Tatad v.

Secretary of Energy
G.R. No. 124360 | November 5, 1997| J. Puno

Thus, it runs counter to the objective of the law "to foster a

truly competitive market."

Facts
The consolidated petitions assail the constitutionality of various
provisions of RA 8180 entitled the Downstream Oil Industry
Deregulation Act of 1996. Under the deregulated
environment, any person or entity may import or purchase any
quantity of crude oil and petroleum products from a foreign or
domestic source, lease or own and operate refineries and other
downstream oil facilities and market such crude oil or use the
same for his own requirement, subject only to monitoring by
the Department of Energy.

Third, whether predatory prices imposed substantial barriers to the

Issue/s
First, that the imposition of different tariff rates on imported
crude oil and imported refined petroleum products violates the
equal protection clause. Petitioner contends that the 3%-7%
tariff differential unduly favors the three existing oil refineries
and discriminates against prospective investors in the
downstream oil industry who do not have their own refineries
and will have to source refined petroleum products from
abroad.
Second, that the imposition of different tariff rates does not
deregulate the downstream oil industry but instead controls the
oil industry, contrary to the avowed policy of the law.
Petitioner avers that the tariff differential between imported
crude oil and imported refined petroleum products bars the
entry of other players in the oil industry because it effectively
protects the interest of oil companies with existing refineries.

entry and exit of new players in our downstream oil industry. If they do,
they have to be struck down for they will necessarily inhibit the
formation of a truly competitive market. Contrariwise, if they are
insignificant impediments, they need not be stricken down.

Ratio.
-Unconstitutional in toto
In the cases at bar, it cannot be denied that our downstream oil
industry is operated and controlled by an oligopoly, a foreign
oligopoly at that. Petron, Shell and Caltex stand as the only
major league players in the oil market. All other players belong
to the lilliputian league. As the dominant players, Petron, Shell
and Caltex boast of existing refineries of various capacities.
-As to the Tariff Differential:
The tariff differential of 4% therefore works to their immense
benefit. Yet, this is only one edge of the tariff differential. The
other edge cuts and cuts deep in the heart of their competitors.
It erects a high barrier to the entry of new players. New players
that intend to equalize the market power of Petron, Shell and
Caltex by building refineries of their own will have to spend
billions of pesos. Those who will not build refineries but
compete with them will suffer the huge disadvantage of
increasing their product cost by 4%. They will be competing on
an uneven field. The argument that the 4% tariff differential is
desirable because it will induce prospective players to invest in
refineries puts the cart before the horse. The first need is to

attract new players and they cannot be attracted by burdening

them with heavy disincentives. Without new players belonging
to the league of Petron, Shell and Caltex, competition in our
downstream oil industry is an idle dream.

by R.A. No. 8180 and the lack of players with the comparable
clout of PETRON, SHELL and CALTEX, the temptation for a
dominant player to engage in predatory pricing and succeed is
a chilling reality. Petitioners' charge that this provision on
predatory pricing is anti-competitive is not without reason.

-As to the Inventory Requirement

Analysis
The provision on inventory widens the balance of advantage of
Petron, Shell and Caltex against prospective new players.
Petron, Shell and Caltex can easily comply with the inventory
requirement of R.A. No. 8180 in view of their existing storage
facilities. Prospective competitors again will find compliance
with this requirement difficult as it will entail a prohibitive
cost. The construction cost of storage facilities and the cost of
inventory can thus scare prospective players. Their net effect is
to further occlude the entry points of new players, dampen
competition and enhance the control of the market by the three
(3) existing oil companies.
-As to the Predatory Pricing Provision
Finally, we come to the provision on predatory pricing which is
defined as ". . . selling or offering to sell any product at a price
unreasonably below the industry average cost so as to attract
customers to the detriment of competitors." Respondents
contend that this provision works against Petron, Shell and
Caltex and protects new entrants. The ban on predatory pricing
cannot be analyzed in isolation. Its validity is interlocked with
the barriers imposed by R.A. No. 8180 on the entry of new
players. The inquiry should be to determine whether predatory
pricing on the part of the dominant oil companies is
encouraged by the provisions in the law blocking the entry of
new players. Considering these significant barriers established

In this case, the Supreme Court clearly decided the

constitutionality of the three challenged provisions purely on
the potential effect these could have on the economy. This is
important, because it can be seen that the arguments raised by
the court are purely speculative, and not based on findings of
evidentiary value. Although the plain text of the case does not
outright state it, what the Supreme Court actually did was
draw behavioral assumptions similar to those used in
economic analysis in order to conclude that the big players
were going to engage in violations as a matter of certainty.
To emphasize, the case drew the following behavioral
assumptions: First, that new players will not enter the market
if there are high costs to entry due to the need to construct
facilities for maintaining an inventory. Second, that a higher
tariff rate will automatically favor the large players, who have
existing refineries in the country, and third, that the large
players will surely succeed if they engage in predatory pricing.
As can be seen, these assumptions, while seemingly
reasonable, may not actually be borne out by actual evidence
or what may occur in reality. To strike down these provisions
on unfounded speculation, was, to my mind, an abuse of
discretion on the part of the court.

Mirupuri v. Court of Appeals

G.R. No. 114508 | November 19, 1999| J. Puno
Facts
The Convention of Paris for the Protection of Industrial
Property is a multi-lateral treaty which the Philippines bound
itself to honor and enforce in this country. As to whether or not
the treaty affords protection to a foreign corporation against a
Philippine applicant for the registration of a similar trademark
is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-ininterest of petitioner Pribhdas J. Mirpuri, filed an application
with the Bureau of Patents for the registration of the trademark
"Barbizon"
for
use
in
brassieres
and
ladies
undergarments. Escobar alleged that she had been
manufacturing and selling these products under the firm name
"L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation
organized and doing business under the laws of New York,
U.S.A., opposed the application. It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly
similar to the trademark BARBIZON which opposer owns and
has not abandoned. That opposer will be damaged by the
registration of the mark BARBIZON and its business
reputation and goodwill will suffer great and irreparable
injury.
The DTI Office of Legal Affairs cancelled petitioner's
certificate of registration, and declared private respondent the
owner and prior user of the business name "Barbizon
International."

Meanwhile the evidence of both parties were received by the

Director of Patents. On June 18, 1992, the Director rendered a
decision declaring private respondent's opposition barred
by res judicata and giving due course to petitioner's application
for registration.
Private respondent questioned this decision before the Court of
Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the
Court of Appeals reversed the Director of Patents finding that
IPC No. 686 was not barred by judgment in IPC No. 2049 and
ordered that the case be remanded to the Bureau of Patents for
further proceedings.
Issue/s
Whether a decision of the Department Of Trade And Industry
cancelling Petitioner's firm name 'Barbizon International' has
the right to decide such cancellation not on the basis of the
Business Name Law (As Implemented By The Bureau Of
Domestic Trade) but on the basis of the Paris Convention and
the Trademark Law (R.A. 166) which is within the original and
exclusive jurisdiction of the Director Of Patents.
Ratio.
The CAs decision was affirmed, the remand was proper.
Before arriving at a decision, the court had opportunity to
explain the general purpose of trademark law:
A "trademark" is defined under R.A. 166, the Trademark Law,
as including "any word, name, symbol, emblem, sign or device
or any combination thereof adopted and used by a

manufacturer or merchant to identify his goods and distinguish

them from those manufactured, sold or dealt in by others." This
definition has been simplified in R.A. No. 8293, the Intellectual
Property Code of the Philippines, which defines a "trademark"
as "any visible sign capable of distinguishing goods." In
Philippine jurisprudence, the function of a trademark is to point
out distinctly the origin or ownership of the goods to which it is
affixed; to secure to him, who has been instrumental in
bringing into the market a superior article of merchandise, the
fruit of his industry and skill; to assure the public that they are
procuring the genuine article; to prevent fraud and imposition;
and to protect the manufacturer against substitution and sale of
an inferior and different article as his product
Today, the trademark is not merely a symbol of origin and
goodwill; it is often the most effective agent for the actual
creation and protection of goodwill. It imprints upon the public
mind an anonymous and impersonal guaranty of satisfaction,
creating a desire for further satisfaction. In other words, the
mark actually sells the goods. The mark has become the "silent
salesman," the conduit through which direct contact between
the trademark owner and the consumer is assured. It has
invaded popular culture in ways never anticipated that it has
become a more convincing selling point than even the quality
of the article to which it refers. In the last half century, the
unparalleled growth of industry and the rapid development of
communications technology have enabled trademarks,
tradenames and other distinctive signs of a product to penetrate
regions where the owner does not actually manufacture or sell
the product itself. Goodwill is no longer confined to the
territory of actual market penetration; it extends to zones where
the marked article has been fixed in the public mind through
advertising. Whether in the print, broadcast or electronic

communications
medium,
particularly
on
the
Internet, advertising has paved the way for growth and
expansion of the product by creating and earning a reputation
that crosses over borders, virtually turning the whole world into
one vast marketplace.
Having thus said that, the court then proceeded to rule that:
Intellectual and industrial property rights cases are not
simple property cases. Trademarks deal with the psychological
function of symbols and the effect of these symbols on the
public at large. Trademarks play a significant role in
communication, commerce and trade, and serve valuable and
interrelated business functions, both nationally and
internationally. For this reason, all agreements concerning
industrial property, like those on trademarks and tradenames,
are
intimately
connected
with
economic
development. Industrial property encourages investments in
new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of
technology and industrialization, and thereby bring about social
and economic progress. These advantages have been
acknowledged by the Philippine government itself.
The Intellectual Property Code of the Philippines declares
that "an effective intellectual and industrial property system is
vital to the development of domestic and creative activity,
facilitates transfer of technology, it attracts foreign investments,
and ensures market access for our products." The Intellectual
Property Code took effect on January 1, 1998 and by its
express provision, repealed the Trademark Law, the Patent
Law, Articles 188 and 189 of the Revised Penal Code, the
Decree on Intellectual Property, and the Decree on Compulsory

Reprinting of Foreign Textbooks. The Code was enacted to

strengthen the intellectual and industrial property system in the
Philippines as mandated by the country's accession to the
Agreement Establishing the World Trade Organization (WTO).
The WTO is a common institutional framework for the
conduct of trade relations among its members in matters related
to the multilateral and plurilateral trade agreements annexed to
the WTO Agreement. The WTO framework ensures a "single
undertaking approach" to the administration and operation of
all agreements and arrangements attached to the WTO
Agreement. Among those annexed is the Agreement on TradeRelated Aspects of Intellectual Property Rights or TRIPs
Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need
to promote effective and adequate protection of intellectual
property rights, and to ensure that measures and procedures to
enforce intellectual property rights do not themselves become
barriers to legitimate trade." To fulfill these objectives, the
members have agreed to adhere to minimum standards of
protection set by several Conventions. These Conventions
are: the Berne Convention for the Protection of Literary and
Artistic Works (1971), the Rome Convention or the
International Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organisations, the
Treaty on Intellectual Property in Respect of Integrated
Circuits, and the Paris Convention (1967), as revised in
Stockholm on July 14, 1967.
A major proportion of international trade depends on the
protection of intellectual property rights. Since the late 1970's,
the unauthorized counterfeiting of industrial property and
trademarked products has had a considerable adverse impact on
domestic and international trade revenues. The TRIPs

Agreement seeks to grant adequate protection of intellectual

property rights by creating a favorable economic environment
to encourage the inflow of foreign investments, and
strengthening the multi-lateral trading system to bring about
economic, cultural and technological independence. The
Philippines and the United States of America have acceded to
the WTO Agreement. This Agreement has revolutionized
international business and economic relations among states,
and has propelled the world towards trade liberalization and
economic globalization. Protectionism and isolationism belong
to the past. Trade is no longer confined to a bilateral
system. There is now "a new era of global economic
cooperation, reflecting the widespread desire to operate in a
fairer
and
more
open
multilateral
trading
system." Conformably, the State must reaffirm its commitment
to the global community and take part in evolving a new
international economic order at the dawn of the new
millennium.
Analysis
The court based its ruling here on the belief that protecting
trademarks would spur innovation, which would be necessary
to maintain global competitiveness in a world where freer
trade was becoming possible. Interestingly, the court
concluded that a stronger trademark system would spur
investment, which is a behavioral assumption: Industrial
property encourages investments in new ideas and inventions
and stimulates creative efforts for the satisfaction of human
needs. They speed up transfer of technology and
industrialization, and thereby bring about social and economic
progress.

It is actually common orthodoxy amongst development studies

that technology transfer is one of the best ways to enhance
economic efficiency, because it accelerates the rate at which
an optimum improvement in the learning curve can be reached.
The court, in deciding in favor of stricter patent rights, based
its reasoning on the benefits that a stronger patent system
could potentially bring to the economy. However, it has also
been established that an unduly restrictive system of patents
and trademarks can actually stifle innovation in certain
industries, and bring about market failure in some of them (as
demonstrated by certain pharmaceuticals). In that sense, the
Supreme Court decided this case following conventional lines
of economic thinking.

Imbong v. Ochoa
G.R. No. 204819 | April 8, 2014| J. Mendoza

Facts
Republic Act (R.A.) No. 10354, otherwise known as the
Responsible Parenthood and Reproductive Health Act of 2012
(RH Law), was enacted by Congress on December 21, 2012.
Challengers from various sectors of society are questioning the
constitutionality of the said Act. The petitioners are assailing
the constitutionality of RH Law on the following grounds:

From the enactment of R.A. No. 4729, entitled "An Act To

Regulate The Sale, Dispensation, and/or Distribution of
Contraceptive Drugs and Devices "on June 18, 1966,
prescribing rules on contraceptive drugs and devices which
prevent fertilization,138 to the promotion of male vasectomy and
tubal ligation,139 and the ratification of numerous international
agreements, the country has long recognized the need to
promote population control through the use of
contraceptives in order to achieve long-term economic
development.

Issue/s
The RH Law violates the right to life of the unborn.
The RH Law violates the right to health and the right to
protection against hazardous products.
The RH Law violates the right to religious freedom.
The RH Law violates the constitutional provision on
involuntary servitude.
The RH Law violates the right to equal protection of the law.
The RH Law violates the right to free speech.
The RH Law is void-for-vagueness in violation of the due
process clause of the Constitution.
The RH Law intrudes into the zone of privacy of ones family
protected by the Constitution
Ratio.
The case upheld in sum the Reproductive Health Act. The
underlying assumption behind the decision was that high
population growth was harmful to the economy:
As expounded earlier, the use of contraceptives and family
planning methods in the Philippines is not of recent vintage.

More importantly, the court further reiterates the close

connection between economic growth and OFWs, and the
importance of a stable population:
As healthful as the intention of the RH Law may be, the idea
does not escape the Court that what it seeks to address is
the problem of rising poverty and unemployment in the
country. Let it be said that the cause of these perennial
issues is not the large population but the unequal
distribution of wealth. Even if population growth is
controlled, poverty will remain as long as the country's wealth
remains in the hands of the very few.
At any rate, population control may not be beneficial for the
country in the long run. The European and Asian countries,
which embarked on such a program generations ago, are now
burdened with ageing populations. The number of their
young workers is dwindling with adverse effects on their
economy. These young workers represent a significant
human capital which could have helped them invigorate,
innovate and fuel their economy. These countries are now

trying to reverse their programs, but they are still struggling.

For one, Singapore, even with incentives, is failing.
And in this country, the economy is being propped up by
remittances from our Overseas Filipino Workers. This is
because we have an ample supply of young able-bodied
workers. What would happen if the country would be weighed
down by an ageing population and the fewer younger
generation would not be able to support them? This would be
the situation when our total fertility rate would go down below
the replacement level of two (2) children per woman.
Indeed, at the present, the country has a population problem,
but the State should not use coercive measures (like the penal
provisions of the RH Law against conscientious objectors) to
solve it. Nonetheless, the policy of the Court is noninterference in the wisdom of a law.
Analysis
The court based its ruling here on the merits, but decided it
with the proper contextualization that it was primarily a
population control measure. However, they appear to have
bought into the mistaken assumption that the Philippine
economy is propped up by OFW remittances. It is not, though
they do have a favorable effect on our foreign reserves. The
court as correct however, in deciding that human capital is
important in the long term growth of the economy. What is
puzzling is that the court found opportunity to state that
unequal distribution of wealth was the cause of poverty and
unemployment, which is a total obiter dictum without any
bearing on the lis mota of the case.