the
sum of Bifty Thousand Pesos ;P$','''.''< as damaes to
its business reputation and oodwill, plus the further sum
of )ihty Thousand Pesos ;P>','''.''< for unreali.ed
pro+ts durin the period defendant was manufacturin
and sellin copied or imitation Poatin power tillerH
0. "rderin the defendant to pay the plaintif, the further
sum of )iht Thousand Pesos ;P>,'''.''< as
reimbursement of attorney9s fees and other eCpenses of
litiationH and to pay the costs of the suit.
4" "6?)6)?.
4
The decision was aDrmed by the appellate court.
Thereafter, this petition was +led. Petitioner maintains the defenses
which he raised before the trial and appellate courts, to wit5 that he was
not enaed in the manufacture and sale of the power tillers as he
made them only upon the special order of his customers who ave their
own speci+cationsH hence, he could not be liable for infrinement of
patent and unfair competitionH and that those made by him were
diferent from those bein manufactured and sold by private
respondent.
@e +nd no merit in his aruments. The Euestion of whether petitioner
was manufacturin and sellin power tillers is a Euestion of fact better
addressed to the lower courts. In dismissin the +rst arument of
petitioner herein, the Court of Appeals Euoted the +ndins of the court,
to wit5
It is the contention of defendant that he did not
manufacture or ma!e imitations or copies of plaintif9s
turtle power tiller as what he merely did was to fabricate
his Poatin power tiller upon speci+cations and desins of
those who ordered them. Aowever, this contention
appears untenable in the liht of the followin
circumstances5 1< he admits in his Answer that he has
been manufacturin power tillers or hand tractors, sellin
and distributin them lon before plaintif started sellin
its turtle power tiller in 7amboana del 4ur and *isamis
"ccidental, meanin that defendant is principally a
manufacturer of power tillers, not upon speci+cation and
desin of buyers, but upon his own speci+cation and
desinH F< it would be unbelievable that defendant would
fabricate power tillers similar to the turtle power tillers of
plaintif upon speci+cations of buyers without reEuirin a
8ob order where the speci+cation and desins of those
ordered are speci+ed. 1o document was ;sic< ever been
presented showin such 8ob orders, and it is rather
1'F
unusual for defendant to manufacture somethin without
the speci+cation and desins, considerin that he is an
enineer by profession and proprietor of the ".amis
)nineerin shop. "n the other hand, it is also hihly
unusual for buyers to order the fabrication of a power
tiller or hand tractor and allow defendant to manufacture
them merely based on their verbal instructions. This is
contrary to the usual business and manufacturin
practice. This is not only time consumin, but costly
because it involves a trial and error method, repeat 8obs
and material wastae. ?efendant 8udicially admitted two
;F< units of the turtle power tiller sold by him to Policarpio
,erondo.
5
"f eneral acceptance is the rule imbedded in our 8urisprudence that
-. . . the 8urisdiction of the 4upreme Court in cases brouht to it from
the Court of Appeals in a petition for certiorari under 6ule :$ of the
6ules of Court is limited to the review of errors of law, and that said
appellate court9s +ndins of fact are conclusive upon this Court.-
+
The fact that petitioner herein manufactured and sold power tillers
without patentee9s authority has been established by the courts despite
petitioner9s claims to the contrary.
The Euestion now arises5 ?id petitioner9s product infrine upon the
patent of private respondentR
Tests have been established to determine infrinement. These are ;a<
literal infrinementH and ;b< the doctrine of eEuivalents.
,
In usin literal
infrinement as a test, -. . . resort must be had, in the +rst instance, to
the words of the claim. If accused matter clearly falls within the claim,
infrinement is made out and that is the end of it.-
8
To determine
whether the particular item falls within the literal meanin of the patent
claims, the court must 8uCtapose the claims of the patent and the
accused product within the overall conteCt of the claims and
speci+cations, to determine whether there is eCact identity of all
material elements.
9
The trial court made the followin observation5
4amples of the defendant9s Poatin power tiller have
been produced and inspected by the court and compared
with that of the turtle power tiller of the plaintif ;see
)Chibits A to A-F><. In appearance and form, both the
Poatin power tillers of the defendant and the turtle
power tiller of the plaintif are virtually the same.
?efendant admitted to the Court that two ;F< of the
power inspected on *arch 1F, 1%>:, were manufactured
and sold by him ;see T41, *arch 1F, 1%>:, p. &<. The
three power tillers were placed alonside with each other.
At the center was the turtle power tiller of plaintif, and
on both sides thereof were the Poatin power tillers of
defendant ;)Chibits A to A-F<. @itness 6odrio too!
photoraphs of the same power tillers ;front, side, top
and bac! views for purposes of comparison ;see )Chibits
A-: to A-F><. Liewed from any perspective or anle, the
power tiller of the defendant is identical and similar to
that of the turtle power tiller of plaintif in form,
con+uration, desin and appearance. The parts or
components thereof are virtually the same. ,oth have the
circularly-shaped vacuumatic housin Poat, a paddy in
front, a protective water coverin, a transmission boC
housin the transmission ears, a handle which is L-
shaped and inclined upwardly, attached to the side of the
vacuumatic housin Poat and supported by the
upstandin I.I. pipes and an enine base at the top
midportion of the vacuumatic housin Poat to which the
enine drive may be attached. In operation, the Poatin
power tiller of the defendant operates also in similar
manner as the turtle power tiller of plaintif. This was
admitted by the defendant himself in court that they are
operatin on the same principles. ;T41, Auust 1%, 1%>&,
p. 10<
10
*oreover, it is also observed that petitioner also called his power tiller
as a Poatin power tiller. The patent issued by the Patent "Dce referred
to a -farm implement but more particularly to a turtle hand tractor
havin a vacuumatic housin Poat on which the enine drive is held in
place, the operatin handle, the harrow housin with its operatin
handle and the paddy wheel protective coverin.-
11
It appears from the
foreoin observation of the trial court that these claims of the patent
and the features of the patented utility model were copied by petitioner.
@e are compelled to arrive at no other conclusion but that there was
infrinement.
Petitioner9s arument that his power tillers were diferent from private
respondent9s is that of a drownin man clutchin at straws.
6econi.in that the loical fallbac! position of one in the place of
defendant is to aver that his product is diferent from the patented one,
courts have adopted the doctrine of eEuivalents which reconi.es that
minor modi+cations in a patented invention are suDcient to put the
1'0
item beyond the scope of literal infrinement.
1)
Thus, accordin to this
doctrine, -;a<n infrinement also occurs when a device appropriates a
prior invention by incorporatin its innovative concept and, albeit with
some modi+cation and chane, performs substantially the same
function in substantially the same way to achieve substantially the
same result.-
1*
The reason for the doctrine of eEuivalents is that to
permit the imitation of a patented invention which does not copy any
literal detail would be to convert the protection of the patent rant into
a hollow and useless thin. 4uch imitation would leave room for G
indeed encourae G the unscrupulous copyist to ma!e unimportant and
insubstantial chanes and substitutions in the patent which, thouh
addin nothin, would be enouh to ta!e the copied matter outside the
claim, and hence outside the reach of the law.
14
In this case, the trial court observed5
?efendant9s witness )duardo Ca_ete, employed for 11
years as welder of the ".amis )nineerin, and therefore
actually involved in the ma!in of the Poatin power
tillers of defendant tried to eCplain the diference
between the Poatin power tillers made by the
defendant. ,ut a careful eCamination between the two
power tillers will show that they will operate on the same
fundamental principles. And, accordin to establish
8urisprudence, in infrinement of patent, similarities or
diferences are to be determined, not by the names of
thins, but in the liht of what elements do, and
substantial, rather than technical, identity in the test.
*ore speci+cally, it is necessary and suDcient to
constitute eEuivalency that the same function can be
performed in substantially the same way or manner, or
by the same or substantially the same, principle or mode
of operationH but where these tests are satis+ed, mere
diferences of form or name are immaterial. . . .
15
It also stated5
To establish an infrinement, it is not essential to show
that the defendant adopted the device or process in
every particularH Proof of an adoption of the substance of
the thin will be suDcient. -In one sense,- said #ustice
,rown, -it may be said that no device can be ad8uded an
infrinement that does not substantially correspond with
the patent. ,ut another construction, which would limit
these words to eCact mechanism described in the patent,
would be so obviously un8ust that no court could be
eCpected to adopt it. . . .
The law will protect a patentee aainst imitation of his
patent by other forms and proportions. If two devices do
the same wor! in substantially the same way, and
accomplish substantially the same result, they are the
same, even thouh they difer in name, form, or shape.
1+
@e pronounce petitioner liable for infrinement in accordance with
4ection 0& of 6epublic Act 1o. 1=$, as amended, providin, inter alia5
4ec. 0&. Ri+#t o$ ,atentees. G A patentee shall have the
eCclusive riht to ma!e, use and sell the patented
machine, article or product, and to use the patented
process for the purpose of industry or commerce,
throuhout the territory of the Philippines for the terms of
the patentH and suc# makin+% usin+% or sellin+ b" an"
erson wit#out t#e aut#orization o$ t#e ,atentee
constitutes in$rin+ement o$ t#e atent. ;)mphasis ours<
As far as the issue reardin unfair competition is concerned, suDce it
to say that 6epublic Act 1o. 1==, as amended, provides, inter alia5
4ec. F%. Un$air cometition% ri+#ts and remedies. G . . .
CCC CCC CCC
In particular, and without in any way limitin the scope of
unfair competition, the followin shall be deemed uilty
of unfair competition5
;a< Any person, who in sellin his oods shall ive them
the eneral appearance of oods of another
manufacturer or dealer, either as to the oods
themselves or in the wrappin of the pac!aes in which
they are contained, or the devices or words thereon, or in
any other feature of their appearance, which would be
li!ely to inPuence purchasers that the oods ofered are
those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the
oods with such appearance as shall deceive the public
and defraud another of his leitimate trade. . . .
CCC CCC CCC
1':
Considerin the foreoin, we +nd no reversible error in the decision of
the Court of Appeals aDrmin with modi+cation the decision of the trial
court.
@A)6)B"6), premises considered, the decision of the Court of Appeals
is hereby ABBI6*)? and this petition ?)1I)? for lac! of merit.
:idin% 3elo and Ditu+% JJ(% concur(
)eliciano% J(% is on leave(
18.G.R. No. 118)95 M#B ), 199,
FIGB!RTO !. TATADA #$% ANNA DOMINI2U! COS!T!NG, #8
member8 oD &'e P':1:99:$e Se$#&e #$% #8 &#C9#Ber8K GR!GORIO
ANDO"ANA #$% JO5!R ARRO6O #8 member8 oD &'e Ho=8e oD
Re9re8e$&#&:ve8 #$% #8 &#C9#Ber8K NICANOR P. P!R"AS #$%
HORACIO R. MORA"!S, bo&' #8 &#C9#Ber8K CIGI" "IB!RTI!S
1'$
UNION, NATIONA" !CONOMIC PROT!CTIONISM ASSOCIATION,
C!NT!R OR A"T!RNATIG! D!G!"OPM!NT INITIATIG!S, "I5AS-
5A6ANG 5AUN"ARAN OUNDATION, INC., PHI"IPPIN! RURA"
R!CONSTRUCTION MOG!M!NT, D!MO5RATI5ONG 5I"USAN NG
MAGBUBU5ID NG PI"IPINAS, INC., #$% PHI"IPPIN! P!ASANT
INSTITUT!, :$ re9re8e$&#&:o$ oD v#r:o=8 &#C9#Ber8 #$% #8 $o$-
0over$me$&#1 or0#$:>#&:o$8, petitioners,
vs.
!DGARDO ANGARA, A"B!RTO ROMU"O, "!TICIA RAMOS-
SHAHANI, H!H!RSON A"GAR!(, AGAPITO A2UINO, RODO"O
BIA(ON, N!PTA"I GON(A"!S, !RN!STO H!RR!RA, JOS! "INA,
G"ORIA. MACAPAGA"-ARRO6O, OR"ANDO M!RCADO, B"AS
OP"!, JOHN OSM!TA, SANTANINA RASU", RAMON R!GI""A,
RAU" ROCO, RANCISCO TATAD #$% R!DDI! F!BB, :$ &'e:r
re89e<&:ve <#9#<:&:e8 #8 member8 oD &'e P':1:99:$e Se$#&e ;'o
<o$<=rre% :$ &'e r#&:@<#&:o$ bB &'e Pre8:%e$& oD &'e P':1:99:$e8
oD &'e A0reeme$& !8&#b1:8':$0 &'e For1% Tr#%e Or0#$:>#&:o$K
SA"GADOR !NRI2U!(, :$ ':8 <#9#<:&B #8 Se<re&#rB oD B=%0e&
#$% M#$#0eme$&K CARIDAD GA"D!HU!SA, :$ 'er <#9#<:&B #8
N#&:o$#1 Tre#8=rerK RI(A"INO NAGARRO, :$ ':8 <#9#<:&B #8
Se<re&#rB oD Tr#%e #$% I$%=8&rBK ROB!RTO S!BASTIAN, :$ ':8
<#9#<:&B #8 Se<re&#rB oD A0r:<=1&=reK ROB!RTO D! OCAMPO, :$
':8 <#9#<:&B #8 Se<re&#rB oD :$#$<eK ROB!RTO ROMU"O, :$ ':8
<#9#<:&B #8 Se<re&#rB oD ore:0$ AA#:r8K #$% T!OISTO T.
GUINGONA, :$ ':8 <#9#<:&B #8 !Ce<=&:ve Se<re&#rB, respondents.

PANGANIBAN, J.:
The emerence on #anuary 1, 1%%$ of the @orld Trade "rani.ation,
abetted by the membership thereto of the vast ma8ority of countries
has revolutioni.ed international business and economic relations
amonst states. It has irreversibly propelled the world towards trade
liberali.ation and economic lobali.ation. (iberali.ation, lobali.ation,
dereulation and privati.ation, the third-millennium bu.. words, are
usherin in a new borderless world of business by sweepin away as
mere historical relics the heretofore traditional modes of promotin and
protectin national economies li!e tarifs, eCport subsidies, import
Euotas, Euantitative restrictions, taC eCemptions and currency controls.
Bindin mar!et niches and becomin the best in speci+c industries in a
mar!et-driven and eCport-oriented lobal scenario are replacin ae-old
-bear-thy-neihbor- policies that unilaterally protect wea! and
ineDcient domestic producers of oods and services. In the words of
Peter ?ruc!er, the well-!nown manaement uru, -Increased
participation in the world economy has become the !ey to domestic
economic rowth and prosperity.-
:rie$ Jistorical :ack+round
To hasten worldwide recovery from the devastation wrouht by the
4econd @orld @ar, plans for the establishment of three multilateral
institutions G inspired by that rand political body, the 3nited 1ations
G were discussed at ?umbarton "a!s and ,retton @oods. The !rst was
the @orld ,an! ;@,< which was to address the rehabilitation and
reconstruction of war-ravaed and later developin countriesH
the second, the International *onetary Bund ;I*B< which was to deal
with currency problemsH and the t#ird, the International Trade
"rani.ation ;IT"<, which was to foster order and predictability in world
trade and to minimi.e unilateral protectionist policies that invite
challene, even retaliation, from other states. Aowever, for a variety of
reasons, includin its non-rati+cation by the 3nited 4tates, the IT",
unli!e the I*B and @,, never too! of. @hat remained was only IATT G
the Ieneral Areement on Tarifs and Trade. IATT was a collection of
treaties overnin access to the economies of treaty adherents with no
institutionali.ed body administerin the areements or dependable
system of dispute settlement.
After half a century and several di..yin rounds of neotiations,
principally the Nennedy 6ound, the To!yo 6ound and the 3ruuay
6ound, the world +nally ave birth to that administerin body G the
@orld Trade "rani.ation G with the sinin of the -Binal Act- in
*arra!esh, *orocco and the rati+cation of the @T" Areement by its
members.
1
(i!e many other developin countries, the Philippines 8oined @T" as a
foundin member with the oal, as articulated by President Bidel L.
6amos in two letters to the 4enate ;in$ra<, of improvin -Philippine
access to forein mar!ets, especially its ma8or tradin partners, throuh
the reduction of tarifs on its eCports, particularly aricultural and
industrial products.- The President also saw in the @T" the openin of
-new opportunities for the services sector . . . , ;the reduction of< costs
and uncertainty associated with eCportin . . . , and ;the attraction of<
more investments into the country.- Althouh the Chief )Cecutive did
not eCpressly mention it in his letter, the Philippines G and this is of
special interest to the leal profession G will bene+t from the @T"
system of dispute settlement by 8udicial ad8udication throuh the
independent @T" settlement bodies called ;1< ?ispute 4ettlement
Panels and ;F< Appellate Tribunal. Aeretofore, trade disputes were
settled mainly throuh neotiations where solutions were arrived at
1'=
freEuently on the basis of relative barainin strenths, and where
naturally, wea! and underdeveloped countries were at a disadvantae.
T#e ,etition in :rie$
Aruin mainly ;1< that the @T" reEuires the Philippines -to place
nationals and products of member-countries on the same footin as
Bilipinos and local products- and ;F< that the @T" -intrudes, limits
andQor impairs- the constitutional powers of both Conress and the
4upreme Court, the instant petition before this Court assails the @T"
Areement for violatin the mandate of the 1%>& Constitution to
-develop a self-reliant and independent national economy efectively
controlled by Bilipinos . . . ;to< ive preference to Euali+ed Bilipinos ;and
to< promote the preferential use of Bilipino labor, domestic materials
and locally produced oods.-
4imply stated, does the Philippine Constitution prohibit Philippine
participation in worldwide trade liberali.ation and economic
lobali.ationR ?oes it proscribe Philippine interation into a lobal
economy that is liberali.ed, dereulated and privati.edR These are the
main Euestions raised in this petition for certiorari, prohibition
andmandamus under 6ule =$ of the 6ules of Court prayin ;1< for the
nulli+cation, on constitutional rounds, of the concurrence of the
Philippine 4enate in the rati+cation by the President of the Philippines of
the Areement )stablishin the @orld Trade "rani.ation ;@T"
Areement, for brevity< and ;F< for the prohibition of its implementation
and enforcement throuh the release and utili.ation of public funds, the
assinment of public oDcials and employees, as well as the use of
overnment properties and resources by respondent-heads of various
eCecutive oDces concerned therewith. This concurrence is embodied in
4enate 6esolution 1o. %&, dated ?ecember 1:, 1%%:.
T#e )acts
"n April 1$, 1%%:, 6espondent 6i.alino 1avarro, then 4ecretary of The
?epartment of Trade and Industry ;4ecretary 1avarro, for brevity<,
representin the Iovernment of the 6epublic of the Philippines, sined
in *arra!esh, *orocco, the Binal Act )mbodyin the 6esults of the
3ruuay 6ound of *ultilateral 1eotiations ;Binal Act, for brevity<.
,y sinin the Binal Act,
)
4ecretary 1avarro on behalf of the 6epublic of
the Philippines, areed5
;a< to submit, as appropriate, the @T" Areement for the
consideration of their respective competent authorities,
with a view to see!in approval of the Areement in
accordance with their proceduresH and
;b< to adopt the *inisterial ?eclarations and ?ecisions.
"n Auust 1F, 1%%:, the members of the Philippine 4enate received a
letter dated Auust 11, 1%%: from the President of the
Philippines,
*
statin amon others that -the 3ruuay 6ound Binal Act is
hereby submitted to the 4enate for its concurrence pursuant to 4ection
F1, Article LII of the Constitution.-
"n Auust 10, 1%%:, the members of the Philippine 4enate received
another letter from the President of the Philippines
4
li!ewise dated
Auust 11, 1%%:, which stated amon others that -the 3ruuay 6ound
Binal Act, the Areement )stablishin the @orld Trade "rani.ation, the
*inisterial ?eclarations and ?ecisions, and the 3nderstandin on
Commitments in Binancial 4ervices are hereby submitted to the 4enate
for its concurrence pursuant to 4ection F1, Article LII of the
Constitution.-
"n ?ecember %, 1%%:, the President of the Philippines certi+ed the
necessity of the immediate adoption of P.4. 1'>0, a resolution entitled
-Concurrin in the 6ati+cation of the Areement )stablishin the @orld
Trade "rani.ation.-
5
"n ?ecember 1:, 1%%:, the Philippine 4enate adopted 6esolution 1o.
%& which -6esolved, as it is hereby resolved, that the 4enate concur, as
it hereby concurs, in the rati+cation by the President of the Philippines
of the Areement )stablishin the @orld Trade "rani.ation.-
+
The teCt
of the @T" Areement is written on paes 10& et se5. of Lolume I of
the 0=-volume Uru+ua" Round o$ 3ultilateral Trade <e+otiations and
includes various areements and associated leal instruments
;identi+ed in the said Areement as AnneCes 1, F and 0 thereto and
collectively referred to as *ultilateral Trade Areements, for brevity< as
follows5
A11)M 1
AnneC 1A5 *ultilateral Areement on Trade in Ioods
Ieneral Areement on Tarifs and Trade 1%%:
Areement on Ariculture
Areement on the Application of 4anitary and
Phytosanitary *easures
Areement on TeCtiles and Clothin
Areement on Technical ,arriers to Trade
Areement on Trade-6elated Investment *easures
1'&
Areement on Implementation of Article LI of he
Ieneral Areement on Tarifs and Trade
1%%:
Areement on Implementation of Article LII of the
Ieneral on Tarifs and Trade 1%%:
Areement on Pre-4hipment Inspection
Areement on 6ules of "riin
Areement on Imports (icensin Procedures
Areement on 4ubsidies and Coordinatin
*easures
Areement on 4afeuards
AnneC 1,5 Ieneral Areement on Trade in 4ervices and
AnneCes
AnneC 1C5 Areement on Trade-6elated Aspects of
Intellectual
Property 6ihts
A11)M F
3nderstandin on 6ules and Procedures
Iovernin
the 4ettlement of ?isputes
A11)M 0
Trade Policy 6eview *echanism
"n ?ecember 1=, 1%%:, the President of the Philippines sined
,
the
Instrument of 6ati+cation, declarin5
1"@ TA)6)B"6), be it !nown that I, BI?)( L. 6A*"4,
President of the 6epublic of the Philippines, after havin
seen and considered the aforementioned Areement
)stablishin the @orld Trade "rani.ation and the
areements and associated leal instruments included in
AnneCes one ;1<, two ;F< and three ;0< of that Areement
which are interal parts thereof, sined at *arra!esh,
*orocco on 1$ April 1%%:, do hereby ratify and con+rm
the same and every Article and Clause thereof.
To emphasi.e, the @T" Areement rati+ed by the President of the
Philippines is composed of the Areement Proper and -the associated
leal instruments included in AnneCes one ;1<, two ;F< and three ;0< of
that Areement which are interal parts thereof.-
"n the other hand, the Binal Act sined by 4ecretary 1avarro embodies
not only the @T" Areement ;and its interal anneCes aforementioned<
but also ;1< the *inisterial ?eclarations and ?ecisions and ;F< the
3nderstandin on Commitments in Binancial 4ervices. In his
*emorandum dated *ay 10, 1%%=,
8
the 4olicitor Ieneral describes
these two latter documents as follows5
The *inisterial ?ecisions and ?eclarations are twenty-+ve
declarations and decisions on a wide rane of matters,
such as measures in favor of least developed countries,
noti+cation procedures, relationship of @T" with the
International *onetary Bund ;I*B<, and areements on
technical barriers to trade and on dispute settlement.
The 3nderstandin on Commitments in Binancial 4ervices
dwell on, amon other thins, standstill or limitations and
Euali+cations of commitments to eCistin non-conformin
measures, mar!et access, national treatment, and
de+nitions of non-resident supplier of +nancial services,
commercial presence and new +nancial service.
"n ?ecember F%, 1%%:, the present petition was +led. After careful
deliberation on respondents9 comment and petitioners9 reply thereto,
the Court resolved on ?ecember 1F, 1%%$, to ive due course to the
petition, and the parties thereafter +led their respective memoranda.
The court also reEuested the Aonorable (ilia 6. ,autista, the Philippine
Ambassador to the 3nited 1ations stationed in Ieneva, 4wit.erland, to
submit a paper, hereafter referred to as -,autista Paper,-
9
for brevity,
;1< providin a historical bac!round of and ;F< summari.in the said
areements.
?urin the "ral Arument held on Auust F&, 1%%=, the Court directed5
;a< the petitioners to submit the ;1< 4enate Committee
6eport on the matter in controversy and ;F< the transcript
of proceedinsQhearins in the 4enateH and
;b< the 4olicitor Ieneral, as counsel for respondents, to
+le ;1< a list of Philippine treaties sined prior to the
Philippine adherence to the @T" Areement, which
deroate from Philippine sovereinty and ;F< copies of
the multi-volume @T" Areement and other documents
mentioned in the Binal Act, as soon as possible.
1'>
After receipt of the foreoin documents, the Court said it would
consider the case submitted for resolution. In a Compliance dated
4eptember 1=, 1%%=, the 4olicitor Ieneral submitted a printed copy of
the 0=-volume Uru+ua" Round o$ 3ultilateral Trade <e+otiations, and in
another Compliance dated "ctober F:, 1%%=, he listed the various
-bilateral or multilateral treaties or international instruments involvin
deroation of Philippine sovereinty.- Petitioners, on the other hand,
submitted their Compliance dated #anuary F>, 1%%&, on #anuary 0',
1%%&.
T#e Issues
In their *emorandum dated *arch 11, 1%%=, petitioners summari.ed
the issues as follows5
A. @hether the petition presents a political Euestion or is
otherwise not 8usticiable.
,. @hether the petitioner members of the 4enate who
participated in the deliberations and votin leadin to the
concurrence are estopped from impunin the validity of
the Areement )stablishin the @orld Trade "rani.ation
or of the validity of the concurrence.
C. @hether the provisions of the Areement )stablishin
the @orld Trade "rani.ation contravene the provisions
of 4ec. 1%, Article II, and 4ecs. 1' and 1F, Article MII, all of
the 1%>& Philippine Constitution.
?. @hether provisions of the Areement )stablishin the
@orld Trade "rani.ation unduly limit, restrict and impair
Philippine sovereinty speci+cally the leislative power
which, under 4ec. F, Article LI, 1%>& Philippine
Constitution is -vested in the Conress of the
Philippines-H
). @hether provisions of the Areement )stablishin the
@orld Trade "rani.ation interfere with the eCercise of
8udicial power.
B. @hether the respondent members of the 4enate acted
in rave abuse of discretion amountin to lac! or eCcess
of 8urisdiction when they voted for concurrence in the
rati+cation of the constitutionally-in+rm Areement
)stablishin the @orld Trade "rani.ation.
I. @hether the respondent members of the 4enate acted
in rave abuse of discretion amountin to lac! or eCcess
of 8urisdiction when they concurred only in the rati+cation
of the Areement )stablishin the @orld Trade
"rani.ation, and not with the Presidential submission
which included the Binal Act, *inisterial ?eclaration and
?ecisions, and the 3nderstandin on Commitments in
Binancial 4ervices.
"n the other hand, the 4olicitor Ieneral as counsel for respondents
-synthesi.ed the several issues raised by petitioners into the
followin-5
10
1. @hether or not the provisions of the -Areement
)stablishin the @orld Trade "rani.ation and the
Areements and Associated (eal Instruments included in
AnneCes one ;1<, two ;F< and three ;0< of that areement-
cited by petitioners directly contravene or undermine the
letter, spirit and intent of 4ection 1%, Article II and
4ections 1' and 1F, Article MII of the 1%>& Constitution.
F. @hether or not certain provisions of the Areement
unduly limit, restrict or impair the eCercise of leislative
power by Conress.
0. @hether or not certain provisions of the Areement
impair the eCercise of 8udicial power by this Aonorable
Court in promulatin the rules of evidence.
:. @hether or not the concurrence of the 4enate -in the
rati+cation by the President of the Philippines of the
Areement establishin the @orld Trade "rani.ation-
implied re8ection of the treaty embodied in the Binal Act.
,y raisin and aruin only four issues aainst the seven presented by
petitioners, the 4olicitor Ieneral has efectively inored three, namely5
;1< whether the petition presents a political Euestion or is otherwise not
8usticiableH ;F< whether petitioner-members of the 4enate ;@iberto ).
Ta_ada and Anna ?ominiEue Coseten< are estopped from 8oinin this
suitH and ;0< whether the respondent-members of the 4enate acted in
rave abuse of discretion when they voted for concurrence in the
rati+cation of the @T" Areement. The foreoin notwithstandin, this
Court resolved to deal with these three issues thus5
;1< The -political Euestion- issue G bein very fundamental and vital,
and bein a matter that probes into the very 8urisdiction of this Court to
1'%
hear and decide this case G was deliberated upon by the Court and will
thus be ruled upon as the +rst issueH
;F< The matter of estoppel will not be ta!en up because this defense is
waivable and the respondents have efectively waived it by not
pursuin it in any of their pleadinsH in any event, this issue, even if
ruled in respondents9 favor, will not cause the petition9s dismissal as
there are petitioners other than the two senators, who are not
vulnerable to the defense of estoppelH and
;0< The issue of alleed rave abuse of discretion on the part of the
respondent senators will be ta!en up as an interal part of the
disposition of the four issues raised by the 4olicitor Ieneral.
?urin its deliberations on the case, the Court noted that the
respondents did not Euestion the locus standi of petitioners. Aence,
they are also deemed to have waived the bene+t of such issue. They
probably reali.ed that rave constitutional issues, eCpenditures of
public funds and serious international commitments of the nation are
involved here, and that transcendental public interest reEuires that the
substantive issues be met head on and decided on the merits, rather
than s!irted or dePected by procedural matters.
11
To recapitulate, the issues that will be ruled upon shortly are5
;1< ?")4 TA) P)TITI"1 P6)4)1T A #34TICIA,()
C"1T6"L)642R "TA)6@I4) 4TAT)?, ?")4 TA)
P)TITI"1 I1L"(L) A P"(ITICA( O3)4TI"1 "L)6 @AICA
TAI4 C"36T AA4 1" #36I4?ICTI"1R
;F< ?" TA) P6"LI4I"14 "B TA) @T" AI6))*)1T A1?
IT4 TA6)) A11)M)4 C"1T6AL)1) 4)C. 1%, A6TIC() II,
A1? 4)C4. 1' A1? 1F, A6TIC() MII, "B TA) PAI(IPPI1)
C"14TIT3TI"1R
;0< ?" TA) P6"LI4I"14 "B 4AI? AI6))*)1T A1? IT4
A11)M)4 (I*IT, 6)4T6ICT, "6 I*PAI6 TA) )M)6CI4) "B
()II4(ATIL) P"@)6 ,2 C"1I6)44R
;:< ?" 4AI? P6"LI4I"14 31?3(2 I*PAI6 "6 I1T)6B)6)
@ITA TA) )M)6CI4) "B #3?ICIA( P"@)6 ,2 TAI4 C"36T
I1 P6"*3(IATI1I 63()4 "1 )LI?)1C)R
;$< @A4 TA) C"1C366)1C) "B TA) 4)1AT) I1 TA) @T"
AI6))*)1T A1? IT4 A11)M)4 43BBICI)1T A1?Q"6
LA(I?, C"14I?)6I1I TAAT IT ?I? 1"T I1C(3?) TA)
BI1A( ACT, *I1I4T)6IA( ?)C(A6ATI"14 A1? ?)CI4I"14,
A1? TA) 31?)64TA1?I1I "1 C"**IT*)1T4 I1
BI1A1CIA( 4)6LIC)4R
T#e )irst Issue5 Does t#e Court
Jave Jurisdiction ;ver t#e Controvers"M
In see!in to nullify an act of the Philippine 4enate on the round that it
contravenes the Constitution, the petition no doubt raises a 8usticiable
controversy. @here an action of the leislative branch is seriously
alleed to have infrined the Constitution, it becomes not only the riht
but in fact the duty of the 8udiciary to settle the dispute. -The Euestion
thus posed is 8udicial rather than political. The duty ;to ad8udicate<
remains to assure that the supremacy of the Constitution is
upheld.-
1)
"nce a -controversy as to the application or interpretation of
a constitutional provision is raised before this Court ;as in the instant
case<, it becomes a leal issue which the Court is bound by
constitutional mandate to decide.-
1*
The 8urisdiction of this Court to ad8udicate the matters
14
raised in the
petition is clearly set out in the 1%>& Constitution,
15
as follows5
#udicial power includes the duty of the courts of 8ustice to
settle actual controversies involvin rihts which are
leally demandable and enforceable, and to determine
whether or not there has been a rave abuse of
discretion amountin to lac! or eCcess of 8urisdiction on
the part of any branch or instrumentality of the
overnment.
The foreoin teCt emphasi.es the 8udicial department9s duty and
power to stri!e down rave abuse of discretion on the part of any
branch or instrumentality of overnment includin Conress. It is an
innovation in our political law.
1+
As eCplained by former Chief #ustice
6oberto Concepcion,
1,
-the 8udiciary is the +nal arbiter on the Euestion
of whether or not a branch of overnment or any of its oDcials has
acted without 8urisdiction or in eCcess of 8urisdiction or so capriciously
as to constitute an abuse of discretion amountin to eCcess of
8urisdiction. This is not only a 8udicial power but a duty to pass
8udment on matters of this nature.-
As this Court has repeatedly and +rmly emphasi.ed in many cases,
18
it
will not shir!, diress from or abandon its sacred duty and authority to
uphold the Constitution in matters that involve rave abuse of
11'
discretion brouht before it in appropriate cases, committed by any
oDcer, aency, instrumentality or department of the overnment.
As the petition allees rave abuse of discretion and as there is no
other plain, speedy or adeEuate remedy in the ordinary course of law,
we have no hesitation at all in holdin that this petition should be iven
due course and the vital Euestions raised therein ruled upon under 6ule
=$ of the 6ules of Court. Indeed, certiorari, prohibition
andmandamus are appropriate remedies to raise constitutional issues
and to review andQor prohibitQnullify, when proper, acts of leislative
and eCecutive oDcials. "n this, we have no eEuivocation.
@e should stress that, in decidin to ta!e 8urisdiction over this petition,
this Court will not review the wisdom of the decision of the President
and the 4enate in enlistin the country into the @T", or pass upon
the merits of trade liberali.ation as a policy espoused by said
international body. 1either will it rule on the roriet" of the
overnment9s economic policy of reducinQremovin tarifs, taCes,
subsidies, Euantitative restrictions, and other importQtrade barriers.
6ather, it will only eCercise its constitutional duty -to determine
whether or not there had been a rave abuse of discretion amountin
to lac! or eCcess of 8urisdiction- on the part of the 4enate in ratifyin
the @T" Areement and its three anneCes.
Second Issue5 T#e *T; A+reement
and Economic <ationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners viorously arue that the -letter, spirit and intent- of the
Constitution mandatin -economic nationalism- are violated by the so-
called -parity provisions- and -national treatment- clauses scattered in
various parts not only of the @T" Areement and its anneCes but also
in the *inisterial ?ecisions and ?eclarations and in the 3nderstandin
on Commitments in Binancial 4ervices.
4peci+cally, the -Paship- constitutional provisions referred to are 4ec
1%, Article II, and 4ecs. 1' and 1F, Article MII, of the Constitution, which
are worded as follows5
Article II
?)C(A6ATI"1 "B P6I1CIP()4
A1? 4TAT) P"(ICI)4
CCC CCC CCC
4ec. 1%. The 4tate shall develop a self-reliant and
independent national economy efectively controlled by
Bilipinos.
CCC CCC CCC
Article MII
1ATI"1A( )C"1"*2 A1? PAT6I*"12
CCC CCC CCC
4ec. 1'. . . . The Conress shall enact measures that will
encourae the formation and operation of enterprises
whose capital is wholly owned by Bilipinos.
In the rant of rihts, privilees, and concessions
coverin the national economy and patrimony, the 4tate
shall ive preference to Euali+ed Bilipinos.
CCC CCC CCC
4ec. 1F. The 4tate shall promote the preferential use of
Bilipino labor, domestic materials and locally produced
oods, and adopt measures that help ma!e them
competitive.
Petitioners aver that these sacred constitutional principles are
desecrated by the followin @T" provisions Euoted in their
memorandum5
19
a< In the area of investment measures related to trade in
oods ;T6I*4, for brevity<5
Article F
<ational Treatment and Ouantitative 6estrictions.
1. @ithout pre8udice to other rihts and
obliations under IATT 1%%:, no *ember
shall apply any T6I* that is inconsistent
111
with the provisions of Article II or Article MI
of IATT 1%%:.
F. An illustrative list of T6I*4 that are
inconsistent with the obliations of eneral
elimination of Euantitative restrictions
provided for in pararaph I of Article MI of
IATT 1%%: is contained in the AnneC to this
Areement.- ;Areement on Trade-6elated
Investment *easures, Lol. F&, 3ruuay
6ound, (eal Instruments, p. FF1F1,
emphasis supplied<.
The AnneC referred to reads as follows5
A11)M
Illustrative (ist
1. T6I*4 that are inconsistent with the obliation of
national treatment provided for in pararaph : of Article
III of IATT 1%%: include those which are mandatory or
enforceable under domestic law or under administrative
rulins, or compliance with which is necessary to obtain
an advantae, and which reEuire5
;a< the purchase or use by an enterprise of
products of domestic oriin or from any
domestic source, whether speci+ed in
terms of particular products, in terms of
volume or value of products, or in terms of
proportion of volume or value of its local
productionH or
;b< that an enterprise9s purchases or use of
imported products be limited to an amount
related to the volume or value of local
products that it eCports.
F. T6I*4 that are inconsistent with the obliations of
eneral elimination of Euantitative restrictions provided
for in pararaph 1 of Article MI of IATT 1%%: include
those which are mandatory or enforceable under
domestic laws or under administrative rulins, or
compliance with which is necessary to obtain an
advantae, and which restrict5
;a< the importation by an enterprise of
products used in or related to the local
production that it eCportsH
;b< the importation by an enterprise of
products used in or related to its local
production by restrictin its access to
forein eCchane inPows attributable to
the enterpriseH or
;c< the eCportation or sale for eCport
speci+ed in terms of particular products, in
terms of volume or value of products, or in
terms of a preparation of volume or value
of its local production. ;AnneC to the
Areement on Trade-6elated Investment
*easures, Lol. F&, 3ruuay 6ound (eal
?ocuments, p. FF1F$, emphasis supplied<.
The pararaph : of Article III of IATT 1%%: referred to is
Euoted as follows5
The products of the territory of any
contractin party imported into the
territory of any other contractin
party s#all be accorded treatment no less
$avorable t#an t#at accorded to like
roducts o$ national ori+in in respect of
laws, reulations and reEuirements
afectin their internal sale, oferin for
sale, purchase, transportation, distribution
or use, the provisions of this pararaph
shall not prevent the application of
diferential internal transportation chares
which are based eCclusively on the
economic operation of the means of
transport and not on the nationality of the
product.- ;Article III, IATT 1%:&, as
amended by the Protocol *odifyin Part II,
and Article MMLI of IATT, 1: 4eptember
1%:>, =F 3*T4 >F->: in relation to
pararaph 1;a< of the Ieneral Areement
on Tarifs and Trade 1%%:, Lol. 1, 3ruuay
11F
6ound, (eal Instruments p. 1&&, emphasis
supplied<.
;b< In t#e area o$ trade related asects o$ intellectual
roert" ri+#ts -TRI,S% $or brevit"25
Eac# 3ember s#all accord to t#e nationals
o$ ot#er 3embers treatment no less
$avourable t#an t#at it accords to its own
nationals with reard to the protection of
intellectual property. . . ;par. 1 Article 0,
Areement on Trade-6elated Aspect of
Intellectual Property rihts, Lol. 01,
3ruuay 6ound, (eal Instruments, p.
F$:0F ;emphasis supplied<
;c< In t#e area o$ t#e 4eneral A+reement on Trade in
Services5
<ational Treatment
1. In the sectors inscribed in its schedule,
and sub8ect to any conditions and
Euali+cations set out therein, each *ember
shall accord to services and service
suppliers of any other *ember, in respect
of all measures afectin the supply of
services, treatment no less $avourable t#an
it accords to its own like services and
service suliers.
F. A *ember may meet the reEuirement of
pararaph I by accordin to services and
service suppliers of any other *ember,
either formally suppliers of any other
*ember, either formally identical
treatment or formally diferent treatment
to that it accords to its own li!e services
and service suppliers.
0. Bormally identical or formally diferent
treatment shall be considered to be less
favourable if it modi+es the conditions of
completion in favour of services or service
suppliers of the *ember compared to li!e
services or service suppliers of any other
*ember. ;Article MLII, Ieneral Areement
on Trade in 4ervices, Lol. F>, 3ruuay
6ound (eal Instruments, p. FF=1'
emphasis supplied<.
It is petitioners9 position that the foreoin -national treatment- and
-parity provisions- of the @T" Areement -place nationals and products
of member countries on the same footin as Bilipinos and local
products,- in contravention of the -Bilipino Birst- policy of the
Constitution. They alleedly render meaninless the phrase -efectively
controlled by Bilipinos.- The constitutional conPict becomes more
manifest when viewed in the conteCt of the clear duty imposed on the
Philippines as a @T" member to ensure the conformity of its laws,
reulations and administrative procedures with its obliations as
provided in the anneCed areements.
)0
Petitioners further arue that
these provisions contravene constitutional limitations on the role
eCports play in national development and neate the preferential
treatment accorded to Bilipino labor, domestic materials and locally
produced oods.
"n the other hand, respondents throuh the 4olicitor Ieneral counter
;1< that such Charter provisions are not self-eCecutin and merely set
out eneral policiesH ;F< that these nationalistic portions of the
Constitution invo!ed by petitioners should not be read in isolation but
should be related to other relevant provisions of Art. MII, particularly
4ecs. 1 and 10 thereofH ;0< that read properly, the cited @T" clauses do
not conPict with ConstitutionH and ;:< that the @T" Areement contains
suDcient provisions to protect developin countries li!e the Philippines
from the harshness of sudden trade liberali.ation.
@e shall now discuss and rule on these aruments.
Declaration o$ ,rinciles
<ot Sel$-E&ecutin+
,y its very title, Article II of the Constitution is a -declaration of
principles and state policies.- The counterpart of this article in the 1%0$
Constitution
)1
is called the -basic political creed of the nation- by ?ean
Licente 4inco.
))
These principles in Article II are not intended to be self-
eCecutin principles ready for enforcement throuh the courts.
)*
They
are used by the 8udiciary as aids or as uides in the eCercise of its
power of 8udicial review, and by the leislature in its enactment of laws.
As held in the leadin case of Iilosba"an% Incororated
vs. 3orato,
)4
the principles and state policies enumerated in Article II
and some sections of Article MII are not -self-eCecutin provisions, the
disreard of which can ive rise to a cause of action in the courts. They
110
do not embody 8udicially enforceable constitutional rihts but uidelines
for leislation.-
In the same liht, we held in :asco vs. ,a+cor
)5
that broad
constitutional principles need leislative enactments to implement the,
thus5
"n petitioners9 alleation that P.?. 1>=% violates 4ections
11 ;Personal ?inity< 1F ;Bamily< and 10 ;6ole of 2outh< of
Article IIH 4ection 10 ;4ocial #ustice< of Article MIII and
4ection F ;)ducational Lalues< of Article MIL of the 1%>&
Constitution, suDce it to state also that these are merely
statements of principles and policies. As such, they are
basically not self-eCecutin, meanin a law should be
passed by Conress to clearly de+ne and efectuate such
principles.
In eneral, therefore, the 1%0$ provisions
were not intended to be self-eCecutin
principles ready for enforcement throuh
the courts. They were rather directives
addressed to the eCecutive and to the
leislature. If the eCecutive and the
leislature failed to heed the directives of
the article, the available remedy was not
8udicial but political. The electorate could
eCpress their displeasure with the failure of
the eCecutive and the leislature throuh
the lanuae of the ballot. ;,ernas, Lol. II,
p. F<.
The reasons for denyin a cause of action to an alleed infrinement of
board constitutional principles are sourced from basic considerations of
due process and the lac! of 8udicial authority to wade -into the
uncharted ocean of social and economic policy ma!in.- *r. #ustice
Blorentino P. Beliciano in his concurrin opinion in;osa vs. )actoran%
Jr.,
)+
eCplained these reasons as follows5
*y suestion is simply that petitioners must, before the
trial court, show a more speci+c leal riht G a riht cast
in lanuae of a sini+cantly lower order of enerality
than Article II ;1$< of the Constitution G that is or may be
violated by the actions, or failures to act, imputed to the
public respondent by petitioners so that the trial court
can validly render 8udment ratin all or part of the
relief prayed for. To my mind, the court should be
understood as simply sayin that such a more speci+c
leal riht or rihts may well eCist in our corpus of law,
considerin the eneral policy principles found in the
Constitution and the eCistence of the Philippine
)nvironment Code, and that the trial court should have
iven petitioners an efective opportunity so to
demonstrate, instead of abortin the proceedins on a
motion to dismiss.
It seems to me important that the leal riht which is an
essential component of a cause of action be a speci+c,
operable leal riht, rather than a constitutional or
statutory policy, for at least two ;F< reasons. "ne is that
unless the leal riht claimed to have been violated or
disrearded is iven speci+cation in operational terms,
defendants may well be unable to defend themselves
intelliently and efectivelyH in other words, there are due
process dimensions to this matter.
The second is a broader-aue consideration G where a
speci+c violation of law or applicable reulation is not
alleed or proved, petitioners can be eCpected to fall
bac! on the eCpanded conception of 8udicial power in the
second pararaph of 4ection 1 of Article LIII of the
Constitution which reads5
4ec. 1. . . .
#udicial power includes the duty of the
courts of 8ustice to settle actual
controversies involvin rihts which are
leally demandable and enforceable, and
to determine whether or not there has
been a rave abuse of discretion
amountin to lac! or eCcess of 8urisdiction
on the part of any branch or
instrumentality of the Iovernment.
;)mphasis supplied<
@hen substantive standards as eneral as -the riht to a
balanced and healthy ecoloy- and -the riht to health-
are combined with remedial standards as broad ranin
as -a rave abuse of discretion amountin to lac! or
eCcess of 8urisdiction,- the result will be, it is respectfully
submitted, to propel courts into the uncharted ocean of
social and economic policy ma!in. At least in respect of
11:
the vast area of environmental protection and
manaement, our courts have no claim to special
technical competence and eCperience and professional
Euali+cation. @here no speci+c, operable norms and
standards are shown to eCist, then the policy ma!in
departments G the leislative and eCecutive
departments G must be iven a real and efective
opportunity to fashion and promulate those norms and
standards, and to implement them before the courts
should intervene.
Economic <ationalism S#ould :e Read wit#
;t#er Constitutional 3andates to Attain
:alanced Develoment o$ Econom"
"n the other hand, 4ecs. 1' and 1F of Article MII, apart from merely
layin down eneral principles relatin to the national economy and
patrimony, should be read and understood in relation to the other
sections in said article, especially 4ecs. 1 and 10 thereof which read5
4ec. 1. The oals of the national economy are a more
eEuitable distribution of opportunities, income, and
wealthH a sustained increase in the amount of oods and
services produced by the nation for the bene+t of the
peopleH and an eCpandin productivity as the !ey to
raisin the Euality of life for all especially the
underprivileed.
The 4tate shall promote industriali.ation and full
employment based on sound aricultural development
and ararian reform, throuh industries that ma!e full
and eDcient use of human and natural resources, and
which are competitive in both domestic and forein
mar!ets. Aowever, the 4tate shall protect Bilipino
enterprises aainst unfair forein competition and trade
practices.
In the pursuit of these oals, all sectors of the economy
and all reions of the country shall be iven optimum
opportunity to develop. . . .
CCC CCC CCC
4ec. 10. The 4tate shall pursue a trade policy that serves
the eneral welfare and utili.es all forms and
arranements of eCchane on the basis of eEuality and
reciprocity.
As pointed out by the 4olicitor Ieneral, 4ec. 1 lays down the basic
+oals of national economic development, as follows5
1. A more eEuitable distribution of opportunities, income and wealthH
F. A sustained increase in the amount of oods and services provided
by the nation for the bene+t of the peopleH and
0. An eCpandin productivity as the !ey to raisin the Euality of life for
all especially the underprivileed.
@ith these oals in conteCt, the Constitution then ordains the ideals of
economic nationalism ;1< by eCpressin preference in favor of Euali+ed
Bilipinos -in the rant of rihts, privilees and concessions coverin the
national economy and patrimony-
),
and in the use of -Bilipino labor,
domestic materials and locally-produced oods-H ;F< by mandatin the
4tate to -adopt measures that help ma!e them competitiveH
)8
and ;0<
by reEuirin the 4tate to -develop a self-reliant and independent
national economy efectively controlled by Bilipinos.-
)9
In similar
lanuae, the Constitution ta!es into account the realities of the
outside world as it reEuires the pursuit of -a trade policy that serves the
eneral welfare and utili.es all forms and arranements of eCchane on
the basis of eEuality ad reciprocity-H
*0
and spea!s of industries -which
are competitive in both domestic and $orei+n mar!ets- as well as of the
protection of -Bilipino enterprises aainstun$air forein competition and
trade practices.-
It is true that in the recent case of 3anila ,rince Jotel vs. 4overnment
Service Insurance S"stem, et al.,
*1
this Court held that -4ec. 1', second
par., Art. MII of the 1%>& Constitution is a mandatory, positive command
which is complete in itself and which needs no further uidelines or
implementin laws or rule for its enforcement. Brom its very words the
provision does not reEuire any leislation to put it in operation. It is er
se 8udicially enforceable.- Aowever, as the constitutional provision itself
states, it is enforceable only in reard to -the rants of rihts, privilees
and concessions coverin national economy and patrimony- and not to
every aspect of trade and commerce. It refers to eCceptions rather than
the rule. The issue here is not whether this pararaph of 4ec. 1' of Art.
MII is self-eCecutin or not. 6ather, the issue is whether, as a rule, there
are enouh balancin provisions in the Constitution to allow the 4enate
to ratify the Philippine concurrence in the @T" Areement. And we hold
that there are.
11$
All told, while the Constitution indeed mandates a bias in favor of
Bilipino oods, services, labor and enterprises, at the same time, it
reconi.es the need for business eCchane with the rest of the world on
the bases of eEuality and reciprocity and limits protection of Bilipino
enterprises only aainst forein competition and trade practices that
are unfair.
*)
In other words, the Constitution did not intend to pursue
an isolationist policy. It did not shut out forein investments, oods and
services in the development of the Philippine economy. @hile the
Constitution does not encourae the unlimited entry of forein oods,
services and investments into the country, it does not prohibit them
either. In fact, it allows an eCchane on the basis of eEuality and
reciprocity, frownin only on forein competition that is un$air.
*T; Reco+nizes <eed to
,rotect *eak Economies
3pon the other hand, respondents maintain that the @T" itself has
some built-in advantaes to protect wea! and developin economies,
which comprise the vast ma8ority of its members. 3nli!e in the 31
where ma8or states have permanent seats and veto powers in the
4ecurity Council, in the @T", decisions are made on the basis of
soverein eEuality, with each member9s vote eEual in weiht to that of
any other. There is no @T" eEuivalent of the 31 4ecurity Council.
@T" decides by consensus whenever possible,
otherwise, decisions of the *inisterial Conference and the
Ieneral Council shall be ta!en by the ma8ority of the
votes cast, eCcept in cases of interpretation of the
Areement or waiver of the obliation of a member which
would reEuire three fourths vote. Amendments would
reEuire two thirds vote in eneral. Amendments to *B1
provisions and the Amendments provision will reEuire
assent of all members. Any member may withdraw from
the Areement upon the eCpiration of siC months from
the date of notice of withdrawals.
**
Aence, poor countries can protect their common interests more
efectively throuh the @T" than throuh one-on-one neotiations with
developed countries. @ithin the @T", developin countries can form
powerful blocs to push their economic aenda more decisively than
outside the "rani.ation. This is not merely a matter of practical
alliances but a neotiatin stratey rooted in law. Thus, the basic
principles underlyin the @T" Areement reconi.e the need of
developin countries li!e the Philippines to -share in the rowth in
international tradecommensurate wit# t#e needs o$ t#eir economic
develoment.- These basic principles are found in the preamble
*4
of the
@T" Areement as follows5
The Parties to this Areement,
6econi.in that their relations in the +eld of trade and
economic endeavour should be conducted with a view to
raisin standards of livin, ensurin full employment and
a lare and steadily rowin volume of real income and
efective demand, and eCpandin the production of and
trade in oods and services, while allowin for the
optimal use of the world9s resources in accordance with
the ob8ective of sustainable development, see!in both
to protect and preserve the environment and to enhance
the means for doin so in a manner consistent wit# t#eir
resective needs and concerns at di7erent levels o$
economic develoment%
6econi.in further that there is need for positive eforts
desined to ensure that developin countries, and
especially the least developed amon them, secure
a s#are in t#e +rowt# in international trade
commensurate wit# t#e needs o$ t#eir economic
develoment%
,ein desirous of contributin to these ob8ectives by
enterin into reciprocal and mutually advantaeous
arranements directed to the substantial reduction of
tarifs and other barriers to trade and to the elimination
o$ discriminator" treatment in international trade
relations,
6esolved, therefore, to develop an interated, more
viable and durable multilateral tradin system
encompassin the Ieneral Areement on Tarifs and
Trade, the results of past trade liberali.ation eforts, and
all of the results of the 3ruuay 6ound of *ultilateral
Trade 1eotiations,
?etermined to preserve the basic principles and to
further the ob8ectives underlyin this multilateral tradin
system, . . . ;emphasis supplied.<
Seci!c *T; ,rovisos
,rotect Develoin+ Countries
11=
4o too, the 4olicitor Ieneral points out that pursuant to and consistent
with the foreoin basic principles, the @T" Areement rants
developin countries a more lenient treatment, ivin their domestic
industries some protection from the rush of forein competition. Thus,
with respect to tarifs in eneral, preferential treatment is iven to
developin countries in terms of the amount o$ tari7 reduction and
the eriod wit#in w#ic# t#e reduction is to be sread out. 4peci+cally,
IATT reEuires an averae tarif reduction rate o$ F0N $or develoed
countries to be efected within a eriod o$ si& -02 "ears while developin
countries G includin the Philippines G are re5uired to e7ect an
avera+e tari7 reduction o$ onl" GON wit#in ten -.P2 "ears.
In respect to domestic subsidy, IATT reEuires develoed countries to
reduce domestic support to aricultural products by GPN over si& -02
"ears, as compared to onl" .FN $or develoin+ countries to be e7ected
wit#in ten -.P2 "ears.
In reard to eCport subsidy for aricultural products, IATT reEuires
developed countries to reduce their budetary outlays for eCport
subsidy b" F0N and eCport volumes receivin eCport subsidy by G.N
wit#in a eriod o$ si& -02 "ears. Bor developin countries, however, the
reduction rate is only two-t#irds of that prescribed for developed
countries and a loner eriod o$ ten -.P2 "ears within which to efect
such reduction.
*oreover, IATT itself has provided built-in protection from unfair
forein competition and trade practices includin anti-dumpin
measures, countervailin measures and safeuards aainst import
sures. @here local businesses are 8eopardi.ed by unfair forein
competition, the Philippines can avail of these measures. There is
hardly therefore any basis for the statement that under the @T", local
industries and enterprises will all be wiped out and that Bilipinos will be
deprived of control of the economy. Ouite the contrary, the wea!er
situations of developin nations li!e the Philippines have been ta!en
into accountH thus, there would be no basis to say that in 8oinin the
@T", the respondents have ravely abused their discretion. True, they
have made a bold decision to steer the ship of state into the yet
uncharted sea of economic liberali.ation. ,ut such decision cannot be
set aside on the round of rave abuse of discretion, simply because we
disaree with it or simply because we believe only in other economic
policies. As earlier stated, the Court in ta!in 8urisdiction of this case
will not pass upon the advantaes and disadvantaes of trade
liberali.ation as an economic policy. It will only perform its
constitutional duty of determinin whether the 4enate committed rave
abuse of discretion.
Constitution Does <ot
Rule ;ut )orei+n Cometition
Burthermore, the constitutional policy of a -self-reliant and independent
national economy-
*5
does not necessarily rule out the entry of forein
investments, oods and services. It contemplates neither -economic
seclusion- nor -mendicancy in the international community.- As
eCplained by Constitutional Commissioner ,ernardo Lilleas, sponsor of
this constitutional policy5
Economic sel$-reliance is a rimar" objective o$ a
develoin+ countr" t#at is keenl" aware o$
overdeendence on e&ternal assistance $or even its most
basic needs( It does not mean autark" or economic
seclusionH rather, it means avoidin mendicancy in the
international community. Independence refers to the
freedom from undue forein control of the national
economy, especially in such strateic industries as in the
development of natural resources and public utilities.
*+
The @T" reliance on -most favored nation,- -national treatment,- and
-trade without discrimination- cannot be struc! down as
unconstitutional as in fact they are rules of eEuality and reciprocity that
apply to all @T" members. Aside from envisionin a trade policy based
on -eEuality and reciprocity,-
*,
the fundamental law encouraes
industries that are -competitive in both domestic and forein mar!ets,-
thereby demonstratin a clear policy aainst a sheltered domestic trade
environment, but one in favor of the radual development of robust
industries that can compete with the best in the forein mar!ets.
Indeed, Bilipino manaers and Bilipino enterprises have shown capability
and tenacity to compete internationally. And iven a free trade
environment, Bilipino entrepreneurs and manaers in Aon!on have
demonstrated the Bilipino capacity to row and to prosper aainst the
best ofered under a policy of laissez $aire.
Constitution )avors Consumers%
<ot Industries or Enterrises
The Constitution has not really shown any unbalanced bias in favor of
any business or enterprise, nor does it contain any speci+c
pronouncement that Bilipino companies should be pampered with a
total proscription of forein competition. "n the other hand,
respondents claim that @T"QIATT aims to ma!e available to the Bilipino
consumer the best oods and services obtainable anywhere in the
world at the most reasonable prices. ConseEuently, the Euestion boils
11&
down to whether @T"QIATT will favor the eneral welfare of the public
at lare.
@ill adherence to the @T" treaty brin this ideal ;of favorin the
eneral welfare< to realityR
@ill @T"QIATT succeed in promotin the Bilipinos9 eneral welfare
because it will G as promised by its promoters G eCpand the country9s
eCports and enerate more employmentR
@ill it brin more prosperity, employment, purchasin power and
Euality products at the most reasonable rates to the Bilipino publicR
The responses to these Euestions involve -8udment calls- by our policy
ma!ers, for which they are answerable to our people durin appropriate
electoral eCercises. 4uch Euestions and the answers thereto are not
sub8ect to 8udicial pronouncements based on rave abuse of discretion.
Constitution Desi+ned to 3eet
)uture Events and Contin+encies
1o doubt, the @T" Areement was not yet in eCistence when the
Constitution was drafted and rati+ed in 1%>&. That does not mean
however that the Charter is necessarily Pawed in the sense that its
framers miht not have anticipated the advent of a borderless world of
business. ,y the same to!en, the 3nited 1ations was not yet in
eCistence when the 1%0$ Constitution became efective. ?id that
necessarily mean that the then Constitution miht not have
contemplated a diminution of the absoluteness of sovereinty when the
Philippines sined the 31 Charter, thereby efectively surrenderin part
of its control over its forein relations to the decisions of various 31
orans li!e the 4ecurity CouncilR
It is not diDcult to answer this Euestion. Constitutions are desined to
meet not only the vaaries of contemporary events. They should be
interpreted to cover even future and un!nown circumstances. It is to
the credit of its drafters that a Constitution can withstand the assaults
of biots and in+dels but at the same time bend with the refreshin
winds of chane necessitated by unfoldin events. As one eminent
political law writer and respected 8urist
*8
eCplains5
The Constitution must be Euintessential rather than
super+cial, the root and not the blossom, the base and
frame-wor! only of the edi+ce that is yet to rise. It is but
the core of the dream that must ta!e shape, not in a
twin!lin by mandate of our deleates, but slowly -in the
crucible of Bilipino minds and hearts,- where it will in time
develop its sinews and radually ather its strenth and
+nally achieve its substance. In +ne, the Constitution
cannot, li!e the oddess Athena, rise full-rown from the
brow of the Constitutional Convention, nor can it con8ure
by mere +at an instant 3topia. It must +row wit# t#e
societ" it seeks to re-structure and marc# aace wit# t#e
ro+ress o$ t#e race% drawin+ $rom t#e vicissitudes o$
#istor" t#e d"namism and vitalit" t#at will kee it% $ar
$rom becomin+ a etri!ed rule% a ulsin+% livin+ law
attuned to t#e #eartbeat o$ t#e nation.
T#ird Issue5 T#e *T; A+reement and 'e+islative ,ower
The @T" Areement provides that -;e<ach *ember shall ensure the
conformity of its laws, reulations and administrative procedures with
its obliations as provided in the anneCed Areements.-
*9
Petitioners
maintain that this underta!in -unduly limits, restricts and impairs
Philippine sovereinty, speci+cally the leislative power which under
4ec. F, Article LI of the 1%>& Philippine Constitution is vested in the
Conress of the Philippines. It is an assault on the soverein powers of
the Philippines because this means that Conress could not pass
leislation that will be ood for our national interest and eneral welfare
if such leislation will not conform with the @T" Areement, which not
only relates to the trade in oods . . . but also to the Pow of investments
and money . . . as well as to a whole slew of areements on socio-
cultural matters . . .
40
*ore speci+cally, petitioners claim that said @T" proviso deroates
from the power to taC, which is loded in the Conress.
41
And while the
Constitution allows Conress to authori.e the President to +C tarif
rates, import and eCport Euotas, tonnae and wharfae dues, and other
duties or imposts, such authority is sub8ect to -speci+ed limits and . . .
such limitations and restrictions- as Conress may provide,
4)
as in fact
it did under 4ec. :'1 of the Tarif and Customs Code.
Soverei+nt" 'imited b"
International 'aw and Treaties
This Court notes and appreciates the ferocity and passion by which
petitioners stressed their aruments on this issue. Aowever, while
sovereinty has traditionally been deemed absolute and all-
encompassin on the domestic level, it is however sub8ect to
restrictions and limitations voluntarily areed to by the Philippines,
eCpressly or impliedly, as a member of the family of nations.
11>
3nEuestionably, the Constitution did not envision a hermit-type
isolation of the country from the rest of the world. In its ?eclaration of
Principles and 4tate Policies, the Constitution -adopts the enerally
accepted principles of international law as part of the law of the land,
and adheres to the policy of peace, eEuality, 8ustice, freedom,
cooperation and amity, with all nations.-
4*
,y the doctrine of
incorporation, the country is bound by enerally accepted principles of
international law, which are considered to be automatically part of our
own laws.
44
"ne of the oldest and most fundamental rules in
international law is acta sunt servanda G international areements
must be performed in ood faith. -A treaty enaement is not a mere
moral obliation but creates a leally bindin obliation on the
parties . . . A state which has contracted valid international obliations
is bound to ma!e in its leislations such modi+cations as may be
necessary to ensure the ful+llment of the obliations underta!en.-
45
,y their inherent nature, treaties really limit or restrict the absoluteness
of sovereinty. ,y their voluntary act, nations may surrender some
aspects of their state power in eCchane for reater bene+ts ranted by
or derived from a convention or pact. After all, states, li!e individuals,
live with coeEuals, and in pursuit of mutually covenanted ob8ectives and
bene+ts, they also commonly aree to limit the eCercise of their
otherwise absolute rihts. Thus, treaties have been used to record
areements between 4tates concernin such widely diverse matters as,
for eCample, the lease of naval bases, the sale or cession of territory,
the termination of war, the reulation of conduct of hostilities, the
formation of alliances, t#e re+ulation o$ commercial relations, the
settlin of claims, the layin down of rules overnin conduct in peace
and the establishment of international orani.ations.
4+
The sovereinty
of a state therefore cannot in fact and in reality be considered absolute.
Certain restrictions enter into the picture5 ;1< limitations imposed by the
very nature of membership in the family of nations and ;F< limitations
imposed by treaty stipulations. As aptly put by #ohn B. Nennedy, -Today,
no nation can build its destiny alone. The ae of self-suDcient
nationalism is over. The ae of interdependence is here.-
4,
U< C#arter and ;t#er Treaties
'imit Soverei+nt"
Thus, when the Philippines 8oined the 3nited 1ations as one of its $1
charter members, it consented to restrict its soverein rihts under the
-concept of sovereinty as auto-limitation.-
4,
-A 3nder Article F of the
31 Charter, -;a<ll members shall ive the 3nited 1ations every
assistance in any action it ta!es in accordance with the present Charter,
and shall refrain from ivin assistance to any state aainst which the
3nited 1ations is ta!in preventive or enforcement action.- 4uch
assistance includes payment of its correspondin share not merely in
administrative eCpenses but also in eCpenditures for the peace-!eepin
operations of the orani.ation. In its advisory opinion of #uly F', 1%=1,
the International Court of #ustice held that money used by the 3nited
1ations )merency Borce in the *iddle )ast and in the Cono were
-eCpenses of the 3nited 1ations- under Article 1&, pararaph F, of the
31 Charter. Aence, all its members must bear their correspondin share
in such eCpenses. In this sense, the Philippine Conress is restricted in
its power to appropriate. It is compelled to appropriate funds whether it
arees with such peace-!eepin eCpenses or not. 4o too, under Article
1'$ of the said Charter, the 31 and its representatives en8oy diplomatic
privilees and immunities, thereby limitin aain the eCercise of
sovereinty of members within their own territory. Another eCample5
althouh -soverein eEuality- and -domestic 8urisdiction- of all
members are set forth as underlyin principles in the 31 Charter, such
provisos are however sub8ect to enforcement measures decided by the
4ecurity Council for the maintenance of international peace and
security under Chapter LII of the Charter. A +nal eCample5 under Article
1'0, -;i<n the event of a conPict between the obliations of the
*embers of the 3nited 1ations under the present Charter and their
obliations under any other international areement, their obliation
under the present charter shall prevail,- thus unEuestionably denyin
the Philippines G as a member G the soverein power to ma!e a choice
as to which of conPictin obliations, if any, to honor.
Apart from the 31 Treaty, the Philippines has entered into many other
international pacts G both bilateral and multilateral G that involve
limitations on Philippine sovereinty. These are enumerated by the
4olicitor Ieneral in his Compliance dated "ctober F:, 1%%=, as follows5
;a< ,ilateral convention with the 3nited 4tates reardin
taCes on income, where the Philippines areed, amon
others, to eCempt from taC, income received in the
Philippines by, amon others, the Bederal 6eserve ,an!
of the 3nited 4tates, the )CportQImport ,an! of the
3nited 4tates, the "verseas Private Investment
Corporation of the 3nited 4tates. (i!ewise, in said
convention, waes, salaries and similar remunerations
paid by the 3nited 4tates to its citi.ens for labor and
personal services performed by them as employees or
oDcials of the 3nited 4tates are eCempt from income taC
by the Philippines.
;b< ,ilateral areement with ,elium, providin, amon
others, for the avoidance of double taCation with respect
to taCes on income.
11%
;c< ,ilateral convention with the Nindom of 4weden for
the avoidance of double taCation.
;d< ,ilateral convention with the Brench 6epublic for the
avoidance of double taCation.
;e< ,ilateral air transport areement with Norea where
the Philippines areed to eCempt from all customs duties,
inspection fees and other duties or taCes aircrafts of
4outh Norea and the reular eEuipment, spare parts and
supplies arrivin with said aircrafts.
;f< ,ilateral air service areement with #apan, where the
Philippines areed to eCempt from customs duties, eCcise
taCes, inspection fees and other similar duties, taCes or
chares fuel, lubricatin oils, spare parts, reular
eEuipment, stores on board #apanese aircrafts while on
Philippine soil.
;< ,ilateral air service areement with ,elium where
the Philippines ranted ,elian air carriers the same
privilees as those ranted to #apanese and Norean air
carriers under separate air service areements.
;h< ,ilateral notes with Israel for the abolition of transit
and visitor visas where the Philippines eCempted Israeli
nationals from the reEuirement of obtainin transit or
visitor visas for a so8ourn in the Philippines not eCceedin
$% days.
;i< ,ilateral areement with Brance eCemptin Brench
nationals from the reEuirement of obtainin transit and
visitor visa for a so8ourn not eCceedin $% days.
;8< *ultilateral Convention on 4pecial *issions, where the
Philippines areed that premises of 4pecial *issions in
the Philippines are inviolable and its aents can not enter
said premises without consent of the Aead of *ission
concerned. 4pecial *issions are also eCempted from
customs duties, taCes and related chares.
;!< *ultilateral convention on the (aw of Treaties. In this
convention, the Philippines areed to be overned by the
Lienna Convention on the (aw of Treaties.
;l< ?eclaration of the President of the Philippines
acceptin compulsory 8urisdiction of the International
Court of #ustice. The International Court of #ustice has
8urisdiction in all leal disputes concernin the
interpretation of a treaty, any Euestion of international
law, the eCistence of any fact which, if established, would
constitute a breach -of international obliation.-
In the foreoin treaties, the Philippines has efectively areed to limit
the eCercise of its soverein powers of taCation, eminent domain and
police power. The underlyin consideration in this partial surrender of
sovereinty is the reciprocal commitment of the other contractin
states in rantin the same privilee and immunities to the Philippines,
its oDcials and its citi.ens. The same reciprocity characteri.es the
Philippine commitments under @T"-IATT.
International treaties, whether relatin to nuclear
disarmament, human rihts, the environment, the law of
the sea, or trade, constrain domestic political sovereinty
throuh the assumption of eCternal obliations. ,ut
unless anarchy in international relations is preferred as
an alternative, in most cases we accept that the bene+ts
of the reciprocal obliations involved outweih the costs
associated with any loss of political sovereinty. ;T<rade
treaties that structure relations by reference to durable,
well-de+ned substantive norms and ob8ective dispute
resolution procedures reduce the ris!s of larer countries
eCploitin raw economic power to bully smaller countries,
by sub8ectin power relations to some form of leal
orderin. In addition, smaller countries typically stand to
ain disproportionately from trade liberali.ation. This is
due to the simple fact that liberali.ation will provide
access to a larer set of potential new tradin
relationship than in case of the larer country ainin
enhanced success to the smaller country9s mar!et.
48
The point is that, as shown by the foreoin treaties, a portion of
sovereinty may be waived without violatin the Constitution, based on
the rationale that the Philippines -adopts the enerally accepted
principles of international law as part of the law of the land and adheres
to the policy of . . . cooperation and amity with all nations.-
)ourt# Issue5 T#e *T; A+reement and Judicial ,ower
Petitioners aver that pararaph 1, Article 0: of the Ieneral Provisions
and ,asic Principles of the Areement on Trade-6elated Aspects of
1F'
Intellectual Property 6ihts ;T6IP4<
49
intrudes on the power of the
4upreme Court to promulate rules concernin pleadin, practice and
procedures.
50
To understand the scope and meanin of Article 0:, T6IP4,
51
it will be
fruitful to restate its full teCt as follows5
Article 0:
,rocess ,atents5 :urden o$ ,roo$
1. Bor the purposes of civil proceedins in respect of the
infrinement of the rihts of the owner referred to in
pararaph 1 ;b< of Article F>, if the sub8ect matter of a
patent is a process for obtainin a product, the 8udicial
authorities shall have the authority to order the
defendant to prove that the process to obtain an identical
product is diferent from the patented process. Therefore,
*embers shall provide, in at least one of the followin
circumstances, that any identical product when produced
without the consent of the patent owner shall, in the
absence of proof to the contrary, be deemed to have
been obtained by the patented process5
;a< if the product obtained by the patented
process is newH
;b< if there is a substantial li!elihood that
the identical product was made by the
process and the owner of the patent has
been unable throuh reasonable eforts to
determine the process actually used.
F. Any *ember shall be free to provide that the burden of
proof indicated in pararaph 1 shall be on the alleed
infriner only if the condition referred to in subpararaph
;a< is ful+lled or only if the condition referred to in
subpararaph ;b< is ful+lled.
0. In the adduction of proof to the contrary, the leitimate
interests of defendants in protectin their manufacturin
and business secrets shall be ta!en into account.
Brom the above, a @T" *ember is reEuired to provide a rule of
disputable ;not the words -in the absence of proof to the contrary-<
presumption that a product shown to be identical to one produced with
the use of a patented process shall be deemed to have been obtained
by the ;illeal< use of the said patented process, ;1< where such product
obtained by the patented product is new, or ;F< where there is
-substantial li!elihood- that the identical product was made with the
use of the said patented process but the owner of the patent could not
determine the eCact process used in obtainin such identical product.
Aence, the -burden of proof- contemplated by Article 0: should actually
be understood as the duty of the alleed patent infriner to overthrow
such presumption. 4uch burden, properly understood, actually refers to
the -burden of evidence- ;burden of oin forward< placed on the
producer of the identical ;or fa!e< product to show that his product was
produced without the use of the patented process.
The foreoin notwithstandin, the patent owner still has the -burden of
proof- since, reardless of the presumption provided under pararaph 1
of Article 0:, such owner still has to introduce evidence of the eCistence
of the alleed identical product, the fact that it is -identical- to the
enuine one produced by the patented process and the fact of
-newness- of the enuine product or the fact of -substantial li!elihood-
that the identical product was made by the patented process.
The foreoin should really present no problem in chanin the rules of
evidence as the present law on the sub8ect, 6epublic Act 1o. 1=$, as
amended, otherwise !nown as the Patent (aw, provides a similar
presumption in cases of infrinement of patented desin or utility
model, thus5
4ec. ='. In$rin+ement. G Infrinement of a desin patent
or of a patent for utility model shall consist in
unauthori.ed copyin of the patented desin or utility
model for the purpose of trade or industry in the article or
product and in the ma!in, usin or sellin of the article
or product copyin the patented desin or utility
model. Identit" or substantial identit" wit# t#e atented
desi+n or utilit" model s#all constitute evidence o$
co"in+. ;emphasis supplied<
*oreover, it should be noted that the reEuirement of Article 0: to
provide a disputable presumption applies only if ;1< the product
obtained by the patented process in 1)@ or ;F< there is a substantial
li!elihood that the identical product was made by the process and the
process owner has not been able throuh reasonable efort to
determine the process used. @here either of these two provisos does
not obtain, members shall be free to determine the appropriate method
1F1
of implementin the provisions of T6IP4 within their own internal
systems and processes.
,y and lare, the aruments adduced in connection with our disposition
of the third issue G deroation of leislative power G will apply to this
fourth issue also. 4uDce it to say that the reciprocity clause more than
8usti+es such intrusion, if any actually eCists. ,esides, Article 0: does
not contain an unreasonable burden, consistent as it is with due process
and the concept of adversarial dispute settlement inherent in our
8udicial system.
4o too, since the Philippine is a sinatory to most international
conventions on patents, trademar!s and copyrihts, the ad8ustment in
leislation and rules of procedure will not be substantial.
5)
)i$t# Issue5 Concurrence ;nl" in t#e *T; A+reement and
<ot in ;t#er Documents Contained in t#e )inal Act
Petitioners allee that the 4enate concurrence in the @T" Areement
and its anneCes G but not in the other documents referred to in the
Binal Act, namely the *inisterial ?eclaration and ?ecisions and the
3nderstandin on Commitments in Binancial 4ervices G is defective
and insuDcient and thus constitutes abuse of discretion. They submit
that such concurrence in the @T" Areement alone is Pawed because it
is in efect a re8ection of the Binal Act, which in turn was the document
sined by 4ecretary 1avarro, in representation of the 6epublic upon
authority of the President. They contend that the second letter of the
President to the 4enate
5*
which enumerated what constitutes the Binal
Act should have been the sub8ect of concurrence of the 4enate.
-A !nal act, sometimes called rotocol de cloture, is an instrument
which records the windin up of the proceedins of a diplomatic
conference and usually includes a reproduction of the teCts of treaties,
conventions, recommendations and other acts areed upon and sined
by the plenipotentiaries attendin the conference.-
54
It is not the treaty
itself. It is rather a summary of the proceedins of a protracted
conference which may have ta!en place over several years. The teCt of
the -Binal Act )mbodyin the 6esults of the 3ruuay 6ound of
*ultilateral Trade 1eotiations- is contained in 8ust one pae
55
in Lol. I
of the 0=-volume Uru+ua" Round o$ 3ultilateral Trade <e+otiations. ,y
sinin said Binal Act, 4ecretary 1avarro as representative of the
6epublic of the Philippines undertoo!5
;a< to submit, as appropriate, the @T" Areement for the
consideration of their respective competent authorities
with a view to see!in approval of the Areement in
accordance with their proceduresH and
;b< to adopt the *inisterial ?eclarations and ?ecisions.
The assailed 4enate 6esolution 1o. %& eCpressed concurrence in eCactly
what the Binal Act reEuired from its sinatories, namely, concurrence of
the 4enate in the @T" Areement.
The *inisterial ?eclarations and ?ecisions were deemed adopted
without need for rati+cation. They were approved by the ministers by
virtue of Article MML5 1 of IATT which provides that representatives of
the members can meet -to ive efect to those provisions of this
Areement which invo!e 8oint action, and enerally with a view to
facilitatin the operation and furtherin the ob8ectives of this
Areement.-
5+
The 3nderstandin on Commitments in Binancial 4ervices also approved
in *arra!esh does not apply to the Philippines. It applies only to those
F& *embers which -have indicated in their respective schedules of
commitments on standstill, elimination of monopoly, eCpansion of
operation of eCistin +nancial service suppliers, temporary entry of
personnel, free transfer and processin of information, and national
treatment with respect to access to payment, clearin systems and
re+nancin available in the normal course of business.-
5,
"n the other hand, the @T" Areement itself eCpresses what
multilateral areements are deemed included as its interal parts,
58
as
follows5
Article II
Scoe o$ t#e *T;
1. The @T" shall provide the common institutional frame-
wor! for the conduct of trade relations amon its
*embers in matters to the areements and associated
leal instruments included in the AnneCes to this
Areement.
F. The Areements and associated leal instruments
included in AnneCes 1, F, and 0, ;hereinafter referred to
as -*ultilateral Areements-< are interal parts of this
Areement, bindin on all *embers.
1FF
0. The Areements and associated leal instruments
included in AnneC : ;hereinafter referred to as
-Plurilateral Trade Areements-< are also part of this
Areement for those *embers that have accepted them,
and are bindin on those *embers. The Plurilateral Trade
Areements do not create either obliation or rihts for
*embers that have not accepted them.
:. The Ieneral Areement on Tarifs and Trade 1%%: as
speci+ed in anneC 1A ;hereinafter referred to as -IATT
1%%:-< is leally distinct from the Ieneral Areement on
Tarifs and Trade, dated 0' "ctober 1%:&, anneCed to the
Binal Act adopted at the conclusion of the 4econd 4ession
of the Preparatory Committee of the 3nited 1ations
Conference on Trade and )mployment, as subseEuently
recti+ed, amended or modi+ed ;hereinafter referred to as
-IATT 1%:&-<.
It should be added that the 4enate was well-aware of what it was
concurrin in as shown by the members9 deliberation on Auust F$,
1%%:. After readin the letter of President 6amos dated Auust 11,
1%%:,
59
the senators
of the 6epublic minutely dissected what the 4enate was concurrin in,
as follows5
+0
TA) CAAI6*A15 2es. 1ow, the Euestion of the validity of
the submission came up in the +rst day hearin of this
Committee yesterday. @as the observation made by
4enator Ta_ada that what was submitted to the 4enate
was not the areement on establishin the @orld Trade
"rani.ation by the +nal act of the 3ruuay 6ound which
is not the same as the areement establishin the @orld
Trade "rani.ationR And on that basis, 4enator Tolentino
raised a point of order which, however, he areed to
withdraw upon understandin that his suestion for an
alternative solution at that time was acceptable. That
suestion was to treat the proceedins of the
Committee as bein in the nature of brie+ns for
4enators until the Euestion of the submission could be
clari+ed.
And so, 4ecretary 6omulo, in efect, is the President
submittin a new . . . is he ma!in a new submission
which improves on the clarity of the +rst submissionR
*6. 6"*3("5 *r. Chairman, to ma!e sure that it is clear
cut and there should be no misunderstandin, it was his
intention to clarify all matters by ivin this letter.
TA) CAAI6*A15 Than! you.
Can this Committee hear from 4enator Ta_ada and later
on 4enator Tolentino since they were the ones that raised
this Euestion yesterdayR
4enator Ta_ada, please.
SE<. TAQADA5 T#ank "ou% 3r. C#airman.
:ased on w#at Secretar" Romulo #as read% it would now
clearl" aear t#at w#at is bein+ submitted to t#e Senate
$or rati!cation is not t#e )inal Act o$ t#e Uru+ua" Round%
but rat#er t#e A+reement on t#e *orld Trade
;r+anization as well as t#e 3inisterial Declarations and
Decisions% and t#e Understandin+ and Commitments in
)inancial Services.
I am now satis!ed wit# t#e wordin+ o$ t#e new
submission o$ ,resident Ramos.
4)1. TAaA?A. . . . of President 6amos, *r. Chairman.
TA) CAAI6*A1. Than! you, 4enator Ta_ada. Can we hear
from 4enator TolentinoR And after him 4enator 1eptali
Ion.ales and 4enator (ina.
SE<. T;'E<TI<;% 3r. C#airman% I #ave not seen t#e new
submission actuall" transmitted to us but I saw t#e dra$t
o$ #is earlier% and I t#ink it now comlies wit# t#e
rovisions o$ t#e Constitution% and wit# t#e )inal Act
itsel$ . T#e Constitution does not re5uire us to rati$" t#e
)inal Act( It re5uires us to rati$" t#e A+reement w#ic# is
now bein+ submitted( T#e )inal Act itsel$ seci!es w#at is
+oin+ to be submitted to wit# t#e +overnments o$ t#e
articiants.
In ara+ra# G o$ t#e )inal Act% we read and I 5uote5
:" si+nin+ t#e resent )inal Act% t#e reresentatives
a+ree5 -a2 to submit as aroriate t#e *T; A+reement
1F0
$or t#e consideration o$ t#e resective cometent
aut#orities wit# a view to seekin+ aroval o$ t#e
A+reement in accordance wit# t#eir rocedures.
In ot#er words% it is not t#e )inal Act t#at was a+reed to
be submitted to t#e +overnments $or rati!cation or
accetance as w#atever t#eir constitutional rocedures
ma" rovide but it is t#e *orld Trade ;r+anization
A+reement. And i$ t#at is t#e one t#at is bein+ submitted
now% I t#ink it satis!es bot# t#e Constitution and t#e )inal
Act itsel$ .
Than! you, *r. Chairman.
TA) CAAI6*A1. Than! you, 4enator Tolentino, *ay I call
on 4enator Ion.ales.
SE<. 4;<RA'ES. 3r. C#airman% m" views on t#is matter
are alread" a matter o$ record. And t#e" #ad been
ade5uatel" reSected in t#e journal o$ "esterda"Cs session
and I donCt see an" need $or reeatin+ t#e same.
<ow% I would consider t#e new submission as an act e&
abudante cautela.
TA) CAAI6*A1. Than! you, 4enator Ion.ales. 4enator
(ina, do you want to ma!e any comment on thisR
SE<. 'I<A. 3r. ,resident% I a+ree wit# t#e observation
just made b" Senator 4onzales out o$ t#e abundance o$
5uestion. T#en t#e new submission is% I believe% statin+
t#e obvious and t#ere$ore I #ave no $urt#er comment to
make.
Eilo+ue
In prayin for the nulli+cation of the Philippine rati+cation of the @T"
Areement, petitioners are invo!in this Court9s constitutionally
imposed duty -to determine whether or not there has been rave abuse
of discretion amountin to lac! or eCcess of 8urisdiction- on the part of
the 4enate in ivin its concurrence therein via 4enate 6esolution 1o.
%&. Procedurally, a writ of certiorari rounded on rave abuse of
discretion may be issued by the Court under 6ule =$ of the 6ules of
Court when it is amply shown that petitioners have no other plain,
speedy and adeEuate remedy in the ordinary course of law.
,y rave abuse of discretion is meant such capricious and whimsical
eCercise of 8udment as is eEuivalent to lac! of 8urisdiction.
+1
*ere
abuse of discretion is not enouh. It must be +rave abuse of discretion
as when the power is eCercised in an arbitrary or despotic manner by
reason of passion or personal hostility, and must be so patent and so
ross as to amount to an evasion of a positive duty or to a virtual
refusal to perform the duty en8oined or to act at all in contemplation of
law.
+)
Bailure on the part of the petitioner to show rave abuse of
discretion will result in the dismissal of the petition.
+*
In renderin this ?ecision, this Court never forets that the 4enate,
whose act is under review, is one of two soverein houses of Conress
and is thus entitled to reat respect in its actions. It is itself a
constitutional body independent and coordinate, and thus its actions
are presumed reular and done in ood faith. 3nless convincin proof
and persuasive aruments are presented to overthrow such
presumptions, this Court will resolve every doubt in its favor. 3sin the
foreoin well-accepted de+nition of rave abuse of discretion and the
presumption of reularity in the 4enate9s processes, this Court cannot
+nd any coent reason to impute rave abuse of discretion to the
4enate9s eCercise of its power of concurrence in the @T" Areement
ranted it by 4ec. F1 of Article LII of the Constitution.
+4
It is true, as alleed by petitioners, that broad constitutional principles
reEuire the 4tate to develop an independent national economy
efectively controlled by BilipinosH and to protect andQor prefer Bilipino
labor, products, domestic materials and locally produced oods. ,ut it is
eEually true that such principles G while servin as 8udicial and
leislative uides G are not in themselves sources of causes of action.
*oreover, there are other eEually fundamental constitutional principles
relied upon by the 4enate which mandate the pursuit of a -trade policy
that serves the eneral welfare and utili.es all forms and arranements
of eCchane on the basis of eEuality and reciprocity- and the promotion
of industries -which are competitive in both domestic and forein
mar!ets,- thereby 8ustifyin its acceptance of said treaty. 4o too, the
alleed impairment of sovereinty in the eCercise of leislative and
8udicial powers is balanced by the adoption of the enerally accepted
principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and amity
with all nations.
That the 4enate, after deliberation and votin, voluntarily and
overwhelminly ave its consent to the @T" Areement thereby
ma!in it -a part of the law of the land- is a leitimate eCercise of its
soverein duty and power. @e +nd no -patent and ross- arbitrariness
or despotism -by reason of passion or personal hostility- in such
1F:
eCercise. It is not impossible to surmise that this Court, or at least some
of its members, may even aree with petitioners that it is more
advantaeous to the national interest to stri!e down 4enate 6esolution
1o. %&. ,ut that is not a le+al reason to attribute rave abuse of
discretion to the 4enate and to nullify its decision. To do so would
constitute rave abuse in the eCercise of our own 8udicial power and
duty. Ineludably, what the 4enate did was a valid eCercise of its
authority. As to whether such eCercise was wise, bene+cial or viable is
outside the realm of 8udicial inEuiry and review. That is a matter
between the elected policy ma!ers and the people. As to whether the
nation should 8oin the worldwide march toward trade liberali.ation and
economic lobali.ation is a matter that our people should determine in
electin their policy ma!ers. After all, the @T" Areement allows
withdrawal of membership, should this be the political desire of a
member.
The eminent futurist #ohn 1aisbitt, author of the best seller 3e+atrends,
predicts an Asian 6enaissance
+5
where -the )ast will become the
dominant reion of the world economically, politically and culturally in
the neCt century.- Ae refers to the -free mar!et- espoused by @T" as
the -catalyst- in this comin Asian ascendancy. There are at present
about 01 countries includin China, 6ussia and 4audi Arabia neotiatin
for membership in the @T". 1otwithstandin ob8ections aainst
possible limitations on national sovereinty, the @T" remains as the
only viable structure for multilateral tradin and the veritable forum for
the development of international trade law. The alternative to @T" is
isolation, stanation, if not economic self-destruction. ?uly enriched
with oriinal membership, !eenly aware of the advantaes and
disadvantaes of lobali.ation with its on-line eCperience, and endowed
with a vision of the future, the Philippines now straddles the crossroads
of an international stratey for economic prosperity and stability in the
new millennium. (et the people, throuh their duly authori.ed elected
oDcers, ma!e their free choice.
@A)6)B"6), the petition is ?I4*I44)? for lac! of merit.
4" "6?)6)?.
19.G.R. No. 14*99* A=0=8& 18, )004
MCDONA"D?S CORPORATION #$% MCG!ORG! OOD INDUSTRI!S,
INC., petitioners,
vs.
".C. BIG MA5 BURG!R, INC., RANCIS B. D6, !DNA A. D6, R!N!
B. D6, FI""IAM B. D6, J!SUS A6CARDO, ARAC!"I A6CARDO, #$%
GRAC! HU!RTO, respondents.
? ) C I 4 I " 1
CARPIO, J.7
T'e C#8e
This is a petition for review
1
of the ?ecision dated F= 1ovember 1%%% of
the Court of Appeals
F
+ndin respondent (.C. ,i *a! ,urer, Inc. not
liable for trademar! infrinement and unfair competition and orderin
1F$
petitioners to pay respondents P1,%'',''' in damaes, and of its
6esolution dated 11 #uly F''' denyin reconsideration. The Court of
Appeals9 ?ecision reversed the $ 4eptember 1%%: ?ecision
0
of the
6eional Trial Court of *a!ati, ,ranch 10&, +ndin respondent (.C. ,i
*a! ,urer, Inc. liable for trademar! infrinement and unfair
competition.
T'e #<&8
Petitioner *c?onald9s Corporation ;-*c?onald9s-< is a corporation
orani.ed under the laws of ?elaware, 3nited 4tates. *c?onald9s
operates, b" itsel$ or throuh its franchisees, a lobal chain of fast-food
restaurants. *c?onald9s
:
owns a family of mar!s
$
includin the -,i
*ac- mar! for its -double-dec!er hamburer sandwich.-
=
*c?onald9s
reistered this trademar! with the 3nited 4tates Trademar! 6eistry on
1= "ctober 1%&%.
&
,ased on this Aome 6eistration, *c?onald9s applied
for t#e reistration o$ the same mar! in the ,rincial 6eister of the
then Philippine ,ureau of Patents, Trademar!s and Technoloy
;-P,PTT-<, now the Intellectual Property "Dce ;-IP"-<. ,endin+ approval
of its application, *c?onald9s introduced its -,i *ac- hamburer
sandwiches in the Philippine mar!et in 4eptember 1%>1. "n 1> #uly
1%>$, t#e P,PTT allowed reistration o$ the -,i *ac- mar! in
the ,rincial 6eister based on its Aome 6eistration in the 3nited
4tates.
(i!e its other mar!s, *c?onald9s displays the -,i *ac- mar! in
items
>
and paraphernalia
%
in its restaurants, and in its outdoor and
indoor sinaes. Brom 1%>F to 1%%', *c?onald9s spent P1'.$ million in
advertisement for -,i *ac- hamburer sandwiches alone.
1'
Petitioner *cIeore Bood Industries ;-petitioner *cIeore-<, a
domestic corporation, is *c?onald9s Philippine franchisee.
11
6espondent (.C. ,i *a! ,urer, Inc. ;-respondent corporation-< is a
domestic corporation which operates fast-food outlets and snac! vans
in *etro *anila and nearby provinces.
1F
6espondent corporation9s menu
includes hamburer sandwiches and other food items.
10
6espondents
Brancis ,. ?y, )dna A. ?y, 6ene ,. ?y, @illiam ,. ?y, #esus Aycardo,
Araceli Aycardo, and Irace Auerto ;-private respondents-< are the
incorporators, stoc!holders and directors of respondent corporation.
1:
"n F1 "ctober 1%>>, respondent corporation applied with the P,PTT
for t#e reistration o$ the -,i *a!- mar! for its hamburer sandwiches.
*c?onald9s opposed respondent corporation9s application on the
round that -,i *a!- was a colorable imitation of its reistered -,i
*ac- mar! for the same food products. *c?onald9s also informed
respondent Brancis ?y ;-respondent ?y-<, the chairman of the ,oard of
?irectors of respondent corporation, of its eCclusive riht to the -,i
*ac- mar! and reEuested him to desist from usin the -,i *ac- mar!
or an" similar mar!.
Aavin received no reply from respondent ?y, petitioners on = #une
1%%' sued respondents in the 6eional Trial Court of *a!ati, ,ranch 10&
;-6TC-<, for trademar! infrinement and unfair competition. In its "rder
of 11 #uly 1%%', the 6TC issued a temporary restrainin order ;-T6"-<
aainst respondents en8oinin them from usin the -,i *a!- mar!
in t#e operation o$ their business in the 1ational Capital 6eion.
1$
"n 1=
Auust 1%%', the 6TC issued a writ of preliminary in8unction replacin
the T6".
1=
In their Answer, respondents admitted that they have been usin the
name -,i *a! ,urer- for their fast-food business. 6espondents
claimed, however, that *c?onald9s does not have an eCclusive riht to
the -,i *ac- mar! or to an" other similar mar!. 6espondents point out
that the Isaiyas Iroup of Corporations ;-Isaiyas Iroup-< reistered the
same mar! for hamburer sandwiches with the P,PTT on 01 *arch
1%&%. "ne 6odolfo Topacio ;-Topacio-< similarly reistered the same
mar! on F: #une 1%>0, rior to *c?onald9s reistration on 1> #uly
1%>$.Alternativel", respondents claimed that they are not liable for
trademar! infrinement or for unfair competition, as the -,i *a!-
mar! they souht to reister does not constitute a colorable imitation of
the -,i *ac- mar!. 6espondents asserted that they did not
fraudulently pass of their hamburer sandwiches as those of
petitioners9 ,i *ac hamburers.
1&
6espondents souht damaes in
their counterclaim.
In their 6eply, petitioners denied respondents9 claim that *c?onald9s is
not the eCclusive owner of the -,i *ac- mar!. Petitioners asserted that
while the Isaiyas Iroup and Topacio did reister the -,i *ac- mar!
ahead of *c?onald9s, the Isaiyas Iroup did so only in the 4upplemental
6eister of the P,PTT and such reistration does not
provide an" protection. *c?onald9s disclosed that it
had ac5uired Topacio9s rihts to his reistration in a ?eed of
Assinment dated 1> *ay 1%>1.
1>
T'e Tr:#1 Co=r&?8 R=1:$0
"n $ 4eptember 1%%:, the 6TC rendered 8udment ;-6TC ?ecision-<
+ndin respondent corporation liable for trademar! infrinement and
unfair competition. Jowever, the 6TC dismissed the complaint aainst
private respondents and the counterclaim aainst petitioners for lac! of
merit and insuDciency of evidence. The 6TC held5
1F=
3ndeniably, the mar! -,JiK *JacK- is a reistered trademar! for
plaintif *c?onald9s, and as such, it is entitled JtoK protection
aainst infrinement.
CCCC
T#ere e&ist some distinctions between the names -,JiK *JacK-
and -,JiK *Ja!K- as appearin in the respective sinaes,
wrappers and containers of the food products of the parties. ,ut
infrinement oes beyond the physical features of the
Euestioned name and the oriinal name. There are still other
factors to be considered.
CCCC
4ini+cantly, the contendin parties are both in the business of
fast-food chains and restaurants. An averae person who is
hunry and wants to eat a hamburer sandwich may not be
discriminatin enouh to loo! for a *c?onald9s restaurant and
buy a -,JiK *JacK- hamburer. "nce he sees a stall sellin
hamburer sandwich, in all li!elihood, he will dip into his poc!et
and order a -,JiK *Ja!K- hamburer sandwich. Plaintif
*c?onald9s fast-food chain has attained wide popularity and
acceptance by the consumin public so much so that its air-
conditioned food outlets and restaurants will perhaps not be
mista!en by many to be the same as defendant corporation9s
mobile snac! vans located alon busy streets or hihways. ,ut
the thin is that what is bein sold by bot# contendin parties is
a food item W a hamburer sandwich which is for immediate
consumption, so that a buyer may easily be confused or
deceived into thin!in that the -,JiK *Ja!K- hamburer
sandwich he bouht is a food-product of plaintif *c?onald9s, or
a subsidiary or allied outlett#ereo$. 4urely, defendant
corporation has its own secret inredients to ma!e its
hamburer sandwiches as palatable and as tasty as the other
brands in the mar!et, considerin the !een competition amon
mushroomin hamburer stands and multinational fast-food
chains and restaurants. Jence, the trademar! -,JiK *JacK- has
been infrined by defendant corporation when it used the name
-,JiK *Ja!K- in its sinaes, wrappers, and containers in
connection wit# its food business. CCCC
?id the same acts of defendants in usin the name -,JiK *Ja!K-
as a trademar! or tradename in their sinaes, or in causin the
name -,JiK *Ja!K- to be printed on the wrappers and containers
of their food products also constitute an act of unfair competition
under 4ection F% of the Trademar! (awR
The answer is in the aDrmative. CCCC
The CCC provision of the law concernin+ unfair competition is
broader and more inclusive than the lawconcernin+ the
infrinement of trademar!, which is of more limited rane, but
within its narrower rane reconi.es a more eCclusive riht
derived by t#e adoption and reistration o$ the trademar! by the
person whose oods or services are +rst associated t#erewit#.
CCC <otwit#standin+ the distinction between an action for
trademar! infrinement and an action for unfair competition,
however, the law eCtends substantially the same relief to the
in8ured party for bot# cases. ;4ee 4ections F0 and F% of 6epublic
Act 1o. 1==<
An" conduct may be said to constitute unfair competition if the
efect is to pass of on the public the oods of one man as the
oods of another. The choice of -,JiK *Ja!K- as tradename by
defendant corporation is not merely for sentimental reasons but
was clearly made to ta!e advantae of the reputation, popularity
and the established oodwill of plaintif *c?onald9s. Bor, as
stated in 4ection F%, a person is uilty of unfair competition who
in sellin his oods s#all ive them the eneral appearance, of
oods of another manufacturer or dealer, either as to the oods
themselves or in the wrappin of the pac!aes in which they are
contained, or the devices or words thereon, or in an" other
feature of their appearance, which would li!ely inPuence
purchasers to believe that the oods ofered are those of a
manufacturer or dealer ot#er t#an the actual manufacturer or
dealer. T#us, plaintifs have established their valid cause of
action aainst the defendants for trademar! infrinement and
unfair competition and for damaes.
1%
The dispositive ortion of the 6TC ?ecision provides5
@A)6)B"6), 8udment is rendered in favor of plaintifs
*c?onald9s Corporation and *cIeore Bood Industries, Inc. and
aainst defendant (.C. ,i *a! ,urer, Inc., as follows5
1. The writ of preliminary in8unction issued in this case on J1=
Auust 1%%'K is made permanentH
F. ?efendant (.C. ,i *a! ,urer, Inc. is ordered to pay
plaintifs actual damaes in the amount o$P:'','''.'',
1F&
eCemplary damaes in the amount o$ P1'','''.'', and
attorney9s fees and eCpenses of litiation in the amount
o$ P1'','''.''H
0. The complaint aainst defendants Brancis ,. ?y, )dna A. ?y,
6ene ,. ?y, @iliam ,. ?y, #esus Aycardo, Araceli Aycardo and
Irace Auerto, as well as all counter-claims, are dismissed for
lac! of merit as well asfor insuDciency of evidence.
F'
6espondents appealed to the Court of Appeals.
T'e R=1:$0 oD &'e Co=r& oD A99e#18
"n F= 1ovember 1%%%, the Court of Appeals rendered 8udment ;-Court
of Appeals9 ?ecision-< reversin the 6TC ?ecision and orderin
*c?onald9s to pay respondents P1,='',''' as actual and compensatory
damaes and P0'',''' as moral damaes. The Court of Appeals held5
Plaintifs-appellees in the instant case would li!e to impress on
this Court that t#e use o$ defendants-appellants of its corporate
name W the whole -(.C. ,JiK *Ja!K ,JurerK, IJncK.- which
appears on their food pac!aes, sinaes and advertisements is
an infrinement of their trademar! -,JiK *JacK- which they use
to identify JtheirK double dec!er sandwich, sold in a 4tyrofoam
boC pac!ain material with the *c?onald9s loo of umbrella
-*- stamped thereon, to+et#er wit# the printed mar! in red
blJoKc! capital letters, the words bein separated by a
sin+le space. 4peci+cally, plaintifs-appellees arue that
defendants-appellants9 use of their corporate name is a
colorable imitation of their trademar! -,i *ac-.
CCCC
To "ur mind, however, this Court is fully convinced that no
colorable imitation eCists. As the de+nition dictates, it is
not suEcient that a similarity eCists in bot# names, but
that more imortantl", the over-all presentation, or in their
essential, substantive and distinctive parts is such as would
li!ely *I4()A? or C"1B34) persons in the ordinary course of
purchasin the enuine article. A care$ul comparison of the way
the trademar! -,JiK *JacK- is bein used by plaintifs-appellees
and corporate name (.C. ,i *a! ,urer, Inc. by defendants-
appellants, would readily reveal that no confusion could ta!e
place, or that the ordinary purchasers would be misled by it. As
pointed out by defendants-appellants, the plaintifs-appellees9
trademar! is used to desinate only one product, a double
dec!er sandwich sold in a 4tyrofoam boC with the -*c?onalds-
loo. ;n t#e ot#er #and% what the defendants-appellants
corporation is usin is not a trademar! for its food product but a
business or corporate name. They use the business name -(.C.
,i *a! ,urer, Inc.- in their restaurant business which serves
diversi+ed food items such as siopao, noodles, pi..a, and
sandwiches such as hotdo, ham, +sh burer and
hamburer. Secondl", defendants-appellants9 corporate or
business name appearin in the food pac!aes and sinaes are
written in silhouette red-orane letters with the -b- and -m- in
upper case letters. Above the words -,i *a!- are the upper
case letter -(.C.-. ,elow the words -,i *a!- are the words
-,urer, Inc.- spelled out in upper case letters.)urt#ermore, said
corporate or business name appearin in such food pac!aes
and sinaes is always accompanied by the company mascot, a
youn chubby boy named *a!y who wears a red T-shirt with the
upper case -m- appearin t#erein and a blue lower
arment. )inall"% the defendants-appellants9 food pac!aes are
made of plastic material.
CCCC
CCC JIKt is readily apparent to the na!ed eye that there appears a
vast diference in the appearance of the product and
the manner that the tradename -,i *a!- is bein used and
presented to the public. As earlier noted, there are larin
dissimilarities between plaintifs-appellees9 trademar! and
defendants-appellants9 corporate name. Plaintifs-appellees9
product carryin the trademar! -,JiK *JacK- is a double dec!er
sandwich ;depicted in the tray mat containin photoraphs of
the various food products CCC sold in a 4tyrofoam boC with the
-*c?onald9s- loo and trademar! in red, blJoKc! capital letters
printed thereon CCC at a price which is more eCpensive than the
defendants-appellants9 comparable food products. In order
to buy a -,i *ac-, a customer needs to visit an air-conditioned
-*c?onald9s- restaurant usually located in a nearby commercial
center, advertised and identi+ed by its loo - the umbrella -*-,
and its mascot W -6onald *c?onald-. A typical *c?onald9s
restaurant boasts of a playround for !ids, a second Poor to
accommodateadditional customers, a drive-thru to allow
customers with cars to ma!e orders without alihtin from their
vehicles, the interiors of the buildin are well-lihted, distinctly
decorated and painted with pastel colors CCC. In buyin a -,JiK
*JacK-, it is necessar" to specify it by its trademar!. T#us, a
customer needs to loo! for a -*c?onald9s- and enter it +rst
before he can +nd a hamburer sandwich which carry the mar!
1F>
-,i *ac-. ;n t#e ot#er #and% defendants-appellants sell their
oods throuh snac! vans CCCC
Anent the alleation that defendants-appellants are uilty of
unfair competition, @e likewise +nd the same untenable.
3nfair competition is de+ned as -the emlo"ment of deception
or an" other means contrary to ood faith by which a
person s#all pass of the oods manufactured by him or in which
he deals, or his business, or service, for those of another who
has already established ood will for his similar ood, business
or services, or an" acts calculated to produce the same result-
;4ec. F%, 6ep. Act 1o. 1==, as amended<.
To constitute unfair competition therefore it
must necessaril" follow that there was malice and that the entity
concerned was in bad faith.
In the case at bar, @e +nd no suEcient evidence adduced by
plaintifs-appellees that defendants-appellants deliberately tried
to pass of the oods manufactured by them for those of
plaintifs-appellees. The mere suspected similarity in the sound
of the defendants-appellants9 corporate name with the plaintifs-
appellees9 trademar! is not suEcient evidence to conclude
unfair competition. ?efendants-appellants eCplained that the
name -*Ja!K- in their corporate name was derived from bot# the
+rst names of the mother and father of defendant Brancis ?y,
whose names are *aCima and Nimsoy. @ith this eCplanation, it is
up to the plaintifs-appellees to prove bad faith on t#e art
o$ defendants-appellants. It is a settled rule that the law always
presumes ood faith such that an" person who see!s to be
awarded damaes due to acts of another has the burden
of rovin+ t#at the latter acted in bad faith or with ill motive.
F1
Petitioners souht reconsideration of the Court of Appeals9 ?ecision but
the appellate court denied their motion in its 6esolution of 11 #uly F'''.
Jence, this petition for review.
Petitioners raise the followin rounds for their petition5
I. TA) C"36T "B APP)A(4 )66)? I1 BI1?I1I TAAT
6)4P"1?)1T49 C"6P"6AT) 1A*) -(.C. ,II *AN ,36I)6, I1C.-
I4 1"T A C"("6A,() I*ITATI"1 "B TA) *C?"1A(?94
T6A?)*A6N -,II *AC-, 43CA C"("6A,() I*ITATI"1 ,)I1I
A1 E'E3E<T ;) T6A?)*A6N I1B6I1I)*)1T.
A. 6espondents use the words -,i *a!- as trademar! for
their products and not merely as their business or
corporate name.
,. As a trademar!, respondents9 -,i *a!- is undeniably
and unEuestionably similar to petitioners9 -,i *ac-
trademar! based on the dominancy test and the idem
sonans test resultin ineCorably in confusion on the part
of the consumin public.
II. TA) C"36T "B APP)A(4 )66)? I1 6)B34I1I T" C"14I?)6
TA) I1A)6)1T 4I*I(A6IT2 ,)T@))1 TA) *A6N -,II *AN- A1?
TA) @"6? *A6N -,II *AC- A4 A1 I<DICATI;< "B
6)4P"1?)1T49 I1T)1T T" ?)C)IL) "6 ?)B6A3?
B"6 ,UR,;SES ;) ESTA:'ISJI<4 31BAI6 C"*P)TITI"1.
FF
Petitioners pray that we set aside the Court of Appeals9 ?ecision and
reinstate the 6TC ?ecision.
In their Comment to the petition, respondents Euestion the propriety of
this petition as it alleedly raises only Euestions of fact. "n the merits,
respondents contend that the Court of Appeals committed no reversible
error in +ndin them not liable for trademar! infrinement and unfair
competition and in orderin petitioners to pay damaes.
T'e I88=e8
The issues are5
1. Procedurally, whether the Euestions raised in this petition are proper
for a petition for review under 6ule :$.
F. "n the merits, ;a< whether respondents used the words -,i *a!- not
only as part of the corporate name -(.C. ,i *a! ,urer, Inc.- but also
as a trademar! for their hamburer products, and ;b< whether
respondent corporation is liable for trademar! infrinement and unfair
competition.
F0
T'e Co=r&?8 R=1:$0
The petition has merit.
1F%
)n 2hether the 3uestions /aised in the (etition are (roper for
a (etition for /eview
A party intendin+ to appeal from a 8udment of the Court of Appeals
may +le with this Court a petition for review under 4ection 1 of 6ule :$
;-4ection 1-<
F:
raisin only Euestions of law. A Euestion of law eCists
when the doubt or diference arises on what the law is on a certain
state of facts. There is a Euestion of fact when the doubt or diference
arises on the truth or falsity of the alle+ed facts.
F$
Aere, petitioners raise Euestions of fact and law in assailin the Court of
Appeals9 +ndins on respondent corporation9s non-liability for
trademar! infrinement and unfair competition. "rdinarily, the Court
can deny due course to such a petition. In view, however, of the
contradictory +ndins of fact of the 6TC and Court of Appeals, the Court
opts to accept the petition, this bein one of the reconi.ed eCceptions
to 4ection 1.
F=
@e too! a similar course of action in !sia 4rewery, "nc.
v. #ourt of !ppeals
F&
which also involved a suit for trademar!
infrinement and unfair competition in which the trial court and the
Court of Appeals arrived at conPictin +ndins.
)n the 5anner /espondents ,sed
*4ig 5ak* in their 4usiness
Petitioners contend that the Court of Appeals erred in rulin that the
corporate name -(.C. ,i *a! ,urer, Inc.- appears in the pac!ain for
respondents9 hamburer products and not the words -,i *a!- only.
The contention has merit.
The evidence presented durin the hearins on petitioners9 motion for
the issuance of a writ of preliminary in8unction shows that the plastic
wrappins and plastic bas used by respondents for their hamburer
sandwiches bore the words -,i *a!.- The other descriptive words
-burer- and -1''Y pure beef- were set in smaller type, alon with the
locations of branches.
F>
6espondents9 cash invoices simply refer to their
hamburer sandwiches as -,i *a!.-
F%
It is respondents9 snac! vans
that carry the words -(.C. ,i *a! ,urer, Inc.-
0'
It was only durin the trial that respondents presented in evidence the
plastic wrappers and bas for their hamburer sandwiches relied on by
the Court of Appeals.
01
6espondents9 plastic wrappers and bas were
identical with those petitioners presented durin the hearins for the
in8unctive writ eCcept that the letters -(.C.- and the words -,urer, Inc.-
in respondents9 evidence were added above and below the words -,i
*a!,-resectivel". 4ince petitioners9 complaint was based on facts
eCistin before and durin the hearins on the in8unctive writ, the facts
established durin those hearins are the proper factual bases for the
disposition of the issues raised in this petition.
)n the "ssue of 6rademark "nfringement
4ection FF ;-4ection FF< of 6epublic Act 1o. 1==, as amended ;-6A
1==-<, the law applicable to this case,
0F
de+nes trademar! infrinement
as follows5
Infrinement, what constitutes. G An" person who J1K s#all use,
without the consent of the reistrant, an"reproduction,
counterfeit, copy or colorable imitation of an" reistered mar! or
trade-name in connection wit# the sale, oferin for sale, or
advertisin of an" oods, business or services on or in
connection wit#which such use is li!ely to cause confusion or
mista!e or to deceive purchasers or others as to the source or
oriin of such oods or services, or identity of such businessH or
JFK reproduce, counterfeit, copy, or colorably imitate an" such
mar! or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, sins, prints, pac!aes,
wrappers, receptacles or advertisements intended to be
useduon or in connection wit# such oods, business or
services, s#all be liable to a civil action by the reistrant
for an" or all o$ the remedies #erein provided.
00
Petitioners base their cause of action under the +rst part of 4ection
FF, i(e( respondents alleedly used, without petitioners9 consent, a
colorable imitation of the -,i *ac- mar! in advertisin and sellin
respondents9 hamburer sandwiches. This li!ely caused confusion in the
mind of the purchasin public on the source of the hamburers or the
identity of the business.
To establis# trademar! infrinement, the followin elements must be
shown5 ;1< the validity of plaintif9s mar!H ;F< the plaintif9s ownership of
the mar!H and ;0< t#e use o$ the mar! or its colorable imitation by
the alle+ed infriner results in -li!elihood of confusion.-
0:
"f these, it is
the element o$ li!elihood of confusion that is the ravamen of
trademar! infrinement.
0$
)n the alidity of the *4ig 5ac*5ark
and 5c0onald7s )wnership of such 5ark
A mar! is valid if it is -distinctive- and thus not barred from reistration
under 4ection :
0=
of 6A 1== ;-4ection :-<.Jowever, once reistered, not
10'
only the mar!9s validity but also the reistrant9s ownership of the mar!
is prima facie presumed.
0&
6espondents contend that of the two words in the -,i *ac- mar!, it is
only the word -*ac- that is valid because the word -,i- is eneric and
descriptive ;proscribed under 4ection :JeK<, and thus -incapable of
eCclusive appropriation.-
0>
The contention has no merit. The -,i *ac- mar!, which should be
treated in its entirety and not dissected word for word,
0%
is neither
eneric nor descriptive. Ieneric mar!s are commonly used as the name
or description of akind o$ oods,
:'
such as -(ite- for beer
:1
or
-Chocolate Bude- for chocolate soda drin!.
:F
?escriptive mar!s, on the
other hand, convey the characteristics, $unctions, Eualities or
inredients of a product to one who has never seen it or does not !now
it eCists,
:0
such as -Arthriticare- for arthritis medication.
::
"n the
contrary, -,i *ac- falls under t#e class o$ fanciful or arbitrary mar!s as
it bears no loical relation to the actual characteristics of the product it
represents.
:$
As suc#, it is hihly distinctive and thus valid. 4ini+cantly,
the trademar! -(ittle ?ebbie- for snac! ca!es was found arbitrary or
fanciful.
:=
The Court also +nds that petitioners have duly established *c?onald9s
eCclusive ownership of the -,i *ac- mar!. Althouh Topacio and the
Isaiyas Iroup reistered the -,i *ac- mar! ahead of *c?onald9s,
Topacio, as petitioners disclosed, had already assined his rihts to
*c?onald9s. The Isaiyas Iroup, on the other hand, reistered its
trademar! only in the 4upplemental 6eister. A mar! which is not
reistered in the ,rincial6eister, and thus not distinctive, has no real
protection.
:&
Indeed, we have held that reistration in the 4upplemental
6eister is not even a prima facie evidence of the validity of the
reistrant9s eCclusive riht to use the mar! on the oods speci+ed in
the certi+cate.
:>
)n 6ypes of #onfusion
4ection FF covers two types of confusion arisin from t#e use o$ similar
or colorable imitation mar!s, namel", confusion of oods ;product
confusion< and confusion of business ;source or oriin confusion<. In
4terlin Products International, Incorporated v. Barbenfabri!en ,ayer
A!tienesellschaft, et al.,
:%
the Court distinuished these two types of
confusion, thus5
J6udolfK Callman notes two types of confusion. The +rst is the
confusion of oods -in which event the ordinarily prudent
purchaser would be induced to purchase one product in the
belief that he was purchasin the other.- CCC The other is the
confusion of business5 -Aere thouh the oods of the parties are
diferent, the defendant9s product is such as miht reasonably
be assumed to oriinate with the plaintif, and the public would
then be deceived either into that belief or into the belief that
there is some connection between the plaintif and defendant
which, in $act, does not eCist.-
3nder Act 1o. ===,
$'
the +rst trademar! law, infrinement was limited
to confusion of oods only, when the infrinin mar! is used on -oods
of a similar !ind.-
$1
Thus, no relief was aforded to the party whose
reistered mar! or its colorable imitation is used on diferent althouh
related oods. To remedy this situation, Conress enacted 6A 1== on F'
#une 1%:&. In de+nin trademar! infrinement, 4ection FF of 6A 1==
deleted the reEuirement in Euestion and eCpanded its scope to include
such use of the mar! or its colorable imitation that is li!ely to result in
confusion on -the source or oriin of such oods or services, or identity
of such business.-
$F
T#us, while there is confusion of oods when the
products are competin, confusion of business eCists when the products
are non-competin but related enouh to produce confusion of
aDliation.
$0
)n 2hether #onfusion of 8oods and
#onfusion of 4usiness are !pplicable
Petitioners claim that respondents9 use of the -,i *a!- mar! on
respondents9 hamburers results in confusion of oods,
particularly wit# resect to petitioners9 hamburers labeled -,i
*ac.- T#us, petitioners alle+ed in their complaint5
1.1$. ?efendants have unduly pre8udiced and clearly
infrined uon the property rihts of plaintifs in the *c?onald9s
*ar!s, particularly the mar! -,JiK *JacK-. ?efendants9
unauthori.ed acts are li!ely, and calculated, to confuse, mislead
or deceive the public into believin that the products and
services ofered by defendant ,i *a! ,urer, and the business
it is enaed in, are approved and sponsored by, or aDliated
with, plaintifs.
$:
;)mphasis supplied<
4ince respondents used the -,i *a!- mar! on the same
oods, i(e( hamburer sandwiches, that petitioners9 -,i *ac- mar! is
used, trademar! infrinement throuh confusion of oods is a proper
issue in this case.
Petitioners also claim that respondents9 use of the -,i *a!- mar! in
the sale of hamburers, the same business that petitioners are enaed
101
in, results in confusion of business. ,etitioners alle+ed in their
complaint5
1.1'. Bor some eriod o$ time, and without the consent of
plaintif *c?onald9s nor its licenseeQfranchisee, plaintif
*cIeore, and in clear violation of plaintifs9 eCclusive riht to
use and@or aroriate the *c?onald9s mar!s, defendant ,i
*a! ,urer actin throuh individual defendants, has been
operatin -,i *a! ,urer-, a fast food restaurant business
dealin in the sale of hamburer and cheeseburer sandwiches,
french fries and other food products, and has caused to be
printed on the wrapper of defendant9s food products and
incorporated in its sinaes the name -,i *a! ,urer-, which is
confusinly similar to and@or is a colorable imitation of the
plaintif *c?onald9s mar! -,JiK *JacK-, CCC. DeDe$%#$& B:0
M#3 B=r0er '#8 &'=8 =$L=8&1B <re#&e% &'e :m9re88:o$ &'#&
:&8 b=8:$e88 :8 #99rove% #$% 89o$8ore% bB, or #M1:#&e%
;:&', 91#:$&:A8 . CCCC
F.F As a conse5uence o$ the acts committed by defendants,
which unduly pre8udice and infrine uon the property rihts of
plaintifs *c?onald9s and *cIeore as the real owner and
rihtful proprietor, and the licenseeQfranchisee, resectivel", of
the *c?onald9s mar!s, and which are li!ely to have <#=8e%
<o$D=8:o$ or %e<e:ve% &'e 9=b1:< as to &'e &r=e 8o=r<e,
89o$8or8':9 or #M1:#&:o$ oD %eDe$%#$&8? Doo% 9ro%=<&8
#$% re8&#=r#$& b=8:$e88, plaintifs have sufered and continue
to sufer actual damaes in t#e $orm o$ in8ury to their business
reputation and oodwill, and of t#e dilution o$ the distinctive
Euality of the *c?onald9s mar!s, in articular, the mar! -,JiK
*JacK-.
$$
;)mphasis supplied<
Resondents admit t#at t#eir business includes sellin+ #ambur+er
sandwic#es% t#e same $ood roduct t#at etitioners sell usin+ t#e K:i+
3acK mark( T#us, trademar! infrinement throuh confusion of
business is also a proper issue in this case.
6espondents assert that their -,i *a!- hamburers cater mainl" to the
low-income roup while petitioners9 -,i *ac- hamburers cater to the
middle and upper income roups. )ven if this is true, the li!elihood of
confusion of business remains, since the low-income roup miht be led
to believe that the -,i *a!- hamburers are the low-end hamburers
mar!eted by petitioners. After all, petitioners have the eCclusive riht to
use the -,i *ac- mar!.;n t#e ot#er #and% respondents would bene+t
by associatin their low-end hamburers, throuh t#e use o$ the -,i
*a!- mar!, with petitioners9 hih-end -,i *ac- hamburers, leadin to
li!elihood of confusion in the identity of business.
6espondents further claim that petitioners use the -,i *ac- mar! only
on petitioners9 double-dec!er hamburers, while respondents use the
-,i *a!- mar! on hamburers and other products li!e siopao, noodles
and pi..a. 6espondents also point out that petitioners sell their ,i *ac
double-dec!ers in a styrofoam boC with the -*c?onald9s- loo and
trademar! in red, bloc! letters at a price more eCpensive than the
hamburers of respondents. In contrast, respondents sell their ,i *a!
hamburers in plastic wrappers and plastic bas. 6espondents further
point out that petitioners9 restaurants are air-conditioned buildins with
drive-thru service, compared to respondents9 mobile vans.
These and other factors respondents cite cannot neate the undisputed
fact that respondents use their -,i *a!- mar! on hamburers, the
same food product that petitioners9 sell with t#e use o$ their reistered
mar! -,i *ac.- @hether a hamburer is sinle, double or triple-dec!er,
and whether wrapped in plastic or styrofoam, it remains the same
hamburer food product. )ven respondents9 use of the -,i *a!- mar!
on non-hamburer food products cannot eCcuse their infrinement of
petitioners9 reistered mar!, otherwise reistered mar!s will lose their
protection under the law.
The reistered trademar! owner may use his mar! on the same or
similar products, in diferent sements of the mar!et, and at diferent
price levels dependin on variations of the products for speci+c
sements of the mar!et. The Court has reconi.ed that the reistered
trademar! owner en8oys protection in product and mar!et areas that
are the $orm#1 9o&e$&:#1 eC9#$8:o$ oD ':8 b=8:$e88. T#us, the
Court has declared5
*odern law reconi.es that the protection to which the owner of
a trademar! is entitled is not limited to uardin his oods or
business from actual mar!et competition with identical or similar
products of the parties, but eCtends to all cases in which the use
by a 8unior appropriator of a trade-mar! or trade-name is li!ely
to lead to a confusion of source, as where prospective
purchasers would be misled into thin!in that the complainin
party has eCtended his business into the +eld ;see 1:> A(6 $= et
seEH $0 Am #ur. $&=< or is in an" way connected with the
activities of the infrinerH or when it forestalls the normal
potential eCpansion of his business ;v. 1:> A(6, &&, >:H $F Am.
#ur. $&=, $&&<.
$=
;)mphasis supplied<
10F
)n 2hether /espondents7 ,se of the *4ig 5ak*
5ark /esults in Likelihood of #onfusion
In determinin+ li!elihood of confusion, 8urisprudence has developed two
tests, the dominancy test and the holistic test.
$&
The dominancy test
focuses on the similarity of the revalent features of the competin
trademar!s that miht cause confusion. In contrast, the holistic
test re5uires the court to consider the entirety of the mar!s as applied
to the products, includin the labels and pac!ain,
in determinin+ confusin similarity.
The Court of Appeals, in +ndin that there is no li!elihood of confusion
that could arise in t#e use o$ respondents9 -,i *a!- mar! on
hamburers, relied on the holistic test. T#us, the Court of Appeals ruled
that -it is not suEcientthat a similarity eCists in bot# name;s<, but
that more imortantl", the overall presentation, or in their essential,
substantive and distinctive parts is such as would li!ely *I4()A? or
C"1B34) persons in the ordinary course of purchasin the enuine
article.- The holistic test considers the two mar!s in their entirety, as
they appear on the oods with their labels and pac!ain. It is not
enouh to consider their words and compare t#e spellin and
pronunciation o$ the words.
$>
6espondents now viorously arue that the Court of Appeals9
application of the holistic test to this case is correct and in accord with
prevailin 8urisprudence.
This Court, however, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in the
competin mar!s in determinin+ whether they are confusinly similar.
3nder the dominancy test, courts ive reater weiht to the similarity
of the appearance of the product arisin from t#eadoption o$ the
dominant features of the reistered mar!,
disreardin minor diferences.
$%
Courts will consider more the aural
and visual impressions created by the mar!s in the public mind, ivin
little weiht to factors li!e prices, Euality, sales outlets and mar!et
sements.
T#us, in the 1%$: case of #o 6iong +a v. 0irector of (atents,
='
the
Court ruled5
CCC It has been consistently held that the Euestion of
infrinement of a trademar! is to be determined by the test of
dominancy. 4imilarity in si.e, form and color, while relevant, is
not conclusive. ID &'e <om9e&:$0 &r#%em#r3 <o$&#:$8 &'e
m#:$ or e88e$&:#1 or %om:$#$& De#&=re8 oD #$o&'er, #$%
<o$D=8:o$ #$% %e<e9&:o$ :8 1:3e1B &o re8=1&, :$Dr:$0eme$&
&#3e8 91#<e. ?uplication or imitation is not necessar"H nor is
it necessar" that the infrinin label should suest an efort to
imitate. ;I. Aeilman ,rewin Co. vs. Independent ,rewin Co.,
1%1 B., :>%, :%$, citin )ale @hite (ead Co. vs. PPuh ;CC< 1>'
Bed. $&%<. The Euestion at issue in cases o$ infrinement of
trademar!s is whether t#e use o$ the mar!s involved would be
li!ely to cause confusion or mista!es in the mind of the public or
deceive purchasers. ;Auburn 6ubber Corporation vs. Aonover
6ubber Co., 1'& B. Fd $>>H CCC< ;)mphasis supplied.<
The Court reiterated the dominancy test in Lim .oa v. 0irector of
(atents,
=1
(hil. -ut "ndustry, "nc. v. +tandard 4rands
"nc.,
=F
#onverse /ubber #orporation v. ,niversal /ubber
(roducts, "nc.,
=0
and !sia 4rewery, "nc. v. #ourt of !ppeals.
=:
In
the F''1 case of +ociete 0es (roduits -estl9, +.!. v. #ourt of
!ppeals,
=$
the Court eCplicitly re8ected the holistic test in this wise5
JTKhe &o&#1:&B or 'o1:8&:< &e8& :8 <o$&r#rB &o &'e e1eme$&#rB
9o8&=1#&e oD &'e 1#; o$ &r#%em#r38 #$% =$D#:r
<om9e&:&:o$ that confusin similarity is to be determined on
t#e basis o$ visual, aural, connotative comparisons
and overall impressions e$0e$%ere% bB &'e m#r38 :$
<o$&rover8B as they areencountered in the realities of the
mar!etplace. ;)mphasis supplied<
The test of dominancy is now eCplicitly incorporated into law in 4ection
1$$.1 of the Intellectual Property Code which de+nes infrinement
as t#e -colorable imitation o$ a reistered mar! CCC or a %om:$#$&
De#&=re t#ereo$.-
Applyin the dominancy test, the Court +nds that respondents9 use of
the -,i *a!- mar! results in li!elihood of confusion. Birst, -,i *a!-
sounds e&actl" the same as -,i *ac.- 4econd, the +rst word in -,i
*a!- is e&actl" the same as the +rst word in -,i *ac.- Third, the +rst
two letters in -*a!- are the same as the +rst two letters in -*ac.-
Bourth, the last letter in -*a!- while a -!- sounds the same as -c- when
the word -*a!- is pronounced. Bifth, in Bilipino, the letter -!- replaces
-c- in spellin, thus -Caloocan- is spelled -Naloo!an.-
In short, aurally the two mar!s are the same, with the +rst word
of bot# mar!s phonetically the same, and the second word
of bot# mar!s also phonetically the same. Lisually, the two mar!s
have bot# two words and siC letters, with the +rst word of bot# mar!s
havin the same letters and the second word havin the same +rst two
100
letters. In spellin, considerin the Bilipino lanuae, even the last
letters of bot# mar!s are the same.
#learly, respondents have adopted in *4ig 5ak* not only the
dominant but also almost all the features of *4ig 5ac.* Applied
to the same food product of hamburers, the two mar!s will li!ely result
in confusion in the public mind.
The Court has ta!en into account the #=r#1 eAe<&8 of the words and
letters contained in the mar!s in determinin+ t#e issue o$ confusin
similarity. T#us, in 5arvex #ommercial #o., "nc. v. (etra .awpia :
#o., et al.,
==
the Court held5
The followin random list of confusinly similar sounds in the
matter of trademar!s, culled from 1ims, 3nfair Competition and
Trade *ar!s, 1%:&, Lol. 1, will reinforce our view that
-4A("1PA4- and -(I"1PA4- are confusinly similar in sound5
-Iold ?ust- and -Iold ?rop-H -#ant.en- and -#ass-4ea-H -4ilver
Blash- and -4upper Blash-H -Cascarete- and -Celborite-H
-Celluloid- and -Cellonite-H -Chartreuse- and -Charseurs-H
-CuteC- and -Cuticlean-H -Aebe- and -*e8e-H -NoteC- and
-BemeteC-H -7uso- and -Aoo Aoo-. (eon Amdur, in his boo!
-Trade-*ar! (aw and Practice-, pp. :1%-:F1, cities, as
comin wit#in the purview of the idem sonans rule, -2usea- and
-3-C-A-, -4teinway Pianos- and -4teinber Pianos-, and -4even-
3p- and -(emon-3p-. In Co Tion vs. ?irector of Patents, this
Court uneEuivocally said that -Celdura- and -Cordura- are
confusinly similar in soundH this Court held in 4apolin Co. vs.
,almaceda, =& Phil. &%$ that the name -(usolin- is an
infrinement of the trademar! -4apolin-, as the sound of the two
names is almost the same. ;)mphasis supplied<
Certainl", -,i *ac- and -,i *a!- for hamburers create even reater
confusion, not only aurally but also visually.
Indeed, a person cannot distinuish -,i *ac- from -,i *a!- by their
sound. @hen one hears a -,i *ac- or -,i *a!- hamburer
advertisement over the radio, one would not !now whether the -*ac-
or -*a!- ends with a -c- or a -!.-
Petitioners9 aressive promotion of the -,i *ac- mar!, as borne by
their advertisement e&enses, has built oodwill and reputation for
such mar! ma!in it one of the easily reconi.able mar!s in the mar!et
today. Thisincreases the li!elihood that consumers will mista!enly
associate petitioners9 hamburers and business with those of
respondents9.
Respondents9 inability to eCplain suEcientl" how and why they came to
choose -,i *a!- for their hamburer sandwiches indicates their intent
to imitate petitioners9 -,i *ac- mar!. Contrary to the Court of Appeals9
+ndin, respondents9 claim that their -,i *a!- mar! was inspired by
the +rst names of respondent ?y9s mother ;*aCima< and father
;Nimsoy< is not credible. As petitioners well noted5
J6Kespondents, particularly 6espondent *r. Brancis ?y, could
have arrived at a more creative choice for a corporate name by
usin the names of his parents, especially since he was alleedly
driven by sentimental reasons. Bor one, he could have put his
father9s name ahead of his mother9s, as is usually done in this
patriarchal society, and derived letters from said names in that
order. "r, he could have ta!en an eEualnumber o$ letters ;i.e.,
two< from each name, as is the more usual thin done. 4urely,
the more plausible reason behind 6espondents9 choice of the
word -*Ja!K-, especially when ta!en in con8unction with the
word -,JiK-, was their intent to ta!e advantae of Petitioners9
CCC -,JiK *JacK- trademar!, with their alle+edsentiment-
focused -eCplanation- merely thouht of as a
convenient, albeit unavailin, eCcuse or defense for such an
unfair choice of name.
=&
Absent proof that respondents9 adoption o$ the -,i *a!- mar! was due
to honest mista!e or was fortuitous,
=>
the inescapable conclusion is that
respondents adopted the -,i *a!- mar! to -ride on the coattails- of
the more established -,i *ac- mar!.
=%
This saves respondents much of
the eCpense in advertisin to create mar!et reconition of their mar!
and hamburers.
&'
Thus, we hold that confusion is li!ely to result in the public mind. @e
sustain petitioners9 claim of trademar! infrinement.
)n the Lack of (roof of
!ctual #onfusion
Petitioners9 failure to present proof of actual confusion does not neate
their claim of trademar! infrinement. As noted in !merican 2ire :
#able #o. v. 0irector of (atents,
&1
4ection FF re5uires the less
strinent standard of -li!elihood of confusion- only. *#ile proof
of actual confusion is the best evidence of infrinement, its absence is
inconseEuential.
&F
;n t#e Issue o$ Un$air Cometition
4ection F% ;-4ection F%-<
&0
of 6A 1== de+nes unfair competition, thus5
10:
CCCC
An" person who will employ deception or an" other means
contrary to ood faith by which he s#all pass of the oods
manufactured by him or in which he deals, or his business, or
services for those of the one havin established such oodwill,
or who s#all commit an" acts calculated to produce said
result, s#all be uilty of unfair competition, and s#all be sub8ect
to an action t#ere$or.
In articular, and without in an" way limitin the scope of unfair
competition, &'e Do11o;:$0 shall be %eeme% 0=:1&B oD =$D#:r
<om9e&:&:o$5
;a< !ny 9er8o$, ;'o :$ 8e11:$0 ':8 0oo%8 shall 0:ve &'em
&'e 0e$er#1 #99e#r#$<e oD 0oo%8 oD #$o&'er
m#$=D#<&=rer or %e#1er, e:&'er as to &'e 0oo%8
&'em8e1ve8 or in the wrappin of the pac!aes in which they
are contained, or &'e %ev:<e8 or ;or%8 &'ereo$, or
in an" feature of their appearance, which would be li!ely to
inPuence purchasers to believe that the oods ofered are those
of a manufacturer or dealer, ot#er t#an the actual manufacturer
or dealer, or who otherwise clothes the oods with such
appearance as s#all deceive the public and defraud another of
his leitimate trade, or an"subseEuent vendor of such oods
or an" aent of an" vendor enaed in sellin such oods with a
li!e purposeH
;b< An" person who by an" arti+ce, or device, or who emlo"s
an" other means calculated to induce the false belief that such
person is oferin the services of another who has identi+ed
such services in the mind of the publicH or
;c< An" person who s#all ma!e an" false statement in t#e course
o$ trade or who s#all commit an" other act contrary to ood faith
of a nature calculated to discredit the oods, business or
services of another. ;)mphasis supplied<
The essential elements o$ an action for unfair competition are ;1<
confusin similarity in the eneral appearance of the oods, and ;F<
intent to deceive the public and defraud a competitor.
&:
The confusin
similarity may or may not result from similarity in the mar!s, but may
result from other eCternal factors in t#e pac!ain or presentation
o$ the oods. The intent to deceive and defraud may be inferred from
the similarity of the appearance of the oods as ofered for sale to the
public.
&$
Actual fraudulent intent need not be shown.
&=
3nfair competition is broader than trademar! infrinement and includes
passin of oods with or without trademar! infrinement. Trademar!
infrinement is a form of unfair competition.
&&
Trademar! infrinement
constitutes unfair competition when there is not merely li!elihood of
confusion, but also actual or probable deception on the public because
of the eneral appearance of the oods. There can be trademar!
infrinement without unfair competition as when the infriner discloses
on the labels containin the mar! that he manufactures the oods, thus
preventin the public from bein deceived that the oods oriinate
from the trademar! owner.
&>
To support their claim of unfair competition, petitioners allee that
respondents fraudulently passed of their hamburers as -,i *ac-
hamburers. Petitioners add that respondents9 fraudulent intent can be
inferred from the similarity of the mar!s in Euestion.
&%
Passin of ;or palmin of< ta!es place where the defendant, by
imitative devices on the eneral appearance of the oods, misleads
prospective purchasers into buyin his merchandise under the
impression that they are buyin that of his competitors.
>'
T#us, the
defendant ives his oods the eneral appearance of the oods of his
competitor with the intention of deceivin the public that the oods are
those of his competitor.
The 6TC described the respective mar!s and the oods of petitioners
and respondents in this wise5
The mar! -,JiK *JacK- is used by plaintif *c?onald9s to identify
its double dec!er hamburer sandwich. The pac!ain material
is a styrofoam boC with the *c?onald9s loo and trademar! in
red with bloc! capital letters printed on it. All letters of the -,JiK
*JacK- mar! are also in red and bloc! capital letters. ;n t#e
ot#er #and% defendants9 -,JiK *Ja!K- script print is in orane
with only the letter -,- and -*- bein capitali.ed and the
pac!ain material is plastic wrapper. CCCC Burther, plaintifs9
loo and mascot are the umbrella -*- and -6onald
*c?onald9s-, resectivel", compared to the mascot of defendant
Corporation which is a chubby boy called -*ac!y- displayed or
printed between the words -,i- and -*a!.-
>1
;)mphasis
supplied<
6espondents point to these dissimilarities as proof that they did not
ive their hamburers the eneral appearance of petitioners9 -,i *ac-
hamburers.
10$
The dissimilarities in the pac!ain are minor compared to the 8&#r3
8:m:1#r:&:e8 :$ &'e ;or%8 that ive respondents9 -,i *a!-
hamburers the eneral appearance of petitioners9 -,i *ac-
hamburers. 4ection F%;a< eCpressly provides that the similarity in the
eneral appearance of the oods may be in the -devices or words- used
on the wrappins. 6espondents have applied on their plastic wrappers
and bas almost the 8#me ;or%8that petitioners use on their
styrofoam boC. @hat attracts the attention of the buyin public are the
words -,i *a!- which are almost the same, aurally and visually, as the
words -,i *ac.- The dissimilarities in the material and other devices
are insini+cant compared to the larin similarity in the words used in
the wrappins.
4ection F%;a< also provides that the defendant ives -his oods the
eneral appearance of oods of another manufacturer.- 6espondents9
oods are hamburers which are also the oods of petitioners. If
respondents sold e sandwiches only instead o$ hamburer
sandwiches, their use of the -,i *a!- mar! would not ive their oods
the eneral appearance of petitioners9 -,i *ac- hamburers. In such
case, there is only trademar! infrinement but no unfair
competition. Jowever, since respondents chose to apply the -,i *a!-
mar! on hamburers, 8ust li!e petitioner9s use of the -,i *ac- mar! on
hamburers, respondents have obviousl" clothed their oods with the
eneral appearance of petitioners9 oods.
*oreover, there is no notice to the public that the -,i *a!-
hamburers are products of -(.C. ,i *a! ,urer, Inc.- 6espondents
introduced durin the trial plastic wrappers and bas with the words
-(.C. ,i *a! ,urer, Inc.- to inform the public of the name of the seller
of the hamburers. Jowever, petitioners introduced durin the
in8unctive hearins plastic wrappers and bas with the -,i *a!-
mar! ;:&'o=& the name -(.C. ,i *a! ,urer, Inc.- 6espondents9
belated presentation of plastic wrappers and bas bearin the name of
-(.C. ,i *a! ,urer, Inc.- as the seller of the hamburers is an after-
thouht desined to eCculpate them from their unfair business conduct.
As earlier stated, we cannot consider respondents9 evidence since
petitioners9 complaint was based on facts eCistin before and durin the
in8unctive hearins.
T#us, there is actuall" no notice to the public that the -,i *a!-
hamburers are products of -(.C. ,i *a! ,urer, Inc.- and not those of
petitioners who have the eCclusive riht to the -,i *ac- mar!. This
clearly shows respondents9 intent to deceive the public. Aad
respondents9 placed a notice on their plastic wrappers and bas that
the hamburers are sold by -(.C. ,i *a! ,urer, Inc.-, then they could
validly claim that they did not intend to deceive the public. In such
case, there is only trademar! infrinement but no unfair
competition.
>F
6espondents, however, did not ive such notice. @e hold
that as found by the 6TC, respondent corporation is liable for unfair
competition.
T#e Remedies Available to ,etitioners
3nder 4ection F0
>0
;-4ection F0-< in relation to 4ection F% of 6A 1==, a
plaintif who successfully maintains trademar! infrinement and unfair
competition claims is entitled to in8unctive and monetary reliefs. Aere,
the 6TC did not err in issuin the in8unctive writ of 1= Auust 1%%'
;made permanent in its ?ecision of $ 4eptember 1%%:< and in orderin
the payment of P:'',''' actual damaes in favor of petitioners. The
in8unctive writ is indispensable to prevent further acts of infrinement
by respondent corporation. Also% the amount of actual damaes is a
reasonable percentae ;11.%Y< of respondent corporation9s ross sales
for three ;1%>>-1%>% and 1%%1< of the siC years ;1%>:-1%%'<
respondents have used the -,i *a!- mar!.
>:
The 6TC also did not err in awardin eCemplary damaes by way of
correction for the public ood
>$
in view o$ the +ndin of unfair
competition where intent to deceive the public is essential. The award
of attorney9s fees and eCpenses of litiation is also in order.
>=
FH!R!OR!, we GRANT the instant petition. @e 4)T A4I?) the
?ecision dated F= 1ovember 1%%% of the Court of Appeals and its
6esolution dated 11 #uly F''' and 6)I14TAT) the ?ecision dated $
4eptember 1%%: of the 6eional Trial Court of *a!ati, ,ranch 10&,
+ndin respondent (.C. ,i *a! ,urer, Inc. liable for trademar!
infrinement and unfair competition.
SO ORD!R!D.
)0.G.R. No. 154*4) J=1B 14, )004
MIGHT6 CORPORATION #$% "A CAMPANA ABRICA D! TABACO,
INC., petitioner,
vs.
!. N J. GA""O FIN!R6 #$% TH! ANDR!SONS GROUP,
INC., respondents.
? ) C I 4 I " 1
10=
CORONA, J.7
In this petition for review on certiorari under 6ule :$, petitioners *ihty
Corporation and (a Campana Babrica de Tabaco, Inc. ;(a Campana<
see! to annul, reverse and set aside5 ;a< the 1ovember 1$, F''1
decision
1
of the Court of Appeals ;CA< in CA-I.6. CL 1o. =$1&$ aDrmin
the 1ovember F=, 1%%> decision,
F
as modi+ed by the #une F:, 1%%%
order,
0
of the 6eional Trial Court of *a!ati City, ,ranch $& ;*a!ati 6TC<
in Civil Case 1o. %0->$', which held petitioners liable for, and
permanently en8oined them from, committin trademar! infrinement
and unfair competition, and which ordered them to pay damaes to
respondents ). / #. Iallo @inery ;Iallo @inery< and The Andresons
Iroup, Inc. ;Andresons<H ;b< the #uly 11, F''F CA resolution denyin
their motion for reconsideration
:
and ;c< the aforesaid *a!ati 6TC
decision itself.
I.
T'e #<&=#1 B#<30ro=$%
6espondent Iallo @inery is a forein corporation not doin business in
the Philippines but orani.ed and eCistin under the laws of the 4tate of
California, 3nited 4tates of America ;3.4.<, where all its wineries are
located. Iallo @inery produces diferent !inds of wines and brandy
products and sells them in many countries under diferent reistered
trademar!s, includin the IA((" and )61)4T / #3(I" IA((" wine
trademar!s.
6espondent domestic corporation, Andresons, has been Iallo @inerySs
eCclusive wine importer and distributor in the Philippines since 1%%1,
sellin these products in its own name and for its own account.
$
Iallo @inerySs IA((" wine trademar! was reistered in the principal
reister of the Philippine Patent "Dce ;now Intellectual Property "Dce<
on 1ovember 1=, 1%&1 under Certi+cate of 6eistration 1o. 1&'F1
which was renewed on 1ovember 1=, 1%%1 for another F' years.
=
Iallo
@inery also applied for reistration of its )61)4T / #3(I" IA((" wine
trademar! on "ctober 11, 1%%' under Application 4erial 1o. %'1'11-
'''&0$%%-P1 but the records do not disclose if it was ever approved by
the ?irector of Patents.
&
"n the other hand, petitioners *ihty Corporation and (a Campana and
their sister company, Tobacco Industries of the Philippines ;Tobacco
Industries<, are enaed in the cultivation, manufacture, distribution
and sale of tobacco products for which they have been usin the IA(("
ciarette trademar! since 1%&0.
>
The ,ureau of Internal 6evenue ;,I6< approved Tobacco IndustriesS use
of IA((" 1''Ss ciarette mar! on 4eptember 1:, 1%&0 and IA((" +lter
ciarette mar! on *arch F=, 1%&=, both for the manufacture and sale of
its ciarette products. In 1%&=, Tobacco Industries +led its
manufacturerSs sworn statement as basis for ,I6Ss collection of speci+c
taC on IA((" ciarettes.
%
"n Bebruary $, 1%&:, Tobacco Industries applied for, but eventually did
not pursue, the reistration of the IA((" ciarette trademar! in the
principal reister of the then Philippine Patent "Dce.
1'
In *ay 1%>:, Tobacco Industries assined the IA((" ciarette
trademar! to (a Campana which, on #uly 1=, 1%>$, applied for
trademar! reistration in the Philippine Patent "Dce(
11
"n #uly 1&,
1%>$, the 1ational (ibrary issued Certi+cate of Copyriht 6eistration
1o. $>0: for (a CampanaSs lifetime copyriht claim over IA(("
ciarette labels.
1F
4ubseEuently, (a Campana authori.ed *ihty Corporation to
manufacture and sell ciarettes bearin the IA((" trademar!.
10
,I6
approved *ihty CorporationSs use of IA((" 1''Ss ciarette brand,
under licensin areement with Tobacco Industries, on *ay 1>, 1%>>,
and IA((" 4P)CIA( *)1TA"( 1''Ss ciarette brand on April 0, 1%>%.
1:
Petitioners claim that IA((" ciarettes have been sold in the
Philippines since 1%&0, initially by Tobacco Industries, then by (a
Campana and +nally by *ihty Corporation.
1$
"n the other hand, althouh the IA((" wine trademar! was reistered
in the Philippines in 1%&1, respondents claim that they +rst introduced
and sold the IA((" and )61)4T / #3(I" IA((" wines in the
Philippines circa1%&: within the then 3.4. military facilities only. ,y
1%&%, they had eCpanded their Philippine mar!et throuh authori.ed
distributors and independent outlets.
1=
6espondents claim that they +rst learned about the eCistence of IA(("
ciarettes in the latter part of 1%%F when an Andresons employee saw
such ciarettes on display with IA((" wines in a ?avao supermar!et
wine cellar section.
1&
Borthwith, respondents sent a demand letter to
petitioners as!in them to stop usin the IA((" trademar!, to no avail.
10&
II.
T'e "e0#1 D:89=&e
"n *arch 1F, 1%%0, respondents sued petitioners in the *a!ati 6TC for
trademar! and tradename infrinement and unfair competition, with a
prayer for damaes and preliminary in8unction.
6espondents chared petitioners with violatin Article =
bis
of the Paris
Convention for the Protection of Industrial Property ;Paris
Convention<
1>
and 6A 1== ;Trademar! (aw<,
1%
speci+cally, 4ections FF
and F0 ;for trademar! infrinement<,
F'
F% and 0'
F1
;for unfair
competition and false desination of oriin< and 0& ;for tradename
infrinement<.
FF
They claimed that petitioners adopted the IA(("
trademar! to ride on Iallo @inerySs IA((" and )61)4T / #3(I" IA(("
trademar!sS established reputation and popularity, thus causin
confusion, deception and mista!e on the part of the purchasin public
who had always associated IA((" and )61)4T / #3(I" IA(("
trademar!s with Iallo @inerySs wines. 6espondents prayed for the
issuance of a writ of preliminary in8unction and e& arte restrainin
order, plus PF million as actual and compensatory damaes, at
least P$'',''' as eCemplary and moral damaes, and at
least P$'',''' as attorneySs fees and litiation eCpenses.
F0
In their answer, petitioners alleed, amon other aDrmative defenses,
that5 petitionerSs IA((" ciarettes and Iallo @inerySs wines were
totally unrelated productsH Iallo @inerySs IA((" trademar! reistration
certi+cate covered wines only, not ciarettesH IA((" ciarettes and
IA((" wines were sold throuh diferent channels of tradeH IA(("
ciarettes, sold at P:.=' for IA((" +lters and P0 for IA((" menthols,
were low-cost items compared to Iallo @inerySs hih-priced luCury
wines which cost between P%> to PF:F.$'H the taret mar!et of Iallo
@inerySs wines was the middle or hih-income brac!et with at
least P1',''' monthly income while IA((" ciarette buyers were
farmers, +shermen, laborers and other low-income wor!ersH the
dominant feature of the IA((" ciarette mar! was the rooster device
with the manufacturerSs name clearly indicated as *IIAT2
C"6P"6ATI"1 while, in the case of Iallo @inerySs wines, it was the full
names of the founders-owners )61)4T / #3(I" IA((" or 8ust their
surname IA(("H by their inaction and conduct, respondents were uilty
of laches and estoppelH and petitioners acted with honesty, 8ustice and
ood faith in the eCercise of their riht to manufacture and sell IA(("
ciarettes.
In an order dated April F1, 1%%0,
F:
the *a!ati 6TC denied, for lac! of
merit, respondentSs prayer for the issuance of a writ of preliminary
in8unction,
F$
holdin that respondentSs IA((" trademar! reistration
certi+cate covered wines only, that respondentsS wines and petitionersS
ciarettes were not related oods and respondents failed to prove
material damae or reat irreparable in8ury as reEuired by 4ection $,
6ule $> of the 6ules of Court.
F=
"n Auust 1%, 1%%0, the *a!ati 6TC denied, for lac! of merit,
respondentsS motion for reconsideration. The court reiterated that
respondentsS wines and petitionersS ciarettes were not related oods
since the li!elihood of deception and confusion on the part of the
consumin public was very remote. The trial court emphasi.ed that it
could not rely on forein rulins cited by respondents -because theJseK
cases were decided by forein courts on the basis of un!nown facts
peculiar to each case or upon factual surroundins which may eCist only
within their 8urisdiction. *oreover, there JwasK no showin that Jthese
cases hadK been tested or found applicable in our 8urisdiction.-
F&
"n Bebruary F', 1%%$, the CA li!ewise dismissed respondentsS petition
for review on certiorari, doc!eted as CA-I.6. 1o. 0F=F=, thereby
aDrmin the *a!ati 6TCSs denial of the application for issuance of a writ
of preliminary in8unction aainst petitioners.
F>
After trial on the merits, however, the *a!ati 6TC, on 1ovember F=,
1%%>, held petitioners liable for, and permanently en8oined them from,
committin trademar! infrinement and unfair competition with respect
to the IA((" trademar!5
@A)6)B"6), 8udment is rendered in favor of the plaintif ;sic<
and aainst the defendant ;sic<, to wit5
a. permanently restrainin and en8oinin defendants,
their distributors, trade outlets, and all persons actin for
them or under their instructions, from ;i< usin ) / #Ss
reistered trademar! IA((" or any other reproduction,
counterfeit, copy or colorable imitation of said trademar!,
either sinly or in con8unction with other words, desins
or emblems and other acts of similar nature, and ;ii<
committin other acts of unfair competition aainst
plaintifs by manufacturin and sellin their ciarettes in
the domestic or eCport mar!ets under the IA(("
trademar!.
b. orderin defendants to pay plaintifs W
;i< actual and compensatory damaes for the
in8ury and pre8udice and impairment of plaintifsS
10>
business and oodwill as a result of the acts and
conduct pleaded as basis for this suit, in an
amount eEual to 1'Y of B"36T))1 *I((I"1 T@"
A31?6)? TAI6T2 BIL) TA"34A1? P)4"4
;PAP1:,F0$,'''.''< from the +lin of the
complaint until fully paidH
;ii< eCemplary damaes in the amount of
PAP1'','''.''H
;iii< attorneySs fees and eCpenses of litiation in
the amount of PAP1,10','=>.%1H
;iv< the cost of suit.
4" "6?)6)?.-
F%
"n #une F:, 1%%%, the *a!ati 6TC ranted respondentSs motion for
partial reconsideration and increased the award of actual and
compensatory damaes to 1'Y of P1%%,F%',''' or P1%,%F%,'''.
0'
"n appeal, the CA aDrmed the *a!ati 6TC decision and subseEuently
denied petitionerSs motion for reconsideration.
III.
T'e I88=e8
Petitioners now see! relief from this Court contendin that the CA did
not follow prevailin laws and 8urisprudence when it held that5 JaK 6A
>F%0 ;Intellectual Property Code of the Philippines JIP CodeK< was
applicable in this caseH JbK IA((" ciarettes and IA((" wines were
identical, similar or related oods for the reason alone that they were
purportedly forms of viceH JcK both oods passed throuh the same
channels of trade and JdK petitioners were liable for trademar!
infrinement, unfair competition and damaes.
01
6espondents, on the other hand, assert that this petition which invo!es
6ule :$ does not involve pure Euestions of law, and hence, must be
dismissed outriht.
IG.
D:8<=88:o$
TH! !OC!PTIONA" CIRCUMSTANC!S
IN THIS CAS! OB"IG! TH! COURT TO R!GI!F
TH! CAUS ACTUA" INDINGS
As a eneral rule, a petition for review on certiorari under 6ule :$ must
raise only -Euestions of law-
0F
;that is, the doubt pertains to the
application and interpretation of law to a certain set of facts< and not
-Euestions of fact- ;where the doubt concerns the truth or falsehood of
alleed facts<,
00
otherwise, the petition will be denied. @e are not a trier
of facts and the Court of AppealsS factual +ndins are enerally
conclusive upon us.
0:
This case involves Euestions of fact which are directly related and
intertwined with Euestions of law. The resolution of the factual issues
concernin the oodsS similarity, identity, relation, channels of trade,
and acts of trademar! infrinement and unfair competition is reatly
dependent on the interpretation of applicable laws. The controversy
here is not simply the identity or similarity of both partiesS trademar!s
but whether or not infrinement or unfair competition was committed, a
conclusion based on statutory interpretation. Burthermore, one or more
of the followin eCceptional circumstances oblie us to review the
evidence on record5
0$
;1< the conclusion is rounded entirely on speculation, surmises,
and con8ecturesH
;F< the inference of the Court of Appeals from its +ndins of fact
is manifestly mista!en, absurd and impossibleH
;0< there is rave abuse of discretionH
;:< the 8udment is based on a misapprehension of factsH
;$< the appellate court, in ma!in its +ndins, went beyond the
issues of the case, and the same are contrary to the admissions
of both the appellant and the appelleeH
;=< the +ndins are without citation of speci+c evidence on which
they are basedH
;&< the facts set forth in the petition as well as in the petitioner9s
main and reply briefs are not disputed by the respondentsH and
10%
;>< the +ndins of fact of the Court of Appeals are premised on
the absence of evidence and are contradicted Jby the evidenceK
on record.
0=
In this liht, after thorouhly eCaminin the evidence on record,
weihin, analy.in and balancin all factors to determine whether
trademar! infrinement andQor unfair competition has been committed,
we conclude that both the Court of Appeals and the trial court veered
away from the law and well-settled 8urisprudence.
Thus, we ive due course to the petition.
TH! TRAD!MAR5 "AF AND TH! PARIS
CONG!NTION AR! TH! APP"ICAB"! "AFS,
NOT TH! INT!""!CTUA" PROP!RT6 COD!
@e note that respondents sued petitioners on *arch 1F, 1%%0 for
trademar! infrinement and unfair competition committed durin the
efectivity of the Paris Convention and the Trademar! (aw.
2et, in the *a!ati 6TC decision of 1ovember F=, 1%%>, petitioners were
held liable not only under the aforesaid overnin laws but also under
the IP Code which too! efect only on #anuary 1, 1%%>,
0&
or about +ve
years after the +lin of the complaint5
?efendantsS unauthori.ed use of the IA((" trademar!
constitutes trademar! infrinement pursuant to 4ection FF of
6epublic Act 1o. 1==, Se<&:o$ 155 oD &'e IP Co%e, Article
=
bis
of the Paris Convention, and Article 1= ;1< of the T6IP4
Areement as it causes confusion, deception and mista!e on the
part of the purchasin public.
0>
;)mphasis and underscorin
supplied<
The CA apparently did not notice the error and aDrmed the *a!ati 6TC
decision5
In the liht of its +ndin that appellantsS use of the IA(("
trademar! on its ciarettes is li!ely to create confusion with the
IA((" trademar! on wines previously reistered and used in the
Philippines by appellee ) / # Iallo @inery, the &r:#1 <o=r& &'=8
%:% $o& err :$ 'o1%:$0 &'#& #99e11#$&8U #<&8 not
only v:o1#&e%the provisions of the our trademar! laws ;6.A. 1o.
1== and R.A. No8. .sic / 8)9*/ but also Article =
bis
of the Paris
Convention.
0%
;)mphasis and underscorin supplied<
@e therefore hold that the courts a 5uo erred in retroactively applyin
the IP Code in this case.
It is a fundamental principle that the validity and obliatory force of a
law proceed from the fact that it has +rst been promulated. A law that
is not yet efective cannot be considered as conclusively !nown by the
populace. To ma!e a law bindin even before it ta!es efect may lead to
the arbitrary eCercise of the leislative power.
:'
<ova constitutio $uturis
$ormam imonere debet non raeteritis( A new state of the law ouht to
afect the future, not the past. Any doubt must enerally be resolved
aainst the retroactive operation of laws, whether these are oriinal
enactments, amendments or repeals.
:1
There are only a few instances
when laws may be iven retroactive efect,
:F
none of which is present in
this case.
The IP Code, repealin the Trademar! (aw,
:0
was approved on #une =,
1%%&. 4ection F:1 thereof eCpressly decreed that it was to ta!e efect
only on #anuary 1, 1%%>, without any provision for retroactive
application. Thus, the *a!ati 6TC and the CA should have limited the
consideration of the present case within the parameters of the
Trademar! (aw and the Paris Convention, the laws in force at the time
of the +lin of the complaint.
DISTINCTIONS B!TF!!N
TRAD!MAR5 INRING!M!NT
AND UNAIR COMP!TITION
Althouh the laws on trademar! infrinement and unfair competition
have a common conception at their root, that is, a person shall not be
permitted to misrepresent his oods or his business as the oods or
business of another, the law on unfair competition is broader and more
inclusive than the law on trademar! infrinement. The latter is more
limited but it reconi.es a more eCclusive riht derived from the
trademar! adoption and reistration by the person whose oods or
business is +rst associated with it. The law on trademar!s is thus a
speciali.ed sub8ect distinct from the law on unfair competition, althouh
the two sub8ects are entwined with each other and are dealt with
toether in the Trademar! (aw ;now, both are covered by the IP Code<.
Aence, even if one fails to establish his eCclusive property riht to a
trademar!, he may still obtain relief on the round of his competitorSs
unfairness or fraud. Conduct constitutes unfair competition if the efect
is to pass of on the public the oods of one man as the oods of
another. It is not necessary that any particular means should be used to
this end.
::
1:'
In Del 3onte Cororation vs( Court o$ Aeals%
:$
we distinuished
trademar! infrinement from unfair competition5
;1< Infrinement of trademar! is the unauthori.ed use of a
trademar!, whereas unfair competition is the passin of of one9s
oods as those of another.
;F< In infrinement of trademar! fraudulent intent is
unnecessary, whereas in unfair competition fraudulent intent is
essential.
;0< In infrinement of trademar! the prior reistration of the
trademar! is a prereEuisite to the action, whereas in unfair
competition reistration is not necessary.
Per&:$e$& Prov:8:o$8 o$ Tr#%em#r3
I$Dr:$0eme$& =$%er &'e P#r:8
Co$ve$&:o$ #$% &'e Tr#%em#r3 "#;
Article =
bis
of the Paris Convention,
:=
an international areement bindin
on the Philippines and the 3nited 4tates ;Iallo @inerySs country of
domicile and oriin< prohibits -the JreistrationK or use of a trademar!
which constitutes a reproduction, imitation or translation, liable to
create confusion, of a mar! considered by the competent authority of
the country of reistration or use to be well-known in that country as
bein already the mar! of a person entitled to the bene+ts of the JParisK
Convention and used for identical or similar oods( JThis rule also
appliesK when the essential part of the mar! constitutes a reproduction
of any such well-!nown mar! or an imitation liable to
createcon$usion therewith.- There is no time limit for see!in the
prohibition of the use of mar!s used in bad faith.
:&
Thus, under Article =
bis
of the Paris Convention, the followin are the
elements of trademar! infrinement5
;a< reistration or use by another person of a trademar! which is
a reproduction, imitation or translationliable to create con$usion,
;b< of a mar! considered by the competent authority of the
country of reistration or use
:>
to be well-knownin that country
and is already the mar! of a person entitled to the bene+ts of
the Paris Convention, and
;c< such trademar! is used $or identical or similar +oods(
"n the other hand, 4ection FF of the Trademar! (aw holds a person
liable for infrinement when, amon others, he -uses without the
consent of the reistrant, any reproduction, counterfeit, copy or
colorable imitation of any reistered mar! or tradename in connection
with the sale, oferin for sale, or advertisin of any oods, business or
services or in connection with which such use is li!ely to cause
confusion or mista!e or to deceive purchasers or others as to the source
or oriin of such oods or services, or identity of such businessH or
reproduce, counterfeit, copy or colorably imitate any such mar! or
tradename and apply such reproduction, counterfeit, copy or colorable
imitation to labels, sins, prints, pac!aes, wrappers, receptacles or
advertisements intended to be used upon or in connection with such
oods, business or services.-
:%
Trademar! reistration and actual use
are material to the complainin partySs cause of action.
Corollary to this, 4ection F' of the Trademar! (aw
$'
considers the
trademar! reistration certi+cate as rima $acieevidence of the validity
of the reistration, the reistrantSs ownership and eCclusive riht to use
the trademar! in connection with the oods, business or services as
classi+ed by the ?irector of Patents
$1
and as speci+ed in the certi+cate,
sub8ect to the conditions and limitations stated therein. 4ections F and
F-A
$F
of the Trademar! (aw emphasi.e the importance of the
trademar!Ss actual use in commerce in the Philippines prior to its
reistration. In the ad8udication of trademar! rihts between
contendin parties, eEuitable principles of laches, estoppel, and
acEuiescence may be considered and applied.
$0
3nder 4ections F, F-A, %-A, F' and FF of the Trademar! (aw therefore,
the followin constitute the elements of trademar! infrinement5
;a< a trademar! actually used in commerce in the Philippines
and reistered in the principal reister of the Philippine Patent
"Dce
;b< is used by another person in connection with the sale,
oferin for sale, or advertisin of any oods, business or
services or in connection with which such use is likel" to cause
con$usion or mistake or to deceive urc#asers or others as to
the source or ori+in of such oods or services, or identit" of such
businessH or such trademar! is reproduced, counterfeited, copied
or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels,
sins, prints, pac!aes, wrappers, receptacles or advertisements
intended to be used upon or in connection with such oods,
business or services as to li!ely cause confusion or mista!e or to
deceive purchasers,
1:1
;c< the trademar! is used for identical or similar oods, and
;d< such act is done without the consent of the trademar!
reistrant or assinee.
In summary, the Paris Convention protects well-!nown trademar!s only
;to be determined by domestic authorities<, while the Trademar! (aw
protects all trademar!s, whether well-!nown or not, provided that they
have been reistered and are in actual commercial use in the
Philippines. Bollowin universal acEuiescence and comity, in case of
domestic leal disputes on any conPictin provisions between the Paris
Convention ;which is an international areement< and the Trademar!
law ;which is a municipal law< the latter will prevail.
$:
3nder both the Paris Convention and the Trademar! (aw, the protection
of a reistered trademar! is limited only to oods identical or similar to
those in respect of which such trademar! is reistered and only when
there is li!elihood of confusion. 3nder both laws, the time element in
commencin infrinement cases is material in ascertainin the
reistrantSs eCpress or implied consent to anotherSs use of its trademar!
or a colorable imitation thereof. This is why acEuiescence, estoppel or
laches may defeat the reistrantSs otherwise valid cause of action.
Aence, proof of all the elements of trademar! infrinement is a
condition precedent to any +ndin of liability.
TH! ACTUA" COMM!RCIA" US! IN TH!
PHI"IPPIN!S O GA""O CIGAR!TT!
TRAD!MAR5 PR!C!D!D THAT O
GA""O FIN! TRAD!MAR5.
,y respondentsS own 8udicial admission, the IA((" wine trademar! was
reistered in the Philippines in 1ovember 1%&1 but the wine itself was
+rst mar!eted and sold in the country only in 1%&: and only within the
former 3.4. military facilities, and outside thereof, only in 1%&%. To
prove commercial use of the IA((" wine trademar! in the Philippines,
respondents presented sales invoice no. F%%%1 dated #uly %, 1%>1
addressed to Conrad Company Inc., *a!ati, Philippines and sales
invoice no. >$%F= dated *arch FF, 1%%= addressed to Andresons
Ilobal, Inc., Oue.on City, Philippines. ,oth invoices were for the sale
and shipment of IA((" wines to the Philippines durin that
period.
$$
1othin at all, however, was presented to evidence the alleed
sales of IA((" wines in the Philippines in 1%&: or, for that matter, prior
to #uly %, 1%>1.
"n the other hand, by testimonial evidence supported by the ,I6
authori.ation letters, forms and manufacturerSs sworn statement, it
appears that petitioners and its predecessor-in-interest, Tobacco
Industries, have indeed been usin and sellin IA((" ciarettes in the
Philippines since 1%&0 or before #uly %, 1%>1.
$=
In Emerald 4arment 3anu$acturin+ Cororation vs( Court o$
Aeals%
$&
we reiterated our rulins in ,a+asa Industrial Cororation vs(
Court o$ Aeals%
$>
Converse Rubber Cororation vs( Universal Rubber
,roducts% Inc(%
$%
Sterlin+ ,roducts International% Inc( vs( )arben$abriken
:a"er Aktien+esellsc#a$t%
='
Iabus#i Iais#a Isetan vs( Intermediate
Aellate Court%
=1
and ,#ili 3orris vs( Court o$ Aeals%
=F
ivin utmost
importance to the#<&=#1 <ommer<:#1 =8e of a trademar! in the
Philippines prior to its reistration, notwithstandin the provisions of the
Paris Convention5
CCC CCC CCC
In addition to the foreoin, we are constrained to aree with
petitioner9s contention that 9r:v#&e re89o$%e$& D#:1e% &o
9rove 9r:or #<&=#1 <ommer<:#1 =8e oD :&8 4"!!4 &r#%em#r3
:$ &'e P':1:99:$e8 beDore @1:$0 :&8 #991:<#&:o$ Dor
re0:8&r#&:o$ ;:&' &'e BPTTT #$% 'e$<e, '#8 $o& #<E=:re%
o;$er8':9 over 8#:% m#r3.
A<&=#1 =8e :$ <ommer<e :$ &'e P':1:99:$e8 :8 #$ e88e$&:#1
9rereE=:8:&e Dor &'e #<E=:8:&:o$ oD o;$er8':9 over #
&r#%em#r3 pursuant to 4ec. F and F-A of the Philippine
Trademar! (aw ;6.A. 1o. 1==< C C C
CCC CCC CCC
T'e 9rov:8:o$8 oD &'e 19+5 P#r:8 Co$ve$&:o$ for the
Protection of Industrial Property relied upon by private
respondent and 4ec. F1-A of the Trademar! (aw ;6.A. 1o. 1==<
were suDciently eCpounded upon and E=#1:@e% :$ &'e re<e$&
<#8e oD (hilip 5orris, "nc. v. #ourt of !ppeals ;FF: 4C6A
$&= J1%%0K<5
CCC CCC CCC
Bollowin universal acEuiescence and comity, o=r
m=$:<:9#1 1#; o$ &r#%em#r38 re0#r%:$0 &'e
reE=:reme$& oD #<&=#1 =8e :$ &'e P':1:99:$e8 m=8&
8=bor%:$#&e #$ :$&er$#&:o$#1 #0reeme$& :$#8m=<'
1:F
#8 &'e #99#re$& <1#8' :8 be:$0 %e<:%e% bB #
m=$:<:9#1 &r:b=$#1 ;*ortisen vs. Peters, Ireat ,ritain,
Aih Court of #udiciary of 4cotland, 1%'=, > 4essions, %0H
Paras, International (aw and @orld "rani.ation, 1%&1
)d., p. F'<. @ithal, the fact that international law has
been made part of the law of the land does not by any
means imply the primacy of international law over
national law in the municipal sphere. 3nder the doctrine
of incorporation as applied in most countries, rules of
international law are iven a standin eEual, not superior,
to national leislative enactments.
CCC CCC CCC
In other words, .# Dore:0$ <or9or#&:o$/ m#B '#ve &'e
<#9#<:&B &o 8=e Dor :$Dr:$0eme$& :rre89e<&:ve oD
1#<3 oD b=8:$e88 #<&:v:&B :$ &'e P':1:99:$e8 o$
#<<o=$& oD Se<&:o$ )1-A oD &'e Tr#%em#r3 "#; b=&
&'e E=e8&:o$ oD ;'e&'er &'eB '#ve #$ eC<1=8:ve
r:0'& over &'e:r 8Bmbo1 #8 &o L=8&:DB :88=#$<e oD &'e
<o$&rover8:#1 ;r:& ;:11 %e9e$% o$ #<&=#1 =8e oD
&'e:r &r#%em#r38 :$ &'e P':1:99:$e8 :$ 1:$e ;:&'
Se<&:o$8 ) #$% )-A oD &'e 8#me 1#;. It is thus
inconruous for petitioners to claim that when a forein
corporation not licensed to do business in the Philippines
+les a complaint for infrinement, the entity need not be
actually usin the trademar! in commerce in the
Philippines. 4uch a forein corporation may have the
personality to +le a suit for infrinement but it may not
necessarily be entitled to protection due to absence of
actual use of the emblem in the local mar!et.
CCC CCC CCC
U$%:89=&#b1B, 9r:v#&e re89o$%e$& :8 &'e 8e$:or
re0:8&r#$&, havin obtained several reistration certi+cates for
its various trademar!s -()),- -()) 6I?)64,- and -())436)4- in
both the supplemental and principal reisters, as early as 1%=%
to 1%&0. Ho;ever, re0:8&r#&:o$ #1o$e ;:11 $o& 8=M<e.
I$ +terling (roducts "nternational, "nc. v. ;arbenfabriken
4ayer !ktiengesellschaft -F& 4C6A 1F1: J1%=%KH 6eiterated
in Iabus#i Isetan vs( Intermediate Aellate Court ;F'0 4C6A
$>0 J1%%1K< we declared5
CCC CCC CCC
A rule widely accepted and +rmly entrenched because it
has come down throuh the years is that#<&=#1 =8e :$
<ommer<e or b=8:$e88 :8 # 9rereE=:8:&e :$ &'e
#<E=:8:&:o$ oD &'e r:0'& oD o;$er8':9 over #
&r#%em#r3.
CCC CCC CCC
The credibility placed on a certi+cate of reistration of one9s
trademar!, or its weiht as evidence of validity, ownership and
eCclusive use, is Euali+ed. A re0:8&r#&:o$ <er&:@<#&e 8erve8
mere1B #8 prima facieev:%e$<e. I& :8 $o& <o$<1=8:ve b=&
<#$ #$% m#B be reb=&&e% bB <o$&rover&:$0 ev:%e$<e.
CCC CCC CCC
In the case at bench, however, we reverse the +ndins of the
?irector of Patents and the Court of Appeals.AD&er #
me&:<=1o=8 8&=%B oD &'e re<or%8, ;e ob8erve &'#& &'e
D:re<&or oD P#&e$&8 #$% &'e Co=r& oD A99e#18 re1:e%
m#:$1B o$ &'e re0:8&r#&:o$ <er&:@<#&e8 #8 9rooD oD =8e bB
9r:v#&e re89o$%e$& oD &'e &r#%em#r3 4"!!4 ;':<', #8 ;e
'#ve 9rev:o=81B %:8<=88e% #re $o& 8=M<:e$&. Fe <#$$o&
0:ve <re%e$<e &o 9r:v#&e re89o$%e$&?8 <1#:m &'#& :&8 4"!!4
m#r3 @r8& re#<'e% &'e P':1:99:$e8 :$ &'e 19+0?8 &'ro=0'
1o<#1 8#1e8 bB &'e Po8& !C<'#$0e8 oD &'e U.S. M:1:&#rB
B#8e8 :$ &'e P':1:99:$e8 .Ro11o, 9. 1,,/ b#8e% #8 :& ;#8
8o1e1B o$ &'e 8e1D-8erv:$0 8&#&eme$&8 oD Mr. !%;#r%
Po8&e, Ge$er#1 M#$#0er oD "ee .P':18./, I$<., # ;'o11B
o;$e% 8=b8:%:#rB oD &'e H.D. "ee, Co., I$<., U.S.A., 'ere:$
9r:v#&e re89o$%e$&. .Or:0:$#1 Re<or%8, 9. 5)/ S:m:1#r1B,
;e 0:ve 1:&&1e ;e:0'& &o &'e $=mero=8 vo=<'er8
re9re8e$&:$0 v#r:o=8 #%ver&:8:$0 eC9e$8e8 :$ &'e
P':1:99:$e8 Dor 4"!!4 9ro%=<&8. I& :8 ;e11 &o $o&e &'#&
&'e8e eC9e$8e8 ;ere :$<=rre% o$1B :$ 1981 #$% 198) bB
"!! .P':18./, I$<. #D&er :& e$&ere% :$&o # 1:<e$8:$0
#0reeme$& ;:&' 9r:v#&e re89o$%e$& o$ 11 M#B
1981. ;)Chibit )<
"n the other hand, 9e&:&:o$er '#8 8=M<:e$&1B 8'o;$ &'#& :&
'#8 bee$ :$ &'e b=8:$e88 oD 8e11:$0 Le#$8 #$% o&'er
0#rme$&8 #%o9&:$0 :&8 4ST6"ISTIC MR. "!!4 &r#%em#r3
8:$<e 19,5 as evidenced by appropriate sales invoices to
various stores and retailers. ;)Chibit 1-e to 1-o<
1:0
"ur rulins in ,a+asa Industrial Cor( v( Court o$ Aeals ;11>
4C6A $F= J1%>FK< and Converse Rubber Cor( v( Universal
Rubber ,roducts% Inc(% ;1:& 4C6A 1$: J1%>&K<% respectively, are
instructive5
The Trademar! (aw is very clear. It reEuires actual
commercial use of the mar! prior to its
reistration. T'ere :8 $o %:89=&e &'#& re89o$%e$&
<or9or#&:o$ ;#8 &'e @r8& re0:8&r#$&, Be& :& D#:1e% &o
D=11B 8=b8&#$&:#&e :&8 <1#:m &'#& :& =8e% :$ &r#%e or
b=8:$e88 :$ &'e P':1:99:$e8 &'e 8=bLe<& m#r3K :& %:%
$o& 9re8e$& 9rooD &o :$ve8& :& ;:&' eC<1=8:ve,
<o$&:$=o=8 #%o9&:o$ oD &'e &r#%em#r3 ;':<'
8'o=1% <o$8:8& #mo$0 o&'er8, oD <o$8:%er#b1e 8#1e8
8:$<e :&8 @r8& =8e. T'e :$vo:<e8 8=bm:&&e% bB
re89o$%e$& ;':<' ;ere %#&e% ;#B b#<3 :$ 195,
8'o; &'#& &'e >:99er8 8e$& &o &'e P':1:99:$e8 ;ere
&o be =8e% #8 48#m91e84 #$% 4oD $o <ommer<:#1
v#1=e.4 The evidence for respondent must be clear,
de+nite and free from inconsistencies. -4amples- are not
for sale and therefore, the fact of eCportin them to the
Philippines cannot be considered to be eEuivalent to the
-use- contemplated by law. 6espondent did not eCpect
income from such -samples.- There were no receipts to
establish sale, and no proof were presented to show that
they were subseEuently sold in the Philippines.
CCC CCC CCC
or 1#<3 oD #%eE=#&e 9rooD oD #<&=#1 =8e oD :&8 &r#%em#r3
:$ &'e P':1:99:$e8 9r:or &o 9e&:&:o$er?8 =8e oD :&8 o;$
m#r3 #$% Dor D#:1=re &o e8&#b1:8' <o$D=8:$0 8:m:1#r:&B
be&;ee$ 8#:% &r#%em#r38, 9r:v#&e re89o$%e$&?8 #<&:o$ Dor
:$Dr:$0eme$& m=8& $e<e88#r:1B D#:1. ;)mphasis supplied.<
In view of the foreoin 8urisprudence and respondentsS 8udicial
admission that the actual commercial use of the IA((" wine trademar!
was subse5uent to its reistration in 1%&1 and to Tobacco IndustriesS
commercial use of the IA((" ciarette trademar! in 1%&0, we rule that,
on this account, respondents never en8oyed the eCclusive riht to use
the IA((" wine trademar! to the pre8udice of Tobacco Industries and its
successors-in-interest, herein petitioners, either under the Trademar!
(aw or the Paris Convention.
Re89o$%e$&8U GA""O &r#%em#r3
re0:8&r#&:o$ :8 1:m:&e% &o ;:$e8 o$1B
@e also note that the IA((" trademar! reistration certi+cates in the
Philippines and in other countries eCpressly state that they cover wines
onl", without any evidence or indication that reistrant Iallo @inery
eCpanded or intended to eCpand its business to ciarettes.
=0
Thus, by strict application of 4ection F' of the Trademar! (aw, Iallo
@inerySs eCclusive riht to use the IA((" trademar! should be limited
to wines, the only product indicated in its reistration certi+cates. This
strict statutory limitation on the eCclusive riht to use trademar!s was
amply clari+ed in our rulin in )aber+e% Inc( vs( Intermediate Aellate
Court5
=:
Aavin thus reviewed the laws applicable to the case before 3s,
it is not diDcult to discern from the foreoin statutory
enactments that private respondent may be permitted to
reister the trademar! -,63T)- for briefs produced by it
notwithstandin petitioner9s vehement protestations of unfair
dealins in mar!etin its own set of items which are limited to5
after-shave lotion, shavin cream, deodorant, talcum powder
and toilet soap. I$#8m=<' #8 9e&:&:o$er '#8 $o& ve$&=re% :$
&'e 9ro%=<&:o$ oD br:eD8, #$ :&em ;':<' :8 $o& 1:8&e% :$ :&8
<er&:@<#&e oD re0:8&r#&:o$, 9e&:&:o$er <#$$o& #$% 8'o=1%
$o& be #11o;e% &o De:0$ &'#& 9r:v#&e re89o$%e$& '#%
:$v#%e% 9e&:&:o$er?8 eC<1=8:ve %om#:$. To be sure, it is
sini+cant that petitioner failed to anneC in its ,rief the so-called
-eloEuent proof that petitioner indeed intended to eCpand its
mar! V,63TS to other oods- ;Pae F&, ,rief for the PetitionerH
pae F'F, 6ollo<. )ven then, a mere application by petitioner in
this aspect does not suDce and may not vest an eCclusive riht
in its favor that can ordinarily be protected by the Trademar!
(aw. In short, 9#r#9'r#8:$0 Se<&:o$ )0 oD &'e Tr#%em#r3
"#; #8 #991:e% &o &'e %o<=me$&#rB ev:%e$<e #%%=<e% bB
9e&:&:o$er, &'e <er&:@<#&e oD re0:8&r#&:o$ :88=e% bB &'e
D:re<&or oD P#&e$&8 <#$ <o$Der =9o$ 9e&:&:o$er &'e
eC<1=8:ve r:0'& &o =8e :&8 o;$ 8Bmbo1 o$1B &o &'o8e 0oo%8
89e<:@e% :$ &'e <er&:@<#&e, sub8ect to any conditions and
limitations stated therein. This basic point is perhaps the
unwritten r#&:o$#1e oD J=8&:<e !8<o1:$ :$(hilippine /efning
#o., "nc. vs. -g +am ;11$ 4C6A :&F J1%>FK<, when he stressed
the principle enunciated by the 3nited 4tates 4upreme Court
in American )oundries vs( Robertson ;F=% 3.4. 0&F, 0>1, &' ( ed
01&, := 4ct. 1='< &'#& o$e ;'o '#8 #%o9&e% #$% =8e% #
&r#%em#r3 o$ ':8 0oo%8 %oe8 $o& 9reve$& &'e #%o9&:o$
#$% =8e oD &'e 8#me &r#%em#r3 bB o&'er8 Dor 9ro%=<&8
;':<' #re oD # %:Aere$& %e8<r:9&:o$. Lerily, this Court had
the occasion to observe in the 1%== case of 4eor+e *( 'u$t Co(%
Inc( vs( <+o 4uan ;1> 4C6A %:: J1%==K< that no serious
1::
ob8ection was posed by the petitioner therein since the applicant
utili.ed the emblem -Tano- for no other product than hair
pomade in which petitioner does not deal.
This brins 3s bac! to the incidental issue raised by petitioner
which private respondent souht to belie as reards petitioner9s
alleed eCpansion of its business. It may be recalled that
petitioner claimed that it has a pendin application for
reistration of the emblem -,63T 00- for briefs ;pae F$, ,rief
for the PetitionerH pae F'F, 6ollo< to impress upon 3s the
4olomonic wisdom imparted by #ustice #,( 6eyes in +ta. !na
vs. 5aliwat ;F: 4C6A 1'1> J1%=>K<, &o &'e eAe<& &'#&
%:88:m:1#r:&B oD 0oo%8 ;:11 $o& 9re<1=%e re1:eD :D &'e L=$:or
=8er?8 0oo%8 #re $o& remo&e Drom #$B o&'er 9ro%=<&
;':<' &'e @r8& =8er ;o=1% be 1:3e1B &o m#3e or
8e11 ;vide% at pae 1'F$<. Commentin on the former provision
of the Trademar! (aw now embodied substantially under 4ection
:;d< of 6epublic Act 1o. 1==, as amended, the erudite 8urist
opined that the law in point -does not reEuire that the articles of
manufacture of the previous user and late user of the mar!
should possess the same descriptive properties or should fall
into the same cateories as to bar the latter from reisterin his
mar! in the principal reister.- ;sura at pae 1'F=<.
6e&, :& :8 eE=#11B &r=e &'#& #8 #Dore8#:%, &'e 9ro&e<&:ve
m#$&1e oD &'e Tr#%em#r3 "#; eC&e$%8 o$1B &o &'e 0oo%8
=8e% bB &'e @r8& =8er #8 89e<:@e% :$ &'e <er&:@<#&e oD
re0:8&r#&:o$ Do11o;:$0 &'e <1e#r me88#0e <o$veBe% bB
Se<&:o$ )0.
Ho; %o Fe $o; re<o$<:1e &'e #99#re$& <o$V:<& be&;ee$
Se<&:o$ 4.%/ ;':<' ;#8 re1:e% =9o$ bB J=8&:<e JB" ReBe8
:$ &'e +ta. !na <#8e #$% Se<&:o$ )0W I& ;o=1% 8eem &'#&
Se<&:o$ 4.%/ %oe8 $o& reE=:re &'#& &'e 0oo%8
m#$=D#<&=re% bB &'e 8e<o$% =8er be re1#&e% &o &'e 0oo%8
9ro%=<e% bB &'e 8e$:or =8er ;':1e Se<&:o$ )0 1:m:&8 &'e
eC<1=8:ve r:0'& oD &'e 8e$:or =8er o$1B &o &'o8e 0oo%8
89e<:@e% :$ &'e <er&:@<#&e oD re0:8&r#&:o$. ,ut the rule has
been laid down that the clause which comes later shall be iven
paramount sini+cance over an anterior roviso upon the
presumption that it eCpresses the latest and dominant
purpose. -4ra#am ,aer Co( vs( <ational <ewsaers Asso( ;*o.
App.< 1%0 4.@. 1''0H :arnett vs( 3erc#antCs '( Ins( Co(% >& "!l.
:FH State e& nel Att"( 4en( vs( Toledo% G0 1.)., p. 1'=1H cited
by 3artin, 4tatutory Construction 4iCth ed., 1%>' 6eprinted, p.
1::<. It ineluctably follows &'#& Se<&:o$ )0 :8 <o$&ro11:$0 #$%,
&'ereDore, 9r:v#&e re89o$%e$& <#$ #99ro9r:#&e :&8 8Bmbo1
Dor &'e br:eD8 :& m#$=D#<&=re8 be<#=8e #8 #9&1B rem#r3e%
bB J=8&:<e S#$<'e> :$ +terling (roducts "nternational "nc.
vs. ;arbenfabriken 4ayer ;F& 4C6A 1F1: J1%=%K<5
4Re#11B, :D &'e <er&:@<#&e oD re0:8&r#&:o$ ;ere &o be
%eeme% #8 :$<1=%:$0 0oo%8 $o& 89e<:@e% &'ere:$,
&'e$ # 8:&=#&:o$ m#B #r:8e ;'erebB #$ #991:<#$&
m#B be &em9&e% &o re0:8&er # &r#%em#r3 o$ #$B
#$% #11 0oo%8 ;':<' ':8 m:$% m#B <o$<e:ve eve$ :D
'e '#% $ever :$&e$%e% &o =8e &'e &r#%em#r3 Dor
&'e 8#:% 0oo%8. @e believe that such omnibus
reistration is not contemplated by our Trademar! (aw.-
;1FF=<.
NO "I5!"IHOOD O CONUSION, MISTA5!
OR D!C!IT AS TO TH! ID!NTIT6 OR SOURC!
O P!TITION!RSU AND R!SPOND!NTSU
GOODS OR BUSIN!SS
A crucial issue in any trademar! infrinement case is the li!elihood of
confusion, mista!e or deceit as to the identity, source or oriin of the
oods or identity of the business as a conseEuence of usin a certain
mar!. (i!elihood of confusion is admittedly a relative term, to be
determined riidly accordin to the particular ;and sometimes peculiar<
circumstances of each case. Thus, in trademar! cases, more than in
other !inds of litiation, precedents must be studied in the liht of each
particular case.
=$
There are two types of confusion in trademar! infrinement. The +rst is
-confusion of oods- when an otherwise prudent purchaser is induced
to purchase one product in the belief that he is purchasin another, in
which case defendantSs oods are then bouht as the plaintifSs and its
poor Euality rePects badly on the plaintifSs reputation. The other is
-confusion of business- wherein the oods of the parties are diferent
but the defendantSs product can reasonably ;thouh mista!enly< be
assumed to oriinate from the plaintif, thus deceivin the public into
believin that there is some connection between the plaintif and
defendant which, in fact, does not eCist.
==
In determinin the li!elihood of confusion, the Court must consider5 JaK
the resemblance between the trademar!sH JbK the similarity of the
oods to which the trademar!s are attachedH JcK the li!ely efect on the
purchaser and JdK the reistrantSs eCpress or implied consent and other
fair and eEuitable considerations.
1:$
Petitioners and respondents both use -IA(("- in the labels of their
respective ciarette and wine products. ,ut, as held in the followin
cases, the use of an identical mar! does not, by itself, lead to a leal
conclusion that there is trademar! infrinement5
;a< in Acoje 3inin+ Co(% Inc( vs( Director o$ ,atent%
=&
we ordered
the approval of Aco8e *ininSs application for reistration of the
trademar! ("T34 for its soy sauce even thouh Philippine
6e+nin Company had prior reistration and use of such
identical mar! for its edible oil which, li!e soy sauce, also
beloned to Class :&H
;b< in ,#iliine Re!nin+ Co(% Inc( vs( <+ Sam and Director o$
,atents%
=>
we upheld the Patent ?irectorSs reistration of the
same trademar! CA*IA for 1 4amSs ham under Class :&,
despite Philippine 6e+nin CompanySs prior trademar!
reistration and actual use of such mar! on its lard, butter,
coo!in oil ;all of which beloned to Class :&<, abrasive
deterents, polishin materials and soapsH
;c< in Jickok 3anu$acturin+ Co(% Inc( vs( Court o$ Aeals and
Santos 'im :un 'ion+%
=%
we dismissed Aic!o!Ss petition to cancel
private respondentSs AICN"N trademar! reistration for its
*ari!ina shoes as aainst petitionerSs earlier reistration of the
same trademar! for hand!erchiefs, briefs, belts and walletsH
;d< in S#ell Coman" o$ t#e ,#iliines vs( Court o$ Aeals%
&'
in
a minute resolution, we dismissed the petition for review for lac!
of merit and aDrmed the Patent "DceSs reistration of the
trademar! 4A)(( used in the ciarettes manufactured by
respondent Bortune Tobacco Corporation, notwithstandin 4hell
CompanySs opposition as the prior reistrant of the same
trademar! for its asoline and other petroleum productsH
;e< in Esso Standard Eastern% Inc( vs( Court o$ Aeals%
&1
we
dismissed )44"Ss complaint for trademar! infrinement aainst
3nited Ciarette Corporation and allowed the latter to use the
trademar! )44" for its ciarettes, the same trademar! used by
)44" for its petroleum products, and
;f< in Canon Iabus#iki Iais#a vs( Court o$ Aeals and <SR
Rubber Cororation%
&F
we aDrmed the rulins of the Patent
"Dce and the CA that 146 6ubber Corporation could use the
trademar! CA1"1 for its sandals ;Class F$< despite Canon
Nabushi!i NaishaSs prior reistration and use of the same
trademar! for its paints, chemical products, toner and dyestuf
;Class F<.
@hether a trademar! causes confusion and is li!ely to deceive the
public hines on -colorable imitation-
&0
which has been de+ned as -such
similarity in form, content, words, sound, meanin, special arranement
or eneral appearance of the trademar! or tradename in their overall
presentation or in their essential and substantive and distinctive parts
as would li!ely mislead or confuse persons in the ordinary course of
purchasin the enuine article.-
&:
#urisprudence has developed two tests in determinin similarity and
li!elihood of confusion in trademar! resemblance5
&$
;a< the ?ominancy Test applied in Asia ,rewery, Inc. vs. Court of
Appeals
&=
and other cases,
&&
and
;b< the Aolistic or Totality Test used in ?el *onte Corporation vs.
Court of Appeals
&>
and its precedin cases.
&%
The ?ominancy Test focuses on the similarity of the prevalent features
of the competin trademar!s which miht cause confusion or
deception, and thus infrinement. If the competin trademar! contains
the main, essential or dominant features of another, and confusion or
deception is li!ely to result, infrinement ta!es place. ?uplication or
imitation is not necessaryH nor is it necessary that the infrinin label
should suest an efort to imitate. The Euestion is whether the use of
the mar!s involved is li!ely to cause confusion or mista!e in the mind of
the public or deceive purchasers.
>'
"n the other hand, the Aolistic Test reEuires that the entirety of the
mar!s in Euestion be considered in resolvin confusin similarity.
Comparison of words is not the only determinin factor. The trademar!s
in their entirety as they appear in their respective labels or han tas
must also be considered in relation to the oods to which they are
attached. The discernin eye of the observer must focus not only on the
predominant words but also on the other features appearin in both
labels in order that he may draw his conclusion whether one is
confusinly similar to the other.
>1
In comparin the resemblance or colorable imitation of mar!s, various
factors have been considered, such as the dominant color, style, si.e,
form, meanin of letters, words, desins and emblems used, the
li!elihood of deception of the mar! or name9s tendency to confuse
>F
and
the commercial impression li!ely to be conveyed by the trademar!s if
used in con8unction with the respective oods of the parties.
>0
1:=
Applyin the ?ominancy and Aolistic Tests, we +nd that the dominant
feature of the IA((" ciarette trademar! is the device of a lare
rooster facin left, outlined in blac! aainst a old bac!round. The
roosterSs color is either reen or red W reen for IA((" menthols and
red for IA((" +lters. ?irectly below the lare rooster device is the word
IA((". The rooster device is iven prominence in the IA((" ciarette
pac!s in terms of si.e and location on the labels.
>:
The IA((" mar! appears to be a fanciful and arbitrary mar! for the
ciarettes as it has no relation at all to the product but was chosen
merely as a trademar! due to the fondness for +htin coc!s of the son
of petitionersS president. Burthermore, petitioners adopted IA((", the
4panish word for rooster, as a ciarette trademar! to appeal to one of
their taret mar!ets, the sabun+eros ;coc!+ht a!cionados<.
>$
Also, as admitted by respondents themselves,
>=
on the side of the
IA((" ciarette pac!s are the words -*A?) ,2 *IIAT2
C"6P"6ATI"1,- thus clearly informin the public as to the identity of
the manufacturer of the ciarettes.
"n the other hand, IA((" @inerySs wine and brandy labels are diverse.
In many of them, the labels are embellished with s!etches of buildins
and trees, vineyards or a bunch of rapes while in a few, one or two
small roosters facin riht or facin each other ;atop the )#I crest,
surrounded by leaves or ribbons<, with additional desins in reen, red
and yellow colors, appear as minor features thereof.
>&
?irectly below or
above these s!etches is the entire printed name of the founder-owners,
-)61)4T / #3(I" IA(("- or 8ust their surname -IA((",-
>>
which
appears in di7erent fonts, si.es, styles and labels, unli!e
petitionersS uni$orm casEue-font bold-lettered IA((" mar!.
*oreover, on the labels of Iallo @inerySs wines are printed the words
-LI1T)? A1? ,"TT()? ,2 )61)4T / #3(I" IA((", *"?)4T",
CA(IB"61IA.-
>%
T#e man" di7erent $eatures like color sc#emes% art works and ot#er
markin+s o$ bot# roducts drown out t#e similarit" between t#em T t#e
use o$ t#e word U4A'';V W a $amil" surname $or t#e 4allo *iner"Ls
wines and a Sanis# word $or rooster $or etitionersL ci+arettes(
FIN!S AND CIGAR!TT!S AR! NOT
ID!NTICA", SIMI"AR, COMP!TING OR
R!"AT!D GOODS
Confusion of oods is evident where the litiants are actually in
competitionH but confusion of business may arise between non-
competin interests as well.
%'
Thus, apart from the strict application of 4ection F' of the Trademar!
(aw and Article =
bis
of the Paris Convention which proscribe trademar!
infrinement not only of oods speci+ed in the certi+cate of reistration
but also of identical or similar oods, we have also uniformly reconi.ed
and applied the modern concept of -related oods.-
%1
4imply stated,
when oods are so related that the public may be, or is actually,
deceived and misled that they come from the same ma!er or
manufacturer, trademar! infrinement occurs.
%F
1on-competin oods may be those which, thouh they are not in
actual competition, are so related to each other that it can reasonably
be assumed that they oriinate from one manufacturer, in which case,
confusion of business can arise out of the use of similar mar!s.
%0
They
may also be those which, bein entirely unrelated, cannot be assumed
to have a common sourceH hence, there is no confusion of business,
even thouh similar mar!s are used.
%:
Thus, there is no trademar!
infrinement if the public does not eCpect the plaintif to ma!e or sell
the same class of oods as those made or sold by the defendant.
%$
In resolvin whether oods are related,
%=
several factors come into play5
;a< the business ;and its location< to which the oods belon
;b< the class of product to which the oods belon
;c< the product9s Euality, Euantity, or si.e, includin the nature of the
pac!ae, wrapper or container
%&
;d< the nature and cost of the articles
%>
;e< the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, teCture or
Euality
;f< the purpose of the oods
%%
;< whether the article is bouht for immediate consumption,
1''
that is,
day-to-day household items
1'1
;h< the +elds of manufacture
1'F
1:&
;i< the conditions under which the article is usually purchased
1'0
and
;8< the channels of trade throuh which the oods Pow,
1':
how they are
distributed, mar!eted, displayed and sold.
1'$
The wisdom of this approach is its reconition that each trademar!
infrinement case presents its own uniEue set of facts. 1o sinle factor
is preeminent, nor can the presence or absence of one determine,
without analysis of the others, the outcome of an infrinement suit.
6ather, the court is reEuired to sift the evidence relevant to each of the
criteria. This reEuires that the entire panoply of elements constitutin
the relevant factual landscape be comprehensively eCamined.
1'=
It is a
weihin and balancin process. @ith reference to this ultimate
Euestion, and from a balancin of the determinations reached on all of
the factors, a conclusion is reached whether the parties have a riht to
the relief souht.
1'&
A very important circumstance thouh is whether there eCists a
li!elihood that an appreciable number of ordinarily prudent purchasers
will be misled, or simply confused, as to the source of the oods in
Euestion.
1'>
The -purchaser- is not the -completely unwary consumer-
but is the -ordinarily intellient buyer- considerin the type of product
involved.
1'%
Ae is -accustomed to buy, and therefore to some eCtent
familiar with, the oods in Euestion. The test of fraudulent simulation is
to be found in the li!elihood of the deception of some persons in some
measure acEuainted with an established desin and desirous of
purchasin the commodity with which that desin has been associated.
The test is not found in the deception, or the possibility of deception, of
the person who !nows nothin about the desin which has been
counterfeited, and who must be indiferent between that and the other.
The simulation, in order to be ob8ectionable, must be such as appears
li!ely to mislead the ordinary intellient buyer who has a need to supply
and is familiar with the article that he see!s to purchase.-
11'
Aence, in the ad8udication of trademar! infrinement, we ive due
reard to the oodsS usual purchaserSs character, attitude, habits, ae,
trainin and education.
111
Applyin these leal precepts to the present case, petitionerSs use of
the IA((" ciarette trademar! is not li!ely to cause confusion or
mista!e, or to deceive the -ordinarily intellient buyer- of either wines
or ciarettes or both as to the identity of the oods, their source and
oriin, or identity of the business of petitioners and respondents.
"bviously, wines and ciarettes are not identical or competin
products. 1either do they belon to the same class of oods.
6espondentsS IA((" wines belon to Class 00 under 6ule >:JaK Chapter
III, Part II of the 6ules of Practice in Trademar! Cases while petitionersS
IA((" ciarettes fall under Class 0:.
@e are mindful that product classi+cation alone cannot serve as the
decisive factor in the resolution of whether or not wines and ciarettes
are related oods. )mphasis should be on the similarity of the products
involved and not on the arbitrary classi+cation or eneral description of
their properties or characteristics. ,ut the mere fact that one person
has adopted and used a particular trademar! for his oods does not
prevent the adoption and use of the same trademar! by others on
articles of a diferent description.
11F
,oth the *a!ati 6TC and the CA held that wines and ciarettes are
related products because5 ;1< -they are related forms of vice, harmful
when ta!en in eCcess, and used for pleasure and relaCation- and ;F<
-they are rouped or classi+ed in the same section of supermar!ets and
roceries.-
@e +nd these premises patently insuDcient and too arbitrary to support
the leal conclusion that wines and ciarettes are related products
within the contemplation of the Trademar! (aw and the Paris
Convention.
Birst, anythin W- not only wines and ciarettes b can be used for
pleasure and relaCation and can be harmful when ta!en in eCcess.
Indeed, it would be a rave abuse of discretion to treat wines and
ciarettes as similar or related products li!ely to cause confusion 8ust
because they are pleasure-ivin, relaCin or potentially harmful. 4uch
reasonin ma!es no sense.
4econd, it is common !nowlede that supermar!ets sell an in+nite
variety of wholly unrelated products and the oods here involved, wines
and ciarettes, have nothin whatsoever in common with respect to
their essential characteristics, Euality, Euantity, si.e, includin the
nature of their pac!aes, wrappers or containers.
110
Accordinly, the 3.4. patent oDce and courts have consistently held
that the mere fact that oods are sold in one store under the same roof
does not automatically mean that buyers are li!ely to be confused as to
the oodsS respective sources, connections or sponsorships. The fact
that diferent products are available in the same store is an insuDcient
standard, in and of itself, to warrant a +ndin of li!elihood of
confusion.
11:
1:>
In this reard, we adopted the ?irector of PatentsS +ndin in ,#iliine
Re!nin+ Co(% Inc( vs( <+ Sam and t#e Director o$ ,atents5
11$
In his decision, the ?irector of Patents enumerated the factors
that set respondentSs products apart from the oods of
petitioner. Ae opined and we Euote5
-I have ta!en into account such factors as probable
purchaser attitude and habits, mar!etin activities, retail
outlets, and commercial impression li!ely to be conveyed
by the trademar!s if used in con8unction with the
respective oods of the parties, I be1:eve &'#& '#m o$
o$e '#$%, #$% 1#r%, b=&&er, o:1, #$% 8o#9 o$ &'e
o&'er #re 9ro%=<&8 &'#& ;o=1% $o& move :$ &'e
8#me m#$$er &'ro=0' &'e 8#me <'#$$e18 oD &r#%e.
T'eB 9er&#:$ &o =$re1#&e% @e1%8 oD m#$=D#<&=re,
m:0'& be %:8&r:b=&e% #$% m#r3e&e% =$%er
%:88:m:1#r <o$%:&:o$8, #$% #re %:891#Be% 8e9#r#&e1B
eve$ &'o=0' &'eB DreE=e$&1B m#B be 8o1% &'ro=0'
&'e 8#me re&#:1 Doo% e8&#b1:8'me$&8."pposerSs
products are ordinary day-to-day household items
whereas ham is not necessarily so. Thus, the oods of the
parties are not of a character which purchasers would
li!ely attribute to a common oriin.
The observations and conclusion of the ?irector of Patents are
correct. The particular oods of the parties are so unrelated that
consumers, would not, in any probability mista!e one as the
source of oriin of the product of the other. ;)mphasis supplied<.
The same is true in the present case. @ines and ciarettes are non-
competin and are totally unrelated products not li!ely to cause
confusion vis-X-vis the oods or the business of the petitioners and
respondents.
@ines are bottled and consumed by drin!in while ciarettes are
pac!ed in cartons or pac!aes and smo!ed. There is a whale of a
diference between their descriptive properties, physical attributes or
essential characteristics li!e form, composition, teCture and Euality.
IA((" ciarettes are ineCpensive items while IA((" wines are not.
IA((" wines are patroni.ed by middle-to-hih-income earners while
IA((" ciarettes appeal only to simple fol!s li!e farmers, +shermen,
laborers and other low-income wor!ers.
11=
Indeed, the bi price
diference of these two products is an important factor in provin that
they are in fact unrelated and that they travel in diferent channels of
trade. There is a distinct price sementation based on vastly diferent
social classes of purchasers.
11&
IA((" ciarettes and IA((" wines are not sold throuh the same
channels of trade. IA((" ciarettes are Philippine-made and petitioners
neither claim nor pass of their oods as imported or emanatin from
Iallo @inery. IA((" ciarettes are distributed, mar!eted and sold
throuh ambulant and sidewal! vendors, small localsari-sari stores and
rocery stores in Philippine rural areas, mainly in *isamis "riental,
Panasinan, ,ohol, and Cebu.
11>
"n the other hand, IA((" wines are
imported, distributed and sold in the Philippines throuh Iallo @inerySs
eCclusive contracts with a domestic entity, which is currently
Andresons. ,y respondentsS own testimonial evidence, IA((" wines are
sold in hotels, eCpensive bars and restaurants, and hih-end rocery
stores and supermar!ets, not throuh sari-sari stores or ambulant
vendors.
11%
Burthermore, the *a!ati 6TC and the CA erred in relyin on Carlin+
:rewin+ Coman" vs( ,#ili 3orris% Inc(
1F'
to support its +ndin that
IA((" wines and IA((" ciarettes are related oods. The courts a
5uo should have ta!en into consideration the subseEuent case of IDD
<ort# America% Inc( and R 9 A :aile" Co( 'imited vs( S 9 3 :rands%
Inc(8
1F1
I?L correctly ac!nowledes, however, that there is no er
se rule that the use of the same mar! on alcohol and tobacco
products always will result in a li!elihood of confusion.
1onetheless, I?L relies heavily on the decision in Jo#n *alker 9
Sons% 'td( vs( Tama Ci+ar Co(% 1F: B. 4upp. F$:, F$= ;4.?. Bla.
1%$:<, a7Ld%FFF B. Fd :=' ;$
th
Cir. 1%$$<, wherein the court
en8oined the use of the mar! -#"A11I) @A(N)6- on ciars
because the fame of the plaintifSs mar! for scotch whis!ey and
because the plaintif advertised its scotch whis!ey on, or in
connection with tobacco products. T'e <o=r&, :$ John 2alker
: +ons, 91#<e% 0re#& 8:0$:@<#$<e o$ &'e @$%:$0 &'#& &'e
:$Dr:$0er8 =8e ;#8 # %e1:ber#&e #&&em9& &o <#9:&#1:>e o$
&'e 8e$:or m#r38U D#me. "d. A& )5+. IDG #18o re1:e8
o$ #arling 4rewing #o. v. (hilip 5orris, "nc., )9, . S=99.
1**0, 1**8 .N.D. G#. 19+8/, :$ ;':<' &'e <o=r& e$Lo:$e%
&'e %eDe$%#$&U8 =8e oD &'e m#r3 4B"AC5 "AB!"4 Dor
<:0#re&&e8 be<#=8e :& ;#8 1:3e1B &o <#=8e <o$D=8:o$ ;:&'
&'e 91#:$&:AU8 ;e11-3$o;$ m#r3 4B"AC5 "AB!"4 Dor beer.
CCC CCC CCC
1:%
T'o8e %e<:8:o$8, 'o;ever, m=8& be <o$8:%ere% :$
9er89e<&:ve oD &'e 9r:$<:91e &'#& &ob#<<o 9ro%=<&8 #$%
#1<o'o1 9ro%=<&8 8'o=1% be <o$8:%ere% re1#&e% o$1B :$
<#8e8 :$vo1v:$0 89e<:#1 <:r<=m8&#$<e8. +chenley
0istillers, "nc. v. 8eneral #igar #o., 5,C.C.P.A. 1)1*, 4),
. )% ,8*, ,85 .19,0/. T'e 9re8e$<e oD 89e<:#1
<:r<=m8&#$<e8 '#8 bee$ Do=$% &o eC:8& ;'ere &'ere :8 #
@$%:$0 oD =$D#:r <om9e&:&:o$ or ;'ere # XD#mo=8U or
X;e11-3$o;$ m#r3U :8 :$vo1ve% and &'ere :8 #
%emo$8&r#&e% :$&e$& &o <#9:&#1:>e o$ &'#& m#r3. Bor
eCample, in Jo#n *alker 9 Sons% the court was persuaded to +nd
a relationship between products, and hence a li!elihood of
confusion, because of the plaintifSs lon use and eCtensive
advertisin of its mar! and placed reat emphasis on the fact
that the defendant used the trademar! V#ohnnie @al!er with full
!nowlede of its fame and reputation and with the intention of
ta!in advantae thereof.S Jo#n *alker 9 Sons% 1F: B. 4upp. At
F$=H see 3ckesson 9 Robbins% Inc( v( ,( 'orillard Co(% 1%$% @(
$>%:, 1F' 3.4.P.O. 0'=, 0'& ;1%$%< ;holdin that the decision
inJo#n *alker 9 Sons was Vmerely the law on the particular case
based upon its own peculiar factsS<H see also Al$red Dun#ill% 0$'
B. 4upp. At 10=0 ;defendantSs adoption of V?unhillS mar! was not
innocent<. Aowever, inSc#enle"% the court noted that the relation
between tobacco and whis!ey products is sini+cant where a
widely !nown arbitrary mar! has lon been used for diversi+ed
products emanatin from a sinle source and a newcomer see!s
to use the same mar! on unrelated oods. Sc#enle"% :F& B.Fd. at
&>$. 4ini+cantly, in Sc#enle"% the court loo!ed at the industry
practice and the facts of the case in order to determine the
nature and eCtent of the relationship between the mar! on the
tobacco product and the mar! on the alcohol product.
The record here establishes conclusively that I?L has never
advertised ,AI()24 liEueurs in con8unction with tobacco or
tobacco accessory products and that I?L has no intent to do so.
And, unli!e the defendant in Dun#ill% 4 / * ,rands does not
mar!et bar accessories, or liEueur related products, with its
ciarettes. The advertisin and promotional materials presented
a trial in this action demonstrate a complete lac! of aDliation
between the tobacco and liEueur products bearin the mar!s
here at issue.
CCC CCC CCC
"f eEual sini+cance, it is undisputed that 4 / * ,rands had no
intent, by adoptin the family nameY:aile"LsL as the mar! for its
ciarettes, to capitali.e upon the fame of the V,AI()24S mar! for
liEueurs. See Sc#enle"% OG1 )( Gd at 1?>( Moreover, #8 ;:11 be
%:8<=88e% be1o;, #$% #8 Do=$% :$ 5ckesson :
/obbins, &'e 8=rveB ev:%e$<e reD=&e8 &'e <o$&e$&:o$ &'#&
<:0#re&&e8 #$% #1<o'o1:< bever#0e8 #re 8o :$&:m#&e1B
#88o<:#&e% :$ &'e 9=b1:< m:$% &'#& &'eB <#$$o& =$%er #$B
<:r<=m8&#$<e8 be 8o1% =$%er &'e 8#me m#r3 ;:&'o=&
<#=8:$0 <o$D=8:o$. +ee 5ckesson : /obbins, <=> ,.+.(.3.
at ?>@.
Ta!en as a whole, the evidence here demonstrates the absence
of the Vspecial circumstancesS in which courts have found a
relationship between tobacco and alcohol products suDcient to
tip the similarity of oods analysis in favor of the protected mar!
and aainst the alleedly infrinin mar!. I& :8 &r=e &'#&
BAI"!6S 1:E=e=r, &'e ;or1%U8 be8& 8e11:$0 1:E=e=r #$% &'e
8e<o$% be8& 8e11:$0 :$ &'e U$:&e% S&#&e8, :8 # ;e11-3$o;$
9ro%=<&. T'#& D#<& #1o$e, 'o;ever, :8 :$8=M<:e$& &o
:$vo3e &'e 89e<:#1 <:r<=m8&#$<e8 <o$$e<&:o$ 'ere ;'ere
8o m=<' o&'er ev:%e$<e #$% 8o m#$B o&'er D#<&or8
%:89rove # 1:3e1:'oo% oD <o$D=8:o$. T'e 8:m:1#r:&B oD
9ro%=<&8 #$#1B8:8, &'ereDore, #=0er8 #0#:$8& @$%:$0 &'#&
&'ere :8 # 1:3e1:'oo% oD <o$D=8:o$. ;)mphasis supplied<.
In short, tobacco and alcohol products may be considered related only
in cases involvin secial circumstancesw#ic# e&ist onl" i$ a $amous
mark is involved and t#ere is a demonstrated intent to caitalize on it.
,oth of these are absent in the present case.
TH! GA""O FIN! TRAD!MAR5 IS NOT A
F!""-5NOFN MAR5 IN TH! CONT!OT
O TH! PARIS CONG!NTION IN THIS CAS!
SINC! FIN!S AND CIGAR!TT!S AR! NOT
ID!NTICA" OR SIMI"AR GOODS
Birst, the records bear out that most of the trademar! reistrations too!
place in the late 1%>'s and the 1%%'s, that is, after Tobacco IndustriesS
use of the IA((" ciarette trademar! in 1%&0 and petitionersS use of
the same mar! in 1%>:.
IA((" wines and IA((" ciarettes are neither the same, identical,
similar nor related oods, a re5uisite elementunder both the Trademar!
(aw and the Paris Convention.
4econd, the IA((" trademar! cannot be considered a stron and
distinct mar! in the Philippines. 6espondents do not dispute the
1$'
documentary evidence that aside from Iallo @inerySs IA((" trademar!
reistration, the ,ureau of Patents, Trademar!s and Technoloy Transfer
also issued on 4eptember :, 1%%F Certi+cate of 6eistration 1o. $00$=
under the Principal 6eister approvin ,roductos Alimenticios 4allo%
S(ALs April 1%, 1%%' application for IA((" trademar! reistration and
use for its -noodles, prepared food or canned noodles, ready or canned
sauces for noodles, semolina, wheat Pour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, ba!in powder,
salt, mustard, vinear, species and ice.-
1FF
T#ird and most imortant% ursuant to our rulin+ in Canon Iabus#iki
Iais#a vs( Court o$ Aeals and <SR Rubber Cororation%
1F0
K4A'';K
cannot be considered a Kwell-knownK mark wit#in t#e contemlation
and rotection o$ t#e ,aris Convention in t#is case since wines and
ci+arettes are not identical or similar +oods8
@e aree with public respondents that the controllin doctrine
with respect to the applicability of Article > of the Paris
Convention is that established in Iabus#i Iais#a Isetan vs(
Intermediate Aellate Court ;F'0 4C6A $% J1%%1K<( As pointed
out by the ,PTTT5
4Re0#r%:$0 &'e #991:<#b:1:&B oD Ar&:<1e 8 oD &'e
P#r:8 Co$ve$&:o$, &':8 OM<e be1:eve8 &'#& &'ere :8
$o #=&om#&:< 9ro&e<&:o$ #Aor%e% #$ e$&:&B ;'o8e
&r#%e$#me :8 #11e0e% &o '#ve bee$ :$Dr:$0e%
&'ro=0' &'e =8e oD &'#& $#me as a trademark bB #
1o<#1 e$&:&B.
In Iabus#iki Iais#a Isetan vs( T#e Intermediate Aellate
Court% et( al(% 4(R( <o( 1>OGP% .> <ovember .//.% the
Aonorable 4upreme Court held that5
XT'e P#r:8 Co$ve$&:o$ Dor &'e Pro&e<&:o$ oD
I$%=8&r:#1 Pro9er&B %oe8 $o& #=&om#&:<#11B
eC<1=%e #11 <o=$&r:e8 oD &'e ;or1% ;':<'
'#ve 8:0$e% :& Drom =8:$0 # &r#%e$#me
;':<' '#99e$8 &o be =8e% :$ o$e <o=$&rB. To
:11=8&r#&e R :D # &#C:<#b or b=8 <om9#$B :$ #
&o;$ :$ &'e U$:&e% 5:$0%om or I$%:#
'#99e$8 &o =8e &'e &r#%e$#me XR#9:%
Tr#$89or&#&:o$,U :& %oe8 $o& $e<e88#r:1B
Do11o; &'#& XR#9:%U <#$ $o 1o$0er be
re0:8&ere% :$ U0#$%#, :L:, or &'e P':1:99:$e8.
This oDce is not unmindful that in ;sic< the Treaty of Paris
for the Protection of Intellectual Property reardin well-
!nown mar!s and possible application thereof in this
case. Petitioner, as this oDce sees it, is tryin to see!
refue under its protective mantle, claimin that the
sub8ect mar! is well !nown in this country at the time the
then application of 146 6ubber was +led.
Aowever, the then *inister of Trade and Industry, the
Aon. 6oberto L. "npin, issued a memorandum dated F$
"ctober 1%>0 to the ?irector of Patents, # 8e& oD
0=:%e1:$e8 :$ &'e :m91eme$&#&:o$ oD Ar&:<1e +
b:8
oD
&'e Tre#&B oD P#r:8. T'e8e <o$%:&:o$8 #re7
a< the mar! must be internationally !nownH
b< the sub8ect of the riht must be a trademar!,
not a patent or copyriht or anythin elseH
c< the mar! must be for use in the same
or 8:m:1#r 3:$%8 oD 0oo%8K and
d< the person claimin must be the owner of the
mar! -T#e ,arties Convention Commentar" on t#e
,aris Convention( Article b" Dr( :o+sc#% Director
4eneral o$ t#e *orld Intellectual ,roert"
;r+anization% 4eneva% Switzerland% ./?>2L
Brom the set of facts found in the records, it is ruled that
the Pe&:&:o$er D#:1e% &o <om91B ;:&' &'e &':r%
reE=:reme$& oD &'e 8#:% memor#$%=m &'#& :8 &'e
m#r3 m=8& be Dor =8e :$ &'e 8#me or 8:m:1#r 3:$%8
oD 0oo%8. T'e Pe&:&:o$er :8 =8:$0 &'e m#r3
4CANON4 Dor 9ro%=<&8 be1o$0:$0 &o <1#88 ) .9#:$&8,
<'em:<#1 9ro%=<&8/ ;':1e &'e Re89o$%e$& :8 =8:$0
&'e 8#me m#r3 Dor 8#$%#18 .<1#88 )5/.
Aence, Pe&:&:o$er?8 <o$&e$&:o$ &'#& :&8 m#r3 :8 ;e11-
3$o;$ #& &'e &:me &'e Re89o$%e$& @1e% :&8
#991:<#&:o$ Dor &'e 8#me m#r3 8'o=1%
D#:1.4 ;)mphasis supplied.<
Co$8e$& oD &'e Re0:8&r#$& #$%
O&'er #:r, J=8& #$% !E=:&#b1e
Co$8:%er#&:o$8
1$1
)ach trademar! infrinement case presents a uniEue problem which
must be answered by weihin the conPictin interests of the
litiants.
1F:
6espondents claim that IA((" wines and IA((" ciarettes Pow
throuh the same channels of trade, that is, retail trade. If respondentsS
assertion is true, then both oods co-eCisted peacefully for a
considerable period of time. It too! respondents almost F' years to
!now about the eCistence of IA((" ciarettes and sue petitioners for
trademar! infrinement. Iiven, on one hand, the lon period of time
that petitioners were enaed in the manufacture, mar!etin,
distribution and sale of IA((" ciarettes and, on the other,
respondentsS delay in enforcin their rihts ;not to mention implied
consent, acEuiescence or nelience< we hold that eEuity, 8ustice and
fairness reEuire us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than
respondents.
*oreover, there eCists no evidence that petitioners employed malice,
bad faith or fraud, or that they intended to capitali.e on respondentsS
oodwill in adoptin the IA((" mar! for their ciarettes which are
totally unrelated to respondentsS IA((" wines. Thus, we rule out
trademar! infrinement on the part of petitioners.
P!TITION!RS AR! A"SO NOT "IAB"!
OR UNAIR COMP!TITION
3nder 4ection F% of the Trademar! (aw, any person who employs
deception or any other means contrary to ood faith by which he
passes of the oods manufactured by him or in which he deals, or his
business, or services for those of the one havin established such
oodwill, or who commits any acts calculated to produce said result, is
uilty of unfair competition. It includes the followin acts5
;a< Any person, who in sellin his oods shall ive them the
eneral appearance of oods of another manufacturer or dealer,
either as to the oods themselves or in the wrappin of the
pac!aes in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which
would be li!ely to inPuence purchasers to believe that the oods
ofered are those of a manufacturer or dealer other than the
actual manufacturer or dealer, or who otherwise clothes the
oods with such appearance as shall deceive the public and
defraud another of his leitimate trade, or any subseEuent
vendor of such oods or any aent of any vendor enaed in
sellin such oods with a li!e purposeH
;b< Any person who by any arti+ce, or device, or who employs
any other means calculated to induce the false belief that such
person is oferin the services of another who has identi+ed
such services in the mind of the publicH
;c< Any person who shall ma!e any false statement in the course
of trade or who shall commit any other act contrary to ood faith
of a nature calculated to discredit the oods, business or
services of another.
The universal test Euestion is whether the public is li!ely to be
deceived. 1othin less than conduct tendin to pass of one manSs
oods or business as that of another constitutes unfair competition.
Actual or probable deception and confusion on the part of customers by
reason of defendantSs practices must always appear.
1F$
"n this score,
we +nd that petitioners never attempted to pass of their ciarettes as
those of respondents. There is no evidence of bad faith or fraud
imputable to petitioners in usin their IA((" ciarette mar!.
All told, after applyin all the tests provided by the overnin laws as
well as those reconi.ed by 8urisprudence, we conclude that petitioners
are not liable for trademar! infrinement, unfair competition or
damaes.
FH!R!OR!, +ndin the petition for review meritorious, the same is
hereby I6A1T)?. The Euestioned decision and resolution of the Court
of Appeals in CA-I.6. CL 1o. =$1&$ and the 1ovember F=, 1%%>
decision and the #une F:, 1%%% order of the 6eional Trial Court of
*a!ati, ,ranch $& in Civil Case 1o. %0->$' are hereby 6)L)64)? and
4)T A4I?) and the complaint aainst petitioners ?I4*I44)?.
Costs aainst respondents.
SO ORD!R!D.
G.R. No. 144*09 November )*, )001
SO"ID TRIANG"! SA"!S CORPORATION #$% ROB!RT
SITCHON, petitioners,
vs.
TH! SH!RI O RTC 2C, Br#$<' 9*K SAN"6 CORPORATION, !RA
RADIO AND !"!CTRICA" SUPP"6, "FT CO., INCORPORAT!DK ROD
CASTRO, GICTOR TUPA( #$% &'e P!OP"! O TH!
PHI"IPPIN!S, respondents.
1$F
5APUNAN, J.7
The petition at bar stems from two cases, 4earch @arrant Case 1o. O-
00F: ;%%< before ,ranch %0 of the Oue.on City 6eional Trial Court
;6TC<, and Civil Case 1o. O-%0-0&F'= for damaes and in8unctions
before ,ranch %1 of the same court.
The facts are set forth in the ?ecision of the Court of Appeals dated #uly
=, 1%%%5
C C C on #anuary F>, 1%%%, #ude Apolinario ?. ,ruselas, #r.,
Presidin #ude of 6TC, ,ranch %0, Oue.on City, upon application
of the )conomic Intellience and Investiation ,ureau ;)II,<,
issued 4earch @arrant 1o. 00F: ;%%< aainst 4anly Corporation
;4anly<, respondent, for violation of 4ection 1=> of 6.A. 1o. >F%0
;unfair competition<.
,y virtue of 4earch @arrant 1o. 00F: ;%%<, )II, aents sei.ed
:$1 boCes of *itsubishi photoraphic color paper from
respondent 4anly. . .
Borthwith, 4olid Trianle, throuh 6obert 4itchon, its *ar!etin
and Communication *anaer, +led with the "Dce of the City
Prosecutor, Oue.on City, an aDdavit complaint for unfair
competition aainst the members of the ,oard of 4anly and (@T
Co., Inc. ;(@T<, doc!eted as I.4. 1o. 1-%%-F>&'.
4itchon alleed that )6A 6adio and )lectrical 4upply ;)6A<,
owned and operated by (@T, is in conspiracy with 4anly in
sellin andQor distributin *itsubishi brand photo paper to the
damae and pre8udice of 4olid Trianle, Jwhich claims to be the
sole and eCclusive distributor thereof, pursuant to an areement
with the *itsubishi CorporationK.
"n Bebruary :, 1%%%, petitioner 4olid Trianle +led with #ude
,ruselas9 sala an urent e& arte motion for the transfer of
custody of the sei.ed *itsubishi photo color paper stored in the
oDce of )II,.
"n Bebruary >, 1%%%, respondents 4anly, (@T and )6A moved to
Euash the search warrant which was denied by #ude ,ruselas in
an order dated *arch $, 1%%%.
The said respondents +led a motion for reconsideration which
was ranted by #ude ,ruselas in the +rst assailed order of
*arch 1>, 1%%%. 6espondent #ude held that there is doubt
whether the act complained of ;unfair competition< is criminal in
nature.
Petitioner 4olid Trianle +led a motion for reconsideration
contendin that the Euashal of the search warrant is not proper
considerin the pendency of the preliminary investiation in I.4.
1o. 1-%%-F>&' for unfair competition wherein the sei.ed items
will be used as evidence.
"n *arch F=, 1%%%, #ude ,ruselas issued the second assailed
order denyin 4olid Trianle9s motion for reconsideration.
"n *arch F%, 1%%%, petitioner 4olid Trianle +led with ,ranch %1
of the same Court, presided by #ude (ita 4. Tolentino-Ienilo,
Civil Case 1o. O-%%-0&F'= for damaes and in8unction with
prayer for writs of preliminary in8unction and attachment.
Impleaded as defendants were 4anly, (@T and )6A.
"n *arch 0', 1%%%, the defendants +led their opposition to the
application for the issuance of writs of in8unction and
attachment.
"n *arch 01, 1%%%, #ude Ienilo denied petitioner9s application
for a preliminary attachment on the round that the application
is not supported with an aDdavit by the applicant, throuh its
authori.ed oDcer, who personally !nows the facts.
*eanwhile, on April F', 1%%%, #ude ,ruselas issued the third
assailed order, the dispositive portion of which reads5
@A)6)B"6), the foreoin premises considered, the
court directs
1< )II,, *r. 6obert 4itchon and 4olid Trianle 4ales
Corporation to divule and report to the court the eCact
location of the warehouse where the oods sub8ect of this
proceedin are presently !ept within seventy-two hours
from receipt hereofH
F< *r. 6obert 4itchon and 4olid Trianle 4ales Corporation
to appear and show cause why they should not be held in
contempt of court for failure to obey a lawful order of the
court at a hearin for the purpose on 1F *ay 1%%% at
>50' o9cloc! in the morninH
1$0
0< The ?eputy 4herif of this Court to ta!e custody of the
sei.ed oods and cause their delivery to the person from
whom the oods were sei.ed without further lost JsicK of
timeH
(et a copy of this order be served by personal service
upon *r. 6obert 4itchon and 4olid Trianle 4ales
Corporation. 4erve copies also to )II, and the
respondents 6od Castro and 4anly Corporation.
4" "6?)6)?.
1
Allein rave abuse of discretion, petitioners Euestioned before the
Court of Appeals the orders of ,ranch %0 of the Oue.on City 6TC
rantin private respondents9 motion for reconsideration and denyin
that of petitioners9, as well as the order dated April F', 1%%% directin
petitioners to, amon other thins, show cause why they should not be
held in contempt. Petitioners also assailed the order of the Oue.on City
6TC, ,ranch %1 denyin their application for a writ of attachment. 3pon
the +lin of the petition on April F=, 1%%%, the Court of Appeals issued a
temporary restrainin order to prevent #ude ,ruselas from
implementin the "rder dated April F', 1%%%.
"n #uly =, 1%%%, the Court of Appeals rendered 8udment initially
rantin certiorari. It held that the Euashin of the warrant deprived the
prosecution of vital evidence to determine probable cause.
Admittedly, the City Prosecutor of Oue.on City has +led a complaint for
unfair competition aainst private respondents and that the underoin
preliminary investiation is in proress. In the said proceedins, the
prosecution inevitably will present the sei.ed items to establish a prima
facie case of unfair competition aainst private respondents.
Considerin that #ude ,ruselas Euashed the search warrant, he
practically deprived the prosecution of its evidence so vital in
establishin the eCistence of probable cause.
Petitioners9 reliance on Dlasons Enterrises Cororation vs( Court o$
Aeals J1$$ 4C6A 1>= ;1%>&<.K is in order. Thus5
The proceedin for the sei.ure of property in virtue of a search
warrant does not end with the actual ta!in of the property by
the proper oDcers and its delivery, usually constructive, to the
court. The order for the issuance of the warrant is not a +nal one
and cannot constitute res 8udicata ;Cruz vs( Din+lasan, >0 Phil.
000<. 4uch an order does not ascertain and ad8udicate the
permanent status or character of the sei.ed property. ,y its very
nature, it is provisional, interlocutory ;3arcelo vs( de 4uzman,
11: 4C6A =$&<. It is merely the +rst step in the process to
determine the character and title of the property. That
determination is done in the criminal action involvin the crime
or crimes in connection with which the search warrant was
issued. Aence, such a criminal action should be prosecuted, or
commenced if not yet instituted, and prosecuted. The outcome
of the criminal action will dictate the disposition of the sei.ed
property.
F
The appellate court further ruled that the aDdavit of merits is not
necessary for the order of preliminary attachment to issue considerin
that the petition itself is under oath5
The denial was based on the round that the application is not
supported by an aDdavit of the applicant corporation, throuh
its authori.ed oDcer, who personally !nows the facts.
@e cannot o alon with respondent 8ude9s theory. In Consul
vs( Consul J1& 4C6A ==& ;1%%=<K, the 4upreme Court held5
ADdavit of merits has a !nown purpose5 Courts and
parties should not reEuire the machinery of 8ustice to
rind anew, if the prospects of a diferent conclusion
cannot be reasonably reached should relief from
8udment be ranted. @e loo! bac! at the facts here. The
petition for relief is veri+ed by petitioner himself. T#e
merits o$ etitionerCs case are aarent in t#e recitals o$
t#e etition( Said etition is under oat#( T#at oat#% we
believe% elevates t#e etition to t#e same cate+or" as a
searate aEdavit. To reEuire defendant to append an
aDdavit of merits to his veri+ed petition to the
circumstances, is to compel him to do the unnecessary.
Therefore, the defect pointed by the court below is one of
forms, not of substance. 6esult5 Absence of a separate
aDdavit is of de minimisimportance.
0
3pon motion by respondents, however, the Court of Appeals reversed
itself. In its -Amendatory ?ecision,- the appellate court held that there
was no probable cause for the issuance of the search warrant.
Accordinly, the evidence obtained by virtue of said warrant was
inadmissible in the preliminary investiation.
1$:
C C C 3nder 4ections 1=> and 1&' of 6.A. >F%0 ;the Intellectual
Property Code<, there is unfair competition if the alleed
ofender has iven to his oods the eneral appearance of the
oods of another manufacturer or dealer and sells or passes
them of as oods of that manufacturer or dealer in order to
deceive or defraud the eneral public or the leitimate trader.
Also, if he ma!es false statements in the course of trade to
discredit the oods, business, or services of another.
3ndisputedly, the sei.ed oods from 4anly are enuine and not
mere imitations. This is admitted by petitioners in their
application for a search warrant and supportin aDdavits,
AnneCes -A- to -?-, inclusive, in their April F&, 1%%% 4ubmission
of AnneCes to this Court. It bears stressin that there is no
showin or alleation that 4anly has presented, sold, or passed
of its photoraphic paper as oods which come from 4olid
Trianle. There is no attempt on its part to deceive.
,oth 4anly and 4olid Trianle sell enuine *itsubishi products.
4olid Trianle acEuires its oods from #apan on the basis of its
eCclusive distributorship with *itsubishi Corporation. @hile 4anly
buys its oods from Aon!on, claimin it is a parallel importer,
not an unfair competitor. As de+ned, a parallel importer is one
which imports, distributes, and sells enuine products in the
mar!et, indeendentl" o$ an e&clusive distributors#i or a+enc"
a+reement with the manufacturer. And, this is precisely what
4anly states as its commercial status.
6ecords show that 4anly sold its photoraphic paper purchased
from Aon!on without alterin its appearance. It is distributed
in the same *itsubishi boC with its loo and distinuishin mar!s
as mar!eted in #apan. The same brown paper with the *itsubishi
seal is wrapped around its products. Copies of the importation
documents and the certi+cation on imports issued by the
Philippine overnment reconi.ed 4ociete9 Ienerale9 d9
4urveillance ;4I4< were appended to the motion to Euash
search warrant.
Thus, on factual basis, the real dispute is actually between 4olid
Trianle and the manufacturer *itsubishi. If 4olid Trianle feels
arieved, it should sue *itsubishi for damaes, if at all for
breach of its distributorship. ,ut that is between them.
Certainly, there is here no probable cause to 8ustify the issuance
of a search warrant based on a criminal action for -unfair
competition.-
Therefore, since there is no probable cause for unfair
competition in this case, then the Euashal of the search warrant
by respondent #ude ,ruselas is valid. This bein the case, there
is merit in the motion for reconsideration.
In ascertainin the leality of a search warrant and the validity
of the search and sei.ure conducted by the )II, aents by virtue
of the warrant, it is essential that a crime has been committed or
is bein committed and that the thins sei.ed are fruits of the
crime or the means by which it is committed.
The validity of a search and sei.ure is of constitutional
dimensions. The riht to privacy and the sanctity of a person9s
house, papers and efects aainst unreasonable searches and
sei.ures are not only ancient. They are also .ealously protected.
CCC CCC CCC
4olid Trianle contends that the Euashal of the search warrant
deprived it of its riht to prove a rima $aciecase of unfair
competition in the preliminary investiation. @e initially areed
with it.
@hile 4olid Trianle has the riht to present every sinle piece of
evidence it can ather and muster, however, it has no riht to
prove its case throuh the use of illeally sei.ed evidence
secured in deroation of a constitutionally uaranteed riht.
The constitutional provision that any evidence obtained in
violation of the provision aainst unreasonable searches and
sei.ures -shall be inadmissible for any purpose in any
proceedin- +nds application here. The oods sei.ed without
probable cause are fruits of the poisonous tree and cannot be
used for the purpose of provin unfair competition durin
preliminary investiation proceedins.
The case of Dlasons Enterrises Cororation vs( Court o$
Aeals does not apply since it involved a diferent set of facts
and issues.
"n the contrary, it is the case of ,eole vs( Court o$
Aeals JF1= 4C6A 1'1 ;1%%F<K that overns, where the
4upreme Court ruled that with the Euashal of the search
warrant, the sei.ed oods could not be used as evidence for any
purpose, in any proceedin.
:
1$$
As reards the preliminary attachment, the appellate court found that
there was no round for the issuance of the writ because5
C C C 4anly does not deny that it sells *itsubishi photoraphic
color paper. ,ut there is no showin that it attempts to depart
from country, defraud 4olid Trianle or the buyin public,
conceal or dispose of un8ustly detained personal property, or
commit any of the acts provided in 6ule $& of the 1%%& 6ules of
Civil Procedure as rounds for the issuance of a writ of
preliminary attachment.
$
Petitioners moved for reconsideration but the same was denied by the
Court of Appeals in its 6esolution dated Auust :, F'''.
In assailin the Amendatory ?ecision of the Court of Appeals,
petitioners arue that5
I.
TA) #3?I) @A" I443)? A 4)A6CA @A66A1T TAAT AA4 A(6)A?2 ,))1
I*P()*)1T)? CA11"T O3A4A TA) @A66A1T A12*"6), AT ()A4T
@ITA"3T @AITI1I B"6 TA) BI1?I1I4 "B TA) CIT2 P6"4)C3T"6 @A"
AA4 TA) )MC(34IL) #36I4?ICTI"1 T" ?)T)6*I1) P6",A,() CA34).
II.
I1 TA) PA6A(()( I*P"6TATI"1 )BB)CT)? ,2 TA) 6)4P"1?)1T4 @ITA
?)C)IT A1? ,A? BAITA, TA)6) )MI4T4 P6",A,() CA34) TAAT TA)
C6I*) "B 31BAI6 C"*P)TITI"1 31?)6 TA) I1T)(()CT3A( P6"P)6T2
C"?) AA4 ,))1 C"**ITT)? ,2 TA) 6)4P"1?)1T4.
III.
P)TITI"1)649 APP(ICATI"1 B"6 A @6IT "B ATTACA*)1T CA11"T ,)
?)1I)? "1 TA) I6"31? TAAT A1 ABBI?ALIT "B *)6IT4 I4 1"T
APP)1?)? T" TA) C"*P(AI1T, A4 TA) C"36T "B APP)A(4 AA4
A(6)A?2 63()?, A1? "1 TA) I6"31? TAAT TA)6) I4 1"
#34TIBICATI"1 B"6 IT ,)CA34) TA) O3)4TI"14 P)6TI1)1T TA)6)T"
A6) 1"T ,)B"6) TA) C"36T "B APP)A(4 ,3T ,)B"6) TA) T6IA(
C"36T.
IL.
P)TITI"1)64 CA11"T ,) A)(? (IA,() B"6 C"1T)*PT I1 1"T
6)T361I1I TA) I""?4 43,#)CT "B TA) 4)A6CA @A66A1T
1"T@ITA4TA1?I1I TA) 6)B34A( "B TA) C"36T "B APP)A(4 T" 63()
"1 TAI4 P"I1T B36TA)6 @AICA I4 A I6I)L"34 )66"6 T" TA)
P6)#3?IC) "B TA) P)TITI"1)64.
=
Petitioners contend that the Constitution does not authori.e the 8ude
to reverse himself and Euash the warrant, -especially after oods had
been sei.ed pursuant to the search warrant, and the prosecution is
poised to push forward with the oods as evidence.-
&
In +ndin that
doubt eCists that a crime has been committed, it is arued that the
8ude -trenchJedK upon the preroative and duty of the city
prosecutor.-
>
The contention has no merit.
It is undisputed that only 8udes have the power to issue search
warrants.
%
This function is eCclusively 8udicial. Article III of the
Constitution uneEuivocally states5
4)CTI"1 F. The riht of the people to be secure in their persons,
houses, papers, and efects aainst unreasonable searches and
sei.ures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue
eCcept upon probable cause to be determined personally b" t#e
jud+e after eCamination under oath or aDrmation of the
complainant and the witnesses he may produce, and particularly
describin the place to be searched and the persons or thins to
be sei.ed. J)mphasis supplied.K
Inherent in the courts9 power to issue search warrants is the power to
Euash warrants already issued. In this connection, this Court has ruled
that the motion to Euash should be +led in the court that issued the
warrant unless a criminal case has already been instituted in another
court, in which case, the motion should be +led with the latter.
1'
The
rulin has since been incorporated in 6ule 1F= of the 6evised 6ules of
Criminal Procedure5
4)CTI"1 1:. 3otion to 5uas# a searc# warrant or to suress
evidence6 w#ere to !le. G A motion to Euash a search warrant
andQor to suppress evidence obtained thereby may be +led in
and acted upon only by the court where the action has been
instituted. If no criminal action has been instituted, the motion
may be +led in and resolved by the court that issued the search
warrant. Aowever, if such court failed to resolve the motion and
a criminal case is subseEuently +led in another court, the motion
shall be resolved by the latter court.
1$=
In the determination of probable cause, the court must necessarily
resolve whether or not an ofense eCists to 8ustify the issuance or
Euashal of the search warrant. Prior to the revision of ?ecember 1,
F''', 6ule 1F= of the 6ules of Court provided5
4)CTI"1 0. Re5uisites $or issuin+ searc# warrant. G A search
warrant shall not issue but upon probable cause in connection
with one seci!c o7ense to be determined personally by the
8ude after eCamination under oath or aDrmation of the
complainant and the witnesses he may produce, and particularly
describin the place to be searched and the thins to be sei.ed
J)mphasis supplied.K
11
1ote that probable cause is de+ned as5
. . .the eCistence of such facts and circumstances which could
lead a reasonably discreet and prudent man to believe that
an o7ense #as been committed and that the item;s<, article;s< or
ob8ect;s< souht in connection with said ofense or sub8ect to
sei.ure and destruction by law is in the place to be searched.
1F
In Iennet# Ro" Sava+e@I An+elin E&ort Tradin+ vs( Ta"in,
10
the Court
was confronted with a search warrant that was issued purportedly in
connection with unfair competition involvin desin patents. The Court
held that the alleed crime is not punishable under Article 1>% of the
6evised Penal Code, and accordinly, Euashed the search warrant
issued for the non-eCistent crime.
In the issuance of search warrants, the 6ules of Court reEuires a
+ndin of probable cause in connection with one seci!c
o7ense to be determined personally by the 8ude after
eCamination of the complainant and the witnesses he may
produce, and particularly describin the place to be searched
and the thins to be sei.ed. Aence, since there is no crime to
spea! of, the search warrant does not even bein to ful+ll these
strinent reEuirements and is therefore defective on its face. C C
C.
A preliminary investiation, by de+nition, also reEuires a +ndin by the
authori.ed oDcer of the commission of a crime. Previous to the F'''
revision, 4ection 1 of 6ule 11F of the 6ules of Court de+ned a
preliminary investiation as -an inEuiry or proceedin to determine
whether there is suDcient round to enender a well-founded belief
that a crime coni.able by the 6eional Trial Court #as been
committed and the respondent is probably uilty thereof, and should be
held for trial.99
1:
4ection F of the same 6ule enumerates who may conduct preliminary
investiations5
4)CTI"1 F. ;Ecers aut#orized to conduct reliminar"
investi+ations. G The followin may conduct preliminary
investiations5
;a< Provincial or city +scals and their assistantsH
;b< #udes of the *unicipal Trial Courts and *unicipal
Circuit Trial CourtsH
;c< 1ational and 6eional state prosecutorsH and
;d< 4uch other oDcers as may be authori.ed by law.
Their authority to conduct preliminary investiations shall
include all crimes coni.able by the proper court in their
respective territorial 8urisdictions.
1$
The determination of probable cause durin a preliminary investiation
has been described as an eCecutive function.
1=
The proceedins for the issuanceQEuashal of a search warrant before a
court on the one hand, and the preliminary investiation before an
authori.ed oDcer on the other, are proceedins entirely independent of
each other. "ne is not bound by the other9s +ndin as reards the
eCistence of a crime. The purpose of each proceedin difers from the
other. The +rst is to determine whether a warrant should issue or be
Euashed, and the second, whether an information should be +led in
court.
@hen the court, in determinin probable cause for issuin or Euashin a
search warrant, +nds that no ofense has been committed, it does not
interfere with or encroach upon the proceedins in the preliminary
investiation. The court does not oblie the investiatin oDcer not to
+le an information for the court9s rulin that no crime eCists is only for
purposes of issuin or Euashin the warrant. This does not, as
petitioners would li!e to believe, constitute a usurpation of the
eCecutive function. Indeed, to shir! from this duty would amount to an
abdication of a constitutional obliation.
The efect of the Euashal of the warrant on the round that no ofense
has been committed is to render the evidence obtained by virtue of the
1$&
warrant -inadmissible for any purpose in any proceedin,- includin the
preliminary investiation. Article III of the Constitution provides5
4)CTI"1 0. ;1< . . .
;F< Any evidence obtained in violation of this or the precedin
section J4ection FK shall be inadmissible for any purpose in any
proceedin.
It may be true that, as a result of the Euashal of the warrant, the private
complainant is deprived of vital evidence to establish his case, but such
is the inevitable conseEuence.
1evertheless, the inadmissibility of the evidence obtained throuh an
illeal warrant does not necessarily render the preliminary investiation
academic. The preliminary investiation and the +lin of the
information may still proceed if, because of other ;admissible< evidence,
there eCists -suDcient round to enender a well-founded belief that a
crime has been committed and the respondent is probably uilty
thereof, and should be held for trial.- The +ndin by the court that no
crime eCists does not preclude the authori.ed oDcer conductin the
preliminary investiation from ma!in his own determination that a
crime has been committed and that probable cause eCists for purposes
of +lin the information.
Petitioners also arue that 4ection 1:, 6ule 1F= of the 6evised 6ules of
Criminal Procedure, supra, while intended -to resolve conPicts of
responsibility between courts,- -does not eCpressly cover the situation
where the criminal complaint is pendin with the prosecutor.- In such a
case, petitioners submit, the public prosecutor should be allowed to
resolve the Euestion of whether or not probable cause eCists.
1&
The Court +nds this interpretation too contrived. 4ection 1:, 6ule 1F=
precisely covers situations li!e the one at bar. 4ection 1: eCpressly
provides that a motion to Euash a search warrant andQor to suppress
evidence obtained thereby may be +led in and acted upon only by the
court where the action has been instituted. 3nder the same section, the
court which issued the search warrant may be prevented from resolvin
a motion to Euash or suppress evidence only when a criminal case is
subseEuently +led in another court, in which case, the motion is to be
resolved by the latter court. It is therefore puerile to arue that the
court that issued the warrant cannot entertain motions to suppress
evidence while a preliminary investiation is onoin. 4uch erroneous
interpretation would place a person whose property has been sei.ed by
virtue of an invalid warrant without a remedy while the oods procured
by virtue thereof are sub8ect of a preliminary investiation
@e now turn to the Euestion of whether the facts, as presented before
the trial court, constitute an ofense.
Private respondents are alleed to have committed unfair competition
in violation of 4ection 1=> of the Intellectual Property Code, which
states5
4)CTI"1 1=>. Un$air Cometition% Ri+#ts% Re+ulation and
Remedies. G 1=>.1 A person who has identi+ed in the mind of
the public oods he manufactures or deals in, his business or
services from those of others, whether or not a reistered mar!
is employed, has a property riht in the oodwill of the said
oods, business or services so identi+ed, which will be protected
in the same manner as other property rihts.
1=>.F Any person who shall employ deception or any other
means contrary to ood faith by which he shall pass of the
oods manufactured by him or in which he deals, or his
business, or services for those of the one havin established
such oodwill, or who shall commit any acts calculated to
produce said result, shall be uilty of unfair competition, and
shall be sub8ect to an action therefor.
1=>.0 In particular, and without in any way limitin the scope of
protection aainst unfair competition, the followin shall be
deemed uilty of unfair competition5
;a< Any person, who is sellin his oods and ives them the
eneral appearance of oods of another manufacturer or dealer,
either as to the oods themselves or in the wrappin of the
pac!aes in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which
would be li!ely to inPuence purchasers to believe that the oods
ofered are those of a manufacturer or dealer, other than the
actual manufacturer or dealer, or who otherwise clothes the
oods with such appearance as shall deceive the public and
defraud another of his leitimate trade, or any subseEuent
vendor of such oods or any aent of any vendor enaed in
sellin such oods with a lie purposeH
;b< Any person who by any arti+ce, or device, or who employs
any other means calculated to induce the false belief that such
person is oferin the service of another who has identi+ed such
services in the mind of the publicH or
1$>
;c< Any person who shall ma!e any false statement in the course
of trade or who shall commit any other act contrary to ood faith
of a nature calculated to discredit the oods, business or
services of another.
1=>.: The remedies provided by 4ections 1$=, 1$& and 1=1 shall
apply mutatis mutandis.
The same law, in 4ection 1&', provides the penalty for violation of
4ection 1=>5
4)CTI"1 1&'. ,enalties. G Independent of the civil and
administrative sanctions imposed by law, a criminal penalty of
imprisonment from two ;F< years to +ve ;$< years and a +ne
ranin from Bifty thousand pesos ;$','''< to Two hundred
thousand pesos ;F'','''<, shall be imposed on any person who
is found uilty of committin any of the acts mentioned in
4ection 1$$, 4ection 1=> and 4ubsection 1=%.1.
Petitioners submit that -the importation of even enuine oods can
constitute a crime under the Intellectual Property Code so lon as fraud
or deceit is present.- The intent to deceive in this case, accordin to
petitioners, is -patent- -from the followin undisputed facts-5
;a< ,efore mar!etin its product, the respondents totally
obliterated and erased the )mulsion 1umber and Type that was
printed on the boCQcarton of the product because of which the
source of the oods can no loner be traced.
;b< 6espondents even covered the boCes with newspapers to
conceal true identity.
;c< ,ein also enaed in the sale of photo eEuipments JsicK and
havin had the occasion of participatin in the same eChibit with
petitioner 4olid Trianle several times already, respondents
certainly !new that petitioner 4olid Trianle is the sole and
eCclusive importer and distributor of *itsubishi Photo Paper.
;d< Two aents of the )II, were also able to con+rm from a
salesirl of respondents that substantial Euantity of stoc!s of
*itsubishi Photo Paper are available at respondents9 store and
that the products are enuine, as they are duly authori.ed to sell
and distribute it to interested customers.
;e< 1o better proof of unfair competition is the sei.ure of the
oods, :$1 boCes of *itsubishi photoraphic color paper.
1>
Petitioners further eCpound5
:&. @e may cateori.e the acts of the respondents as
-underround sales and mar!etin- of enuine oods,
underminin the property rihts of petitioner 4olid Trianle. The
Court of Appeals itself reconi.ed the rihts of a dealer. The acts
of the respondents were made to appropriate un8ustly the
oodwill of petitioner 4olid Trianle, and oodwill is protected by
the law on unfair competition.
:>. Petitioner 4olid Trianle has established a trade or business
in which it had acEuired oodwill and reputation that will be
protected, and so, to permit respondents to continue importin
and distributin *itsubishi Photo Paper, would be to
countenance the unlawful appropriation of the bene+t of a
oodwill which petitioner 4olid Trianle has acEuired and permit
the respondent to rab the reputation or oodwill of the business
of another.
:%. . . petitioners have a valid cause to complain aainst
respondents for the criminal violation of the Intellectual Property
(aw when the latter made it appear that they were duly
authori.ed to sell or distribute *itsubishi Photo Paper in the
Philippines, when in truth and in fact they were not, and when
they were hidin their importation from the petitioners by such
acts as removin the )mulsion 1umber and Type and coverin
the boCes with old newspapers.
1%
@e disaree with petitioners and +nd that the evidence presented
before the trial court does not prove unfair competition under 4ection
1=> of the Intellectual Property Code. 4anly Corporation did not pass of
the sub8ect oods as that of another. Indeed, it admits that the oods
are enuine *itsubishi photoraphic paper, which it purchased from a
supplier in Aon Non.
F'
Petitioners also allee that private respondents
-made it appear that they were duly authori.ed to sell or distribute
*itsubishi Photo Paper in the Philippines.- Assumin that this act
constitutes a crime, there is no proof to establish such an alleation.
@e aree with petitioners, however, that the Court of Appeals went
beyond the issues when it ruled that there were no rounds for the
issuance of an order of preliminary attachment. The only issue raised
with respect to the preliminary attachment was whether the application
for the writ should have been denied because the same was not
1$%
supported by an aDdavit of the applicant corporation, throuh its
authori.ed oDcer, who personally !nows the facts. @hether there are
suDcient rounds to 8ustify the order is a matter best left to the trial
court, which apparently has yet to hear the matter. Thus, we sustain the
Court of Appeals9 oriinal decision holdin that an aDdavit of merit is
not necessary since the petition is veri+ed by an authori.ed oDcer who
personally !nows the facts.
4imilarly premature is whether petitioners9 failure to return the oods to
respondents constituted indirect contempt. The assailed order dated
April F', 1%%% was a -show cause- order. ,efore any hearin on the
order could be held, petitioners promptly +led a petition for certiorari.
Clearly, the trial court had yet to rule on the matter, and for this Court
now to hold petitioners9 act contemptuous would preempt said court.
@A)6)B"6), the petition is I6A1T)? I1 PA6T. The Amendatory
?ecision of the Court of Appeals dated *arch 01, F''', as well as its
6esolution dated Auust :, F''', is ABBI6*)? insofar as it holds that
;1< the Oue.on City 6eional Trial Court, ,ranch %0, has the power to
determine the eCistence of a crime in Euashin a search warrant and,
;F< the evidence does not support a +ndin that the crime of unfair
competition has been committed by respondentsH and 6)L)64)?
insofar as it holds that ;1< there are no rounds to warrant the issuance
of a writ of preliminary attachment and ;F< petitioners are uilty of
contempt. The case is remanded for further proceedins to the courts of
oriin, namely, ,ranch %1 of 6TC, Oue.on City for resolution of the
application for a writ of attachment, and ,ranch %0 of the same court
for resolution of the application to cite petitioners for contempt.
Petitioners are ordered to return to respondent 4anly Corporation the
:$1 boCes of *itsubishi photoraphic color paper sei.ed by virtue of
4earch @arrant 1o. 00F: ;%%< issued by the Oue.on City 6eional Trial
Court, ,ranch %0.
4" "6?)6)?.
G.R. No. 1*4)1, M#B 11, )000
5!NN!TH RO6 SAGAG!J5 ANG!"IN !OPORT TRADING, o;$e% #$%
m#$#0e% bB G!MMA D!MORA"-SAGAG!, petitioners,
vs.
JUDG! APRONIANO B. TA6PIN, Pre8:%:$0 J=%0e, RTC-BR. 1),
Ceb= C:&B, C!BU PROGINCIA" PROS!CUTOR?S OIC!, NATIONA"
BUR!AU O ING!STIGATION, Re0:o$ GII, Ceb= C:&B, JUANITA NG
M!NDO(A, M!NDCO D!G!"OPM!NT CORPORATION, A"R!DO
SABJON #$% DANT! SOSM!TA,respondents.

B!""OSI""O, J.:
Petitioners N)11)TA 6"2 4ALAI) and N A1I)(I1 )MP"6T T6A?I1I,
owned and manaed by I)**A ?)*"6A(-4ALAI), see! to nullify the
search warrant issued by respondent #ude Aproniano ,. Taypin of the
6eional Trial Court, ,r. 1F Cebu City, which resulted in the sei.ure of
certain pieces of wrouht iron furniture from the factory of petitioners
located in ,iason, Talisay, Cebu. Their motion to Euash the search
warrant was denied by respondent #ude as well as their motion to
reconsider the denial. Aence, this petition for certiorari.
The antecedent facts5 Actin on a complaint loded by private
respondent )ric 1 *endo.a, president and eneral manaer of
*endco ?evelopment Corporation ;*)1?C"<,
1
4upervisin Aent #ose
)rmie *onsanto of the 1ational ,ureau of Investiation ;1,I< +led an
application for search warrant with the 6eional Trial Court of Cebu
City.
F
The application souht the authori.ation to search the premises
of N Anelin )Cport International located in ,iason, Talisay, Cebu, and
to sei.e the pieces of wrouht iron furniture found therein which were
alleedly the ob8ect of unfair competition involvin desin patents,
punishable under Art. 1>% of the 6evised Penal Code as amended. The
assailed 4earch @arrant 1o. =0&-1'-1=%&-1F was issued by respondent
#ude on 1= "ctober 1%%& and eCecuted in the afternoon of the
followin day by 1,I aents.
0
4ei.ed from the factory were several
pieces of furniture, indicated in the Inventory 4heet attached to the
6eturn of 4earch @arrant, and all items sei.ed have remained in 1,I
custody up to the present.
:
"n 0' "ctober 1%%& petitioners moved to Euash the search warrant
allein that5 ;a< the crime they were accused of did not eCistH ;b< the
issuance of the warrant was not based on probable causeH ;c< the 8ude
failed to as! the witnesses searchin EuestionsH and, ;d< the warrant did
not particularly describe the thins to be sei.ed.
$
"n 1' 1ovember 1%%& petitioners +led a 4upplemental *otion to Ouash
where they additionally alleed that the assailed warrant was applied
for without a certi+cation aainst forum shoppin.
=
"n 0' #anuary 1%%>
respondent #ude denied the *otion to Ouash and the 4upplemental
*otion to Ouash.
&
"n F *arch 1%%> petitioners moved to reconsider
the denial of their motion to Euash and alleed substantially the same
rounds found in their oriinal *otion to Ouash but addin thereto two
;F< new rounds, namely5 ;a< respondent court has no 8urisdiction over
the sub8ect-matterH and, ;b< respondent court failed to -substantiate-
1='
the order souht to be reconsidered.
>
The denial of their last
motion
%
prompted petitioners to come to this Court.
The principal issues that must be addressed in this petition are5 ;a<
Euestions involvin 8urisdiction over the ofenseH ;b< the need for a
certi+cation of non-forum shoppinH and, ;c< the eCistence of the crime.
Petitioners claim that respondent trial court had no 8urisdiction over the
ofense since it was not desinated as a special court for Intellectual
Property 6ihts ;IP6<, citin in support thereof 4upreme Court
Administrative "rder 1o. 110-%$ desinatin certain branches of the
6eional Trial Courts, *etropolitan Trial Courts and *unicipal Trial
Courts in Cities as 4pecial Courts for IP6. The courts enumerated
therein are mandated to try and decide violations of IP6 includin Art.
1>% of the 6evised Penal Code committed within their respective
territorial 8urisdictions. The sala of #ude ,enino I. Iaviola of the 6TC-
,r. %, Cebu City, was desinated 4pecial Court for IP6 for the &th #udicial
6eion.
1'
4ubseEuently 4upreme Court Administrative "rder 1o. 1':-
%= was issued providin that 8urisdiction over all violations of IP6 was
thereafter con+ned to the 6eional Trial Courts.
11
The authority to issue search warrants was not amon those mentioned
in the administrative orders. ,ut the Court has consistently ruled that a
search warrant is merely a process issued by the court in the eCercise of
its ancillary 8urisdiction and not a criminal action which it may entertain
pursuant to its oriinal 8urisdiction.
1F
The authority to issue search
warrants is inherent in all courts and may be efected outside their
territorial 8urisdiction.
1
In the instant case, the premises searched
located in ,iason, Talisay, Cebu, are well within the territorial
8urisdiction of the respondent court.
1:
Petitioners apparently misconstrued the import of the desination of
4pecial Courts for IP6. Administrative "rder 1o. 110-%$ merely speci+ed
which court could -try and decide- cases involvin violations of IP6. It
did not, and could not, vest eCclusive 8urisdiction with reard to all
matters ;includin the issuance of search warrants and other 8udicial
processes< in any one court. #urisdiction is conferred upon courts by
substantive lawH in this case, ,P ,l.1F%, and not by a procedural rule,
much less by an administrative order.
1$
The power to issue search
warrants for violations of IP6 has not been eCclusively vested in the
courts enumerated in 4upreme Court Administrative "rder 1o.110-%$.
Petitioners neCt allee that the application for a search warrant should
have been dismissed outriht since it was not accompanied by a
certi+cation of non-forum shoppin, citin as authority
therefor *as#in+ton Distillers% Inc( v( Court o$ Aeals.
1=
In that case,
we sustained the Euashal of the search warrant because the applicant
had been uilty of forum shoppin as private respondent souht a
search warrant from the *anila 6eional Trial Court only after he was
denied by the courts of Pampana. The instant case difers sini+cantly,
for here there is no alleation of forum-shoppin, only failure to acEuire
a certi+cation aainst forum-shoppin. The 6ules of Court as amended
reEuires such certi+cation only from initiatory pleadins, omittin any
mention of -applications.-
1&
In contrast, 4upreme Court Circular ':-%:,
the old rule on the matter, reEuired such certi+cation even from
-applications.- "ur rulin in @ashinton ?istillers reEuired no such
certi+cation from applications for search warrants. Aence, the absence
of such certi+cation will not result in the dismissal of an application for
search warrant.
The last Euestion to be resolved is whether unfair competition involvin
desin patents punishable under Art. 1>% of the 6evised Penal Code
eCists in this case. Prosecutor Ivan Aerrero seems to aree as he +led
the correspondin Information aainst petitioners on 1& *arch
1%%>.
1>
Aowever, since the IP6 Code too! efect on 1 #anuary 1%%> any
discussion contrary to the view herein eCpressed would be pointless.
The repealin clause of the Code provides G
All Acts and parts of Acts inconsistent herewith, more
particularly, 6epublic Act 1o. 1=$, as amendedH 6epublic
Act 1o. 1==, as amendedH and Articles 1>> and 1>% of the
6evised Penal CodeH Presidential ?ecree 1o. :%, includin
Presidential ?ecree 1o. F>$, as amended, are hereby
repealed ;emphasis ours<.
1%
The issue involvin the eCistence of -unfair competition- as a felony
involvin desin patents, referred to in Art. 1>% of the 6evised Penal
Code, has been rendered moot and academic by the repeal of the
article.
The search warrant cannot even be issued by virtue of a possible
violation of the IP6 Code. The assailed acts speci+cally alleed were the
manufacture and fabrication of wrouht iron furniture similar to that
patented by *)1?C", without securin any license or patent for the
same, for the purpose of deceivin or defraudin *endco and the
buyin public.
F'
The Code de+nes -unfair competition- thus G
1=>.F. Any person who shall employ deception or any
other means contrary to ood faith by which he shall
pass of the oods manufactured by him or in which he
deals, or his business, or services for those of the one
havin established such oodwill, or shall commit any
1=1
acts calculated to produce said result, shall be uilty of
unfair competition, and shall be sub8ect to an action
therefor.
1=>.0. In particular, and without in any way limitin the
scope of protection aainst unfair competition, the
followin shall be deemed uilty of unfair competition5
;a< Any person who is sellin his oods and ives them
the eneral appearance of oods of another
manufacturer or dealer, either as to the oods
themselves or in the wrappin of the pac!aes in which
they are contained, or the devices or words thereon, or in
any other feature of their appearance which would be
li!ely to inPuence purchasers to believe that the oods
ofered are those of a manufacturer or dealer, other than
the actual manufacturer or dealer, or who otherwise
clothes the oods with such appearance as shall deceive
the public and defraud another of his leitimate trade, or
any subseEuent vendor of such oods or any aent of
any vendor enaed in sellin such oods with a li!e
purposeH
;b< Any person who by any arti+ce, or device, or who
employs any other means calculated to induce the false
belief that such person is oferin the services of another
who has identi+ed such services in the mind of the
publicH or
;c< Any person who shall ma!e any false statement in the
course of trade or who shall commit any other act
contrary to ood faith of a nature calculated to discredit
oods, businesses or services of another.
F1
There is evidently no mention of any crime of -unfair competition-
involvin desin patents in the controllin provisions on 3nfair
Competition. It is therefore unclear whether the crime eCists at all, for
the enactment of 6A >F%0 did not result in the reenactment of Art. 1>%
of the 6evised Penal Code. In the face of this ambiuity, we must
strictly construe the statute aainst the 4tate and liberally in favor of
the accused,
FF
for penal statutes cannot be enlared or eCtended by
intendment, implication or any eEuitable consideration.
F
6espondents
invo!e 8urisprudence to support their contention that -unfair
competition- eCists in this case.
F:
Aowever, we are prevented from
applyin these principles, alon with the new provisions on 3nfair
Competition found in the IP6 Code, to the alleed acts of the
petitioners, for such acts constitute patent infrinement as de+ned by
the same Code G
4ec. &=. Civil Action $or In$rin+ement. G &=.1. The
ma!in, usin, oferin for sale, sellin, or importin a
patented product or a product obtained directly or
indirectly from a patented process, or the use of a
patented process without authori.ation of the patentee
constitutes patent infrinement.
F$
Althouh this case traces its oriins to the year 1%%& or before the
enactment of the IP6 Code, we are constrained to invo!e the provisions
of the Code. Article FF of the 6evised Penal Code provides that penal
laws shall be applied retrospectively, if such application would be
bene+cial to the
accused.
F=
4ince the IP6 Code efectively obliterates the possibility of
any criminal liability attachin to the acts alleed, then that Code must
be applied here.
In the issuance of search warrants, the 6ules of Court reEuires a +ndin
of probable cause in connection with one speci+c ofense to be
determined personally by the 8ude after eCamination of the
complainant and the witnesses he may produce, and particularly
describin the place to be searched and the thins to be
sei.ed.
F&
Aence, since there is no crime to spea! of, the search warrant
does not even bein to ful+ll these strinent reEuirements and is
therefore defective on its face. The nullity of the warrant renders moot
and academic the other issues raised in petitioners9 *otion to Ouash
and *otion for 6econsideration. 4ince the assailed search warrant is
null and void, all property sei.ed by virtue thereof should be returned to
petitioners in accordance with established 8urisprudence.
F>
In petitioners9 6eply with Additional Information they allee that the
trial court denied their motion to transfer their case to a 4pecial Court
for IP6. @e have one throuh the records and we fail to +nd any trace
of such motion or even a copy of the order denyin it. All that appears
in the records is a copy of an order rantin a similar motion +led by a
certain *innie ?ayon with reard to 4earch @arrant 1o. =0%-1'-1=%&-
1F.
F%
This attachment bein immaterial we shall ive it no further
attention.
@A)6)B"6), the "rder of the 6eional Trial Court, ,r. 1F, Cebu City,
dated 0' #anuary 1%%>, denyin the *otion to Ouash 4earch @arrant
1o. =0&-1'-1=%&-1F dated 0' "ctober 1%%& and the 4upplemental
*otion to Ouash dated 1' 1ovember 1%%& +led by petitioners, as well
as the "rder dated > April 1%%> denyin petitioners9 *otion for
1=F
6econsideration dated F *arch 1%%>, is 4)T A4I?). 4earch @arrant 1o.
=0&-1'-1=%&-1F issued on 1= "ctober 1%%& is A113(()? and 4)T
A4I?), and respondents are ordered to return to petitioners the
property sei.ed by virtue of the illeal search warrant.
4" "6?)6)?.
G.R. No. "-))))1 A=0=8& *1, 19+5
PAR5!, DAGIS #$% COMPAN6, petitioner,
vs.
DOCTORS? PHARMAC!UTICA"S, INC., !T A"., respondents.
Ross% Sel# and Carrascoso $or etitioner(
3anuel Seraio% Jr(% $or resondent DoctorsC ,#armaceuticals% Inc(
Solicitor 4eneral $or resondent Director o$ ,atents(
BAUTISTA ANG!"O, J.:
Par!e ?avis / Company, petitioner herein, is a forein corporation
orani.ed and eCistin under the laws of the 4tate of *ichian, 3.4.A.,
with principal oDce in the City of ?etroit, and as such is the owner of a
patent entitled -Process for the *anufacturin of Antibiotics- ;(etters
Patent 1o. $'< which was issued by the Philippine Patent "Dce on
Bebruary %, 1%$'. The patent relates to a chemical compound
represented by a formula commonly called c#loram#enicol. The patent
contains ten claims, nine of which are process claims, and the other is a
product claim to the chemical substance c#loram#enicol.
6espondent ?octors9 Pharmaceuticals, Inc., on the other hand, is a
domestic corporation duly orani.ed under our Corporation (aw with
principal oDce situated in Caloocan City. "n "ctober %, 1%$%, its
eneral manaer wrote a letter to Par!e ?avis / Company reEuestin
that it be ranted a voluntary license -to manufacture and produce our
own brand of medicine, containin chloramphenicol, and to use, sell,
distribute, or otherwise dispose of the same in the Philippines under
such terms and conditions as may be deemed reasonable and mutually
satisfactory,- to which Par!e ?avis / Company replied reEuestin
information concernin the facilities and plans for the manufacture
of c#loram#enicol of ?octors9 Pharmaceuticals, Inc. The latter
answered sayin that it did not intend to
manufacture c#loram#enicol itself but its purpose was merely to use it
in its own brand of medicinal preparations, emphasi.in that its reEuest
for license was based on an eCpress provision of the Philippine law
which has reference to patents that had been in eCistence for more
than three years from their dates of issue. Aence, it reiterated its
reEuest that said license be ranted under such terms and conditions
as may be reasonable and mutually satisfactory.
As apparently Par!e ?avis / Company was not inclined to rant the
reEuest for a voluntary license, ?octors9 Pharmaceuticals, Inc. +led on
*arch 11, 1%=' a petition with the ?irector of Patents, which was later
amended, prayin that it be ranted a compulsory license under (etters
Patent 1o. $' ranted to Par!e ?avis / Company based on the followin
rounds5 ;1< the patented invention relates to medicine and is
necessary for public health and safetyH ;F< Par!e ?avis / Company is
unwillin to rant petitioner a voluntary license under said patent by
reason of which the production and manufacture of needed medicine
containin c#loram#enicol has been unduly restrained to a certain
eCtent that it is becomin a monopolyH ;0< the demand for medicine
containinc#loram#enicol is not bein met to an adeEuate eCtent and
on reasonable pricesH and ;:< the patented invention is not bein
wor!ed in the Philippines on a commercial scale. In its petition, ?octors9
Pharmaceuticals, Inc. prayed that it be authori.ed to manufacture, use,
and sell its own products containin c#loram#enicol as well as choose
its own brand or trademar!.
Par!e ?avis / Company +led a written opposition settin up the
followin aDrmative defenses5 ;1< a compulsory license may only be
issued to one who will wor! the patent and respondent does not intend
to wor! it itself but merely to import the patented productH ;F<
respondent has not reEuested any license to wor! the patented
invention in the PhilippinesH ;0< respondent is not competent to wor!
the patented inventionH ;:< to rant respondent the reEuested license
would be aainst public interest and would only serve its monetary
interestH and ;=< the patented invention is not necessary for public
health and safety.
At the hearin held on 1ovember 1:, 1%=F, respondent abandoned the
second, third and fourth rounds of its petition and con+ned itself
merely to the +rst round, to wit5 that the patented invention relates to
medicine and is necessary for public health and safety. Then, after the
parties had presented oral and documentary evidence and submitted
memoranda in support of their contentions, the ?irector of Patents
rendered on 1ovember 1$, 1%=0 his decision rantin to respondent
the license prayed for. The followin is the dispositive part of the
decision5
@A)6)B"6), the 6espondent-Patentee is hereby ordered to
rant the Petitioner a license under (etters Patent 1o. $'. The
parties hereto are hereby ordered to submit to me, within
TAI6T2 ;0'< days from their receipt of a copy of this decision a
1=0
licensin areement, and in default thereof, they may submit
within the same period their respective proposals. It must be
shown that neotiations as to the terms and conditions thereof
have been made between the parties, and if there are points of
disareement I shall +C such terms and conditions.
If, within the said period, no licensin areement is +led or no
neotiations therefor transpires between the parties, I shall issue
the licensin areement in such terms and conditions as may be
8ust and reasonable under the circumstances.
In due time, Par!e ?avis / Company interposed the present petition for
review.
In this appeal, Par!e, ?avis / Company imputes to the ?irector of
Patents eleven errors which may be briePy stated as follows5
1. 6espondent has not proven the round relied upon by it in its
petitionH
F. 6espondent ?octors9 Pharmaceuticals, Inc. has no intention to
wor! the patent but merely to import the patented
article c#loram#enicolH
0. Petitioner9s invention is bein wor!ed in the PhilippinesH
:. 6espondent is not competent to wor! petitioner9s patented
invention, that is, to manufacturec#loram#enicol and sell the
same in the PhilippinesH
$. The rant of the license is aainst public interestH
=. The license reEuested by respondent will not serve any
leitimate purposeH
&. 6espondent is not competent to use the license reEuestedH
>. The theory that a compulsory license under a patented
invention, after the eCpiration of three years after the rant of
the letters patent, may be ranted to one who petitions for a
license, is erroneousH
%. 6espondent ?irector of Patents cannot issue an in
ersonam order aainst petitioner to rant the licenceH
1'. 6espondent ?irector of Patents erred in not considerin the
defenses interposed by petitioner to the application for licenseH
and
11. 6espondent ?irector of Patents erred in renderin his
decision orderin petitioner to rant a compulsory license to co-
respondent ?octors9 Pharmaceuticals, Inc.
As may be leaned from the errors above pointed out, the principal
issue raised by petitioner boils down to whether or not the ?irector of
Patents ravely abused his discretion in orderin the rant of
compulsory license to respondent under 4ection 0:;d< of 6epublic Act
1o. 1=$ for the manufacture of preparations
containinc#loram#enicol under (etters Patent 1o. $' issued to
petitioner despite the written ob8ection interposed aainst it by the
latter based on the round therein enumerated.
The pertinent statutory provisions that overn the issues raised herein
are found in Chapter LIII of 6epublic Act 1o. 1=$, as amended, which for
ready reference are hereunder Euoted5
CAAPT)6 LIII. G Compulsory (icensin
4)C. 0:. 4rounds $or comulsor" license. G Any person may
apply to the ?irector for the rant of a license under a particular
patent at any time after the eCpiration of three years from the
date of the rant of the patent, under any of the followin
circumstances5
;a< If the patented invention is not bein wor!ed within the
Philippines on a commercial scale, althouh capable of bein so
wor!ed, without satisfactory reasonH
;b< If the demand for the patented article in the Philippines is not
bein met to an adeEuate eCtent and on reasonable terms,
without satisfactory reasonH
;c< If by reason of the refusal of the patentee to rant a license
or licenses on reasonable terms, or by reason of the conditions
attached by the patentee to licenses or to the purchase, lease or
use of the patented article or wor!in of the patented process or
machine of production the establishment of any new trade or
industry in the Philippines is prevented, or the trade or industry
therein is unduly restrainedH or
1=:
;d< If the patented invention relates to food or medicine or is
necessary for public health or public safety.
The term -wor!ed- or -wor!in- as used in this section means the
manufacture and sale of a patented article, or the carryin on of a
patented process or the use of a patented machine for production, in or
by means of a de+nite and substantial establishment or orani.ation in
the Philippines and on a scale which is adeEuate and reasonable under
the circumstances.
4)C. 0$. <otice and #earin+. G 3pon the +lin of a petition
under section thirty-four hereof, notice shall be iven in the
same manner and form as that provided in section thirty-one,
Chapter LII hereof.
4)C. 0=. 4rant o$ license. G If The ?irector +nds that a case for
the rant of a license under section thirty-four hereof has been
made out, he may order the rant of an appropriate license and
in default of an areement amon the parties as to the terms
and conditions of the license he shall +C the terms and
conditions of the license in the order.
The order of the ?irector rantin a license under this Chapter,
when +nal, shall operate as a deed rantin a license eCecuted
by the patentee and the other parties in interest.
A cursory readin of the provisions above-Euoted will reveal that any
person may apply for the rant of a license under any of the
circumstances stated in 4ection 0: ;a<, ;b<, ;c< or ;d<, which are in the
dis8unctive, showin that any of the circumstances thus enumerated
would be suDcient to support the rant, as evidenced by the use of the
particle -or- between pararaphs ;c< and ;d<. As may be noted, each of
these circumstances stands alone and is independent of the others. And
from them we can see that in order that any person may be ranted a
license under a particular patented invention relatin to medicine under
4ection 0:;d<, it is suDcient that the application be made after the
eCpiration of three years from the date of the rant of the patent and
that the ?irector should +nd that a case for rantin such license has
been made out. 4ince in the instant case it is admitted by petitioner
that the chemical substance c#loram#enicol is a medicine, while
(etters Patent 1o. $' coverin said substance were ranted to Par!e
?avis / Company on Bebruary %, 1%$', and the instant application for
license under said patent was only +led in 1%=', verily the period that
had elapsed then is more than three years, and so the conditions for
the rant of the license had been ful+lled. @e +nd, therefore, no error in
the decision of the ?irector of Patents on this aspect of the controversy.
The claim that respondent has not proven the round it relies upon in
its petition to the efect that c#loram#enicolis not only a medicine but
is indispensable to public health and safety is not Euite correct, for the
main reliance of respondent is on the fact that c#loram#enicol is an
invention that is related to medicine and as such it comes under
4ection 0:;d< of 6epublic Act 1=$. 6espondent does not predicate its
claim on the fact that invention is necessary for public health or public
safety, althouh either round is reconi.ed as valid in itself for the
rant of a license under said 4ection 0:;d<. Indeed, it is suDcient that
the invention be related to medicine. It is not reEuired that it be at the
same time necessary for public health or public safety. *oreover, the
claim of petitioner that the word -necessary- means -indispensable-
does not hold water, for necessity admits of many derees, as it is
clearly eCplained in ,ouvier9s (aw ?ictionary. 1
,ut, even if we assume that the patented invention is not only related
to medicine but to one that is also indispensable or necessary to public
health and public safety, here we can say that both conditions are
present, since accordin to ?r. (eon L. Picache, who testi+ed in this
case, the substance c#loram#enicol is one that constitutes an
efective cure for astro-enteritis diseases, while the inventor9s own
speci+cations attest thatc#loram#enicol is a -therapeutic aent
notably in the case of shiella pradysenteria. Chloramphenicol is much
more active than streptomycin- and -is the +rst antibiotic eChibitin a
hih deree of activity aainst ram neative bacteria which is
therapeutically efective upon oral administration- ;)Chibit =<. Aain, ?r.
Ouerbral-Ireaa in the #une, 1%=1 issue of the 4cienti+c ?iest, a
publication of the *anila *edical 4ociety, aDrmed that antibiotics
li!ec#loram#enicol have played a very important role in the control of
diarrhea-enteritis which is the third most rampant !iller of infants in this
country.
The claim that a compulsory license cannot be ranted to respondent
because the latter does not intend to wor! the patented invention itself
but merely to import it has also no leal nor factual basis. In the +rst
place, 4ection 0: of 6epublic Act 1o. 1=$ does not reEuire the petitioner
of a license to wor! the patented invention if the invention refers to
medicine, for the term -wor!ed- or -wor!in- used in said section does
not apply to the circumstance mentioned in subsection ;d<, which
relates to medicine or to one necessary for public health and public
safety. Indeed, the ?irector of Patents has already correctly stated in
previous cases that, in its strict sense, the term -wor!ed- or -wor!in-
mentioned in the last pararaph of 4ection 0: of the Patent (aw -has no
applicability to those cited patented matters and the Euali+cation of the
petitioner to wor! the invention is immaterial, it bein not a condition
precedent before any person may apply for the rant of the license.- In
the second place, it is not the intention of respondent to wor! or
1=$
manufacture the patented invention itself but merely to manufacture its
brand of medicinal preparations containin such substance. And even if
it be reEuired that respondent should wor! itself the invention that it
intends to use in the manufacture of its own brand of medicinal
preparations said respondent would not be found wantin for it is
stafed with adeEuate and competent personnel and techniciansH it has
several laboratories where medicines are prepared for safety and
EualityH it is eEuipped with machines for subdividin antibioticsH and it
has capsule-+llin machines and adeEuate personnel and facilities to
test the Euality ofc#loram#enicol.
Binally, we may add that it is not a valid round to refuse the license
applied for the fact that the patentee is wor!in the invention and as
such has the eCclusive riht to the invention for a term of 1& years
;4ections F' / F1, 6epublic Act 1=$< as claimed in the third assinment
of error, the reason for it bein that the provision permittin the rant
of compulsory license is intended not only to ive a chance to others to
supply the public with the Euantity of the patented article but especially
to prevent the buildin up of patent monopolies. )
The point is raised that the rant of the license is aainst public interest
for it would force Par!e, ?avis / Company to close or stop
manufacturin the patented invention which would thereby adversely
afect local employment and pre8udice technoloy and chemical
manufacturin and cut of the local supply of medicinal products. It
should be noted, however, that respondent does not intend to compete
with petitioner in the manufacture of c#loram#enicolfor it would either
obtain the same from petitioner or would import whatever it may need
in the manufacture of its own brand of medicinal preparations. ,ut even
assumin that the conseEuence the petitioner has envisioned may
come true if the license is ranted, still that should not stand in the way
of the rant for that is in line with an eCpress provision of our law. The
rant of such license may wor! disadvantae on petitioner but the law
must be observed until modi+ed or repealed. "n the other hand, there
is the advantae that the importation ofc#loram#enicol miht redound
to the bene+t of the public in eneral as it will increase the supply of
medicines in our country containin c#loram#enicol thereby reducin
substantially the price of this dru.
@e +nd no merit in the contention that the ?irector of Patents erred in
orderin the rant of the patent to respondent for the simple reason
that the application does not automatically entitle the person applyin
to such a rant as was done by said ?irector. Thouh in substance such
is the efect of the rant, it cannot however be said that the ?irector of
Patents automatically ordered the rant of the license for it was only
after hearin and a careful consideration of the evidence that he
ordered the rant. In fact, the decision states that the ?irector has
carefully weihed the evidence of the parties and the aruments in
support of their contentions and that it was only after analy.in the
same that he became convinced of the riht of respondent to the
compulsory license he prayed for.
Binally, with reard to the contention that petitioner is entitled to the
eCclusive use of the invention for a term which under the law eCtends to
1& years, suDce it for us to Euote what the ?irector of Patents says on
this point5
The riht to eCclude others from the manufacturin, usin, or
vendin an invention relatin to food or medicine should be
conditioned to allowin any person to manufacture, use, or vend
the same after a period of three years from the date of the rant
of the letters patent. After all, the patentee is not entirely
deprived of any proprietary riht. In act, he has been iven the
period of three years of complete monopoly over the patent.
Compulsory licensin of a patent on food or medicine without
reard to the other conditions imposed in 4ection 0: is not an
undue deprivation of proprietary interests over a patent riht
because the law sees to it that even after three years of
complete monopoly somethin is awarded to the inventor in the
form of a bilateral and wor!able licensin areement and a
reasonable royalty to be areed upon by the parties and in
default of such areement, the ?irector of Patents may +C the
terms and conditions of the license. ;4ee 4ec. 0=, 6ep. Act 1o.
1=$<
@A)6)B"6), the decision appealed from is aDrmed, with costs aainst
petitioner.
:en+zon% C(J(% Concecion% Re"es% J(:('(% Dizon% Re+ala% 3akalintal%
:en+zon% J(,(% and Raldivar% JJ(% concur(
G.R. No. 1900+5 A=0=8& 1+, )010
D!RMA"IN!, INC., Petitioner,
vs.
M6RA PHARMAC!UTICA"S, INC. 6espondent.
? ) C I 4 I " 1
NACHURA, J.:
1==
This is a petition for review on certiorari
1
see!in to reverse and set
aside the ?ecision dated Auust &, F''%
F
and the 6esolution dated
"ctober F>, F''%
0
of the Court of Appeals ;CA< in CA-I.6. 4P 1o.
1'>=F&.
The antecedent facts and proceedinsG
"n "ctober F1, F''=, petitioner ?ermaline, Inc. ;?ermaline< +led before
the Intellectual Property "Dce ;IP"< an application for reistration of
the trademar! -?)6*A(I1) ?)6*A(I1), I1C.- ;Application 1o. :-
F''='11$0=<. The application was published for "pposition in the IP"
)-Ia.ette on *arch %, F''&.
"n *ay >, F''&, respondent *yra Pharmaceuticals, Inc. ;*yra< +led a
Leri+ed "pposition
:
allein that the trademar! souht to be reistered
by ?ermaline so resembles its trademar! -?)6*A(I1- and will li!ely
cause confusion, mista!e and deception to the purchasin public. *yra
said that the reistration of ?ermalineSs trademar! will violate 4ection
1F0
$
of 6epublic Act ;6.A.< 1o. >F%0 ;Intellectual Property Code of the
Philippines<. It further alleed that ?ermalineSs use and reistration of
its applied trademar! will diminish the distinctiveness and dilute the
oodwill of *yraSs -?)6*A(I1,- reistered with the IP" way bac! #uly >,
1%>=, renewed for ten ;1'< years on #uly >, F''=. *yra has been
eCtensively usin -?)6*A(I1- commercially since "ctober 01, 1%&&,
and said mar! is still valid and subsistin.
*yra claimed that, despite ?ermalineSs attempt to diferentiate its
applied mar!, the dominant feature is the term -?)6*A(I1),- which is
practically identical with its own -?)6*A(I1,- more particularly that the
+rst eiht ;>< letters of the mar!s are identical, and that
notwithstandin the additional letter -)- by ?ermaline, the
pronunciation for both mar!s are identical. Burther, both mar!s have
three ;0< syllables each, with each syllable identical in sound and
appearance, even if the last syllable of -?)6*A(I1)- consisted of four
;:< letters while -?)6*A(I1- consisted only of three ;0<.
*yra also pointed out that ?ermaline applied for the same mar!
-?)6*A(I1)- on #une 0, F''0 and was already refused reistration by
the IP". ,y +lin this new application for reistration, ?ermaline
appears to have enaed in a +shin eCpedition for the approval of its
mar!. *yra arued that its intellectual property riht over its trademar!
is protected under 4ection 1:&
=
of 6.A. 1o. >F%0.
*yra asserted that the mar! -?)6*A(I1) ?)6*A(I1), I1C.- is aurally
similar to its own mar! such that the reistration and use of
?ermalineSs applied mar! will enable it to obtain bene+t from *yraSs
reputation, oodwill and advertisin and will lead the public into
believin that ?ermaline is, in any way, connected to *yra. *yra added
that even if the sub8ect application was under Classi+cation ::
&
for
various s!in treatments, it could still be connected to the -?)6*A(I1-
mar! under Classi+cation $
>
for pharmaceutical products, since
ultimately these oods are very closely related.
In its Leri+ed Answer,
%
?ermaline countered that a simple comparison
of the trademar! -?)6*A(I1) ?)6*A(I1), I1C.- vis-c-vis *yraSs
-?)6*A(I1- trademar! would show that they have entirely diferent
features and distinctive presentation, thus it cannot result in confusion,
mista!e or deception on the part of the purchasin public. ?ermaline
contended that, in determinin if the sub8ect trademar!s are
confusinly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the
oods to which they are attached, includin the other features
appearin in both labels. It claimed that there were larin and stri!in
dissimilarities between the two trademar!s, such that its trademar!
-?)6*A(I1) ?)6*A(I1), I1C.- spea!s for itself ;6es ipsa loEuitur<.
?ermaline further arued that there could not be any relation between
its trademar! for health and beauty services from *yraSs trademar!
classi+ed under medicinal oods aainst s!in disorders.
The parties failed to settle amicably. ConseEuently, the preliminary
conference was terminated and they were directed to +le their
respective position papers.
1'
"n April 1', F''>, the IP"-,ureau of (eal Afairs rendered ?ecision 1o.
F''>-&'
11
sustainin *yraSs opposition pursuant to 4ection 1F0.1;d< of
6.A. 1o. >F%0. It disposedG
@A)6)B"6), the Leri+ed "pposition is, as it is, hereby 434TAI1)?.
ConseEuently, Application 4erial 1o. :-F''=-'11$0= for the mar!
V?)6*A(I1), ?)6*A(I1), I1C. 4tyli.ed @ordmar!S for ?ermaline, Inc.
under class :: coverin the aforementioned oods +led on F1 "ctober
F''=, is as it is hereby, 6)#)CT)?.
(et the +le wrapper of V?)6*A(I1), ?)6*A(I1), I1C. 4tyli.ed
@ordmar!S sub8ect matter of this case be forwarded to the ,ureau of
Trademar!s ;,"T< for appropriate action in accordance with this
?ecision.
4" "6?)6)?.
1F
Arieved, ?ermaline +led a motion for reconsideration, but it was
denied under 6esolution 1o. F''%-1F;?<
10
dated #anuary 1=, F''%.
1=&
)Cpectedly, ?ermaline appealed to the "Dce of the ?irector Ieneral of
the IP". Aowever, in an "rder
1:
dated April 1&, F''%, the appeal was
dismissed for bein +led out of time.
3ndaunted, ?ermaline appealed to the CA, but it aDrmed and upheld
the "rder dated April 1&, F''% and the re8ection of ?ermalineSs
application for reistration of trademar!. The CA li!ewise denied
?ermalineSs motion for reconsiderationH hence, this petition raisin the
issue of whether the CA erred in upholdin the IP"Ss re8ection of
?ermalineSs application for reistration of trademar!.
The petition is without merit.
A trademar! is any distinctive word, name, symbol, emblem, sin, or
device, or any combination thereof, adopted and used by a
manufacturer or merchant on his oods to identify and distinuish them
from those manufactured, sold, or dealt by others.
1$
Inaruably, it is an
intellectual property deservin protection by law. In trademar!
controversies, each case must be scrutini.ed accordin to its peculiar
circumstances, such that 8urisprudential precedents should only be
made to apply if they are speci+cally in point.
1=
As *yra correctly posits, as a reistered trademar! owner, it has the
riht under 4ection 1:& of 6.A. 1o. >F%0 to prevent third parties from
usin a trademar!, or similar sins or containers for oods or services,
without its consent, identical or similar to its reistered trademar!,
where such use would result in a li!elihood of confusion.
In determinin li!elihood of confusion, case law has developed two ;F<
tests, the ?ominancy Test and the Aolistic or Totality Test.
The ?ominancy Test focuses on the similarity of the prevalent features
of the competin trademar!s that miht cause confusion or
deception.
1&
It is applied when the trademar! souht to be reistered
contains the main, essential and dominant features of the earlier
reistered trademar!, and confusion or deception is li!ely to result.
?uplication or imitation is not even reEuiredH neither is it necessary that
the label of the applied mar! for reistration should suest an efort to
imitate. The important issue is whether the use of the mar!s involved
would li!ely cause confusion or mista!e in the mind of or deceive the
ordinary purchaser, or one who is accustomed to buy, and therefore to
some eCtent familiar with, the oods in Euestion.
1>
Iiven reater
consideration are the aural and visual impressions created by the mar!s
in the public mind, ivin little weiht to factors li!e prices, Euality,
sales outlets, and mar!et sements.
1%
The test of dominancy is now
eCplicitly incorporated into law in 4ection 1$$.1 of 6.A. 1o. >F%0 which
providesG
1$$.1. 3se in commerce any reproduction, counterfeit, copy, or
colorable imitation of a reistered mar! or the same container or a
dominant feature thereof in connection with the sale, oferin for sale,
distribution, advertisin of any oods or services includin other
preparatory steps necessary to carry out the sale of any oods or
services on or in connection with which such use is li!ely to cause
confusion, or to cause mista!e, or to deceiveH ;emphasis supplied<
"n the other hand, the Aolistic Test entails a consideration of the
entirety of the mar!s as applied to the products, includin labels and
pac!ain, in determinin confusin similarity. The scrutini.in eye of
the observer must focus not only on the predominant words but also on
the other features appearin in both labels so that a conclusion may be
drawn as to whether one is confusinly similar to the other.
F'
6elative to the Euestion on confusion of mar!s and trade names,
8urisprudence has noted two ;F< types of confusion, vi.5 ;1< confusion of
oods ;product confusion<, where the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasin the otherH and ;F< confusion of business ;source or oriin
confusion<, where, althouh the oods of the parties are diferent, the
product, the mar! of which reistration is applied for by one party, is
such as miht reasonably be assumed to oriinate with the reistrant of
an earlier product, and the public would then be deceived either into
that belief or into the belief that there is some connection between the
two parties, thouh ineCistent.
F1
In re8ectin the application of ?ermaline for the reistration of its mar!
-?)6*A(I1) ?)6*A(I1), I1C.,- the IP" applied the ?ominancy Test. It
declared that both confusion of oods and service and confusion of
business or of oriin were apparent in both trademar!s. It also noted
that, per ,ureau ?ecision 1o. F''&-1&% dated ?ecember :, F''&, it
already sustained the opposition of *yra involvin the trademar!
-?)6*A(I1)- of ?ermaline under Classi+cation $. The IP" also upheld
*yraSs riht under 4ection 10> of 6.A. 1o. >F%0, which provides that a
certi+cation of reistration of a mar! is prima facie evidence of the
validity of the reistration, the reistrantSs ownership of the mar!, and
of the reistrantSs eCclusive riht to use the same in connection with
the oods and those that are related thereto speci+ed in the certi+cate.
@e aree with the +ndins of the IP". As correctly applied by the IP" in
this case, while there are no set rules that can be deduced as what
constitutes a dominant feature with respect to trademar!s applied for
1=>
reistrationH usually, what are ta!en into account are sins, color,
desin, peculiar shape or name, or some special, easily remembered
earmar!s of the brand that readily attracts and catches the attention of
the ordinary consumer.
FF
?ermalineSs insistence that its applied trademar! -?)6*A(I1)
?)6*A(I1), I1C.- had diferences -too stri!in to be mista!en- from
*yraSs -?)6*A(I1- cannot, therefore, be sustained. @hile it is true that
the two mar!s are presented diferently W ?ermalineSs mar! is written
with the +rst -?)6*A(I1)- in script oin diaonally upwards from left
to riht, with an upper case -?- followed by the rest of the letters in
lower case, and the portion -?)6*A(I1), I1C.- is written in upper case
letters, below and smaller than the lon-hand portionH while *yraSs
mar! -?)6*A(I1- is written in an upriht font, with a capital -?- and
followed by lower case letters W the li!elihood of confusion is still
apparent. This is because they are almost spelled in the same way,
eCcept for ?ermalineSs mar! which ends with the letter -),- and they
are pronounced practically in the same manner in three ;0< syllables,
with the endin letter -)- in ?ermalineSs mar! pronounced silently.
Thus, when an ordinary purchaser, for eCample, hears an advertisement
of ?ermalineSs applied trademar! over the radio, chances are he will
associate it with *yraSs reistered mar!.
Burther, ?ermalineSs stance that its product belons to a separate and
diferent classi+cation from *yraSs products with the reistered
trademar! does not eradicate the possibility of mista!e on the part of
the purchasin public to associate the former with the latter, especially
considerin that both classi+cations pertain to treatments for the
s!in..avv#i.
Indeed, the reistered trademar! owner may use its mar! on the same
or similar products, in diferent sements of the mar!et, and at diferent
price levels dependin on variations of the products for speci+c
sements of the mar!et. The Court is coni.ant that the reistered
trademar! owner en8oys protection in product and mar!et areas that
are the normal potential eCpansion of his business. Thus, we have held
W
*odern law reconi.es that the protection to which the owner of a
trademar! is entitled is not limited to uardin his oods or business
from actual mar!et competition with identical or similar products of the
parties, but eCtends to all cases in which the use by a 8unior
appropriator of a trade-mar! or trade-name is li!ely to lead to a
confusion of source, as where prospective purchasers would be misled
into thin!in that the complainin party has eCtended his business into
the +eld ;see 1:> A(6 $= et seEH $0 Am #ur. $&=< or is in any way
connected with the activities of the infrinerH or when it forestalls the
normal potential eCpansion of his business ;v. 1:> A(6 &&, >:H $F Am.
#ur. $&=, $&&<.
F0
;)mphasis supplied<
Thus, the public may mista!enly thin! that ?ermaline is connected to or
associated with *yra, such that, considerin the current proliferation of
health and beauty products in the mar!et, the purchasers would li!ely
be misled that *yra has already eCpanded its business throuh
?ermaline from merely carryin pharmaceutical topical applications for
the s!in to health and beauty services.
Lerily, when one applies for the reistration of a trademar! or label
which is almost the same or that very closely resembles one already
used and reistered by another, the application should be re8ected and
dismissed outriht, even without any opposition on the part of the
owner and user of a previously reistered label or trademar!. This is
intended not only to avoid confusion on the part of the public, but also
to protect an already used and reistered trademar! and an established
oodwill.
F:
,esides, the issue on protection of intellectual property, such as
trademar!s, is factual in nature. The +ndins of the IP", upheld on
appeal by the same oDce, and further sustained by the CA, bear reat
weiht and deserves respect from this Court. *oreover, the decision of
the IP" had already attained +nality when ?ermaline failed to timely +le
its appeal with the IP" "Dce of the ?irector Ieneral.
@A)6)B"6), the petition is ?)1I)?. The ?ecision dated Auust &, F''%
and the 6esolution dated "ctober F>, F''% of the Court of Appeals in
CA-I.6. 4P 1o. 1'>=F& are ABBI6*)?. Costs aainst petitioner.
4" "6?)6)?.
G.R. No. 1)0900 J=1B )0, )000
CANON 5ABUSHI5I 5AISHA, petitioner,
vs.
COURT O APP!A"S #$% NSR RUBB!R
CORPORATION, respondents.
GON(AGA-R!6!S, J.7
,efore us is a petition for review that see!s to set aside the
?ecision
1
dated Bebruary F1, 1%%$ of the Court of Appeals in CA-I6 4P
1o. 0'F'0, entitled -Canon Nabushi!i Naisha vs. 146 6ubber
1=%
Corporation- and its 6esolution dated #une F&, 1%%$ denyin the motion
for reconsideration of herein petitioner Canon Nabushi!i Naisha
;petitioner<.
"n #anuary 1$, 1%>$, private respondent 146 6ubber Corporation
;private respondent< +led an application for reistration of the mar!
CA1"1 for sandals in the ,ureau of Patents, Trademar!s, and
Technoloy Transfer ;,PTTT<. A Leri+ed 1otice of "pposition was +led by
petitioner, a forein corporation duly orani.ed and eCistin under the
laws of #apan, allein that it will be damaed by the reistration of the
trademar! CA1"1 in the name of private respondent. The case was
doc!eted as Inter Partes Case 1o. 0':0.
Petitioner moved to declare private respondent in default for its failure
to +le its answer within the prescribed period. The ,PTTT then declared
private respondent in default and allowed petitioner to present its
evidence e&-arte.
,ased on the records, the evidence presented by petitioner consisted of
its certi+cates of reistration for the mar! CA1"1 in various countries
coverin oods belonin to class F ;paints, chemical products, toner,
and dye stuf<. Petitioner also submitted in evidence its Philippine
Trademar! 6eistration 1o. 0%0%>, showin its ownership over the
trademar! CA1"1 also under class F.
"n 1ovember 1', 1%%F, the ,PTTT issued its decision dismissin the
opposition of petitioner and ivin due course to private respondent9s
application for the reistration of the trademar! CA1"1. "n Bebruary
1=, 1%%0, petitioner appealed the decision of the ,PTTT with public
respondent Court of Appeals that eventually aDrmed the decision of
,PTTT. Aence, this petition for review.
Petitioner anchors this instant petition on these rounds5
A< P)TITI"1)6 I4 )1TIT()? T" )MC(34IL) 34) "B TA) *A6N
CA1"1 ,)CA34) IT I4 IT4 T6A?)*A6N A1? I4 34)? A(4" B"6
B""T@)A6.
,< T" A(("@ P6ILAT) 6)4P"1?)1T T" 6)II4T)6 CA1"1 B"6
B""T@)A6 I4 T" P6)L)1T P)TITI"1)6 B6"* 34I1I CA1"1
B"6 LA6I"34 NI1?4 "B B""T@)A6, @A)1 I1 BACT, P)TITI"1)6
AA4 )A6(I)6 34)? 4AI? *A6N B"6 4AI? I""?4.
C< P)TITI"1)6 I4 A(4" )1TIT()? T" TA) 6IIAT T" )MC(34IL)(2
34) CA1"1 T" P6)L)1T C"1B34I"1 "B ,34I1)44.
?< P)TITI"1)6 I4 A(4" )1TIT()? T" TA) )MC(34IL) 34) "B
CA1"1 ,)CA34) IT B"6*4 PA6T "B IT4 C"6P"6AT) 1A*),
P6"T)CT)? ,2 TA) PA6I4 C"1L)1TI"1.
F
The ,PTTT and the Court of Appeals share the opinion that the
trademar! -CA1"1- as used by petitioner for its paints, chemical
products, toner, and dyestuf, can be used by private respondent for its
sandals because the products of these two parties are dissimilar.
Petitioner protests the appropriation of the mar! CA1"1 by private
respondent on the round that petitioner has used and continues to use
the trademar! CA1"1 on its wide rane of oods worldwide. Alleedly,
the corporate name or tradename of petitioner is also used as its
trademar! on diverse oods includin footwear and other related
products li!e shoe polisher and polishin aents. To lend credence to its
claim, petitioner points out that it has branched out in its business
based on the various oods carryin its trademar! CA1"1
0
, includin
footwear which petitioner contends covers sandals, the oods for which
private respondent souht to reister the mar! CA1"1. Bor petitioner,
the fact alone that its trademar! CA1"1 is carried by its other products
li!e footwear, shoe polisher and polishin aents should have precluded
the ,PTTT from ivin due course to the application of private
respondent.
@e +nd the aruments of petitioner to be unmeritorious. "rdinarily, the
ownership of a trademar! or tradename is a property riht that the
owner is entitled to protect
:
as mandated by the Trademar!
(aw.
$
Aowever, when a trademar! is used by a party for a product in
which the other party does not deal, the use of the same trademar! on
the latter9s product cannot be validly ob8ected to.
=
A review of the records shows that with the order of the ,PTTT declarin
private respondent in default for failure to +le its answer, petitioner had
every opportunity to present e&-arte all of its evidence to prove that
its certi+cates of reistration for the trademar! CA1"1 cover footwear.
The certi+cates of reistration for the trademar! CA1"1 in other
countries and in the Philippines as presented by petitioner, clearly
showed that said certi+cates of reistration cover oods belonin to
class F ;paints, chemical products, toner, dyestuf<. "n this basis, the
,PTTT correctly ruled that since the certi+cate of reistration of
petitioner for the trademar! CA1"1 covers class F ;paints, chemical
products, toner, dyestuf<, private respondent can use the trademar!
CA1"1 for its oods classi+ed as class F$ ;sandals<. Clearly, there is a
world of diference between the paints, chemical products, toner, and
dyestuf of petitioner and the sandals of private respondent.
1&'
Petitioner counters that notwithstandin the dissimilarity of the
products of the parties, the trademar! owner is entitled to protection
when the use of by the 8unior user -forestalls the normal eCpansion of
his business-.
&
Petitioner9s opposition to the reistration of its trademar!
CA1"1 by private respondent rests upon petitioner9s insistence that it
would be precluded from usin the mar! CA1"1 for various !inds of
footwear, when in fact it has earlier used said mar! for said oods.
4tretchin this arument, petitioner claims that it is possible that the
public could presume that petitioner would also produce a wide variety
of footwear considerin the diversity of its products mar!eted
worldwide.
@e do not aree. )ven in this instant petition, eCcept for its bare
assertions, petitioner failed to attach evidence that would convince this
Court that petitioner has also embar!ed in the production of footwear
products. @e Euote with approval the observation of the Court of
Appeals that5
-The herein petitioner has not made !nown that it intends to
venture into the business of producin sandals. This is clearly
shown in its Trademar! Principal 6eister ;)Chibit -3-< where the
products of the said petitioner had been clearly and speci+cally
described as -Chemical products, dyestufs, piments, toner
developin preparation, shoe polisher, polishin aent-. It would
be taCin one9s credibility to aver at this point that the
production of sandals could be considered as a possible -natural
or normal eCpansion- of its business operation-.
>
In )aber+e% Incororated vs( Intermediate Aellate Court,
%
the ?irector
of patents allowed the 8unior user to use the trademar! of the senior
user on the round that the briefs manufactured by the 8unior user, the
product for which the trademar! ,63T) was souht to be reistered,
was unrelated and non-competin with the products of the senior user
consistin of after shave lotion, shavin cream, deodorant, talcum
powder, and toilet soap. The senior user vehemently ob8ected and
claimed that it was eCpandin its trademar! to briefs and arued that
permittin the 8unior user to reister the same trademar! would allow
the latter to invade the senior user9s eCclusive domain. In sustainin the
?irector of Patents, this Court said that since -;the senior user< has not
ventured in the production of briefs, an item which is not listed in its
certi+cate of reistration, ;the senior user<, cannot and should not be
allowed to fein that ;the 8unior user< had invaded ;the senior user9s<
eCclusive domain.-
1'
@e reiterated the principle that the certi+cate of
reistration confers upon the trademar! owner the eCclusive riht to
use its own symbol onl" to t#ose +oods seci!ed in t#e certi!cate,
sub8ect to the conditions and limitations stated therein.
11
Thus, the
eCclusive riht of petitioner in this case to use the trademar! CA1"1 is
limited to the products covered by its certi+cate of reistration.
Petitioner further arues that the alleed diversity of its products all
over the world ma!es it plausible that the public miht be misled into
thin!in that there is some supposed connection between private
respondent9s oods and petitioner. Petitioner is apprehensive that there
could be confusion as to the oriin of the oods, as well as confusion of
business, if private respondent is allowed to reister the mar! CA1"1.
In such a case, petitioner would alleedly be immensely pre8udiced if
private respondent would be permitted to ta!e -a free ride on, and reap
the advantaes of, the oodwill and reputation of petitioner Canon-.
1F
In
support of the foreoin aruments, petitioner invo!es the rulins
in Sta( Ana vs( 3aliwat
10
, An+ vs( Teodoro
1:
and Converse Rubber
Cororation vs( Universal Rubber ,roducts% Inc(
1$
.
The li!elihood of confusion of oods or business is a relative concept, to
be determined only accordin to the particular, and sometimes
peculiar, circumstances of each case.
1=
Indeed, in trademar! law cases,
even more than in other litiation, precedent must be studied in the
liht of the facts of the particular case.
1&
Contrary to petitioner9s
supposition, the facts of this case will show that the cases of Sta( Ana
vs( 3aliwat%% An+ vs( Teodoro and Converse Rubber Cororation vs(
Universal Rubber ,roducts% Inc( are hardly in point. The 8ust cited cases
involved oods that were confusinly similar, if not identical, as in the
case of Converse Rubber Cororation vs( Universal Rubber ,roducts%
Inc. Aere, the products involved are so unrelated that the public will not
be misled that there is the slihtest neCus between petitioner and the
oods of private respondent.
In cases of confusion of business or oriin, the Euestion that usually
arises is whether the respective oods or services of the senior user
and the 8unior user are so related as to li!ely cause confusion of
business or oriin, and thereby render the trademar! or tradenames
confusinly similar.
1>
Ioods are related when they belon to the same
class or have the same descriptive propertiesH when they possess the
same physical attributes or essential characteristics with reference to
their form, composition, teCture or Euality.
1%
They may also be related
because they serve the same purpose or are sold in rocery stores.
F'
Thus, in Esso Standard Eastern% Inc( vs( Court o$ Aeals, this Court
ruled that the petroleum products on which the petitioner therein used
the trademar! )44", and the product of respondent, ciarettes are -so
forein to each other as to ma!e it unli!ely that purchasers would thin!
that petitioner is the manufacturer of respondent9s oods-
F1
. *oreover,
1&1
the fact that the oods involved therein Pow throuh diferent channels
of trade hihlihted their dissimilarity, a factor eCplained in this wise5
-The products of each party move alon and are disposed
throuh diferent channels of distribution. The ;petitioner9s<
products are distributed principally throuh asoline service and
lubrication stations, automotive shops and hardware stores. "n
the other hand, the ;respondent9s< ciarettes are sold in sari-sari
stores, rocery store, and other small distributor outlets.
;6espondnet9s< ciarettes are even peddled in the streets while
;petitioner9s< 9asul9 burners are not. Binally, there is a mar!ed
distinction between oil and tobacco, as well as between
petroleum and ciarettes. )vidently, in !ind and nature the
products of ;respondent< and of ;petitioner< are poles apart.-
FF
3ndoubtedly, the paints, chemical products, toner and dyestuf of
petitioner that carry the trademar! CA1"1 are unrelated to sandals,
the product of private respondent. @e aree with the ,PTTT, followin
the )sso doctrine, when it noted that the two classes of products in this
case Pow throuh diferent trade channels. The products of petitioner
are sold throuh special chemical stores or distributors while the
products of private respondent are sold in rocery stores, sari-sari
stores and department stores.
F0
Thus, the evident disparity of the
products of the parties in the case at bar renders unfounded the
apprehension of petitioner that confusion of business or oriin miht
occur if private respondent is allowed to use the mar! CA1"1.
In its bid to bar the reistration of private respondent of the mar!
CA1"1, petitioner invo!es the protective mantle of the Paris
Convention. Petitioner asserts that it has the eCclusive riht to the mar!
CA1"1 because it forms part of its corporate name or tradename,
protected by Article > of the Paris Convention, to wit5
-A tradename shall be protected in all the countries of the 3nion
without the obliation of +lin or reistration, whether or not it
forms part of a trademar!.-
Public respondents ,PTTT and the Court of Appeals alleedly committed
an oversiht when they reEuired petitioner to prove that its mar! is a
well-!nown mar! at the time the application of private respondent was
+led. Petitioner Euestions the applicability of the uidelines embodied in
the *emorandum of then *inister of Trade and Industry 6oberto "npin
;"npin< dated "ctober F$, 1%>0 which accordin to petitioner
implements Article =bis of the Paris Convention, the provision referrin
to the protection of trademar!s. The memorandum reads5
-a< the mar! must be internationally !nownH
b< the sub8ect of the riht must be a trademar!, not a patent or
copyriht or anythin elseH
c< the mar! must be for use in the same or similar class of
oodsH
d< the person claimin must be the owner of the mar!.-
Accordin to petitioner, it should not be reEuired to prove that its
trademar! is well-!nown and that the products are not similar as
reEuired by the Euoted memorandum. Petitioner emphasi.es that the
uidelines in the memorandum of "npin implement Article =bis of the
Paris Convention, the provision for the protection of trademar!s, not
tradenames. Article =bis of the Paris Convention states5
;1< The countries of the 3nion underta!e, either administratively
if their leislation so permits, or at the reEuest of an interested
party, to refuse or to cancel the reistration and to prohibit the
use of a trademar! which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mar! considered by
the competent authority of the country of reistration or use to
be well-!nown in that country as bein already the mar! of a
person entitled to the bene+ts of the present Convention and
used for identical or similar oods. These provisions shall also
apply when the essential part of the mar! constitutes a
reproduction of any such well-!nown mar! or an imitation liable
to create confusion therewith.
;F< A period of at least +ve years from the date of reistration
shall be allowed for see!in the cancellation of such a mar!. The
countries of the 3nion may provide for a period within which the
prohibition of use must be souht.
;0< 1o time limit shall be +Ced for see!in the cancellation or the
prohibition of the use of mar!s or used in bad faith.-
Petitioner insists that what it see!s is the protection of Article > of the
Paris Convention, the provision that pertains to the protection of
tradenames. Petitioner believes that the appropriate memorandum to
consider is that issued by the then *inister of Trade and Industry, (uis
Lillafuerte, directin the ?irector of patents to5
1&F
-re8ect all pendin applications for Philippine reistration of
sinature and other world famous trademar!s by applicants
other than the oriinal owners or users.-
As far as petitioner is concerned, the fact that its tradename is at ris!
would call for the protection ranted by Article > of the Paris
Convention. Petitioner calls attention to the fact that Article >, even as
embodied in par. =, sec. 0& of 6A 1==, mentions no reEuirement of
similarity of oods. Petitioner claims that the reason there is no mention
of such a reEuirement, is -because there is a diference between the
referent of the name and that of the mar!-
F:
and that -since Art. >
protects the tradename in the countries of the 3nion, such as #apan and
the Philippines, Petitioner9s tradename should be protected here.-
F$
@e cannot uphold petitioner9s position.
The term -trademar!- is de+ned by 6A 1==, the Trademar! (aw, as
includin -any word, name, symbol, emblem, sin or device or any
combination thereof adopted and used by a manufacturer or merchant
to identify his oods and distinuish them for those manufactured, sold
or dealt in by others.-
F=
Tradename is de+ned by the same law as
includin -individual names and surnames, +rm names, tradenames,
devices or words used by manufacturers, industrialists, merchants,
ariculturists, and others to identify their business, vocations, or
occupationsH the names or titles lawfully adopted and used by natural
or 8uridical persons, unions, and any manufacturin, industrial,
commercial, aricultural or other orani.ations enaed in trade or
commerce.-
F&
4imply put, a trade name refers to the business and its
oodwillH a trademar! refers to the oods.
F>
The Convention of Paris for the Protection of Industrial Property,
otherwise !nown as the Paris Convention, of which both the Philippines
and #apan, the country of petitioner, are sinatories
F%
, is a multilateral
treaty that see!s to protect industrial property consistin of patents,
utility models, industrial desins, trademar!s, service mar!s, trade
names and indications of source or appellations of oriin, and at the
same time aims to repress unfair competition.
0'
@e aree with public
respondents that the controllin doctrine with respect to the
applicability of Article > of the Paris Convention is that established
in Iabus#i Iais#a Isetan vs( Intermediate Aellate Court(
01
As pointed
out by the ,PTTT5
-6eardin the applicability of Article > of the Paris Convention,
this "Dce believes that there is no automatic protection
aforded an entity whose tradename is alleed to have been
infrined throuh the use of that name as a trademar! by a local
entity.
In Nabushi!i Naisha Isetan vs. The Intermediate Appellate Court,
et. al., I.6. 1o. &$:F', 1$ 1ovember 1%%1, the Aonorable
4upreme Court held that5
9The Paris Convention for the Protection of Industrial
Property does not automatically eCclude all countries of
the world which have sined it from usin a tradename
which happens to be used in one country. To illustrate W if
a taCicab or bus company in a town in the 3nited
Nindom or India happens to use the tradename -6apid
Transportation-, it does not necessarily follow that
-6apid- can no loner be reistered in 3anda, Bi8i, or the
Philippines.
This oDce is not unmindful that in the Treaty of Paris for the
Protection of Intellectual Property reardin well-!nown mar!s
and possible application thereof in this case. Petitioner, as this
oDce sees it, is tryin to see! refue under its protective
mantle, claimin that the sub8ect mar! is well !nown in this
country at the time the then application of 146 6ubber was +led.
Aowever, the then *inister of Trade and Industry, the Aon.
6oberto L. "npin, issued a memorandum dated F$ "ctober
1%>0 to the ?irector of Patents, a set of uidelines in the
implementation of Article =bis ;sic< of the Treaty of Paris. These
conditions are5
a< the mar! must be internationally !nownH
b< the sub8ect of the riht must be a trademar!, not a
patent or copyriht or anythin elseH
c< the mar! must be for use in the same or similar !inds
of oodsH and
d< the person claimin must be the owner of the mar!
;The Parties Convention Commentary on the Paris
Convention. Article by ?r. ,osch, ?irector Ieneral of the
@orld Intellectual Property "rani.ation, Ieneva,
4wit.erland, 1%>$<9
1&0
Brom the set of facts found in the records, it is ruled that the
Petitioner failed to comply with the third reEuirement of the said
memorandum that is the mar! must be for use in the same or
similar !inds of oods. The Petitioner is usin the mar! -CA1"1-
for products belonin to class F ;paints, chemical products<
while the 6espondent is usin the same mar! for sandals ;class
F$<. Aence, Petitioner9s contention that its mar! is well-!nown at
the time the 6espondent +led its application for the same mar!
should fail. -
0F
Petitioner assails the application of the case of Iabus#i Iais#a Isetan
vs( Intermediate Aellate Court to this case. Petitioner points out that
in the case of Iabus#i Iais#a Isetan vs( Intermediate Aellate
Court% petitioner therein was found to have never at all conducted its
business in the Philippines unli!e herein petitioner who has eCtensively
conducted its business here and also had its trademar! reistered in
this country. Aence, petitioner submits that this factual diference
renders inapplicable our rulin in the case of Iabus#i Iais#a Isetan vs(
Intermediate Aellate Court that Article > of the Paris Convention does
not automatically eCtend protection to a tradename that is in daner of
bein infrined in a country that is also a sinatory to said treaty( This
contention deserves scant consideration. 4uDce it to say that the 8ust
Euoted pronouncement in the case of Iabus#i Iais#a Isetan vs(
Intermediate Aellate Court% was made independent of the factual
+ndin that petitioner in said case had not conducted its business in
this country.
FH!R!OR!, in view of the foreoin, the instant petition for review
on certiorari is ?)1I)? for lac! of merit.
4" "6?)6)?.
G.R. No. 184850 O<&ober )0, )010
!.6. INDUSTRIA" SA"!S, INC. #$% !NGRACIO 6AP, Petitioners,
vs.
SH!N DAR !"!CTRICIT6 AND MACHIN!R6 CO., "TD., 6espondent.
? ) C I 4 I " 1
G!"ASCO, JR., J.:
The Case
This Petition for 6eview on Certiorari under 6ule :$ see!s to nullify and
reverse the Bebruary F1, F''> ?ecision
1
and the "ctober =, F''>
6esolution
F
rendered by the Court of Appeals ;CA< in CA-I.6. 4P 1o.
%%0$= entitled 4hen ?ar )lectricity and *achinery Co., (td. v. ).2.
Industrial 4ales, Inc. and )nracio 2ap.
The assailed decision reversed the ?ecision dated *ay F$, F''&
0
issued
by the ?irector Ieneral of the Intellectual Property "Dce ;IP"< in Inter
Partes Case 1o. 1:-F'':-'''>:. The IP" ?irector Ieneral upheld
Certi+cate of 6eistration ;C"6< 1o. :-1%%%-''$0%0 issued by the IP"
for the trademar! -L)4PA- in favor of petitioner ).2. Industrial 4ales, Inc.
;)2I4<, but ordered the cancellation of C"6 1o. :-1%%&-1F1:%F, also for
the trademar! -L)4PA,- issued in favor of respondent 4hen ?ar
)lectricity and *achinery Co., (td. ;4hen ?ar<. The ?ecision of the IP"
?irector Ieneral, in efect, aDrmed the ?ecision dated *ay F%,
F''=
:
issued by the ?irector of the ,ureau of (eal Afairs ;,(A< of the
IP".
The Bacts
)2I4 is a domestic corporation enaed in the production, distribution
and sale of air compressors and other industrial tools and
eEuipment.
$
Petitioner )nracio 2ap is the Chairman of the ,oard of
?irectors of )2I4.
=
6espondent 4hen ?ar is a Taiwan-based forein corporation enaed in
the manufacture of air compressors.
&
,oth companies claimed to have the riht to reister the trademar!
-L)4PA- for air compressors.
Brom 1%%& to F'':, )2I4 imported air compressors from 4hen ?ar
throuh sales contracts. In the 4ales Contract dated April F', F''F,
>
for
eCample, 4hen ?ar would supply )2I4 in one ;1< year with F: to 0'
units of :'-ft. containers worth of air compressors identi+ed in the
Pac!inQ@eiht (ists simply as 4?-F0, 4?-F%, 4?-01, 4?-0F, 4?-0%, 4?-
=& and 4?-=>. In the correspondin ,ill of (adins, the items were
described merely as air compressors.
%
There is no documentary
evidence to show that such air compressors were mar!ed -L)4PA.-
"n #une %, 1%%&, 4hen ?ar +led Trademar! Application 4erial 1o. :-
1%%&-1F1:%F with the IP" for the mar! -L)4PA, Chinese Characters and
?evice- for use on air compressors and weldin machines.
1'
1&:
"n #uly F>, 1%%%, )2I4 +led Trademar! Application 4erial 1o. :-1%%%-
''$0%0, also for the mar! -L)4PA,- for use on air compressors.
11
"n
#anuary 1>, F'':, the IP" issued C"6 1o. :-1%%%-''$0%0 in favor of
)2I4.
1F
Thereafter, on Bebruary >, F''&, 4hen ?ar was also issued C"6
1o. :-1%%&-1F1:%F.
10
In the meantime, on #une F1, F'':, 4hen ?ar +led a Petition for
Cancellation of )2I4S C"6 with the ,(A.
1:
In the Petition, 4hen ?ar
primarily arued that the issuance of the C"6 in favor of )2I4 violated
4ection 1F0.1 pararaphs ;d<, ;e< and ;f< of 6epublic Act 1o. ;6A< >F%0,
otherwise !nown as the Intellectual Property Code ;IP Code<, havin
+rst +led an application for the mar!. 4hen ?ar further alleed that )2I4
was a mere distributor of air compressors bearin the mar! -L)4PA-
which it imported from 4hen ?ar. 4hen ?ar also arued that it had prior
and eCclusive riht to the use and reistration of the mar! -L)4PA- in
the Philippines under the provisions of the Paris Convention.
1$
In its Answer, )2I4 and 2ap denied the claim of 4hen ?ar to be the true
owners of the mar! -L)4PA- bein the sole assembler and fabricator of
air compressors since the early 1%%'s. They further alleed that the air
compressors that 4hen ?ar alleedly supplied them bore the mar! -4?-
for 4hen ?ar and not -L)4PA.- *oreover, )2I4 arued that 4hen ?ar,
not bein the owner of the mar!, could not see! protection from the
provisions of the Paris Convention or the IP Code.
1=
Thereafter, the ?irector of the ,(A issued its ?ecision dated *ay F%,
F''= in favor of )2I4 and aainst 4hen ?ar, the dispositive portion of
which reads5
@A)6)B"6), premises considered, the Petition for Cancellation is, as it
is hereby, ?)1I)?. ConseEuently, Certi+cate of 6eistration 1o. :-1%%%-
J''$0%0K for the mar! -L)4PA- ranted in the name of ).2. Industrial
4ales, Inc. on % #anuary F''& is hereby upheld.
(et the +lewrapper of L)4PA sub8ect matter of this case be forwarded to
the Administrative, Binancial and Auman 6esource ?evelopment
4ervices ,ureau for issuance and appropriate action in accordance with
this ?)CI4I"1 and a copy thereof furnished to the ,ureau of
Trademar!s for information and update of its records.
4" "6?)6)?.
1&
4hen ?ar appealed the decision of the ,(A ?irector to the ?irector
Ieneral of the IP". In the appeal, 4hen ?ar raised the followin issues5
1. @hether the ,(A ?irector erred in rulin that 4hen ?ar failed
to present evidenceH
F. @hether the reistration of )2I4S application was proper
considerin that 4hen ?ar was the +rst to +le an application for
the mar!H and
0. @hether the ,(A ?irector correctly ruled that )2I4 is the true
owner of the mar!.
1>
(ater, the IP" ?irector Ieneral issued a ?ecision dated *ay F$, F''&
upholdin the C"6 issued in favor of )2I4 while cancellin the C"6 of
4hen ?ar, the dispositive portion of which reads5
@A)6)B"6), premises considered, the appeal is ?)1I)?. Certi+cate of
6eistration 1o. :-1%%%-''$0%0 for the mar! L)4PA for air compressor
issued in favor of Appellee is hereby upheld. ConseEuently, Certi+cate
of 6eistration 1o. :-1%%&-1F1:%F for the mar! L)4PA, Chinese
Characters / ?evice for oods air compressor and spot weldin
machine issued in favor of Appellant is hereby ordered cancelled.
(et a copy of this ?ecision as well as the records of this case be
furnished and returned to the ?irector of ,ureau of (eal Afairs for
appropriate action. Burther, let also the ?irectors of the ,ureau of
Trademar!s, the Administrative, Binancial and Auman 6esources
?evelopment 4ervices ,ureau, and the ?ocumentation, Information and
Technoloy Transfer ,ureau be furnished a copy of this ?ecision for
information, uidance, and records purposes.
1%
4hen ?ar appealed the above decision of the IP" ?irector Ieneral to
the CA where 4hen ?ar raised the followin issues5
1. @hether 4hen ?ar is uilty of forum shoppinH
F. @hether the +rst-to-+le rule applies to the instant caseH
0. @hether 4hen ?ar presented evidence of actual useH
:. @hether )2I4 is the true owner of the mar! -L)4PA-H
$. @hether the IP" ?irector Ieneral erred in cancellin 4hen
?arSs C"6 1o. :-1%%&-1F1:%F without a petition for cancellationH
and
=. @hether 4hen ?ar sustained damaes.
F'
1&$
In the assailed decision, the CA reversed the IP" ?irector Ieneral and
ruled in favor of 4hen ?ar. The dispositive portion states5
@A)6)B"6), premises considered, the petition is I6A1T)?.
ConseEuently, the assailed decision of the ?irector Ieneral of the
Intellectual Property "Dce dated *ay F$, F''& is hereby 6)L)64)?
and 4)T A4I?). In lieu thereof, a new one is entered5 a< orderin the
cancellation of Certi+cate of 6eistration 1o. :-1%%%-''$0%0 issued on
#anuary 1%, F'': for the trademar! L)4PA in favor of ).2. Industrial
4ales, Inc.H b< orderin the restoration of the validity of Certi+cate of
6eistration 1o. :-1%%&-1F1:%F for the trademar! L)4PA in favor of
4hen ?ar )lectricity and *achinery Co., (td. 1o pronouncement as to
costs.
4" "6?)6)?.
F1
In rulin for 4hen ?ar, the CA ruled that, despite the fact that 4hen ?ar
did not formally ofer its evidence before the ,(A, such evidence was
properly attached to the Petition for Cancellation. As such, 4hen ?arSs
evidence may be properly considered. The CA also enunciated that the
IP" failed to properly apply the provisions of 4ec. 1F0.1;d< of 6A >F%0,
which prohibits the reistration of a trademar! in favor of a party when
there is an earlier +led application for the same mar!. The CA further
ruled that 4hen ?ar should be considered to have prior use of the mar!
based on the statements made by the parties in their respective
?eclarations of Actual 3se. The CA added that )2I4 is a mere importer
of the air compressors with the mar! -L)4PA- as may be leaned from
its receipts which indicated that )2I4 is an importer, wholesaler and
retailer, and therefore, cannot be considered an owner of the mar!.
FF
)2I4 +led a motion for reconsideration of the assailed decision which
the CA denied in the assailed resolution.
Aence, the instant appeal.
Issues
)2I4 and 2ap raise the followin issues in their petition5
A. @hether the ?irector Ieneral of the IP" correctly upheld the
rihts of Petitioners over the trademar! L)4PA.
,. @hether the ?irector Ieneral of the IP" can, under the
circumstances, order the cancellation of 6espondentSs certi+cate
of reistration for L)4PA, which has been fraudulently obtained
and erroneously issued.
C. @hether the Aonorable Court of Appeals was 8usti+ed in
reversin the +ndins of fact of the IP", which aDrm the rihts
of Petitioner )2I4 over the trademar! L)4PA and when such
+ndins are supported by the evidence on record.
?. @hether this Aonorable Court may review Euestions of fact
considerin that the +ndins of the Court of Appeals and the IP"
are in conPict and the conclusions of the appellee court are
contradicted by the evidence on record.
F0
The 6ulin of the Court
The appeal is meritorious.
:r8& I88=e7
F'e&'er &':8 Co=r& m#B rev:e; &'e E=e8&:o$8 oD D#<& 9re8e$&e%
Petitioners raise the factual issue of who the true owner of the mar! is.
As a eneral rule, this Court is not a trier of facts. Aowever, such rule is
sub8ect to eCceptions.
In 1ew City ,uilders, Inc. v. 1ational (abor 6elations Commission,
F:
the
Court ruled that5
@e are very much aware that the rule to the efect that this Court is not
a trier of facts admits of eCceptions. As we have stated in Insular (ife
Assurance Company, (td. vs. CA5
JiKt is a settled rule that in the eCercise of the 4upreme CourtSs power of
review, the Court is not a trier of facts and does not normally underta!e
the re-eCamination of the evidence presented by the contendin parties
durin the trial of the case considerin that the +ndins of facts of the
CA are conclusive and bindin on the Court. Aowever, the Court had
reconi.ed several eCceptions to this rule, to wit5 ;1< when the +ndins
are rounded entirely on speculation, surmises or con8ecturesH ;F< when
the inference made is manifestly mista!en, absurd or impossibleH ;0<
when there is rave abuse of discretionH ;:< when the 8udment is
based on a misapprehension of factsH ;$< when the +ndins of facts are
conPictinH ;=< when in ma!in its +ndins the Court of Appeals went
beyond the issues of the case, or its +ndins are contrary to the
admissions of both the appellant and the appelleeH .,/ ;'e$ &'e
1&=
@$%:$08 #re <o$&r#rB &o &'e &r:#1 <o=r&H ;>< when the +ndins are
conclusions without citation of speci+c evidence on which they are
basedH ;%< when the facts set forth in the petition as well as in the
petitionerSs main and reply briefs are not disputed by the respondentH
;1'< when the +ndins of fact are premised on the supposed absence of
evidence and contradicted by the evidence on recordH and ;11< when
the Court of Appeals manifestly overloo!ed certain relevant facts not
disputed by the parties, which, if properly considered, would 8ustify a
diferent conclusion. ;)mphasis supplied.<
In the instant case, the records will show that the IP" and the CA made
diferin conclusions on the issue of ownership based on the evidence
presented by the parties. Aence, this issue may be the sub8ect of this
CourtSs review.
Se<o$% I88=e7
F'e&'er ev:%e$<e 9re8e$&e% beDore &'e B"A m=8& be Dorm#11B
oAere%
Preliminarily, it must be noted that the ,(A ruled that 4hen ?ar failed to
adduce evidence in support of its alleations as reEuired under "Dce
"rder 1o. &%, 4eries of F''$, Amendments to the 6eulations on Inter
Partes Proceedins, havin failed to formally ofer its evidence durin
the proceedins before it. The ,(A ruled5
At the outset, we note petitionerSs failure to adduce any evidence in
support of its alleations in the Petition for Cancellation. Petitioner did
not +le nor submit its mar!ed evidence as reEuired in this ,ureauSs
"rder 1o. F''=-1$& dated F$ #anuary F''= in compliance with "Dce
"rder 1o. &%, 4eries of F''$, Amendments to the 6eulations on Inter
Partes Proceedins.
F$
C C C
In reversin such +ndin, the CA cited 4ec. F.: of ,(A *emorandum
Circular 1o. '0, 4eries of F''$, which states5
4ection F.:. In all cases, failure to +le the documentary evidences in
accordance with 4ections & and > of the rules on summary proceedins
shall be construed as a waiver on the part of the parties. In such a case,
the oriinal petition, opposition, answer and the supportin documents
therein shall constitute the entire evidence for the parties sub8ect to
applicable rules.
The CA concluded that 4hen ?ar needed not formally ofer its evidence
but merely needed to attach its evidence to its position paper with the
proper mar!ins,
F=
which it did in this case.
The IP Code provides under its 4ec. 1'.0 that the ?irector Ieneral of
the IP" shall establish the procedure for the application for the
reistration of a trademar!, as well as the opposition to it5
4ection 1'. The ,ureau of (eal Afairs.dThe ,ureau of (eal Afairs
shall have the followin functions5
C C C C
1'.0. The ?irector Ieneral may by 6eulations establish the procedure
to overn the implementation of this 4ection.
Thus, the ?irector Ieneral issued "Dce "rder 1o. &%, 4eries of F''$
amendin the reulations on Inter Partes Proceedins, 4ec. 1F.1 of
which provides5
4ection 1F. Evidence $or t#e ,artiesZ
1F.1. The veri+ed petition or opposition, reply if any, duly mar!ed
aDdavits of the witnesses, and the documents submitted, shall
constitute the entire evidence for the petitioner or opposer. The veri+ed
answer, re8oinder if any, and the duly mar!ed aDdavits and documents
submitted shall constitute the evidence for the respondent. ADdavits,
documents and other evidence not submitted and duly mar!ed in
accordance with the precedin sections shall not be admitted as
evidence.
The precedin sections referred to in the above provision refer to 4ecs.
&.1, >.1 and % which, in turn, provide5
4ection &. Bilin of Petition or "ppositiond
&.1. The petition or opposition, toether with the aDdavits of witnesses
and oriinals of the documents and other reEuirements, shall be +led
with the ,ureau, provided, that in case of public documents, certi+ed
copies shall be allowed in lieu of the oriinals. The ,ureau shall chec! if
the petition or opposition is in due form as provided in the 6eulations
particularly 6ule 0, 4ection 0H 6ule :, 4ection FH 6ule $, 4ection 0H 6ule
=, 4ection %H 6ule &, 4ections 0 and $H 6ule >, 4ections 0 and :. Bor
petition for cancellation of layout desin ;toporaphy< of interated
circuits, 6ule 0, 4ection 0 applies as to the form and reEuirements. The
1&&
aDdavits, documents and other evidence shall be mar!ed consecutively
as -)Chibits- beinnin with the letter -A-.
4ection >. Answerd
>.1. @ithin three ;0< wor!in days from receipt of the petition or
opposition, the ,ureau shall issue an order for the respondent to +le an
answer toether with the aDdavits of witnesses and oriinals of
documents, and at the same time shall notify all parties reEuired to be
noti+ed in the IP Code and these 6eulations, provided, that in case of
public documents, certi+ed true copies may be submitted in lieu of the
oriinals. The aDdavits and documents shall be mar!ed consecutively
as -)Chibits- beinnin with the number -1-.
4ection %. Petition or "pposition and Answer must be veri+edd 4ub8ect
to 6ules & and > of these reulations, the petition or opposition and the
answer must be veri+ed. "therwise, the same shall not be considered
as havin been +led.
In other words, as lon as the petition is veri+ed and the pieces of
evidence consistin of the aDdavits of the witnesses and the oriinal of
other documentary evidence are attached to the petition and properly
mar!ed in accordance with 4ecs. &.1 and >.1 abovementioned, these
shall be considered as the evidence of the petitioner. There is no
reEuirement under the abovementioned rules that the evidence of the
parties must be formally ofered to the ,(A.
In any case, as a Euasi-8udicial aency and as stated in 6ule F, 4ec. $ of
the 6eulations on Inter Partes Proceedins, the ,(A is not bound by
technical rules of procedure. The evidence attached to the petition may,
therefore, be properly considered in the resolution of the case.
Third Issue5
@hether the IP" ?irector Ieneral can
validly cancel 4hen ?arSs Certi+cate of 6eistration
In his ?ecision, the IP" ?irector Ieneral stated that, despite the fact
that the instant case was for the cancellation of the C"6 issued in favor
of )2I4, the interests of 8ustice dictate, and in view of its +ndins, that
the C"6 of 4hen ?ar must be cancelled. The ?irector Ieneral
eCplained5
Accordinly, while the instant case involves a petition to cancel the
reistration of the AppelleeSs trademar! L)4PA, the interest of 8ustice
reEuires that Certi+cate of 6eistration 1o. :-1%%&-1F1:%F be
cancelled. @hile the normal course of proceedins should have been
the +lin of a petition for cancellation of Certi+cate of 6eistration 1o.
:-1%%&-1F1:%F, that would involve critical facts and issues that have
already been resolved in this case. To allow the Applicant to still
maintain in the Trademar! 6eistry Certi+cate of 6eistration 1o. :-
1%%&-1F1:%F would nullify the eCclusive rihts of Appellee as the true
and reistered owner of the mar! L)4PA and defeat the purpose of the
trademar! reistration system.
F&
4hen ?ar challenes the propriety of such cancellation on the round
that there was no petition for cancellation as reEuired under 4ec. 1$1 of
6A >F%0.
"Dce "rder 1o. &%, 4eries of F''$, provides under its 4ec. $ that5
4ection $. 6ules of Procedure to be followed in the conduct of hearin of
Inter Partes cases.dThe rules of procedure herein contained primarily
apply in the conduct of hearin of Inter Partes cases. The 6ules of Court
may be applied suppletorily. The ,ureau shall not be bound by strict
technical rules of procedure and evidence but may adopt, in the
absence of any applicable rule herein, such mode of proceedins which
is consistent with the reEuirements of fair play and conducive to the
8ust, speedy and ineCpensive disposition of cases, and which will ive
the ,ureau the reatest possibility to focus on the contentious issues
before it. ;)mphasis supplied.<
The above rule rePects the oft-repeated leal principle that Euasi-
8udicial and administrative bodies are not bound by technical rules of
procedure. 4uch principle, however, is tempered by fundamental
evidentiary rules, includin due process. Thus, we ruled in Aya-ay, 4r. v.
Arpaphil 4hippin Corp.5
F>
That administrative Euasi-8udicial bodies li!e the 1(6C are not bound by
technical rules of procedure in the ad8udication of cases does not mean
that the basic rules on provin alleations should be entirely dispensed
with. A party allein a critical fact must still support his alleation with
substantial evidence. Any decision based on unsubstantiated alleation
cannot stand as it will ofend due process.
C C C The liberality of procedure in administrative actions is sub8ect to
limitations imposed by basic reEuirements of due process. As this Court
said in An Tibay v. CI6, the provision for PeCibility in administrative
procedure -does not o so far as to 8ustify orders without a basis in
1&>
evidence havin rational probative value.- *ore speci+cally, as held in
3ichico v. 1(6C5
It is true that administrative and Euasi-8udicial bodies li!e the 1(6C are
not bound by the technical rules of procedure in the ad8udication of
cases. Aowever, this procedural rule should not be construed as a
license to disreard certain fundamental evidentiary rules.
This was later reiterated in (epanto Consolidated *inin Company v.
?umapis5
F%
@hile it is true that administrative or Euasi-8udicial bodies li!e the 1(6C
are not bound by the technical rules of procedure in the ad8udication of
cases, this procedural rule should not be construed as a license to
disreard certain fundamental evidentiary rules. The evidence
presented must at least have a modicum of admissibility for it to have
probative value. 1ot only must there be some evidence to support a
+ndin or conclusion, but the evidence must be substantial. 4ubstantial
evidence is more than a mere scintilla. It means such relevant evidence
as a reasonable mind miht accept as adeEuate to support a
conclusion. Thus, even thouh technical rules of evidence are not
strictly complied with before the (A and the 1(6C, their decision must
be based on evidence that must, at the very least, be substantial.
The fact that no petition for cancellation was +led aainst the C"6
issued to 4hen ?ar does not preclude the cancellation of 4hen ?arSs
C"6. It must be emphasi.ed that, durin the hearin for the
cancellation of )2I4S C"6 before the ,(A, 4hen ?ar tried to establish
that it, not )2I4, was the true owner of the mar! -L)4PA- and, thus,
entitled to have it reistered. 4hen ?ar had more than suDcient
opportunity to present its evidence and arue its case, and it did. It was
iven its day in court and its riht to due process was respected. The
IP" ?irector IeneralSs disreard of the procedure for the cancellation of
a reistered mar! was a valid eCercise of his discretion.
Bourth Issue5
@hether the factual +ndins of the IP" are bindin on the CA
1eCt, petitioners challene the CASs reversal of the factual +ndins of
the ,(A that 4hen ?ar and not )2I4 is the prior user and, therefore, true
owner of the mar!. In aruin its position, petitioners cite numerous
rulins of this Court where it was enunciated that the factual +ndins of
administrative bodies are iven reat weiht if not conclusive upon the
courts when supported by substantial evidence.
@e aree with petitioners that the eneral rule in this 8urisdiction is that
the factual +ndins of administrative bodies deserve utmost respect
when supported by evidence. Aowever, such eneral rule is sub8ect to
eCceptions.
In Buentes v. Court of Appeals,
0'
the Court established the rule of
conclusiveness of factual +ndins of the CA as follows5
#urisprudence teaches us that -;a<s a rule, the 8urisdiction of this Court
in cases brouht to it from the Court of Appeals C C C is limited to the
review and revision of errors of law alleedly committed by the
appellate court, as its +ndins of fact are deemed conclusive. As such
this Court is not duty-bound to analy.e and weih all over aain the
evidence already considered in the proceedins below. This rule,
however, is not without eCceptions.- The +ndins of fact of the Court of
Appeals, which are as a eneral rule deemed conclusive, may admit of
review by this Court5
;1< when the factual +ndins of the Court of Appeals and the trial
court are contradictoryH
;F< when the +ndins are rounded entirely on speculation,
surmises, or con8ecturesH
;0< when the inference made by the Court of Appeals from its
+ndins of fact is manifestly mista!en, absurd, or impossibleH
;:< when there is rave abuse of discretion in the appreciation of
factsH
;$< when the appellate court, in ma!in its +ndins, oes beyond
the issues of the case, and such +ndins are contrary to the
admissions of both appellant and appelleeH
;=< when the 8udment of the Court of Appeals is premised on a
misapprehension of factsH
;&< when the Court of Appeals fails to notice certain relevant
facts which, if properly considered, will 8ustify a diferent
conclusionH
;>< when the +ndins of fact are themselves conPictinH
;%< when the +ndins of fact are conclusions without citation of
the speci+c evidence on which they are basedH and
1&%
;1'< when the +ndins of fact of the Court of Appeals are
premised on the absence of evidence but such +ndins are
contradicted by the evidence on record. ;)mphasis supplied.<
Thereafter, in LillaPor v. Court of Appeals,
01
this Court applied the above
principle to factual +ndins of Euasi-8udicial bodies, to wit5
Proceedin by analoy, the eCceptions to the rule on conclusiveness of
factual +ndins of the Court of Appeals, enumerated
in Buentes vs( Court of Appeals% can also be applied to those of Euasi-
8udicial bodies C C C. ;)mphasis supplied.<
Aere, the CA identi+ed certain material facts that were alleedly
overloo!ed by the ,(A and the IP" ?irector Ieneral which it opined,
when correctly appreciated, would alter the result of the case. An
eCamination of the IP" ?ecisions, however, would show that no such
evidence was overloo!ed.
Birst, as to the date of +rst use of the mar! by the parties, the CA
stated5
To bein with, when respondents-appellees +led its application for
reistration of the L)4PA trademar! on #uly F>, 1%%%, they stated under
oath, as found in their ?)C(A6ATI"1 "B ACT3A( 34), that their +rst
use of the mar! was on ?ecember FF, 1%%>. "n the other hand, J4hen
?arK in its application dated #une '%, 1%%& stated, li!ewise under oath in
their ?)C(A6ATI"1 "B ACT3A( 34), that its +rst use of the mar! was in
#une 1%%=. This cannot be made any clearer. J4hen ?arK was not only
the +rst to +le an application for reistration but li!ewise +rst to use
said reistrable mar!.
0F
)vidently, the CA anchors its +ndin that 4hen ?ar was the +rst to use
the mar! on the statements of the parties in their respective
?eclarations of Actual 3se. 4uch conclusion is premature at best. @hile
a ?eclaration of Actual 3se is a notari.ed document, hence, a public
document, it is not conclusive as to the fact of +rst use of a mar!. The
declaration must be accompanied by proof of actual use as of the date
claimed. In a declaration of actual use, the applicant must, therefore,
present evidence of such actual use.
The ,(A ruled on the same issue, as follows5
*ore importantly, the private respondentSs prior adoption and
continuous use of the mar! VL)4PAS on air compressors is bolstered by
numerous documentary evidence consistin of sales invoices issued in
the name of ).2. Industrial and ,ill of (adin ;)Chibits V:S to V0&$S<. 4ales
Invoice 1o. 1F'&$ dated *arch F&, 1%%$ antedates petitionerSs date of
+rst use on #anuary 1, 1%%& indicated in its trademar! application +led
on #une %, 1%%& as well as the date of +rst use in #une of 1%%= as
indicated in the ?eclaration of Actual 3se submitted on ?ecember 0,
F''1 ;)Chibit V0>$S<. The use by respondent reistrant in the concept of
owner is shown by commercial documents, sales invoices
unambiuously describin the oods as -L)4PA- air compressors.
Private respondents have sold the air compressors bearin the -L)4PA-
to various locations in the Philippines, as far as *indanao and the
Lisayas since the early 1%%'Ss. @e carefully inspected the evidence
consistin of three hundred seventy-one ;0&1< invoices and shipment
documents which show that L)4PA air compressors were sold not only
in *anila, but to locations such as Iloilo City, Cebu City, ?umauete
City, 7amboana City, Caayan de "ro City, ?avao City, to name a few.
There is no doubt that it is throuh private respondentsS eforts that the
mar! -L)4PA- used on air compressors has ained business oodwill
and reputation in the Philippines for which it has validly acEuired
trademar! rihts. 6espondent ).2. IndustrialSs riht has been preserved
until the passae of 6A >F%0 which entitles it to reister the same.
00
Comparatively, the ,(ASs +ndins were founded upon the evidence
presented by the parties. An eCample of such evidence is Invoice 1o.
1F'&$ dated *arch F%, 1%%$
0:
where )2I4 sold four units of L)4PA air
compressors to Leteran Paint Trade Center. 4hen ?ar failed to rebut
such evidence. The truth, as supported by the evidence on record, is
that )2I4 was +rst to use the mar!.
*oreover, the discrepancy in the date provided in the ?eclaration of
Actual 3se +led by )2I4 and the proof submitted was appropriately
considered by the ,(A, rulin as follows5
"n the contrary, respondent )2 Industrial was able to prove the use of
the mar! -L)4PA- on the concept of an owner as early as 1%%1.
Althouh 6espondent ).2. indicated in its trademar! application that its
+rst use was in ?ecember FF, 1%%>, it was able to prove by clear and
positive evidence of use prior to such date.
In Chuan Te v. 1 Nian-Iuiab and ?irector of Patents, (-F0&%1, F0
1ovember 1%==, the Aih Court clari+ed5 @here an applicant for
reistration of a trademar! states under oath the date of his earliest
use, and later on he wishes to carry bac! his +rst date of use to an
earlier date, he then ta!es on the reater burden of presentin -clear
and convincin evidence- of adoption and use as of that earlier date.
;,.6. ,a!er Co. vs. (ebrow ,ros., 1$' B. Fd $>'.<
0$
1>'
The CA further found that )2I4 is not a manufacturer of air compressors
but merely imports and sells them as a wholesaler and retailer. The CA
reasoned5
Conversely, a careful perusal of appelleesS own submitted receipts
shows that it is not manufacturer but an importer, wholesaler and
retailer. This fact is corroborated by the testimony of a former employee
of appellees. Admittedly too, appellees are importin air compressors
from J4hen ?arK from 1%%& to F'':. These matters, lend credence to
J4hen ?arSsK claim that the letters 4? followed by a number inscribed in
the air compressor is only to describe its type, manufacturer business
name and capacity. The L)4PA mar! is in the stic!er which is attached
to the air compressors. The rulin of the 4upreme Court, in the case of
311" Commercial )nterprises, Inc. vs. Ieneral *illin Corporation et
al., is Euite enlihtenin, thus @e Euote5
-The term owner does not include the importer of the oods bearin the
trademar!, trade name, service mar!, or other mar! of ownership,
unless such importer is actually the owner thereof in the country from
which the oods are imported. Thus, this Court, has on several
occasions ruled that where the applicantSs alleed ownership is not
shown in any notarial document and the applicant appears to be merely
an importer or distributor of the merchandise covered by said
trademar!, its application cannot be ranted.-
0=
This is a non seEuitur. It does not follow. The fact that )2I4 described
itself in its sales invoice as an importer, wholesaler and retailer does
not preclude its bein a manufacturer. 4ec. F0& of the 1ational Internal
6evenue Code states5
4ection F0&. Issuance of 6eceipts or 4ales or Commercial Invoices.dAll
persons sub8ect to an internal revenue taC shall, for each sale and
transfer of merchandise or for services rendered valued at Twenty-+ve
pesos ;PF$.''< or more, issue duly reistered receipts or sale or
commercial invoices, prepared at least in duplicate, showin the date of
transaction, Euantity, unit cost and description of merchandise or
nature of service5 Provided, however, That where the receipt is issued
to cover payment made as rentals, commissions, compensation or fees,
receipts or invoices shall be issued which shall show the name, business
style, if any, and address of the purchaser, customer or client.
The oriinal of each receipt or invoice shall be issued to the purchaser,
customer or client at the time the transaction is efected, who, if
enaed in business or in the eCercise of profession, shall !eep and
preserve the same in his place of business for a period of three ;0<
years from the close of the taCable year in which such invoice or receipt
was issued, while the duplicate shall be !ept and preserved by the
issuer, also in his place of business, for a li!e period.
The Commissioner may, in meritorious cases, eCempt any person
sub8ect to an internal revenue taC from compliance with the provisions
of this 4ection. ;)mphasis supplied.<
Correlatively, in 6evenue *emorandum 1o. 1=-F''0 dated *ay F',
F''0, the ,ureau of Internal 6evenue de+ned a 4ales Invoice and
identi+ed its reEuired information as follows5
4ales Invoices ;4I<QCash Invoice ;CI< W is written account of oods sold or
services rendered and the prices chared therefor used in the ordinary
course of business evidencin sale and transfer or areement to sell or
transfer of oods and services. It contains the same information found
in the "Dcial 6eceipt.
"Dcial 6eceipt ;"6< W is a receipt issued for the payment of services
rendered or oods sold. It contains the followin information5
a. ,usiness name and addressH
b. TaCpayer Identi+cation 1umberH
c. 1ame of printer ;,I6 Permit 1o.< with inclusive serial number
of boo!lets and date of issuance of receipts.
There is no reEuirement that a sales invoice should accurately state the
nature of all the businesses of the seller. There is no leal round to
state that )2I4S -declaration- in its sales invoices that it is an importer,
wholesaler and retailer is restrictive and would preclude its bein a
manufacturer.
Brom the above +ndins, there was no 8usti+able reason for the CA to
disreard the factual +ndins of the IP". The rulins of the IP" ?irector
Ieneral and the ,(A ?irector were supported by clear and convincin
evidence. The facts cited by the CA and 4hen ?ar do not 8ustify a
diferent conclusion from that of the IP". Aence, the +ndins of the ,(A
?irector and the IP" ?irector Ieneral must be deemed as conclusive on
the CA.
Bifth Issue5
@hether )2I4 is the true owner of the mar! -L)4PA-
1>1
In any event, iven the lenth of time already invested by the parties in
the instant case, this Court must write +nis to the instant controversy
by determinin, once and for all, the true owner of the mar! -L)4PA-
based on the evidence presented.
6A >F%0 espouses the -+rst-to-+le- rule as stated under 4ec. 1F0.1;d<
which states5
4ection 1F0. 6eistrability. - 1F0.1. A mar! cannot be reistered if it5
C C C C
;d< Is identical with a reistered mar! belonin to a diferent proprietor
or a mar! with an earlier +lin or priority date, in respect of5
;i< The same oods or services, or
;ii< Closely related oods or services, or
;iii< If it nearly resembles such a mar! as to be li!ely to deceive
or cause confusion. ;)mphasis supplied.<
3nder this provision, the reistration of a mar! is prevented with the
+lin of an earlier application for reistration. This must not, however,
be interpreted to mean that ownership should be based upon an earlier
+lin date. @hile 6A >F%0 removed the previous reEuirement of proof of
actual use prior to the +lin of an application for reistration of a mar!,
proof of prior and continuous use is necessary to establish ownership of
a mar!. 4uch ownership constitutes suDcient evidence to oppose the
reistration of a mar!.
4ec. 10: of the IP Code provides that -any person who believes that he
would be damaed by the reistration of a mar! C C C- may +le an
opposition to the application. The term -any person- encompasses the
true owner of the mar!dthe prior and continuous user.
1otably, the Court has ruled that the prior and continuous use of a
mar! may even overcome the presumptive ownership of the reistrant
and be held as the owner of the mar!. As aptly stated by the Court in
4hanri-la International Aotel *anaement, (td. v. ?evelopers Iroup of
Companies, Inc.5
0&
6eistration, without more, does not confer upon the reistrant an
absolute riht to the reistered mar!. The certi+cate of reistration is
merely a rima $acie proof that the reistrant is the owner of the
reistered mar! or trade name. )vidence of prior and continuous use of
the mar! or trade name by another can overcome the presumptive
ownership of the reistrant and may very well entitle the former to be
declared owner in an appropriate case.
C C C C
"wnership of a mar! or trade name may be acEuired not necessarily by
reistration but by adoption and use in trade or commerce. As between
actual use of a mar! without reistration, and reistration of the mar!
without actual use thereof, the former prevails over the latter. Bor a rule
widely accepted and +rmly entrenched, because it has come down
throuh the years, is that actual use in commerce or business is a pre-
reEuisite to the acEuisition of the riht of ownership.
C C C C
,y itself, reistration is not a mode of acEuirin ownership. @hen the
applicant is not the owner of the trademar! bein applied for, he has no
riht to apply for reistration of the same. 6eistration merely creates a
prima facie presumption of the validity of the reistration, of the
reistrantSs ownership of the trademar! and of the eCclusive riht to the
use thereof. 4uch presumption, 8ust li!e the presumptive reularity in
the performance of oDcial functions, is rebuttable and must ive way to
evidence to the contrary.
Aere, the incontrovertible truth, as established by the evidence
submitted by the parties, is that )2I4 is the prior user of the mar!. The
eChaustive discussion on the matter made by the ,(A suDciently
addresses the issue5
,ased on the evidence, 6espondent ).2. Industrial is a leitimate
corporation enaed in buyin, importin, sellin, industrial
machineries and tools, manufacturin, amon others since its
incorporation in 1%>>. ;)Chibit -1-<. Indeed private respondents have
submitted photoraphs ;)Chibit -0&=-, -0&&-, -0&>-, -0&%-< showin an
assembly line of its manufacturin or assembly process..avv#i.
*ore importantly, the private respondentSs prior adoption and
continuous use of the mar! -L)4PA- on air compressors is bolstered by
numerous documentary evidence consistin of sales invoices issued in
the name of respondent )2 Industrial and ,ills of (adin. ;)Chibits -:- to
-0&$-<. 4ales Invoice 1o. 1F'&$ dated *arch F&, 1%%$ antedates
petitionerSs date of +rst use in #anuary 1, 1%%& indicated in its
trademar! application +led in #une %, 1%%& as well as the date of +rst
use in #une of 1%%= as indicated in the ?eclaration of Actual 3se
1>F
submitted on ?ecember 0, F''1 ;)Chibit -0>$-<. The use by
respondent-reistrant in the concept of owner is shown by commercial
documents, sales invoices unambiuously describin the oods as
-L)4PA- air compressors. Private respondents have sold the air
compressors bearin the -L)4PA- to various locations in the Philippines,
as far as *indanao and the Lisayas since the early 1%%'Ss. @e carefully
inspected the evidence consistin of three hundred seventy one ;0&1<
invoices and shipment documents which show that -L)4PA- air
compressors were sold not only in *anila, but to locations such as Iloilo
City, Cebu City, ?umauete City, 7amboana City, Caayan de "ro
City, ?avao City to name a few. There is no doubt that it is throuh
private respondentsS eforts that the mar! -L)4PA- used on air
compressors has ained business oodwill and reputation in the
Philippines for which it has validly acEuired trademar! rihts.
6espondent )2 IndustrialSs riht has been preserved until the passae
of 6A >F%0 which entitles it to reister the same. C C C
0>
"n the other hand, 4hen ?ar failed to refute the evidence cited by the
,(A in its decision. *ore importantly, 4hen ?ar failed to present
suDcient evidence to prove its own prior use of the mar! -L)4PA.- @e
cite with approval the rulin of the ,(A5
J4hen ?arK avers that it is the true and rihtful owner of the trademar!
-L)4PA- used on air compressors. The thrust of J4hen ?arSsK arument
is that respondent ).2. Industrial 4ales, Inc. is a mere distributor of the
-L)4PA- air compressors. @e disaree.
This conclusion is belied by the evidence. @e have one over each and
every document attached as AnneCes -A-, -A- 1-:> which consist of ,ill
of (adin and Pac!in @eiht (ist. 1ot one of these documents referred
to a -L)4PA- air compressor. Instead, it simply describes the oods
plainly as air compressors which is type -4?- and not -L)4PA-. *ore
importantly, the earliest date rePected on the ,ill of (adin was on *ay
$, 1%%&. ;AnneC W -A--1<. J4hen ?arK also attached as AnneC -,- a
purported 4ales Contract with respondent )2 Industrial 4ales dated
April F', F''F. 4urprisinly, nowhere in the document does it state that
respondent )2 Industrial areed to sell -L)4PA- air compressors. The
document only mentions air compressors which if enuine merely
bolsters respondent )nracio 2apSs contention that J4hen ?arK
approached them if it could sell the -4hen ?ar- or -4?- air compressor.
;)Chibit -0>=-< In its position paper, J4hen ?arK merely mentions of ,ill
of (adin constitutin respondent as consinee in 1%%0 but never
submitted the same for consideration of this ,ureau. The document is
also not sined by J4hen ?arK. The areement was not even drafted in
the letterhead of either J4hen ?arK nor JsicK respondent W reistrant. "ur
only conclusion is that J4hen ?arK was not able to prove to be the owner
of the L)4PA mar! by appropriation. 1either was it able to prove actual
commercial use in the Philippines of the mar! L)4PA prior to its +lin of
a trademar! application in % #une 1%%&.
0%
As such, )2I4 must be considered as the prior and continuous user of
the mar! -L)4PA- and its true owner. Aence, )2I4 is entitled to the
reistration of the mar! in its name.
@A)6)B"6), the petition is hereby I6A1T)?. The CASs Bebruary F1,
F''> ?ecision and "ctober =, F''> 6esolution in CA-I.6. 4P 1o. %%0$=
are hereby 6)L)64)? and 4)T A4I?). The ?ecision dated *ay F$, F''&
issued by the IP" ?irector Ieneral in Inter Partes Case 1o. 1:-F'':-
'''>: and the ?ecision dated *ay F%, F''= of the ,(A ?irector of the
IP" are hereby 6)I14TAT)?.
1o costs.
4" "6?)6)?.
G.R. No. 1599*8 M#r<' *1, )00+
SHANGRI-"A INT!RNATIONA" HOT!" MANAG!M!NT, "TD.,
SHANGRI-"A PROP!RTI!S, INC., MA5ATI SHANGRI-"A HOT!" N
R!SORT, INC., AND 5UO5 PHI"IPPIN!S PROP!RTI!S,
INC., Petitioners,
vs.
D!G!"OP!RS GROUP O COMPANI!S, INC., 6espondent.
? ) C I 4 I " 1
GARCIA, J.:
In this petition for review under 6ule :$ of the 6ules of Court,
petitioners 4hanri-(a International Aotel *anaement, (td. ;4(IA*<, et
al. assail and see! to set aside the ?ecision dated *ay 1$, F''0
1
of the
Court of Appeals ;CA< in CA-I.6. CL 1o. $00$1 and its 6esolution
F
of
4eptember 1$, F''0 which efectively aDrmed with modi+cation an
earlier decision of the 6eional Trial Court ;6TC< of Oue.on City in Civil
Case 1o. O-%1->:&=, an action for infrinement and damaes, thereat
commenced by respondent ?evelopers Iroup of Companies, Inc. ;?ICI<
aainst the herein petitioners.
The facts5
1>0
At the core of the controversy are the -4hanri-(a- mar! and -4- loo.
6espondent ?ICI claims ownership of said mar! and loo in the
Philippines on the strenth of its prior use thereof within the country. As
?ICI stresses at every turn, it +led on "ctober 1>, 1%>F with the
,ureau of Patents, Trademar!s and Technoloy Transfer ;,PTTT<
pursuant to 4ections F and : of 6epublic Act ;6A< 1o. 1==,
0
as
amended, an application for reistration coverin the sub8ect mar! and
loo. "n *ay 01, 1%>0, the ,PTTT issued in favor of ?ICI the
correspondin certi+cate of reistration therefor, i(e(, 6eistration 1o.
01%':. 4ince then, ?ICI started usin the -4hanri-(a- mar! and -4-
loo in its restaurant business.
"n the other hand, the Nuo! family owns and operates a chain of hotels
with interest in hotels and hotel-related transactions since 1%=%. As far
bac! as 1%=F, it adopted the name -4hanri-(a- as part of the
corporate names of all companies orani.ed under the aeis of the
Nuo! Iroup of Companies ;the Nuo! Iroup<. The Nuo! Iroup has used
the name -4hanri-(a- in all 4hanri-(a hotels and hotel-related
establishments around the world which the Nuo! Bamily owned.
To centrali.e the operations of all 4hanri-la hotels and the ownership of
the -4hanri-(a- mar! and -4- loo, the Nuo! Iroup had incorporated in
Aon Non and 4inapore, amon other places, several companies that
form part of the 4hanri-(a International Aotel *anaement (td. Iroup
of Companies. )?4A 4hanri-(a Aotel and 6esort, Inc., and *a!ati
4hanri-(a Aotel and 6esort, Inc. were incorporated in the Philippines
beinnin 1%>& to own and operate the two ;F< hotels put up by the
Nuo! Iroup in *andaluyon and *a!ati, *etro *anila.
All hotels owned, operated and manaed by the aforesaid 4(IA* Iroup
of Companies adopted and used the distinctive letterin of the name
-4hanri-(a- as part of their trade names.
Brom the records, it appears that 4hanri-(a Aotel 4inapore
commissioned a 4inaporean desin artist, a certain *r. @illiam (ee, to
conceptuali.e and desin the loo of the 4hanri-(a hotels.
?urin the launchin of the styli.ed -4- (oo in Bebruary 1%&$, *r. (ee
ave the followin eCplanation for the loo, to wit5
The loo which is shaped li!e a -4- represents the uniEuely Asean
architectural structures as well as !eep to the leendary 4hanri-la
theme with the mountains on top bein rePected on waters below and
the connectin centre JsicK line servin as the hori.on. This loo, which
is a bold, stri!in de+nitive desin, embodies both modernity and
sophistication in balance and thouht.
4ince 1%&$ and up to the present, the -4hanri-(a- mar! and -4- loo
have been used consistently and continuously by all 4hanri-(a hotels
and companies in their paraphernalia, such as stationeries, envelopes,
business forms, menus, displays and receipts.
The Nuo! Iroup andQor petitioner 4(IA* caused the reistration of, and
in fact reistered, the -4hanri-(a- mar! and -4- loo in the patent
oDces in diferent countries around the world.
"n #une F1, 1%>>, the petitioners +led with the ,PTTT a petition,
doc!eted as Inter Partes Case 1o. 01:$, prayin for the cancellation of
the reistration of the -4hanri-(a- mar! and -4- loo issued to
respondent ?ICI on the round that the same were illeally and
fraudulently obtained and appropriated for the latter9s restaurant
business. They also +led in the same oDce Inter Partes Case 1o. 0$F%,
prayin for the reistration of the same mar! and loo in their own
names.
3ntil 1%>& or 1%>>, the petitioners did not operate any establishment in
the Philippines, albeit they advertised their hotels abroad since 1%&F in
numerous business, news, andQor travel maa.ines widely circulated
around the world, all readily available in Philippine maa.ines and
newsstands. They, too, maintained reservations and boo!in aents in
airline companies, hotel orani.ations, tour operators, tour promotion
orani.ations, and in other allied +elds in the Philippines.
It is principally upon the foreoin factual bac!drop that respondent
?ICI +led a complaint for Infrinement and ?amaes with the 6TC of
Oue.on City aainst the herein petitioners 4(IA*, 4hanri-(a Properties,
Inc., *a!ati 4hanri-(a Aotel / 6esort, Inc., and Nuo! Philippine
Properties, Inc., doc!eted as Civil Case 1o. O-%1->:&= and eventually
ra`ed to ,ranch %% of said court. The complaint with prayer for
in8unctive relief and damaes alleed that ?ICI has, for the last eiht
;>< years, been the prior eCclusive user in the Philippines of the mar!
and loo in Euestion and the reistered owner thereof for its restaurant
and allied services. As ?ICI alleed in its complaint, 4(IA*, et al., in
promotin and advertisin their hotel and other allied pro8ects then
under construction in the country, had been usin a mar! and loo
confusinly similar, if not identical, with its mar! and -4- loo.
Accordinly, ?ICI souht to prohibit the petitioners, as defendants a
Euo, from usin the -4hanri-(a- mar! and -4- loo in their hotels in the
Philippines.
In their Answer with Counterclaim, the petitioners accused ?ICI of
appropriatin and illeally usin the -4hanri-(a- mar! and -4- loo,
addin that the leal and bene+cial ownership thereof pertained to
1>:
4(IA* and that the Nuo! Iroup and its related companies had been
usin this mar! and loo since *arch 1%=F for all their corporate names
and afairs. In this reard, they point to the Paris Convention for the
Protection of Industrial Property as afordin security and protection to
4(IA*9s eCclusive riht to said mar! and loo. They further claimed
havin used, since late 1%&$, the internationally-!nown and specially-
desined -4hanri-(a- mar! and -4- loo for all the hotels in their hotel
chain.
Pendin trial on the merits of Civil Case 1o. O-%1->:&=, the trial court
issued a @rit of Preliminary In8unction en8oinin the petitioners from
usin the sub8ect mar! and loo. The preliminary in8unction issue
ultimately reached the Court in I.6. 1o. 1':$>0 entitled ?evelopers
Iroup of Companies, Inc. vs. Court of Appeals, et al. In a
decision
:
dated *arch >, 1%%0, the Court nulli+ed the writ of preliminary
in8unction issued by the trial court and directed it to proceed with the
main case and decide it with deliberate dispatch.
@hile trial was in proress, the petitioners +led with the court a motion
to suspend proceedins on account of the pendency before the ,PTTT
of Inter Partes Case 1o. 01:$ for the cancellation of ?ICI9s certi+cate of
reistration. Bor its part, respondent ?ICI +led a similar motion in that
case, invo!in in this respect the pendency of its infrinement case
before the trial court. The parties9 respective motions to suspend
proceedins also reached the Court via their respective petitions in I.6.
1o. 11:>'F, entitled ?evelopers Iroup of Companies, Inc. vs. Court of
Appeals, et al. and I.6. 1o. 111$>', entitled 4hanri-(a International
Aotel *anaement (T?., et al. vs. Court of Appeals, et al., which were
accordinly consolidated.
In a consolidated decision
$
dated #une F1, F''1, the Court, limitin itself
to the core issue of whether, despite the petitioners9 institution of Inter
Partes Case 1o. 01:$ before the ,PTTT, herein respondent ?ICI -can
+le a subseEuent action for infrinement with the reular courts of
8ustice in connection with the same reistered mar!,- ruled in the
aDrmative, but nonetheless ordered the ,PTTT to suspend further
proceedins in said inter partes case and to await the +nal outcome of
the main case.
*eanwhile, trial on the merits of the infrinement case proceeded.
Presented as ?ICI9s lone witness was 6amon 4yhunlion, President and
Chairman of ?ICI9s ,oard of ?irectors. Amon other thins, this witness
testi+ed that5
1. Ae is a businessman, with interest in lumber, hotel, hospital,
tradin and restaurant businesses but only the restaurant
business bears the name -4hanri-(a- and uses the same and
the -4-loo- as service mar!s. The restaurant now !nown as
-4hanri-(a Binest Chinese Cuisine- was formerly !nown as the
-Carva8al 6estaurant- until ?ecember 1%>F, when respondent
too! over said restaurant business.
F. Ae had traveled widely around Asia prior to 1%>F, and
admitted !nowin the 4hanri-(a Aotel in Aon Non as early as
Auust 1%>F.
0. The -4-loo- was one of two ;F< desins iven to him in
?ecember 1%>F, scribbled on a piece of paper by a 8eepney
sinboard artist with an oDce somewhere in ,alintawa!. The
unnamed artist supposedly produced the two desins after
about two or three days from the time he ;4yhunlion< ave the
idea of the desin he had in mind.
:. "n "ctober 1$, 1%>F, or before the un!nown sinboard artist
supposedly created the -4hanri-(a- and -4- desins, ?ICI was
incorporated with the primary purpose of -ownin or operatin,
or both, of hotels and restaurants-.
$. "n "ctober 1>, 1%>F, aain prior to the alleed creation date
of the mar! and loo, ?ICI +led an application for trademar!
reistration of the mar! -4AA1I6I-(A BI1)4T CAI1)4) C3I4I1)
/ 4. (oo- with the ,PTTT. "n said date, respondent ?ICI
amended its Articles of Incorporation to rePect the name of its
restaurant, !nown and operatin under the style and name of
-4AA1I6I-(A BI1)4T CAI1)4) C3I4I1).- 6espondent ?ICI
obtained Certi+cate of 6eistration 1o. 01%': for the -4hanri-
(a- mar! and -4- loo.
)ventually, the trial court, on the postulate that petitioners9, more
particularly petitioner 4(IA*9s, use of the mar! and loo in dispute
constitutes an infrinement of ?ICI9s riht thereto, came out with its
decision
=
on *arch >, 1%%= renderin 8udment for ?ICI, as follows5
@A)6)B"6), 8udment is hereby rendered in favor of Jrespondent
?ICIK and aainst J4(IA*, et al.K -
a< 3pholdin the validity of the reistration of the service mar!
-4hanri-la- and -4-(oo- in the name of JrespondentKH
b< ?eclarin Jpetitioners9K use of said mar! and loo as
infrinement of Jrespondent9sK riht theretoH
1>$
c< "rderin JpetitionersK, their representatives, aents,
licensees, assinees and other persons actin under their
authority and with their permission, to permanently cease and
desist from usin andQor continuin to use said mar! and loo, or
any copy, reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel
and allied pro8ects and services or in any other manner
whatsoeverH
d< "rderin JpetitionersK to remove said mar! and loo from any
premises, ob8ects, materials and paraphernalia used by them
andQor destroy any and all prints, sins, advertisements or other
materials bearin said mar! and loo in their possession andQor
under their controlH and
e< "rderin JpetitionersK, 8ointly and severally, to indemnify
JrespondentK in the amounts of PF,''','''.'' as actual and
compensatory damaes, P$'','''.'' as attorney9s fee and
eCpenses of litiation.
(et a copy of this ?ecision be certi+ed to the ?irector, ,ureau of
Patents, Trademar!s and Technoloy Transfer for his information and
appropriate action in accordance with the provisions of 4ection F$,
6epublic Act 1o. 1==
Costs aainst JpetitionersK.
4" "6?)6)?. J@ords in brac!ets added.K
Therefrom, the petitioners went on appeal to the CA whereat their
recourse was doc!eted as CA I.6. 4P 1o. $00$1.
As stated at the threshold hereof, the CA, in its assailed ?ecision of *ay
1$, F''0,
&
aDrmed that of the lower court with the modi+cation of
deletin the award of attorney9s fees. The appellate court predicated its
aDrmatory action on the strenth or interplay of the followin
premises5
1. Albeit the Nuo! Iroup used the mar! and loo since 1%=F, the
evidence presented shows that the bul! use of the tradename
was abroad and not in the Philippines ;until 1%>&<. 4ince the
Nuo! Iroup does not have proof of actual use in commerce in
the Philippines ;in accordance with 4ection F of 6.A. 1o. 1==<, it
cannot claim ownership of the mar! and loo in accordance with
the holdin in Nabushi Naisha Isetan v. IAC
>
, as reiterated in
Philip *orris, Inc. v. Court of Appeals.
%
F. "n the other hand, respondent has a riht to the mar! and
loo by virtue of its prior use in the Philippines and the issuance
of Certi+cate of 6eistration 1o. 01%':.
0. The use of the mar! or loo in commerce throuh the
boo!ins made by travel aencies is unavailin since the Nuo!
Iroup did not establish any branch or reional oDce in the
Philippines. As it were, the Nuo! Iroup was not enaed in
commerce in the Philippines inasmuch as the boo!ins were
made throuh travel aents not owned, controlled or manaed
by the Nuo! Iroup.
:. @hile the Paris Convention protects internationally !nown
mar!s, 6.A. 1o. 1== still reEuires use in commerce in the
Philippines. Accordinly, and on the premise that international
areements, such as Paris Convention, must yield to a municipal
law, the Euestion on the eCclusive riht over the mar! and loo
would still depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied
by the CA in its eEually assailed 6esolution of 4eptember 1$, F''0.
1'
As formulated by the petitioners, the issues upon which this case
hines are5
1. @hether the CA erred in +ndin that respondent had the riht
to +le an application for reistration of the -4hanri-(a- mar!
and -4- loo althouh respondent never had any prior actual
commercial use thereofH
F. @hether the CA erred in +ndin that respondent9s supposed
use of the identical -4hanri-(a- mar! and -4- loo of the
petitioners was not evident bad faith and can actually ripen into
ownership, much less reistrationH
0. @hether the CA erred in overloo!in petitioners9 widespread
prior use of the -4hanri-(a- mar! and -4- loo in their
operationsH
:. @hether the CA erred in refusin to consider that petitioners
are entitled to protection under both 6.A. 1o. 1==, the old
1>=
trademar! law, and the Paris Convention for the Protection of
Industrial PropertyH
$. @hether the CA erred in holdin that 4(IA* did not have the
riht to leally own the -4hanri-(a- mar! and -4- loo by virtue
of and despite their ownership by the Nuo! IroupH
=. @hether the CA erred in rulin that petitioners9 use of the
mar! and loo constitutes actionable infrinementH
&. @hether the CA erred in awardin damaes in favor of
respondent despite the absence of any evidence to support the
same, and in failin to award relief in favor of the petitionersH
and
>. @hether petitioners should be prohibited from continuin
their use of the mar! and loo in Euestion.
There are two preliminary issues, however, that respondent ?ICI calls
our attention to, namely5
1. @hether the certi+cation aainst forum-shoppin submitted
on behalf of the petitioners is suDcientH
F. @hether the issues posed by petitioners are purely factual in
nature hence improper for resolution in the instant petition for
review on certiorari(
?ICI claims that the present petition for review should be dismissed
outriht for certain procedural defects, to wit5 an insuDcient
certi+cation aainst forum shoppin and raisin pure Euestions of fact.
"n both counts, we +nd the instant petition formally and substantially
sound.
In its Comment, respondent alleed that the certi+cation aainst forum
shoppin sined by Atty. (ee ,en8amin 7. (erma on behalf and as
counsel of the petitioners was insuDcient, and that he was not duly
authori.ed to eCecute such document. 6espondent further alleed that
since petitioner 4(IA* is a forein entity based in Aon Non, the
?irector9s Certi+cate eCecuted by *r. *adhu 6ama Chandra 6ao,
embodyin the board resolution which authori.es Atty. (erma to act for
4(IA* and eCecute the certi+cation aainst forum shoppin, should
contain the authentication by a consular oDcer of the Philippines in
Aon Non.
In <ational Steel Cororation v( CA,
11
the Court has ruled that the
certi+cation on non-forum shoppin may be sined, for and in behalf of
a corporation, by a speci+cally authori.ed lawyer who has personal
!nowlede of the facts reEuired to be disclosed in such document. The
reason for this is that a corporation can only eCercise its powers throuh
its board of directors andQor its duly authori.ed oDcers and aents.
Physical acts, li!e the sinin of documents, can be performed only by
natural persons duly authori.ed for the purpose.
1F
*oreover, 6ule &, 4ection $ of the 6ules of Court concernin the
certi+cation aainst forum shoppin does not reEuire any consular
certi+cation if the petitioner is a forein entity. 1onetheless, to banish
any linerin doubt, petitioner 4(IA* furnished this Court with a
consular certi+cation dated "ctober F%, F''0 authenticatin the
?irector9s Certi+cate authori.in Atty. (erma to eCecute the certi+cation
aainst forum shoppin, toether with petitioners9 manifestation of
Bebruary %, F'':.
6espondent also attac!s the present petition as one that raises pure
Euestions of fact. It points out that in a petition for review under 6ule :$
of the 6ules of Court, the Euestions that may properly be inEuired into
are strictly circumscribed by the eCpress limitation that -the petition
shall raise only Euestions of law which must be distinctly set
forth.-
10
@e do not, however, +nd that the issues involved in this
petition consist purely of Euestions of fact. These issues will be dealt
with as we o throuh the Euestions raised by the petitioners one by
one.
Petitioners9 +rst arument is that the respondent had no riht to +le an
application for reistration of the -4hanri-(a- mar! and -4- loo
because it did not have prior actual commercial use thereof. To
respondent, such an arument raises a Euestion of fact that was
already resolved by the 6TC and concurred in by the CA.
Birst of, all that the 6TC found was that respondent was the prior user
and reistrant of the sub8ect mar! and loo in the Philippines. Ta!en in
proper conteCt, the trial court9s +ndin on -prior use- can only be
interpreted to mean that respondent used the sub8ect mar! and loo in
the country before the petitioners did. It cannot be construed as bein a
factual +ndin that there was prior use of the mar! and loo before
reistration.
4econdly, the Euestion raised is not purely factual in nature. In the
conteCt of this case, it involves resolvin whether a certi+cate of
reistration of a mar!, and the presumption of reularity in the
performance of oDcial functions in the issuance thereof, are suDcient
1>&
to establish prior actual use by the reistrant. It further entails
answerin the Euestion of whether prior actual use is reEuired before
there may be a valid reistration of a mar!.
3nder the provisions of the former trademar! law, 6.A. 1o. 1==, as
amended, which was in efect up to ?ecember 01, 1%%&, hence, the law
in force at the time of respondent9s application for reistration of
trademar!, the root of ownership of a trademar! is actual use in
commerce. 4ection F of said law reEuires that before a trademar! can
be reistered, it must have been actually used in commerce and service
for not less than two months in the Philippines prior to the +lin of an
application for its reistration.
6eistration, without more, does not confer upon the reistrant an
absolute riht to the reistered mar!. The certi+cate of reistration is
merely a rima $acie proof that the reistrant is the owner of the
reistered mar! or trade name. )vidence of prior and continuous use of
the mar! or trade name by another can overcome the presumptive
ownership of the reistrant and may very well entitle the former to be
declared owner in an appropriate case.
1:
Amon the efects of reistration of a mar!, as cataloued by the Court
in (oren.ana v. *acaba,
1$
are5
1. 6eistration in the Principal 6eister ives rise to
a 9re8=m9&:o$ of the validity of the reistration, the
reistrant9s ownership of the mar!, and his riht to the eCclusive
use thereof. C C C
F. 6eistration in the Principal 6eister is 1:m:&e% &o &'e #<&=#1
o;$er of the trademar! and proceedins therein pass on the
issue of ownership, which m#B be <o$&e8&e% &'ro=0'
o99o8:&:o$ or :$&erDere$<e 9ro<ee%:$08, or, #D&er
re0:8&r#&:o$, :$ # 9e&:&:o$ Dor <#$<e11#&:o$. CCC
J)mphasis suppliedK.avv#il([et
"wnership of a mar! or trade name may be acEuired not necessarily by
reistration but by adoption and use in trade or commerce. As between
actual use of a mar! without reistration, and reistration of the mar!
without actual use thereof, the former prevails over the latter. Bor a rule
widely accepted and +rmly entrenched, because it has come down
throuh the years, is that actual use in commerce or business is a pre-
reEuisite to the acEuisition of the riht of ownership.
1=
@hile the present law on trademar!s
1&
has dispensed with the
reEuirement of prior actual use at the time of reistration, the law in
force at the time of reistration must be applied, and thereunder it was
held that as a condition precedent to reistration of trademar!, trade
name or service mar!, the same must have been in actual use in the
Philippines before the +lin of the application for
reistration.
1>
Trademar! is a creation of use and therefore actual use is
a pre-reEuisite to eCclusive ownership and its reistration with the
Philippine Patent "Dce is a mere administrative con+rmation of the
eCistence of such riht.
1%
,y itself, reistration is not a mode of acEuirin ownership. @hen the
applicant is not the owner of the trademar! bein applied for, he has no
riht to apply for reistration of the same. 6eistration merely creates
a rima $aciepresumption of the validity of the reistration, of the
reistrant9s ownership of the trademar! and of the eCclusive riht to the
use thereof.
F'
4uch presumption, 8ust li!e the presumptive reularity in
the performance of oDcial functions, is rebuttable and must ive way to
evidence to the contrary.
Aere, respondent9s own witness, 6amon 4yhunlion, testi+ed that a
8eepney sinboard artist alleedly commissioned to create the mar!
and loo submitted his desins only in ?ecember 1%>F.
F1
This was two-
and-a-half months a$ter the +lin of the respondent9s trademar!
application on "ctober 1>, 1%>F with the ,PTTT. It was also only in
?ecember 1%>F when the respondent9s restaurant was opened for
business.
FF
6espondent cannot now claim before the Court that the
certi+cate of reistration itself is proof that the two-month prior use
reEuirement was complied with, what with the fact that its very own
witness testi+ed otherwise in the trial court. And because at the time
;"ctober 1>, 1%>F< the respondent +led its application for trademar!
reistration of the -4hanri-(a- mar! and -4- loo, respondent was not
usin these in the Philippines commercially, the reistration is void.
Petitioners also arue that the respondent9s use of the -4hanri-(a-
mar! and -4- loo was in evident bad faith and cannot therefore ripen
into ownership, much less reistration. @hile the respondent is correct
in sayin that a +ndin of bad faith is factual, not leal,
F0
hence beyond
the scope of a petition for review, there are, however, noted eCceptions
thereto. Amon these eCceptions are5
1. @hen the inference made is manifestly mista!en, absurd or
impossibleH
F:
F. @hen there is rave abuse of discretionH
F$
1>>
0. @hen the 8udment is based on a misapprehension of factsH
F=
:. @hen the +ndins of fact are conPictinH
F&
and
$. @hen the facts set forth in the petition as well as in the
petitioner9s main and reply briefs are not disputed by the
respondent.
F>
And these are namin but a few of the reconi.ed eCceptions to the
rule.
The CA itself, in its ?ecision of *ay 1$, F''0, found that the
respondent9s president and chairman of the board, 6amon 4yhunlion,
had been a uest at the petitioners9 hotel before he caused the
reistration of the mar! and loo, and surmised that he must have
copied the idea there5
?id *r. 6amon 4yhunlion, Jrespondent9sK President copy the mar! and
devise from one of Jpetitioners9K hotel ;Nowloon 4hanri-la< abroadR The
mere fact that he was a visitor of Jpetitioners9K hotel abroad at one time
;4eptember F&, 1%>F< establishes Jpetitioners9K alleation that he ot
the idea there.
F%
2et, in the very neCt pararaph, despite the precedin admission that
the mar! and loo must have been copied, the CA tries to ma!e it
appear that the adoption of the same mar! and loo could have been
coincidental5
The word or name -4hanri-la- and the 4-loo, are not uncommon. The
word -4hanri-la- refers to a ;a< remote beautiful imainary place
where life approaches perfection or ;b< imainary mountain land
depicted as a utopia in the novel (ost Aori.on by #ames Ailton. The (ost
Aori.on was a well-read and popular novel written in 1%&=. It is not
impossible that the parties, inspired by the novel, both adopted the
mar! for their business to con8ure JaK place of beauty and pleasure.
The 4-loo is, li!ewise, not unusual. The devise loo!s li!e a modi+ed "ld
)nlish print.
0'
To 8ump from a reconition of the fact that the mar! and loo must have
been copied to a rationali.ation for the possibility that both the
petitioners and the respondent coincidentally chose the same name
and loo is not only contradictory, but also manifestly mista!en or
absurd. Burthermore, the -4- loo appears nothin li!e the -"ld )nlish-
print that the CA ma!es it out to be, but is obviously a symbol with
oriental or Asian overtones. At any rate, it is ludicrous to believe that
the parties would come up with the eCact same letterin for the word
-4hanri-(a- and the eCact same loo to boot. As correctly observed by
the petitioners, to which we are in full accord5
C C C @hen a trademar! copycat adopts the word portion of another9s
trademar! as his own, there may still be some doubt that the adoption
is intentional. ,ut if he copies not only the word but also the word9s
eCact font and letterin style and in addition, he copies also the loo
portion of the trademar!, the slihtest doubt vanishes. It is then
replaced by the certainty that the adoption was deliberate, malicious
and in bad faith.
01
It is truly diDcult to understand why, of the millions of terms and
combination of letters and desins available, the respondent had to
choose eCactly the same mar! and loo as that of the petitioners, if
there was no intent to ta!e advantae of the oodwill of petitioners9
mar! and loo.
0F
"ne who has imitated the trademar! of another cannot brin an action
for infrinement, particularly aainst the true owner of the mar!,
because he would be comin to court with unclean hands.
00
Priority is of
no avail to the bad faith plaintif. Iood faith is reEuired in order to
ensure that a second user may not merely ta!e advantae of the
oodwill established by the true owner.
This point is further bolstered by the fact that under either 4ection 1& of
6.A. 1o. 1==, or 4ection 1$1 of 6.A. 1o. >F%0, or Article =bis;0< of the
Paris Convention, no time limit is +Ced for the cancellation of mar!s
reistered or used in bad faith.
0:
This is precisely why petitioners had
+led an inter partes case before the ,PTTT for the cancellation of
respondent9s reistration, the proceedins on which were suspended
pendin resolution of the instant case.
6espondent ?ICI also rebu!es the neCt issue raised by the petitioners
as bein purely factual in nature, namely, whether the CA erred in
overloo!in petitioners9 widespread prior use of the -4hanri-(a- mar!
and -4- loo in their operations. The Euestion, however, is not whether
there had been widespread prior use, which would have been factual,
but whether that prior use entitles the petitioners to use the mar! and
loo in the Philippines. This is clearly a Euestion which is leal in nature.
It has already been established in the two courts below, and admitted
b" t#e resondentCs resident #imsel$, that petitioners had prior
widespread use of the mar! and loo abroad5
1>%
There is, to be sure, an :m9re88:ve m#88 oD 9rooD that petitioner
4(IA* and its related companies abroad used the name and loo for
one purpose or another C C C.
0$
J)mphasis suppliedK
In respondent9s own words, -JTKhe Court of Appeals did note petitioners9
use of the mar! and loo but held that such use did not confer to them
ownership or eCclusive riht to use them in the Philippines.-
0=
To
petitioners9 mind, it was error for the CA to rule that their worldwide use
of the mar! and loo in dispute could not have conferred upon them
any riht thereto. Aain, this is a leal Euestion which is well worth
delvin into.
6.A. 1o. 1==, as amended, under which this case was heard and
decided provides5
4ection F. @hat are re0:8&r#b1e. - Trademar!s, trade names and
service mar!s o;$e% by persons, corporations, partnerships or
associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domiciled in any forein country may be
reistered in accordance with the provisions of this Act5 Provided, That
said trademar!s trade names, or service mar!s are #<&=#11B :$ =8e :$
<ommer<e #$% 8erv:<e8 $o& 1e88 &'#$ &;o mo$&'8 :$ &'e
P':1:99:$e8 before the time the applications for reistration are +led5
And provided, further, That the country of which the applicant for
reistration is a citi.en rants by law substantially similar privilees to
citi.ens of the Philippines, and such fact is oDcially certi+ed, with a
certi+ed true copy of the forein law translated into the )nlish
lanuae, by the overnment of the forein country to the Iovernment
of the 6epublic of the Philippines.
4ection F-A. O;$er8':9 of trademar!s, trade names and service
mar!sH how acEuired. - Anyone who lawfully produces or deals in
merchandise of any !ind or who enaes in any lawful business, or who
renders any lawful service in commerce, by #<&=#1 =8e thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his eCclusive use a trademar!, a trade name, or a
servicemar! $o& 8o #99ro9r:#&e% bB #$o&'er, to distinuish his
merchandise, business or service from the merchandise, business or
services of others. The ownership or possession of a trademar!, trade
name, service mar!, heretofore or hereafter appropriated, as in this
section provided, shall be reconi.ed and protected in the same
manner and to the same eCtent as are other property rihts !nown to
this law. J)mphasis suppliedK
Admittedly, the CA was not amiss in sayin that the law reEuires the
actual use in commerce of the said trade name and -4- loo in t#e
,#iliines( Aence, consistent with its +ndin that the bul! of the
petitioners9 evidence shows that the alleed use of the 4hanri-(a trade
name was done abroad and not in the Philippines, it is understandable
for that court to rule in respondent9s favor. 3nfortunately, however,
what the CA failed to perceive is that there is a crucial diference
between the aforeEuoted 4ection F and 4ection F-A of 6.A. 1o. 1==. Bor,
while 4ection F provides for what is re+istrable% 4ection F-A, on the
other hand, sets out how owners#i is acEuired. These are two distinct
concepts.
3nder 4ection F, in order to reister a trademar!, one must be the
owner thereof and must have actually used the mar! in commerce in
the Philippines for F months prior to the application for reistration.
4ince -ownership- of the trademar! is reEuired for reistration, 4ection
F-A of the same law sets out to de+ne how one oes about acEuirin
ownership thereof. 3nder 4ection F-A, it is clear that actual use in
commerce is also the test of ownership but the provision went further
by sayin that the mar! must not have been so appropriated by
another. Additionally, it is sini+cant to note that 4ection F-A does not
reEuire that the actual use of a trademar! must be within the
Philippines. Aence, under 6.A. 1o. 1==, as amended, one may be an
owner of a mar! due to actual use thereof but not yet have the riht to
reister such ownership here due to failure to use it within the
Philippines for two months.
@hile the petitioners may not have Euali+ed under 4ection F of 6.A. 1o.
1== as a reistrant, neither did respondent ?ICI, since the latter also
failed to ful+ll the F-month actual use reEuirement. @hat is worse, ?ICI
was not even the owner of the mar!. Bor it to have been the owner, the
mar! must not have been already appropriated ;i(e(% used< by someone
else. At the time of respondent ?ICI9s reistration of the mar!, the
same was already bein used by the petitioners, albeit abroad, of which
?ICI9s president was fully aware(
It is respondent9s contention that since the petitioners adopted the
-4hanri-(a- mar! and -4- loo as a mere corporate name or as the
name of their hotels, instead of usin them as a trademar! or service
mar!, then such name and loo are not trademar!s. The two concepts
of corporate name or business name and trademar! or service mar!,
are not mutually eCclusive. It is common, indeed li!ely, that the name of
a corporation or business is also a trade name, trademar! or service
mar!. 4ection 0> of 6.A. 1o. 1== de+nes the terms as follows5
4ec. 0>. @ords and terms de+ned and construed - In the construction of
this Act, unless the contrary is plainly apparent from the conteCt - The
term -trade name- includes individual names and surnames, +rm
1%'
names, trade names, devices or words used by manufacturers,
industrialists, merchants, ariculturists, and others to identify their
business, vocations or occupationsH the $#me8 or &:&1e8 1#;D=11B
#%o9&e% #$% =8e% bB $#&=r#1 or L=r:%:<#1 9er8o$8, unions, and any
manufacturin, industrial, commercial, aricultural or other
orani.ations enaed in trade or commerce.
The term -trade mar!- includes any word, name, symbol, emblem, sin
or device or any combination thereof adopted and used by a
manufacturer or merchant to identify his oods and distinuish them
from those manufactured, sold or dealt in by others.
The term -service mar!- means a mar! used in the sale or advertisin
of services to identify the serv:<e8 oD o$e 9er8o$ #$% %:8&:$0=:8'
&'em Drom &'e 8erv:<e8 oD o&'er8 #$% :$<1=%e8 ;:&'o=&
1:m:&#&:o$ &'e m#r38, $#me8, 8Bmbo18, &:&1e8, %e8:0$#&:o$8,
81o0#$8, <'#r#<&er $#me8, #$% %:8&:$<&:ve De#&=re8 oD r#%:o or
o&'er #%ver&:8:$0. J)mphasis suppliedK
Clearly, from the broad de+nitions Euoted above, the petitioners can be
considered as havin used the -4hanri-(a- name and -4- loo as a
tradename and service mar!.
The new Intellectual Property Code ;IPC<, 6epublic Act 1o. >F%0,
undoubtedly shows the +rm resolve of the Philippines to observe and
follow the Paris Convention by incorporatin the relevant portions of the
Convention such that persons who may Euestion a mar! ;that is,
oppose reistration, petition for the cancellation thereof, sue for unfair
competition< include persons whose internationally well-!nown
mar!, w#et#er or not re+istered, is
identical with or confusinly similar to or constitutes a translation of a
mar! that is souht to be reistered or is actually reistered.
0&
Aowever, while the Philippines was already a sinatory to the Paris
Convention, the IPC only too! efect on #anuary 1, 1%>>, and in the
absence of a retroactivity clause, 6.A. 1o. 1== still applies.
0>
3nder the
prevailin law and 8urisprudence at the time, the CA had not erred in
rulin that5
The Paris Convention mandates that protection should be aforded to
internationally !nown mar!s as sinatory to the Paris Convention,
without reard as to whether the forein corporation is reistered,
licensed or doin business in the Philippines. It oes without sayin that
the same runs afoul to 6epublic Act 1o. 1==, which reEuires the actual
use in commerce in the Philippines of the sub8ect mar! or devise. The
apparent conPict between the two ;F< was settled by the 4upreme
Court in this wise -
-Bollowin universal acEuiescence and comity, o=r m=$:<:9#1 1#; o$
&r#%em#r38 re0#r%:$0 &'e reE=:reme$& oD #<&=#1 =8e :$ &'e
P':1:99:$e8 m=8& 8=bor%:$#&e #$ :$&er$#&:o$#1
#0reeme$& inasmuch as the apparent clash is bein decided by a
municipal tribunal ;*ortensen vs. Peters, Ireat ,ritain, Aih Court of
#udiciary of 4cotland, 1%'=, > 4essions %0H Paras, International (aw and
@orld "rani.ation, 1%&1 )d., p. F'<. @ithal, the fact that international
law has been made part of the law of the land does not by any means
imply the primacy of international law over national law in the
municipal sphere. 3nder the doctrine of incorporation as applied in
most countries, rules of international law are iven a standin eEual,
not superior, to national leislative enactments ;4alona and 2ap, Public
International (aw, Bourth ed., 1%&:, p. 1=<.-
0%
J)mphasis suppliedK
ConseEuently, the petitioners cannot claim protection under the Paris
Convention. 1evertheless, with the double in+rmity of lac! of two-
month prior use, as well as bad faith in the respondent9s reistration of
the mar!, it is evident that the petitioners cannot be uilty of
infrinement. It would be a reat in8ustice to ad8ude the petitioners
uilty of infrinin a mar! when they are actually the oriinator and
creator thereof.
1or can the petitioners9 separate personalities from their mother
corporation be an obstacle in the enforcement of their rihts as part of
the Nuo! Iroup of Companies and as oDcial repository, manaer and
operator of the sub8ect mar! and loo. ,esides, 6.A. 1o. 1== did not
reEuire the party see!in relief to be the owner of the mar! but -any
person who believes that he is or will be damaed by the reistration of
a mar! or trade name.-
:'
@A)6)B"6), the instant petition is I6A1T)?. The assailed ?ecision
and 6esolution of the Court of Appeals dated *ay 1$, F''0 and
4eptember 1$, F''0, respectively, and the ?ecision of the 6eional Trial
Court of Oue.on City dated *arch >, 1%%= are hereby 4)T A4I?).
Accordinly, the complaint for infrinement in Civil Case 1o. O-%1->:&=
is ordered ?I4*I44)?.
SO ORD!R!D.
G.R. No. 1,105* O<&ober 15, )00,
S!HFANI, INCORPORAT!D #$%Jor B!NITA?S RIT!S,
INC., Petitioner,
1%1
vs.
IN-N-OUT BURG!R, INC., 6espondent.
? ) C I 4 I " 1
6NAR!S-SANTIAGO, J.:
This petition for review assails the ?ecision
1
of the Court of Appeals in
CA-I.6. 4P 1o. >>'': dated "ctober F1, F''$, which aDrmed the
?ecember &, F'': "rder
F
of ?irector Ieneral )mma C. Brancisco of the
Intellectual Property "Dce ;IP"<, in Appeal 1o. 1:-F'':-''': +ndin
that petitionersS appeal was +led out of time, as well as the
6esolution
0
dated #anuary 1F, F''= denyin the motion for
reconsideration.
6espondent I1-1-"3T ,urer, Inc., a forein corporation orani.ed
under the laws of California, 3.4.A., and not doin business in the
Philippines, +led before the ,ureau of (eal Afairs of the IP" ;,(A-IP"<,
an administrative complaint aainst petitioners 4ehwani, Inc. and
,enitaSs Brites, Inc. for violation of intellectual property rihts,
attorneySs fees and damaes with prayer for the issuance of a
restrainin order or writ of preliminary in8unction.
:
6espondent alleed that it is the owner of the tradename -I1-1-"3T-
and trademar!s -I1-1-"3T,- -I1-1-"3T ,urer / Arrow ?esin- and -I1-
1-"3T ,urer (oo,- which are used in its business since 1%:> up to
the present. These tradename and trademar!s were reistered in the
3nited 4tates as well as in other parts of the world.
$
"n #une F, 1%%&, respondent applied with the IP" for the reistration of
its trademar! -I1-1-"3T ,urer / Arrow ?esin- and servicemar! -I1-
1-"3T.- In the course of its application, respondent discovered that
petitioner 4ehwani, Inc. had obtained Trademar! 6eistration 1o. $====
for the mar! -I1 1 "3T- ;TA) I14I?) "B TA) ()TT)6 -"- B"6*)? (IN)
A 4TA6< on ?ecember 1&, 1%%0 without its authority.
=
6espondent thus
demanded that petitioner 4ehwani, Inc. desist from claimin ownership
of the mar! -I1-1-"3T- and to voluntarily cancel its Trademar!
6eistration 1o. $====. Petitioner 4ehwani, Inc. however refused to
accede to the demand and even entered into a (icensin Areement
rantin its co-petitioner ,enitaSs Brites, Inc. license to use for a period
of +ve years the trademar! -I1-1-"3T ,36I)6- in its restaurant in
Pasi City.
&
Aence, respondent +led a complaint for violation of
intellectual property rihts.
In their answer with counterclaim, petitioners alleed that respondent
lac! the leal capacity to sue because it was not doin business in the
Philippines and that it has no cause of action because its mar! is not
reistered or used in the Philippines. Petitioner 4ehwani, Inc. also
claimed that as the reistered owner of the -I1-1-"3T- mar!, it en8oys
the presumption that the same was validly acEuired and that it has the
eCclusive riht to use the mar!. *oreover, petitioners arued that other
than the bare alleation of fraud in the reistration of the mar!,
respondent failed to show the eCistence of any of the rounds for
cancellation thereof under 4ection 1$1 of 6epublic Act ;6.A.< 1o. >F%0,
otherwise !nown as T#e Intellectual ,roert" Code o$ t#e ,#iliines.
>
"n ?ecember FF, F''0, ,ureau ?irector )strellita ,eltran-Abelardo
rendered ?ecision 1o. F''0-'F +ndin that respondent has the leal
capacity to sue and that it is the owner of the internationally well-
!nown trademar!sH however, she held that petitioners are not uilty of
unfair competition, thus5
@ith the foreoin disEuisition, Certi+cate of 6eistration 1o. $====
dated 1& ?ecember 1%%0 for the mar! -I1-1-"3T ;the inside of the
letter -"- formed li!e a star< issued in favor of 4ehwani, Incorporated is
hereby CA1C)(()?. ConseEuently, 6espondents 4ehwani, Inc. and
,enitaSs Brites are hereby ordered to permanently cease and desist
from usin the mar! -I1-1-"3T- and -I1-1-"3T ,36I)6 ("I"- on its
oods and in its business. @ith reard to mar! -?ouble-?ouble-,
considerin that as earlier discussed, the mar! has been approved by
this "Dce for publication and that as shown by the evidence,
Complainant is the owner of the said mar!, 6espondents are also
ordered to permanently cease and desist from usin the mar! ?ouble-
?ouble. 1" C"4T4.
4" "6?)6)?.
%
Petitioners +led a motion for reconsideration
1'
insistin that respondent
has no leal capacity to sue, that no round for cancellation was duly
proven, and that the action is barred by lac#esH while respondent
moved for partial reconsideration
11
assailin the +ndin that petitioners
are not uilty of unfair competition. ,oth, however, were denied in
6esolution 1o. F'':-1> dated "ctober F>, F'':
1F
and 6esolution 1o.
F''$-'$ dated April F$, F''$,
10
respectively.
"n separate dates, the parties appealed to the "Dce of the ?irector
Ieneral which rendered an "rder dated ?ecember &, F'':,
1:
in Appeal
1o. 1:-F'':-''':, dismissin petitionersS appeal for bein +led out of
time, thus5
1%F
@A)6)B"6), premises considered, the *"TI"1 T" A?*IT C"P2 "B
?)CI4I"1 1". F''0-'F is hereby ranted. The instant appeal, however,
is hereby ?I4*I44)? for havin been +led out of time.
1$
Arieved, petitioners +led a petition before the Court of Appeals which
was dismissed for lac! of merit. It held that the riht to appeal is not a
natural riht or a part of due process, but a procedural remedy of
statutory oriin, hence, its reEuirements must be strictly complied with.
The appeal bein +led out of time, the ?ecember FF, F''0 ?ecision and
the "ctober F>, F'': "rders of ,ureau ?irector ,eltran-Abelardo are
now +nal and eCecutory.
1=
*eanwhile, respondent +led a *anifestation with the Court of Appeals
that on ?ecember F0, F''$, ?irector Ieneral Adrian 4. Cristobal, #r. had
rendered a ?ecision in Appeal 1'-'$-'1 +ndin petitioners uilty of
unfair competition.
1&
PetitionersS motion for reconsideration was deniedH hence, the instant
petition raisin the followin issues5
TA) C"36T "B APP)A(4 C"**ITT)? I6AL) )66"6 I1
3PA"(?I1I TA) IP" ?I6)CT"6 I)1)6A(S4 ?I4*I44A( "B
APP)A( 1". 1:-F'':-''': "1 A *)6) T)CA1ICA(IT2.
43,4TA1TIA( #34TIC) @"3(? ,) ,)TT)6 4)6L)? IB TA) C"36T
"B APP)A(4 A1? TA) IP" ?I6)CT"6 I)1)6A( )1T)6TAI1)?
P)TITI"1)64 APP)A( A4 TA) ,36)A3 "B ()IA( ABBAI6S4
?)CI4I"1 A1? 6)4"(3TI"1 ;1< CA1C)(I1I P)TITI"1)6
4)A@A1IS4 C)6TIBICAT) "B 6)II4T6ATI"1 B"6 TA) *A6N -I1-
1-"3T,- A1? ;F< "6?)6I1I P)TITI"1)64 T" P)6*A1)1T(2
C)A4) A1? ?)4I4T B6"* 34I1I TA) 43,#)CT *A6N "1 IT4
I""?4 A1? ,34I1)44 A6) C"1T6A62 T" (A@ A1?Q"6 1"T
43PP"6T)? ,2 )LI?)1C).
1>
Petitioners contend that the Court of Appeals erred when it dismissed
the petition on mere technicality which resulted in a miscarriae of
8ustice and deprivation of intellectual property rihts. They claim that
their counsel believed in ood faith that 6esolution 1o. F'':-1> dated
"ctober F>, F'':, denyin the motion for reconsideration, was received
only on 1ovember 0, F'':, thus, they have until 1ovember 1>, F'':
within which to +le an appeal memorandum with the "Dce of the
?irector Ieneral. They claim that they should not be pre8udiced by their
counselSs mista!e in computin the period to appealH besides, the same
is understandable and eCcusable as their counsel is a solo practitioner
with only a handful of non-leal staf assistin him. They also reiterate
their position that respondent has no leal capacity to sue, that no
round for cancellation was duly proven, and that the complaint is
barred by laches, if not, by prescription.
1%
The petition has no merit.
The Court has invariably ruled that perfection of an appeal within the
statutory or relementary period is not only mandatory but also
8urisdictionalH failure to do so renders the Euestioned decisionQ+nal
order +nal and eCecutory, and deprives the appellate court of
8urisdiction to alter the 8udment or +nal order, much less to entertain
the appeal.
F'
True, this rule had been relaCed but only in hihly
meritorious cases to prevent a rave in8ustice from bein done.
F1
4uch
does not obtain in this case.
?irector Ieneral Brancisco, as aDrmed by the Court of Appeals,
correctly held5
JTKhat the appeal must be dismissed outriht. 4ection F of the 3niform
6ules on Appeal ;"Dce "rder no. 1F, s. F''F< states that5
4ection F. Appeal to the ?irector Ieneral. W The decisions or +nal orders
of the ,ureau ?irector shall become +nal and eCecutory thirty ;0'< days
after receipt of a copy thereof by the appellant or appellants unless,
within the same period, a motion for reconsideration is +led with the
,ureau ?irector or an appeal to the ?irector Ieneral has been
perfectedH Provided, that only one ;1< motion for reconsideration of the
decision or order of the ,ureau ?irector shall be allowed, and, in case
the motion for reconsideration is denied, the appellant or appellants
hasQhave the balance of the period prescribed above within which to +le
the appeal.
Considerin that the 6espondent-Appellants received a copy of the
appealed ?ecision on 1$ #anuary F'': and +led their *"TI"1 B"6
6)C"14I?)6ATI"1 on 0' #anuary F'':, said parties had a balance of
1$ days from their receipt of the 6esolution denyin said motion within
which to +le the APP)A( *)*"6A1?3*. Per records of the ,ureau of
(eal Afairs, the 6espondents-Appellants received a copy of the
6esolution on F% "ctober F'':. Aence the deadline for the +lin of the
APP)A( *)*"6A1?3* was on 10 1ovember F'':. 4ince said date fell
on a 4aturday, the appeal should have been +led on the ensuin
wor!in day, that is, 1$ 1ovember F'':.
"n this score, 4ection $;c< of the 3niform 6ules on Appeal provides5
1%0
4ection $. Action on the Appeal *emorandum W The ?irector Ieneral
shall5
C C C C
c< ?ismiss the appeal for bein patently without merit, provided that
the dismissal shall be outriht if the appeal is not +led within the
prescribed period or for failure of the appellant to pay the reEuired fee
within the period of appeal.
FF
;3nderscorin supplied<
PetitionersS alleation that they honestly believed that they received
6esolution 1o. F'':-1> dated "ctober F>, F'': on 1ovember 0, F'':
and not on "ctober F%, F'':, as what appears on the records of the
,(A-IP", is self-servin and unbelievable. The inadvertent computation
of the period for one to +le a pleadin is ineCcusable, and has become
an all too familiar and ready eCcuse on the part of lawyers remiss in
their bounden duty to comply with the mandatory periods.
F0
This Court has always reminded the members of the leal profession
that every case they handle deserves full and undivided attention,
dilience, s!ill and competence, reardless of its importance.
F:
A lawyer
has the responsibility of monitorin and !eepin trac! of the period of
time left to +le pleadins and to see to it that said pleadins are +led
before the lapse of the period. If he fails to do so, his client is bound by
his conduct, nelience and mista!es.
F$
This responsibility is imposed
on all lawyers notwithstandin the presence or absence of staf
assistin them in the dischare thereof.
Thus, as correctly held by the Court of Appeals, petitionersS belated
+lin of an appeal memorandum rendered the ?ecember FF, F''0
?ecision and the "ctober F>, F'': "rder of ,ureau ?irector ,eltran-
Abelardo +nal and eCecutory.
At this point, the Court could very well write +nis to this petition.
Aowever, in disposin of the instant case, we shall resolve the principal
issues raised by petitioners.
Contrary to petitionersS arument, respondent has the leal capacity to
sue for the protection of its trademar!s, albeit it is not doin business in
the Philippines. 4ection 1=' in relation to 4ection 0 of 6.A. 1o. >F%0,
provides5
4)CTI"1 1='. 6iht of Borein Corporation to 4ue in Trademar! or
4ervice *ar! )nforcement Action. G Any forein national or 8uridical
person who meets the reEuirements of 4ection 0 of this Act and does
not enae in business in the Philippines may brin a civil or
administrative action hereunder for opposition, cancellation,
infrinement, unfair competition, or false desination of oriin and false
description, whether or not it is licensed to do business in the
Philippines under eCistin laws.
4ection 0 thereof provides5
4)CTI"1 0. International Conventions and 6eciprocity. G Any person
who is a national or who is domiciled or has a real and efective
industrial establishment in a country which is a party to any convention,
treaty or areement relatin to intellectual property rihts or the
repression of unfair competition, to which the Philippines is also a party,
or eCtends reciprocal rihts to nationals of the Philippines by law, shall
be entitled to bene+ts to the eCtent necessary to ive efect to any
provision of such convention, treaty or reciprocal law, in addition to the
rihts to which any owner of an intellectual property riht is otherwise
entitled by this Act.
6espondent anchors its causes of action under Articles =
bis
and > of The
Convention of Paris for the Protection of Industrial Property, otherwise
!nown as the Paris Convention, wherein both the 3nited 4tates and the
Philippines are sinatories.
F=
The Articles read5
Article =
bis
;1< The countries of the 3nion underta!e, eC oDcio if their leislation so
permits, or at the reEuest of an interested party, to refuse or to cancel
the reistration, and to prohibit the use, of a trademar! which
constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mar! considered by the competent authority of the
country of reistration or use to be well !nown in that country as bein
already the mar! of a person entitled to the bene+ts of this Convention
and used for identical or similar oods. These provisions shall also apply
when the essential part of the mar! constitutes a reproduction of any
such well-!nown mar! or an imitation liable to create confusion
therewith.
C C C C.
Article >
A tradename shall be protected in all countries of the 3nion without the
obliation of +lin or reistration whether or not it forms part of a
trademar!.
1%:
Article =
bis
which overns the protection of well-!nown trademar!s, is a
self-eCecutin provision and does not reEuire leislative enactment to
ive it efect in the member country. It may be applied directly by the
tribunals and oDcials of each member country by the mere publication
or proclamation of the Convention, after its rati+cation accordin to the
public law of each state and the order for its eCecution. The essential
reEuirement under this Article is that the trademar! to be protected
must be -well-!nown- in the country where protection is souht. The
power to determine whether a trademar! is well-!nown lies in the
-competent authority of the country of reistration or use.- This
competent authority would be either the reisterin authority if it has
the power to decide this, or the courts of the country in Euestion if the
issue comes before a court.
F&
The Euestion of whether or not respondentSs trademar!s are considered
-well-!nown- is factual in nature, involvin as it does the appreciation of
evidence adduced before the ,(A-IP". The settled rule is that the
factual +ndins of Euasi-8udicial aencies, li!e the IP", which have
acEuired eCpertise because their 8urisdiction is con+ned to speci+c
matters, are enerally accorded not only respect, but, at times, even
+nality if such +ndins are supported by substantial evidence.
F>
?irector ,eltran-Abelardo found that5
Aruin mainly that it is the owner of an internationally well-!nown
mar!, complainant presented its 3nited 4tates trademar! reistrations,
namely5 3nited 4tates Trademar! 6eistration 1o. 1,$1:,=>% for the
mar! -I1-1-"3T ,urer and Arrow ?esin- under class F$ dated
1ovember F%, 1%>> for the shirts ;)Chibit -(-<H 3nited 4tates Trademar!
6eistration 1o. 1,$F>,:$= for the mar! -I1-1-"3T ,urer and Arrow
?esin- under Class F%, 0', 0F and :F dated *arch &, 1%>% for mil! and
french-fried potatoes for consumption on or of the premises, for
hamburer sandwiches, cheeseburer sandwiches, hot cofee and
mil!sha!es for consumption on or of the premises, lemonade and
softdrin!s for consumption on and of the premises, restaurant services
respectively ;)Chibit -*-<H 34 Trademar! 6eistration 1o. 1,1'1,=0> for
the mar! -I1-1-"3T- under Class 1o. 0' dated 4eptember $, 1%&> for
cheeseburers, hamburers, hot cofee and mil!sha!e for consumption
on or of premises ;)Chibit -1-<H 34 Trademar! 6eistration 1o.
1,'>$,1=0 -I1-1-"3T- under Class :F dated Bebruary &, 1%&> for
6estaurant 4ervices and carry-out restaurant services ;)Chibit -O-<. Bor
its mar! -?ouble-?ouble- it submitted Certi+cates of 6eistration of
said mar! in several countries ;)Chibits -**- and submar!ins<.
C C C C
*oreover, complainant also cites our decision in Inter Pares Case 1o.
1:-1%%>-''':$ dated 1F 4eptember F''', an opposition case involvin
the mar! -I1-1-"3T- between I1-1-"3T ,urer ;herein complainant<
and 1estor 4# ,on8ales where we ruled5
-And last but not the lease, the herein "pposer was able to prove
substantially that its mar! -I1-1-"3T ,urer and Arrow ?esin- is an
internationally well !nown mar! as evidenced by its trademar!
reistrations around the world and its comprehensive advertisements
therein.-
The nub of complainantSs reasonin is that the Intellectual Property
"Dce as a competent authority had declared in previous inter partes
case that -I1-1-"3T ,urer and Arrow ?esin- is an internationally well
!nown mar!.
In the aforementioned case, we are inclined to favor the declaration of
the mar! -I1-1-"3T- as an internationally well-!nown mar! on the basis
of -reistrations in various countries around the world and its
comprehensive advertisements therein.-
The "npin *emorandum dated F$ "ctober 1%>0 which was the basis
for the decision in the previous inter partes case and which set the
criteria for determinin whether a mar! is well !nown, ta!es into
consideration the eCtent of reistration of a mar!. 4imilarly, the
implementin rules of 6epublic Act >F%0, speci+cally 4ection ;e< 6ule
1'F Criteria for determinin whether a mar! is well !nown, also ta!es
into account the eCtent to which the mar! has been reistered in the
world in determinin whether a mar! is well !nown.
(i!ewise, as shown by the records of the instant case, Complainant
submitted evidence consistin of articles about -I1-1-"3T ,urer-
appearin in maa.ines, newspapers and print-out of what appears to
be printed representations of its internet website ;www.innout.com<
;)Chibits -CCC- to -OOO-<, as well as ob8ect evidence consistin of
videotapes of famous celebrities mentionin I1-1-"3T burers in the
course of their interviews ;)Chibits -))))- and -BBBB-< showin a
tremendous followin amon celebrities.
The Euality imae and reputation acEuired by the complainantSs I1-1-
"3T mar! is unmista!able. @ith this, complainantSs mar! have met
other criteria set in the Implementin 6ules of 6epublic Act >F%0,
namely, VaS and VdS of 6ule 1'F, to wit5
-6ule 1'F5
1%$
;a< the duration, eCtent and eoraphical area of any use of the mar!,
in particular, the duration, eCtent and eoraphical area of any
promotion of the mar!, includin publicity and the presentation at fairs
or eChibitions, of the oods andQor services to which the mar! appliesH
C C C C
;d< the Euality imae or reputation acEuired by the mar!-
Aence, on the basis of evidence presented consistin of worldwide
reistration of mar! -I1-1-"3T- almost all of which were issued earlier
than the respondentSs date of +lin of its application and the
subseEuent reistration of the mar! -I1-1-"3T- in this "Dce, as well as
the advertisements therein by the complainant, this "Dce hereby
aDrms its earlier declaration that indeed, the mar! -I1-1-"3T ,36I)6
("I"- is an internally well-!nown mar!.
F%
@e +nd the foreoin +ndins and conclusions of ?irector ,eltran-
Abelardo fully substantiated by the evidence on record and in accord
with law.
The fact that respondentSs mar!s are neither reistered nor used in the
Philippines is of no moment. The scope of protection initially aforded by
Article =
bis
of the Paris Convention has been eCpanded in the 1%%% #oint
6ecommendation Concernin Provisions on the Protection of @ell-
Nnown *ar!s, wherein the @orld Intellectual Property "rani.ation
;@IP"< Ieneral Assembly and the Paris 3nion areed to a nonbindin
recommendation that a well-!nown mar! should be protected in a
country even if the mar! is neither reistered nor used in that country.
Part I, Article F;0< thereof provides5
;0< J)actors *#ic# S#all <ot :e Re5uiredK ;a< A *ember 4tate shall not
reEuire, as a condition for determinin whether a mar! is a well-!nown
mar!5
;i< that the mar! has been used in, or that the mar! has been
reistered or that an application for reistration of the mar! has
been +led in or in respect of, the *ember 4tateH
;ii< that the mar! is well !nown in, or that the mar! has been
reistered or that an application for reistration of the mar! has
been +led in or in respect of, any 8urisdiction other than the
*ember 4tateH or
;iii< that the mar! is well !nown by the public at lare in the
*ember 4tate. ;3nderscorin supplied<
*oreover, petitionersS claim that no round eCists for the cancellation of
their reistration lac!s merit. 4ection 1$1;b< of 6A >F%0 provides5
4)CTI"1 1$1. Cancellation. G 1$1.1. A petition to cancel a reistration
of a mar! under this Act may be +led with the ,ureau of (eal Afairs by
any person who believes that he is or will be damaed by the
reistration of a mar! under this Act as follows5
C C C C
;b< At any time, if the reistered mar! becomes the eneric name for
the oods or services, or a portion thereof, for which it is reistered, or
has been abandoned, or its reistration was obtained fraudulently
or contrary to the provisions of this Act, or if the reistered mar! is
bein used by, or with the permission of, the reistrant so as to
misrepresent the source of the oods or services on or in connection
with which the mar! is used. C C C..Aw#i.
The evidence on record shows that not only did the petitioners use the
I1-1-"3T ,urer trademar! for the name of their restaurant, but they
also used identical or confusinly similar mar! for their hamburer
wrappers and french-fries receptacles, thereby efectively
misrepresentin the source of the oods and services.
0'
Binally, petitionerSs contention that respondent is precluded from
assertin its claim by laches, if not by prescription, lac!s basis. 4ection
1$1;b< of 6.A. 1o. >F%0 speci+cally provides that a petition to cancel
the reistration of a mar! which is reistered contrary to the provisions
thereof, or which is used to misrepresent the source of the oods or
services, may be +led at any time. *oreover, laches may not prevail
aainst a speci+c provision of law, since eEuity, which has been de+ned
as V8ustice outside lealityS is applied in the absence of and not aainst
statutory law or rules of procedure.
01
Aside from the speci+c provisions
of 6.A. 1o. >F%0, the Paris Convention and the @IP" #oint
6ecommendation have the force and efect of law, for under 4ection F,
Article II of the Constitution, the Philippines adopts the enerally
accepted principles of international law as part of the law of the land. To
rule otherwise would be to defeat the eEuitable consideration that no
one other than the owner of the well-!nown mar! shall reap the fruits of
an honestly established oodwill.
@A)6)B"6), the petition is ?)1I)?. The ?ecision and 6esolution of the
Court of Appeals in CA-I.6. 4P 1o. >>'':, dated "ctober F1, F''$ and
1%=
#anuary 1=, F''=, aDrmin the ?ecember &, F'': "rder of ?irector
Ieneral )mma C. Brancisco, in Appeal 1o. 1:-F'':-''':, and denyin
the motion for reconsideration, respectively, are ABBI6*)?.
4" "6?)6)?.
G.R. No. "-18**, J#$=#rB *0, 19+5
CHUA CH!, petitioner,
vs.
PHI"IPPIN!S PAT!NT OIC! #$% S6 TUO, respondents.
C#ieco 9 Alcaraz% Jr( $or etitioner(
,er$ecto E( de Dera $or resondents(
PAR!D!S, J.:
This is a petition to review the decision of the ?irector of Patents, in
Inter Partes Case 1o. 1=1, denyin the application of petitioner Chua
Che for the reistration of -T.*. M-&- for use on soap Class $1, bein
manufactured by said Chua Che, upon the opposition of respondent 4y
Tuo.
3nder date of "ctober 0', 1%$>, Chua Che presented with the
Philippines Patent "Dce a petition prayin for the reistration in his
favor the trade name -M-&-. The petition, states5
The undersined CA3A CA), a citi.en of China, a resident of
F>': (imay 4t., Tondo, *anila, and doin business at same
address, has adopted and used the trademar! -M-&- shown in
the accompanyin ?rawin.
In accordance with the reEuirements of law, the undersined
declares that this trademar! G
1. @as +rst used by him on #une 1', 1%$&.
F. @as +rst used by him in commerce in or with the Philippines
on #une 1', 1%$&.
0. Aas been continuously used by him in trade in or with the
Philippines for more than one year.
:. Is, on the date of this application, actually used by him on the
followin oods, classi+ed accordin to the "Dcial Classi+cation
of Ioods ;6ule >F<5
Class >. \ Soa
$. Is applied to the oods or to the pac!aes containin the
same, by placin thereon a printed label on which the trademar!
is shown, or by directly impressin the mar! to the oods.
The correspondin declaration, which was under oath, contained,
amon others, the followin5
0. That he believes himself to be the lawful owner of the
trademar! souht to be reistered.
:. That the said trademar! is in actual use in commerce in or
with the Philippines not less than two months before this
application is +led.
$. That no other person, partnership, corporation, or association,
to the best of his !nowlede and belief, has the riht to use said
trademar! in the Philippines, either in the identical form or in
any such near resemblance thereto as miht be calculated to
deceive.
3nder date of #uly =, 1%$%, an )Caminer of the ?epartment of
Commerce and Industry, submitted a report recommendin the
allowance of the application, which report was approved by the
4upervisin T* )Caminer. After the 1otice of allowance was published
in the "Dcial Ia.ette, as reEuired, respondent 4y Tuo presented a
-1otice of "pposition,- dated "ctober 1$, 1%$%, anchorin said
opposition on the followin alleations5
1. The reistration of the trademar! -M-&- as applied for by
CA3A CA) will not only violate the rihts and interests of the
"ppositor over his reistered trademar! -M-&- covered by
Certi+cate of 6eistration 1o. $,''', issued April F1, 1%$1, but
will also tend to mislead the purchasin public and ma!e it
convenient for unscrupulous dealers to pass of the oods of the
applicant CA3A CA), for those of the oppositor 42 T3", to the
in8ury of both the oppositor and the public.
F. The reistration of the said trademar! -M-&- in the name of
CA3A CA) will be in violation of, and will run counter to, 4ection
1%&
: ;d< of 6epublic Act 1o. 1==, as amended, because it is
confusinly similar to the trademar! -M-&- covered by
6eistration 1o. $,''' previously reistered to, and bein used
by the oppositor and is not abandoned.
The "ppositor 42 T3", doin business as the @estern Cosmetic
(aboratory will rely on the followin facts5
;a< "ppositor has prior use of the trademar! -M-&- as he
has been usin it eCtensively and continuously since #uly
01, 1%$F, while the applicant, Chua Che, alleedly used
his trademar! only since #une 1', 1%$&..]w#^.([_t
;b< "ppositor9s mar! -M-&- is distinctive and his invented
mar! and not merely an ordinary, common and wea!
mar!.
;c< The oppositor and the applicant use the trademar! -M-
&- for allied and closely related products.
;d< The oppositor has spent a hue amount by way of
advertisin and advertisin his -M-&- brand.
;e< The oppositor has spent a bi amount in eCpandin
his business for the manufacture of toilet soap and
crystal laundry soap with his already popular -M-&- brand.
;f< The trademar! applied for by the applicant Chua Che
consists of the trademar! -M-&- and anyone is li!ely to be
misled as to the source or oriin by the close
resemblance or identity with the trademar! -M-&- of the
oppositor.
Attached to the "pposition were labels ;samples< bein used by
oppositor on his products, which clearly show -M-&-.
Petitioner herein presented an Answer to 1otice of "pposition, claimin
amon others that the rounds of opposition are not correct, since
althouh it is admitted that -M-&- is reistered in the name of oppositor,
said trademar! is not bein used on soap, but purely toilet articles.
After the presentation of the Answer the case was heard, wherein the
parties presented their respective evidence, both testimonial and
documentary. In the memoranda of the contenders, they limited the
principal issues, thus G
;ositor S= TU; \
The reistration of the trademar! -M-&- in the name of applicant
CA3A CA) will li!ely mislead the public so as to ma!e them
believe that said oods are manufactured or sponsored by or in
some way in trade associated with opposer.
Alicant CJUA CJE \
In Inter Partes proceedins, the principal issue is -priority of
adoption and use.- 4ince opposer has not yet used -M-&- mar!
on soap, but will still use it, applicant should be entitled to the
reistration of the same.
The ?irector of Patents rendered 8udment on #anuary 1>, 1%=1, the
pertinent portions of which read5
,ased on those facts there is no Euestion that opposer9s +rst use
of the trademar! M-& on #uly 01, 1%$0, is prior to applicant9s +rst
use of the mar! on #une 1', 1%$&. The only Euestion then in this
case is whether or not purchasers of M-& perfume, lipstic! and
nail polish would li!ely upon seein M-& laundry soap, attribute
common oriin to the products or assume that there eCisted
some !ind of trade connection between applicant and opposer.
"pposer9s record shows that he has been usin since #uly 01,
1%$0 the trademar! M-& on perfume, lipstic! and nail polishH that
he has spent substantial amounts of money in buildin upon the
oodwill of this trademar! throuh advertisements in all !inds of
media G throuh newspapers of eneral circulation, by means of
billboards in various places in the Philippines, and also over the
radio and television. In these advertisements opposer has spent
about P1F','''.''. There is no Euestion that opposer en8oys a
valuable oodwill in the trademar! M-&.
The products of the parties, while speci+cally diferent, are
products intended for use in the home and usually have common
purchasers. Burthermore, the use of M-& for laundry soap is but a
natural eCpansion of business of the opposer. In fact, herein
opposer in 1%$=, prior to the alleed date of +rst use by
respondent-applicant of the trademar! M-& for laundry soap on
#une 1', 1%$&, had made steps in eCpandin the use of this
trademar! to ranulated soap. 3nder these circumstances, it is
concluded that the averae purchasers are li!ely to associate M-
& laundry soap with M-& perfume, lipstic! and nail polish or to
thin! that the products have common oriin or sponsorship.
1%>
I1 LI)@ "B TA) A,"L) BI1?I1I4, the opposition in this case
should be as it is hereby sustained and conseEuently Application
4erial 1o. =%:1, of Chua Che, is also hereby re8ected.
"PP"4ITI"1 434TAI1)?
The above 8udment is now before 3s, applicant-appellant claimin that
it was error for the ?irector to conclude that opposer 42 T3" had
priority to use the trademar! in Euestion, and that the use by appellant
of the trademar! -M-&- on ranulated soap to be manufactured and sold
by him, would li!ely mislead purchasers.
At the very outset, we would li!e to state that in cases of the nature of
the one at bar, only Euestions of law should be raised, and the only
eCception to this rule, meanin that +ndins of facts may be reviewed,
is when such +ndins are not supported by substantial evidence ;4ec.
F, 6ule ::, 6evised 6ules<. The +ndin of the ?irector of Patents "Dce
to the efect that opposer-appellee 4y Tuo had priority of use and
adoption of the trademar! -M-&-, is for all intents and purposes, one of
fact. This bein the case, such +ndin becomes conclusive to this Court.
)ven on this sole issue alone, the petition for review must fall.
Aowever, there are other matters which must be clari+ed. Bor instance,
the fact that appellee has not yet used the trademar! -M-&- on
ranulated soap, the product on which appellant wants to use the said
trademar!. The circumstance of non-actual use of the mar! on
ranulated soap by appellee, does not detract from the fact that he has
already a riht to such a trademar! and should, therefore, be protected.
The observation of the ?irector of Patents to the efect that -the
averae purchasers are li!ely to associate M-& laundry soap with M-&
perfume, lipstic! and nail polish or to thin! that the products have
common oriin or sponsorship,- is indeed well ta!en. It has been
pointed out by appellant that the product upon which the trademar! M-&
will be used ;laundry soap< is diferent from those of appellee9s, and
therefore no infrinement andQor confusion may result. @e +nd no merit
in the above contention, for it has been held that while it is no loner
necessary to establish that the oods of the parties possess the same
descriptive properties, as previously reEuired under the Trade *ar! Act
of 1%'$, reistration of a trademar! should be refused in cases where
there is a li!elihood of confusion, mista!e, or deception, even thouh
the oods fall into diferent cateories. ;Application of 4ylvan 4weets
Co., F'$ B. Fnd, F'&.< The products of appellee are common household
items nowadays, in the same manner as laundry soap. The li!elihood of
purchasers to associate those products to a common oriin is not far-
fetched. ,oth from the standpoint of priority of use and for the
protection of the buyin public and, of course, appellee9s rihts to the
trademar! -M-&-, it becomes manifest that the reistration of said
trademar! in favor of applicant-appellant should be denied.
P6)*I4)4 C"14I?)6)?, the decision souht to be reviewed should be,
as it is hereby aDrmed in all respects, with costs aainst appellant
CA3A CA) in both instances.
:en+zon% C(J(% :autista An+elo% Re"es% J(:('(% :arrera% Dizon% Re+ala%
3akalintal% :en+zon% J(,(% and Raldivar% JJ(% concur(
Concecion% J(% took no art(
G.R. No. "-)+9++ O<&ober *0, 19,0
D! "A RAMA ST!AMSHIP CO., plaintif-appellee,
vs.
NATIONA" D!G!"OPM!NT CO., defendant-appellant.
E( del Rosario and Associates $or lainti7-aellee(
4ovCt( Cororate Counsel '( 3( Abellera and Secial Counsel 'eonardo
R( Re"es $or de$endant-aellant(

(A"DIGAR, J.:.
This case oriinated in the Court of Birst Instance of *anila as Civil Case
1o. $1=1, entitled -?e la 6ama 4teamship Co. Inc., plaintif, versus
1ational ?evelopment Company, defendant.- This is the third time that
this case has come up to this Court.
This case is the outcome of an areement entered into on "ctober F=,
1%:% between the ?e la 6ama 4teamship Co. Inc. ;hereinafter referred
to as ?e la 6ama< and the 1ational ?evelopment Company ;hereinafter
referred to as 1?C< whereby ?e la 6ama undertoo! the manaement of
the three vessels !nown as -?o_a Aurora,- -?o_a 1ati- and -?o_a
Alicia- which had been purchased by the Philippine Iovernment from
#apan with the advise and technical supervision of ?e la 6ama. In the
manaement contract it was provided that ?e la 6ama had the option
to buy the vessels at the +fth year followin the purchase and delivery
of each of the vessels at a price which is to consist of the cost price of
each vessel, plus such eCpenses as ?e la 6ama may have incurred in
connection with the construction, out+ttin, provisionin and operation
thereofH but should ?e la 6ama fail to eCercise the riht of option it
should be reimbursed of the eCpenses it incurred in mannin,
1%%
eEuippin, fuelin, overhaulin and repairin the vessels, and the
payment of loadin commission discharin commission, overridin
commission sub-aent9s commission, etc.
The +rst time that this case came up to this Court was in I.6. 1o. (-
>&>:, decided on *ay F1, 1%$=, which involved the principal Euestion
reardin the riht ranted by the manaement contract to 1?C to
cancel upon one year9s notice the eneral aency ranted ?ela 6ama.
The 1?C decided to cancel the contract but was opposed by ?e la
6ama, which alleed that it had been ranted the option to purchase
the vessels and that in 1%$F it eCercised that riht of option. In the
decision in I.6. 1o. (->&>: this Court upheld the riht of 1?C to cancel
the manaement contract, and the option of ?e la 6ama to purchase
the vessels was declared inefective.
The riht of 1?C to cancel the manaement contract havin been
upheld by the Court and ?e la 6ama9s riht to eCercise the option to
purchase the vessels could not thereby be eCercised, ?e la 6ama +led
on Auust F1, 1%$= a -4upplemental Pleadin- in Civil Case 1o. F$1=1
then pendin in the Court of Birst Instance of *anila. This supplemental
pleadin, in the nature of a supplemental complaint ave rise to the
proceedin which later brouht Civil Case 1o. F$1=1 to this Court for
the second time in I.6. 1o. (-F$=$%.
1
3nder the +rst cause of action of
the -4upplemental Pleadin,- ?e la 6ama demanded that 1?C refrain
from usin the names -?o_a Aurora,- -?o_a 1ati- and -?o_a Alicia- on
the three vessels sub8ect of the oriinal action, claimin that it had
acEuired eCclusive property riht to the use of said names of the three
vessels as trade namesH under the second cause of action, ?e la 6ama
souht the payment to it by the 1?C of P1,$'$,='0.>F as
reimbursement for various advances and eCpenses it had made in
behalf of, and commissions earned as aent of, 1?CH and under the
third cause of action, ?e la 6ama souht the payment of P1,''','''.''
as damaes on account of 1?C9s continued use of the names -?o_a
Aurora,- -?o_a 1ati- and -?o_a Alicia,- on the vessels that ?e la 6ama
had turned over to it ;1?C<, and P1'','''.'' as eCpenses and
attorney9s fees. )
"ver the opposition of 1?C to the admission of the -4upplemental
Pleadin,- upon the rounds that ?e la 6ama could not +le a
supplemental pleadin because it had already been, held in I.6. 1o. (-
>&>: that it had no riht of action and a party may not +le a
supplemental pleadin if it had no valid and subsistin cause of action,
and that all the causes pleaded were only remotely connected with, and
not material to, the oriinal action in Civil Case 1o. F$1=1, the lower
court, in an order dated "ctober 1>, 1%$=, ranted ?e la 6ama9s motion
to +le the -4upplemental Pleadin.-
*
In its answer to ?e la 6ama9s supplemental pleadin, 1?C denied ?e la
6ama9s eCclusive riht to use the names -?o_a Aurora,- -?o_a 1ati-
and -?o_a Alicia- on the vessels upon the round that said names
;eCcept ?o_a 1ati< represented names of wives of former Presidents of
the Philippines and could not be approriated by a private individualH
1?C averred that the alleed advances and commissions claimed in the
second cause of action were never alleed and claimed in the oriinal
complaint and should be deemed barred and dismissed toether with
the oriinal principal actionH 1?C also averred that the demands in the
third cause of action were unreasonable, and that ?e la 6ama had tried
to retain all the bene+ts arisin from the operation of the vessels and
shifted to 1?C the liabilities and obliations. 1?C also set forth special
defenses and a counterclaim, allein that ?e la 6ama was under
obliation to submit a true and correct accountin of the operation of
the three vessels, and to remit to 1?C the amounts due to the latter
from #anuary 1, 1%$: to the dates the vessels were separately returnedH
and that plaintif had chared eCcessive commissions of 1&-eY when
the reasonable rate should only be %.:$Y after the notice of
cancellation, and should account for and deliver to 1?C the eCcess
commissions actually received.
4
In its reply to 1?C9s answer, and in its answer to 1?C9s counterclaim,
?e la 6ama alleed that the names -?o_a Aurora,- -?o_a 1ati- and
-?o_a Alicia- were its property, havin used the name -?o_a- on its
vessels in its shippin business even before the last war and had
acEuired a vested riht on that trade name, that the claim for
reimbursement andQor payment of advances andQor eCpenses made,
and commissions earned by virtue and pursuant to the manaement
contract matured after the +lin of the amended complaintH
5
that true
and correct accountin of the operations of the vessels had always
been submitted to 1?C. ?e la 6ama denied, for lac! of !nowlede or
information suDcient to form a belief, the alleations in defendant9s
counterclaim.
+
"n *arch F', 1%$&, the trial court, in consonance with its order iven in
open court on *arch >, 1%$&, considerin that the case involved mainly
accountin, issued an order appointin a ,oard of Accountants to ma!e
an eCamination of the accounts submitted by ?e la 6ama to determine
what amount is due ?e la 6ama, and what amount is due 1?C, and to
ma!e such recommendations as, in its opinion, are proper. The Court
appointed *r. Ireorio (icaros, then President of the Philippine Institute
of Accountants, to represent the court and to act as chairman of the
,oardH *r. *iuel Calinasan comptroller of ?e la 6ama, recommended
by counsel for ?e la 6ama, to represent ?e la 6amaH and ?el+n
?ianco, accountant and manaer of the shippin department of 1?C,
recommended by counsel for 1?C, represent the 1?C. The deputy cler!
of court. The deputy cler! of court of the branch of the Court of Birst
F''
Instance of *anila where the case was pendin was appointed
secretary of the ,oard. The order of the court provided for the
compensation of the members of the ,oard of Accountants and its
4ecretary. The court ave the ,oard thirty days from the date of
Euali+cation by its members within which to receive the evidence and
thereafter another thirty days within which to submit its report.
,
The Chairman of the ,oard of Accountants, on April 10, 1%$%, submitted
his report and recommendations to the court. ,ased on said report and
recommendations the trial court rendered its decision, dated April F%,
1%$%, the dispositive portion of which reads as follows5.
I1 LI)@ "B A(( TA) B"6)I"I1I C"14I?)6ATI"1, the
Court hereby renders 8udment5.
-;a< Approvin the report and
recommendations of *r. Ireorio 4.
(icaros, Chairman, ,oard of Iovernors,
?evelopment ,an! of the Philippines,
dated April 10, 1%$%, and orderin
defendant 1ational ?evelopment Company
to pay to plaintif the sum of PF::,F&&.>1,
representin the balance of the advances
made by plaintif9s operation of the ?o_a
1ati, ?o_a Alicia and ?o_a Aurora, with
leal interest thereof from #anuary F:,
1%$$.
-;b< )n8oinin and restrainin defendant
perpetually from usin the 9?o_a9 name or
title on any of its vesselsH and
-;c< "rderin defendant to pay plaintif,
nominal or temperate damaes in the sum
of PF','''.'', and attorney9s fees in the
amount of PF','''.''.
@ith costs aainst the defendant. 8
Brom the above-mentioned decision 1?C interposed an appeal to this
Court, doc!eted herein as I.6. 1o. (-1$=$%. This is the second time that
Civil Case 1o. F$1=1 of the Court of Birst Instance of *anila came up to
this Court.
In its decision in I.6. 1o. (-1$=$% this Court upheld 1?C9s contention
that the causes of action in the -4upplemental Pleadin- were not in
any way relevant and material to the oriinal action of ?e la 6ama to
compel the 1?C to sell the three -?o_a- vessels to it, and that,
therefore, the -4upplemental Pleadin- was improperly admitted. This
Court also sustained the contention of the 1?C that the lower court did
not follow the suestion of the Chairman of the ,oard of Accountants
to ive opportunity to the 1?C to submit its ob8ections to the amounts
stated in the report of the chairman of the board. This Court, therefore,
set aside the decision appealed from. Aowever, in the interest of a
prompt termination of the suit, this Court ordered the remand of the
case to the court below -with instructions to enroll the pleadins and
papers startin with the -supplemental pleadin,- reisterin the
complaint, collectin the correspondin fee based on the amount
demanded in the complaint and enterin the complaint and all the
papers in the doc!ets of the court.- This Court also ave instructions -to
ive, the defendant 1?C the opportunity to submit its ob8ections to the
report of the board of accountants and to have a hearin on this report
in accordance with the rules as above pointed out,- and -thereafter the
action shall proceed or continue in accordance with this decision.- 9
4o the case was before the trial court for the third proceedins. The trial
court complied with the instructions of this Court, as stated in the
decision in I.6. 1o. (-1$=$%. After the trial court had repeatedly iven
the 1?C the opportunity to +le its ob8ections, if any, to the report
submitted by the Chairman of the ,oard of Accountants, and the 1?C
failed so to do, the trial court rendered its decision dated Bebruary F0,
1%==, the dispositive part of which reads5.
@A)6)B"6), 8udment is hereby rendered approvin the
conclusions and recommendations contained in the
aforesaid 6eport of April 10, 1%$%, and orderin
defendant 1ational ?evelopment Company to pay to the
plaintif ?e la 6ama 4teamship Co., Inc., the sum of
PF::,FF&.>1 with leal interest thereon from #anuary F:,
1%$$ until fully paid.
@ith costs aainst the defendant.
10
"n Bebruary F:, 1%== ?e la 6ama +led a motion for the partial
eCecution of the decision dated April F%, 1%$% reardin the damaes
in the sum of PF','''.'' and attorney9s fees in the sum, of PF','''.''
on the round that those portions of the decision had not been
appealed from and had therefore become the -law of the case- as far as
the parties were concerned.
11
1?C +led its opposition to the motion on
the round that the decision of April F%, 1%$% was -set aside- by the
F'1
4upreme Court, and conseEuently there was no leal basis for
eCecution.
"n *arch 1>, 1%== the lower court issued an -order andQor amendatory
decision,- the concludin portion of which reads as follows5.
P6)*I4)4 C"14I?)6)?, plaintif9s motion of Bebruary F0,
1%== for partial eCecution is hereby denied. Instead, in
the interest of 8ustice, and the decision of this Court of
Bebruary &, 1%== not havin yet become +nal, the same
is hereby amended by addin thereto the +ndins of fact
and conclusion of law made above, and by amendin its
dispositive part to read as follows5
@A)6)B"6), 8udment is hereby rendered5.
-;a< )n8oinin and restrainin the
defendant perpetually from usin the
-?o_a- name or title on any of its vesselsH
-;b< Approvin the conclusions and
recommendations contained in the
aforesaid 6eport of April 10, 1%$%, and
orderin the defendant 1ational
?evelopment Company to pay to the
plaintif ?e la 6ama 4teamship Co., Inc.,
the sum of PF::,FFF.>1 with leal interest
thereon from #anuary F:, 1%$$ until fully
paidH and
-;c< "rderin the defendant to pay to the
plaintif by way of damaes, as andQor
attorney9s fee, the amount of PF','''.''.
4aid decision of Bebruary &, 1%== is
maintained in all other respects.
@ith costs aainst the defendant.
1)
Brom both the decision dated Bebruary &, 1%== and the amendatory
decision dated *arch 1>, 1%== 1?C appealed directly to this Court,
because of the amount involved, statin that it would raise Euestions
both of fact and of law.
1*
The present appeal is the third time that this
case
14
has come up to this Court.
1?C in its brief, assins siC errors which, it claims, were committed by
the lower court in decidin the case.
The +rst four errors refer to the lower court9s havin adopted in toto the
+ndins and recommendations of the ,oard of Accountants, as
contained in the 6eport submitted to this court dated April 10, 1%$%,
reardin5.
1. -the net results of the operational eCpenses of the
-?o_a- vesselsH-
F. -the inventory of eEuipment, supplies, materials,
provisions, fuel, etc. on board the vessels upon the
delivery thereofH-
0. -the commission on caros boo!ed and loaded after
delivery of the vesselsH- and
:. -the additional chares to 1?CH-
The +fth error assined is that.
$. -The lower court erred in holdin that the plaintif is
entitled to the preferential riht to the use of the -?o_a-
names and en8oinin and restrainin the defendant-
appellant perpetually from usin the -?o_a- names or
title on any of its vessels.-
The siCth error assined is that.
=. -The lower court, +nally, erred in condemnin
defendant-appellant to pay to the plaintif-appellee the
sum of PF::,FF&.>1 with leal interest thereon from #an.
F:, 1%$$ until fully paid and also the sum of PF','''.''
by way of damaes and attorney9s fees.-
In support of its +rst assinment of error, that the lower court erred in
adoptin in toto the +ndins and recommendations of the ,oard of
Accountants reardin the net results of the operational eCpenses of
the -?o_a- vessels, as contained in the ,oard9s 6eport submitted to the
Court, dated April 10, 1%$%, 1?C contends that ?e la 6ama had
overchared 1?C as per 1?C 6eport dated April 1', 1%$% in the amount
of P$0,0%0.%: before the cancellation of the contract and P1F,&'$.$%
after the cancellation of the contract as 1&-1QFY commissions on
-arbitraries- which cannot be included in the terms -caro freiht- or
F'F
-freiht revenue- on the basis of which alone ?e la 6ama should receive
the aency commissions as per pararaph : of the manaement
contractH that ?e la 6ama had also chared eCcess commissions in the
amount of P>'0,%&0.%:, as shown in the 1?C audit veri+cation report
dated April 1', 1%$%, on freiht revenues and passae revenues after
the cancellation of the manaement contract efective #uly 11, 1%$$,
because the 1&-1QFY commission on -freiht revenue- and the 1'Y
commission on -passae revenue- under the manaement contract
were applicable only while said contract was in force, such that after
the rescission of said contract, until the vessels, were returned, ?e la
6ama operated the vessels at its own ris! and should be entitled only to
&-eY commission on freiht revenues and &-eY commission on,
passae revenues which rates were those areed upon by 1?C and A.
L. 6ocha and CompanyH that ?e la 6ama overchared 1?C P:=,=F&.>0
as eCpenses for advertisin, which should have been borne by ?e la
6ama pursuant to stipulation 1o. : of the manaement contract which
in part reads5.
... in consideration of said overridin commission, ?e la
6ama shall assume all eCpenses of the service with
respect to sub-aents9 commissions, advertisin,
entertainin, documentation of caro oDce rent and
eCpenses, telephone costs and eneral travellin
eCpenses. Cable and teleram eCpenses, however, shall
be directly chareable to the respective vessel9s voyae
accounts.
but which ?e la 6ama chared directly to the miscellaneous eCpense
accounts of the respective voyae account of the vesselsH that ?e la
6ama also overchared 1?C, without specifyin the amount, for
eCpenses for entertainment, telephone costs, eneral travelin
eCpenses, sub-aents9 commission of caro, all of which 1?C must
assume pursuant to pararaph : of the manaement contractH that
1?C was overchared P:,&1'.%: for subsistence, which amount was
spent not for the meals of the passeners, oDcers, and crew, but for
various parties, and, which, not havin been previously authori.ed by
1?C, should be chareable to ?e la 6amaH that ?e la 6ama
overchared operational eCpenses in the amount of P1>F,0&=.0$ which
were without supportin vouchersH that there was an understatement of
the operational income of 1?C vessels in the amount of PF&,:1>.$=H
that the operational eCpenses of the 1?C vessels was overchared for
various eCpenses in the amount of P$,:=F.'%.
15
In support of its second assinment of error, that the lower court erred
in adoptin in toto the +ndins and recommendations of the ,oard of
Accountants reardin the inventory of eEuipment, supplies, materials,
provisions, fuels, etc. on board the vessels upon the delivery thereof to
1?C as contained in the report dated April 10, 1%$%, 1?C contends that
?e la 6ama9s claim on this matter was only P=F=,0':.&', but 4chedule
, ;)Ch. PP<, purportin to be the +nal inventory, showed only a total of
P$&0,%&%.$0 as aainst 1?C audit report dated *arch 01, 1%$> in the
amount of only P:%=,=0&.1'.
1+
In support of the third assinment of error, that the lower court erred in
adoptin in toto the +ndins and recommendations of the ,oard of
Accountants reardin the commission on caroes boo!ed and loaded
after delivery of the vessels as convinced in the ,oard9s 6eport dated
April 10, 1%$%, 1?C avers that when the -?o_a Alicia- was delivered to
1?C the latter honored the ?e la 6ama commitments on caro and
passeners without however stipulatin the commissions to be earned
by ?e la 6amaH that the claim of ?e la 6ama for P1=,%F&.&F, or %-eY of
P1&>,1>=.$=, freiht revenues was &Y hiher than those chared for
the same service and should be reduced to F-eY onlyH that ?e la 6ama
also overchared 1?C in the amount of P110.&$ passae commission,
because ?e la 6ama should not be allowed to chare more than &-eY
which 1?C pays to its present aent.
1,
In its fourth assinment of error, that the lower court erred in
adoptin in toto the recommendations of the ,oard of Accountants
reardin the additional chares to 1?C as contained in the ,oard9s
6eport dated April 10, 1%$% 1?C avers that of the PF1,%%>.11 claimed
by ?e la 6ama, the bills for eneral averaes in the amount of
PF',:&>.$F for -?o_a Alicia- and -?o_a Aurora- were for services that
were normal duties of the relationship between 1?C and ?e la 6ama,
and were therefore without basis, more so because all of ?e la 6ama9s
eCpenses includin travel, hotel and entertainment eCpenses of its
oDcials incident thereto in the amount of P$1,$>0.00 had been
included in the casualty account claimed by ?e la 6ama and the
desinated ad8uster, Bunch, )dye, and Co., already collected their fees
of P=,'''H so that said amount of PF',:&>.$F should have been
disallowed.
18
In refutation of the reasons adduced by 1?C in support of its four
assinments of error, ?e la 6ama contends that the alleed errors
involve principally factual matters which had been twice resolved by
the lower court G +rst in the decision of April F%, 1%$% and aain in the
decisions of Bebruary & and *arch 1>, 1%==, and those alleed errors
relate to matters that 1?C had been iven many opportunities to ob8ect
to in the lower court, but which it did not doH that for havin failed to
ob8ect, 1?C is bound by the +ndins embodied in the report.
19
F'0
@e sustain the stand of ?e la 6ama. 1?C complains aainst the
adoption in toto by the trial court of the +ndins and recommendations
of the ,oard of Accountants. @e +nd the actuation of the trial court to
be in accordance with 6ule 00, 4ection 11, of the 6ules of Court G
which authori.es the trial court to render 8udment, after the report of
the commissioner has been set for hearin, by adoptin, modifyin, or
re8ectin the report in whole or in part. The report of the ,oard of
Accountants in the case at bar is similar to the report of the
commissioner, or referee, as provided in 6ule 00 of the 6ules of Court.
This Court, in the case of Aurillo v( 4raciano, )0 held that the trial
#ude9s adoption in toto of the +ndins of the Commissioner is allowed
under 6ule 00 of those 6ules of Court. In the case at bar, 1?C9s
repeated failures to +le its ob8ections, if any, to the report, left the trial
court no other choice but to render 8udment base, on the report.
4ection, 11 of 6ule 00 of the 6ules of Court was ta!en from 4ection 1:'
of the former Code of Civil Procedure ;Act 1%'<.tB[(`a#5wA` Interpretin
4ection 1:' of the said Code of Civil Procedure, this Court, in the case
of Nreidt vs. ). C. *cCullouh / Co., )1 held5.
... 4ection 1:' of the Code of Civil Procedure must be
interpreted as placin upon the litiant parties the duty
of discoverin and eChibitin to the court the reasons, if
any there be, why the report should not be con+rmedH
and it is not ordinarily incumbent upon the court to
discover the errors that may lur! therein. The duty which
the law imposes upon the court is to render 8udment in
accordance with the report, and this will ordinarily be
done unless the party arieved shall, in a manner
conformable with proper practice, demonstrate the
eCistence of error in the report. It is in elementary rule of
procedure that the eCceptions to the referee9s report
should speci+cally point out the error, or error relied upon
by the party eCceptin, when the report comes up for
con+rmation the court cannot be eCpected to rehear the
case upon the entire record but will review only so much
as may be drawn in Euestion by proper eCceptions ...
@hen a referee is appointed he becomes for the time
bein an accredited aent and an oDcer of the court, and
the reference is clearly a 8udicial proceedin. @hat the
referee does while actin within the scope of his authority
is, therefore, in the contemplation of law done by the
court itself. Aence his conclusions must be assumed to be
correct until error is properly shown ... It follows that
when the referee has eCamined the evidence and
reached his conclusions of fact and law, those
conclusions have a presumption in their favor both of law
and of reason. It would be impossible to administer
8ustice on any other theory than that as facts are found
and determined in accordance with the proper procedure
of the court they must be assumed to be true until the
contrary is shown.
In the case at bar, 1?C nelected to perform the duty of pointin and
demonstratin the alleed errors in the report of the ,oard of
Accountants, in spite of the fact that this Court in I.6. 1o. (-1$=$% had
ordered the case to be remanded to the lower court precisely in order
that 1?C miht be iven the opportunity, which it claimed it had
previously been derived of by the trial court, to submit its ob8ections to
the report, and to have a hearin on the report, not withstandin the
repeated opportunities iven to it by the trial court for a period of three
years to submit its ob8ections. "n this matter, the followin is what the
trial court said in its decision which is now appealed to this Court5.
... and as directed by the 4upreme Court, the defendant
was iven repeated opportunities to submit its ob8ections
to the 6eport of the Chairman of the ,oard.
3nfortunately, however, the defendant9s, conduct for the
last three years amounts to waiver of its riht to be heard
on the sub8ect report, to paraphrase the lanuae of the
4upreme Court in this reard in its decision Euoted
above. Thus defendant 1?C reEuested and was ranted
on "ctober 1', 1%=0 a +rst eCtension of time to submit
its ob8ections to the 6eport ;p. 10:F, 6ecords<. As late as
"ctober 0', 1%=0 ;p. 10%', 6ecords<, that is, after several
eCtensions of time totallin more than one ;1< year, this
Court ranted 1?C a +nal and last eCtension of three
wee!s within which to submit 1?C9s ob8ections, if any to
said 6eport. This period eCpired without the +lin by
defendant 1?C of ob8ections, if any, to said 6eportH but
this Court, notwithstandin the absence of any ob8ection
to said report, and with a view to ivin the defendant a
last chance to assail any part of said 6eport, eCercised its
discretion to, as it did, set said 6eport for bearin on *ay
0, 1%=$ ;p. 10%$, 6ecords<, and thereafter on *ay =, *ay
F>, #uly %, Auust $, 4eptember 1=, "ctober FF and
1ovember 1F, 1%=$, which hearins were cancelled at
the instance and reEuest of the defendant. At t#e #earin+
on <ovember .G% ./0> t#e arties a+reed t#at de$endant
be +ranted two weeks wit#in w#ic# to !le its objections%
i$ an"% to said Reort6 t#at lainti7 s#all submit its rel"
to t#e objections wit#in a similar eriod and t#at i$ t#e
de$endant $ailed to !le t#e objections wit#in said
stiulated eriod it s#all be deemed to #ave waived its
F':
ri+#t to do so. The defendant aain failed to +le its
ob8ections to said 6eport, and instead +led an urent
motion, dated 1ovember F=, 1%=$, to eCtend the period,
but said urent motion was +led after several days after
the eCpiration of the period ranted for the purpose in
this Court9s "rder of 1ovember 1F, 1%=$, and as the
defendant actually failed to +le the intended ob8ections
within the eCtension of time prayed for in said urent
motion ;see "rder of this Court of ?ecember &, 1%=$<, on
motion of the plaintif this Court found no other
alternative proper under the circumstances mentioned
above than to issue its "rder of ?ecember 10, 1%=$ to
the efect that said 6eport was deemed submitted for
decision andQor approval as of the last mentioned
date. ))
The appellant havin failed to +le its ob8ections to the report, it was the
duty imposed by the law upon the court, to Euote aainst Iriedt vs( E(
C( 3cCullou+# 9 Co(% sura, -to render 8udement in accordance with
the report,- as thouh the facts had been found by the 8ude himself.
If a party fails to +le opportunely his ob8ections to the report of the
commissioner or referee, such that the record does not disclose the
ob8ections thereto, as in the instant case, Euestions relatin to the
report cannot be reviewed and he cannot dispute the +ndin in the
report or escape the leal conseEuences Powin therefrom. Thus, in the
case of Santos v( De 4uzman and 3artinez, )* this Court ruled5.
,y way of emphasis, we now desire to add that if a party
desires to challene the +ndins of a referee, he must do
so by timely and speci+c eCceptions to the referee9s
report. If he fails to ma!e such eCceptions and the report
is con+rmed by the trial 8ude, he is bound by the
+ndins and cannot be heard to dispute their truthfulness
or escape the leal conseEuences Powin therefrom.
Ouestions relatin to the report of a referee can be
reviewed only where the record discloses the eCceptions
ta!en thereto.
Another reason why 1?C9s +rst four assinments of errors should no
loner be considered is that, as appears in the trial court9s decision,
1?C a+reed that should it fail to +le its ob8ections within two wee!s
from 1ovember 1F, 1%=$, -it shall be deemed to have waived its ri+#t
to do so.- Burthermore, it has been repealed time and aain by this
Court, that issues not raised in the lower court cannot be raised for the
+rst time on appeal. )4 In the recent case ofIalalo v( 'uz )5 this Court
refused to consider on appeal the correctness of the amount due from
appellant to appellee as found by the Commissioner, it bein too late to
Euestion on appeal its correctness, the same not havin been,
submitted to the trial court for resolution.
It has also been held, in this connection, that when the +ndins of the
Commissioner are approved by the trial court, they will not enerally be
disturbed by the reviewin court, unless the +ndins are unsupported
by the evidence. )+ The trial court adopted the +ndins and
recommendations embodied in the 6eport in the instant case -after a
careful consideration of said report and after a careful evaluation of the
pertinent data and +ures ta!en from authentic records as to which the
members of the ,oard of Accountants are in areement.- ),
In support of the +fth assinment of error, that the lower court erred in
holdin that ?e la 6ama is entitled to the preferential riht to the use of
the -?o_a- names and en8oinin and restrainin 1?C perpetually from
usin the -?o_a- names on any of its vessels, 1?C arues that as
owner of the vessels it had reistered the -?o_a- names in the ,ureau
of Customs with full !nowlede and consent of ?e la 6ama which,
therefore, is now estopped from Euestionin the riht, or from denyin
the ownership, of 1?C over the -?o_a- names ;Art. 1:01, Civil
Code<.tB[(`a#5wA` )8 ?e la 6ama, on the other hand maintains that
the +ndins and conclusion of the lower court on this matter, Euotin
the pertinent portion of the lower court9s decision, are well founded.
In the amendatory decision, dated *arch 1>, 1%==, the lower court
found that ?e la 6ama had been in the shippin business since 1%00
and had adopted, prior to the war in 1%:1, the word -?o_a- in
desinatin its vesselsH that the three ocean-oin vessels that it
operated under the manaement contract were named -?o_a 1ati-
after the wife of the late ?on )steban de la 6ama, who was founder of
the steamship companyH -?o_a Alicia- after the late wife of former
President )lpidio OuirinoH and -?o_a Aurora- after the late widow of
President *anuel Oue.onH that there is unrebutted testimony that in the
shippin business, oodwill and reputation are inevitably acEuired by
the names iven to a
vessel. )9
1?C9s contention, in its answer, that ?e la 6ama, a private +rm, could
not appropriate said names ;-eCcept ?o_a 1ati-< on the round that
those are names of wives of former Presidents, does not have a leal
basis. 3nder 4ection :;c< of 6ep. Act 1o. 1== as amended, which
apparently is the basis of the contention of 1?C, what is prohibited from
bein appropriated and bein reistered are trade-names consistin of,
or comprisin, a name identifyin a particular livin individual, or the
F'$
name of a deceased President of the Philippines. The names of
deceased wives of Presidents are not included in the prohibition.
*oreover, 4ection :;f< of said Act does not prohibit the reistration, and
hence appropriation, of a trade-name that has become distinctive and
the substantial and eCclusive use of a trade-name for +ve years
accepted as rima $acie proof that the trade-name has become
distinctive. And this Court has said, in An+ vs( Teodoro,
*0
that even a
name or phrase not capable of appropriation as a trade name may, by
lon and eCclusive use by a business with reference thereto of to its
products, acEuire a proprietary connotation, such that, to the
purchasin public, the name or phrase becomes associated with the
service or the products of the business, and so it is entitled to
protection aainst unfair competition.
1either is the claim of estoppel, alleedly based on acEuiescence, in
that 1?C had reistered with full !nowlede andQor consent of ?e la
6ama the -?o_a- names in the ,ureau of Customs, tenable. A readin
of 4ections 11== to 11&= of the 6evised Administrative Code, under
which the -?o_a- vessels were presumably reistered, would show that
the principally purpose of the reistration is to determine the ownership
of the vessel, althouh for reistration it is necessary that the vessel
should have a name as a prereEuisite under the provision of 4ection
11&'. ?e la 6ama certainly could not, and had no riht, to oppose the
reistration of the vessels by 1?C because the vessels were in fact
owned by 1?C. 1either could ?e la 6ama then oppose the reistration
of the -?o_a- names of the vessels for it was ?e la 6ama itself that
ave those names when it operated the vessels, and it had also
eCpectant riht to become owners of said vessels. ?e la 6ama9s
consent to the reistration of the vessels as owned by 1?C did not
necessarily imply that it also consented to 1?C9s appropriation of the
-?o_a- names, for almost immediately after the riht of 1?C to cancel
the manaement contract had been upheld by this Court in I.6. 1o. (-
>&>:, decided on *ay F1, 1%$=, ?e la 6ama formally noti+ed, on
Auust 1', 1%$= 1?C or its aent to refrain from usin, announcin or
in any manner referrin to the three vessels here in Euestion as the
9?o_a Aurora,9 9?o_a 1ati9 or 9?o_a Alicia9.-
*1
Brom these facts if cannot
reasonably be ured that ?e la 6ama is estopped from preventin 1?C
to use the -?o_a- names on its vessels. Anent this matter, it has been
held that5.
... an estoppel will not ordinarily arise from a consent
iven under an eCcusable misapprehension of facts...
li!ewise, the estoppel will not be iven efect beyond the
precise thin consented to and matters which are
necessarily, or at least, reasonably, to be implied
therefrom. ;F> Am #ur Fd, pp. ==F-==0.<
And even if it be assumed, +ratia ar+umenti% that ?e la 6ama
acEuiesced to the reistration of the -?o_a- names of the vessels, as
1?C contends, that acEuiescence could not necessarily estop ?e la
6ama to claim its riht to said names, after the conditions had chaned,
that is when the manaement contract had been cancelled by 1?C.
6eardin this matter it has been held that5.
AcEuiescence in the past does not necessarily estop a
party from chanin his course of conduct as to the
future, especially where there has been a chane in
conditions. ;F> Am #ur Fd p. =&$.<
1?C does not dispute the fact that the -?o_a- names had been
oriinally used by ?e la 6ama,
*)
and accordin to the lower court ?e la
6ama had been usin the -?o_a- names even before the war, and that
said names have acEuired oodwill and reputation. Ioodwill is
protected by the law on unfair competition. Ioodwill is easily damaed,
and is easily vulnerable to assault, throuh the brand which symboli.es
it. @hen a person has established a trade or business in which he has
used a name or device to desinate his oods, he will be protected in
the use of the name or device. -4uch person has a riht to complain
when another adopts this symbol or manner of ma!in of his oods so
as to mislead the public into purchasin the same as and for the oods
of the complainant.-
**
.
The oodwill in business is a valuable asset, and in
modern commercial life it is freEuently built upon a trade-
name. Any trade-mar! or name ... which has become of a
pecuniary value or a business advantae, becomes a
property riht, and, as such, is entitled to the protection
aforded by the courts ;American Aricultural Chemical
Co. v. *oore, 1& B ;Fd< 1%=, 1%%.<
In An+ v( Teodoro
*4
this Court said5.
The owner of a trade-mar! or trade-name has a property
riht in which he is entitled to protection, since there is
damae to him from confusion of reputation or oodwill
in the mind of the public as well as confusion of oods.
The modern trend is to ive emphasis to the unfairness of
the acts and to treat the issue as a fraud.
To permit 1?C to continue usin the -?o_a- names would be to
countenance the unlawful appropriation of the bene+t of a oodwill
which ?e la 6ama has acEuired as a result of continued usae and lare
eCpenseH it would be tantamount to permittin 1?C to rab the
F'=
reputation or oodwill of the business of another.
*5
@e +nd that the
decision of the trial court on this matter is in accordance with the law
on unfair competition.
6eardin 1?C9s siCth assinment of error, that the lower court erred in
condemnin defendant-appellant to pay to the plaintif-appellee the
sum of PF::,FF&.>1 with leal interest thereon, from #anuary F:, 1%$$
until fully paid and also the sum of PF',''' by way of damaes and
attorney9s fees, @e believe that no such error was committed by the
lower court. The view @e have eCpressed reardin the +rst four errors
assined by 1?C fully supports the correctness of the lower court9s
holdin that 1?C should pay ?e la 6ama the sum of PF::,FF&.>1 with
leal interest, as stated in the decision. The facts and circumstances
eCtant in the record, li!ewise, amply warrant the award to ?e la 6ama
of the sum of PF','''.'' by way of damaes and attorney9s fee9s.
@A)6)B"6), the decision appealed from is aDrmed, with cost aainst
the defendant-appellant 1ational ?evelopment Company. It is so
ordered.
Concecion% C(J(% Re"es% J(:('(% Dizon% 3akalintal% Castro% )ernando and
:arredo% JJ(% concur(
Tee#ankee and Dillamor% JJ(% took no art(

Você também pode gostar