FIRST DIVISION [G.R. No. L-8191. February 27, 1956.] DIOSDADO A. SITCHON, ET AL., Petitioners-Appellants, vs.

ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8397. February 27, 1956] RICARDO DE LA CRUZ, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8500. February 27, 1956] FELINO PEA, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8513. February 27, 1956] SANTIAGO BROTAMONTE, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8516. February 27, 1956] ERNESTO NAVARRO, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as the City Engineer of the City of Manila, Respondent-Appellee. [G.R. No. L-8620. February 27, 1956] AMADO SAYO, ET AL., Petitioners-Appellants, vs. ALEJO AQUINO, in his capacity as City Engineer of the City of Manila, Respondent-Appellee. DECISION CONCEPCION, J.: These are six (6) class suits against the City Engineer of Manila to enjoin him from carrying out his threat to demolish the houses of Petitioners herein, upon the ground that said houses constitute public nuisances. In due course, the Court of First Instance of Manila rendered separate, but substantially identical, decisions adverse to the Petitioners, who have appealed therefrom directly to this Court. Inasmuch as the fact are not disputed and the same issues have been raised in all these cases, which were jointly heard before this Court, we deem it fit to dispose of the appeals in one decision. 1. Case No. L-8191 (Case No. 21530 of the Court of First Instance of Manila) was instituted by Diosdado A. Sitchon, Luis Gavino and Ponciano Adoremos, in their own behalf and in representation of twenty-two (22) persons, named in an annex to the petition. In 1947 and 1948, said Petitioners occupied portions of the public street known as Calabash Road, City of Manila, and constructed houses thereon, without the consent of the authorities. Later on, some of them paid concession fees or damages, for the use of said portions of the street, to a collector of the city treasurer, who issued receipts with an annotation reading:chanroblesvirtuallawlibrary without prejudice to the order to vacate. On or about July 5, 1952, Respondent City Engineer advised and ordered them to vacate the place and remove their houses therefrom before August 5, 1952, with the warning that otherwise he would effect the demolition of said houses at their expense. This notice having been unheeded, a demolition team of the office of the City Engineer informed the Petitioners in December, 1953, that their houses would be removed, whereupon the case was instituted for the purpose already stated. At the instance of Petitioners herein, the lower court issued a writ of preliminary injunction. 2. Case No. L-8397 (Case No. 21755 of the Court of First Instance of Manila) was brought by Ricardo de la Cruz, Isidro Perez and Fernando Figuerroa, in their behalf and in representation of two hundred sixty-seven (267) persons, who, sometime after the liberation of Manila, occupied portions of Antipolo and Algeciras Streets, of said city, and constructed houses thereon, without any authority therefor. Several Petitioners later paid concession fees or

damages to a collector of the city treasurer, and were given receipts with the annotation:chanroblesvirtuallawlibrary without prejudice to the order to vacate. The constructions were such that the roads and drainage on both sides thereof were obstructed. In some places, the ditches used for drainage purposes were completely obliterated. What is more, said ditches cannot be opened, repaired or placed in proper condition because of said houses. On or about May 15, 1952, Respondent City Engineer advised them to vacate the place and remove their houses within a stated period, with the warning already referred to. Hence, the institution of the case, upon the filing of which a writ of preliminary injunction was issued. 3. Felino Pea, Francisco Morales and Jose Villanueva filed case No. L-8500 (Case No. 21535 of the Court of First Instance of Manila), on their own behalf and in representation of about thirty (30) persons, who, without the aforementioned authority, occupied portions of the street area of R. Papa Extension, City of Manila, sometime after its liberation. As in the preceding cases, several Petitioners paid concession fees or damages to a collector of the city treasurer, without prejudice to the order to vacate, which was given on May 10, 1952, with the warning that should they fail to remove said houses, Respondent would do so, at their expense. Upon being advised, later on, of the intention of Respondents agents to carry out said threat, the corresponding petition was filed and a writ of preliminary injunction secured. 4. Santiago Brotamonte, Godofredo Blanquiso and Salvador Justiniano commenced case No. L-8513 (Case No. 21531 of the Court of First Instance of Manila), on their behalf and in representation of forty-two (42) other persons, who, without any authority, occupied portions of the bed of a branch of the Estero de San Miguel, City of Manila, and constructed houses thereon, sometime in 1947 and 1948. As in the cases already mentioned, some of them paid concession fees or damages, without prejudice to the order to vacate, which was given, with the usual warning, in December, 1953. The institution of the case and a writ of preliminary injunction soon followed. 5. In case No. L-8516 (Case No. 21580 of the Court of First Instance of Manila), Ernesto Navarro, Pablo Salas and Herminigildo Digap are Petitioners, on their own behalf and in that of fifteen (15) persons, who, sometime after the liberation of Manila, occupied portions of the bed of the Pasig River, at about the end of Rio Vista Street, San Miguel, Manila, which are covered and uncovered by the tide, and erected houses there on without any authority therefor. Concession fees or damages were paid by some of them, without prejudice to the order to vacate. After giving, on or about June 20, 1952, the corresponding notice and warning, which were not heeded, Respondent threatened to demolish said houses at Petitioners expense, whereupon the case was instituted and a writ of preliminary injunction secured. 6. Case No. L-8620 (Case No. 22143 of the Court of First Instance of Manila) was filed by Amado Sayo, Marciano Lamco and Victor Bernardo, on their behalf and in that of twenty-two (22) other persons, who, in 1946 and 1947, occupied portions of Torres Bugallon, Cavite, Misericordia and Antipolo Streets, in the City of Manila, and constructed houses thereon, without any authority therefor. Some paid monthly rentals and/or damages, and/or concession fees from 1946 to 1951, without prejudice to the order to vacate, which was given on May 1, 1952, with the usual warning, followed, about two (2) years later, by a threat to demolish said houses. Hence, the case, upon the filing of which writ of preliminary injunction was issued. After appropriate proceedings, the Court of First Instance of Manila rendered separate decisions, the dispositive part of which, except in case No. L-8620, is of the following tenor:chanroblesvirtuallawlibrary

Por tanto, el Juzgado sobresee esta causa por falta de meritos y ordena al ingeniero de la ciudad de Maniia que haga la demolicion o la remocion de las citadas casas, dentro de quince dias despues de haber avisado al efecto a los aqui recurrentes, y a costa de los mismos. In said case No. L-8620, the lower court rendered judgment as follows:chanroblesvirtuallawlibrary In view of the foregoing considerations the Court hereby declares:chanroblesvirtuallawlibrary (a) that the houses of all Petitioners in this case erected on the land which forms part of Torres Bugallon, Cavite, Misericordia and Antipolo Streets constitute public nuisance as defined by section 1112 of Ordinance No. 1600 of the City of Manila and by Article 694 paragraphs 4 and 5 of the Civil Code and (b) that the City Engineer of the City of Manila is the official authorized by Article 1112 of Ordinance No. 1600 of the City of Manila and Article 699, paragraph 3 of the Civil Code to abate said public nuisance and charge the expenses thereof to Petitioners. Petitioners contend that said decisions should be reversed upon the ground that, in trying to demolish their respective houses without notice and hearing, the city engineer sought to deprive them of their property without due process of law, apart from the fact that, under Articles 701 and 702 of the new Civil Code, the power to remove public nuisances is vested in the district health officer, not in Respondent city engineer. It should be noted, however, that, before expressing his intent to demolish the houses in question, Respondent had advised and ordered the Petitioners to remove said houses, within the periods stated in the corresponding notices; chan roblesvirtualawlibrarythat Petitioners do not question, and have not questioned, the reasonableness or sufficiency of said periods; chan roblesvirtualawlibraryand that they have never asked Respondent herein to give them an opportunity to show that their houses do not constitute public nuisances. Besides, it is not disputed that said houses are standing on public streets, with the exception of the houses involved in cases Nos. 8513 and 8516, which are built on portions of river beds. It is clear, therefore, that said houses are public nuisances, pursuant to Articles 694 and 695 of the Civil Code of the Philippines, which is Republic Act No. 386, reading:chanroblesvirtuallawlibrary ART. 694. A nuisance is any act, omission, establishment, business, condition of property, or anything else which:chanroblesvirtuallawlibrary (1) Injures or endangers the health or safety of others; chan roblesvirtualawlibraryor (2) Annoys or offends the senses; chan roblesvirtualawlibraryor (3) Shocks, defies or disregards decency or morality; chan roblesvirtualawlibraryor (4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; chan roblesvirtualawlibraryor (5) Hinders or impairs the use of property. ART. 695. Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. A private nuisance is one that is not included in the foregoing definition. (Italics supplied.) It is true that Articles 700 and 702 of the same Code provide:chanroblesvirtuallawlibrary ART. 700. The district health officer shall take care that one or all of the remedies against a public nuisance are availed of. ART. 702. The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against a public nuisance. However, section 31 of Republic Act No. 409, the Revised Charter of the City of Manila, specifically places upon the city engineer the duty, among others, to have charge of the cralaw care of cralaw streets, canals and esteros cralaw; chan roblesvirtualawlibraryto

prevent the encroachment of private buildings cralaw on the streets and public places cralaw; chan roblesvirtualawlibraryto have supervision cralaw of all private docks, wharves, piers cralaw and other property bordering on the harbor, rivers, esteros and waterways cralaw and cralaw issue permits for the construction, repair and removal of the same and enforce all ordinances relating to the same; chan roblesvirtualawlibraryto have the care and custody of all sources of water supply cralaw; chan roblesvirtualawlibraryto cause buildings dangerous to the public to be cralaw; chan roblesvirtualawlibrarytorn down; chan roblesvirtualawlibraryand to order the removal of buildings and structures erected in violation of the ordinances cralaw. Obviously, articles 700 and 702 of Republic Act No. 386, should yield to said section 31 of Republic Act No. 409, not only because the former preceded the latter, but, also, because said section 31 of Republic Act No. 409 is a special provision specifically designed for the City of Manila, whereas said Articles 700 and 702 of the Civil Code are general provisions applicable throughout the Philippines. Moreover, section 1122 of the Revised Ordinance of the City of Manila (No. 1600) explicitly authorizes the action sought to be taken by Respondent herein, by providing:chanroblesvirtuallawlibrary Whenever the owner or person responsible for any unauthorized obstruction shall, after official notice from the proper department, refuse or neglect to remove the same within a reasonable time, such obstruction shall be deemed a public nuisance, and the city engineer is authorized to remove the same at the owners expense. Again, houses constructed, without governmental authority, on public streets and waterways, obstruct at all times the free use by the public of said streets and waterways, and, accordingly, constitute nuisances per se, aside from public nuisances. As such, the summary removal thereof, without judicial process or proceedings may be authorized by the statute or municipal ordinance, despite the due process clause. (66 C.J.S. 733-734.) The police power of the state justifies the abatement or destruction, by summary proceedings, of whatever may be regarded as a public nuisance; chan roblesvirtualawlibraryand the legislature may authorize the summary abatement of a nuisance without judicial process or proceeding. cralaw The remedy of summary abatement for violation of a municipal ordinance may be used against a public nuisance. (66 C.J.S. 855, 856.) When necessary to insure the public safety, the legislature may under its police power authorize municipal authorities summarily to destroy property without legal process or previous notice to the owner. cralaw It is not an objection to the validity of a police regulation that it does not provide for a hearing or for notice to the owner before his property is subjected to restraint or destruction. (12 Am. Jur. 356, 357.) In the exercise of the police power the state may authorize its officers summarily to abate public nuisances without resort to legal proceedings and without notice or a hearing. Municipal Corporations generally have power to cause the abatement of public nuisances summarily without resort to legal proceedings. (39 Am. Jur. 455, 456, 457.) Being in conformity with the facts and the law, the decisions appealed from are hereby affirmed in toto, and the writs of preliminary injunction issued by the lower court dissolved, with costs against Petitioners-Appellants. It is SO ORDERED.

G.R. No. L-18390 August 6, 1971 PEDRO J. VELASCO, plaintiff-appellant, vs. MANILA ELECTRIC CO., WILLIAM SNYDER, its President; JOHN COTTON and HERMENEGILDO B. REYES, its Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of Quezon City, defendants-appellees. Q. Paredes, B. Evangelista and R. T. Durian for plaintiff-appellant. Ross, Selph and Carrascoso for defendants-appellees Manila Electric Co., etc., et al. Asst. City Fiscal Jaime R. Agloro for defendant-appellee Anastacio A. Agan, etc. REYES, J.B.L., J.: The present case is direct appeal (prior to Republic Act 5440) by the herein plaintiffappellant, Pedro J. Velasco (petitioner in L-14035; respondent in L-13992) * from the decision of the Court of First Instance of Rizal, Quezon City Branch, in its Civil Case No. 1355, absolving the defendants from a complaint for the abatement of the substation as a nuisance and for damages to his health and business in the amount of P487,600.00. In 1948, appellant Velasco bought from the People's Homesite and Housing Corporation three (3) adjoining lots situated at the corner of South D and South 6 Streets, Diliman, Quezon City. These lots are within an area zoned out as a "first residence" district by the City Council of Quezon City. Subsequently, the appellant sold two (2) lots to the Meralco, but retained the third lot, which was farthest from the street-corner, whereon he built his house. In September, 1953, the appellee company started the construction of the sub-station in question and finished it the following November, without prior building permit or authority from the Public Service Commission (Meralco vs. Public Service Commission, 109 Phil. 603). The facility reduces high voltage electricity to a current suitable for distribution to the company's consumers, numbering not less than 8,500 residential homes, over 300 commercial establishments and about 30 industries (T.s.n., 19 October 1959, page 1765). The substation has a rated capacity of "2 transformers at 5000 Kva each or a total of 10,000 Kva without fan cooling; or 6250 Kva each or a total of 12,500 Kva with fan cooling" (Exhibit "A-3"). It was constructed at a distance of 10 to 20 meters from the appellant's house (T.s.n., 16 July 1956, page 62; 19 December 1956, page 343; 1 June 1959, page 29). The company built a stone and cement wall at the sides along the streets but along the side adjoining the appellant's property it put up a sawale wall but later changed it to an interlink wire fence. It is undisputed that a sound unceasingly emanates from the substation. Whether this sound constitutes an actionable nuisance or not is the principal issue in this case. Plaintiff-appellant Velasco contends that the sound constitutes an actionable nuisance under Article 694 of the Civil Code of the Philippines, reading as follows: A nuisance is any act, omission, establishment, business condition of property or anything else which: (1) Injuries or endangers the health or safety of others; or (2) Annoys or offends the senses; xxx xxx xxx because subjection to the sound since 1954 had disturbed the concentration and sleep of said appellant, and impaired his health and lowered the value of his property. Wherefore, he sought a judicial decree for the abatement of the nuisance and asked that he be declared entitled to recover compensatory, moral and other damages under Article 2202 of the Civil Code.

ART. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant. After trial, as already observed, the court below dismissed the claim of the plaintiff, finding that the sound of substation was unavoidable and did not constitute nuisance; that it could not have caused the diseases of anxiety neurosis, pyelonephritis, ureteritis, lumbago and anemia; and that the items of damage claimed by plaintiff were not adequate proved. Plaintiff then appealed to this Court. The general rule is that everyone is bound to bear the habitual or customary inconveniences that result from the proximity of others, and so long as this level is not surpassed, he may not complain against them. But if the prejudice exceeds the inconveniences that such proximity habitually brings, the neighbor who causes such 1 disturbance is held responsible for the resulting damage, being guilty of causing nuisance. While no previous adjudications on the specific issue have been made in the Philippines, our law of nuisances is of American origin, and a review of authorities clearly indicates the rule to be that the causing or maintenance of disturbing noise or sound may constitute an actionable nuisance (V. Ed. Note, 23 ALR, 2d 1289). The basic principles are laid down in Tortorella vs. Traiser & Co., Inc., 90 ALR 1206: A noise may constitute an actionable nuisance, Rogers vs. Elliott, 146 Mass, 349, 15 N.E. 768, 4 Am. St. Rep. 316, Stevens v. Rockport Granite Co., 216 Mass. 486, 104 N.E. 371, Ann. Cas. 1915B, 1954, Stodder v. Rosen Talking Machine Co., 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197, but it must be a noise which affects injuriously the health or comfort of ordinary people in the vicinity to an unreasonable extent. Injury to a particular person in a peculiar position or of specially sensitive characteristics will not render the noise an actionable nuisance. Rogers v. Elliott, 146 Mass. 349, 15 N. E. 768, 4 Am. St. Rep. 316. In the conditions of present living noise seems inseparable from the conduct of many necessary occupations. Its presence is a nuisance in the popular sense in which that word is used, but in the absence of statute noise becomes actionable only when it passes the limits of reasonable adjustment to the conditions of the locality and of the needs of the maker to the needs of the listener. What those limits are cannot be fixed by any definite measure of quantity or quality. They depend upon the circumstances of the particular case. They may be affected, but are not controlled, by zoning ordinances. Beane v. H. J. Porter, Inc., 280 Mass. 538, 182 N. E. 823, Marshal v. Holbrook, 276 Mass. 341, 177 N. E. 504, Strachan v. Beacon Oil Co., 251 Mass. 479, 146 N. E. 787. The delimitation of designated areas to use for manufacturing, industry or general business is not a license to emit every noise profitably attending the conduct of any one of them. Bean v. H. J. Porter, Inc.. 280 Mass. 538, 182 N. E. 823. The test is whether rights of property of health or of comfort are so injuriously affected by the noise in question that the sufferer is subjected to a loss which goes beyond the reasonable limit imposed upon him by the condition of living, or of holding property, in a particular locality in fact devoted to uses which involve the emission of noise although ordinary care is taken

to confine it within reasonable bounds; or in the vicinity of property of another owner who though creating a noise is acting with reasonable regard for the rights of those affected by it. Stevens v. Rockport Granite Co., 216 Mass. 486, 104 NE 371, Ann. Cas. 1915B, 1054. With particular reference to noise emanating from electrical machinery and appliances, the court, in Kentucky & West Virginia Power Co. v. Anderson, 156 S. W. 2d 857, after a review of authorities, ruled as follows: There can be no doubt but that commercial and industrial activities which are lawful in themselves may become nuisances if they are so offensive to the senses that they render the enjoyment of life and property uncomfortable. It is no defense that skill and care have been exercised and the most improved methods and appliances employed to prevent such result. Wheat Culvert Company v. Jenkins, 246 Ky. 319, 55 S. W. 2d 4; 46 C.J. 683, 705; 20 R. C. L. 438; Annotations, 23 A. L. R. 1407; 90 A. L. R. 1207. Of course, the creation of trifling annoyance and inconvenience does not constitute an actionable nuisance, and the locality and surroundings are of importance. The fact that the cause of the complaint must be substantial has often led to expressions in the opinions that to be a nuisance the noise must be deafening or loud or excessive and unreasonable. Usually it was shown to be of that character. The determinating factor when noise alone is the cause of complaint is not its intensity or volume. It is that the noise is of such character as to produce actual physical discomfort and annoyance to a person of ordinary sensibilities, rendering adjacent property less comfortable and valuable. If the noise does that it can well be said to be substantial and unreasonable in degree; and reasonableness is a question of fact dependent upon all the circumstances and conditions. 20 R. C. L. 445, 453; Wheat Culvert Company v. Jenkins, supra. There can be no fixed standard as to what kind of noise constitutes a nuisance. It is true some witnesses in this case say they have been annoyed by the humming of these transformers, but that fact is not conclusive as to the nonexistence of the cause of complaint, the test being the effect which is had upon an ordinary person who is neither sensitive nor immune to the annoyance concerning which the complaint is made. In the absence of evidence that the complainant and his family are supersensitive to distracting noises, it is to be assumed that they are persons of ordinary and normal sensibilities. Roukovina v. Island Farm Creamery Company, 160 Minn. 335, 200 N. W. 350, 38 A. L. R. 1502. xxx xxx xxx In Wheat Culvert Company vs. Jenkins, supra, we held an injunction was properly decreed to stop the noise from the operation of a metal culvert factory at night which interfered with the sleep of the occupants of an adjacent residence. It is true the clanging, riveting and hammering of metal plates produces a sound different in character from the steady hum or buzz of the electric machinery described in this case. In the Jenkins case the noise was loud, discordant and intermittent. Here it is interminable and monotonous. Therein lies the physical annoyance and disturbance.

Though the noise be harmonious and slight and trivial in itself, the constant and monotonous sound of a cricket on the earth, or the drip of a leaking faucet is irritating, uncomfortable, distracting and disturbing to the average man and woman. So it is that the intolerable, steady monotony of this ceaseless sound, loud enough to interfere with ordinary conversation in the dwelling, produces a result generally deemed sufficient to constitute the cause of it an actionable nuisance. Thus, it has been held the continuous and monotonous playing of a phonograph for advertising purposes on the street even though there were various records, singing, speaking and instrumental, injuriously affected plaintiff's employees by a gradual wear on their nervous systems, and otherwise, is a nuisance authorizing an injunction and damages. Frank F. Stodder, et al. v. Rosen Talking Machine Company, 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197. The principles thus laid down make it readily apparent that inquiry must be directed at the character and intensity of the noise generated by the particular substation of the appellee. As can be anticipated, character and loudness of sound being of subjective appreciation in ordinary witnesses, not much help can be obtained from the testimonial evidence. That of plaintiff Velasco is too plainly biased and emotional to be of much value. His exaggerations are readily apparent in paragraph V of his amended complaint, signed by him as well as his counsel, wherein the noise complained of as fearful hazardous noise and clangor are produced by the said electric transformer of the MEC's substation, approximating a noise of a reactivated about-to-explode volcano, perhaps like the nerve wracking noise of the torture chamber in Germany's Dachau or Buchenwald (Record on Appeal, page 6). The estimate of the other witnesses on the point of inquiry are vague and imprecise, and fail to give a definite idea of the intensity of the sound complained of. Thus: OSCAR SANTOS, Chief Building Inspector, Department of Engineering, Quezon City ____ "the sound (at the front door of plaintiff Velasco's house) becomes noticeable only when I tried to concentrate ........" (T.s.n., 16 July 1956, page 50) SERAFIN VILLARAZA, Building Inspector ____ "..... like a high pitch note." (the trial court's description as to the imitation of noise made by witness:"........ more of a hissing sound) (T.s.n., 16 July 1956, pages 59-60) CONSTANCIO SORIA, City Electrician ____ "........ humming sound" ..... "of a running car". (T.s.n., 16 July 1956, page 87) JOSE R. ALVAREZ, Sanitary Engineer, Quezon City Health Department ____ "..... substation emits a continuous rumbling sound which is audible within the premises and at about a radius of 70 meters." "I stayed there from 6:00 p.m. to about 1:00 o'clock in the morning" ..... "increases with the approach of twilight." (T.s.n., 5 September 1956, pages 40-44) NORBERTO S. AMORANTO, Quezon City Mayor ____ (for 30 minutes in the street at a distance of 12 to 15 meters from sub-station) "I felt no effect on myself." "..... no [piercing noise]" (T.s.n., 18 September 1956, page 189) PACIFICO AUSTRIA, architect, appellant's neighbor: "..... like an approaching airplane ..... around five kilometers away." (T.s.n., 19 November 1956, pages 276277) ANGEL DEL ROSARIO, radiologist, appellant's neighbor: "..... as if it is a running motor or a running dynamo, which disturbs the ear and the hearing of a person." T.s.n., 4 December 1956, page 21)

ANTONIO D. PAGUIA, lawyer ____ "It may be likened to the sound emitted by the whistle of a boat at a far distance but it is very audible." (T.s.n., 19 December 1956, page 309) RENE RODRIGUEZ, sugar planter and sugar broker, appellant's neighbor ____ "It sounds like a big motor running continuously." (T.s.n., 19 December 1956, page 347) SIMPLICIO BELISARIO, Army captain, ____ (on a visit to Velasco) "I can compare the noise to an airplane C-47 being started - the motor." [Did not notice the noise from the substation when passing by, in a car, Velasco's house] (T.s.n., 7 January 1957, pages 11-12) MANOLO CONSTANTINO, businessman, appellant's neighbor ____ "It disturbs our concentration of mind." (T.s.n., 10 January 1957, page 11) PEDRO PICA, businessman, appellant's neighbor: "..... We can hear it very well [at a distance of 100 to 150 meters]. (T.s.n., 10 January 1957, page 41) CIRENEO PUNZALAN, lawyer ____ "..... a continuous droning, ..... like the sound of an airplane." (T.s.n., 17 January 1957, page 385) JAIME C. ZAGUIRRE, Chief, Neuro-Psychiatry Section, V. Luna Gen. Hospital ____ "..... comparatively the sound was really loud to bother a man sleeping." (T.s.n., 17 January 1957, page 406) We are thus constrained to rely on quantitative measurements shown by the record. Under instructions from the Director of Health, samplings of the sound intensity were taken by Dr. Jesus Almonte using a sound level meter and other instruments. Within the compound of the plaintiff-appellant, near the wire fence serving as property line between him and the appellee, on 27 August 1957 at 11:45 a.m., the sound level under the sampaloc tree was 46-48 decibels, while behind Velasco's kitchen, the meter registered 49-50; at the same places on 29 August 1957, at 6:00 a.m., the readings were 56-59 and 61-62 decibels, respectively; on 7 September 1957, at 9:30 a.m., the sound level under the sampaloc tree was 74-76 decibels; and on 8 September 1957 at 3:35 in the morning, the reading under the same tree was 70 decibels, while near the kitchen it was 79-80 decibels. Several measurements were also taken inside and outside the house (Exhibit "NN-7, b-f"). The ambient sound of the locality, or that sound level characteristic of it or that sound predominating minus the sound of the sub-station is from 28 to 32 decibels. (T.s.n., 26 March 1958, pages 6-7) Mamerto Buenafe, superintendent of the appellee's electrical laboratory, also took sound level samplings. On 19 December 1958, between 7:00 to 7:30 o'clock in the evening, at the substation compound near the wire fence or property line, the readings were 55 and 54 and still near the fence close to the sampaloc tree, it was 52 decibels; outside but close to the concrete wall, the readings were 42 to 43 decibels; and near the transformers, it was 76 decibels (Exhibit "13"). Buenafe also took samplings at the North General Hospital on 4 January 1959 between 9:05 to 9:45 in the evening. In the different rooms and wards from the first to the fourth floors, the readings varied from 45 to 67 decibels. Technical charts submitted in evidence show the following intensity levels in decibels of some familiar sounds: average residence: 40; average office: 55; average automobile, 15 feet: 70; noisiest spot at Niagara Falls: 92 (Exhibit "11- B"); average dwelling: 35; quiet office: 40; average office: 50; conversation: 60; pneumatic rock drill: 130 (Exhibit "12"); quiet home average living room: 40; home ventilation fan, outside sound of good home airconditioner or automobile at 50 feet: 70 (Exhibit "15A"). Thus the impartial and objective evidence points to the sound emitted by the appellee's substation transformers being of much higher level than the ambient sound of the locality. The measurements taken by Dr. Almonte, who is not connected with

either party, and is a physician to boot (unlike appellee's electrical superintendent Buenafe), appear more reliable. The conclusion must be that, contrary to the finding of the trial court, the noise continuously emitted, day and night, constitutes an actionable nuisance for which the appellant is entitled to relief, by requiring the appellee company to adopt the necessary measures to deaden or reduce the sound at the plaintiff's house, by replacing the interlink wire fence with a partition made of sound absorbent material, since the relocation of the substation is manifestly impracticable and would be prejudicial to the customers of the Electric Company who are being serviced from the substation. Appellee company insists that as the plaintiff's own evidence (Exhibit "NN-7[c]") the intensity of the sound (as measured by Dr. Almonte) inside appellant's house is only 46 to 47 decibels at the consultation room, and 43 to 45 decibels within the treatment room, the appellant had no ground to complain. This argument is not meritorious, because the noise at the bedrooms was determined to be around 64-65 decibels, and the medical evidence is to the effect that the basic root of the appellant's ailments was his inability to sleep due to the incessant noise with consequent irritation, thus weakening his constitution and making him easy prey to pathogenic germs that could not otherwise affect a person of normal health. In Kentucky and West Virginia Co., Inc. vs. Anderson, 156 SW. 857, the average of three readings along the plaintiff's fence was only 44 decibels but, because the sound from the sub-station was interminable and monotonous, the court authorized an injunction and damages. In the present case, the three readings along the property line are 52, 54 and 55 decibels. Plaintiff's case is manifestly stronger. Appellee company argues that the plaintiff should not be heard to complain because the sound level at the North General Hospital, where silence is observed, is even higher than at his residence. This comparison lacks basis because it has not been established that the hospital is located in surroundings similar to the residential zone where the plaintiff lived or that the sound at the hospital is similarly monotonous and ceaseless as the sound emitted by the sub-station. Constancio Soria testified that "The way the transformers are built, the humming sound cannot be avoided". On this testimony, the company emphasizes that the substation was constructed for public convenience. Admitting that the sound cannot be eliminated, there is no proof that it cannot be reduced. That the sub-station is needed for the Meralco to be able to serve well its customers is no reason, however, 2 why it should be operated to the detriment and discomfort of others. The fact that the Meralco had received no complaint although it had been operating hereabouts for the past 50 years with substations similar to the one in controversy is not a valid argument. The absence of suit neither lessens the company's liability under the law nor weakens the right of others against it to demand their just due. As to the damages caused by the noise, appellant Velasco, himself a physician, claimed that the noise, as a precipitating factor, has caused him anxiety neurosis, which, in turn, predisposed him to, or is concomitant with, the other ailments which he was suffering at the time of the trial, namely, pyelonephritis, ureteritis and others; that these resulted in the loss of his professional income and reduced his life expectancy. The breakdown of his claims is as follows: Loss of professional earnings P12,600 Damage to life expectancy 180,000 Moral damages 100,000 Loss due to frustration of sale of house 125,000 Exemplary damages 25,000 Attorneys' fees 45,000

A host of expert witnesses and voluminous medical literature, laboratory findings and statistics of income were introduced in support of the above claims. The medical evidence of plaintiff's doctors preponderates over the expert evidence for defendant-appellee, not merely because of its positive character but also because the physicians presented by plaintiff had actually treated him, while the defense experts had not done so. Thus the evidence of the latter was to a large extent conjectural. That appellant's physical ailments should be due to infectious organisms does not alter the fact that the loss of sleep, irritation and tension due to excessive noise weakened his constitution and made him easy prey to the infection. Regarding the amount of damages claimed by appellant, it is plain that the same are exaggerated. To begin with, the alleged loss of earnings at the rate of P19,000 per annum is predicated on the Internal Revenue assessment, Exhibit "QQ-1", wherein appellant was found to have undeclared income of P8,338.20 in additional to his declared gross income of P10,975.00 for 1954. There is no competent showing, however, that the source of such undeclared income was appellant's profession. In fact, the inference would be to the contrary, for his gross income from the previous years 1951 to 1953 [Exhibits "QQ-1 (d)" to "QQ-1 (f)"] was only P8,085.00, P5,860.00 and P7,120.00, respectively, an average of P7,000.00 per annum. Moreover, while his 1947 and 1948 income was larger (P9,995.00 and P11,900.00), it appears that P5,000 thereof was the appellant's annual salary from the Quezon Memorial Foundation, which was not really connected with the usual earnings derived from practice as a physician. Considering, therefore, his actual earnings, the claimed moral damages of P100,000.00 are utterly disproportionate. The alleged losses for shortening of appellant's, life expectancy are not only inflated but speculative. As to the demand for exemplary or punitive damages, there appears no adequate basis for their award. While the appellee Manila Electric Company was convicted for erecting the substation in question without permit from the Public Service Commission, We find reasonable its explanation that its officials and counsel had originally deemed that such permit was not required as the installation was authorized by the terms of its franchise (as amended by Republic Act No. 150) requiring it to spend within 5 years not less than forty million pesos for maintenance and additions to its electric system, including needed power plants and substations. Neither the absence of such permit from the Public Service Commission nor the lack of permit from the Quezon City authorities (a permit that was subsequently granted) is incompatible with the Company's good faith, until the courts finally ruled that its interpretation of the franchise was incorrect. There are, moreover, several factors that mitigate defendant's liability in damages. The first is that the noise from the substation does not appear to be an exclusive causative factor of plaintiff-appellant's illnesses. This is proved by the circumstance that no other person in Velasco's own household nor in his immediate neighborhood was shown to have become sick despite the noise complained of. There is also evidence that at the time the plaintiff-appellant appears to have been largely indebted to various credit institutions, as a result of his unsuccessful gubernatorial campaign, and this court can take judicial cognizance of the fact that financial worries can affect unfavorably the debtor's disposition and mentality. The other factor militating against full recovery by the petitioner Velasco in his passivity in the face of the damage caused to him by the noise of the substation. Realizing as a physician that the latter was disturbing or depriving him of sleep and affecting both his physical and mental well being, he did not take any steps to bring action to abate the nuisance or remove himself from the affected area as soon as the deleterious effects became noticeable. To evade them appellant did not even have to sell his house; he could have leased it and rented other premises for sleeping and

maintaining his office and thus preserve his health as ordinary prudence demanded. Instead he obstinately stayed until his health became gravely affected, apparently hoping that he would thereby saddle appellee with large damages. The law in this jurisdiction is clear. Article 2203 prescribes that "The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question". This codal rule, which 3 embodies the previous jurisprudence on the point, clearly obligates the injured party to undertake measures that will alleviate and not aggravate his condition after the infliction of the injury, and places upon him the burden of explaining why he could not do so. This was not done. Appellant Velasco introduced evidence to the effect that he tried to sell his house to Jose Valencia, Jr., in September, 1953, and on a 60 day option, for P95,000.00, but that the prospective buyer backed out on account of his wife objecting to the noise of the substation. There is no reliable evidence, however, how much were appellant's lot and house worth, either before the option was given to Valencia or after he refused to proceed with the sale or even during the intervening period. The existence of a previous offer for P125,000.00, as claimed by the plaintiff, was not corroborated by Valencia. What Valencia testified to in his deposition is that when they were negotiating on the price Velasco mentioned to him about an offer by someone for P125,000.00. The testimony of Valencia proves that in the dialogue between him and Velasco, part of the subject of their conversation was about the prior offer, but it does not corroborate or prove the reality of the offer for P125,000.00. The testimony of Velasco on this point, standing alone, is not credible enough, what with his penchant for metaphor and exaggeration, as previously adverted to. It is urged in appellant's brief, along the lines of his own testimony, that since one (1) transformer was measured by witness, Jimenez with a noise intensity of 47.2 decibels at a distance of 30.48 meters, the two (2) transformers of the substation should create an intensity of 94.4 decibels at the same distance. If this were true, then the residence of the plaintiff is more noisy than the noisiest spot at the Niagara Falls, which registers only 92 decibels (Exhibit "15-A"). Since there is no evidence upon which to compute any loss or damage allegedly incurred by the plaintiff by the frustration of the sale on account of the noise, his claim therefore was correctly disallowed by the trial court. It may be added that there is no showing of any further attempts on the part of appellant to dispose of the house, and this fact suffices to raise doubts as to whether he truly intended to dispose of it. He had no actual need to do so in order to escape deterioration of his health, as heretofore noted. Despite the wide gap between what was claimed and what was proved, the plaintiff is entitled to damages for the annoyance and adverse effects suffered by him since the substation started functioning in January, 1954. Considering all the circumstances disclosed by the record, as well as appellant's failure to minimize the deleterious influences from the substation, this Court is of the opinion that an award in the amount of P20,000.00, by way of moderate and moral damages up to the present, is reasonable. Recovery of attorney's fees and litigation expenses in the sum of P5,000.00 is also justified the factual and legal issues were intricate (the transcript of the stenographic notes is about 5,000 pages, side from an impressive number of 4 exhibits), and raised for the first time in this jurisdiction. The last issue is whether the City Engineer of Quezon City, Anastacio A. Agan, a codefendant, may be held solidarily liable with Meralco. Agan was included as a party defendant because he allegedly (1) did not require the Meralco to secure a building permit for the construction of the substation; (2) even

defended its construction by not insisting on such building permit; and (3) did not initiate its removal or demolition and the criminal prosecution of the officials of the Meralco. The record does not support these allegations. On the first plea, it was not Agan's duty to require the Meralco to secure a permit before the construction but for Meralco to apply for it, as per Section 1. Ordinance No. 1530, of Quezon City. The second allegation is not true, because Agan wrote the Meralco requiring it to submit the plan and to pay permit fees (T.s.n., 14 January 1960, pages 2081-2082). On the third allegation, no law or ordinance has been cited specifying that it is the city engineer's duty to initiate the removal or demolition of, or for the criminal prosecution of, those persons who are responsible for the nuisance. Republic Act 537, Section 24 (d), relied upon by the plaintiff, requires an order by, or previous approval of, the mayor for the city engineer to cause or order the removal of buildings or structures in violation of law or ordinances, but the mayor could not be expected to take action because he was of the belief, as he testified, that the sound "did not have any effect on his body." FOR THE FOREGOING REASONS, the appealed decision is hereby reversed in part and affirmed in part. The defendant-appellee Manila Electric Company is hereby ordered to either transfer its substation at South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at the property line between the defendant company's compound and that of the plaintiff-appellant to an average of forty (40) to fifty (50) decibels within 90 days from finality of this decision; and to pay the said plaintiff-appellant P20,000.00 in damages and P5,000.00 for attorney's fees. In all other respects, the appealed decision is affirmed. No costs.

G.R. No. L-7012 March 26, 1913 THE ILOILO ICE AND COLD STORAGE COMPANY, plaintiff-appellee, vs. THE MUNICIPAL COUNCIL OF ILOILO, ET AL., defendants-appellants. Juan de Leon, Quirico Abeto, and Crecenciano Lozano, for appellants. Bruce, Lawrence, Ross and Block, for appellee. TRENT, J.: According to the pleadings, the plaintiff, upon authority granted by the defendant, constructed an ice and cold storage plant in the city of Iloilo. Some time after the plant had been completed and was in operation, nearby residents made complaints to the defendant that the smoke from the plant was very injurious to their health and comfort. Thereupon the defendant appointed a committee to investigate and report upon the matters contained in said complaints. The committee reported that the complaints were well-founded. The defendant counsel then passed a resolution which reads in part as follows: That after the approval by the honorable provincial board of this resolution, a period of one month will be granted to the said entity. The Iloilo Ice and Cold Storage Company, in which to proceed with the elevation of said smokestacks, and if not done, the municipal president will execute the order requiring the closing or suspension of operations of said establishment. Upon receipt of this resolution and order, the plaintiff commenced this action in the Court of First Instance to enjoin the defendant from carrying into effect the said resolution. The fifth paragraph of the complaint is as follows: That the defendants intend and threaten to require compliance with said resolution administratively and without the intervention of the court, and by force to compel the closing and suspension of operations of the plaintiff's machinery and consequently of the entire plant, should the plaintiff not proceed with the elevation of the smokestacks to one hundred feet, which the plaintiff maintains it is not obliged to do and will not do. Upon notice and after hearing, a preliminary injunction was issued. Subsequently thereto the defendant answered, admitting paragraphs 1 and 4 and denying all the other allegations in the complaint, and as a special defense alleged: 1. xxx xxx xxx. 2. That the factory of the plaintiff company stands in a central and populated district of the municipality; 3. That the quantity of smoke discharged from the smokestacks of said factory is so great and so dense that it penetrates into the dwelling houses situated near it and causes great annoyance to the residents and prejudice to their health; 4. That the municipal board of health of the city has reported that the smoke discharged from the smokestacks of said factory is prejudicial and injurious to the public health; 5. That the plaintiff company has no right to maintain and operate machinery in its factory under the conditions which it is at present operating the same, without complying with the regulations which were imposed upon it when the license for its installation was granted, because it thereby violates the ordinances of the city now in force upon the matter. Wherefore, the defendant prays that it be absolved from the complaint and the plaintiff be declared to have no right to the remedy asked, and that the preliminary injunction issued in this case be set aside, with the costs against the plaintiff. The plaintiff demurred to this answer upon the following grounds: 1. That the facts alleged in the answer do not constitute a defense; and

2. That the answer is vague and ambiguous and contains arguments and conclusions of law instead of facts. This demurrer was sustained, the court saying: The defendant will amend his answer within five days or the injunction will be permanently granted as prayed for, with costs to the defendant. To this order the defendant excepted and, not desiring to amend its answer, appealed to this court. It is alleged in paragraph 1 that both the plaintiff and the defendants are corporations duly organized under the laws of the Philippine Islands; and paragraph 4 sets forth the resolution complained of, the dispositive part of which is inserted above. The allegations in paragraph 2, 3, 5, 6, 7, and 8, which are specifically denied in the answer, all (except the fifth) relate to the building of the plant under authority granted by the defendant, the cost of its construction, the legality of the resolution in question, the power of the defendant to pass such resolution, and the damages which will result if that resolution is carried into effect. As before stated, the allegations in paragraph 5 to the effect that the defendants intend and are threatening to close by force and without the intervention of the courts the plaintiff's plant is specifically denied. The issue in this case, according to the pleadings, relates to the power of the municipal council to declare the plant of the petitioner a nuisance as operated, and the method of abating it. The municipal council is, under section 39 (j) of the Municipal Code, specifically empowered "to declare and abate nuisances." A nuisance is, according to Blackstone, "Any thing that worketh hurt, inconvenience, or damages." (3 Black. Com., 216.) They arise from pursuing particular trades or industries in populous neighborhoods; from acts of public indecency, keeping disorderly houses, and houses of ill fame, gambling houses, etc. (2 Bouv., 248; Miller vs. Burch, 32 Tex., 208.) Nuisances have been divided into two classes: Nuisances per se, and nuisances per accidens. To the first belong those which are unquestionably and under all circumstances nuisances, such as gambling houses, houses of ill fame, etc. The number of such nuisances is necessarily limited, and by far the greater number of nuisances are such because of particular facts and circumstances surrounding the otherwise harmless cause of the nuisance. For this reason, it will readily be seen that whether a particular thing is a nuisance is generally a question of fact, to be determined in the first instance before the term nuisance can be applied to it. This is certainly true of a legitimate calling, trade, or business such as an ice plant. Does the power delegated to a municipal council under section 39 (j) of the Municipal Code commit to the unrestrained will of that body the absolute power of declaring anything to be a nuisance? Is the decision of that body final despite the possibility that it may proceed from animosity or prejudice, from partisan zeal or enmity, from favoritism and other improper influences and motives, easy of concealment and difficult to be detected and exposed? Upon principle and authority, we think it does not. In Rutton vs. City of Camden, 39 N.J.L., 122, 129; 23 Am. Rep. 203, 209, the court said: The authority to decide when a nuisance exists in an authority to find facts, to estimate their force, and to apply rules of law to the case thus made. This is the judicial function, and it is a function applicable to a numerous class of important interests. The use of land and buildings, the enjoyment of water rights, the practice of many trades and occupations, and the business of manufacturing in particular localities, all fall on some occasions, in important respects, within its sphere. To say to a man that he shall not use his property as he pleases, under certain conditions, is to deprive him pro tanto of the enjoyment of such property. To find conclusively against him that a state of

facts exists with respect to the use of his property, or the pursuit of his business, which subjects him to the condemnation of the law, is to affect his rights in a vital point. The next thing to depriving a man of his property is to circumscribe him in its use, and the right to use property is as much under the protection of the law as the property itself, in any other aspect, is, and the one interest can no more be taken out of the hands of the ordinary tribunal than the other can. If a man's property cannot be taken away from him except upon trial by jury, or by the exercise of the right of eminent domain upon compensation made, neither can be, in any other mode, be limited in the use of it. The right to abate public nuisances, whether we regard it as existing in the municipalities, or in the community, or in the land of the individual, is a common law right, and is derived, in every instance of its exercise, from the same source that of necessity. It is akin to the right of destroying property for the public safety, in case of the prevalence of a devastating fire or other controlling exigency. But the necessity must be present to justify the exercise of the right, and whether present or not, must be submitted to a jury under the guidance of a court. The finding of a sanitary committee, or of a municipal council, or of any other body of a similar kind, can have no effect whatever for any purpose, upon the ultimate disposition of the matter of this kind. It cannot be used as evidence in any legal proceeding, for the end of establishing, finally, the fact of nuisance, and if can be made testimony for any purpose, it would seem that it can be such only to show that the persons acting in pursuance of it were devoid of that malicious spirit which sometimes aggravates a trespass and swells the damages. I repeat that the question of nuisance can conclusively be decided, for all legal uses, by the established courts of law or equity alone, and that the resolutions of officers, or of boards organized by force of municipal charters, cannot, to any degree, control such decision. The leading case upon this point is Yates vs. Milwaukee, (10 Wall., 497; 19 L. ed., 984). The following quotation from this case has been cited or quoted with approval in a great number of cases. (See Notes to this case in 19 L. ed., Notes, page 356.) But the mere declaration by the city council of Milwaukee that a certain structure was an encroachment or obstruction did not make structure was an encroachment or obstruction did not make it so, nor could such declaration make it a nuisance unless it in fact had that character. It is a doctrine not to be tolerated in this country, that a municipal corporation, without any general laws either of the city or of the State, within which a given structure can be shown to be a nuisance, can, by its mere declaration that it is one, subject it to removal by any person supposed to be aggrieved, or even by the city itself. This would place every house, every business, and all the property of the city at the uncontrolled will of the temporary local authorities. Yet this seems to have been the view taken by counsel who defended this case in the circuit court; for that single ordinance of the city, declaring the wharf of Yates a nuisance, and ordering its abatement, is the only evidence in the record that it is a nuisance or an obstruction to navigation, or in any manner injurious to the public. In Cole vs. Kegler (64 la., 59, 61) the court said: We do not think the general assembly intended to confer on cities and towns the power of finally and conclusively determine, without notice or a hearing, and without the right of appeal, that any given thing constitutes a nuisance, unless, probably, in cases of great emergency, so strong as to justify extraordinary measures upon the ground of paramount necessity. The law

does not contemplate such an exigency, and therefore does not provide for it. If it did, it would no longer be the undefined law of necessity. (Nelson, J., in The People vs. The Corporation of Albay, 11 Wend., 539.) Nuisance may be abated by an individual, but they must in fact exist, The determination of the individual that a nuisance exists does not make it so, and if he destroys property on the that it is a nuisance, he is responsible, unless it is established that the property destroyed constituted a nuisance. This precise power, and no more, is conferred by the statute on cities and towns. In Wood on Nuisances, section 740, it is said: "If the authorities of a city abate a nuisance under authority of an ordinance of the city, they are subject to the same perils and liabilities as an individual, if the thing in fact is not nuisance." In Grossman vs. City of Oakland (30 Ore., 478, 483) the court said: In our opinion this ordinance cannot be sustained as a legitimate exercise of municipal power. The character of the city confers upon it the power to prevent and restrain nuisances, and to "declare what shall constitute a nuisance;" but this does not authorize it to declare a particular use of property a nuisance, unless such use comes within the common law or statutory idea of a nuisance. (2 Wood on Nuisances (3d ed.), 977; Yates vs. Milwaukee, 77 U.S. (10 Wall.), 497; Village of Des Plaines vs. Poyer, 123 Ill., 348; 5 Am. St. Rep., 524; 14 N.E., 677; Quintini vs. City Board of Aldermen, 64 Miss., 483; 60 Am. Rep., 62; 1 So., 625; Chicago & Rock Islands R.R. Co. vs. City of Joliet, 79 Ill., 44; Hutton vs. City of Camden, 39 N.J. Law, 122; 23 Am. Rep., 203.) By this provision of the charter the city is clothed with authority to declare by general ordinance under what circumstances and conditions certain specified acts or things injurious to the health or dangerous to the public are to constitute and be deemed nuisances, leaving the question of fact open for judicial determination as to whether the particular act or thing complained of comes within the prohibited class; but it cannot by ordinance arbitrarily declare any particular thing a nuisance which has not heretofore been so declared by law, or judicially determined to be such. (City of Dener vs. Mullen, 7 Colo., 345). In Western & Atlantic R. Co. vs. Atlanta (113 Ga., 537, 551), after an extensive review of the authorities, the court, per Lumpkin, J., said: It is our opinion that the provisions of our code require, when a municipal corporation is seeking to abate a nuisance such as it was alleged the floor of the union passenger station was in this case, that the parties interested be given reasonable notice of the time and place of hearing at which the fact whether the property complained of is or is not a nuisance shall be inquired into and determined; that, without such notice and a judgment on the facts by the body invested with power to abate the nuisance, it is unlawful to enter thereon and remove or destroy it as a nuisance. If the thing, as we said, is declared by law to be a nuisance, or if it is unquestionably a nuisance, such as a rabid dog, infected clothing, the carcass of a dead animal on a private lot, the presence of a smallpox patient on the street, it may be abated by the municipal authorities at once, by order, from the necessity of the case, and to meet an emergency which exists, to at once protect the health and lives of the people. In Everett vs. City of Council Bluffs (46 Ia., 66, 67), where the council passed an ordinance declaring trees on certain streets to be a nuisance and ordering the marshall to abate the same, the court held:

The defendant is incorporated under a special charter, which provides that the city council has power "to declare what shall be a nuisance, and to prevent, remove, or abate the same." This general grant of power, however, will not authorize the council to declare anything a nuisance which is not such at common law, or has been declared such by statute. In Frostburg vs. Wineland (98 Md., 239, 243) the court said: The first question, then, in the case revolves itself to this, was the summary proceeding of the appellants in declaring the two trees in front of the appellee's property to be a nuisance and an obstruction to the paving and curbing of the street, and directing them to be removed and destroyed, so far final as not to be reviewable by the Courts? This question we think was in effect settled by this court in the recent cases of New Windsor vs. Stocksdale (95 Md., 215) and King vs. Hamil (97 Md., 103). In the latter case it is said that equity will not lend its aid to enforce by injunction the by-laws or ordinances of a municipal corporation, restraining an act, unless the act is shown to be a nuisance per se. . . . It is clear, we think, both upon reason and authority, that when a municipality undertakes to destroy private property which is not a nuisance per se, it then transcends its powers and its acts are reviewable by a court of equity. In C.R.I. & P.R. Co. vs. City of Joilet (79 Ill., 25, 44) the court said: As to the ordinance of the common council of the city of Joilet, of September, 1872, declaring the railroad a nuisance, we regard that as without effect upon the case, although the charter of the city confers upon the common council the power to abate and remove nuisances, and to punish the authors thereof, and to define and declare what shall be deemed nuisances. We will, in this respect, but refer to the language of the Supreme Court of the United State in Yates vs. Milwaukee (10 Wall., 505). (See supra.) In the leading case of Denver vs. Mullen (7 Colo., 345, 353) where an extended review of the authorities is made, the court said: The basis of authority for the action of the city in the premises is made to rest upon certain provisions of the city charter, and certain ordinances, which are set out as exhibits in the testimony; and the following, among other of the enumerated powers conferred by the legislature upon the city, in said charter, is relied upon, viz: "To make regulations to secure the general health of the inhabitants, to declare what shall be a nuisance, and to prevent and remove the same." The proper construction of this language is that the city is clothed with authority to declare, by general ordinance, what shall constitute a nuisance. That is to say, the city may, by such ordinance, define, classify and enact what things or classes of things, and under what conditions and circumstances, such specified things are to constitute and be deemed nuisances. For instance, the city might, under such authority, declare by ordinance that slaughter-houses within the limits of the city, carcasses of dead animals left lying within the city, goods, boxes, and the like, piled up or remaining for certain length of time on the sidewalks, or other things injurious to health, or causing obstruction or danger to the public in the use of the streets and sidewalks, should be deemed nuisances; not that the city council may, by a mere resolution or motion, declare any particular thing a nuisance which has not theretofore been pronounced to be such by law, or so adjudged by judicial determination. (Everett vs. Council Bluffs, 40 Iowa, 66; Yates vs. Milwaukee, 10 Wall., 497.) No law or ordinance, under which the city council assumed to act in respect to this ditch, has been cited which

defines nuisance, or within the meaning of which such ditch is comprehended. xxx xxx xxx It is only certain kinds of nuisances that may be removed or abated summarily by the acts of individuals or by the public, such as those which affect the health, or interfere with the safety of property or person, or are tangible obstructions to streets and highways under circumstances presenting an emergency; such clear cases of nuisances per se, are well understood, and need not to be further noticed here to distinguish them from the case before us. If it were admitted that this ditch, by reason of its obstruction to the use of the public streets, at the time of the acts complained of, was a nuisance, it must also be admitted that it was not a nuisance per se. It was constructed for a necessary, useful and lawful purpose, was used for such purpose, and therefore in its nature was not a nuisance, as a matter of law. Nor as a matter of fact was it a nuisance while it was no hurt, detriment, or offense to the public, or to any private citizen. If, then, it has become a nuisance, it is by reason of a change of circumstances brought about neither by the ditch itself, nor its use. Indeed, the sole matter complained of, to warrant its being regarded as a nuisance, is the absence of bridges at street crossings. The town has become populous; its growth has extended beyond the ditch and along its line for a great distance; streets laid out across its course have come to be traveled so much, that without bridges, the ditch, as appears by the testimony, has become inconvenient, detrimental, and an obstruction to the full, safe and lawful use of such streets as highways by the public. To this extent, and from these causes outside the ditch and its use per se, has the ditch come to be a public nuisance, if, as a matter of fact, it is such. But whether it is such or not is a fact which must first be ascertained by judicial determination before it can be lawfully abated, either by the public or by a private person. In Joyce vs. Woods (78 Ky., 386, 388) the court said: There was no judicial determination that there was a nuisance, and no opportunity offered the owner of the lot to contest that matter. Under the exercise of the police power, it may be conceded that municipalities can declare and abate nuisances in cases of necessity, without citation and without adjudication as to whether there is in fact a nuisance. But whenever the action of the municipality in declaring and abating a nuisance goes so far as to fix a burden upon the owner of the property, he is entitled to be heard upon the question as to the existence of the nuisance. This right to a hearing upon this question may come before or after the nuisance is abated, as circumstances may require, but there must be an opportunity offered him to be heard upon that matter before his property can be loaded with the cost of the removal of the nuisance. To the extent that property is thus burdened by the action of the city council, when there is no necessity to precipitate action without adjudication, the owner is deprived of his property, regardless of "the law of the land." The meaning of that provision of the constitution has generally been construed to be a law that hears before condemning, and arrives at a judgment for the divestiture of the rights of property through what is ordinarily understood to be judicial process the general rules that govern society in reference, to the rights of property; and it is only in extreme cases, where the preservation and repose of society or the protection of the property rights of a large class of the community absolutely require a departure, that the courts recognize any exception. In this case there is no

pretense of a necessity for precipitate action. There is no reason why appellant should not have been permitted to test the question as to the existence of the nuisance. In Everett vs. Marquette (53 Mich., 450, 451) the court, per Cooley, J., said: But it is not necessary in this case to determine whether the permission given by the village council was in due form for the purposes of a permanent appropriation, or even whether the council had the power to consent to such an appropriation. It is undoubted that the council had general control of the streets under the village charter; and it was a part of its duty to prevent the creation of any public nuisance within them. It is not to be assumed that consent would have been given to such a nuisance, and when, by formal resolution the council assumed to give permission to complainant to make the openings and build the stairways complained of, it must have been done in the belief that no public inconvenience would follow. If the permission was effectual for no other purpose, it at least rebutted any presumption which might otherwise have existed, that this partial appropriation of the street was per se a nuisance. If the permission was a mere license, and the subsequent action of the city council is to be regarded as a revocation of the license, it does not follow that the plaintiff has by the revocation immediately been converted into a wrongdoer. The question will then be whether the act of the complainant in maintaining his structures constitutes a public nuisance; and while the city council is entitled, under its supervisory control of the public streets, to consider and pass upon that question for the purpose of deciding upon the institution of legal proceedings for abatement, it cannot make itself the judge. Maintaining a nuisance is a public offense; and the fact, as in other cases of alleged criminality, is to be tried on proper accusation and in the regular courts. The mere fact that the party makes use of some part of a public street for his private purposes does not make out the public offense. This was decided in People vs. Carpenter (1 Mich., 273), and has never been doubted in this State. The city in this case proceeding in an act of destruction on an assumption that the structures were already condemned as illegal. This was unwarranted, and it was quite right that the action should be restrained. The above authorities are collated in Judge Dillon's work on Municipal Corporations, fifth edition, section 684, with the following comment by the author: It is to secure and promote the public health, safety, and convenience that municipal corporations are so generally and so liberally endowed with power to prevent and abate nuisances. This authority and its summary exercise may be constitutionally conferred on the incorporated place, and it authorizes its council to act against that which comes within the legal notion of a nuisance; but such power, conferred in general terms, cannot be taken to authorize the extrajudicial condemnation and destruction of that as a nuisance which, in its nature, situation, or use, is not such. The questions discussed in this august array of authorities are exactly those of the present case, and the controlling principles and the reasoning upon which they are founded are so fully and lucidly set forth as to justify us in refraining from comment of our own. It is clear that municipal councils have, under the code, the power to declare and abate nuisances, but it is equally clear that they do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extrajudicial condemnation and destruction of that as a

nuisance which in its nature, situation, or use is not such. These things must be determined in the ordinary courts of law. In the present case it is certain that the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry, beneficial to the people, and conducive to their health and comfort. If it be in fact a nuisance due to the manner of its operation, that question cannot de determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal. The respondent has, we think, joined issued by its answer denying that it was intending to proceed with the abatement of the alleged nuisance by arbitrary administrative proceedings. This is the issue of the present case, and upon its determination depends whether the injunction should be made permanent (but limited in its scope to prohibiting the closing of petitioner's factory by administrative action), or whether the injunction should be dissolved, which will be done in case it be shown that the municipal officials intend to proceed with the abatement of the alleged nuisance in an orderly and legal manner. It is said that the plaintiff cannot be compelled to build its smokestack higher if said stack is in fact a nuisance, for the reason that the stack was built under authority granted by the defendant, and in accordance with the prescribed requirements. If the charter or license does not expressly subject the business or industry to the exercise of the police power by the State, it is conceded by the great preponderance of authority that such a reservation is implied to the extent that may be reasonably necessary for the public welfare. (Freud, Police Power, 361 et seq, and 513 et seq.) For the foregoing reasons, the order sustaining the plaintiff's demurrer to the defendant's answer is reversed. The record will be returned to the court whence it came with instructions to proceed with the trial of the cause in accordance with this opinion. No costs will be allowed in this instance. So ordered.

G.R. No. L-3422 June 13, 1952 HIDALGO ENTERPRISES, INC., petitioner, vs. GUILLERMO BALANDAN, ANSELMA ANILA and THE COURT OF APPEALS, respondents. Quisumbing, Sycip, Quisumbing and Salazar for petitioner. Antonio M. Moncado for respondents. BENGZON, J.: This is an appeal by certiorari, from a decision of the Court of Appeals requiring Hidalgo Enterprises, Inc. to pay Guillermo Balandan and his wife, damages in the sum of P2,000 for the death of their son Mario. It appears that the petitioner Hidalgo Enterprises, Inc. "was the owner of an ice-plant factory in the City of San Pablo, Laguna, in whose premises were installed two tanks full of water, nine feet deep, for cooling purposes of its engine. While the factory compound was surrounded with fence, the tanks themselves were not provided with any kind of fence or top covers. The edges of the tanks were barely a foot high from the surface of the ground. Through the wide gate entrance, which is continually open, motor vehicles hauling ice and persons buying said commodity passed, and any one could easily enter the said factory, as he pleased. There was no guard assigned on the gate. At about noon of April 16, 1948, plaintiff's son, Mario Balandan, a boy barely 8 years old, while playing with and in company of other boys of his age entered the factory premises through the gate, to take a bath in one of said tanks; and while thus bathing, Mario sank to the bottom of the tank, only to be fished out later, already a cadaver, having been died of "asphyxia secondary to drowning." The Court of Appeals, and the Court of First Instance of Laguna, took the view that the petitioner maintained an attractive nuisance (the tanks), and neglected to adopt the necessary precautions to avoid accidents to persons entering its premises. It applied the doctrine of attractive nuisance, of American origin, recognized in this Jurisdiction in Taylor vs. Manila Electric 16 Phil., 8. The doctrine may be stated, in short, as follows: One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. (See 65 C.J.S., p. 455.) The principle reason for the doctrine is that the condition or appliance in question although its danger is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to approach, get on or use it, and this attractiveness is an implied invitation to such children (65 C.J.S., p. 458). Now, is a swimming pool or water tank an instrumentality or appliance likely to attract the little children in play? In other words is the body of water an attractive nuisance? The great majority of American decisions say no. The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location. There are numerous cases in which the attractive nuisance doctrine has not been held not to be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts, drains, cesspools or sewer pools, . . . (65 C.J.S., p. 476 et seg. citing decisions of California, Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin.)

In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris Secundum was published in 1950, whereas its decision was promulgated on September 30, 1949. The reason why a swimming pool or pond or reservoir of water is not considered an attractive nuisance was lucidly explained by the Indiana Appellate Court as follows: Nature has created streams, lakes and pools which attract children. Lurking in their waters is always the danger of drowning. Against this danger children are early instructed so that they are sufficiently presumed to know the danger; and if the owner of private property creates an artificial pool on his own property, merely duplicating the work of nature without adding any new danger, . . . (he) is not liable because of having created an "attractive nuisance." Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 112 Ind. App., 170. Therefore, as petitioner's tanks are not classified as attractive nuisance, the question whether the petitioner had taken reasonable precautions becomes immaterial. And the other issue submitted by petitioner that the parents of the boy were guilty of contributory negligence precluding recovery, because they left for Manila on that unlucky day leaving their son under the care of no responsible individual needs no further discussion. The appealed decision is reversed and the Hidalgo Enterprises, Inc. is absolved from liability. No costs.

G.R. No. 97477 May 8, 1992 RTC JUDGE CAMILO E. TAMIN, Presiding Judge, Regional Trial Court, Branch 23, Molave, Zamboanga del Sur and the MUNICIPALITY OF DUMINGAG, ZAMBOANGA DEL SUR; represented by MAYOR DOMICIANO E. REAL,petitioners, vs. COURT OF APPEALS, VICENTE MEDINA and FORTUNATA ROSELLON, respondents. GUTIERREZ, JR., J.: The present petition seeks to annul and set aside the decision and resolution dated January 21, 1991 and February 20, 1991, respectively of the Court of Appeals which declared as null and void the October 10, 1991 order of the petitioner Judge in a civil case "for ejectment with preliminary injunction and damages" filed by petitioner municipality against the private respondents granting the petitioner municipality's motion for a writ of possession and the writ issued pursuant to it. On September 24, 1990, petitioner municipality represented by its mayor Domiciano E. Real filed with the Regional Trial Court of Zamboanga del Sur, Branch 23, Molave, presided by the petitioner Judge, a complaint denominated as "Ejectment with Preliminary Injunction and Damages" against respondents Vicente Medina and Fortunata Rosellon. The complaint alleged that the plaintiff (petitioner municipality herein) is the owner of a parcel of residential land located at Poblacion, Dumingag, Zamboanga del Sur with an area of 5,894 square meters more or less; that the parcel of land was reserved for public plaza under Presidential Proclamation No. 365 dated March 15, 1968; that during the incumbency of the late Mayor Isidoro E. Real, Sr. or in 1958, the municipality leased an Area of 1,350 square meters to the defendants (respondents herein) subject to the condition that they should vacate the place in case it is needed for public purposes; that the defendants religiously paid the rentals until 1967; that thereafter, the defendants refused to pay the rentals; that the incumbent mayor discovered that the defendants filed a "Cadastral Answer" over said lot; that the defendants refused to vacate the place despite efforts of the municipality; that the national government had alloted an appropriation for the construction of a municipal gymnasium within the public plaza but the said construction which was already started could not continue because of the presence of the buildings constructed by the defendants; that the appropriation for the construction of the gymnasium might be reverted back to the national government which would result to "irreparable damage, injury and prejudice" to the municipality and its people who are expected to derive benefit from the accomplishment of the project. The complaint prayed: 1. That a restraining order shall be issued immediately after the filing of this case; 2. That after due notice and hearing, a writ of preliminary mandatory injunction shall be issued against the herein defendants for them (sic) form further occupying the leased portion to them (sic), and/or that a Writ of Possession be immediately issued to preserve the rights of the herein plaintiff; 3. That judgment should be entered against the herein defendants to vacate the premises of the leased portion given to them. (CA Rollo, pp. 11-12)

On the same day, September 24, 1990, the petitioner Judge issued an order setting the preliminary hearing for the issuance of a writ of preliminary mandatory injunction and/or writ of possession on October 10, 1990. Instead of filing an answer, the respondents filed a motion to dismiss alleging the lack of jurisdiction of the trial court, since the complaint is for illegal detainer which is within the original jurisdiction of the municipal court and the pendency of a cadastral case (Cadastral Case No. N-10, LRC Cad. Rec. No. N-108, Lot 9481 [Pls-61] TS-218) between the parties over the ownership of the same parcel of land. On October 10, 1990, the petitioner Judge issued two (2) orders. The first order denied the motion to dismiss. The second order granted the petitioner municipality's motion for a writ of possession "with the ancillary writ of demolition to place in possession the plaintiff on the land subject of this case, to the end that the public construction thereon will not be jeopardized." (CA Rollo, p. 22) In denying the motion to dismiss, the petitioner Judge said: xxx xxx xxx 2. In the complaint, the plaintiff alleges that the defendant is claiming ownership over the land which was previously rented to defendant by the plaintiff municipality. This action is, therefore, clearly an accion de reivindicacion, a real action within the jurisdiction of this court. 3. As the complaint is for recovery of ownership of the land not to enforce the contract, the Statute of Fraud does not apply. 4. The land subject of this case is covered by P.D. No. 365, withdrawing this land from sale of settlement and reserving the same for school site purposes under the administration of the Director of Public School and public plaza under the administration of the Municipality of Dumingag, therefore the Cadastral court has no jurisdiction over the land involved in this case. (CA Rollo, p. 20) The petitioner Judge justified his granting the motion for a writ of possession with the ancillary writ of demolition by applying the rule an eminent domain (Rule 67 of the Revised Rules of Court, erroneously referred to as Rule 68) in analogy in that under this Rule the complainant is given the right to the writ of possession in order that public construction and projects will not be delayed. According to the petitioner Judge, the necessity of a writ of possession is greater in the instant case considering that the parcel of land is covered by a Presidential Proclamation and the on-going construction thereon is being endangered to be left unfinished on account of the buildings standing on the parcel of land because the appropriation for the construction might be reverted back to the national treasury. The private respondents filed an omnibus motion for reconsideration with motion to set aside order and to quash writ of possession and demolition but this was denied in an order dated October 19, 1990. On October 19, 1990, the petitioner municipality implemented the writ of possession and ancillary writ of demolition issued by the petitioner Judge resulting in the dispossession of the private respondents from the parcel of land and the demolition of structures and buildings thereon owned by the respondents. On October 23, 1990, the private respondents filed their answer to the complaint alleging therein that the subject parcel of land has been owned, occupied and possess by respondent Vicente Medina since 1947 when he bought the subject parcel from a Subanan native; that the other respondent Fortunata Rosellon leased from Medina a portion of the parcel of land; that the respondents were never lessees of the petitioner municipality; that Proclamation No-365 issued on March 15, 1968 recognized "private rights"; and, that a case is pending before the Cadastral court

between respondent Medina and petitioner municipality as regards the ownership of the subject parcel of land. Before the petitioner Judge could further act on the case, the private respondents filed a petition for certiorari with the Court of Appeals questioning the October 10 and October 19, 1990 orders of the petitioner Judge. In a resolution dated November 14, 1990, the petition was given due course and a temporary restraining order was issued enjoining the petitioner Judge from proceeding with the hearing of the case and from enforcing the October 10, and 19, 1990 orders. On January 21, 1990, the appellate court rendered the questioned decision. A motion for reconsideration was denied in a resolution dated February 20, 1991. Hence, this petition. In a resolution dated November 26, 1991, we gave due course to the petition. The appellate court rightfully upheld the jurisdiction of the Regional Trial Court over the case based on the allegations in the complaint. The allegations and not the title control the cause of action of the complaint. (Andamo v. Intermediate Appellate Court, 191 SCRA 195 [1990]). The Court said: First, Does the Regional Trial Court have jurisdiction over the case brought by the Municipality of Dimangag? As already noted, the gist of the complaint below is that the land in question is part of the public domain which the President of the Philippines, under Proclamation No. 365, dated March 25, (should be 15) 1968, reserved for school site and public plaza in the Municipality of Dumingag and that the petitioners, to whom the former town mayor had leased a part of the land, refused to vacate and to pay rents. If this is the theory on which the complaint is based, then the action may really be considered one for recovery of possession. For though a lease is alleged, the lease would be void and the municipality could recover the possession of the land. This is the teaching of the leading case of Municipality of Cavite v. Rojas, 30 Phil. 602 [1915] in which it was held that the lease by a municipal corporation of a public plaza is null and void because land for public use is outside the commerce of man and, therefore, the lessee must restore possession of the land by vacating it. As in this case, in the Rojas case the action was for recovery of possession instituted in the Court of First Instance, the counterpart of which at present is the Regional Trial Court. We, therefore, hold that the respondent judge has jurisdiction of the case brought against petitioners for recovery of possession of what is alleged to be land for public use of the respondent municipality. (CA Rollo, pp. 53-54) Prescinding from the finding that the complaint is for recovery of possession the appellate court concluded that the trial court did not have authority to issue a writ of possession and a writ of demolition citing the case of Mabale v. Apalisok (88 SCRA 234 [1979]), to wit: In that connection, it should be borne in mind that the law specifies when a writ of possession may be issued. That writ is available (1) in a land registration proceeding, which is a proceeding in rem (Sec. 17, Act No. 496; Estipona v. Navarro, 69 SCRA 285, 291); (2) in an extra-judicial foreclosure of a realty mortgage (Sec. 7, Act No. 3135); (3) in a judicial foreclosure of mortgage, a quasi in rem proceeding, provided that the mortgagor is in possession of the

mortgaged realty and no third person, not party to the foreclosure suit, had intervened (Rivera v. Court of First Instance of Nueva Ecija and Rupac, 61 Phil. 201; Ramos v. Maalac and Lopez, 89 Phil. 270, 275) and (4) in execution sales (last par. of sec. 35, Rule 39, Rules of Court). The appellate court also ruled that the trial court committed an error when it applied by analogy the rule on eminent domain (Rule 67, Revised Rules of Court) to justify the issuance of the writ of possession and writ of demolition. The appellate court pointed out that under this rule: xxx xxx xxx . . . (i) There is clear statutory authority for the taking of possession by the government and (ii) The authority is premised on the government depositing the value of the land to be taken. For unless the taking of the land is done under these conditions, the taking would constitute deprivation of property without due process of law which the Constitution prohibits. (See Manila Railroad Co. v. Paredes, 31 Phil. 118 [1915]) (CA Rollo, p. 55) The appellate court then stated: In the case at bar, there is neither statutory authority for the trial court's action nor bond given to compensate the petitioners for the deprivation of their possession and the destruction of their houses if it turns out that the land belongs to them. For this reason, we think the trial courts order is arbitrary and void. For the fact is that petitioners claim ownership of the land in question and until that question is resolved either in the case pending before the respondent judge or in the cadastral proceeding, it would be unjust to deprive petitioners of its possession. (CA Rollo, pp. 55-56) The petitioners now contend that the allegations in the complaint constitute a cause of action for abatement of public nuisance under Article 694 of the Civil Code. On the basis of this proposition, the petitioners assert that petitioner municipality is entitled to the writ of possession and writ of demolition. Article 694 of the Civil Code defines nuisance as follows: Art. 694. A nuisance is any act, omission, establishment, business, condition of property or anything else which: xxx xxx xxx (5) Hinders or impairs the use of property. while Article 695 provides: Art. 695 Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. . . . Applying these criteria, we agree with the petitioners that the complaint alleges factual circumstances of a complaint for abatement of public nuisance. Thus, the complaint states: that petitioner municipality is the owner of a parcel of land covered by Presidential Proclamation No 365 which is reserved for a public plaza; that the private respondents by virtue of a contract of lease entered into by the former mayor occupied a portion of the parcel of land constructing buildings thereon; that the private respondents refused to vacate the premises despite demands; that the municipality is constructing a municipal gymnasium in the area financed by appropriations provided by the national government; and that the appropriations are in

danger of being reverted to the national treasury because the construction had to be stopped in view of the refusal of the private respondents to vacate the area. The issue, however, is not the nature of the cause of action alleged in the complaint. The more important question is whether or not the petitioner municipality is entitled to a writ of possession and a writ of demolition even before the trial of the case starts. Article 699 of the Civil Code provides for the following remedies against a public nuisance: (1) A prosecution under the Penal Code or any local ordinance; or (2) A civil action; or (3) Abatement, without judicial proceedings. The petitioner municipality had three remedies from which to select its cause of action. It chose to file a civil action for the recovery of possession of the parcel of land occupied by the private respondents. Obviously, petitioner municipality was aware that under the then Local Government Code (B.P. Blg. 337) the Sangguniang Bayan has to first pass an ordinance before the municipality may summarily abate a public nuisance. (Sec. 149(z) (ee). On the premise that the parcel of land forms part of a public plaza, the petitioners now contend that the Judge was justified in issuing the writ of possession and writ of demolition. A public plaza is outside the commerce of man and constructions thereon can be abated summarily by the municipality. We ruled in the case of Villanueva v. Castaeda, Jr. (154 SCRA 142 [1987]): Exactly in point is Espiritu v. Municipal Council of Pozorrubio, (102 Phil. 869-870) where the Supreme Court declared: There is absolutely no question that the town plaza cannot be used for the construction of market stalls, specially of residences, and that such structures constitute a nuisance subject to abatement according to law. Town plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties. Applying this well-settled doctrine, we rule that petitioners had no right in the first place to occupy the disputed premises and cannot insist in remaining there now on the strength of their alleged lease contracts. They should have realized and accepted this earlier, considering that even before Civil Case No. 2040 was decided, the municipal council of San Fernando had already adopted Resolution No. 29, series of 1964, declaring this area as the parking place and public plaza of the municipality. It is the decision in Civil Case No. 2040 and the said resolution of the municipal council of San Fernando that respondent Macalino was seeking to enforce when he ordered the demolition of the stalls constructed in the disputed area. As officer-in-charge of the office of the mayor, he had the duty to clear the area and restore it to its intended use as a parking place and public plaza of the municipality of San Fernando, conformably to the aforementioned orders from the court and the council. It is, therefore, not correct to say that he had acted without authority or taken the law into his hands in issuing his order.

xxx xxx xxx The Court observes that even without such investigatiom and recommendation, the respondent mayor was justified in ordering the area cleared on the strength alone of its status as a public plaza as declared by the judicial and legislative authorities. . . . If, therefore, the allegations in the complaint are true and that the parcel of land being occupied by the private respondents is indeed a public plaza, then the writ of possession and writ of demolition would have been justified. In fact, under such circumstances, there would have been no need for a writ of possession in favor of the petitioner municipality since the private respondents' occupation over the subject parcel of land can not be recognized by any law. A writ of demolition would have been sufficient to eject the private respondents. However, not only did the municipality avoid the use of abatement without judicial proceedings, but the status of the subject parcel of land has yet to be decided. We have to consider the fact that Proclamation No. 365 dated March 15, 1968 recognizes private rights which may have been vested on other persons, to wit: BY THE PRESIDENT OF THE PHILIPPINES PROCLAMATION NO. 365 RESERVING FOR SCHOOL SITE, PUBLIC PLAZA AND PLAYGROUND PURPOSES CERTAIN PARCELS OF LAND OF THE PUBLIC DOMAIN SITUATED IN THE MUNICIPALITY OF DUMINGAG, PROVINCE OF ZAMBOANGA DEL SUR, ISLAND OF MINDANAO. Upon recommendation of the Secretary of Agriculture and Natural Resources and pursuant to the authority vested in me by law, I FERDINAND E. MARCOS, PRESIDENT OF THE PHILIPPINES, do hereby withdraw from sale or settlement and under the administration of the Director of Public Schools administration of the Municipal Government of Dumingag, subject to private rights, if any there be, certain parcels of land of the public domain situated in the Municipality of Dumingag, Province of Zamboanga del Sur, Island of Mindanao, . . . (CA Rollo, pp. 41-A 42) (Emphasis supplied). It is to be noted that even before the Proclamation, the parcel of land was the subject of cadastral proceedings before another branch of the Regional Trial Court of Zamboanga del Sur. At the time of the filing of the instant case, the cadastral proceedings intended to settle the ownership over the questioned portion of the parcel of land under Proclamation No. 365 were still pending. One of the claimants in the cadastral proceedings is private respondent Vicente Medina who traced his ownership over the subject parcel of land as far back as 1947 when he allegedly bought the same from a Subanan native. Under the cadastral system, the government through the Director of Lands initiates the proceedings by filing a petition in court after which all owners or claimants are compelled to act and present their answers otherwise they lose their right to their own property. The purpose is to serve the public interests by requiring that the titles to any lands "be settled and adjudicated." (Section 1 Cadastral Act [No. 22593] Government of the Philippine Islands v. Abural, 39 Phil. 996 [1919]. It is a proceeding in rem somewhat akin to a judicial inquiry and investigation leading to a judicial decree. (Director of Lands v. Roman Archbishop of Manila, 41 Phil. 120 [1920]) Considering therefore, the nature and purpose of the Cadastral proceedings, the outcome of said proceedings becomes a prejudicial question which must be addressed in the resolution of the instant case. We apply by analogy the ruling in the case of Quiambao v. Osorio (158 SCRA 674 [1988]), to wit:

The instant controversy boils down to the sole question of whether or not the administrative case between the private parties involving the lot subject matter of the ejectment case constitutes a prejudicial question which would operate as a bar to said ejectment case. A prejudicial question is understood in law to be that which arises in a case the resolution of which is a logical antecedent of the issue involved in said case and the cognizance of which pertains to another tribunal. (Zapanta v. Montesa, 4 SCRA 510 [1962]; People v. Aragon, 50 O.G. No. 10, 4863) The doctrine of prejudicial question comes as in to play generally in a situation where civil and criminal actions are pending and the issues involved in bath cases are similar or so closely-related that an issue must be pre-emptively resolved in the civil case before the criminal action can proceed. Thus, the existence it a prejudicial question in a civil case is alleged in the criminal case to cause the suspension of the latter pending final determination of the former. The essential elements of a prejudicial question as provided under Section 5, Rule 111 of the Revised Rules of Court area: [a] the civil action involves an issue similar or intimately related to the issue in the criminal action; and [b] the resolution of such issue determines whether or not the criminal action may proceed. The actions involved in the case at bar being respectively civil and administrative in character, it is obvious that technically, there is no prejudicial question to speak of. Equally apparent, however, is the intimate correlation between said two [2] proceedings, stemming from the fact that the right of private respondents to eject petitioner from the disputed portion depends primarily on the resolution of the pending administrative case. For while it may be true that private respondents had prior possession of the lot in question, at the time of the institution of the ejectment case, such right of possession had been terminated, or at the very least, suspended by the cancellation by the Land Authority of the Agreement to Sell executed in their favor. Whether or not private respondents can continue to exercise their right of possession is but a necessary, logical consequence of the issue involved in the pending administrative case assailing the validity of the cancellation of the Agreement to Sell and the subsequent award of the disputed portion to petitioner. If the cancellation of the agreement, to Sell and the subsequent award to petitioner are voided, then private respondent's right of possession is lost and so would their right to eject petitioner from said portion. Faced with these distinct possibilities, the more prudent course for the trial court to have taken is to hold the ejectment proceedings in abeyance until after a determination of the administrative case. Indeed, logic and pragmatism, if not jurisprudence, dictate such move. To allow the parties to undergo trial notwithstanding the possibility of petitioner's right of possession being upheld in the pending administrative case is to needlessly require not only the parties but the court as well to expend time, effort in what may turn out to be a sheer exercise in futility. Thus, 1 Am Jur 2d tells us: The court in which an action is pending may, in the exercise of a sound discretion, upon proper

application for a stay of that action, hold the action in abeyance to abide the outcome of another pending in another court, especially where the parties and the issues are the same, for there is power inherent in every court to control the disposition of causes an its dockets with economy of time and effort for itself, for counsel, and for litigants. Where the rights of parties in the record action cannot be properly determined until the questions raised in the first action are settled the second action should be stayed. While this rule is properly applicable to instances involving two [2] court actions, the existence in the instant case of the same considerations of identity of parties and issues, economy of time and effort for the court, the counsels and the parties as well as the need to resolve the parties' right of possession before the ejectment case may be properly determined, justifies the rule's analogous application to the case at bar. Technically, a prejudicial question shall not rise in the instant case since the two actions involved are both civil in nature. However, we have to consider the fact that the cadastral proceedings will ultimately settle the real owner/s of the disputed parcel of land. In case respondent Vicente Medina is adjudged the real owner of the parcel of land, then the writ of possession and writ of demolition would necessarily be null and void. Not only that. The demolition of the constructions in the parcel of land would prove truly unjust to the private respondents. Parenthetically, the issuance of the writ of possession and writ of demolition by the petitioner Judge in the ejectment proceedings was premature. What the petitioner should have done was to stop the proceedings in the instant case and wait for the final outcome of the cadastral proceedings. At any rate, affirmative relief based an the above discussions is no longer possible. The demolition of the buildings owned by the private respondents is now a fait accompli. In the case of Estate of Gregoria Francisco v. Court of Appeals (199 SCRA 595 [1991] we awarded just compensation the amount of which was for the trial court to determine in favor of the petitioner whose building was demolished by the municipality even before a proper tribunal could decide whether or not the building constituted a nuisance in law. Our ruling was premised on the ground that the owner of the building was in lawful possession of the lot and the building by virtue of the permit from the authorized government agency when the demolition was effected. We cannot, however, apply this ruling to the present case. The legality of the occupation by the private respondents of the subject parcel of land is still to be resolved in the cadastral proceedings. In the event that respondent Vicente Medina is declared owner of the subject parcel of land, necessarily, the private respondents would be entitled to just compensation for the precipitate demolition of their buildings. On the other hand, if private respondent Medina is declared to have no rights over the subject parcel of land then, the private respondents would not be entitle to any compensation for the demolition of their buildings. In such a case the private respondents are considered squatters and therefore, the demolition of their buildings would turnout to have been justified. Faced with these alternative possibilities, and in the interest of justice, we rule that the petitioner municipality must put up a bond to be determined by the trial court to

answer for just compensation to which the private respondents may be entitled in case the demolition of their buildings is adjudged to be illegal. Moreover, the appellate court correctly ruled this Rule 67 of the Revised Rules of Court on eminent domain can not be made a subterfuge to justify the petitioner Judge's issuance of a writ of possession in favor of petitioner municipality. In the recent case of National Power Corporation v. Hon. Enrique T. Jocson, et al. (G.R. No. 94193-99, February 25, 1992) we said: In Municipality of Bian v. Hon. Jose Mar Garcia, et al. (180 SCRA 576 [1989]) this Court ruled that there are two (2) stages in every action of expropriation: The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the content of the facts involved in the suit. (Citing Sections 1, 2 and 3, Rule 67 of the Rules of Court.) It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." (Citing Section 4, Rule 67; Nieto v. Isip, 97 Phil. 31; Benguet Consolidated v. Republic, 143 SCRA 466.)An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. (Citing Investments, Inc. v. Court of Appeals, et al., 147 SCRA 334) So, too, would an order of condemnation on be a final one, for thereafter as the rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard. The second phase of the eminent domain action is concerned with the determination to the Court of "the just compensation in for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners (Citing Sections 5 to 8, Rule 67 of the Rules of Court) The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . . However, upon the filing of the complaint or at any time thereafter, the petitioner has the right to take enter upon the possession of the property involved upon compliance with P.D. No. 42 which requires the petitioner, after due notice to the defendant, to deposit with the

Philippine National Bank in its main office or any of its branches or agencies, "an amount equivalent to the assessed value of the property for purposes of taxation." This assessed value is that indicated in the tax declaration. Hence, even if we concede that Rule 67 is applicable to the instant case and that petitioner municipality had the lawful right to eject the private respondents from the subject parcel of land the issuance of a writ of possession in favor of petitioner municipality would still not be legal if the petitioner municipality really owns the land. The Judge did not require petitioner municipality to deposit an amount equivalent to the just compensation due the private respondents as provided for under Presidential Decree 42. It is only after the deposit of the just compensation that petitioner municipality would be entitled to a writ of possession. Another point raised by the petitioners questions the alleged ruling of the appellate court "that the petitioners are personally liable for damages to the private respondents for the abatement of public nuisance." (Rollo, p. 50) The petitioners misread the appellate court's decision. The records show Chat the private respondents prayed for, in their petition for certiorari filed with the appellate court, among others: It is likewise, prayed that respondents be ordered to pay jointly and severally the value of the house illegally demolished in the amount of P1,000.00 00, attorney's fees in the amount of P50,000.00, moral damages in the amount of P100,000.00 and exemplary damages in the amount of P50,000.00, to pay the costs, . . . xxx xxx xxx (CA Rollo, p. 6) In response to this prayer, however, the appellate court stated: We do not, however, have jurisdiction over petitioners' claim for damages. This must be pursued in an appropriate action instituted in the Regional Trial Court. (Rollo, p. 26) Moreover, the dispositive portion of the decision does not mention any personal liability for damages against the petitioners. The apprehension of the petitioners lacks factual basis. WHEREFORE, the instant petition is DISMISSED. The questioned decision and resolution of the Court of Appeals are AFFIRMED. The trial court is ordered to require the petitioner municipality to put up a bond to be determined by the court after hearing to answer, for just compensation due the private respondents in case the demolition of their buildings is adjudged to be illegal. The "Motion to Declare in Contempt" filed by petitioner Judge is referred to the Regional Trial Court of Pagadian City, Branch 18 in Civil Case No. 3156 for appropriate action. SO ORDERED.

G.R. No. L-1631 February 27, 1948 ABELARDO SUBIDO, Editor, The Manila Post, petitioner, vs. ROMAN OZAETA, Secretary of Justice, and MARIANO VILLANUEVA, Register of Deeds of City of Manila,respondents. Abelardo Subido in his own behalf. First Assistant Solicitor General Roberto A. Gianzon and Solicitor Felix V. Makasiar for respondents. TUAZON, J.: This is a petition for mandamus. The petitioner, editor of the Manila Post, a morning daily, prays that an order issue "commanding the respondents to furnish (petitioner) the list of real estates sold to aliens and registered with the Register of Deeds of Manila since the promulgation of the Department of Justice Circular No. 128 or to allow the petitioner or his duly accredited representatives (to) examine all records in the respondents' custody relative to the (said) transactions." The first alternative of the petition was denied by the Register of Deeds and later, on appeal, by the Secretary of Justice. No request to inspect the records seems to have ever been made, but the Solicitor General, answering for the respondents, gives to understand that not even this would the petitioner or his representatives be allowed to do if they tried. As the petitioner appears not to insist on his request for a list of sales of real estate to aliens, we shall confine our discussion to the second part of the prayer; namely, that the petitioner be allowed to examine all the records in the respondents' custody to gather the material he wants. In this connection, the Solicitor General contends that "the examination or inspection of the records in the office of the register of deeds may be made only by those having special interest therein and subject to such reasonable regulations as may be prescribed by the Chief of the Land Registration Office, and that the Secretary of Justice has reasonably ruled, to safeguard the public interest and the interest of those directly concerned in the records, that records may not be disclosed for publication." The petition in part is grounded on the liberty of the press. We do not believe that this constitutional right is in any way involved. The refusal by the respondents does not constitute a restriction upon or censorship or publication. It only affects facilities of publication, and the respondents are correct in saying that freedom of information or freedom to obtain information for publication is not guaranteed by the constitution. The case is governed by statute and to a certain degree be general principles of democratic institutions. It has been expressly stated that the right to examine or inspect public records is purely a question of statutory construction. (80 A. L. R., 761 citing cases.) The right of inspection of title records is a subject of express statutory regulation in the Philippines. Section 56 of Act No. 496, as amended by Act No. 3300, provides that "All records relating to registered lands in the office of the Register of Deeds shall be open to the public subject to such reasonable regulations as may be prescribed by the Chief of the General Land Registration Office with the approval of the Secretary of Justice." The Chief of the General Land Registration Office does not seem to have adopted any regulations in pursuance of this provision. Nevertheless, we do not believe this omission relevant. The Register of Deeds has inherent power to control his office and the records under his custody and has some discretion to exercise as to the manner in which persons desiring to inspect, examine, or copy the records may exercise their rights. (45 Am. Jur., 531.) The question at issue boils down to a determination of the scope of this discretion.

No one will contest the proposition that the power to regulate is not synonymous with the power to prohibit. Stated differently, the power to make regulations does not carry with it the power to prohibit. To the extent that newspapers and others who have no direct or tangible interest in the records are obstructed from making an examination thereof, a part, indeed the larger part of the public, is thereby excluded from the right granted by law. Such prohibition is at was with the requirement that the books and records of registered lands shall be open to the public. "Public" is a comprehensive, all-inclusive term. Properly construed, it embraces every person. To say that only those who have a present and existing interest of a pecuniary character in the particular information sought are given the right of inspection is to make an unwarranted distinction. This interpretation is contrary to the letter of the law and the whole concept and purpose of registration of recorded titles, which is to serve notice to all who might be affected by the registries. From the language of section 56 of Act No. 496, as amended, it is our opinion that the regulations which the Register of Deeds, or the Chief of the General Land Registration Office, or the Secretary of Justice is empowered to promulgate are confined to prescribing the manner and hours of examination to the end that damage to, or loss of, the records may be avoided, that undue interference with the duties of the custodian of the books and documents and other employees may be prevented, that the right of other persons entitled to make inspection may be insured, and the like. The idea is aptly expressed in People ex rel. Title Guarantee & T. Co. vs. Railly ([1886], 38 Hun [N. Y.], 429): "The subject is necessarily committed, to a great degree, to his (register of deeds') discretion as to how much of the conveniences of the office are required to be preserved for the accommodation of these persons. It is not his duty to permit the office to be thronged needlessly with persons examining its books or papers, but it is his duty to regulate, govern, and control his office in such a manner as to permit the statutory advantages to be enjoyed by other persons not employed by him as largely and extensibly as that consistently can be done ... . What the law expects and requires from him is the exercise of an unbiased and impartial judgment, by which all persons resorting to the office, under legal authority, and conducting themselves in an orderly manner, shall be secured their lawful rights and privileges, and that a corporation formed in the manner in which the relator has been, shall be permitted to obtain all the information either by searchers, abstracts, or copies, that the law has entitled it to obtain." Except, perhaps, when it is clear that the purpose of the examination is unlawful, or sheer, idle curiosity, we do not believe it is the duty under the law of registration officers to concern themselves with the motives, reasons, and objects of the persons seeking access to the records. It is not their prerogative to see that the information which the records contain is not flaunted before public gaze, or that scandal is not made of it. If it be wrong to publish the contents of the records, it is the legislature and not the officials having custody thereof which is called upon to devise a remedy. As to the moral or material injury which the publication might inflict on other parties, that is the publisher's responsibility and lookout. The publication is made subject to the consequences of the law. The respondents have been guided in their action by the rule laid down in the decision of the Supreme Court of Georgia in Buck vs. Collins ([1874], 51 Ga., 391; 21 Am. Rep., 236), copy of which was furnished the Register of Deeds by the Secretary of Justice in 1933, evidently in answer to a query covering a situation similar to the case at bar. As the respondents place much or entire reliance on this decision, we shall dwell at length on its relevancy in the present case.

Since, as we have pointed out, the right of inspection is dependent on the construction to be given the statute in force in the particular jurisdiction, the decision relied upon can not have any controlling or persuasive effect here unless it is predicated on a statute like or similar to the Philippine law. It is not. That decision was inspired largely by common law principles. It is not in harmony with modern tendencies, and the common law rule has been found to be inapplicable to the conditions obtaining in the United States and, for that matter, in the Philippines. The present tendency is to extend the right of inspection of recorded titles to abstracters, a right denied in Buck vs. Collins. This tendency, according to American Law Reports (80, p. 760), has even led the courts in some instances to overrule prior wellrecognized decisions, among which are Buck vs. Collins and Land Title Warranty & S. D. Co. vs. Tanner (1896, 99 Ga., 470; 27 S. E., 727); while in at least one other instance, a holding by the supreme court that abstracters were not entitled to have access to public records le to the enactment of a statute by the legislature expressly conferring such right. (80 A. L. R., 762.) In Atlanta Title & T. Co. vs. Tidewell Co. ([1931], 173 Ga., 499; 160 S. E., 620), the same court which announced the doctrine in Buck vs. Collins, while not definitely reversing that decision says its opinion does not entirely accord with the views expressed therein. The development of the more modern tendencies is ably explained with a discussion of the common law rule in Shelby County Co. vs. Memphis Abstract Co. (1918, 140 Tenn., 74; 203 S. W., 339). The court said: "According to the rules of the common law as administered in England there was no general or public right of inspection of public records, that right being confined to those who had a personal interest in the property affected by the records. The greater portion of the real property in England was held by the nobility and the aristocracy in large estates, and the system that prevailed looked to the descent of reality to the oldest son and other heirs, often by entail, and this resulted in few transfers. In America different ideals have prevailed, and these brought, as a necessary consequence, a decided change. Small holdings in fee have resulted from the American concept and principle of equality as heirs, and activity of sales and freedom of transfer have been encouraged by the policy of our laws. The earlier common law decisions are, therefore, not applicable to the changed conditions, and should have little influence in the molding of precedents respecting the right to inspect and make use of registries of titles. If subsequent purchasers and encumbrances are to be charged with notice of all that appears of record affecting the particular real estate, it is but sheer justice that the law should be liberalized so as not only to extend the right of inspection to members of the public who may be interested in the title, but so as to expand the opportunity for notice to all who may be injured should they act or deal without notice. Sound policy would give to the contents of the registries of deeds, mortgages and liens the widest possible publicity, and in the form that is most reliable and reassuring. Whatever adds to the vendibility of real property at its full value augments the wealth of the state. While the title examiner or abstractor has followed his profession ever since a system of registration was adopted, there has come in modern times the creation and development of the abstract company, which in turn has paved the way for and made possible the title guaranty company. The constantly increasing complication of land titles, especially in populous estates, has made each of these not only a utility, but a necessity, as aids in the ascertainement and assurance of rights based upon titles of reality." Independently of statutes the petitioner, as editor of a newspaper, has the requisite interest in land records even under the common law theory entitling him to the writ of mandamus. Newspapers have a better-established right of access to records of titles by reason of their relations to the public than abstracters or insurers of title.

Whether by design or otherwise, newspapers perform a mission which does not enter into the calculation of the business of abstracting titles conducted purely for private gain. Newspapers publish information for the benefit of the public while abstracters do so for the benefit of a limited class of investors and purchasers of real estate only. It is through the medium of newspapers that the public is informed of how public servants conduct their business. The public through newspapers have the legitimate right to know the transaction in real estate which they believe, correctly or erroneously, have been registered in violation of the constitution. The publication of these matters is certainly not only legitimate and lawful but necessary in a country where, under the constitution, the people should rule. In this connection, it will profit us to quote the following passages from The Rights and Privileges of the Press, Chapter II, by Siebert: If the Press is to report fully and accurately the affairs of government, it must have ready access to all relevant sources of information. Public officers, public records, and public proceedings furnish quantities of such information to the daily newspaper, whose duty in turn is to pass it on to the reading public. The majority rule in the United States is that any member of the public can demand the right of access to public documents where it can be shown that the public's interest would be benefited. No special pecuniary interest in the record need be shown. This rule does not apply, for reasons of public policy, to demands for access to certain records such as diplomatic correspondence, police records, records of the grand jury, and communications by voluntary informers. Also, where examination has been prompted by a desire for scandalous details, the inspection of court records (especially in divorce cases) has been denied. In addition to his rights as a citizen and an elector, the newspaper proprietor can demand access to public records on the basis of his special pecuniary interest. The interest of the newspaper man in public records is the interest of the manufacturer in his raw materials. By being denied access to the records the newspaper is cut off from a source of income and profit. That the newspaper's prospective business from the sale of copies containing information gathered from the records was a sufficient pecuniary interest to entitle the proprietor or employee to access to the documents was finally established in two cases. Upon the foregoing considerations, mandamus is the appropriate remedy, and the petition will be granted commanding the respondents to allow the petitioner or his accredited representatives to examine, extract, abstract or make memoranda of the records of sales of real properties to aliens subject to such restriction and limitation as may be deemed necessary not incompatible with his decision, without costs.

G.R. No. 101897. March 5, 1993. LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO, INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN LYCEUM, INC., respondents. Quisumbing, Torres & Evangelista Law Offices and Ambrosio Padilla for petitioner. Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan Law Offices for respondents. Froilan Siobal for Western Pangasinan Lyceum. SYLLABUS 1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF PROPOSED NAME WHICH IS IDENTICAL OR CONFUSINGLY SIMILAR TO THAT OF ANY EXISTING CORPORATION, PROHIBITED; CONFUSION AND DECEPTION EFFECTIVELY PRECLUDED BY THE APPENDING OF GEOGRAPHIC NAMES TO THE WORD "LYCEUM". The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation. Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned: "Section 18. Corporate name. No corporate name may be allowed by the Securities an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name." The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations. We do not consider that the corporate names of private respondent institutions are "identical with, or deceptively or confusingly similar" to that of the petitioner institution. True enough, the corporate names of private respondent entities all carry the word "Lyceum" but confusion and deception are effectively precluded by the appending of geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan" would be confused with the Lyceum of the Philippines. 2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD "LYCEUM," NOT ATTENDED WITH EXCLUSIVITY. It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary meaning in relation to petitioner with the result that word, although originally a generic, has become appropriable by petitioner to the exclusion of other institutions like private respondents herein. The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been extended to corporate names sine the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. In Philippine Nut Industry, Inc. v. Standard Brands, Inc., the doctrine of secondary meaning was elaborated in the following terms: " . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one

producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product." The question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its corporate name has been for such length of time and with such exclusivity as to have become associated or identified with the petitioner institution in the mind of the general public (or at least that portion of the general public which has to do with schools). The Court of Appeals recognized this issue and answered it in the negative: "Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive might nevertheless have been used so long and so exclusively by one producer with reference to this article that, in that trade and to that group of the purchasing public, the word or phrase has come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time. . . . No evidence was ever presented in the hearing before the Commission which sufficiently proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If there was any of this kind, the same tend to prove only that the appellant had been using the disputed word for a long period of time. . . . In other words, while the appellant may have proved that it had been using the word 'Lyceum' for a long period of time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor because the appellant failed to prove that it had been using the same word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion will surely arise if the same word were to be used by other educational institutions. Consequently, the allegations of the appellant in its first two assigned errors must necessarily fail." We agree with the Court of Appeals. The number alone of the private respondents in the case at bar suggests strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity essential for applicability of the doctrine of secondary meaning. Petitioner's use of the word "Lyceum" was not exclusive but was in truth shared with the Western Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC using "Lyceum" as part of their corporation names. There may well be other schools using Lyceum or Liceo in their names, but not registered with the SEC because they have not adopted the corporate form of organization. 3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO DETERMINE WHETHER THEY ARE CONFUSINGLY OR DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY'S NAME. petitioner institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other. DECISION FELICIANO, J p: Petitioner is an educational institution duly registered with the Securities and Exchange Commission ("SEC"). When it first registered with the SEC on 21 September 1950, it used the corporate name Lyceum of the Philippines, Inc. and has used that name ever since.

On 24 February 1984, petitioner instituted proceedings before the SEC to compel the private respondents, which are also educational institutions, to delete the word "Lyceum" from their corporate names and permanently to enjoin them from using "Lyceum" as part of their respective names. Some of the private respondents actively participated in the proceedings before the SEC. These are the following, the dates of their original SEC registration being set out below opposite their respective names: Western Pangasinan Lyceum 27 October 1950 Lyceum of Cabagan 31 October 1962 Lyceum of Lallo, Inc. 26 March 1972 Lyceum of Aparri 28 March 1972 Lyceum of Tuao, Inc. 28 March 1972 Lyceum of Camalaniugan 28 March 1972 The following private respondents were declared in default for failure to file an answer despite service of summons: Buhi Lyceum; Central Lyceum of Catanduanes; Lyceum of Eastern Mindanao, Inc.; and Lyceum of Southern Philippines Petitioner's original complaint before the SEC had included three (3) other entities: 1. The Lyceum of Malacanay; 2. The Lyceum of Marbel; and 3. The Lyceum of Araullo The complaint was later withdrawn insofar as concerned the Lyceum of Malacanay and the Lyceum of Marbel, for failure to serve summons upon these two (2) entities. The case against the Liceum of Araullo was dismissed when that school motu proprio change its corporate name to "Pamantasan ng Araullo." The background of the case at bar needs some recounting. Petitioner had sometime before commenced in the SEC a proceeding (SEC-Case No. 1241) against the Lyceum of Baguio, Inc. to require it to change its corporate name and to adopt another name not "similar [to] or identical" with that of petitioner. In an Order dated 20 April 1977, Associate Commissioner Julio Sulit held that the corporate name of petitioner and that of the Lyceum of Baguio, Inc. were substantially identical because of the presence of a "dominant" word, i.e., "Lyceum," the name of the geographical location of the campus being the only word which distinguished one from the other corporate name. The SEC also noted that petitioner had registered as a corporation ahead of the Lyceum of Baguio, Inc. in point of time, 1 and ordered the latter to change its name to another name "not similar or identical [with]" the names of previously registered entities. The Lyceum of Baguio, Inc. assailed the Order of the SEC before the Supreme Court in a case docketed as G.R. No. L-46595. In a Minute Resolution dated 14 September 1977, the Court denied the Petition for Review for lack of merit. Entry of judgment in that case was made on 21 October 1977. 2 Armed with the Resolution of this Court in G.R. No. L-46595, petitioner then wrote all the educational institutions it could find using the word "Lyceum" as part of their corporate name, and advised them to discontinue such use of "Lyceum." When, with the passage of time, it became clear that this recourse had failed, petitioner instituted before the SEC SEC-Case No. 2579 to enforce what petitioner claims as its proprietary right to the word "Lyceum." The SEC hearing officer rendered a decision sustaining petitioner's claim to an exclusive right to use the word "Lyceum." The hearing officer relied upon the SEC ruling in the Lyceum of Baguio, Inc. case (SEC-

Case No. 1241) and held that the word "Lyceum" was capable of appropriation and that petitioner had acquired an enforceable exclusive right to the use of that word. On appeal, however, by private respondents to the SEC En Banc, the decision of the hearing officer was reversed and set aside. The SEC En Banc did not consider the word "Lyceum" to have become so identified with petitioner as to render use thereof by other institutions as productive of confusion about the identity of the schools concerned in the mind of the general public. Unlike its hearing officer, the SEC En Banc held that the attaching of geographical names to the word "Lyceum" served sufficiently to distinguish the schools from one another, especially in view of the fact that the campuses of petitioner and those of the private respondents were physically quite remote from each other. 3 Petitioner then went on appeal to the Court of Appeals. In its Decision dated 28 June 1991, however, the Court of Appeals affirmed the questioned Orders of the SEC En Banc. 4 Petitioner filed a motion for reconsideration, without success. Before this Court, petitioner asserts that the Court of Appeals committed the following errors: 1. The Court of Appeals erred in holding that the Resolution of the Supreme Court in G.R. No. L-46595 did not constitute stare decisis as to apply to this case and in not holding that said Resolution bound subsequent determinations on the right to exclusive use of the word Lyceum. 2. The Court of Appeals erred in holding that respondent Western Pangasinan Lyceum, Inc. was incorporated earlier than petitioner. 3. The Court of Appeals erred in holding that the word Lyceum has not acquired a secondary meaning in favor of petitioner. 4. The Court of Appeals erred in holding that Lyceum as a generic word cannot be appropriated by the petitioner to the exclusion of others. 5 We will consider all the foregoing ascribed errors, though not necessarily seriatim. We begin by noting that the Resolution of the Court in G.R. No. L-46595 does not, of course, constitute res adjudicata in respect of the case at bar, since there is no identity of parties. Neither is stare decisis pertinent, if only because the SEC En Banc itself has re-examined Associate Commissioner Sulit's ruling in the Lyceum of Baguio case. The Minute Resolution of the Court in G.R. No. L-46595 was not a reasoned adoption of the Sulit ruling. The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation. 6 Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned: "SECTION 18. Corporate name. No corporate name may be allowed by the Securities an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation under the amended name." (Emphasis supplied) The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations. 7 We do not consider that the corporate names of private respondent institutions are "identical with, or deceptively or confusingly similar" to that of the petitioner institution. True enough, the corporate names of private respondent entities all carry the word

"Lyceum" but confusion and deception are effectively precluded by the appending of geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan" would be confused with the Lyceum of the Philippines. Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion which in turn referred to a locality on the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and adorned with fountains and buildings erected by Pisistratus, Pericles and Lycurgus frequented by the youth for exercise and by the philosopher Aristotle and his followers for teaching." 8 In time, the word "Lyceum" became associated with schools and other institutions providing public lectures and concerts and public discussions. Thus today, the word "Lyceum" generally refers to a school or an institution of learning. While the Latin word "lyceum" has been incorporated into the English language, the word is also found in Spanish (liceo) and in French (lycee). As the Court of Appeals noted in its Decision, Roman Catholic schools frequently use the term; e.g., "Liceo de Manila," "Liceo de Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de Albay." 9 "Lyceum" is in fact as generic in character as the word "university." In the name of the petitioner, "Lyceum" appears to be a substitute for "university;" in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently denotes a secondary school or a college. It may be (though this is a question of fact which we need not resolve) that the use of the word "Lyceum" may not yet be as widespread as the use of "university," but it is clear that a not inconsiderable number of educational institutions have adopted "Lyceum" or "Liceo" as part of their corporate names. Since "Lyceum" or "Liceo" denotes a school or institution of learning, it is not unnatural to use this word to designate an entity which is organized and operating as an educational institution. It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary meaning in relation to petitioner with the result that that word, although originally a generic, has become appropriable by petitioner to the exclusion of other institutions like private respondents herein. The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been extended to corporate names sine the right to use a corporate name to the exclusion of others is based upon the same principle which underlies the right to use a particular trademark or tradename. 10 In Philippine Nut Industry, Inc. v. Standard Brands, Inc., 11 the doctrine of secondary meaning was elaborated in the following terms: " . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product." 12 The question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its corporate name has been for such length of time and with such exclusivity as to have become associated or identified with the petitioner institution in the mind of the general public (or at least that portion of the general public which has to do with schools). The Court of Appeals recognized this issue and answered it in the negative: "Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive might nevertheless have been used so long and so exclusively by one producer with reference to this article that, in that trade and to that group of the purchasing public, the word or phrase has come to mean that the

article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of time. Consequently, the same doctrine or principle cannot be made to apply where the evidence did not prove that the business (of the plaintiff) has continued for so long a time that it has become of consequence and acquired a good will of considerable value such that its articles and produce have acquired a well-known reputation, and confusion will result by the use of the disputed name (by the defendant) (Ang Si Heng vs. Wellington Department Store, Inc., 92 Phil. 448). With the foregoing as a yardstick, [we] believe the appellant failed to satisfy the aforementioned requisites. No evidence was ever presented in the hearing before the Commission which sufficiently proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If there was any of this kind, the same tend to prove only that the appellant had been using the disputed word for a long period of time. Nevertheless, its (appellant) exclusive use of the word (Lyceum) was never established or proven as in fact the evidence tend to convey that the crossclaimant was already using the word 'Lyceum' seventeen (17) years prior to the date the appellant started using the same word in its corporate name. Furthermore, educational institutions of the Roman Catholic Church had been using the same or similar word like 'Liceo de Manila,' 'Liceo de Baleno' (in Baleno, Masbate), 'Liceo de Masbate,' 'Liceo de Albay' long before appellant started using the word 'Lyceum'. The appellant also failed to prove that the word 'Lyceum' has become so identified with its educational institution that confusion will surely arise in the minds of the public if the same word were to be used by other educational institutions. In other words, while the appellant may have proved that it had been using the word 'Lyceum' for a long period of time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor because the appellant failed to prove that it had been using the same word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion will surely arise if the same word were to be used by other educational institutions. Consequently, the allegations of the appellant in its first two assigned errors must necessarily fail." 13 (Underscoring partly in the original and partly supplied) We agree with the Court of Appeals. The number alone of the private respondents in the case at bar suggests strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity essential for applicability of the doctrine of secondary meaning. It may be noted also that at least one of the private respondents, i.e., the Western Pangasinan Lyceum, Inc., used the term "Lyceum" seventeen (17) years before the petitioner registered its own corporate name with the SEC and began using the word "Lyceum." It follows that if any institution had acquired an exclusive right to the word "Lyceum," that institution would have been the Western Pangasinan Lyceum, Inc. rather than the petitioner institution. In this connection, petitioner argues that because the Western Pangasinan Lyceum, Inc. failed to reconstruct its records before the SEC in accordance with the provisions of R.A. No. 62, which records had been destroyed during World War II, Western Pangasinan Lyceum should be deemed to have lost all rights it may have acquired by virtue of its past registration. It might be noted that the Western Pangasinan Lyceum, Inc. registered with the SEC soon after petitioner had filed its own registration on 21 September 1950. Whether or not Western Pangasinan Lyceum, Inc. must be deemed to have lost its rights under its original 1933 registration, appears to us to be quite secondary in importance; we refer to this earlier registration simply to underscore the fact that petitioner's use of the word "Lyceum" was neither the first use of that term in the Philippines nor an exclusive use thereof. Petitioner's use of the word "Lyceum"

was not exclusive but was in truth shared with the Western Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC using "Lyceum" as part of their corporation names. There may well be other schools using Lyceum or Liceo in their names, but not registered with the SEC because they have not adopted the corporate form of organization. We conclude and so hold that petitioner institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other. WHEREFORE, the petitioner having failed to show any reversible error on the part of the public respondent Court of Appeals, the Petition for Review is DENIED for lack of merit, and the Decision of the Court of Appeals dated 28 June 1991 is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 185917 June 1, 2011 FREDCO MANUFACTURING CORPORATION Petitioner, vs. PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY), Respondents. DECISION CARPIO, J.: The Case 1 2 Before the Court is a petition for review assailing the 24 October 2008 Decision and 3 8 January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394. The Antecedent Facts On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a corporation organized and existing under the laws of the Philippines, filed a Petition for Cancellation of Registration No. 56561 before the Bureau of Legal Affairs of the Intellectual Property Office (IPO) against respondents President and Fellows of Harvard College (Harvard University), a corporation organized and existing under the laws of Massachusetts, United States of America. The case was docketed as Inter Partes Case No. 14-2005-00094. Fredco alleged that Registration No. 56561 was issued to Harvard University on 25 November 1993 for the mark "Harvard Veritas Shield Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice International Classification of Goods and Services. Fredco alleged that the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and slacks was first used in the Philippines on 2 January 1982 by New York Garments Manufacturing & Export Co., Inc. (New York Garments), a domestic corporation and Fredcos predecessor-in-interest. On 24 January 1985, New York Garments filed for trademark registration of the mark "Harvard" for goods under Class 25. The application matured into a registration and a Certificate of Registration was issued on 12 December 1988, with a 20-year term subject to renewal at the end of the term. The registration was later assigned to Romeo Chuateco, a member of the family that owned New York Garments. Fredco alleged that it was formed and registered with the Securities and Exchange Commission on 9 November 1995 and had since then handled the manufacture, promotion and marketing of "Harvard" clothing articles. Fredco alleged that at the time of issuance of Registration No. 56561 to Harvard University, New York Garments had already registered the mark "Harvard" for goods under Class 25. Fredco alleged that the registration was cancelled on 30 July 1998 when New York Garments inadvertently failed to file an affidavit of use/non-use on the fifth anniversary of the registration but the right to the mark "Harvard" remained with its predecessor New York Garments and now with Fredco. Harvard University, on the other hand, alleged that it is the lawful owner of the name and mark "Harvard" in numerous countries worldwide, including the Philippines. Among the countries where Harvard University has registered its name and mark "Harvard" are: 1. Argentina
4

3. Brazil

28. Mexico

4. Canada

29. New Zealand

5. Chile

30. Norway

6. China P.R.

31. Peru

7. Colombia

32. Philippines

8. Costa Rica

33. Poland

9. Cyprus

34. Portugal

10. Czech Republic

35. Russia

11. Denmark

36. South Africa

12. Ecuador

37. Switzerland

13. Egypt

38. Singapore

14. Finland

39. Slovak Republic

15. France

40. Spain

16. Great Britain

41. Sweden

17. Germany

42. Taiwan

26. South Korea 18. Greece 43. Thailand

2. Benelux

27. Malaysia

19. Hong Kong

44. Turkey

20. India

45. United Arab Emirates

21. Indonesia

46. Uruguay

22. Ireland

47. United States of America

23. Israel

48. Venezuela

24. Italy

49. Zimbabwe
5

25. Japan

50. European Community

The name and mark "Harvard" was adopted in 1639 as the name of Harvard 6 College of Cambridge, Massachusetts, U.S.A. The name and mark "Harvard" was allegedly used in commerce as early as 1872. Harvard University is over 350 years old and is a highly regarded institution of higher learning in the United States and throughout the world. Harvard University promotes, uses, and advertises its name "Harvard" through various publications, services, and products in foreign countries, including the Philippines. Harvard University further alleged that the name and the mark have been rated as one of the most famous brands in the world, valued between US $750,000,000 and US $1,000,000,000. Harvard University alleged that in March 2002, it discovered, through its international trademark watch program, Fredcos website www.harvard-usa.com. The website advertises and promotes the brand name "Harvard Jeans USA" without Harvard Universitys consent. The websites main page shows an oblong logo bearing the mark "Harvard Jeans USA," "Established 1936," and "Cambridge, Massachusetts." On 20 April 2004, Harvard University filed an administrative complaint against Fredco before the IPO for trademark infringement and/or unfair competition with damages.lawphi1 Harvard University alleged that its valid and existing certificates of trademark registration in the Philippines are: 1. Trademark Registration No. 56561 issued on 25 November 1993 for "Harvard Veritas Shield Design" for goods and services in Classes 16, 18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs) of the Nice International Classification of Goods and Services; 2. Trademark Registration No. 57526 issued on 24 March 1994 for "Harvard Veritas Shield Symbol" for services in Class 41; Trademark Registration No. 56539 issued on 25 November 1998 for "Harvard" for services in Class 41; and 3. Trademark Registration No. 66677 issued on 8 December 1998 for "Harvard Graphics" for goods in Class 9. Harvard University further alleged

that it filed the requisite affidavits of use for the mark "Harvard Veritas Shield Symbol" with the IPO. Further, on 7 May 2003 Harvard University filed Trademark Application No. 4-200304090 for "Harvard Medical International & Shield Design" for services in Classes 41 and 44. In 1989, Harvard University established the Harvard Trademark Licensing Program, operated by the Office for Technology and Trademark Licensing, to oversee and manage the worldwide licensing of the "Harvard" name and trademarks for various goods and services. Harvard University stated that it never authorized or licensed any person to use its name and mark "Harvard" in connection with any goods or services in the Philippines. 7 In a Decision dated 22 December 2006, Director Estrellita Beltran-Abelardo of the Bureau of Legal Affairs, IPO cancelled Harvard Universitys registration of the mark "Harvard" under Class 25, as follows: WHEREFORE, premises considered, the Petition for Cancellation is hereby GRANTED. Consequently, Trademark Registration Number 56561 for the trademark "HARVARD VE RI TAS SHIELD SYMBOL" issued on November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY) should be CANCELLED only with respect to goods falling under Class 25. On the other hand, considering that the goods of Respondent-Registrant falling under Classes 16, 18, 21 and 28 are not confusingly similar with the Petitioners goods, the Respondent-Registrant has acquired vested right over the same and therefore, should not be cancelled. Let the filewrapper of the Trademark Registration No. 56561 issued on November 25, 1993 for the trademark "HARVARD VE RI TAS SHIELD SYMBOL", subject matter of this case together with a copy of this Decision be forwarded to the Bureau of Trademarks (BOT) for appropriate action. 8 SO ORDERED. Harvard University filed an appeal before the Office of the Director General of the 9 IPO. In a Decision dated 21 April 2008, the Office of the Director General, IPO reversed the decision of the Bureau of Legal Affairs, IPO. The Director General ruled that more than the use of the trademark in the Philippines, the applicant must be the owner of the mark sought to be registered. The Director General ruled that the right to register a trademark is based on ownership and when the applicant is not the owner, he has no right to register the mark. The Director General noted that the mark covered by Harvard Universitys Registration No. 56561 is not only the word "Harvard" but also the logo, emblem or symbol of Harvard University. The Director General ruled that Fredco failed to explain how its predecessor New York Garments came up with the mark "Harvard." In addition, there was no evidence that Fredco or New York Garments was licensed or authorized by Harvard University to use its name in commerce or for any other use. The dispositive portion of the decision of the Office of the Director General, IPO reads: WHEREFORE, premises considered, the instant appeal is GRANTED. The appealed decision is hereby REVERSED and SET ASIDE. Let a copy of this Decision as well as the trademark application and records be furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks and the Administrative, Financial and Human Resources Development Services Bureau, and the library of the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes. 10 SO ORDERED.

Fredco filed a petition for review before the Court of Appeals assailing the decision of the Director General. The Decision of the Court of Appeals In its assailed decision, the Court of Appeals affirmed the decision of the Office of the Director General of the IPO. The Court of Appeals adopted the findings of the Office of the Director General and ruled that the latter correctly set aside the cancellation by the Director of the Bureau of Legal Affairs of Harvard Universitys trademark registration under Class 25. The Court of Appeals ruled that Harvard University was able to substantiate that it appropriated and used the marks "Harvard" and "Harvard Veritas Shield Symbol" in Class 25 way ahead of Fredco and its predecessor New York Garments. The Court of Appeals also ruled that the records failed to disclose any explanation for Fredcos use of the name and mark "Harvard" and the words "USA," "Established 1936," and "Cambridge, Massachusetts" within an oblong device, "US Legend" and "Europes No. 1 Brand." Citing Shangri-La International Hotel Management, Ltd. v. Developers 11 Group of Companies, Inc., the Court of Appeals ruled: One who has imitated the trademark of another cannot bring an action for infringement, particularly against the true owner of the mark, because he would be coming to court with unclean hands. Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take 12 advantage of the goodwill established by the true owner. The dispositive portion of the decision of the Court of Appeals reads: WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated April 21, 2008 of the Director General of the IPO in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby AFFIRMED. 13 SO ORDERED. Fredco filed a motion for reconsideration. In its Resolution promulgated on 8 January 2009, the Court of Appeals denied the motion for lack of merit. Hence, this petition before the Court. The Issue The issue in this case is whether the Court of Appeals committed a reversible error in affirming the decision of the Office of the Director General of the IPO. The Ruling of this Court The petition has no merit. There is no dispute that the mark "Harvard" used by Fredco is the same as the mark "Harvard" in the "Harvard Veritas Shield Symbol" of Harvard University. It is also not disputed that Harvard University was named Harvard College in 1639 and that then, as now, Harvard University is located in Cambridge, Massachusetts, U.S.A. It is also unrefuted that Harvard University has been using the mark "Harvard" in commerce since 1872. It is also established that Harvard University has been using the marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods in the United States since 1953. Further, there is no dispute that Harvard University has registered the name and mark "Harvard" in at least 50 countries. On the other hand, Fredcos predecessor-in-interest, New York Garments, started using the mark "Harvard" in the Philippines only in 1982. New York Garments filed an application with the Philippine Patent Office in 1985 to register the mark "Harvard," which application was approved in 1988. Fredco insists that the date of actual use in the Philippines should prevail on the issue of who has the better right to register the marks. 14 Under Section 2 of Republic Act No. 166, as amended (R.A. No. 166), before a trademark can be registered, it must have been actually used in commerce for not

less than two months in the Philippines prior to the filing of an application for its registration. While Harvard University had actual prior use of its marks abroad for a long time, it did not have actual prior use in the Philippines of the mark "Harvard Veritas Shield Symbol" before its application for registration of the mark "Harvard" with the then Philippine Patents Office. However, Harvard Universitys registration of the name "Harvard" is based on home registration which is allowed under Section 37 15 of R.A. No. 166. As pointed out by Harvard University in its Comment: Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the applicant thereof must prove that the same has been actually in use in commerce or services for not less than two (2) months in the Philippines before the application for registration is filed, where the trademark sought to be registered has already been registered in a foreign country that is a member of the Paris Convention, the requirement of proof of use in the commerce in the Philippines for the said period is not necessary. An applicant for registration based on home certificate of 16 registration need not even have used the mark or trade name in this country. Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that Harvard Universitys registration "is based on home registration for the mark 17 Harvard Veritas Shield for Class 25." In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 18 8293), "[m]arks registered under Republic Act No. 166 shall remain in force but shall be deemed to have been granted under this Act x x x," which does not require actual prior use of the mark in the Philippines. Since the mark "Harvard Veritas Shield Symbol" is now deemed granted under R.A. No. 8293, any alleged defect arising from the absence of actual prior use in the Philippines has been cured 19 by Section 239.2. In addition, Fredcos registration was already cancelled on 30 July 1998 when it failed to file the required affidavit of use/non-use for the fifth anniversary of the marks registration. Hence, at the time of Fredcos filing o f the Petition for Cancellation before the Bureau of Legal Affairs of the IPO, Fredco was no longer the registrant or presumptive owner of the mark "Harvard." There are two compelling reasons why Fredcos petition must fail. First, Fredcos registration of the mark "Harvard" and its identification of origin as "Cambridge, Massachusetts" falsely suggest that Fredco or its goods are connected with Harvard University, which uses the same mark "Harvard" and is also located in Cambridge, Massachusetts. This can easily be gleaned from the following oblong logo of Fredco that it attaches to its clothing line: Fredcos registration of the mark "Harvard" should not have been allowed because Section 4(a) of R.A. No. 166 prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or dead,institutions, beliefs x x x." Section 4(a) of R.A. No. 166 provides: Section 4. Registration of trade-marks, trade-names and service- marks on the principal register. There is hereby established a register of trade-mark, trade-names and service-marks which shall be known as the principal register. The owner of a trade-mark, a trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register, unless it: (a) Consists of or comprises immoral, deceptive or scandalous manner, or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute; (b) x x x (emphasis supplied) Fredcos use of the mark "Harvard," coupled with its claimed origin in Cambridge, Massachusetts, obviously suggests a false connection with Harvard University. On

this ground alone, Fredcos registration of the mark "Harvard" should have been disallowed. Indisputably, Fredco does not have any affiliation or connection with Harvard University, or even with Cambridge, Massachusetts. Fredco or its predecessor New York Garments was not established in 1936, or in the U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no explanation to the Court of Appeals or to the IPO why it used the mark "Harvard" on its oblong logo with the words "Cambridge, Massachusetts," "Established in 1936," and "USA." Fredco now claims before this Court that it used these words "to evoke a lifestyle or suggest a desirable aura of petitioners clothing lines." Fredcos belated justification merely confirms that it sought to connect or associate its products with Harvard University, riding on the prestige and popularity of Harvard University, and thus appropriating part of Harvard Universitys goodwill without the latters consent. 20 Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham Act, the trademark law of the United States. These provisions are intended to protect the right of publicity of famous individuals and institutions from commercial exploitation of their 21 goodwill by others. What Fredco has done in using the mark "Harvard" and the words "Cambridge, Massachusetts," "USA" to evoke a "desirable aura" to its products is precisely to exploit commercially the goodwill of Harvard University without the latters consent. This is a clear violation of Section 4(a) of R.A. No. 166. Under 22 Section 17(c) of R.A. No. 166, such violation is a ground for cancellation of Fredcos registration of the mark "Harvard" because the registration was obtained in violation of Section 4 of R.A. No. 166. Second, the Philippines and the United States of America are both signatories to the Paris Convention for the Protection of Industrial Property (Paris Convention). The Philippines became a signatory to the Paris Convention on 27 September 1965. Articles 6bis and 8 of the Paris Convention state: ARTICLE 6bis (i) The countries of the Union undertake either administratively if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark which constitutes a reproduction, imitation or translation, liable to create confusion or a mark considered by the competent authority of the country as being already the mark of a person entitled to the benefits of the present Convention and used for identical or similar goods . These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith. ARTICLE 8 A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of a trademark. (Emphasis supplied) Thus, this Court has ruled that the Philippines is obligated to assure nationals of countries of the Paris Convention that they are afforded an effective protection against violation of their intellectual property rights in the Philippines in the same way that their own countries are obligated to accord similar protection to Philippine 23 nationals. Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No. 166, as follows: Section 37. Rights of foreign registrants. Persons who are nationals of, domiciled in, or have a bona fide or effective business or commercial establishment in any foreign country, which is a party to any international convention or treaty relating to marks or trade-names, or the repression of unfair competition to which the Philippines

may be a party, shall be entitled to the benefits and subject to the provisions of this Act to the extent and under the conditions essential to give effect to any such convention and treaties so long as the Philippines shall continue to be a party thereto, except as provided in the following paragraphs of this section. xxxx Trade-names of persons described in the first paragraph of this section shall be protected without the obligation of filing or registration whether or not they 24 form parts of marks. x x x x (Emphasis supplied) Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the trade name forms part of a trademark, is protected "without the obligation of filing or registration." "Harvard" is the trade name of the world famous Harvard University, and it is also a trademark of Harvard University. Under Article 8 of the Paris Convention, as well as Section 37 of R.A. No. 166, Harvard University is entitled to protection in the Philippines of its trade name "Harvard" even without registration of such trade name in the Philippines. This means that no educational entity in the Philippines can use the trade name "Harvard" without the consent of Harvard University. Likewise, no entity in the Philippines can claim, expressly or impliedly through the use of the name and mark "Harvard," that its products or services are authorized, approved, or licensed by, or sourced from, Harvard University without the latters consent. Article 6bis of the Paris Convention has been administratively implemented in the Philippines through two directives of the then Ministry (now Department) of Trade, 25 which directives were upheld by this Court in several cases. On 20 November 1980, then Minister of Trade Secretary Luis Villafuerte issued a Memorandum directing the Director of Patents to reject, pursuant to the Paris Convention, all pending applications for Philippine registration of signature and other world-famous 26 trademarks by applicants other than their original owners. The Memorandum states: Pursuant to the Paris Convention for the Protection of Industrial Property to which the Philippines is a signatory, you are hereby directed to reject all pending applications for Philippine registration of signature and other world-famous trademarks by applicants other than its original owners or users. The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus. It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be asked to surrender their certificates of registration, if any, to avoid suits for damages and other legal action by the trademarks foreign or local owners or original users. You are also required to submit to the undersigned a progress report on the matter. 27 For immediate compliance. In a Memorandum dated 25 October 1983, then Minister of Trade and Industry Roberto Ongpin affirmed the earlier Memorandum of Minister Villafuerte. Minister Ongpin directed the Director of Patents to implement measures necessary to comply with the Philippines obligations under the Paris Convention, thus: 1. Whether the trademark under consideration is well-known in the Philippines or is a mark already belonging to a person entitled to the benefits of the CONVENTION, this should be established, pursuant to Philippine Patent Office procedures in inter partes and ex parte cases, according to any of the following criteria or any combination thereof:

(a) a declaration by the Minister of Trade and Industry that the trademark being considered is already well-known in the Philippines such that permission for its use by other than its original owner will constitute a reproduction, imitation, translation or other infringement; (b) that the trademark is used in commerce internationally, supported by proof that goods bearing the trademark are sold on an international scale, advertisements, the establishment of factories, sales offices, distributorships, and the like, in different countries, including volume or other measure of international trade and commerce; (c) that the trademark is duly registered in the industrial property office(s) of another country or countries, taking into consideration the dates of such registration; (d) that the trademark has been long established and obtained goodwill and general international consumer recognition as belonging to one owner or source; (e) that the trademark actually belongs to a party claiming ownership and has the right to registration under the provisions of the aforestated PARIS CONVENTION. 2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service marks, logos, signs, emblems, insignia or other similar devices used for identification and recognition by consumers . 3. The Philippine Patent Office shall refuse all applications for, or cancel the registration of, trademarks which constitute a reproduction, translation or imitation of a trademark owned by a person, natural or corporate, who is a citizen of a country signatory to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY. 28 x x x x (Emphasis supplied) In Mirpuri, the Court ruled that the essential requirement under Article 6 bis of the Paris Convention is that the trademark to be protected must be "well-known" in the 29 country where protection is sought. The Court declared that the power to determine whether a trademark is well-known lies in the competent authority of the country of 30 registration or use. The Court then stated that the competent authority would either be the registering authority if it has the power to decide this, or the courts of the 31 country in question if the issue comes before the courts. To be protected under the two directives of the Ministry of Trade, an internationally 32 well-known mark need not be registered or used in the Philippines. All that is required is that the mark is well-known internationally and in the Philippines for identical or similar goods, whether or not the mark is registered or used in the 33 Philippines. The Court ruled inSehwani, Incorporated v. In-N-Out Burger, Inc.: The fact that respondents marks are neither registered nor used in the Philippines is of no moment. The scope of protection initially afforded by Article 6bis of the Paris Convention has been expanded in the 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, wherein the World Intellectual Property Organization (WIPO) General Assembly and the Paris Union agreed to a nonbinding recommendation that a well-known mark should be protected in a country even if the mark is neither registered nor used in that country. Part I, Article 2(3) thereof provides: (3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a condition for determining whether a mark is a well-known mark:

(i) that the mark has been used in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, the Member State: (ii) that the mark is well known in, or that the mark has been registered or that an application for registration of the mark has been filed in or in respect of, any jurisdiction other than the Member State; or (iii) that the mark is well known by the public at large in the Member 34 State. (Italics in the original decision; boldface supplied) Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states that "a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here," cannot be registered by another in the Philippines. Section 123.1(e) does not require that the well-known mark be used in commerce in the Philippines but only that it be well-known in the Philippines. Moreover, Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, which implement R.A. No. 8293, provides: Rule 102. Criteria for determining whether a mark is well-known. In determining whether a mark is well-known, the following criteria or any combination thereof may be taken into account: (a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies; (b) the market share, in the Philippines and in other countries, of the goods and/or services to which the mark applies; (c) the degree of the inherent or acquired distinction of the mark; (d) the quality-image or reputation acquired by the mark; (e) the extent to which the mark has been registered in the world; (f) the exclusivity of registration attained by the mark in the world; (g) the extent to which the mark has been used in the world; (h) the exclusivity of use attained by the mark in the world; (i) the commercial value attributed to the mark in the world; (j) the record of successful protection of the rights in the mark; (k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and (l) the presence or absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark. (Emphasis supplied) Since "any combination" of the foregoing criteria is sufficient to determine that a mark is well-known, it is clearly not necessary that the mark be used in commerce in the Philippines. Thus, while under the territoriality principle a mark must be used in commerce in the Philippines to be entitled to protection, internationally well-known marks are the exceptions to this rule. In the assailed Decision of the Office of the Director General dated 21 April 2008, the Director General found that: Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other than Harvard University, a recognized and respected institution of higher learning located in Cambridge, Massachusetts, U.S.A. Initially referred to simply as "the new college," the institution was named "Harvard College" on 13 March 1639, after its first principal donor, a young clergyman named John Harvard. A graduate of Emmanuel

College, Cambridge in England, John Harvard bequeathed about four hundred books in his will to form the basis of the college library collection, along with half his personal wealth worth several hundred pounds. The earliest known official reference to Harvard as a "university" rather than "college" occurred in the new Massachusetts Constitution of 1780. Records also show that the first use of the name HARVARD was in 1638 for educational services, policy courses of instructions and training at the university level. It has a Charter. Its first commercial use of the name or mark HARVARD for Class 25 was on 31 December 1953 covered by UPTON Reg. No. 2,119,339 and 2,101,295. Assuming in arguendo, that the Appellate may have used the mark HARVARD in the Philippines ahead of the Appellant, it still cannot be denied that the Appellants use thereof was decades, even centuries, ahead of the Appellees. More importantly, the name HARVARD was the name of a person whose deeds were considered to be a cornerstone of the university. The Appellants logos, emblems or symbols are o wned by Harvard University. The name HARVARD and the logos, emblems or symbols are 35 endemic and cannot be separated from the institution. Finally, in its assailed Decision, the Court of Appeals ruled: Records show that Harvard University is the oldest and one of the foremost educational institutions in the United States, it being established in 1636. It is located primarily in Cambridge, Massachusetts and was named after John Harvard, a puritan minister who left to the college his books and half of his estate. The mark "Harvard College" was first used in commerce in the United States in 1638 for educational services, specifically, providing courses of instruction and training at the university level (Class 41). Its application for registration with the United States Patent and Trademark Office was filed on September 20, 2000 and it was registered on October 16, 2001. The marks "Harvard" and "Harvard Ve ri tas Shield Symbol" were first used in commerce in the the United States on December 31, 1953 for athletic uniforms, boxer shorts, briefs, caps, coats, leather coats, sports coats, gym shorts, infant jackets, leather jackets, night shirts, shirts, socks, sweat pants, sweatshirts, sweaters and underwear (Class 25). The applications for registration with the USPTO were filed on September 9, 1996, the mark "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri tas Shield Symbol" was registered 36 on September 30, 1997. 37 We also note that in a Decision dated 18 December 2008 involving a separate case 38 between Harvard University and Streetward International, Inc., the Bureau of Legal Affairs of the IPO ruled that the mark "Harvard" is a "well-known mark." This Decision, which cites among others the numerous trademark registrations of Harvard University in various countries, has become final and executory. There is no question then, and this Court so declares, that "Harvard" is a well-known name and mark not only in the United States but also internationally, including the Philippines. The mark "Harvard" is rated as one of the most famous marks in the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous publications worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University more than 350 years ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, U.S.A., internationally known as one of the leading educational institutions in the world. As such, even before Harvard University applied for registration of the mark "Harvard" in the Philippines, the mark was already protected under Article 6bis and Article 8 of the Paris Convention. Again, even without applying the Paris Convention, Harvard University can invoke Section 4(a) of R.A. No. 166 which prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs x x x."

WHEREFORE, we DENY the petition. We AFFIRM the 24 October 2008 Decision and 8 January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394. SO ORDERED.

G.R. No. 96161 February 21, 1992 PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC.,petitioners, vs. COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and STANDARD PHILIPS CORPORATION,respondents. Emeterio V. Soliven & Associates for petitioners. Narciso A. Manantan for private respondent. MELENCIO-HERRERA, J.: Petitioners challenge the Decision of the Court of Appeals, dated 31 July 1990, in CAGR Sp. No. 20067, upholding the Order of the Securities and Exchange Commission, dated 2 January 1990, in SEC-AC No. 202, dismissing petitioners' prayer for the cancellation or removal of the word "PHILIPS" from private respondent's corporate name. Petitioner Philips Export B.V. (PEBV), a foreign corporation organized under the laws of the Netherlands, although not engaged in business here, is the registered owner of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM under Certificates of Registration Nos. R-1641 and R-1674, respectively issued by the Philippine Patents Office (presently known as the Bureau of Patents, Trademarks and Technology Transfer). Petitioners Philips Electrical Lamps, Inc. (Philips Electrical, for brevity) and Philips Industrial Developments, Inc. (Philips Industrial, for short), authorized users of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM, were incorporated on 29 August 1956 and 25 May 1956, respectively. All petitioner corporations belong to the PHILIPS Group of Companies. Respondent Standard Philips Corporation (Standard Philips), on the other hand, was issued a Certificate of Registration by respondent Commission on 19 May 1982. On 24 September 1984, Petitioners filed a letter complaint with the Securities & Exchange Commission (SEC) asking for the cancellation of the word "PHILIPS" from Private Respondent's corporate name in view of the prior registration with the Bureau of Patents of the trademark "PHILIPS" and the logo "PHILIPS SHIELD EMBLEM" in the name of Petitioner, PEBV, and the previous registration of Petitioners Philips Electrical and Philips Industrial with the SEC. As a result of Private Respondent's refusal to amend its Articles of Incorporation, Petitioners filed with the SEC, on 6 February 1985, a Petition (SEC Case No. 2743) praying for the issuance of a Writ of Preliminary Injunction, alleging, among others, that Private Respondent's use of the word PHILIPS amounts to an infringement and clear violation of Petitioners' exclusive right to use the same considering that both parties engage in the same business. In its Answer, dated 7 March 1985, Private Respondent countered that Petitioner PEBV has no legal capacity to sue; that its use of its corporate name is not at all similar to Petitioners' trademark PHILIPS when considered in its entirety; and that its products consisting of chain rollers, belts, bearings and cutting saw are grossly different from Petitioners' electrical products. After conducting hearings with respect to the prayer for Injunction; the SEC Hearing Officer, on 27 September 1985, ruled against the issuance of such Writ. On 30 January 1987, the same Hearing Officer dismissed the Petition for lack of merit. In so ruling, the latter declared that inasmuch as the SEC found no sufficient ground for the granting of injunctive relief on the basis of the testimonial and documentary evidence presented, it cannot order the removal or cancellation of the word "PHILIPS" from Private Respondent's corporate name on the basis of the same evidence adopted in toto during trial on the merits. Besides, Section 18 of the

Corporation Code (infra) is applicable only when the corporate names in question are identical. Here, there is no confusing similarity between Petitioners' and Private Respondent's corporate names as those of the Petitioners contain at least two words different from that of the Respondent. Petitioners' Motion for Reconsideration was likewise denied on 17 June 1987. On appeal, the SEC en banc affirmed the dismissal declaring that the corporate names of Petitioners and Private Respondent hardly breed confusion inasmuch as each contains at least two different words and, therefore, rules out any possibility of confusing one for the other. On 30 January 1990, Petitioners sought an extension of time to file a Petition for Review on Certiorari before this Court, which Petition was later referred to the Court of Appeals in a Resolution dated 12 February 1990. In deciding to dismiss the petition on 31 July 1990, the Court of 1 Appeals swept aside Petitioners' claim that following the ruling in Converse Rubber Corporation v. Universal Converse Rubber Products, Inc., et al, (G. R. No. L-27906, January 8, 1987, 147 SCRA 154), the word PHILIPS cannot be used as part of Private Respondent's corporate name as the same constitutes a dominant part of Petitioners' corporate names. In so holding, the Appellate Court observed that the Converse case is not four-square with the present case inasmuch as the contending parties in Converse are engaged in a similar business, that is, the manufacture of rubber shoes. Upholding the SEC, the Appellate Court concluded that "private respondents' products consisting of chain rollers, belts, bearings and cutting saw are unrelated and non-competing with petitioners' products i.e. electrical lamps such that consumers would not in any probability mistake one as the source or origin of the product of the other." The Appellate Court denied Petitioners' Motion for Reconsideration on 20 November 1990, hence, this Petition which was given due course on 22 April 1991, after which the parties were required to submit their memoranda, the latest of which was received on 2 July 1991. In December 1991, the SEC was also required to elevate its records for the perusal of this Court, the same not having been apparently before respondent Court of Appeals. We find basis for petitioners' plea. As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), the Court declared that a corporation's right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by subsequent appropriation by another corporation in the same field (Red Line Transportation Co. vs. Rural Transit Co., September 8, 1934, 20 Phil 549). A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co. 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate. 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird. 10 NH 123); and the right to use its corporate name is as much a part of the corporate franchise as any other privilege

granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36). A corporation acquires its name by choice and need not select a name identical with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more use a corporate name in violation of the rights of others than an individual can use his name legally acquired so as to mislead the public and injure another (Armington vs. Palmer, 21 RI 109. 42 A 308). Our own Corporation Code, in its Section 18, expressly provides that: No corporate name may be allowed by the Securities and Exchange Commission if the proposed name isidentical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law. Where a change in a corporate name is approved, the commission shall issue an amended certificate of incorporation under the amended name. (Emphasis supplied) The statutory prohibition cannot be any clearer. To come within its scope, two requisites must be proven, namely: (1) that the complainant corporation acquired a prior right over the use of such corporate name; and (2) the proposed name is either: (a) identical; or (b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or (c) patently deceptive, confusing or contrary to existing law. The right to the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption (1 Thompson, p. 80 citing Munn v. Americana Co., 82 N. Eq. 63, 88 Atl. 30; San Francisco Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921). In this regard, there is no doubt with respect to Petitioners' prior adoption of' the name ''PHILIPS" as part of its corporate name. Petitioners Philips Electrical and Philips Industrial were incorporated on 29 August 1956 and 25 May 1956, respectively, while Respondent Standard Philips was issued a Certificate of Registration on 12 April 1982, twenty-six (26) years later (Rollo, p. 16). Petitioner PEBV has also used the trademark "PHILIPS" on electrical lamps of all types and their accessories since 30 September 1922, as evidenced by Certificate of Registration No. 1651. The second requisite no less exists in this case. In determining the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person, using ordinary care and discrimination. In so doing, the Court must look to the record as well as the names themselves (Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the corporate names of Petitioners and Private Respondent are not identical, a reading of Petitioner's corporate names, to wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that "PHILIPS" is, indeed, the dominant word in that all the companies affiliated or associated with the principal corporation, PEBV, are known in the Philippines and abroad as the PHILIPS Group of Companies.

Respondents maintain, however, that Petitioners did not present an iota of proof of actual confusion or deception of the public much less a single purchaser of their product who has been deceived or confused or showed any likelihood of confusion. It is settled, however, that proof of actual confusion need not be shown. It suffices that confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases). It may be that Private Respondent's products also consist of chain rollers, belts, bearing and the like, while petitioners deal principally with electrical products. It is significant to note, however, that even the Director of Patents had denied Private Respondent's application for registration of the trademarks "Standard Philips & Device" for chain, rollers, belts, bearings and cutting saw. That office held that PEBV, "had shipped to its subsidiaries in the Philippines equipment, machines and their parts which fall under international class where "chains, rollers, belts, bearings and cutting saw," the goods in connection with which Respondent is seeking to register 'STANDARD PHILIPS' . . . also belong" ( Inter Partes Case No. 2010, June 17, 1988, SEC Rollo). Furthermore, the records show that among Private Respondent's primary purposes in its Articles of Incorporation (Annex D, Petition p. 37, Rollo) are the following: To buy, sell, barter, trade, manufacture, import, export, or otherwise acquire, dispose of, and deal in and deal with any kind of goods, wares, and merchandise such as but not limited to plastics, carbon products, office stationery and supplies, hardware parts, electrical wiring devices, electrical component parts, and/or complement of industrial, agricultural or commercial machineries, constructive supplies, electrical suppliesand other merchandise which are or may become articles of commerce except food, drugs and cosmetics and to carry on such business as manufacturer, distributor, dealer, indentor, factor, manufacturer's representative capacity for domestic or foreign companies. (emphasis ours) For its part, Philips Electrical also includes, among its primary purposes, the following: To develop manufacture and deal in electrical products, including electronic, mechanical and other similar products . . . (p. 30, Record of SEC Case No. 2743) Given Private Respondent's aforesaid underlined primary purpose, nothing could prevent it from dealing in the same line of business of electrical devices, products or supplies which fall under its primary purposes. Besides, there is showing that Private Respondent not only manufactured and sold ballasts for fluorescent lamps with their corporate name printed thereon but also advertised the same as, among others, Standard Philips (TSN, before the SEC, pp. 14, 17, 25, 26, 37-42, June 14, 1985; pp. 16-19, July 25, 1985). As aptly pointed out by Petitioners, [p]rivate respondent's choice of "PHILIPS" as part of its corporate name [STANDARD PHILIPS CORPORATION] . . . tends to show said respondent's intention to ride on the popularity and established goodwill of said petitioner's business throughout the world" (Rollo, p. 137). The subsequent appropriator of the name or one confusingly similar thereto usually seeks an unfair advantage, a free ride of another's goodwill (American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488). In allowing Private Respondent the continued use of its corporate name, the SEC maintains that the corporate names of Petitioners PHILIPS ELECTRICAL LAMPS. INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC. contain at least two words different from that of the corporate name of respondent STANDARD PHILIPS

CORPORATION, which words will readily identify Private Respondent from Petitioners and vice-versa. True, under the Guidelines in the Approval of Corporate and Partnership Names formulated by the SEC, the proposed name "should not be similar to one already used by another corporation or partnership. If the proposed name contains a word already used as part of the firm name or style of a registered company; the proposed name must contain two other words different from the company already registered" (Emphasis ours). It is then pointed out that Petitioners Philips Electrical and Philips Industrial have two words different from that of Private Respondent's name. What is lost sight of, however, is that PHILIPS is a trademark or trade name which was registered as far back as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from any infringement by similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name (6 Fletcher [Perm Ed], pp. 39-40, citing Borden Ice Cream Co. v. Borden's Condensed Milk Co., 210 F 510). Notably, too, Private Respondent's name actually contains only a single word, that is, "STANDARD", different from that of Petitioners inasmuch as the inclusion of the term "Corporation" or "Corp." merely serves the Purpose of distinguishing the corporation from partnerships and other business organizations. The fact that there are other companies engaged in other lines of business using the word "PHILIPS" as part of their corporate names is no defense and does not warrant the use by Private Respondent of such word which constitutes an essential feature of Petitioners' corporate name previously adopted and registered and-having acquired the status of a well-known mark in the Philippines and internationally as well (Bureau of Patents Decision No. 88-35 [TM], June 17, 1988, SEC Records). In support of its application for the registration of its Articles of Incorporation with the SEC, Private Respondent had submitted an undertaking "manifesting its willingness to change its corporate name in the event another person, firm or entity has acquired a prior right to the use of the said firm name or one deceptively or confusingly similar to it." Private respondent must now be held to its undertaking. As a general rule, parties organizing a corporation must choose a name at their peril; and the use of a name similar to one adopted by another corporation, whether a business or a nonbusiness or nonprofit organization if misleading and likely to injure it in the exercise in its corporate functions, regardless of intent, may be prevented by the corporation having the prior right, by a suit for injunction against the new corporation to prevent the use of the name (American Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., 89 App DC 269, 191 F 2d 488, 27 ALR 2d 948). WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and its Resolution dated 20 November 1990, are SET ASIDE and a new one entered ENJOINING private respondent from using "PHILIPS" as a feature of its corporate name, and ORDERING the Securities and Exchange Commission to amend private respondent's Articles of Incorporation by deleting the word PHILIPS from the corporate name of private respondent.

No costs. SO ORDERED.

G.R. No. L-32747 November 29, 1984 FRUIT OF THE LOOM, INC., petitioner, vs. COURT OF APPEALS and GENERAL GARMENTS CORPORATION, respondents. Lichauco, Picazo & Agcaoli Law Office for petitioner. MAKASIAR, J.: This is a petition for review on certiorari of the decision dated October 8, 1970 of the former Court of Appeals reversing the decision of the defunct Court of First Instance of Manila, Branch XIV, ordering the cancellation of private respondent's registration of the trademark FRUIT FOR EVE, enjoining it permanently from using trademark and ordering it to pay herein petitioner P10,000.00 as attorney's fees. Petitioner, a corporation duly organized and existing under the laws of the State of Rhode Island, United States of America, is the registrant of a trademark, FRUIT OF THE LOOM, in the Philippines Patent Office and was issued two Certificates of Registration Nos. 6227 and 6680, on November 29, 1957 and July 26, 1958, respectively. The classes of merchandise covered by Registration Certificate No. 6227 are, among others, men's, women's and children's underwear, which includes women's panties and which fall under class 40 in the Philippine Patent Office's classification of goods. Registration Certificate No. 6680 covers knitted, netted and textile fabrics. Private respondent, a domestic corporation, is the registrant of a trademark FRUIT FOR EVE in the Philippine Patent Office and was issued a Certificate of Registration No. 10160, on January 10, 1963 covering garments similar to petitioner's products like women's panties and pajamas. On March 31, 1965 petitioner filed before the lower court, a complaint for infringement of trademark and unfair competition against the herein private respondent. Petitioner principally alleged in the complaint that private respondent's trademark FRUIT FOR EVE is confusingly similar to its trademark FRUIT OF THE LOOM used also on women's panties and other textile products. Furthermore, it was also alleged therein that the color get-up and general appearance of private respondent's hang tag consisting of a big red apple is a colorable imitation to the hang tag of petitioner. On April 19, 1965, private respondent filed an answer invoking the special defense that its registered trademark is not confusingly similar to that of petitioner as the latter alleged. Likewise, private respondent stated that the trademark FRUIT FOR EVE is being used on ladies' panties and pajamas only whereas petitioner's trademark is used even on men's underwear and pajamas. At the pre-trial on May 5, 1965, the following admissions were made: (1) That the trademark FRUIT OF THE LOOM has been registered with the Bureau of Patents and it does not bear the notice 'Reg. Phil. Patent Off.', and (2) That the trademark FRUIT FOR EVE has been registered with the Bureau of Patents and it bears the notice "Reg. Phil. Patent Off." and (3) That at the time of its registration, plaintiff filed no opposition thereto. After trial, judgment was rendered by the lower court in favor of herein petitioner, the dispositive portion of which reads as follows: Judgment is, therefore, rendered ordering the Bureau of Patents to cancel the registration of the Trademark "Fruit for Eve", permanently enjoining Defendant from using the trademark "Fruit for Eve", ordering Defendant to pay plaintiff the sum of P10,000.00 as attorney's fees and to pay the costs.

Both parties appealed to the former Court of Appeals, herein petitioner's appeal being centered on the failure of the trial court to award damages in its favor. Private respondent, on the other hand, sought the reversal of the lower court's decision. On October 8, 1970, the former Court of Appeals, as already stated, rendered its questioned decision reversing the judgment of the lower court and dismissing herein petitioner's complaint. Petitioner's motion for reconsideration having been denied, the present petition was filed before this Court. The first and second arguments advanced by petitioner are that the respondent court committed an error in holding that the word FRUIT, being a generic word, is not capable of exclusive appropriation by petitioner and that the registrant of a trademark is not entitled to the exclusive use of every word of his mark. Otherwise stated, petitioner argues that the respondent court committed an error in ruling that petitioner cannot appropriate exclusively the word FRUIT in its trademark FRUIT OF THE LOOM. The third and fourth arguments submitted by petitioner which We believe is the core of the present controversy, are that the respondent court erred in holding that there is no confusing similarity in sound and appearance between the two trademarks in question. According to petitioner, the prominent and dominant features in both of petitioner's and private respondent's trademark are the word FRUIT and the big red apple design; that ordinary or average purchasers upon seeing the word FRUIT and the big red apple in private respondent's label or hang tag would be led to believe that the latter's products are those of the petitioner, The resolution of these two assigned errors in the negative will lay to rest the matter in litigation and there is no need to touch on the other issues raised by petitioner. Should the said questions be resolved in favor of petitioner, then the other matters may be considered. Petitioner, on its fifth assigned error, blames the former Court of Appeals for not touching the question of the fraudulent registration of private respondent's trademark FRUIT FOR EVE. As may be gleaned from the questioned decision, respondent court did not pass upon the argument of petitioner that private respondent obtained the registration of its trademark thru fraud or misrepresentation because of the said court's findings that there is no confusing similarity between the two trademarks in question. Hence, said court has allegedly nothing to determine as to who has the right to registration because both parties have the right to have their respective trademarks registered. Lastly, petitioner asserts that respondent court should have awarded damages in its favor because private respondent had clearly profited from the infringement of the former's trademark. The main issue involved in this case is whether or not private respondent's trademark FRUIT FOR EVE and its hang tag are confusingly similar to petitioner's trademark FRUIT OF THE LOOM and its hang tag so as to constitute an infringement of the latter's trademark rights and justify the cancellation of the former. In cases involving infringement of trademark brought before this Court it has been consistently held that there is infringement of trademark when the use of the mark involved would be likely to cause confusion or mistake in the mind of the public or to deceive purchasers as to the origin or source of the commodity (Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75). In cases of this nature, there can be no better evidence as to whether there is a confusing similarity in the contesting trademarks than the labels or hang tags themselves. A visual presentation of the labels or hang tags is the best argument for one or the other, hence, We are reproducing hereunder pictures of the hang tags of

the products of the parties to the case. The pictures below are part of the documentary evidence appearing on page 124 of the original records. Petitioner asseverates in the third and fourth assignment of errors, which, as We have said, constitute the main argument, that the dominant features of both trademarks is the word FRUIT. In determining whether the trademarks are confusingly similar, a comparison of the words is not the only determinant factor. The trademarks in their entirety as they appear in their respective labels or hang tags must also be considered in relation to the goods to which they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131). In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar word is FRUIT. WE agree with the respondent court that by mere pronouncing the two marks, it could hardly be said that it will provoke a confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE LOOM is wholly different from FRUIT FOR EVE. WE do not agree with petitioner that the dominant feature of both trademarks is the word FRUIT for even in the printing of the trademark in both hang tags, the word FRUIT is not at all made dominant over the other words. As to the design and coloring scheme of the hang tags, We believe that while there are similarities in the two marks like the red apple at the center of each mark, We also find differences or dissimilarities which are glaring and striking to the eye such as: 1. The shape of petitioner's hang tag is round with a base that looks like a paper rolled a few inches in both ends; while that of private respondent is plain rectangle without any base. 2. The designs differ. Petitioner's trademark is written in almost semi-circle while that of private respondent is written in straight line in bigger letters than petitioner's. Private respondent's tag has only an apple in its center but that of petitioner has also clusters of grapes that surround the apple in the center. 3. The colors of the hang tag are also very distinct from each other. Petitioner's hang tag is fight brown while that of respondent is pink with a white colored center piece. The apples which are the only similarities in the hang tag are differently colored. Petitioner's apple is colored dark red, while that of private respondent is light red. The similarities of the competing trademarks in this case are completely lost in the substantial differences in the design and general appearance of their respective hang tags. WE have examined the two trademarks as they appear in the hang tags submitted by the parties and We are impressed more by the dissimilarities than by the similarities appearing therein. WE hold that the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble each other as to confuse or deceive an ordinary purchaser. The ordinary purchaser must be thought of as having, and credited with, at least a modicum of intelligence (Carnation Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to see the obvious differences between the two trademarks in question. Furthermore, We believe that a person who buys petitioner's products and starts to have a liking for it, will not get confused and reach out for private respondent's products when she goes to a garment store. These findings in effect render immaterial the other errors assigned by petitioner which are premised on the assumption that private respondent's trademark FRUIT FOR EVE had infringed petitioner's trademark FRUIT OF THE LOOM.

WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS AGAINST PETITIONER. SO ORDERED.

G.R. No. L-78325 January 25, 1990 DEL MONTE CORPORATION and PHILIPPINE PACKING CORPORATION, petitioners, vs. COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING INDUSTRIES, respondents. Bito, Misa & Lozada for petitioners. Reynaldo F. Singson for private respondent. CRUZ, J.: The petitioners are questioning the decision of the respondent court upholding the dismissal by the trial court of their complaint against the private respondent for infringement of trademark and unfair competition. Petitioner Del Monte Corporation is a foreign company organized under the laws of the United States and not engaged in business in the Philippines. Both the Philippines and the United States are signatories to the Convention of Paris of September 27, 1965, which grants to the nationals of the parties rights and advantages which their own nationals enjoy for the repression of acts of infringement and unfair competition. Petitioner Philippine Packing Corporation (Philpack) is a domestic corporation duly organized under the laws of the Philippines. On April 11, 1969, Del Monte granted Philpack the right to manufacture, distribute and sell in the Philippines various agricultural products, including catsup, under the Del Monte trademark and logo. On October 27,1965, Del Monte authorized Philpack to register with the Philippine Patent Office the Del Monte catsup bottle configuration, for which it was granted Certificate of Trademark Registration No. SR-913 by the Philippine Patent Office 1 under the Supplemental Register. On November 20, 1972, Del Monte also obtained 2 two registration certificates for its trademark "DEL MONTE" and its logo. Respondent Sunshine Sauce Manufacturing Industries was issued a Certificate of Registration by the Bureau of Domestic Trade on April 17,1980, to engage in the manufacture, packing, distribution and sale of various kinds of sauce, identified by the 3 logo Sunshine Fruit Catsup. This logo was registered in the Supplemental Register 4 on September 20, 1983. The product itself was contained in various kinds of bottles, including the Del Monte bottle, which the private respondent bought from the junk shops for recycling. Having received reports that the private respondent was using its exclusively designed bottles and a logo confusingly similar to Del Monte's, Philpack warned it to desist from doing so on pain of legal action. Thereafter, claiming that the demand had been ignored, Philpack and Del Monte filed a complaint against the private respondent for infringement of trademark and unfair competition, with a prayer for 5 damages and the issuance of a writ of preliminary injunction. In its answer, Sunshine alleged that it had long ceased to use the Del Monte bottle and that its logo was substantially different from the Del Monte logo and would not 6 confuse the buying public to the detriment of the petitioners. After trial, the Regional Trial Court of Makati dismissed the complaint. It held that there were substantial differences between the logos or trademarks of the parties; that the defendant had ceased using the petitioners' bottles; and that in any case the defendant became the owner of the said bottles upon its purchase thereof from the junk yards. Furthermore, the complainants had failed to establish the defendant's malice or bad faith, which was an essential element of infringement of trademark or 7 unfair competition. This decision was affirmed in toto by the respondent court, which is now faulted in this petition for certiorari under Rule 45 of the Rules of Court.

Section 22 of R.A. No. 166, otherwise known as the Trademark Law, provides in part as follows: Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services or identity of such business; or reproduce, counterfeit copy or colorably imitate any such mark or trade name and apply such reproduction, counterfeit copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. Sec. 29 of the same law states as follows: Sec. 29. Unfair competition, rights and remedies. A person who has identified in the mind of the public the goods he manufactures or deals in, his business or services from those of others, whether or not a mark or tradename is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be protected in the same manner as other property rights. Such a person shall have the remedies provided in section twenty- three, Chapter V hereof. Any person who shall employ deception or any other means contrary to good faith by which he shall pass off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor. In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed guilty of unfair competition: (a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would likely influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose; (b) Any person who by any artifice, or device, or who employs ally other means calculated to

induce the false belief that such person is offering the services of another who has identified such services in the mind of the public; or (c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature calculated to discredit the goods, business or services of another. To arrive at a proper resolution of this case, it is important to bear in mind the following distinctions between infringement of trademark and unfair competition. (1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those of another. (2) In infringement of trademark fraudulent intent is unnecessary whereas in unfair competition fraudulent intent is essential. (3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition 8 registration is not necessary. In the challenged decision, the respondent court cited the following test laid down by this Court in a number of cases: In determining whether two trademarks are confusingly similar, the two marks in their entirety as they appear in the respective labels must be considered in relation to the goods to which they are attached; the discerning eye of the observer must focus not only on the predorninant words but also on the other features appearing on 9 both labels. and applying the same, held that there was no colorable imitation of the petitioners' trademark and logo by the private respondent. The respondent court agreed with the findings of the trial court that: In order to resolve the said issue, the Court now attempts to make a comparison of the two products, to wit: 1. As to the shape of label or make: Del Monte: Semi-rectangular with a crown or tomato shape design on top of the rectangle. Sunshine: Regular rectangle. 2. As to brand printed on label: Del Monte: Tomato catsup mark. Sunshine: Fruit catsup. 3. As to the words or lettering on label or mark: Del Monte: Clearly indicated words packed by Sysu International, Inc., Q.C., Philippines. Sunshine: Sunshine fruit catsup is clearly indicated "made in the Philippines by Sunshine Sauce Manufacturing Industries" No. 1 Del Monte Avenue, Malabon, Metro Manila. 4. As to color of logo:

Del Monte: Combination of yellow and dark red, with words "Del Monte Quality" in white. Sunshine: White, light green and light red, with words "Sunshine Brand" in yellow. 5. As to shape of logo: Del Monte: In the shape of a tomato. Sunshine: Entirely different in shape. 6. As to label below the cap: Del Monte: Seal covering the cap down to the neck of the bottle, with picture of tomatoes with words "made from real tomatoes." Sunshine: There is a label below the cap which says "Sunshine Brand." 7. As to the color of the products: Del Monte: Darker red. Sunshine: Lighter than Del Monte. While the Court does recognize these distinctions, it does not agree with the conclusion that there was no infringement or unfair competition. It seems to us that the lower courts have been so pre-occupied with the details that they have not seen the total picture. It has been correctly held that side-by-side comparison is not the final test of 10 similarity. Such comparison requires a careful scrutiny to determine in what points the labels of the products differ, as was done by the trial judge. The ordinary buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library. Where the housewife has to return home as soon as possible to her baby or the working woman has to make quick purchases during her off hours, she is apt to be confused by similar labels even if they do have minute differences. The male shopper is worse as he usually does not bother about such distinctions. The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely 11 result in his confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying 12 that class of goods is the touchstone. It has been held that in making purchases, the consumer must depend upon his 13 recollection of the appearance of the product which he intends to purchase. The buyer having in mind the mark/label of the respondent must rely upon his memory of 14 the petitioner's mark. Unlike the judge who has ample time to minutely examine the labels in question in the comfort of his sala, the ordinary shopper does not enjoy the same opportunity. A number of courts have held that to determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is 15 deceived, it is attributable to the marks as a totality, not usually to any part of it. The 16 court therefore should be guided by its first impression, for a buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as the 17 court assumes to analyze carefully the respective features of the mark. It has also been held that it is not the function of the court in cases of infringement and unfair competition to educate purchasers but rather to take their carelessness for granted, and to be ever conscious of the fact that marks need not be identical. A

confusing similarity will justify the intervention of equity. The judge must also be aware of the fact that usually a defendant in cases of infringement does not normally 19 copy but makes only colorable changes. Well has it been said that the most successful form of copying is to employ enough points of similarity to confuse the 20 public with enough points of difference to confuse the courts. We also note that the respondent court failed to take into consideration several factors which should have affected its conclusion, to wit: age, training and education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate consumption and also the conditions under which it is usually 21 purchased . Among these, what essentially determines the attitude of the purchaser, specifically his inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in 22 purchasing a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical investigation. But mass products, low priced articles in wide use, and matters of everyday purchase requiring 23 frequent replacement are bought by the casual consumer without great care. In this latter category is catsup. At that, even if the labels were analyzed together it is not difficult to see that the Sunshine label is a colorable imitation of the Del Monte trademark. The predominant colors used in the Del Monte label are green and red-orange, the same with Sunshine. The word "catsup" in both bottles is printed in white and the style of the print/letter is the same. Although the logo of Sunshine is not a tomato, the figure nevertheless approximates that of a tomato. As previously stated, the person who infringes a trade mark does not normally copy out but only makes colorable changes, employing enough points of similarity to confuse the public with enough points of differences to confuse the courts. What is undeniable is the fact that when a manufacturer prepares to package his product, he has before him a boundless choice of words, phrases, colors and symbols sufficient to distinguish his product from the others. When as in this case, Sunshine chose, without a reasonable explanation, to use the same colors and letters as those used by Del Monte though the field of its selection was so broad, the inevitable conclusion is 24 that it was done deliberately to deceive . It has been aptly observed that the ultimate ratio in cases of grave doubt is the rule that as between a newcomer who by the confusion has nothing to lose and everything to gain and one who by honest dealing has already achieved favor with the public, any doubt should be resolved against the newcomer inasmuch as the field from which he can select a desirable trademark to indicate the origin of his product is obviously a 25 large one. Coming now to the second issue, we find that the private respondent is not guilty of infringement for having used the Del Monte bottle. The reason is that the configuration of the said bottle was merely registered in the Supplemental Register. In 26 the case of Lorenzana v. Macagba, we declared that: (1) Registration in the Principal Register gives rise to a presumption of the validity of the registration, the registrant's ownership of the mark and his right to the exclusive use thereof. There is no such presumption in the registration in the Supplemental Register. (2) Registration in the Principal Register is limited to the actual owner of the trademark and

18

proceedings therein on the issue of ownership which may be contested through opposition or interference proceedings or, after registration, in a petition for cancellation. Registration in the Principal Register is constructive notice of the registrant's claim of ownership, while registration in the Supplemental Register is merely proof of actual use of the trademark and notice that the registrant has used or appropriated it. It is not subject to opposition although it may be cancelled after the issuance. Corollarily, registration in the Principal Register is a basis for an action for infringement while registration in the Supplemental Register is not. (3) In applications for registration in the Principal Register, publication of the application is necessary. This is not so in applications for registrations in the Supplemental Register. It can be inferred from the foregoing that although Del Monte has actual use of the bottle's configuration, the petitioners cannot claim exclusive use thereof because it has not been registered in the Principal Register. However, we find that Sunshine, despite the many choices available to it and notwithstanding that the caution "Del Monte Corporation, Not to be Refilled" was embossed on the bottle, still opted to use the petitioners' bottle to market a product which Philpack also produces. This clearly shows the private respondent's bad faith and its intention to capitalize on the latter's reputation and goodwill and pass off its own product as that of Del Monte. The Court observes that the reasons given by the respondent court in resolving the case in favor of Sunshine are untenable. First, it declared that the registration of the Sunshine label belied the company's malicious intent to imitate petitioner's product. Second, it held that the Sunshine label was not improper because the Bureau of Patent presumably considered other trademarks before approving it. Third, it cited the 27 case of Shell Co. v. Insular Petroleum, where this Court declared that selling oil in containers of another with markings erased, without intent to deceive, was not unfair competition. Regarding the fact of registration, it is to be noted that the Sunshine label was registered not in the Principal Register but only in the Supplemental Register where the presumption of the validity of the trademark, the registrant's ownership of the mark and his right to its exclusive use are all absent. Anent the assumption that the Bureau of Patent had considered other existing patents, it is reiterated that since registration was only in the Supplemental Register, this did not vest the registrant with the exclusive right to use the label nor did it give rise to the presumption of the validity of the registration. On the argument that no unfair competition was committed, the Shell Case is not on all fours with the case at bar because: (1) In Shell, the absence of intent to deceive was supported by the fact that the respondent therein, before marketing its product, totally obliterated and erased the brands/mark of the different companies stenciled on the containers thereof, except for a single isolated transaction. The respondent in the present case made no similar effort. (2) In Shell, what was involved was a single isolated transaction. Of the many drums used, there was only one container where the

Shell label was not erased, while in the case at hand, the respondent admitted that it made use of several Del Monte bottles and without obliterating the embossed warning. (3) In Shell, the product of respondent was sold to dealers, not to ultimate consumers. As a general rule, dealers are well acquainted with the manufacturer from whom they make their purchases and since they are more experienced, they cannot be so easily deceived like the inexperienced public. There may well be similarities and imitations which deceive all, but generally the interests of the dealers are not regarded with the same solicitude as are the interests of the ordinary consumer. For it is the form in 28 which the wares come to the final buyer that is of significance. As Sunshine's label is an infringement of the Del Monte's trademark, law and equity call for the cancellation of the private respondent's registration and withdrawal of all its products bearing the questioned label from the market. With regard to the use of Del Monte's bottle, the same constitutes unfair competition; hence, the respondent should be permanently enjoined from the use of such bottles. The court must rule, however, that the damage prayed for cannot be granted because the petitioner has not presented evidence to prove the amount thereof. Section 23 of R.A. No. 166 provides: Sec. 23. Actions and damages and injunction for infringement. Any person entitled to the exclusive use of a registered mark or trade name may recover damages in a civil action from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his said rights or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty the court may award as damages reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was used in the infringement of the rights of the complaining party. In cases where actual intent to mislead the public or to defraud the complaining party shall be shown, in the discretion of the court, the damages may be doubled. The complaining party, upon proper showing may also be granted injunction. Fortunately for the petitioners, they may still find some small comfort in Art. 2222 of the Civil Code, which provides: Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in Art. 1157, or in every case where any property right has been invaded. Accordingly, the Court can only award to the petitioners, as it hereby does award, nominal damages in the amount of Pl,000.00. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated December 24, 1986 and the Resolution dated April 27,1987, are REVERSED and SET ASIDE and a new judgment is hereby rendered: (1) Canceling the private respondent's Certificate of Register No. SR-6310 and permanently enjoining the private respondent from using a label similar to that of the petitioners.

(2) Prohibiting the private respondent from using the empty bottles of the petitioners as containers for its own products. (3) Ordering the private respondent to pay the petitioners nominal damages in the amount of Pl,000.00, and the costs of the suit. SO ORDERED.

G.R. No. 103543 July 5, 1993 ASIA BREWERY, INC., petitioner, vs. THE HON. COURT OF APPEALS and SAN MIGUEL CORPORATION, respondents. Abad Santos & Associates and Sycip, Salazar, Hernandez & Gatmaitan for petitioner. Roco, Bunag, Kapunan Law Office for private respondent. GRIO-AQUINO, J.: On September 15, 1988, San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for infringement of trademark and unfair competition on account of the latter's BEER PALE PILSEN or BEER NA BEER product which has been competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. (San Miguel Corporation vs. Asia Brewery Inc., Civ. Case. No. 56390, RTC Branch 166, Pasig, Metro Manila.). On August 27, 1990, a decision was rendered by the trial Court, presided over by Judge Jesus O. Bersamira, dismissing SMC's complaint because ABI "has not committed trademark infringement or unfair competition against" SMC (p. 189, Rollo). SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On September 30, 1991, the Court of Appeals (Sixth Division composed of Justice Jose C. Campos, Jr., chairman and ponente, and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members) reversed the trial court. The dispositive part of the decision reads as follows: In the light of the foregoing analysis and under the plain language of the applicable rule and principle on the matter, We find the defendant Asia Brewery Incorporated GUILTY of infringement of trademark and unfair competition. The decision of the trial court is hereby REVERSED, and a new judgment entered in favor of the plaintiff and against the defendant as follows: (1) The defendant Asia Brewery Inc. its officers, agents, servants and employees are hereby permanently enjoined and restrained from manufacturing, putting up, selling, advertising, offering or announcing for sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under labels substantially identical with or like the said bottles and labels of plaintiff San Miguel Corporation employed for that purpose, or substantially identical with or like the bottles and labels now employed by the defendant for that purpose, or in bottles or under labels which are calculated to deceive purchasers and consumers into the belief that the beer is the product of the plaintiff or which will enable others to substitute, sell or palm off the said beer of the defendant as and for the beer of the plaintiff-complainant. (2) The defendant Asia Brewery Inc. is hereby ordered to render an accounting and pay the San Miguel Corporation double any and all the payments derived by defendant from operations of its business and the sale of goods bearing the mark "Beer Pale Pilsen" estimated at approximately Five Million Pesos (P5,000,000.00); to recall all its products bearing the mark "Beer Pale Pilsen" from its retailers and deliver these as well as all labels, signs, prints, packages, wrappers, receptacles and advertisements bearing the infringing mark and all plates, molds, materials and other means of making the same to the Court authorized to execute this judgment for destruction.

(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos (P2,000,000.00) as moral damages and Half a Million Pesos (P5,000,000.00) by way of exemplary damages. (4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount of P250,000.00 plus costs to this suit. (p. 90, Rollo.) Upon a motion for reconsideration filed by ABI, the above dispositive part of the 1 decision, was modified by the separate opinions of the Special Sixth Division so that it should read thus: In the light of the foregoing analysis and under the plain language of the applicable rule and principle on the matter, We find the defendant Asia Brewery Incorporated GUILTY of infringement of trademark and unfair competition. The decision of the trial court is hereby REVERSED, and a new judgment entered in favor of the plaintiff and against the defendant as follows: (1) The defendant Asia Brewery Inc., its officers, agents, servants and employees are hereby permanently enjoined and restrained from manufacturing, putting up, selling, advertising, offering or announcing for sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under labels substantially identical with or like the said bottles and labels of plaintiff San Miguel Corporation employed for that purpose, or substantially identical with or like the bottles and labels now employed by the defendant for that purpose, or in bottles or under labels which are calculated to deceive purchasers and consumers into the belief that the beer if the product of the plaintiff or which will enable others to substitute, sell or palm off the said beer of the defendant as and for the beer of the plaintiff-complainant. 2 (2) The defendant Asia Brewery Inc. is hereby ordered to recall all its products bearing the mark Beer Pale Pilsen from its retailers and deliver these as well as all labels, signs, prints, packages, wrappers, receptacles and advertisements bearing the infringing mark and all plates, molds, materials and other means of making the same to the Court authorized to execute this judgment for destruction. (3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos (P2,000,000.00) as moral damages and Half a Million Pesos (P500,000.00) by way of exemplary damages. (4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount of P250,000.00 plus costs of this suit. In due time, ABI appealed to this Court by a petition for certiorari under Rule 45 of the Rules of Court. The lone issue in this appeal is whether ABI infringes SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt Design, and thereby commits unfair competition against the latter. It is a factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a general rule, the findings of the Court of Appeals upon factual questions are conclusive and ought not to be disturbed by us. However, there are exceptions to this general rule, and they are: (1) When the conclusion is grounded entirely on speculation, surmises and conjectures; (2) When the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd and impossible;

(3) Where there is grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the appellate court, in making its findings, went beyond the issues of the case, and the same are contrary to the admissions of both the appellant and the appellee; (6) When the findings of said court are contrary to those of the trial court; (7) When the findings are without citation of specific evidence on which they are based; (8) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (9) When the findings of facts of the Court of Appeals are premised on the absence of evidence and are contradicted on record. (Reynolds Philippine Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609; Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA 333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs. De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA 817; and Moran, Jr. vs. CA, 133 SCRA 88].) Under any of these exceptions, the Court has to review the evidence in order to arrive at the correct findings based on the record (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of Appeals and trial court are contrary to each other, the Supreme Court may scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.) The present case is one of the exceptions because there is no concurrence between the trial court and the Court of Appeals on the lone factual issue of whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber colored steinie bottles of 320 ml. capacity with a white painted rectangular label has committed trademark infringement and unfair competition against SMC. Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the Trademark Law, defines what constitutes infringement: Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. (Emphasis supplied.)

This definition implies that only registered trade marks, trade names and service marks are protected against infringement or unauthorized use by another or others. The use of someone else's registered trademark, trade name or service mark is unauthorized, hence, actionable, if it is done "without the consent of the registrant." (Ibid.) The registered trademark of SMC for its pale pilsen beer is: San Miguel Pale Pilsen With Rectangular Hops and Malt Design. (Philippine Bureau of Patents, Trademarks and Technology Transfer Trademark Certificate of Registration No. 36103, dated 23 Oct. 1986, (p. 174, Rollo.) As described by the trial court in its decision (Page 177, Rollo): . . . . a rectangular design [is] bordered by what appears to be minute grains arranged in rows of three in which there appear in each corner hop designs. At the top is a phrase written in small print "Reg. Phil. Pat. Off." and at the bottom "Net Contents: 320 Ml." The dominant feature is the phrase "San Miguel" written horizontally at the upper portion. Below are the words "Pale Pilsen" written diagonally across the middle of the rectangular design. In between is a coat of arms and the phrase "Expertly Brewed." The "S" in "San" and the "M" of "Miguel," "P" of "Pale" and "Pilsen" are written in Gothic letters with fine strokes of serifs, the kind that first appeared in the 1780s in England and used for printing German as distinguished from Roman and Italic. Below "Pale Pilsen" is the statement "And Bottled by" (first line, "San Miguel Brewery" (second line), and "Philippines" (third line). (p. 177, Rollo; Emphasis supplied.) On the other hand, ABI's trademark, as described by the trial court, consists of: . . . a rectangular design bordered by what appear to be buds of flowers with leaves. The dominant feature is "Beer" written across the upper portion of the rectangular design. The phrase "Pale Pilsen" appears immediately below in smaller block letters. To the left is a hop design and to the right, written in small prints, is the phrase "Net Contents 320 ml." Immediately below "Pale Pilsen" is the statement written in three lines "Especially brewed and bottled by" (first line), "Asia Brewery Incorporated" (second line), and "Philippines" (third line), (p. 177, Rollo; Emphasis supplied.) Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN? The answer is "No." Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated inLim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus: It has been consistently held that the question of infringement of a trademark is to be determined by the test of dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains the main or essential or dominant features of another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor it is necessary that the infringing label should suggest an effort

to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis supplied.) In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test was similarity or "resemblance between the two (trademarks) such as would be likely to cause the one mark to be mistaken for the other. . . . [But] this is not such similitude as amounts to identity." In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was more specific: the test is "similarity in the dominant features of the trademarks." What are the dominant features of the competing trademarks before us? There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on an amber background across the upper portion of the rectangular design. On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters found in the SMC label. The trial court perceptively observed that the word "BEER" does not appear in SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant features of both trademarks. Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC proving otherwise. Besides the dissimilarity in their names, the following other dissimilarities in the trade dress or appearance of the competing products abound: (1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck. The BEER PALE PILSEN bottle has a fat, bulging neck. (2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along a diagonal band, whereas the words "pale pilsen" on ABI's bottle are half the size and printed in slender block letters on a straight horizontal band. (See Exhibit "8-a".). (3) The names of the manufacturers are prominently printed on their respective bottles. SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines," whereas BEER PALE PILSEN is "Especially brewed and bottled by Asia Brewery Incorporated, Philippines." (4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower buds and leaves, its copyrighted slogan: "BEER NA BEER!" Whereas SMC's bottle carries no slogan. (5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas the BEER PALE PILSEN bottle has no logo. (6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the words "San Miguel Brewery Philippines" encircling the same. The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center, surrounded by the words "Asia Brewery Incorporated Philippines."

(7) Finally, there is a substantial price difference between BEER PALE PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN (currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer cannot expect to receive San Miguel Pale Pilsen from the storekeeper or bartender. The fact that the words pale pilsen are part of ABI's trademark does not constitute an infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a light bohemian beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia and became famous in the Middle Ages. (Webster's Third New International Dictionary of the English Language, Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any beer manufacturer. The Trademark Law provides: Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same [on the principal register], unless it: xxx xxx xxx (e) Consists of a mark or trade-name which, when applied to or used in connection with the goods, business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or when applied to or used in connection with the goods, business or services of the applicant is primarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname." (Emphasis supplied.) The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be appropriated by any single manufacturer of these food products, for no other reason than that he was the first to use them in his registered trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in shoes cannot register "Leather Shoes" as his trademark because that would be merely descriptive and it would be unjust to deprive other dealers in leather shoes of the right to use the same words with reference to their merchandise. No one may appropriate generic or descriptive words. They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676 [1955]): A word or a combination of words which is merely descriptive of an article of trade, or of its composition, characteristics, or qualities, cannot be appropriated and protected as a trademark to the exclusion of its use by others. . . . inasmuch as all persons have an equal right to produce and vend similar articles, they also have the right to describe them properly and to use any appropriate language or words for that purpose, andno person can appropriate to himself exclusively any word or expression, properly descriptive of the article, its qualities, ingredients or characteristics, and thus limit other persons in the use of language appropriate to the description of their manufactures, the right to the use of such language being common to all. This rule excluding descriptive terms has also been held to apply to trade-names. As to whether words employed fall within this prohibition, it is said that the true test is not whether they are exhaustively descriptive of the article

designated, but whether in themselves, and as they are commonly used by those who understand their meaning, they are reasonably indicative and descriptive of the thing intended. If they are thus descriptive, and not arbitrary, they cannot be appropriated from general use and become the exclusive property of anyone. (52 Am. Jur. 542-543.) . . . . Others may use the same or similar descriptive word in connection with their own wares, provided they take proper steps to prevent the public being deceived. (Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.) . . . . A descriptive word may be admittedly distinctive, especially if the user is the first creator of the article. It will, however, be denied protection, not because it lacks distinctiveness, but rather because others are equally entitled to its use. (2 Callman. Unfair Competition and Trademarks, pp. 869-870.)" (Emphasis supplied.) The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery Incorporated, has printed its name all over the bottle of its beer product: on the label, on the back of the bottle, as well as on the bottle cap, disproves SMC's charge that ABI dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product. In view of the visible differences between the two products, the Court believes it is quite unlikely that a customer of average intelligence would mistake a bottle of BEER PALE PILSEN for SAN MIGUEL PALE PILSEN. The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast, and television media, does not necessarily constitute unfair competition. Unfair competition is the employment of deception or any other means contrary to good faith by which a person shall pass off the goods manufactured by him or in which he deals, or his business, or services, for those of another who has already established goodwill for his similar goods, business or services, or any acts calculated to produce the same result. (Sec. 29, Republic Act No. 166, as amended.) The law further enumerates the more common ways of committing unfair competition, thus: Sec. 29. . . . In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed guilty of unfair competition: (a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose. (b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the services of another who has identified such services in the mind of the public; or (c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a

nature calculated to discredit the goods, business or services of another. In this case, the question to be determined is whether ABI is using a name or mark for its beer that has previously come to designate SMC's beer, or whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN. . . ..The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off one man's goods or business as that of another will constitute unfair competition. Actual or probable deception and confusion on the part of the customers by reason of defendant's practices must always appear. (Shell Co., of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.) The use of ABI of the steinie bottle, similar but not identical to the SAN MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by ABI's counsel, SMC did not invent but merely borrowed the steinie bottle from abroad and it claims neither patent nor trademark protection for that bottle shape and design. (See rollo, page 55.) The Cerveza Especial and the Efes Pale Pilsen use the "steinie" bottle. (See Exhibits 57D, 57-E.) The trial court found no infringement of SMC's bottle The court agrees with defendant that there is no infringement of plaintiff's bottle, firstly, because according to plaintiff's witness Deogracias Villadolid, it is a standard type of bottle called steinie, and to witness Jose Antonio Garcia, it is not a San Miguel Corporation design but a design originally developed in the United States by the Glass Container Manufacturer's Institute and therefore lacks exclusivity. Secondly, the shape was never registered as a trademark. Exhibit "C" is not a registration of a beer bottle design required under Rep. Act 165 but the registration of the name and other marks of ownership stamped on containers as required by Rep. Act 623. Thirdly, the neck of defendant's bottle is much larger and has a distinct bulge in its uppermost part. (p. 186, Rollo.) The petitioner's contention that bottle size, shape and color may not be the exclusive property of any one beer manufacturer is well taken. SMC's being the first to use the steinie bottle does not give SMC a vested right to use it to the exclusion of everyone else. Being of functional or common use, and not the exclusive invention of any one, it is available to all who might need to use it within the industry. Nobody can acquire any exclusive right to market articles supplying simple human needs in containers or wrappers of the general form, size and character commonly and immediately used in marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.) . . . protection against imitation should be properly confined to nonfunctional features. Even if purely functional elements are slavishly copied, the resemblance will not support an action for unfair competition, and the first user cannot claim secondary meaning protection. Nor can the first user predicate his claim to protection on the argument that his business was established in reliance on any such unpatented nonfunctional feature, even "at large expenditure of money." (Callman Unfair Competition, Trademarks and Monopolies, Sec. 19.33 [4th Ed.].) (Petition for Review, p. 28.) ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own steinie bottle which has a fat bulging neck to differentiate it from SMC's bottle. The amber color is a functional feature of the beer bottle. As pointed out by ABI, all bottled

beer produced in the Philippines is contained and sold in amber-colored bottles because amber is the most effective color in preventing transmission of light and provides the maximum protection to beer. As was ruled in California Crushed Fruit Corporation vs. Taylor B. and Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or color of bottle where the same has the useful purpose of protecting the contents from the deleterious effects of light rays. Moreover, no one may have a monopoly of any color. Not only beer, but most medicines, whether in liquid or tablet form, are sold in amber-colored bottles. That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's bottle because that bottle capacity is the standard prescribed under Metrication Circular No. 778, dated 4 December 1979, of the Department of Trade, Metric System Board. With regard to the white label of both beer bottles, ABI explained that it used the color white for its label because white presents the strongest contrast to the amber color of ABI's bottle; it is also the most economical to use on labels, and the easiest to "bake" in the furnace (p. 16, TSN of September 20, 1988). No one can have a monopoly of the color amber for bottles, nor of white for labels, nor of the rectangular shape which is the usual configuration of labels. Needless to say, the shape of the bottle and of the label is unimportant. What is all important is the name of the product written on the label of the bottle for that is how one beer may be distinguished form the others. In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing tea products were both labelled as Formosan tea, both sold in 5-ounce packages made of ordinary wrapping paper of conventional color, both with labels containing designs drawn in green ink and Chinese characters written in red ink, one label showing a double-decked jar in the center, the other, a flower pot, this court found that the resemblances between the designs were not sufficient to mislead the ordinary intelligent buyer, hence, there was no unfair competition. The Court held: . . . . In order that there may be deception of the buying public in the sense necessary to constitute unfair competition, it is necessary to suppose a public accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the deception of persons in some measure acquainted with an established design and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or possibility of the deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent as between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinarily intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase. The main thrust of SMC's complaint if not infringement of its trademark, but unfair competition arising form the allegedly "confusing similarity" in the general appearance or trade dress of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo) SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its SAN MIGUEL PALE PILSEN because both are bottled in 320 ml. steinie type, amber-colored bottles with white rectangular labels. However, when as in this case, the names of the competing products are clearly different and their respective sources are prominently printed on the label and on other parts of the bottle, mere similarity in the shape and size of the container and label, does not constitute unfair competition. The steinie bottle is a standard bottle for

beer and is universally used. SMC did not invent it nor patent it. The fact that SMC's bottle is registered under R.A. No. 623 (as amended by RA 5700, An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers) simply prohibits manufacturers of other foodstuffs from the unauthorized use of SMC's bottles by refilling these with their products. It was not uncommon then for products such as patis (fish sauce) and toyo (soy sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles. Registration of SMC's beer bottles did not give SMC a patent on the steinie or on bottles of similar size, shape or color. Most containers are standardized because they are usually made by the same manufacturer. Milk, whether in powdered or liquid form, is sold in uniform tin cans. The same can be said of the standard ketchup or vinegar bottle with its familiar elongated neck. Many other grocery items such as coffee, mayonnaise, pickles and peanut butter are sold in standard glass jars. The manufacturers of these foodstuffs have equal right to use these standards tins, bottles and jars for their products. Only their respective labels distinguish them from each other. Just as no milk producer may sue the others for unfair competition because they sell their milk in the same size and shape of milk can which he uses, neither may SMC claim unfair competition arising from the fact that ABI's BEER PALE PILSEN is sold, like SMC's SAN MIGUEL PALE PILSEN in amber steinie bottles. The record does not bear out SMC's apprehension that BEER PALE PILSEN is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely to happen for consumers or buyers of beer generally order their beer by brand. As pointed out by ABI's counsel, in supermarkets and tiendas, beer is ordered by brand, and the customer surrenders his empty replacement bottles or pays a deposit to guarantee the return of the empties. If his empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE PILSEN as replacement. In sari-sari stores, beer is also ordered from the tinderaby brand. The same is true in restaurants, pubs and beer gardens beer is ordered from the waiters by brand. (Op. cit. page 50.) Considering further that SAN MIGUEL PALE PILSEN has virtually monopolized the domestic beer market for the past hundred years, those who have been drinking no other beer but SAN MIGUEL PALE PILSEN these many years certainly know their beer too well to be deceived by a newcomer in the market. If they gravitate to ABI's cheaper beer, it will not be because they are confused or deceived, but because they find the competing product to their taste. Our decision in this case will not diminish our ruling in "Del Monte Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing Industries," 181 SCRA 410, 3 419, that: . . . to determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any part of it. That ruling may not apply to all kinds of products. The Court itself cautioned that in resolving cases of infringement and unfair competition, the courts should "take into consideration several factors which would affect its conclusion, to wit: the age, training and education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate consumption and also the conditions under which it is usually purchased" (181 SCRA 410, 418-419). The Del Monte case involved catsup, a common household item which is bought off the store shelves by housewives and house help who, if they are illiterate and cannot identify the product by name or brand, would very likely identify it by mere recollection of its appearance. Since the competitor, Sunshine Sauce Mfg. Industries, not only

used recycled Del Monte bottles for its catsup (despite the warning embossed on the bottles: "Del Monte Corporation. Not to be refilled.") but also used labels which were "a colorable imitation" of Del Monte's label, we held that there was infringement of Del Monte's trademark and unfair competition by Sunshine. Our ruling in Del Monte would not apply to beer which is not usually picked from a store shelf but ordered by brand by the beer drinker himself from the storekeeper or waiter in a pub or restaurant. Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not infringed by ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI makes its own bottle with a bulging neck to differentiate it from SMC's bottle, and prints ABI's name in three (3) places on said bottle (front, back and bottle cap) to prove that it has no intention to pass of its "BEER" as "SAN MIGUEL." There is no confusing similarity between the competing beers for the name of one is "SAN MIGUEL" while the competitor is plain "BEER" and the points of dissimilarity between the two outnumber their points of similarity. Petitioner ABI has neither infringed SMC's trademark nor committed unfair competition with the latter's SAN MIGUEL PALE PILSEN product. While its BEER PALE PILSEN admittedly competes with the latter in the open market, that competition is neither unfair nor fraudulent. Hence, we must deny SMC's prayer to suppress it. WHEREFORE, finding the petition for review meritorious, the same is hereby granted. The decision and resolution of the Court of Appeals in CA-G.R. CV No. 28104 are hereby set aside and that of the trial court is REINSTATED and AFFIRMED. Costs against the private respondent. SO ORDERED. Narvasa, C.J., Bidin, Regalado, Romero, Nocon, Bellosillo and Melo, JJ., concur. Feliciano, J., took no part.

Separate Opinions CRUZ, J., dissenting: The present ponencia stresses the specific similarities and differences of the two products to support the conclusion that there is no infringement of trade marks or unfair competition. That test was rejected in my own ponencia in Del Monte Corporation vs. Court of Appeals, 181 SCRA 410, concurred in by Justices Narvasa, Gancayco, Grio-Aquino and Medialdea, where we declared: While the Court does recognize these distinctions, it does not agree with the conclusion that there was no infringement or unfair competition. It seems to us that the lower courts have been so preoccupied with the details that they have not seen the total picture. It has been correctly held that side-by-side comparison is not the final test of similarity. Such comparison requires a careful scrutiny to determine in what points the labels of the products differ, as was done by the trial judge. The ordinary buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library. Where the housewife has to return home as soon as possible to her baby or the working woman has to make quick purchases during her off

hours, she is apt to be confused by similar labels even if they do have minute differences. The male shopper is worse as he usually does not bother about such distinctions. The question is not whether the two articles are distinguishable by their labels when set aside by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods, is the touchstone. It has been held that in making purchases, the consumer must depend upon his recollection of the appearance of the product which he intends to purchase. The buyer having in mind the mark/label of the respondent must rely upon his memory of the petitioner's mark. Unlike the judge who has ample time to minutely examine the labels in question in the comfort of his sala, the ordinary shopper does not enjoy the same opportunity. A number of courts have held that to determine whether a trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any part of it. The court therefore should be guided by its first impression, for a buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as the court assumes to analyze carefully the respective features of the mark. It has also been held that it is not the function of the court in cases of infringement and unfair competition to educate purchasers but rather to take their carelessness for granted, and to be ever conscious of the fact that marks need not be identical. A confusing similarity will justify the intervention of equity. The judge must also be aware of the fact that usually a defendant in cases of infringement does not normally copy but makes only colorable changes. Well has it been said that the most successful form of copying is to employ enough points of similarity to confuse the public with enough points of difference to confuse the courts. For the above reasons, and the other arguments stated in Del Monte, I dissent. Note.No exclusive right of use can be claimed if bottle design registered only in Supplemental Register (Del Monte Corporation vs. Court of Appeals, 181 SCRA 410).

G.R. No. 148222 August 15, 2003 PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, vs. SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents. DECISION CORONA, J.: In the instant petition for review on certiorari under Rule 45 of the Rules of Court, 1 petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision of the 2 Court of Appeals reversing the October 31, 1996 decision of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair competition. FACTUAL ANTECEDENTS 3 The May 22, 2001 decision of the Court of Appeals contained a summary of this dispute: "Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its advertising displays. Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply. Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao. Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light boxes for Shoemarts chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City. Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood section of SM Cubao. Upon

investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMIs different branches. Pearl and Dean noted that NEMI is a sister company of SMI. In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease using the subject light boxes and to remove the same from SMIs establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00). Upon receipt of the demand letter, SMI suspended the leasing of two hundred twentyfour (224) light boxes and NEMI took down its advertisements for "Poster Ads" from the lighted display units in SMIs stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and damages. In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known techniques and available technology, without notice of or reference to Pearl and Deans copyright. SMI noted that the registration of the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was purely intended to malign SMIs good name. On this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Deans Certification of Copyright Registration No. PD -R2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988. NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. It repleaded SMIs averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI." The RTC of Makati City decided in favor of P & D: Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed: (1) to pay plaintiff the following damages: (a) actual damages - P16,600,000.00, representing profits derived by defendants as a result of infringement of plaintiffs copyright from 1991 to 1992 (b) moral damages - P1,000.000.00 (c) exemplary damages - P1,000,000.00 (d) attorneys fees - P1,000,000.00 plus

(e) costs of suit; (2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation; (3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction; and (4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its trademark "Poster Ads". Defendants counterclaims are hereby ordered dismissed for lack of merit. 4 SO ORDERED. On appeal, however, the Court of Appeals reversed the trial court: Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes themselves, thus: 42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellants will not extend to the actual object. It has so been held under jurisprudence, of which the leading case is Baker vs. Selden(101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection for a book entitled "Seldens Condensed Ledger or Bookkeeping Simplified" which purported to explai n a new system of bookkeeping. Included as part of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for use in connection with the system explained in the work. These forms showed the entire operation of a day or a week or a month on a single page, or on two pages following each other. The defendant Baker then produced forms which were similar to the forms illustrated in Seldens copyrighted books. The Court held that exclusivity to the actual forms is not extended by a copyright. The reason was that "to grant a monopoly in the underlying art when no examination of its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not of copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass the rigorous examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to a copyright registration which merely employs a recordal system without the benefit of an in-depth examination of novelty. The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished drawing entitled "Bridge Approach the drawing showed a novel bridge approach to unsnarl traffic congestion". The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiffs drawings. In this case it was held that protection of the drawing does not extend to the unauthorized duplication of the object drawn because copyright extends only to the description or expression of the object and not to the object itself. It does not prevent one from using the drawings to construct the object portrayed in the drawing. In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the copyright does not extend to the structures themselves. In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical drawings of the latters advertising display units.

xxx xxx xxx The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective mantle of the Trademark Law extends only to the goods used by the first user as specified in the certificate of registration, following the clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the Trademark Law, which reads: SEC. 20. Certification of registration prima facie evidence of validity .- A certificate of registration of a mark or trade-name shall be prima facie evidence of the validity of the registration, the registrants ownership of the mark or trade -name, and of the registrants exclusive right to use the same in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein." (underscoring supplied) The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register on September 12, 1988 under Registration No. 41165 covering the following products: stationeries such as letterheads, envelopes and calling cards and newsletters. With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of the words "Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit permission to a manufacturer to venture into the production of goods and allow that producer to appropriate the brand name of the senior registrant on goods other than those stated in the certificate of registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated, through Justice Conrado V. Sanchez, that: Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise whereby an applicant may be tempted to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for the said goods. We believe that such omnibus registration is not contemplated by our Trademark Law. While we do not discount the striking similarity between Pearl and Deans registered trademark and defendants-appellants "Poster Ads" design, as well as the parallel use by which said words were used in the parties respective advertising copies, we cannot find defendants-appellants liable for infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who used the same words in their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But, having already done so, it must stand by the consequence of the registration which it had caused. xxx xxx xxx We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction of the generic term poster advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that Pearl and Deans exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of registration, namely, stationeries. Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads". There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to stand on. xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered DISMISSING the complaint and counterclaims in the 5 above-entitled case for lack of merit. Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the Courts consideration: A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI; B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEANS TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI; C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE LATTERS FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN. D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES AND 6 COSTS OF SUIT. ISSUES In resolving this very interesting case, we are challenged once again to put into proper perspective four main concerns of intellectual property law patents, copyrights, trademarks and unfair competition arising from infringement of any of the first three. We shall focus then on the following issues: (1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright? (2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) in addition to the copyright of the engineering drawings? (3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of a term descriptive of his goods, services or business? ON THE ISSUE OF COPYRIGHT INFRINGEMENT Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioners position was premised on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court. First, petitioners application for a copyright certificate as well as Copyright Certificate No. PD-R2588 issued by the National Library on January 20, 1981 clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright: SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works: xxx xxx xxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps; xxx xxx xxx Although petitioners copyright certificate was entitled "Advertising Display Units" (which depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained. Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and 7 conditions specified in the statute. Accordingly, it can cover only the works falling 8 within the statutory enumeration or description. P & D secured its copyright under the classification class "O" work. This being so, petitioners copyright protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within the category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict 9 application of the laws enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising Display Units." In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without license from P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case. SMIs and NEMIs acts complained of by P & D were to have units similar or identical to the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of petitioners copyright over the technical drawings? We do not think so. During the trial, the president of P & D himself admitted that the light box was neither 10 a literary not an artistic work but an "engineering or marketing invention." Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. 11 Court of Appeals, we ruled that these three legal rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others: Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods . In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are original 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 field of human activity which is new, involves an inventive step and is industrially applicable. ON THE ISSUE OF PATENT INFRINGEMENT This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents cannot be held legally liable for infringement of P & Ds copyright over its technical drawings of the

said light boxes, should they be liable instead for infringement of patent? We do not think so either. For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision 12 Systems, Inc. vs. Court of Appeals, we held that "there can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, 13 selling or using the invention. On the assumption that petitioners advertising units were patentable inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library. To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the 14 public domain through disclosure. Ideas, once disclosed to the public without the 15 protection of a valid patent, are subject to appropriation without significant restraint. On one side of the coin is the public which will benefit from new ideas; on the other 16 are the inventors who must be protected. As held in Bauer & Cie vs. ODonnel, "The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new and useful inventions by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions and improvements." The law attempts to strike an ideal balance between the two interests: "(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who 17 are thus enabled to practice it and profit by its use." The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public 18 domain remain there for the free use of the public." It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight 19 technological advance in art."

There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the creation of a work. The law confers the 20 copyright from the moment of creation and the copyright certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation. Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings. Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize the light boxs eligibility as a patentable invention. The irony here is that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through the simplified procedure of copyright-registration with the National Library without undergoing the rigor of defending the patentability of its invention before the IPO and the public the petitioner would be protected for 50 years. This situation could not have been the intention of the law. 21 In the oft-cited case of Baker vs. Selden , the United States Supreme Court held that only the expression of an idea is protected by copyright, not the idea itself . In that case, the plaintiff held the copyright of a book which expounded on a new accounting system he had developed. The publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled that: "There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x. But there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate. The mere statement of the proposition is so evident that it requires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That is the province of letters patent, not of copyright. The claim to an invention of discovery of an art or manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be obtained; and a patent from the government can only secure it. The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or composition of matter. He may copyright his book, if he pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the modes of drawing described, though they may never have been known or used before. By publishing the book without getting a patent for the art, the latter is given to the public. xxx Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any person may practice and use the art itself which he has described and illustrated therein. The use of the art is a totally different thing from a publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to make, sell and use account books prepared upon the plan set forth in such book. Whether the art might or might not have been patented, is a question, which is not before us. It was not patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings 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 books, which have been made the subject of copyright. In describing the art, the illustrations and diagrams employed happened to correspond more closely than usual with the actual work performed by the operator who uses the art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by letters patent." (underscoring supplied) ON THE ISSUE OF TRADEMARK INFRINGEMENT This issue concerns the use by respondents of the mark "Poster Ads" which petitioners president said was a contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards and 22 newsletters." Petitioner admitted it did not commercially engage in or market these goods. On the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate. Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. 23 Intermediate Appellate Court, where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are 24 of a differentdescription." Faberge, Inc. was correct and was in fact recently 25 reiterated in Canon Kabushiki Kaisha vs. Court of Appeals. Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.1wphi1 ON THE ISSUE OF UNFAIR COMPETITION If at all, the cause of action should have been for unfair competition, a situation which 26 was possible even if P & D had no registration. However, while the petitioners complaint in the RTC also cited unfair competition, the trial court did not find private

respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its claim of unfair competition. But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition. By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to 27 protection against unfair competition. In this case, there was no evidence that P & Ds use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioners expert witnesses himself had testified that " Poster Ads was too generic a name. So it was difficult to identify it with any company, honestly 28 speaking." This crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguished from the goods and services of other entities. This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner. "Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his 29 property. The admission by petitioners own expert witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of this exception. Having discussed the most important and critical issues, we see no need to belabor the rest. All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial Court of Makati City. WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMEDin toto. SO ORDERED.