1
July 19, 2016
G.R. No. 204605
INTELLECTUAL PROPERTY ASSOCIATION OF THE
PHILIPPINES, Petitioner,
vs.
HON. PAQUITO OCHOA, IN HIS CAPACITY AS
EXECUTIVE SECRETARY, HON. ALBERT DEL
ROSARIO, IN HIS CAPACITY AS SECRETARY OF
THE DEPARTMENT OF FOREIGN AFFAIRS, AND
HON. RICARDO BLANCAFLOR, IN HIS CAPACITY AS
THE DIRECTOR GENERAL OF THE INTELLECTUAL
PROPERTY OFFICE OF THE
PHILIPPINES, Respondents.
DECISION
BERSAMIN, J.:
In this special civil action for certiorari and prohibition,
the Intellectual Property Association of the Philippines
(IPAP) seeks to declare the accession of the Philippines
to the Protocol Relating to the Madrid Agreement
Concerning the International Registration of Marks
(Madrid Protocol) unconstitutional on the ground of the
lack of concurrence by the Senate, and in the
alternative, to declare the implementation thereof as
unconstitutional because it conflicts with Republic Act
No. 8293, otherwise known as the Intellectual Property
Code of the Philippines (IP Code).1
We find and declare that the President's ratification is
valid and constitutional because the Madrid
Protocol, being an executive agreement as determined
by the Department of Foreign Affairs, does not require
the concurrence of the Senate.
Antecedents
The Madrid System for the International Registration of
Marks (Madrid System), which is the centralized system
providing a one-stop solution for registering and
managing marks worldwide, allows the trademark owner
to file one application in one language, and to pay one
set of fees to protect his mark in the territories of up to
97 member-states.2 The Madrid System is governed by
the Madrid Agreement, concluded in 1891, and
the Madrid Protocol, concluded in 1989.3
The Madrid Protocol, which was adopted in order to
remove the challenges deterring some countries from
acceding to the Madrid Agreement, has two objectives,
namely: (1) to facilitate securing protection for marks;
and (2) to make the management of the registered
marks easier in different countries.4
In 2004; the Intellectual Property Office of the Philippines
(IPOPHL), the government agency mandated to
administer the intellectual property system of the country
and to implement the state policies on intellectual
property; began considering the country's accession to
the Madrid Protocol. However, based on its assessment
in 2005, the IPOPHL needed to first improve its own
operations before making the recommendation in favor
of accession. The IPOPHL thus implemented reforms to
eliminate trademark backlogs and to reduce the
turnaround time for the registration of marks.5
In the meanwhile, the IPOPHL mounted a campaign for
information dissemination to raise awareness of
the Madrid Protocol. It launched a series of consultations
with stakeholders and various business groups
regarding the Philippines' accession to the Madrid
Protocol. It ultimately arrived at the conclusion that
accession would benefit the country and help raise the
level of competitiveness for Filipino brands. Hence, it
recommended in September 2011 to the Department of
Foreign Affairs (DFA) that the Philippines should accede
to the Madrid Protocol.6
After its own review, the DFA endorsed to the President
the country's accession to the Madrid
Protocol. Conformably with its express authority under
Section 9 of Executive Order No. 459 (Providing for the
Guidelines in the Negotiation of International
Agreements and its Ratification) dated November 25,
1997, the DFA determined that the Madrid Protocol was
an executive agreement.1âwphi1 The IPOPHL, the
Department of Science and Technology, and the
Department of Trade and Industry concurred in the
recommendation of the DFA.7
On March 27, 2012, President Benigno C. Aquino III
ratified the Madrid Protocol through an instrument of
accession, The instrument of accession was deposited
with the Director General of the World Intellectual
Property Organization (WIPO) on April 25,
2012.8 The Madrid Protocol entered into force in the
Philippines on July 25, 2012.9
Petitioner IP AP, an association of more than 100 law
firms and individual practitioners in Intellectual Property
Law whose main objective is to promote and protect
intellectual property rights in the Philippines through
constant assistance and involvement in the legislation of
intellectual property law,10 has commenced this special
civil action for certiorari and prohibition11 to challenge the
validity of the President's accession to the Madrid
Protocol without the concurrence of the Senate.
Citing Pimentel, Jr. v. Office of the Executive
Secretary, the IPAP has averred:
Nonetheless, while the President has the sole authority
to negotiate and enter into treaties, the Constitution
provides a limitation to his power by requiring the
concurrence of 2/3 of all the members of the Senate for
the validity of the treaty entered into by him. Section 21,
Article VII of the 1987 Constitution provides that "no
treaty or international agreement shall be valid and
effective unless concurred in by at least two-thirds of all
the Members of the Senate." The 1935 and the 1973
Constitution also required the concurrence by the
legislature to the treaties entered into by the executive.12
According to the IPAP, the Madrid Protocol is a treaty,
not an executive agreement; hence, respondent DFA
Secretary Albert Del Rosario acted with grave abuse of
discretion in determining the Madrid Protocol as an
executive agreement.13
The IPAP has argued that the implementation of
the Madrid Protocol in the Philippines; specifically the
processing of foreign trademark applications, conflicts
with the IP Code,14 whose Section 125 states:
Sec. 125. Representation; Address for Service. - If the
applicant is not domiciled or has no real and effective
commercial establishment in the Philippines; he shall
designate by a written document filed in the office, the

name and address of a Philippine resident who may be
served notices or process in proceedings affecting the
mark. Such notices or services may be served upon the
person so designated by leaving a copy thereof at the
address specified in the last designation filed. If the
person so designated cannot be found at the address
given in the last designation, such notice or process may
be served upon the Director. (Sec. 3; R.A. No. 166 a)
It has posited that Article 2 of the Madrid
Protocol provides in contrast:
Article 2
Securing Protection through International
Registration
(1) Where an application for the registration of a mark
has been filed with the Office of a Contracting Party, or
where a mark has been registered in the register of the
Office of a Contracting Party, the person in whose name
that application (hereinafter referred to as "the basic
application;') or that registration (hereinafter referred to
as "the basic registration") stands may, subject to the
provisions of this Protocol secure protection for his mark
in the territory of the Contracting Parties, by obtaining
the registration of that mark in the register of the
International Bureau of the World Intellectual Property
Organization (hereinafter referred to as "the international
registration," "the International Register," "the
International Bureau" and "the Organization'',
respectively), provided that,
(i) where the basic application has been filed with the
Office of a Contracting State or where the basic
registration has been made by such an Office, the
person in whose name that application or registration
stands is a national of that Contracting State, or is
domiciled, or has a real and effective industrial or
commercial establishment, in the said Contracting State,
(ii) where the basic application has been filed with the
Office of a Contracting Organization or where the basic
registration has been made by such an Office, the
person in whose name that application or registration
stands is a national of a State member of that
Contracting Organization, or is domiciled, or has a real
and effective industrial or commercial establishment, in
the territory of the said Contracting Organization.
(2) The application for international registration
(hereinafter referred to as "the international application")
shall be filed with the International Bureau through the
intermediary of the Office with which the basic
application was filed or by which the basic registration
was made (hereinafter referred to as "the Office of
origin"), as the case may be.
(3) Any reference in this Protocol to an "Office" or an
"Office of a Contracting Party" shall be construed as a
reference to the office that is in charge, on behalf of a
Contracting Party, of the registration of marks, and any
reference in this Protocol to "marks" shall be construed
as a reference to trademarks and service marks.
(4) For the purposes of this Protocol, "territory of a
Contracting Party" means, where the Contracting Party
is a State, the territory of that State and, where the
Contracting Party is an intergovernmental organization,
2
the territory in which the constituting treaty of that
intergovernmental organization applied.
The IPAP has insisted that Article 2 of the Madrid
Protocol means that foreign trademark applicants may
file their applications through the International Bureau or
the WIPO, and their applications will be automatically
granted trademark protection without the need for
designating their resident agents in the country. 15
Moreover, the IPAP has submitted that the procedure
outlined in the Guide to the International Registration of
Marks relating to representation before the International
Bureau is the following, to wit:
Rule 3(1)(a) 09.02 References in the Regulations,
Administrative Instructions or in this Guide to
representation relate only to representation before the
International Bureau. The questions of the need for a
representative before the Office of origin or the Office of
a designated Contracting Party (for example, in the
event of a refusal of protection issued by such an
Office), who may act as a representative in such cases
and the method of appointment, are outside the scope of
the Agreement, Protocol and Regulations and are
governed by the law and practice of the Contracting
Party concerned.
which procedure is in conflict with that under Section 125
of the IP Code, and constitutes in effect an amendment
of the local law by the Executive Department.16
The IPAP has prayed that the implementation of
the Madrid Protocol in the Philippines be restrained in
order to prevent future wrongs considering that the IP
AP and its constituency have a clear and unmistakable
right not to be deprived of the rights granted them by the
IP Code and existing local laws.17
In its comment in behalf of the respondents, the Office of
the Solicitor General (OSG) has stated that the IPAP
does not have the locus standi to challenge the
accession to the Madrid Protocol; that the IPAP cannot
invoke the Court's original jurisdiction absent a showing
of any grave abuse of discretion on the part of the
respondents; that the President's ratification of
the Madrid Protocol as an executive agreement is valid
because the Madrid Protocol is only procedural, does
not create substantive rights, and does not require the
amendment of the IP Code; that the IPAP is not entitled
to the restraining order or injunction because it suffers
no damage from the ratification by the President, and
there is also no urgency for such relief; and the IPAP
has no clear unmistakable right to the relief sought.18
Issues
The following issues are to be resolved, namely:
I. Whether or not the IP AP has locus standi to challenge
the President's ratification of the Madrid Protocol;
II. Whether or not the President's ratification of
the Madrid Protocol is valid and constitutional; and
III. Whether or not the Madrid Protocol is in conflict with
the IP Code.
Ruling of the Court

The petition for certiorari and prohibition is without merit.
A.
The issue of legal standing to sue, or locus standi
The IPAP argues in its reply19 that it has the locus
standi to file the present case by virtue of its being an
association whose members stand to be injured as a
result of the enforcement of the Madrid Protocol in the
Philippines; that the injury pertains to the acceptance
and approval of applications submitted through
the Madrid Protocol without local representation as
required by Section 125 of the IP Code; 20 and that such
will diminish the rights granted by the IP Code to
Intellectual Property Law practitioners like the members
of the IPAP.21
The argument of the IPAP is untenable.
Legal standing refers to "a right of appearance in a court
of justice on a given question."22 According to Agan, Jr.
v. Philippine International Air Terminals Co.,
Inc.,23standing is "a peculiar concept in constitutional law
because in some cases, suits are not brought by parties
who have been personally injured by the operation of a
law or any other government act but by concerned
citizens, taxpayers or voters who actually sue in the
public interest."
The Court has frequently felt the need to dwell on the
issue of standing in public or constitutional litigations to
sift the worthy from the unworthy public law litigants
seeking redress or relief. The following elucidation in De
Castro v. Judicial and Bar Council24offers the general
understanding of the context of legal standing, or locus
standi for that purpose, viz. :
In public or constitutional litigations, the Court is often
burdened with the determination of the locus standi of
the petitioners due to the ever-present need to regulate
the invocation of the intervention of the Court to correct
any official action or policy in order to avoid obstructing
the efficient functioning of public officials and offices
involved in public service. It is required, therefore, that
the petitioner must have a personal stake in the outcome
of the controversy, for, as indicated in Agan, Jr. v.
Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such
parties have "'alleged such a personal stake in the
outcome of the controversy as to assure that
concrete adverseness which sharpens the
presentation of issues upon which the court so
largely depends for illumination of difficult
constitutional questions," Accordingly, it has been
held that the interest of a person assailing the
constitutionality of a statute must be direct and
personal. He must be able to show, not only that the
law or any government act is invalid, but also that he
sustained or is in imminent danger of sustaining
some direct injury as a result of its enforcement, and
not merely that he suffers thereby in some indefinite
way. It must appear that the person complaining has
been or is about to be denied some right or privilege
to which he is lawfully entitled or that he is about to
be subjected to some burdens or penalties by
reason of the statute or act complained of.
3
It is true that as early as in 1937, in People v. Vera, the
Court adopted the direct injury test for determining
whether a petitioner in a public action had locus
standi. There, the Court held that the person who would
assail the validity of a statute must have "a personal and
substantial interest in the case such that he has
sustained, or will sustain direct injury as a
result." Vera was followed in Custodio v. President of the
Senate, Manila Race Horse Trainers' Association v. De
la Fuente, Anti-Chinese League of the Philippines v.
Felix, and Pascual v. Secretary of Public Works.
Yet, the Court has also held that the requirement
of locus standi, being a mere procedural technicality, can
be waived by the Court in the exercise of its discretion.
For instance, in 1949, in Araneta v. Dinglasan, the Court
liberalized the approach when the cases had
"transcendental importance." Some notable
controversies whose petitioners did not pass the direct
injury test were allowed to be treated in the same way as
in Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on
Elections, this Court decided to resolve the issues raised
by the petition due to their "farreaching implications,';
even if the petitioner had no personality to file the suit.
The liberal approach of Aquino v. Commission on
Elections has been adopted in several notable cases,
permitting ordinary citizens, legislators, and civic
organizations to bring their suits involving the
constitutionality or validity of laws, regulations, and
rulings.
However, the assertion of a public right as a predicate
for challenging a supposedly illegal or unconstitutional
executive or legislative action rests on the theory that the
petitioner represents the public in general. Although
such petitioner may not be as adversely affected by the
action complained against as are others, it is enough
that he sufficiently demonstrates in his petition that he is
entitled to protection or relief from the Court in the
vindication ofa public right.25
The injury that the IPAP will allegedly suffer from the
implementation of the Madrid Protocol is imaginary,
incidental and speculative as opposed to a direct and
material injury required by the foregoing tenets on locus
standi. Additionally, as the OSG points out in the
comment,26 the IPAP has misinterpreted Section 125 of
the IP Code on the issue of representation. The
provision only states that a foreign trademark applicant
"shall designate by a written document filed in the office,
the name and address of a Philippine resident who may
be served notices or process in proceedings affecting
the mark;" it does not grant anyone in particular the right
to represent the foreign trademark applicant. Hence, the
IPAP cannot justly claim that it will suffer irreparable
injury or diminution of rights granted to it by Section 125
of the IP Code from the implementation of the Madrid
Protocol.
Nonetheless, the IPAP also emphasizes that the
paramount public interest involved has transcendental
importance because its petition asserts that the
Executive Department has overstepped the bounds of its
authority by thereby cutting into another branch's
functions and responsibilities.27 The assertion of the
IPAP may be valid on this score. There is little question
that the issues raised herein against the implementation
of the Madrid Protocol are of transcendental importance.
Accordingly, we recognize IPAP's locus standi to bring

the present challenge. Indeed, the Court has adopted a
liberal attitude towards locus standi whenever the issue
presented for consideration has transcendental
significance to the people, or whenever the issues raised
are of paramount importance to the public.28
B.
Accession to the
Madrid Protocol was constitutional
The IP AP submits that respondents Executive Secretary
and DFA Secretary Del Rosario gravely abused their
discretion in determining that there was no need for the
Philippine Senate's concurrence with the Madrid
Protocol; that the Madrid Protocol involves changes of
national policy, and its being of a permanent character
requires the Senate's concurrence,29 pursuant to Section
21, Article VII of the Constitution, which states that "no
treaty or international agreement shall be valid and
effective unless concurred in by at least two-thirds of all
the Members of the Senate."
Before going further, we have to distinguish between
treaties and international agreements, which require the
Senate's concurrence, on one hand, and executive
agreements, which may be validly entered into without
the Senate's concurrence. Executive Order No. 459,
Series of 1997,30 notes the following definitions, to wit:
Sec. 2. Definition of Terms.
a. International agreement - shall refer to a contract or
understanding, regardless of nomenclature, entered into
between the Philippines and another government in
written form and governed by international law, whether
embodied in a single instrument or in two or more related
instruments.
b. Treaties - international agreements entered into by
the Philippines which require legislative concurrence
after executive ratification. This term may include
compacts like conventions, declarations, covenants and
acts.
c. Executive Agreements - similar to treaties except
that they do not require legislative concurrence.
The Court has highlighted the difference between
treaties and executive agreements in Commissioner of
Customs v. Eastern Sea Trading,31 thusly:
International agreements involving political issues or
changes of national policy and those involving
international arrangements of a permanent character
usually take the form of treaties. But international
agreements embodying adjustments of detail carrying
out well-established national policies and traditions and
those involving arrangements of a more or
less temporary nature usually take the form of executive
agreements.
In the Philippines, the DFA, by virtue of Section 9,
Executive Order No. 459,32 is initially given the power to
determine whether an agreement is to be treated as a
treaty or as an executive agreement. To determine the
issue of whether DFA Secretary Del Rosario gravely
abused his discretion in making his determination
relative to the Madrid Protocol, we review the
4
jurisprudence on the nature of executive agreements, as
well as the subject matters to be covered by executive
agreements.
The pronouncement in Commissioner of Customs v.
Eastern Sea Trading33is instructive, to wit:
x x x The concurrence of said House of Congress is
required by our fundamental law in the making of
"treaties" (Constitution of the Philippines; Article VII,
Section 10[7]), which are, however, distinct and different
from "executive agreements," which may be validly
entered into without such concurrence.
"Treaties are formal documents which require ratification
with the approval of two thirds of the Senate. Executive
agreements become binding through executive
action without the need of a vote by the Senate or by
Congress.
xxxx
"x x x the right of the Executive to enter into binding
agreements without the necessity of subsequent
Congressional approval has been confirmed by long
usage. From the earliest days of our history we have
entered into executive agreements covering such
subjects as commercial and consular relations, most-
favored-nation rights, patent rights, trademark and
copyright protection, postal and navigation
arrangements and the settlement of claims. The validity
of these has never been seriously questioned by our
courts.
xxxx
Agreements with respect to the registration of
trademarks have been concluded by the Executive with
various countries under the Act of Congress of March 3,
1881 (21 Stat. 502), x x x
xxxx
In this connection, Francis B. Sayre, former U.S. High
Commissioner to the Philippines, said in his work on
"The Constitutionality of Trade Agreement Acts":
Agreements concluded by the President which fall short
of treaties are commonly referred to as executive
agreements and are no less common in our scheme of
government than are the more formal instruments -
treaties and conventions. They sometimes take the form
of exchanges of notes and at other times that or more
formal documents denominated 'agreements' or
'protocols'. The point where ordinary correspondence
between this and other governments ends and
agreements - whether denominated executive
agreements or exchanges of notes or otherwise - begin,
may sometimes be difficult of ready ascertainment. It
would be useless to undertake to discuss here the large
variety of executive agreements as such, concluded from
time to time. Hundreds of executive agreements, other
than those entered into under the trade-agreements act,
have been negotiated with foreign governments. x x x It
would seem to be sufficient, in order to show that the
trade agreements under the act of 1934 are not
anomalous in character, that they are not treaties, and
that they have abundant precedent in our history, to refer
to certain classes of agreements heretofore entered into
by the Executive without the approval of the

Senate. They cover such subjects as the inspection
of vessels, navigation dues, income tax on shipping
profits, the admission of civil aircraft, customs
matters, and commercial relations generally,
international claims, postal matters, the registration
of trademarks and copyrights, etcetera. Some of
them were concluded not by specific congressional
authorization but in conformity with policies
declared in acts of Congress with respect to the
general subject matter, such as tariff acts; while still
others, particularly those with respect of the settlement
of claims against foreign governments, were concluded
independently of any legislation. (Emphasis ours)
As the foregoing pronouncement indicates, the
registration of trademarks and copyrights have been the
subject of executive agreements entered into without the
concurrence of the Senate. Some executive agreements
have been concluded in conformity with the policies
declared in the acts of Congress with respect to the
general subject matter.
It then becomes relevant to examine our state policy on
intellectual property in general, as reflected in Section 2
of our IP Code, to wit:
Section 2. Declaration of State Policy. - The State
recognizes that an effective intellectual and industrial
property system is vital to the development of
domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and
ensures market access for our products. It shall
protect and secure the exclusive rights of scientists,
inventors, artists and other gifted citizens to their
intellectual property and creations, particularly when
beneficial to the people, for such periods as
provided in this Act.
The use of intellectual property bears a social function.
To this end, the State shall promote the diffusion of
knowledge and information for the promotion of national
development and progress and the common good.
It is also the policy of the State to streamline
administrative procedures of registering patents,
trademarks and copyright, to liberalize the registration
on the transfer of technology; and to enhance the
enforcement of intellectual property rights in the
Philippines.
In view of the expression of state policy having been
made by the Congress itself, the IPAP is plainly
mistaken in asserting that "there was no Congressional
act that authorized the accession of the Philippines to
the Madrid Protocol."34
Accordingly, DFA Secretary Del Rosario’s determination
and treatment of the Madrid Protocol as an executive
agreement; being in apparent contemplation of the
express state policies on intellectual property as well as
within his power under Executive Order No. 459, are
upheld. We observe at this point that there are no hard
and fast rules on the propriety of entering into a treaty or
an executive agreement on a given subject as an
instrument of international relations. The primary
consideration in the choice of the form of agreement is
the parties' intent and desire to craft their international
agreement in the form they so wish to further their
respective interests. The matter of form takes a back
seat when it comes to effectiveness and binding effect of
the enforcement of a treaty or an executive agreement;
5
inasmuch as all the parties; regardless of the form,
become obliged to comply conformably with the time-
honored principle of pacta sunt servanda.35The principle
binds the parties to perform in good faith their parts in
the agreements.36
c.
There is no conflict between the
Madrid Protocol and the IP Code.
The IPAP also rests its challenge on the supposed
conflict between the Madrid Protocol and the IP Code,
contending that the Madrid Protocol does away with the
requirement of a resident agent under Section 125 of the
IP Code; and that the Madrid Protocol is unconstitutional
for being in conflict with the local law, which it cannot
modify.
The IPAP's contentions stand on a faulty premise. The
method of registration through the IPOPHL, as laid down
by the IP Code, is distinct and separate from the method
of registration through the WIPO, as set in the Madrid
Protocol. Comparing the two methods of registration
despite their being governed by two separate systems of
registration is thus misplaced.
In arguing that the Madrid Protocol conflicts with Section
125 of the IP Code, the IP AP highlights the importance
of the requirement for the designation of a resident
agent. It underscores that the requirement is intended to
ensure that non-resident entities seeking protection or
privileges under Philippine Intellectual Property Laws will
be subjected to the country's jurisdiction. It submits that
without such resident agent, there will be a need to
resort to costly, time consuming and cumbersome
extraterritorial service of writs and processes.37
The IPAP misapprehends the procedure for examination
under the Madrid Protocol, The difficulty, which the IPAP
illustrates, is minimal, if not altogether inexistent. The
IPOPHL actually requires the designation of the resident
agent when it refuses the registration of a mark. Local
representation is further required in the submission of
the Declaration of Actual Use, as well as in the
submission of the license contract.38 The Madrid
Protocol accords with the intent and spirit of the IP Code,
particularly on the subject of the registration of
trademarks. The Madrid Protocol does not amend or
modify the IP Code on the acquisition of trademark rights
considering that the applications under the Madrid
Protocol are still examined according to the relevant
national law, In that regard, the IPOPHL will only grant
protection to a mark that meets the local registration
requirements.
WHEREFORE, this Court DISMISSES the petition
for certiorari and prohibition for lack of merit;
and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.

G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA
FABRICA DE TABACO, INC., petitioner,
vs.
E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC., respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45,
petitioners Mighty Corporation and La Campana Fabrica
de Tabaco, Inc. (La Campana) seek to annul, reverse
and set aside: (a) the November 15, 2001 decision 1 of
the Court of Appeals (CA) in CA-G.R. CV No. 65175
affirming the November 26, 1998 decision,2 as modified
by the June 24, 1999 order,3 of the Regional Trial Court
of Makati City, Branch 57 (Makati RTC) in Civil Case No.
93-850, which held petitioners liable for, and
permanently enjoined them from, committing trademark
infringement and unfair competition, and which ordered
them to pay damages to respondents E. & J. Gallo
Winery (Gallo Winery) and The Andresons Group, Inc.
(Andresons); (b) the July 11, 2002 CA resolution denying
their motion for reconsideration4and (c) the aforesaid
Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not
doing business in the Philippines but organized and
existing under the laws of the State of California, United
States of America (U.S.), where all its wineries are
located. Gallo Winery produces different kinds of wines
and brandy products and sells them in many countries
under different registered trademarks, including the
GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been
Gallo Winery’s exclusive wine importer and distributor in
the Philippines since 1991, selling these products in its
own name and for its own account.5
Gallo Winery’s GALLO wine trademark was registered in
the principal register of the Philippine Patent Office (now
Intellectual Property Office) on November 16, 1971
under Certificate of Registration No. 17021 which was
renewed on November 16, 1991 for another 20
years.6 Gallo Winery also applied for registration of its
ERNEST & JULIO GALLO wine trademark on October
11, 1990 under Application Serial No. 901011-
00073599-PN but the records do not disclose if it was
ever approved by the Director of Patents.7
On the other hand, petitioners Mighty Corporation and
La Campana and their sister company, Tobacco
Industries of the Philippines (Tobacco Industries), are
engaged in the cultivation, manufacture, distribution and
sale of tobacco products for which they have been using
the GALLO cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved
Tobacco Industries’ use of GALLO 100’s cigarette mark
on September 14, 1973 and GALLO filter cigarette mark
on March 26, 1976, both for the manufacture and sale of
its cigarette products. In 1976, Tobacco Industries filed
6
its manufacturer’s sworn statement as basis for BIR’s
collection of specific tax on GALLO cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but
eventually did not pursue, the registration of the GALLO
cigarette trademark in the principal register of the then
Philippine Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO
cigarette trademark to La Campana which, on July 16,
1985, applied for trademark registration in the Philippine
Patent Office.11 On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for
La Campana’s lifetime copyright claim over GALLO
cigarette labels.12
Subsequently, La Campana authorized
Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand,
under licensing agreement with Tobacco Industries, on
May 18, 1988, and GALLO SPECIAL MENTHOL 100’s
cigarette brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold
in the Philippines since 1973, initially by Tobacco
Industries, then by La Campana and finally by Mighty
Corporation.15
On the other hand, although the GALLO wine trademark
was registered in the Philippines in 1971, respondents
claim that they first introduced and sold the GALLO and
ERNEST & JULIO GALLO wines in the
Philippines circa1974 within the then U.S. military
facilities only. By 1979, they had expanded their
Philippine market through authorized distributors and
independent outlets.16
Respondents claim that they first learned about the
existence of GALLO cigarettes in the latter part of 1992
when an Andresons employee saw such cigarettes on
display with GALLO wines in a Davao supermarket wine
cellar section.17 Forthwith, respondents sent a demand
letter to petitioners asking them to stop using the GALLO
trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the
Makati RTC for trademark and tradename infringement
and unfair competition, with a prayer for damages and
preliminary injunction.
Respondents charged petitioners with violating Article
6bis of the Paris Convention for the Protection of
Industrial Property (Paris Convention)18 and RA 166
(Trademark Law),19 specifically, Sections 22 and 23 (for
trademark infringement),20 29 and 3021 (for unfair
competition and false designation of origin) and 37 (for
tradename infringement).22 They claimed that petitioners
adopted the GALLO trademark to ride on Gallo Winery’s
GALLO and ERNEST & JULIO GALLO trademarks’
established reputation and popularity, thus causing
confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO
and ERNEST & JULIO GALLO trademarks with Gallo
Winery’s wines. Respondents prayed for the issuance of
a writ of preliminary injunction and ex parte restraining

order, plus P2 million as actual and compensatory
damages, at least P500,000 as exemplary and moral
damages, and at least P500,000 as attorney’s fees and
litigation expenses.23
In their answer, petitioners alleged, among other
affirmative defenses, that: petitioner’s GALLO cigarettes
and Gallo Winery’s wines were totally unrelated
products; Gallo Winery’s GALLO trademark registration
certificate covered wines only, not cigarettes; GALLO
cigarettes and GALLO wines were sold through different
channels of trade; GALLO cigarettes, sold at P4.60 for
GALLO filters and P3 for GALLO menthols, were low-
cost items compared to Gallo Winery’s high-priced luxury
wines which cost between P98 to P242.50; the target
market of Gallo Winery’s wines was the middle or high-
income bracket with at least P10,000 monthly income
while GALLO cigarette buyers were farmers, fishermen,
laborers and other low-income workers; the dominant
feature of the GALLO cigarette mark was the rooster
device with the manufacturer’s name clearly indicated as
MIGHTY CORPORATION while, in the case of Gallo
Winery’s wines, it was the full names of the founders-
owners ERNEST & JULIO GALLO or just their surname
GALLO; by their inaction and conduct, respondents were
guilty of laches and estoppel; and petitioners acted with
honesty, justice and good faith in the exercise of their
right to manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993,24 the Makati RTC
denied, for lack of merit, respondent’s prayer for the
issuance of a writ of preliminary injunction,25 holding that
respondent’s GALLO trademark registration certificate
covered wines only, that respondents’ wines and
petitioners’ cigarettes were not related goods and
respondents failed to prove material damage or great
irreparable injury as required by Section 5, Rule 58 of
the Rules of Court.26
On August 19, 1993, the Makati RTC denied, for lack of
merit, respondents’ motion for reconsideration. The court
reiterated that respondents’ wines and petitioners’
cigarettes were not related goods since the likelihood of
deception and confusion on the part of the consuming
public was very remote. The trial court emphasized that
it could not rely on foreign rulings cited by respondents
"because the[se] cases were decided by foreign courts
on the basis of unknown facts peculiar to each case or
upon factual surroundings which may exist only within
their jurisdiction. Moreover, there [was] no showing that
[these cases had] been tested or found applicable in our
jurisdiction."27
On February 20, 1995, the CA likewise dismissed
respondents’ petition for review on certiorari, docketed
as CA-G.R. No. 32626, thereby affirming the Makati
RTC’s denial of the application for issuance of a writ of
preliminary injunction against petitioners.28
After trial on the merits, however, the Makati RTC, on
November 26, 1998, held petitioners liable for, and
permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the
GALLO trademark:
WHEREFORE, judgment is rendered in favor of
the plaintiff (sic) and against the defendant (sic),
to wit:
a. permanently restraining and enjoining
defendants, their distributors, trade
7
outlets, and all persons acting for them
or under their instructions, from (i) using
E & J’s registered trademark GALLO or
any other reproduction, counterfeit, copy
or colorable imitation of said trademark,
either singly or in conjunction with other
words, designs or emblems and other
acts of similar nature, and (ii) committing
other acts of unfair competition against
plaintiffs by manufacturing and selling
their cigarettes in the domestic or export
markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs –
(i) actual and compensatory
damages for the injury and
prejudice and impairment of
plaintiffs’ business and goodwill
as a result of the acts and
conduct pleaded as basis for
this suit, in an amount equal to
10% of FOURTEEN MILLION
TWO HUNDRED THIRTY FIVE
THOUSAND PESOS
(PHP14,235,000.00) from the
filing of the complaint until fully
paid;
(ii) exemplary damages in the
amount of PHP100,000.00;
(iii) attorney’s fees and
expenses of litigation in the
amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondent’s
motion for partial reconsideration and increased the
award of actual and compensatory damages to 10%
of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and
subsequently denied petitioner’s motion for
reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending
that the CA did not follow prevailing laws and
jurisprudence when it held that: [a] RA 8293 (Intellectual
Property Code of the Philippines [IP Code]) was
applicable in this case; [b] GALLO cigarettes and
GALLO wines were identical, similar or related goods for
the reason alone that they were purportedly forms of
vice; [c] both goods passed through the same channels
of trade and [d] petitioners were liable for trademark
infringement, unfair competition and damages.31
Respondents, on the other hand, assert that this petition
which invokes Rule 45 does not involve pure questions
of law, and hence, must be dismissed outright.
IV.

Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under
Rule 45 must raise only "questions of law"32 (that is, the
doubt pertains to the application and interpretation of law
to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of
alleged facts),33 otherwise, the petition will be denied.
We are not a trier of facts and the Court of Appeals’
factual findings are generally conclusive upon us.34
This case involves questions of fact which are directly
related and intertwined with questions of law. The
resolution of the factual issues concerning the goods’
similarity, identity, relation, channels of trade, and acts of
trademark infringement and unfair competition is greatly
dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of
both parties’ trademarks but whether or not infringement
or unfair competition was committed, a conclusion based
on statutory interpretation. Furthermore, one or more of
the following exceptional circumstances oblige us to
review the evidence on record:35
(1) the conclusion is grounded entirely on
speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from its
findings of fact is manifestly mistaken, absurd
and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension
of facts;
(5) 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) the findings are without citation of specific
evidence on which they are based;
(7) 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
(8) the findings of fact of the Court of Appeals
are premised on the absence of evidence and
are contradicted [by the evidence] on record.36
In this light, after thoroughly examining the evidence on
record, weighing, analyzing and balancing all factors to
determine whether trademark infringement and/or unfair
competition has been committed, we conclude that both
the Court of Appeals and the trial court veered away
from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
8
We note that respondents sued petitioners on March 12,
1993 for trademark infringement and unfair competition
committed during the effectivity of the Paris Convention
and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998,
petitioners were held liable not only under the aforesaid
governing laws but also under the IP Code which took
effect only on January 1, 1998,37 or about five years after
the filing of the complaint:
Defendants’ unauthorized use of the GALLO
trademark constitutes trademark infringement
pursuant to Section 22 of Republic Act No.
166, Section 155 of the IP Code, Article 6bis of
the Paris Convention, and Article 16 (1) of the
TRIPS Agreement as it causes confusion,
deception and mistake on the part of the
purchasing public.38 (Emphasis and
underscoring supplied)
The CA apparently did not notice the error and affirmed
the Makati RTC decision:
In the light of its finding that appellants’ use of
the GALLO trademark on its cigarettes is likely
to create confusion with the GALLO trademark
on wines previously registered and used in the
Philippines by appellee E & J Gallo Winery,
the trial court thus did not err in holding that
appellants’ acts not only violated the
provisions of the our trademark laws (R.A. No.
166 and R.A. Nos. (sic) 8293) but also Article
6bis of the Paris Convention.39 (Emphasis and
underscoring supplied)
We therefore hold that the courts a quo erred in
retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and
obligatory force of a law proceed from the fact that it has
first been promulgated. A law that is not yet effective
cannot be considered as conclusively known by the
populace. To make a law binding even before it takes
effect may lead to the arbitrary exercise of the legislative
power.40 Nova constitutio futuris formam imponere debet
non praeteritis. A new state of the law ought to affect the
future, not the past. Any doubt must generally be
resolved against the retroactive operation of laws,
whether these are original enactments, amendments or
repeals.41 There are only a few instances when laws may
be given retroactive effect,42 none of which is present in
this case.
The IP Code, repealing the Trademark Law,43 was
approved on June 6, 1997. Section 241 thereof
expressly decreed that it was to take effect only on
January 1, 1998, without any provision for retroactive
application. Thus, the Makati RTC and the CA should
have limited the consideration of the present case within
the parameters of the Trademark Law and the Paris
Convention, the laws in force at the time of the filing of
the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair
competition have a common conception at their root, that

is, a person shall not be permitted to misrepresent his
goods or his business as the goods or business of
another, the law on unfair competition is broader and
more inclusive than the law on trademark infringement.
The latter is more limited but it recognizes a more
exclusive right derived from the trademark adoption and
registration by the person whose goods or business is
first associated with it. The law on trademarks is thus a
specialized subject distinct from the law on unfair
competition, although the two subjects are entwined with
each other and are dealt with together in the Trademark
Law (now, both are covered by the IP Code). Hence,
even if one fails to establish his exclusive property right
to a trademark, he may still obtain relief on the ground of
his competitor’s unfairness or fraud. Conduct constitutes
unfair competition if the effect is to pass off on the public
the goods of one man as the goods of another. It is not
necessary that any particular means should be used to
this end.44
In Del Monte Corporation vs. Court of Appeals,45 we
distinguished trademark infringement from 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
registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international
agreement binding on the Philippines and the United
States (Gallo Winery’s country of domicile and origin)
prohibits "the [registration] or use of a trademark which
constitutes a reproduction, imitation or translation, liable
to create confusion, of a mark considered by the
competent authority of the country of registration or use
to be well-known in that country as being already the
mark of a person entitled to the benefits of the [Paris]
Convention and used for identical or similar goods. [This
rule also applies] when the essential part of the mark
constitutes a reproduction of any such well-known mark
or an imitation liable to createconfusion therewith." There
is no time limit for seeking the prohibition of the use of
marks used in bad faith.47
Thus, under Article 6bis of the Paris Convention, the
following are the elements of trademark infringement:
(a) registration or use by another person of a
trademark which is a reproduction, imitation or
translation liable to create confusion,
(b) of a mark considered by the competent
authority of the country of registration or use48 to
be well-known in that country and is already the
mark of a person entitled to the benefits of the
Paris Convention, and
9
(c) such trademark is used for identical or similar
goods.
On the other hand, Section 22 of the Trademark Law
holds a person liable for infringement when, among
others, he "uses without the consent of the registrant,
any reproduction, counterfeit, copy or colorable imitation
of any registered mark or tradename in connection with
the sale, offering for sale, or advertising of any goods,
business or services 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 tradename 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."49 Trademark registration and actual use are
material to the complaining party’s cause of action.
Corollary to this, Section 20 of the Trademark
Law50 considers the trademark registration certificate
as prima facieevidence of the validity of the registration,
the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or
services as classified by the Director of Patents51 and as
specified in the certificate, subject to the conditions and
limitations stated therein. Sections 2 and 2-A52 of the
Trademark Law emphasize the importance of the
trademark’s actual use in commerce in the Philippines
prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered
and applied.53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark
Law therefore, the following constitute the elements of
trademark infringement:
(a) a trademark actually used in commerce in
the Philippines and registered in the principal
register of the Philippine Patent Office
(b) is used by another person in connection with
the sale, offering for sale, or advertising of any
goods, business or services 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 such
trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or
services as to likely cause confusion or mistake
or to deceive purchasers,
(c) the trademark is used for identical or similar
goods, and
(d) such act is done without the consent of the
trademark registrant or assignee.
In summary, the Paris Convention protects well-known
trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all

trademarks, whether well-known or not, provided that
they have been registered and are in actual commercial
use in the Philippines. Following universal acquiescence
and comity, in case of domestic legal disputes on any
conflicting provisions between the Paris Convention
(which is an international agreement) and the Trademark
law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark
Law, the protection of a registered trademark is limited
only to goods identical or similar to those in respect of
which such trademark is registered and only when there
is likelihood of confusion. Under both laws, the time
element in commencing infringement cases is material in
ascertaining the registrant’s express or implied consent
to another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches
may defeat the registrant’s otherwise valid cause of
action.
Hence, proof of all the elements of trademark
infringement is a condition precedent to any finding of
liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO
wine trademark was registered in the Philippines in
November 1971 but the wine itself was first marketed
and sold in the country only in 1974 and only within the
former U.S. military facilities, and outside thereof, only in
1979. To prove commercial use of the GALLO wine
trademark in the Philippines, respondents presented
sales invoice no. 29991 dated July 9, 1981 addressed to
Conrad Company Inc., Makati, Philippines and sales
invoice no. 85926 dated March 22, 1996 addressed to
Andresons Global, Inc., Quezon City, Philippines. Both
invoices were for the sale and shipment of GALLO wines
to the Philippines during that period.55 Nothing at all,
however, was presented to evidence the alleged sales of
GALLO wines in the Philippines in 1974 or, for that
matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by
the BIR authorization letters, forms and manufacturer’s
sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have
indeed been using and selling GALLO cigarettes in the
Philippines since 1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs.
Court of Appeals,57 we reiterated our rulings in Pagasa
Industrial Corporation vs. Court of Appeals,58 Converse
Rubber Corporation vs. Universal Rubber Products,
Inc.,59 Sterling Products International, Inc. vs.
Farbenfabriken Bayer Aktiengesellschaft,60 Kabushi
Kaisha Isetan vs. Intermediate Appellate
Court,61 and Philip Morris vs. Court of Appeals,62 giving
utmost importance to the actual commercial useof a
trademark in the Philippines prior to its registration,
notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained
to agree with petitioner's contention that private
respondent failed to prove prior actual
commercial use of its "LEE" trademark in the
10
Philippines before filing its application for
registration with the BPTTT and hence, has
not acquired ownership over said mark.
Actual use in commerce in the Philippines is
an essential prerequisite for the acquisition
of ownership over a trademark pursuant to
Sec. 2 and 2-A of the Philippine Trademark Law
(R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris
Convention for the Protection of Industrial
Property relied upon by private respondent and
Sec. 21-A of the Trademark Law (R.A. No. 166)
were sufficiently expounded upon and qualified
in the recent case of Philip Morris, Inc. v.
Court of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and
comity, our municipal law on
trademarks regarding the
requirement of actual use in the
Philippines must subordinate an
international agreement inasmuch as
the apparent clash is being decided
by a municipal tribunal (Mortisen vs.
Peters, Great Britain, High Court of
Judiciary of Scotland, 1906, 8 Sessions,
93; Paras, International Law and World
Organization, 1971 Ed., p. 20). Withal,
the fact that international law has been
made part of the law of the land does
not by any means imply the primacy of
international law over national law in the
municipal sphere. Under the doctrine of
incorporation as applied in most
countries, rules of international law are
given a standing equal, not superior, to
national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation)
may have the capacity to sue for
infringement irrespective of lack of
business activity in the Philippines
on account of Section 21-A of the
Trademark Law but the question of
whether they have an exclusive right
over their symbol as to justify
issuance of the controversial writ will
depend on actual use of their
trademarks in the Philippines in line
with Sections 2 and 2-A of the same
law. It is thus incongruous for petitioners
to claim that when a foreign corporation
not licensed to do business in the
Philippines files a complaint for
infringement, the entity need not be
actually using the trademark in
commerce in the Philippines. Such a
foreign corporation may have the
personality to file a suit for infringement
but it may not necessarily be entitled to
protection due to absence of actual use
of the emblem in the local market.

xxx xxx xxx
Undisputably, private respondent is the
senior registrant, having obtained several
registration certificates for its various trademarks
"LEE," "LEE RIDERS," and "LEESURES" in
both the supplemental and principal registers, as
early as 1969 to 1973. However, registration
alone will not suffice. In Sterling Products
International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft (27 SCRA 1214 [1969];
Reiterated inKabushi Isetan vs. Intermediate
Appellate Court (203 SCRA 583 [1991]) we
declared:
xxx xxx xxx
A rule widely accepted and firmly
entrenched because it has come down
through the years is that actual use in
commerce or business is a dated way back in 1957 show that the
prerequisite in the acquisition of the
right of ownership over a trademark.
xxx xxx xxx
The credibility placed on a certificate of
registration of one's trademark, or its weight as
evidence of validity, ownership and exclusive
use, is qualified. A registration certificate
serves merely as prima facieevidence. It is
not conclusive but can and may be rebutted
by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the
findings of the Director of Patents and the Court
of Appeals. After a meticulous study of the
records, we observe that the Director of
Patents and the Court of Appeals relied
mainly on the registration certificates as
proof of use by private respondent of the
trademark "LEE" which, as we have
previously discussed are not sufficient. We
cannot give credence to private respondent's
claim that its "LEE" mark first reached the
Philippines in the 1960's through local sales
by the Post Exchanges of the U.S. Military
Bases in the Philippines (Rollo, p. 177) based
as it was solely on the self-serving
statements of Mr. Edward Poste, General
Manager of Lee (Phils.), Inc., a wholly owned
subsidiary of the H.D. Lee, Co., Inc., U.S.A.,
herein private respondent. (Original Records,
p. 52) Similarly, we give little weight to the
numerous vouchers representing various
advertising expenses in the Philippines for
"LEE" products. It is well to note that these
expenses were incurred only in 1981 and
1982 by LEE (Phils.), Inc. after it entered into
a licensing agreement with private
respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently
shown that it has been in the business of
selling jeans and other garments adopting its
"STYLISTIC MR. LEE" trademark since
1975 as evidenced by appropriate sales invoices
to various stores and retailers. (Exhibit 1-e to 1-
o)
11
Our rulings in Pagasa Industrial Corp. v. Court of
Appeals (118 SCRA 526 [1982]) and Converse
Rubber Corp. v. Universal Rubber Products,
Inc., (147 SCRA 154 [1987]), respectively, are
instructive:
The Trademark Law is very clear. It
requires actual commercial use of the
mark prior to its registration. There is no
dispute that respondent corporation
was the first registrant, yet it failed to
fully substantiate its claim that it
used in trade or business in the
Philippines the subject mark; it did
not present proof to invest it with
exclusive, continuous adoption of the
trademark which should consist
among others, of considerable sales
since its first use. The invoices
submitted by respondent which were
zippers sent to the Philippines were
to be used as "samples" and "of no
commercial value." The evidence for
respondent must be clear, definite and
free from inconsistencies. "Samples" are
not for sale and therefore, the fact of
exporting them to the Philippines cannot
be considered to be equivalent to the
"use" contemplated by law. Respondent
did not expect income from such
"samples." There were no receipts to
establish sale, and no proof were
presented to show that they were
subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its
trademark in the Philippines prior to
petitioner's use of its own mark and for
failure to establish confusing similarity
between said trademarks, private
respondent's action for infringement must
necessarily fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’
judicial admission that the actual commercial use of the
GALLO wine trademark was subsequent to its
registration in 1971 and to Tobacco Industries’
commercial use of the GALLO cigarette trademark in
1973, we rule that, on this account, respondents never
enjoyed the exclusive right to use the GALLO wine
trademark to the prejudice of Tobacco Industries and its
successors-in-interest, herein petitioners, either under
the Trademark Law or the Paris Convention.
Respondents’ GALLO trademark
registration is limited to wines only
We also note that the GALLO trademark registration
certificates in the Philippines and in other countries
expressly state that they cover wines only, without any
evidence or indication that registrant Gallo Winery
expanded or intended to expand its business to
cigarettes.63
Thus, by strict application of Section 20 of the
Trademark Law, Gallo Winery’s exclusive right to use the
GALLO trademark should be limited to wines, the only
product indicated in its registration certificates. This strict

statutory limitation on the exclusive right to use
trademarks was amply clarified in our ruling in Faberge,
Inc. vs. Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the
case before Us, it is not difficult to discern from
the foregoing statutory enactments that private
respondent may be permitted to register the
trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its
own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder
and toilet soap. Inasmuch as petitioner has
not ventured in the production of briefs, an
item which is not listed in its certificate of
registration, petitioner cannot and should not
be allowed to feign that private respondent
had invaded petitioner's exclusive
domain. To be sure, it is significant that
petitioner failed to annex in its Brief the so-called
"eloquent proof that petitioner indeed intended to
expand its mark ‘BRUT’ to other goods" (Page
27, Brief for the Petitioner; page 202, Rollo).
Even then, a mere application by petitioner in
this aspect does not suffice and may not vest an
exclusive right in its favor that can ordinarily be
protected by the Trademark Law. In
short, paraphrasing Section 20 of the
Trademark Law as applied to the
documentary evidence adduced by
petitioner, 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 stated therein. This basic point is
perhaps the unwritten rationale of Justice
Escolin in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), when he stressed
the principle enunciated by the United States
Supreme Court in American Foundries vs.
Robertson (269 U.S. 372, 381, 70 L ed 317, 46
Sct. 160) that 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 of a
different description. Verily, this Court had the
occasion to observe in the 1966 case of George
W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944
[1966]) that no serious objection was posed by
the petitioner therein since the applicant utilized
the emblem "Tango" for no other product than
hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue
raised by petitioner which private respondent
sought to belie as regards petitioner's alleged
expansion of its business. It may be recalled that
petitioner claimed that it has a pending
application for registration of the emblem "BRUT
33" for briefs (page 25, Brief for the Petitioner;
page 202, Rollo) to impress upon Us the
Solomonic wisdom imparted by Justice JBL
Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018
[1968]), to the effect that dissimilarity of
goods will not preclude relief if the junior
user's goods are not remote from any other
product which the first user would be likely
to make or sell (vide, at page 1025).
Commenting on the former provision of the
Trademark Law now embodied substantially
12
under Section 4(d) of Republic Act No. 166, as
amended, the erudite jurist opined that the law in
point "does not require that the articles of
manufacture of the previous user and late user
of the mark should possess the same descriptive
properties or should fall into the same categories
as to bar the latter from registering his mark in
the principal register." (supra at page 1026).
Yet, it is equally true that as aforesaid, 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 message
conveyed by Section 20.
How do We now reconcile the apparent
conflict between Section 4(d) which was
relied upon by Justice JBL Reyes in the Sta.
Ana case and Section 20? It would seem that
Section 4(d) does not require that the goods
manufactured by the second user be related
to the goods produced by the senior user
while Section 20 limits the exclusive right of
the senior user only to those goods specified
in the certificate of registration. But the rule
has been laid down that the clause which comes
later shall be given paramount significance over
an anterior proviso upon the presumption that it
expresses the latest and dominant
purpose. (Graham Paper Co. vs. National
Newspapers Asso. (Mo. App.) 193 S.W.
1003; Barnett vs. Merchant's L. Ins. Co., 87 Okl.
42; State ex nel Atty. Gen. vs. Toledo, 26 N.E.,
p. 1061; cited by Martin, Statutory Construction
Sixth ed., 1980 Reprinted, p. 144). It ineluctably
follows that Section 20 is controlling and,
therefore, private respondent can
appropriate its symbol for the briefs it
manufactures because as aptly remarked by
Justice Sanchez in Sterling Products
International Inc. vs. Farbenfabriken
Bayer(27 SCRA 1214 [1969]):
"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." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the
likelihood of confusion, mistake or deceit as to the
identity, source or origin of the goods or identity of the
business as a consequence of using a certain mark.
Likelihood of confusion is admittedly a relative term, to
be determined rigidly according to the particular (and
sometimes peculiar) circumstances of each case. Thus,
in trademark cases, more than in other kinds of litigation,

precedents must be studied in the light of each particular
case. 65
There are two types of confusion in trademark
infringement. The first is "confusion of goods" when an
otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in
which case defendant’s goods are then bought as the
plaintiff’s and its poor quality reflects badly on the
plaintiff’s reputation. The other is "confusion of
business" wherein the goods of the parties are different
but the defendant’s product can reasonably (though
mistakenly) be assumed to originate from the plaintiff,
thus deceiving the public into believing that there is
some connection between the plaintiff and defendant
which, in fact, does not exist.66
In determining the likelihood of confusion, the Court
must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the
purchaser and [d] the registrant’s express or implied
consent and other fair and equitable considerations.
Petitioners and respondents both use "GALLO" in the
labels of their respective cigarette and wine products.
But, as held in the following cases, the use of an
identical mark does not, by itself, lead to a legal
conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of
Patent,67 we ordered the approval of Acoje
Mining’s application for registration of the
trademark LOTUS for its soy sauce even though
Philippine Refining Company had prior
registration and use of such identical mark for its
edible oil which, like soy sauce, also belonged to
Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam
and Director of Patents,68 we upheld the Patent
Director’s registration of the same trademark
CAMIA for Ng Sam’s ham under Class 47,
despite Philippine Refining Company’s prior
trademark registration and actual use of such
mark on its lard, butter, cooking oil (all of which
belonged to Class 47), abrasive detergents,
polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of
Appeals and Santos Lim Bun Liong,69 we
dismissed Hickok’s petition to cancel private
respondent’s HICKOK trademark registration for
its Marikina shoes as against petitioner’s earlier
registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court
of Appeals,70 in a minute resolution, we
dismissed the petition for review for lack of merit
and affirmed the Patent Office’s registration of
the trademark SHELL used in the cigarettes
manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Company’s
opposition as the prior registrant of the same
trademark for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of
Appeals,71 we dismissed ESSO’s complaint for
trademark infringement against United Cigarette
13
Corporation and allowed the latter to use the
trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum
products, and
(f) in Canon Kabushiki Kaisha vs. Court of
Appeals and NSR Rubber Corporation,72 we
affirmed the rulings of the Patent Office and the
CA that NSR Rubber Corporation could use the
trademark CANON for its sandals (Class 25)
despite Canon Kabushiki Kaisha’s prior
registration and use of the same trademark for
its paints, chemical products, toner and dyestuff
(Class 2).
Whether a trademark causes confusion and is likely to
deceive the public hinges on "colorable imitation"73 which
has been defined as "such similarity in form, content,
words, sound, meaning, special arrangement or general
appearance of the trademark or tradename in their
overall presentation or in their essential and substantive
and distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the
genuine article."74
Jurisprudence has developed two tests in determining
similarity and likelihood of confusion in trademark
resemblance:75
(a) the Dominancy Test applied in Asia Brewery,
Inc. vs. Court of Appeals76 and other
cases,77 and
(b) the Holistic or Totality Test used in Del Monte
Corporation vs. Court of Appeals78 and its
preceding cases.79
The Dominancy Test focuses on the similarity of the
prevalent features of the competing trademarks which
might cause confusion or deception, and thus
infringement. If the competing trademark contains the
main, essential or dominant features of another, and
confusion or deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an
effort to imitate. The question is whether the use of the
marks involved is likely to cause confusion or mistake in
the mind of the public or deceive purchasers.80
On the other hand, the Holistic Test requires that the
entirety of the marks in question be considered in
resolving confusing similarity. Comparison of words is
not the only determining 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.81
In comparing the resemblance or colorable imitation of
marks, various factors have been considered, such as
the dominant color, style, size, form, meaning of letters,
words, designs and emblems used, the likelihood of
deception of the mark or name's tendency to
confuse82 and the commercial impression likely to be
conveyed by the trademarks if used in conjunction with
the respective goods of the parties.83

Applying the Dominancy and Holistic Tests, we find that
the dominant feature of the GALLO cigarette trademark
is the device of a large rooster facing left, outlined in
black against a gold background. The rooster’s color is
either green or red – green for GALLO menthols and red
for GALLO filters. Directly below the large rooster device
is the word GALLO. The rooster device is given
prominence in the GALLO cigarette packs in terms of
size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary
mark for the cigarettes as it has no relation at all to the
product but was chosen merely as a trademark due to
the fondness for fighting cocks of the son of petitioners’
president. Furthermore, petitioners adopted GALLO, the
Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets,
the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves,86 on the
side of the GALLO cigarette packs are the words "MADE
BY MIGHTY CORPORATION," thus clearly informing
the public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy
labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees,
vineyards or a bunch of grapes while in a few, one or
two small roosters facing right or facing each other (atop
the EJG crest, surrounded by leaves or ribbons), with
additional designs in green, red and yellow colors,
appear as minor features thereof.87 Directly below or
above these sketches is the entire printed name of the
founder-owners, "ERNEST & JULIO GALLO" or just their
surname "GALLO,"88which appears in different fonts,
sizes, styles and labels, unlike
petitioners’ uniform casque-font bold-lettered GALLO
mark.
Moreover, on the labels of Gallo Winery’s wines are
printed the words "VINTED AND BOTTLED BY ERNEST
& JULIO GALLO, MODESTO, CALIFORNIA."89
The many different features like color schemes, art works and
other markings of both products drown out the similarity
between them – the use of the word “GALLO” ― a family
surname for the Gallo Winery’s wines and a Spanish word for
rooster for petitioners’ cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are
actually in competition; but confusion of business may
arise between non-competing interests as well.90
Thus, apart from the strict application of Section 20 of
the Trademark Law and Article 6bis of the Paris
Convention which proscribe trademark infringement not
only of goods specified in the certificate of registration
but also of identical or similar goods, we have also
uniformly recognized and applied the modern concept of
"related goods."91Simply stated, when goods are so
related that the public may be, or is actually, deceived
and misled that they come from the same maker or
manufacturer, trademark infringement occurs.92
14
Non-competing goods may be those which, though they
are not in actual competition, are so related to each
other that it can reasonably be assumed that they
originate from one manufacturer, in which case,
confusion of business can arise out of the use of similar
marks.93 They may also be those which, being entirely
unrelated, cannot be assumed to have a common
source; hence, there is no confusion of business, even
though similar marks are used.94 Thus, there is no
trademark infringement if the public does not expect the
plaintiff to make or sell the same class of goods as those
made or sold by the defendant.95
In resolving whether goods are related,96 several factors
come into play:
(a) the business (and its location) to which the goods
belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the
nature of the package, wrapper or container 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or
essential characteristics with reference to their form,
composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate
consumption,100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually
purchased103 and
(j) the channels of trade through which the goods
flow,104 how they are distributed, marketed, displayed
and sold.105
The wisdom of this approach is its recognition that each
trademark infringement case presents its own unique set
of facts. No single factor is preeminent, nor can the
presence or absence of one determine, without analysis
of the others, the outcome of an infringement suit.
Rather, the court is required to sift the evidence relevant
to each of the criteria. This requires that the entire
panoply of elements constituting the relevant factual
landscape be comprehensively examined.106 It is a
weighing and balancing process. With reference to this
ultimate question, and from a balancing of the
determinations reached on all of the factors, a
conclusion is reached whether the parties have a right to
the relief sought.107
A very important circumstance though is whether there
exists a likelihood that an appreciable number of
ordinarily prudent purchasers will be misled, or simply
confused, as to the source of the goods in
question.108 The "purchaser" is not the "completely
unwary consumer" but is the "ordinarily intelligent buyer"
considering the type of product involved.109 He is
"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 some 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 the possibility of deception, of the person who knows
nothing about the design which has been counterfeited,
and who must be indifferent between that and the other.
The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinary intelligent
buyer who has a need to supply and is familiar with the
article that he seeks to purchase."110
Hence, in the adjudication of trademark infringement, we
give due regard to the goods’ usual purchaser’s
character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case,
petitioner’s use of the GALLO cigarette trademark is not
likely to cause confusion or mistake, or to deceive the
"ordinarily intelligent buyer" of either wines or cigarettes
or both as to the identity of the goods, their source and
origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or
competing products. Neither do they belong to the same
class of goods. Respondents’ GALLO wines belong to
Class 33 under Rule 84[a] Chapter III, Part II of the
Rules of Practice in Trademark Cases while petitioners’
GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot
serve as the decisive factor in the resolution of whether
or not wines and cigarettes are related goods. Emphasis
should be on the similarity of the products involved and
not on the arbitrary classification or general description
of their properties or characteristics. But the mere fact
that one person has adopted and used a particular
trademark for his goods does not prevent the adoption
and use of the same trademark by others on articles of a
different description. 112
Both the Makati RTC and the CA held that wines and
cigarettes are related products because: (1) "they are
related forms of vice, harmful when taken in excess, and
used for pleasure and relaxation" and (2) "they are
grouped or classified in the same section of
supermarkets and groceries."
We find these premises patently insufficient and too
arbitrary to support the legal conclusion that wines and
cigarettes are related products within the contemplation
of the Trademark Law and the Paris Convention.
First, anything –- not only wines and cigarettes ― can be
used for pleasure and relaxation and can be harmful when
taken in excess. Indeed, it would be a grave abuse of
discretion to treat wines and cigarettes as similar or related
products likely to cause confusion just because they are
pleasure-giving, relaxing or potentially harmful. Such
reasoning makes no sense.
Second, it is common knowledge that supermarkets sell
an infinite variety of wholly unrelated products and the
goods here involved, wines and cigarettes, have nothing
whatsoever in common with respect to their essential
characteristics, quality, quantity, size, including the
nature of their packages, wrappers or containers.113
15
Accordingly, the U.S. patent office and courts have
consistently held that the mere fact that goods are sold
in one store under the same roof does not automatically
mean that buyers are likely to be confused as to the
goods’ respective sources, connections or sponsorships.
The fact that different products are available in the same
store is an insufficient standard, in and of itself, to
warrant a finding of likelihood of confusion. 114
In this regard, we adopted the Director of Patents’
finding in Philippine Refining Co., Inc. vs. Ng Sam and
the Director of Patents:115
In his decision, the Director of Patents
enumerated the factors that set respondent’s
products apart from the goods of petitioner. He
opined and we quote:
"I have taken into account such factors
as probable purchaser attitude and
habits, marketing activities, retail outlets,
and commercial impression likely to be
conveyed by the trademarks if used in
conjunction with the respective goods of
the parties, I believe that ham on one
hand, and lard, butter, oil, and soap
on the other are products that would
not move in the same manner
through the same channels of trade.
They pertain to unrelated fields of
manufacture, might be distributed
and marketed under dissimilar
conditions, and are displayed
separately even though they
frequently may be sold through the
same retail food
establishments. Opposer’s products
are ordinary day-to-day household items
whereas ham is not necessarily so.
Thus, the goods of the parties are not of
a character which purchasers would
likely attribute to a common origin.
The observations and conclusion of the Director
of Patents are correct. The particular goods of
the parties are so unrelated that consumers,
would not, in any probability mistake one as the
source of origin of the product of the other.
(Emphasis supplied).
The same is true in the present case. Wines and
cigarettes are non-competing and are totally unrelated
products not likely to cause confusion vis-à-vis the
goods or the business of the petitioners and
respondents.
Wines are bottled and consumed by drinking while
cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between their
descriptive properties, physical attributes or essential
characteristics like form, composition, texture and
quality.
GALLO cigarettes are inexpensive items while GALLO
wines are not. GALLO wines are patronized by middle-
to-high-income earners while GALLO cigarettes appeal
only to simple folks like farmers, fishermen, laborers and
other low-income workers.116 Indeed, the big price
difference of these two products is an important factor in
proving that they are in fact unrelated and that they
travel in different channels of trade. There is a distinct

price segmentation based on vastly different social
classes of purchasers.117
GALLO cigarettes and GALLO wines are not sold
through the same channels of trade. GALLO cigarettes
are Philippine-made and petitioners neither claim nor
pass off their goods as imported or emanating from Gallo
Winery. GALLO cigarettes are distributed, marketed and
sold through ambulant and sidewalk vendors, small
local sari-saristores and grocery stores in Philippine rural
areas, mainly in Misamis Oriental, Pangasinan, Bohol,
and Cebu.118 On the other hand, GALLO wines are
imported, distributed and sold in the Philippines through
Gallo Winery’s exclusive contracts with a domestic
entity, which is currently Andresons. By respondents’
own testimonial evidence, GALLO wines are sold in
hotels, expensive bars and restaurants, and high-end
grocery stores and supermarkets, not through sari-
sari stores or ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying
on Carling Brewing Company vs. Philip Morris, Inc.120 to
support its finding that GALLO wines and GALLO
cigarettes are related goods. The courts a quo should
have taken into consideration the subsequent case
of IDV North America, Inc. and R & A Bailey Co. Limited
vs. S & M Brands, Inc.:121
IDV correctly acknowledges, however, that there
is no per se rule that the use of the same mark
on alcohol and tobacco products always will
result in a likelihood of confusion. Nonetheless,
IDV relies heavily on the decision in John Walker
& Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp.
254, 256 (S.D. Fla. 1954), aff’d, 222 F. 2d 460
(5th Cir. 1955), wherein the court enjoined the
use of the mark "JOHNNIE WALKER" on cigars
because the fame of the plaintiff’s mark for
scotch whiskey and because the plaintiff
advertised its scotch whiskey on, or in
connection with tobacco products. The court,
in John Walker & Sons, placed great
significance on the finding that the infringers
use was a deliberate attempt to capitalize on
the senior marks’ fame. Id. At 256. IDV also
relies on Carling Brewing Co. v. Philip
Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga.
1968), in which the court enjoined the
defendant’s use of the mark "BLACK LABEL"
for cigarettes because it was likely to cause
confusion with the plaintiff’s well-known
mark "BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be
considered in perspective of the principle
that tobacco products and alcohol products
should be considered related only in cases
involving special circumstances.Schenley
Distillers, Inc. v. General Cigar
Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785
(1970). The presence of special
circumstances has been found to exist where
there is a finding of unfair competition or
where a ‘famous’ or ‘well-known mark’ is
involved and there is a demonstrated intent
to capitalize on that mark. For example,
in John Walker & Sons, the court was persuaded
to find a relationship between products, and
hence a likelihood of confusion, because of the
16
plaintiff’s long use and extensive advertising of
its mark and placed great emphasis on the fact
that the defendant used the trademark ‘Johnnie
Walker with full knowledge of its fame and
reputation and with the intention of taking
advantage thereof.’ John Walker & Sons, 124 F.
Supp. At 256; see Mckesson & Robbins, Inc. v.
P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q.
306, 307 (1959) (holding that the decision
in John Walker & Sons was ‘merely the law on
the particular case based upon its own peculiar
facts’); see also Alfred Dunhill, 350 F. Supp. At
1363 (defendant’s adoption of ‘Dunhill’ mark was
not innocent). However, in Schenley, the court
noted that the relation between tobacco and
whiskey products is significant where a widely
known arbitrary mark has long been used for
diversified products emanating from a single
source and a newcomer seeks to use the same
mark on unrelated goods. Schenley, 427 F.2d. at
785. Significantly, in Schenley, the court looked
at the industry practice and the facts of the case
in order to determine the nature and extent of
the relationship between the mark on the
tobacco product and the mark on the alcohol
product.
The record here establishes conclusively that
IDV has never advertised BAILEYS liqueurs in
conjunction with tobacco or tobacco accessory
products and that IDV has no intent to do so.
And, unlike the defendant in Dunhill, S & M
Brands does not market bar accessories, or
liqueur related products, with its cigarettes. The
advertising and promotional materials presented
a trial in this action demonstrate a complete lack
of affiliation between the tobacco and liqueur
products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M
Brands had no intent, by adopting the family
name ‘Bailey’s’ as the mark for its cigarettes, to
capitalize upon the fame of the ‘BAILEYS’ mark
for liqueurs. See Schenley, 427 F. 2d at
785. Moreover, as will be discussed below,
and as found in Mckesson & Robbins, the
survey evidence refutes the contention that
cigarettes and alcoholic beverages are so
intimately associated in the public mind that
they cannot under any circumstances be
sold under the same mark without causing
confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.
Taken as a whole, the evidence here
demonstrates the absence of the ‘special
circumstances’ in which courts have found a
relationship between tobacco and alcohol
products sufficient to tip the similarity of goods
analysis in favor of the protected mark and
against the allegedly infringing mark. It is true
that BAILEYS liqueur, the world’s best
selling liqueur and the second best selling in
the United States, is a well-known product.
That fact alone, however, is insufficient to
invoke the special circumstances connection
here where so much other evidence and so
many other factors disprove a likelihood of
confusion. The similarity of products
 17

analysis, therefore, augers against finding ‘The Paris Convention for the
that there is a likelihood of Protection of Industrial
confusion. (Emphasis supplied). Property does not
automatically exclude all
In short, tobacco and alcohol products may be countries of the world which
considered related only in cases involving special have signed it from using a
circumstanceswhich exist only if a famous mark is tradename which happens to
involved and there is a demonstrated intent to capitalize be used in one country. To
on it. Both of these are absent in the present case. illustrate — if a taxicab or bus
company in a town in the
United Kingdom or India
THE GALLO WINE TRADEMARK IS NOT A
happens to use the
WELL-KNOWN MARK IN THE CONTEXT
tradename ‘Rapid
OF THE PARIS CONVENTION IN THIS CASE
Transportation,’ it does not
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS necessarily follow that ‘Rapid’
can no longer be registered in
Uganda, Fiji, or the
First, the records bear out that most of the trademark Philippines.
registrations took place in the late 1980s and the 1990s,
that is, after Tobacco Industries’ use of the GALLO
cigarette trademark in 1973 and petitioners’ use of the This office is not unmindful that in
(sic) the Treaty of Paris for the
same mark in 1984.
Protection of Intellectual Property
regarding well-known marks and
GALLO wines and GALLO cigarettes are neither the possible application thereof in this case.
same, identical, similar nor related goods, a requisite Petitioner, as this office sees it, is trying
elementunder both the Trademark Law and the Paris to seek refuge under its protective
Convention. mantle, claiming that the subject mark is
well known in this country at the time the
Second, the GALLO trademark cannot be considered a then application of NSR Rubber was
strong and distinct mark in the Philippines. Respondents filed.
do not dispute the documentary evidence that aside from
Gallo Winery’s GALLO trademark registration, the However, the then Minister of Trade and
Bureau of Patents, Trademarks and Technology Industry, the Hon. Roberto V. Ongpin,
Transfer also issued on September 4, 1992 Certificate of issued a memorandum dated 25
Registration No. 53356 under the Principal Register October 1983 to the Director of
approving Productos Alimenticios Gallo, S.A’s April 19, Patents, a set of guidelines in the
1990 application for GALLO trademark registration and implementation of Article 6bis of the
use for its "noodles, prepared food or canned noodles, Treaty of Paris. These conditions are:
ready or canned sauces for noodles, semolina, wheat
flour and bread crumbs, pastry, confectionery, ice cream,
a) the mark must be
honey, molasses syrup, yeast, baking powder, salt,
mustard, vinegar, species and ice."122 internationally known;

Third and most important, pursuant to our ruling
in Canon Kabushiki Kaisha vs. Court of Appeals and
NSR Rubber Corporation,123 "GALLO" cannot be
considered a "well-known" mark within the contemplation
and protection of the Paris Convention in this case since
wines and cigarettes are not identical or similar goods:
We agree with public respondents that the
controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention
is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court (203 SCRA 59
[1991]). As pointed out by the BPTTT:
"Regarding the applicability of Article
8 of the Paris Convention, this Office
believes that there is no automatic
protection afforded an entity whose
tradename is alleged to have been
infringed through the use of that
name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The
Intermediate Appellate Court, et. al.,
G.R. No. 75420, 15 November 1991, the
Honorable Supreme Court held that:
b) the subject of the right must
be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in
the same or similar kinds of
goods; and
d) the person claiming must be
the owner of the mark (The
Parties Convention
Commentary on the Paris
Convention. Article by Dr.
Bogsch, Director General of the
World Intellectual Property
Organization, Geneva,
Switzerland, 1985)’
From the set of facts found in the
records, it is ruled that the Petitioner
failed to comply with the third
requirement of the said memorandum
that is the mark must be for use in
the same or similar kinds of goods.
The Petitioner is using the mark
"CANON" for products belonging to
class 2 (paints, chemical products)
while the Respondent is using the
same mark for sandals (class 25).
 18

Hence, Petitioner's contention that its
mark is well-known at the time the
Respondent filed its application for
the same mark should
fail." (Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique
problem which must be answered by weighing the
conflicting interests of the litigants.124
Respondents claim that GALLO wines and GALLO
cigarettes flow through the same channels of trade, that
is, retail trade. If respondents’ assertion is true, then both
goods co-existed peacefully for a considerable period of
time. It took respondents almost 20 years to know about
the existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand, the long
period of time that petitioners were engaged in the
manufacture, marketing, distribution and sale of GALLO
cigarettes and, on the other, respondents’ delay in
enforcing their rights (not to mention implied consent,
acquiescence or negligence) we hold that equity, justice
and fairness require us to rule in favor of petitioners. The
scales of conscience and reason tip far more readily in
favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners
employed malice, bad faith or fraud, or that they
intended to capitalize on respondents’ goodwill in
adopting the GALLO mark for their cigarettes which are
totally unrelated to respondents’ GALLO wines. Thus,
we rule out trademark infringement on the part of
petitioners.
offering the services of another who has
identified such services in the mind of the public;
(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.
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
constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by
reason of defendant’s practices must always
appear.125 On this score, we find that petitioners never
attempted to pass off their cigarettes as those of
respondents. There is no evidence of bad faith or fraud
imputable to petitioners in using their GALLO cigarette
mark.
All told, after applying all the tests provided by the
governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable
for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review
meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of
Appeals in CA-G.R. CV No. 65175 and the November
26, 1998 decision and the June 24, 1999 order of the
Regional Trial Court of Makati, Branch 57 in Civil Case
No. 93-850 are hereby REVERSED and SET ASIDE and
the complaint against petitioners DISMISSED.
Costs against respondents.

PETITIONERS ARE ALSO NOT LIABLE SO ORDERED.

FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person

who employs deception or any other means contrary to
good faith by which he passes 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 commits any acts
calculated to produce said result, is guilty of unfair
competition. It includes the following acts:

(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

G.R. No. 143193 June 29, 2005
MELBAROSE R. SASOT and ALLANDALE R.
SASOT, petitioners,
vs.
PEOPLE OF THE PHILIPPINES, The Honorable court
of of appeals, and REBECCA G. SALVADOR,
Presiding Judge, RTC, Branch 1, Manila, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
The case subject of the present special civil action
for certiorari is a criminal prosecution against petitioners
for unfair competition under Article 189 of the Revised
Penal Code, filed before the Regional Trial Court (RTC)
of Manila (Branch 1), and docketed as Criminal Case
No. 98-166147.1
Some time in May 1997, the National Bureau of
Investigation (NBI) conducted an investigation pursuant
to a complaint by the NBA Properties, Inc., against
petitioners for possible violation of Article 189 of the
Revised Penal Code on unfair competition. In its Report
dated June 4, 1997, the NBI stated that NBA Properties,
Inc., is a foreign corporation organized under the laws of
the United States of America, and is the registered
owner of NBA trademarks and names of NBA basketball
teams such as "USA Basketball," "Chicago Bulls,"
"Orlando Magic," "Los Angeles Lakers," "Rockets,"
"Phoenix Suns," "Bullets," "Pacers," "Charlotte Hornets,"
"Blazers," "Denver Nuggets," "Sacramento Kings,"
"Miami Heat," Utah Jazz," "Detroit Pistons," "Milwaukee
Bucks," "Seattle Sonics," "Toronto Raptors," "Atlanta
Hawks," "Cavs," "Dallas Mavericks," "Minnesota
Timberwolves," and "Los Angeles Clippers." These
names are used on hosiery, footwear, t-shirts,
sweatshirts, tank tops, pajamas, sport shirts, and other
garment products, which are allegedly registered with
the Bureau of Patents, Trademarks and Technology
Transfer. The Report further stated that during the
investigation, it was discovered that petitioners are
engaged in the manufacture, printing, sale, and
distribution of counterfeit "NBA" garment products.
Hence, it recommended petitioners’ prosecution for
unfair competition under Article 189 of the Revised
Penal Code.2
In a Special Power of Attorney dated October 7, 1997,
Rick Welts, as President of NBA Properties, Inc.,
constituted the law firm of Ortega, Del Castillo, Bacorro,
Odulio, Calma & Carbonell, as the company’s attorney-
in-fact, and to act for and on behalf of the company, in
the filing of criminal, civil and administrative complaints,
among others.3 The Special Power of Attorney was
notarized by Nicole Brown of New York County and
certified by Norman Goodman, County Clerk and Clerk
of the Supreme Court of the State of New York. Consul
Cecilia B. Rebong of the Consulate General of the
Philippines, New York, authenticated the
certification.4 Welts also executed a Complaint-Affidavit
on February 12, 1998, before Notary Public Nicole J.
Brown of the State of New York.5
Thereafter, in a Resolution dated July 15, 1998,
Prosecution Attorney Aileen Marie S. Gutierrez
recommended the filing of an Information against
petitioners for violation of Article 189 of the Revised
Penal Code.6 The accusatory portion of the Information
reads:
19
That on or about May 9, 1997 and on dates prior thereto,
in the City of Manila, Philippines, and within the
jurisdiction of this Honorable Court, above named
accused ALLANDALE SASOT and MELBAROSE
SASOT of Allandale Sportslines, Inc., did then and there
willfully, unlawfully and feloniously manufacture and sell
various garment products bearing the appearance of
"NBA" names, symbols and trademarks, inducing the
public to believe that the goods offered by them are
those of "NBA" to the damage and prejudice of the NBA
Properties, Inc., the trademark owner of the "NBA".
CONTRARY TO LAW.7
Before arraignment, petitioners filed a Motion to Quash
the Information on the following grounds:
I. THAT THE FACTS CHARGED DO NOT
CONSTITUTE AN OFFENSE
II. AND THIS HONORABLE COURT HAD NO
JURISDICTION OVER THE OFFENSE CHARGED OR
THE PERSON OF THE ACCUSED8
In support of the foregoing, petitioners argue that the
fiscal should have dismissed Welts’s complaint because
under the rules, the complaint must be sworn to before
the prosecutor and the copy on record appears to be
only a fax transmittal.9 They also contend that
complainant is a foreign corporation not doing business
in the Philippines, and cannot be protected by Philippine
patent laws since it is not a registered patentee.
Petitioners aver that they have been using the business
name "ALLANDALE SPORTSLINE, INC." since 1972,
and their designs are original and do not appear to be
similar to complainant’s, and they do not use
complainant’s logo or design.10
The trial prosecutor of the RTC-Manila (Branch 1), Jaime
M. Guray, filed his Comment/Opposition to the motion to
quash, stating that he has the original copy of the
complaint, and that complainant has an attorney-in-fact
to represent it. Prosecutor Guray also contended that the
State is entitled to prosecute the offense even without
the participation of the private offended party, as the
crime charged is a public crime.11
The trial court sustained the prosecution’s arguments
and denied petitioners’ motion to quash in its Order
dated March 5, 1999.12
Petitioners filed a special civil action for certiorari with
the Court of Appeals (CA) docketed as CA-G.R. SP No.
52151 which was dismissed per its Decision dated
January 26, 2000.13 According to the CA, the petition is
not the proper remedy in assailing a denial of a motion to
quash, and that the grounds raised therein should be
raised during the trial of the case on the merits. 14 The
dispositive portion of the assailed Decision reads:
WHEREFORE, premises considered, the petition for
certiorari is hereby DISMISSED. Respondent court is
hereby ordered to conduct further proceedings with
dispatch in Criminal Case No. 98-166147.
SO ORDERED.15
Petitioners sought reconsideration of the Decision but
this was denied by the CA.16

Hence, the present petition for review on certiorari under
Rule 45 of the Rules of Court, with issues raised as
follows:
1. WHETHER A FOREIGN CORPORATION NOT
ENGAGED AND LICENSE (sic) TO DO BUSINESS IN
THE PHILIPPINES MAY MAINTAIN A CAUSE OF
ACTION FOR UNFAIR COMPETITION.
2. WHETHER AN OFFICER OF A FOREIGN
CORPORATION MAY ACT IN BEHALF OF A
CORPORATION WITHOUT AUTHORITY FROM ITS
BOARD OF DIRECTORS.
3. WHETHER A FOREIGN CORPORATION NOT
ENGAGED IN BUSINESS AND WHOSE EMBLEM IT
SOUGHT TO PROTECT IS NOT IN ACTUAL USE IS
ENTITLED TO THE PROTECTION OF THE
PHILIPPINE LAW.
4. WHETHER THE RESPONDENT REGIONAL TRIAL
COURT CORRECTLY ASSUMED JURISDICTION
OVER THE CASE AND THE PERSONS OF THE
ACCUSED.
5. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION WHEN IT DISMISSED THE
PETITION.17
Petitioners reiterate the argument that the complaint filed
by Rick Welts of the NBA Properties, Inc., is defective
and should have been dismissed by the fiscal because it
should have been personally sworn to by the
complainant before the investigating prosecutor. They
also reiterate the claim that Welts failed to show any
board resolution showing his authority to institute any
action in behalf of the company, and that the NBA’s
trademarks are not being actually used in the
Philippines, hence, they are of public dominion and
cannot be protected by Philippine patent laws.
Petitioners further contend that they have not committed
acts amounting to unfair competition.18
The Office of the Solicitor General appeared in behalf of
the People, and filed its Amended Comment to the
petition, praying for its dismissal, arguing that the CA did
not commit any grave abuse of discretion in dismissing
the petition for reasons stated in its Decision dated
January 26, 2000.19
The petition must be denied.
The Court has consistently held that a special civil action
for certiorari is not the proper remedy to assail the denial
of a motion to quash an information.20 The proper
procedure in such a case is for the accused to enter a
plea, go to trial without prejudice on his part to present
the special defenses he had invoked in his motion to
quash and, if after trial on the merits, an adverse
decision is rendered, to appeal therefrom in the manner
authorized by law.21 Thus, petitioners should not have
forthwith filed a special civil action for certiorari with the
CA and instead, they should have gone to trial and
reiterate the special defenses contained in their motion
to quash. There are no special or exceptional
circumstances22 in the present case such that immediate
resort to a filing of a petition for certiorarishould be
permitted. Clearly, the CA did not commit any grave
abuse of discretion in dismissing the petition.
20
Moreover, the Court does not find any justification for the
quashal of the Information filed against petitioners.
For one, while petitioners raise in their motion to quash
the grounds that the facts charged do not constitute an
offense and that the trial court has no jurisdiction over
the offense charged or the person of the accused, 23 their
arguments focused on an alleged defect in the complaint
filed before the fiscal, complainant’s capacity to sue and
petitioners’ exculpatory defenses against the crime of
unfair competition.
Section 3, Rule 117 of the 1985 Rules of Criminal
Procedure, which was then in force at the time the
alleged criminal acts were committed, enumerates the
grounds for quashing an information, to wit:
a) That the facts charged do not constitute an
offense;
b) That the court trying the case has no
jurisdiction over the offense charged or the
person of the accused;
c) That the officer who filed the information had
no authority to do so;
d) That it does not conform substantially to the
prescribed form;
e) That more than one offense is charged except
in those cases in which existing laws prescribe a
single punishment for various offenses;
f) That the criminal action or liability has been
extinguished;
g) That it contains averments which, if true,
would constitute a legal excuse or justification;
and
h) That the accused has been previously
convicted or in jeopardy of being convicted, or
acquitted of the offense charged.
Nowhere in the foregoing provision is there any mention
of the defect in the complaint filed before the fiscal and
the complainant’s capacity to sue as grounds for a
motion to quash.
For another, under Section 3, Rule 112 of the 1985
Rules of Criminal Procedure, a complaint is substantially
sufficient if it states the known address of the
respondent, it is accompanied by complainant’s affidavit
and his witnesses and supporting documents, and the
affidavits are sworn to before any fiscal, state prosecutor
or government official authorized to administer oath,
or in their absence or unavailability, a notary public who
must certify that he personally examined the affiants and
that he is satisfied that they voluntarily executed and
understood their affidavits. All these have been duly
satisfied in the complaint filed before Prosecution
Attorney Aileen Marie S. Gutierrez. It must be noted that
even the absence of an oath in the complaint does not
necessarily render it invalid.24 Want of oath is a mere
defect of form, which does not affect the substantial
rights of the defendant on the merits.25
In this case, Welts’s Complaint-Affidavit contains an
acknowledgement by Notary Public Nicole Brown of the
 21

State of New York that the same has been subscribed
and sworn to before her on February 12, 1998,26 duly
authenticated by the Philippine Consulate. While the
copy on record of the complaint-affidavit appears to be
merely a photocopy thereof, Prosecution Attorney
Gutierrez stated that complainant’s representative will
present the authenticated notarized original in
court,27 and Prosecutor Guray manifested that the
original copy is already on hand.28 It is apt to state at this
point that the prosecutor enjoys the legal presumption of
regularity in the performance of his duties and functions,
which in turn gives his report the presumption of
accuracy.29
Moreover, records show that there are other supporting
documents from which the prosecutor based his
recommendation, to wit:
(1) The NBI Report dated June 4, 1997,
containing an account of the investigation
conducted from April 30, 1997 to May 9, 1997,
and the subsequent search and seizure of
several items from petitioners’ establishment;30
(2) The letter dated May 8, 1997 from the law
firm of Ortega, Del Castillo, Bacorro, Odulio,
Calma & Carbonell to the NBI, seeking
assistance in stopping the illegal manufacture,
distribution and sale of "fake products bearing
the ‘NBA’ trademark, and in prosecuting the
proprietors of aforesaid factory;"31 and
(3) The Joint Affidavit executed by Rechie D.
Malicse and Dalisay P. Bal-ot of the Pinkerton
Consulting Services (Phils.) Inc., which was
certified to by Prosecution Attorney Gutierrez,
attesting to their findings that petitioners were
found to be manufacturing, printing, selling, and
distributing counterfeit "NBA" garment
products.32
Consequently, if the information is valid on its face, and
there is no showing of manifest error, grave abuse of
discretion and prejudice on the part of public prosecutor,
as in the present case, the trial court should respect
such determination.33
aggrieved party since a criminal offense is
essentially an act against the State. It is the latter
which is principally the injured party although there
is a private right violated. Petitioner's capacity to
sue would become, therefore, of not much
significance in the main case. We cannot allow a
possible violator of our criminal statutes to escape
prosecution upon a far-fetched contention that the
aggrieved party or victim of a crime has no standing to
sue.
In upholding the right of the petitioner to maintain the
present suit before our courts for unfair competition or
infringement of trademarks of a foreign corporation, we
are moreover recognizing our duties and the rights of
foreign states under the Paris Convention for the
Protection of Industrial Property to which the Philippines
and France are parties. We are simply interpreting and
enforcing a solemn international commitment of the
Philippines embodied in a multilateral treaty to which we
are a party and which we entered into because it is in
our national interest to do so.36 (Emphasis supplied)
Lastly, with regard to petitioners’ arguments that the
NBA Properties, Inc., is not entitled to protection under
Philippine patent laws since it is not a registered
patentee, that they have not committed acts amounting
to unfair competition for the reason that their designs are
original and do not appear to be similar to complainant’s,
and they do not use complainant’s logo or design, the
Court finds that these are matters of defense that are
better ventilated and resolved during trial on the merits
of the case.
WHERFORE, the petition is DENIED for lack of merit.
Let the records of this case be REMANDED to the
Regional Trial Court of Manila (Branch 24) where
Criminal Case No. 98-166147 is presently assigned, for
further proceedings with reasonable dispatch.
SO ORDERED.

More importantly, the crime of Unfair Competition

punishable under Article 189 of the Revised Penal
Code34 is a public crime. It is essentially an act against
the State and it is the latter which principally stands as
the injured party. The complainant’s capacity to sue in
such case becomes immaterial.

In La Chemise Lacoste, S.A. vs. Fernandez,35 a case

akin to the present dispute, as it involved the crime of
Unfair Competition under Article 189 of the Revised
Penal Code, and the quashal of search warrants issued
against manufacturers of garments bearing the same
trademark as that of the petitioner, the Court succinctly
ruled that:

More important is the nature of the case which led to this

petition. What preceded this petition for certiorari was a
letter-complaint filed before the NBI charging Hemandas
with a criminal offense, i.e., violation of Article 189 of the
Revised Penal Code. If prosecution follows after the
completion of the preliminary investigation being
conducted by the Special Prosecutor the information
shall be in the name of the People of the Philippines
and no longer the petitioner which is only an

G.R. No. 115758 March 19, 2002
ELIDAD C. KHO, doing business under the name and
style of KEC COSMETICS LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE
GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
Decision1 dated May 24, 1993 of the Court of Appeals
setting aside and declaring as null and void the
Orders2 dated February 10, 1992 and March 19, 1992 of
the Regional Trial Court, Branch 90, of Quezon City
granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a
complaint for injunction and damages with a prayer for
the issuance of a writ of preliminary injunction, docketed
as Civil Case No. Q-91-10926, against the respondents
Summerville General Merchandising and Company
(Summerville, for brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing
business under the name and style of KEC Cosmetics
Laboratory, is the registered owner of the
copyrights Chin Chun Su and Oval Facial Cream
Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also
has patent rights on Chin Chun Su & Device and Chin
Chun Su for medicated cream after purchasing the same
from Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent Office on
February 7, 1980 under Registration Certificate No.
4529; that respondent Summerville advertised and sold
petitioner's cream products under the brand name Chin
Chun Su, in similar containers that petitioner uses,
thereby misleading the public, and resulting in the
decline in the petitioner's business sales and income;
and, that the respondents should be enjoined from
allegedly infringing on the copyrights and patents of the
petitioner.
The respondents, on the other hand, alleged as their
defense that Summerville is the exclusive and
authorized importer, re-packer and distributor of Chin
Chun Su products manufactured by Shun Yi Factory of
Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade
name Chin Chun Su Medicated Cream with the
Philippine Patent Office and other appropriate
governmental agencies; that KEC Cosmetics Laboratory
of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the
authority of Quintin Cheng, assignee of the patent
registration certificate, to distribute and market Chin
Chun Suproducts in the Philippines had already been
terminated by the said Taiwanese Manufacturing
Company.
After due hearing on the application for preliminary
injunction, the trial court granted the same in an Order
dated February 10, 1992, the dispositive portion of which
reads:
22
ACCORDINGLY, the application of plaintiff
Elidad C. Kho, doing business under the style of
KEC Cosmetic Laboratory, for preliminary
injunction, is hereby granted. Consequentially,
plaintiff is required to file with the Court a bond
executed to defendants in the amount of five
hundred thousand pesos (P500,000.00) to the
effect that plaintiff will pay to defendants all
damages which defendants may sustain by
reason of the injunction if the Court should finally
decide that plaintiff is not entitled thereto.
SO ORDERED.3
The respondents moved for reconsideration but their
motion for reconsideration was denied by the trial court
in an Order dated March 19, 1992.4
On April 24, 1992, the respondents filed a petition
for certiorari with the Court of Appeals, docketed as CA-
G.R. SP No. 27803, praying for the nullification of the
said writ of preliminary injunction issued by the trial
court. After the respondents filed their reply and almost a
month after petitioner submitted her comment, or on
August 14 1992, the latter moved to dismiss the petition
for violation of Supreme Court Circular No. 28-91, a
circular prohibiting forum shopping. According to the
petitioner, the respondents did not state the docket
number of the civil case in the caption of their petition
and, more significantly, they did not include therein a
certificate of non-forum shopping. The respondents
opposed the petition and submitted to the appellate court
a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a
Decision in CA-G.R. SP No. 27803 ruling in favor of the
respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due
course and the orders of respondent court dated
February 10, 1992 and March 19, 1992 granting
the writ of preliminary injunction and denying
petitioners' motion for reconsideration are
hereby set aside and declared null and void.
Respondent court is directed to forthwith
proceed with the trial of Civil Case No. Q-91-
10926 and resolve the issue raised by the
parties on the merits.
SO ORDERED.5
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname
"Chin Chun Su" by KEC with the supplemental
register of the Bureau of Patents, Trademarks
and Technology Transfer cannot be equated
with registration in the principal register, which is
duly protected by the Trademark
Law.1âwphi1.nêt
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs.
Fernandez, 129 SCRA 373, 393:
"Registration in the Supplemental
Register, therefore, serves as notice that
the registrant is using or has
appropriated the trademark. By the very

fact that the trademark cannot as yet be
on guard and there are certain defects,
some obstacles which the use must still
overcome before he can claim legal
ownership of the mark or ask the courts
to vindicate his claims of an exclusive
right to the use of the same. It would be
deceptive for a party with nothing more
than a registration in the Supplemental
Register to posture before courts of
justice as if the registration is in the
Principal Register.
The reliance of the private respondent
on the last sentence of the Patent office
action on application Serial No. 30954
that 'registrants is presumed to be the
owner of the mark until after the
registration is declared cancelled' is,
therefore, misplaced and grounded on
shaky foundation. The supposed
presumption not only runs counter to the
precept embodied in Rule 124 of the
Revised Rules of Practice before the
Philippine Patent Office in Trademark
Cases but considering all the facts
ventilated before us in the four
interrelated petitions involving the
petitioner and the respondent, it is
devoid of factual basis. As even in cases
where presumption and precept may
factually be reconciled, we have held
that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R.
No. L-10612, May 30, 1958,
Unreported). One may be declared an
unfair competitor even if his competing
trademark is registered (Parke, Davis &
Co. v. Kiu Foo & Co., et al., 60 Phil 928;
La Yebana Co. v. chua Seco & Co., 14
Phil 534)."6
The petitioner filed a motion for reconsideration. This
she followed with several motions to declare
respondents in contempt of court for publishing
advertisements notifying the public of the promulgation
of the assailed decision of the appellate court and stating
that genuine Chin Chun Su products could be obtained
only from Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear
petitioner's complaint for final injunction and damages.
On October 22, 1993, the trial court rendered a
Decision7 barring the petitioner from using the trademark
Chin Chun Su and upholding the right of the
respondents to use the same, but recognizing the
copyright of the petitioner over the oval shaped container
of her beauty cream. The trial court did not award
damages and costs to any of the parties but to their
respective counsels were awarded Seventy-Five
Thousand Pesos (P75,000.00) each as attorney's fees.
The petitioner duly appealed the said decision to the
Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a
Resolution8 denying the petitioner's motions for
reconsideration and for contempt of court in CA-G.R. SP
No. 27803.
Hence, this petition anchored on the following
assignment of errors:
23
I
RESPONDENT HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO RULE ON
PETITIONER'S MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN REFUSING TO PROMPTLY
RESOLVE PETITIONER'S MOTION FOR
RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF
PETITIONER'S MOTION FOR
RECONSIDERATION, THE HONORABLE
COURT OF APPEALS DENIED PETITIONER'S
RIGHT TO SEEK TIMELY APPELLATE RELIEF
AND VIOLATED PETITIONER'S RIGHT TO
DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO CITE THE
PRIVATE RESPONDENTS IN CONTEMPT.9
The petitioner faults the appellate court for not
dismissing the petition on the ground of violation of
Supreme Court Circular No. 28-91. Also, the petitioner
contends that the appellate court violated Section 6,
Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for
reconsideration within ninety (90) days from the time it is
submitted for resolution. The appellate court ruled only
after the lapse of three hundred fifty-four (354) days, or
on June 3, 1994. In delaying the resolution thereof, the
appellate court denied the petitioner's right to seek the
timely appellate relief. Finally, petitioner describes as
arbitrary the denial of her motions for contempt of court
against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of
Civil Procedure, one of the grounds for the issuance of a
writ of preliminary injunction is a proof that the applicant
is entitled to the relief demanded, and the whole or part
of such relief consists in restraining the commission or
continuance of the act or acts complained of, either for a
limited period or perpetually. Thus, a preliminary
injunction order may be granted only when the
application for the issuance of the same shows facts
entitling the applicant to the relief demanded.10 This is
the reason why we have ruled that it must be shown that
the invasion of the right sought to be protected is
material and substantial, that the right of complainant is
clear and unmistakable, and, that there is an urgent and
paramount necessity for the writ to prevent serious
damage.11

In the case at bar, the petitioner applied for the issuance
of a preliminary injunctive order on the ground that she is
entitled to the use of the trademark on Chin Chun
Su and its container based on her copyright and patent
over the same. We first find it appropriate to rule on
whether the copyright and patent over the name and
container of a beauty cream product would entitle the
registrant to the use and ownership over the same to the
exclusion of 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.12 In relation
thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. 13 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.14 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.15
Petitioner has no right to support her claim for the
exclusive use of the subject trade name and its
container. The name and container of a beauty cream
product are proper subjects of a trademark inasmuch as
the same falls squarely within its definition. In order to be
entitled to exclusively use the same in the sale of the
beauty cream product, the user must sufficiently prove
that she registered or used it before anybody else did.
The petitioner's copyright and patent registration of the
name and container would not guarantee her the right to
the exclusive use of the same for the reason that they
are not appropriate subjects of the said intellectual
rights. Consequently, a preliminary injunction order
cannot be issued for the reason that the petitioner has
not proven that she has a clear right over the said name
and container to the exclusion of others, not having
proven that she has registered a trademark thereto or
used the same before anyone did.
We cannot likewise overlook the decision of the trial
court in the case for final injunction and damages. The
dispositive portion of said decision held that the
petitioner does not have trademark rights on the name
and container of the beauty cream product. The said
decision on the merits of the trial court rendered the
issuance of the writ of a preliminary injunction moot and
academic notwithstanding the fact that the same has
been appealed in the Court of Appeals. This is
supported by our ruling in La Vista Association, Inc. v.
Court of Appeals16, to wit:
Considering that preliminary injunction is a
provisional remedy which may be granted at any
time after the commencement of the action and
before judgment when it is established that the
plaintiff is entitled to the relief demanded and
only when his complaint shows facts entitling
such reliefs xxx and it appearing that the trial
court had already granted the issuance of a final
injunction in favor of petitioner in its decision
rendered after trial on the merits xxx the Court
resolved to Dismiss the instant petition having
been rendered moot and academic. An
injunction issued by the trial court after it has
already made a clear pronouncement as to the
24
plaintiff's right thereto, that is, after the same
issue has been decided on the merits, the trial
court having appreciated the evidence
presented, is proper, notwithstanding the fact
that the decision rendered is not yet final xxx.
Being an ancillary remedy, the proceedings for
preliminary injunction cannot stand separately or
proceed independently of the decision rendered
on the merit of the main case for injunction. The
merit of the main case having been already
determined in favor of the applicant, the
preliminary determination of its non-existence
ceases to have any force and effect. (italics
supplied)
La Vista categorically pronounced that the issuance of a
final injunction renders any question on the preliminary
injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal.
Conversely, a decision denying the applicant-plaintiff's
right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution
of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in
not dismissing the petition for certiorari for non-
compliance with the rule on forum shopping. We
disagree. First, the petitioner improperly raised the
technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the
petition for certiorari filed in the appellate court. This is
prohibited by Section 6, Rule 66 of the Revised Rules of
Civil Procedure which provides that "(I)n petitions
for certiorari before the Supreme Court and the Court of
Appeals, the provisions of Section 2, Rule 56, shall be
observed. Before giving due course thereto, the court
may require the respondents to file their comment
to, and not a motion to dismiss, the petition xxx (italics
supplied)". Secondly, the issue was raised one month
after petitioner had filed her answer/comment and after
private respondent had replied thereto. Under Section 1,
Rule 16 of the Revised Rules of Civil Procedure, a
motion to dismiss shall be filed within the time for but
before filing the answer to the complaint or pleading
asserting a claim. She therefore could no longer submit
a motion to dismiss nor raise defenses and objections
not included in the answer/comment she had earlier
tendered. Thirdly, substantial justice and equity require
this Court not to revive a dissolved writ of injunction in
favor of a party without any legal right thereto merely on
a technical infirmity. The granting of an injunctive writ
based on a technical ground rather than compliance with
the requisites for the issuance of the same is contrary to
the primary objective of legal procedure which is to serve
as a means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court
unduly delayed the resolution of her motion for
reconsideration. But we find that petitioner contributed to
this delay when she filed successive contentious
motions in the same proceeding, the last of which was
on October 27, 1993, necessitating counter-
manifestations from private respondents with the last
one being filed on November 9, 1993. Nonetheless, it is
well-settled that non-observance of the period for
deciding cases or their incidents does not render such
judgments ineffective or void.17With respect to the
purported damages she suffered due to the alleged
delay in resolving her motion for reconsideration, we find
that the said issue has likewise been rendered moot and
academic by our ruling that she has no right over the

trademark and, consequently, to the issuance of a writ of
preliminary injunction.1âwphi1.nêt
Finally, we rule that the Court of Appeals correctly
denied the petitioner's several motions for contempt of
court. There is nothing contemptuous about the
advertisements complained of which, as regards the
proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the
promulgation of the assailed Decision of the appellate
court. Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said decision
nullifying the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision
and Resolution of the Court of Appeals dated May 24,
1993 and June 3, 1994, respectively, are
hereby AFFIRMED. With costs against the petitioner.
SO ORDERED.
25
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, petitioner Pearl & Dean (Phil.)
Inc. (P & D) assails the May 22, 2001 decision1 of the
Court of Appeals reversing the October 31, 1996
decision2 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
The May 22, 2001 decision of the Court of
Appeals3 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 Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering
SM Cubao and SM Makati to SMI’s 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, SMI’s 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
Shoemart’s 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 SMI’s 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 SMI’s 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 twenty-four (224) light boxes and
NEMI took down its advertisements for "Poster Ads"
from the lighted display units in SMI’s 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 Dean’s
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
SMI’s 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 Dean’s Certification of
Copyright Registration No. PD-R-2558 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
SMI’s averments, admissions and denials and prayed for
similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
26
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 - ₱16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiff’s copyright
from 1991 to 1992
(b) moral damages - ₱1,000.000.00
(c) exemplary damages - ₱1,000,000.00
(d) attorney’s fees - ₱1,000,000.00
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 plaintiff’s light boxes and its
trademark "Poster Ads".
Defendants’ counterclaims are hereby ordered
dismissed for lack of merit.
SO ORDERED.4
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-
appellant’s 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 "Selden’s Condensed Ledger or
Bookkeeping Simplified" which purported to explain 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 Selden’s
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 plaintiff’s
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
Dean’s copyright over the technical drawings of the
latter’s 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 registrant’s ownership of
the mark or trade-name, and of the registrant’s 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
27
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 Dean’s 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 Dean’s 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 above-entitled case for lack of merit.5
Dissatisfied with the above decision, petitioner P & D
filed the instant petition assigning the following errors for
the Court’s 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 & DEAN’S 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 LATTER’S
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, ATTORNEY’S FEES AND COSTS
OF SUIT.6
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 & D’s 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, petitioner’s 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.
28
First, petitioner’s 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 petitioner’s 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 conditions
specified in the statute.7 Accordingly, it can cover only
the works falling within the statutory enumeration or
description.8
P & D secured its copyright under the classification class
"O" work. This being so, petitioner’s 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 application 9 of
the law’s 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 & D’s 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. SMI’s
and NEMI’s 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 petitioner’s
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 a literary not an artistic

work but an "engineering or marketing
invention."10 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. Court of Appeals,11 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 & D’s 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
Systems, Inc. vs. Court of Appeals,12 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, selling or
using the invention.13 On the assumption that petitioner’s
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 public domain through
disclosure.14 Ideas, once disclosed to the public without
the protection of a valid patent, are subject to
appropriation without significant restraint.15
On one side of the coin is the public which will benefit
from new ideas; on the other are the inventors who must
29
be protected. As held in Bauer & Cie vs.
O’Donnel,16 "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 are thus enabled to
practice it and profit by its use."17
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 domain remain there for the free use
of the public."18
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 technological
advance in art."19
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 copyright from the moment of creation 20 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 box’s 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.
In the oft-cited case of Baker vs. Selden21 , 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
plaintiff’s 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.
30
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 petitioner’s 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 newsletters."22 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. Intermediate Appellate
Court,23where 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 of a
different description."24 Faberge, Inc. was correct and
was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.25
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.1âwphi1
ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair
competition, a situation which was possible even if P & D
had no registration.26 However, while the petitioner’s
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 protection against
unfair competition.27 In this case, there was no evidence
that P & D’s use of "Poster Ads" was distinctive or well-
known. As noted by the Court of Appeals, petitioner’s
expert witnesses himself had testified that " ‘Poster Ads’
was too generic a name. So it was difficult to identify it
with any company, honestly speaking."28 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 property.29 The admission by petitioner’s
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
AFFIRMED in toto.
SO ORDERED.
31
G.R. No. 167715 November 17, 2010
PHIL PHARMAWEALTH, INC., Petitioner,
vs.
PFIZER, INC. and PFIZER (PHIL.) INC., Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review
on certiorari seeking to annul and set aside the
Resolutions dated January 18, 2005 1 and April 11,
20052 by the Court of Appeals (CA) in CA-G.R. SP No.
82734.
The instant case arose from a Complaint3 for patent
infringement filed against petitioner Phil Pharmawealth,
Inc. by respondent companies, Pfizer, Inc. and Pfizer
(Phil.), Inc., with the Bureau of Legal Affairs of the
Intellectual Property Office (BLA-IPO). The Complaint
alleged as follows:
xxxx
6. Pfizer is the registered owner of Philippine
Letters Patent No. 21116 (the "Patent") which
was issued by this Honorable Office on July 16,
1987. The patent is valid until July 16, 2004. The
claims of this Patent are directed to "a method of
increasing the effectiveness of a beta-lactam
antibiotic in a mammalian subject, which
comprises co-administering to said subject a
beta-lactam antibiotic effectiveness increasing
amount of a compound of the formula IA." The
scope of the claims of the Patent extends to a
combination of penicillin such as ampicillin
sodium and beta-lactam antibiotic like sulbactam
sodium.
7. Patent No. 21116 thus covers ampicillin
sodium/sulbactam sodium (hereafter "Sulbactam
Ampicillin"). Ampicillin sodium is a specific
example of the broad beta-lactam antibiotic
disclosed and claimed in the Patent. It is the
compound which efficacy is being enhanced by
co-administering the same with sulbactam
sodium. Sulbactam sodium, on the other hand,
is a specific compound of the formula IA
disclosed and claimed in the Patent.
8. Pfizer is marketing Sulbactam Ampicillin
under the brand name "Unasyn." Pfizer's
"Unasyn" products, which come in oral and IV
formulas, are covered by Certificates of Product
Registration ("CPR") issued by the Bureau of
Food and Drugs ("BFAD") under the name of
complainants. The sole and exclusive distributor
of "Unasyn" products in the Philippines is Zuellig
Pharma Corporation, pursuant to a Distribution
Services Agreement it executed with Pfizer
Phils. on January 23, 2001.
9. Sometime in January and February 2003,
complainants came to know that respondent
[herein petitioner] submitted bids for the supply
of Sulbactam Ampicillin to several hospitals
without the consent of complainants and in
violation of the complainants' intellectual
property rights. x x x

xxxx
10. Complainants thus wrote the above hospitals
and demanded that the latter immediately cease
and desist from accepting bids for the supply [of]
Sulbactam Ampicillin or awarding the same to
entities other than complainants. Complainants,
in the same letters sent through undersigned
counsel, also demanded that respondent
immediately withdraw its bids to supply
Sulbactam Ampicillin.
11. In gross and evident bad faith, respondent
and the hospitals named in paragraph 9 hereof,
willfully ignored complainants' just, plain and
valid demands, refused to comply therewith and
continued to infringe the Patent, all to the
damage and prejudice of complainants. As
registered owner of the Patent, Pfizer is entitled
to protection under Section 76 of the IP Code.
x x x x4
Respondents prayed for permanent injunction, damages
and the forfeiture and impounding of the alleged
infringing products. They also asked for the issuance of
a temporary restraining order and a preliminary
injunction that would prevent herein petitioner, its
agents, representatives and assigns, from importing,
distributing, selling or offering the subject product for
sale to any entity in the Philippines.
In an Order5 dated July 15, 2003 the BLA-IPO issued a
preliminary injunction which was effective for ninety days
from petitioner's receipt of the said Order.
Prior to the expiration of the ninety-day period,
respondents filed a Motion for Extension of Writ of
Preliminary Injunction6 which, however, was denied by
the BLA-IPO in an Order7 dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the
same was also denied by the BLA-IPO in a
Resolution8dated January 23, 2004.
Respondents then filed a special civil action for certiorari
with the CA assailing the October 15, 2003 and January
23, 2004 Resolutions of the BLA-IPO. Respondents also
prayed for the issuance of a preliminary mandatory
injunction for the reinstatement and extension of the writ
of preliminary injunction issued by the BLA-IPO.
While the case was pending before the CA, respondents
filed a Complaint9 with the Regional Trial Court (RTC) of
Makati City for infringement and unfair competition with
damages against herein petitioner. In said case,
respondents prayed for the issuance of a temporary
restraining order and preliminary injunction to prevent
herein petitioner from importing, distributing, selling or
offering for sale sulbactam ampicillin products to any
entity in the Philippines. Respondents asked the trial
court that, after trial, judgment be rendered awarding
damages in their favor and making the injunction
permanent.
On August 24, 2004, the RTC of Makati City issued an
Order10 directing the issuance of a temporary restraining
order conditioned upon respondents' filing of a bond.
32
In a subsequent Order11 dated April 6, 2005, the same
RTC directed the issuance of a writ of preliminary
injunction "prohibiting and restraining [petitioner], its
agents, representatives and assigns from importing,
distributing or selling Sulbactam Ampicillin products to
any entity in the Philippines."
Meanwhile, on November 16, 2004, petitioner filed a
Motion to Dismiss12 the petition filed with the CA on the
ground of forum shopping, contending that the case filed
with the RTC has the same objective as the petition filed
with the CA, which is to obtain an injunction prohibiting
petitioner from importing, distributing and selling
Sulbactam Ampicillin products.
On January 18, 2005, the CA issued its questioned
Resolution13 approving the bond posted by respondents
pursuant to the Resolution issued by the appellate court
on March 23, 2004 which directed the issuance of a
temporary restraining order conditioned upon the filing of
a bond. On even date, the CA issued a temporary
restraining order14 which prohibited petitioner "from
importing, distributing, selling or offering for sale
Sulbactam Ampicillin products to any hospital or to any
other entity in the Philippines, or from infringing Pfizer
Inc.'s Philippine Patent No. 21116 and impounding all
the sales invoices and other documents evidencing
sales by [petitioner] of Sulbactam Ampicillin products."
On February 7, 2005, petitioner again filed a Motion to
Dismiss15 the case for being moot and academic,
contending that respondents' patent had already lapsed.
In the same manner, petitioner also moved for the
reconsideration of the temporary restraining order issued
by the CA on the same basis that the patent right sought
to be protected has been extinguished due to the lapse
of the patent license and on the ground that the CA has
no jurisdiction to review the order of the BLA-IPO as said
jurisdiction is vested by law in the Office of the Director
General of the IPO.
On April 11, 2005, the CA rendered its presently
assailed Resolution denying the Motion to Dismiss,
dated November 16, 2004, and the motion for
reconsideration, as well as Motion to Dismiss, both dated
February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an
action of patent infringement when the patent
allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the
decisions of the Director of Legal Affairs of the
Intellectual Property Office?
c) Is there forum shopping when a party files two
actions with two seemingly different causes of
action and yet pray for the same relief?16
In the first issue raised, petitioner argues that
respondents' exclusive right to monopolize the subject
matter of the patent exists only within the term of the
patent. Petitioner claims that since respondents' patent
expired on July 16, 2004, the latter no longer possess
any right of monopoly and, as such, there is no more
basis for the issuance of a restraining order or injunction
against petitioner insofar as the disputed patent is
concerned.

The Court agrees.
Section 37 of Republic Act No. (RA) 165,17 which was
the governing law at the time of the issuance of
respondents' patent, provides:
Section 37. Rights of patentees. A patentee shall have
the exclusive right to make, use and sell the patented
machine, article or product, and to use the patented
process for the purpose of industry or commerce,
throughout the territory of the Philippines for the term of
the patent; and such making, using, or selling by any
person without the authorization of the patentee
constitutes infringement of the patent.18
It is clear from the above-quoted provision of law that the
exclusive right of a patentee to make, use and sell a
patented product, article or process exists only during
the term of the patent. In the instant case, Philippine
Letters Patent No. 21116, which was the basis of
respondents in filing their complaint with the BLA-IPO,
was issued on July 16, 1987. This fact was admitted by
respondents themselves in their complaint. They also
admitted that the validity of the said patent is until July
16, 2004, which is in conformity with Section 21 of RA
165, providing that the term of a patent shall be
seventeen (17) years from the date of issuance thereof.
Section 4, Rule 129 of the Rules of Court provides that
an admission, verbal or written, made by a party in the
course of the proceedings in the same case, does not
require proof and that the admission may be
contradicted only by showing that it was made through
palpable mistake or that no such admission was made.
In the present case, there is no dispute as to
respondents' admission that the term of their patent
expired on July 16, 2004. Neither is there evidence to
show that their admission was made through palpable
mistake. Hence, contrary to the pronouncement of the
CA, there is no longer any need to present evidence on
the issue of expiration of respondents' patent.
On the basis of the foregoing, the Court agrees with
petitioner that after July 16, 2004, respondents no longer
possess the exclusive right to make, use and sell the
articles or products covered by Philippine Letters Patent
No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the
requirements for the issuance of a writ of preliminary
injunction, viz:
(a) That the applicant is entitled to the relief
demanded, and the whole or part of such relief
consists in restraining the commission or
continuance of the acts complained of, or in
requiring the performance of an act or acts,
either for a limited period or perpetually;
(b) That the commission, continuance or non-
performance of the act or acts complained of
during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, or agency or a person is
doing, threatening, or attempting to do, or is
procuring or suffering to be done, some act or
acts probably in violation of the rights of the
applicant respecting the subject of the action or
proceeding, and tending to render the judgment
ineffectual.
33
In this connection, pertinent portions of Section 5, Rule
58 of the same Rules provide that if the matter is of
extreme urgency and the applicant will suffer grave
injustice and irreparable injury, a temporary restraining
order may be issued ex parte.
From the foregoing, it can be inferred that two requisites
must exist to warrant the issuance of an injunctive relief,
namely: (1) the existence of a clear and unmistakable
right that must be protected; and (2) an urgent and
paramount necessity for the writ to prevent serious
damage.19
In the instant case, it is clear that when the CA issued its
January 18, 2005 Resolution approving the bond filed by
respondents, the latter no longer had a right that must be
protected, considering that Philippine Letters Patent No.
21116 which was issued to them already expired on July
16, 2004. Hence, the issuance by the CA of a temporary
restraining order in favor of the respondents is not
proper.
In fact, the CA should have granted petitioner's motion to
dismiss the petition for certiorari filed before it as the only
issue raised therein is the propriety of extending the writ
of preliminary injunction issued by the BLA-IPO. Since
the patent which was the basis for issuing the injunction,
was no longer valid, any issue as to the propriety of
extending the life of the injunction was already rendered
moot and academic.
As to the second issue raised, the Court, is not
persuaded by petitioner's argument that, pursuant to the
doctrine of primary jurisdiction, the Director General of
the IPO and not the CA has jurisdiction to review the
questioned Orders of the Director of the BLA-IPO.
It is true that under Section 7(b) of RA 8293, otherwise
known as the Intellectual Property Code of the
Philippines, which is the presently prevailing law, the
Director General of the IPO exercises exclusive
appellate jurisdiction over all decisions rendered by the
Director of the BLA-IPO. However, what is being
questioned before the CA is not a decision, but an
interlocutory order of the BLA-IPO denying respondents'
motion to extend the life of the preliminary injunction
issued in their favor.
RA 8293 is silent with respect to any remedy available to
litigants who intend to question an interlocutory order
issued by the BLA-IPO. Moreover, Section 1(c), Rule 14
of the Rules and Regulations on Administrative
Complaints for Violation of Laws Involving Intellectual
Property Rights simply provides that interlocutory orders
shall not be appealable. The said Rules and Regulations
do not prescribe a procedure within the administrative
machinery to be followed in assailing orders issued by
the BLA-IPO pending final resolution of a case filed with
them. Hence, in the absence of such a remedy, the
provisions of the Rules of Court shall apply in a
suppletory manner, as provided under Section 3, Rule 1
of the same Rules and Regulations. Hence, in the
present case, respondents correctly resorted to the filing
of a special civil action for certiorari with the CA to
question the assailed Orders of the BLA-IPO, as they
cannot appeal therefrom and they have no other plain,
speedy and adequate remedy in the ordinary course of
law. This is consistent with Sections 120 and 4,21 Rule 65
of the Rules of Court, as amended.

In the first place, respondents' act of filing their complaint
originally with the BLA-IPO is already in consonance with
the doctrine of primary jurisdiction.
This Court has held that:
[i]n cases involving specialized disputes, the practice
has been to refer the same to an administrative agency
of special competence in observance of the doctrine of
primary jurisdiction. The Court has ratiocinated that it
cannot or will not determine a controversy involving a
question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that
question by the administrative tribunal, where the
question demands the exercise of sound administrative
discretion requiring the special knowledge, experience
and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the premises of the
regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its
jurisdiction until after an administrative agency has
determined some question or some aspect of some
question arising in the proceeding before the court. It
applies where the claim is originally cognizable in the
courts and comes into play whenever enforcement of the
claim requires the resolution of issues which, under a
regulatory scheme, has been placed within the special
competence of an administrative body; in such case, the
judicial process is suspended pending referral of such
issues to the administrative body for its view.22
Based on the foregoing, the Court finds that
respondents' initial filing of their complaint with the BLA-
IPO, instead of the regular courts, is in keeping with the
doctrine of primary jurisdiction owing to the fact that the
determination of the basic issue of whether petitioner
violated respondents' patent rights requires the exercise
by the IPO of sound administrative discretion which is
based on the agency's special competence, knowledge
and experience.
However, the propriety of extending the life of the writ of
preliminary injunction issued by the BLA-IPO in the
exercise of its quasi-judicial power is no longer a matter
that falls within the jurisdiction of the said administrative
agency, particularly that of its Director General. The
resolution of this issue which was raised before the CA
does not demand the exercise by the IPO of sound
administrative discretion requiring special knowledge,
experience and services in determining technical and
intricate matters of fact. It is settled that one of the
exceptions to the doctrine of primary jurisdiction is where
the question involved is purely legal and will ultimately
have to be decided by the courts of justice. 23 This is the
case with respect to the issue raised in the petition filed
with the CA.
Moreover, as discussed earlier, RA 8293 and its
implementing rules and regulations do not provide for a
procedural remedy to question interlocutory orders
issued by the BLA-IPO. In this regard, it bears to
reiterate that the judicial power of the courts, as provided
for under the Constitution, includes the authority of the
courts to determine in an appropriate action the validity
of the acts of the political departments.24 Judicial power
also includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion
34
amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the
Government.25 Hence, the CA, and not the IPO Director
General, has jurisdiction to determine whether the BLA-
IPO committed grave abuse of discretion in denying
respondents' motion to extend the effectivity of the writ of
preliminary injunction which the said office earlier issued.
Lastly, petitioner avers that respondents are guilty of
forum shopping for having filed separate actions before
the IPO and the RTC praying for the same relief.
The Court agrees.
Forum shopping is defined as the act of a party against
whom an adverse judgment has been rendered in one
forum, of seeking another (and possibly favorable)
opinion in another forum (other than by appeal or the
special civil action of certiorari), or the institution of two
(2) or more actions or proceedings grounded on the
same cause on the supposition that one or the other
court would make a favorable disposition.26
The elements of forum shopping are: (a) identity of
parties, or at least such parties that represent the same
interests in both actions; (b) identity of rights asserted
and reliefs prayed for, the reliefs being founded on the
same facts; (c) identity of the two preceding particulars,
such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res
judicata in the action under consideration.27
There is no question as to the identity of parties in the
complaints filed with the IPO and the RTC.
Respondents argue that they cannot be held guilty of
forum shopping because their complaints are based on
different causes of action as shown by the fact that the
said complaints are founded on violations of different
patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause
of action as the act or omission by which a party violates
a right of another. In the instant case, respondents'
cause of action in their complaint filed with the IPO is the
alleged act of petitioner in importing, distributing, selling
or offering for sale Sulbactam Ampicillin products, acts
that are supposedly violative of respondents' right to the
exclusive sale of the said products which are covered by
the latter's patent. However, a careful reading of the
complaint filed with the RTC of Makati City would show
that respondents have the same cause of action as in
their complaint filed with the IPO. They claim that they
have the exclusive right to make, use and sell Sulbactam
Ampicillin products and that petitioner violated this right.
Thus, it does not matter that the patents upon which the
complaints were based are different. The fact remains
that in both complaints the rights violated and the acts
violative of such rights are identical.
In fact, respondents seek substantially the same reliefs
in their separate complaints with the IPO and the RTC
for the purpose of accomplishing the same objective.
It is settled by this Court in several cases that the filing
by a party of two apparently different actions but with the
same objective constitutes forum shopping.28 The Court
discussed this species of forum shopping as follows:

Very simply stated, the original complaint in the court a
quo which gave rise to the instant petition was filed by
the buyer (herein private respondent and his
predecessors-in-interest) against the seller (herein
petitioners) to enforce the alleged perfected sale of real
estate. On the other hand, the complaint in the Second
Case seeks to declare such purported sale involving the
same real property "as unenforceable as against the
Bank," which is the petitioner herein. In other words, in
the Second Case, the majority stockholders, in
representation of the Bank, are seeking to accomplish
what the Bank itself failed to do in the original case in the
trial court. In brief, the objective or the relief being
sought, though worded differently, is the same, namely,
to enable the petitioner Bank to escape from the
obligation to sell the property to respondent.29
In Danville Maritime, Inc. v. Commission on Audit,30 the
Court ruled as follows:
In the attempt to make the two actions appear to be
different, petitioner impleaded different respondents
therein – PNOC in the case before the lower court and
the COA in the case before this Court and sought what
seems to be different reliefs. Petitioner asks this Court to
set aside the questioned letter-directive of the COA
dated October 10, 1988 and to direct said body to
approve the Memorandum of Agreement entered into by
and between the PNOC and petitioner, while in the
complaint before the lower court petitioner seeks to
enjoin the PNOC from conducting a rebidding and from
selling to other parties the vessel "T/T Andres Bonifacio,"
and for an extension of time for it to comply with the
paragraph 1 of the memorandum of agreement and
damages. One can see that although the relief prayed
for in the two (2) actions are ostensibly different, the
ultimate objective in both actions is the same, that is, the
approval of the sale of vessel in favor of petitioner, and
to overturn the letter directive of the COA of October 10,
1988 disapproving the sale.31
In the instant case, the prayer of respondents in their
complaint filed with the IPO is as follows:
A. Immediately upon the filing of this action,
issue an ex parte order (a) temporarily
restraining respondent, its agents,
representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam
Ampicillin products to the hospitals named in
paragraph 9 of this Complaint or to any other
entity in the Philippines, or from otherwise
infringing Pfizer Inc.'s Philippine Patent No.
21116; and (b) impounding all the sales invoices
and other documents evidencing sales by
respondent of Sulbactam Ampicillin products.
B. After hearing, issue a writ of preliminary
injunction enjoining respondent, its agents,
representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam
Ampicillin products to the hospitals named in
paragraph 9 of the Complaint or to any other
entity in the Philippines, or from otherwise
infringing Pfizer Inc.'s Philippine Patent No.
21116; and
C. After trial, render judgment:
(i) declaring that respondent has
infringed Pfizer Inc.'s Philippine Patent
35
No. 21116 and that respondent has no
right whatsoever over complainant's
patent;
(ii) ordering respondent to pay
complainants the following amounts:
(a) at least ₱1,000,000.00 as
actual damages;
(b) ₱700,000.00 as attorney's
fees and litigation expenses;
(d) ₱1,000,000.00 as exemplary
damages; and
(d) costs of this suit.
(iii) ordering the condemnation, seizure
or forfeiture of respondent's infringing
goods or products, wherever they may
be found, including the materials and
implements used in the commission of
infringement, to be disposed of in such
manner as may be deemed appropriate
by this Honorable Office; and
(iv) making the injunction permanent.32
In an almost identical manner, respondents prayed for
the following in their complaint filed with the RTC:
(a) Immediately upon the filing of this action,
issue an ex parte order:
(1) temporarily restraining
Pharmawealth, its agents,
representatives and assigns from
importing, distributing, selling or offering
for sale infringing sulbactam ampicillin
products to various government and
private hospitals or to any other entity in
the Philippines, or from otherwise
infringing Pfizer Inc.'s Philippine Patent
No. 26810.
(2) impounding all the sales invoices
and other documents evidencing sales
by pharmawealth of sulbactam ampicillin
products; and
(3) disposing of the infringing goods
outside the channels of commerce.
(b) After hearing, issue a writ of preliminary
injunction:
(1) enjoining Pharmawealth, its agents,
representatives and assigns from
importing, distributing, selling or offering
for sale infringing sulbactam ampicillin
products to various government
hospitals or to any other entity in the
Philippines, or from otherwise infringing
Patent No. 26810;
(2) impounding all the sales invoices
and other documents evidencing sales
 36

by Pharmawealth of sulbactam
ampicillin products; and
(3) disposing of the infringing goods
outside the channels of commerce.
(c) After trial, render judgment:
(1) finding Pharmawealth to have
infringed Patent No. 26810 and
declaring Pharmawealth to have no right
whatsoever over plaintiff's patent;
(2) ordering Pharmawealth to pay
plaintiffs the following amounts:
(i) at least ₱3,000,000.00 as
actual damages;
(ii) ₱500,000.00 as attorney's
fees and ₱1,000,000.00 as
litigation expenses;
(iii) ₱3,000,000.00 as exemplary
damages; and
prejudice.36 In the present case, the Court finds that
respondents did not deliberately violate the rule on non-
forum shopping. Respondents may not be totally blamed
for erroneously believing that they can file separate
actions simply on the basis of different patents.
Moreover, in the suit filed with the RTC of Makati City,
respondents were candid enough to inform the trial court
of the pendency of the complaint filed with the BLA-IPO
as well as the petition for certiorari filed with the CA. On
these bases, only Civil Case No. 04-754 should be
dismissed on the ground of litis pendentia.
WHEREFORE, the petition is PARTLY GRANTED. The
assailed Resolutions of the Court of Appeals, dated
January 18, 2005 and April 11, 2005, in CA-G.R. No.
82734, are REVERSED and SET ASIDE. The petition
for certiorari filed with the Court of Appeals
is DISMISSED for being moot and academic.
Civil Case No. 04-754, filed with the Regional Trial Court
of Makati City, Branch 138, is likewise DISMISSED on
the ground of litis pendentia.
SO ORDERED.

(iv) costs of this suit.

(3) ordering the condemnation, seizure

or forfeiture of Pharmawealth's infringing
goods or products, wherever they may
be found, including the materials and
implements used in the commission of
infringement, to be disposed of in such
manner as may be deemed appropriate
by this Honorable Court; and

(4) making the injunction permanent.33

It is clear from the foregoing that the ultimate objective

which respondents seek to achieve in their separate
complaints filed with the RTC and the IPO, is to ask for
damages for the alleged violation of their right to
exclusively sell Sulbactam Ampicillin products and to
permanently prevent or prohibit petitioner from selling
said products to any entity. Owing to the substantial
identity of parties, reliefs and issues in the IPO and RTC
cases, a decision in one case will necessarily amount
to res judicata in the other action.

It bears to reiterate that what is truly important to

consider in determining whether forum shopping exists
or not is the vexation caused the courts and parties-
litigant by a party who asks different courts and/or
administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the
same reliefs, in the process creating the possibility of
conflicting decisions being rendered by the different fora
upon the same issue.341avvphi1

Thus, the Court agrees with petitioner that respondents

are indeed guilty of forum shopping.

Jurisprudence holds that if the forum shopping is not

considered willful and deliberate, the subsequent case
shall be dismissed without prejudice, on the ground of
either litis pendentia or res judicata.35 However, if the
forum shopping is willful and deliberate, both (or all, if
there are more than two) actions shall be dismissed with

G.R. No. 179127 December 24, 2008
IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITA’S
FRITES, INC., respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45
of the Rules of Court, seeking to reverse the
Decision1dated 18 July 2006 rendered by the Court of
Appeals in CA-G.R. SP No. 92785, which reversed the
Decision2 dated 23 December 2005 of the Director
General of the Intellectual Property Office (IPO) in
Appeal No. 10-05-01. The Court of Appeals, in its
assailed Decision, decreed that the IPO Director of Legal
Affairs and the IPO Director General do not have
jurisdiction over cases involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity
incorporated under the laws of California, United States
(US) of America, which is a signatory to the Convention
of Paris on Protection of Industrial Property and the
Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS). Petitioner is engaged mainly in
the restaurant business, but it has never engaged in
business in the Philippines. 3
Respondents Sehwani, Incorporated and Benita Frites,
Inc. are corporations organized in the Philippines.4
On 2 June 1997, petitioner filed trademark and service
mark applications with the Bureau of Trademarks (BOT)
of the IPO for "IN-N-OUT" and "IN-N-OUT Burger &
Arrow Design." Petitioner later found out, through the
Official Action Papers issued by the IPO on 31 May
2000, that respondent Sehwani, Incorporated had
already obtained Trademark Registration for the mark
"IN N OUT (the inside of the letter "O" formed like a
star)."5 By virtue of a licensing agreement, Benita Frites,
Inc. was able to use the registered mark of respondent
Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the
Bureau of Legal Affairs (BLA) of the IPO an
administrative complaint against respondents for unfair
competition and cancellation of trademark registration.
Petitioner averred in its complaint that it is the owner of
the trade name IN-N-OUT and the following trademarks:
(1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design";
and (3) "IN-N-OUT Burger Logo." These trademarks are
registered with the Trademark Office of the US and in
various parts of the world, are internationally well-known,
and have become distinctive of its business and goods
through its long and exclusive commercial
use.6 Petitioner pointed out that its internationally well-
known trademarks and the mark of the respondents are
all registered for the restaurant business and are clearly
identical and confusingly similar. Petitioner claimed that
respondents are making it appear that their goods and
services are those of the petitioner, thus, misleading
ordinary and unsuspecting consumers that they are
purchasing petitioner’s products.7
Following the filing of its complaint, petitioner sent on 18
October 2000 a demand letter directing respondent
Sehwani, Incorporated to cease and desist from claiming
37
ownership of the mark "IN-N-OUT" and to voluntarily
cancel its trademark registration. In a letter-reply dated
23 October 2000, respondents refused to accede to
petitioner’ demand, but expressed willingness to
surrender the registration of respondent Sehwani,
Incorporated of the "IN N OUT" trademark for a fair and
reasonable consideration. 8
Petitioner was able to register the mark "Double Double"
on 4 July 2002, based on their application filed on 2
June 1997.9 It alleged that respondents also used this
mark, as well as the menu color scheme. Petitioners also
averred that respondent Benita’s receipts bore the
phrase, "representing IN-N-OUT Burger."10 It should be
noted that that although respondent Sehwahi,
Incorporated registered a mark which appeared as "IN N
OUT (the inside of the letter "O" formed like a star),"
respondents used the mark "IN-N-OUT."11
To counter petitioner’s complaint, respondents filed
before the BLA-IPO an Answer with Counterclaim.
Respondents asserted therein that they had been using
the mark "IN N OUT" in the Philippines since 15 October
1982. On 15 November 1991, respondent Sehwani,
Incorporated filed with the then Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) an
application for the registration of the mark "IN N OUT
(the inside of the letter "O" formed like a star)." Upon
approval of its application, a certificate of registration of
the said mark was issued in the name of respondent
Sehwani, Incorporated on 17 December 1993. On 30
August 2000, respondents Sehwani, Incorporated and
Benita Frites, Inc. entered into a Licensing Agreement,
wherein the former entitled the latter to use its registered
mark, "IN N OUT." Respondents asserted that
respondent Sehwani, Incorporated, being the registered
owner of the mark "IN N OUT," should be accorded the
presumption of a valid registration of its mark with the
exclusive right to use the same. Respondents argued
that none of the grounds provided under the Intellectual
Property Code for the cancellation of a certificate of
registration are present in this case. Additionally,
respondents maintained that petitioner had no legal
capacity to sue as it had never operated in the
Philippines.12
Subsequently, the IPO Director of Legal Affairs, Estrellita
Beltran-Abelardo, rendered a Decision dated 22
December 2003,13 in favor of petitioner. According to
said Decision, petitioner had the legal capacity to sue in
the Philippines, since its country of origin or domicile was
a member of and a signatory to the Convention of Paris
on Protection of Industrial Property. And although
petitioner had never done business in the Philippines, it
was widely known in this country through the use herein
of products bearing its corporate and trade name.
Petitioner’s marks are internationally well-known, given
the world-wide registration of the mark "IN-N-OUT," and
its numerous advertisements in various publications and
in the Internet. Moreover, the IPO had already declared
in a previous inter partes case that "In-N-Out Burger and
Arrow Design" was an internationally well-known mark.
Given these circumstances, the IPO Director for Legal
Affairs pronounced in her Decision that petitioner had
the right to use its tradename and mark "IN-N-OUT" in
the Philippines to the exclusion of others, including the
respondents. However, respondents used the mark "IN
N OUT" in good faith and were not guilty of unfair
competition, since respondent Sehwani, Incorporated did
not evince any intent to ride upon petitioner’s goodwill by
copying the mark "IN-N-OUT Burger" exactly. The inside
of the letter "O" in the mark used by respondents formed

a star. In addition, the simple act of respondent Sehwani,
Incorporated of inquiring into the existence of a pending
application for registration of the "IN-N-OUT" mark was
not deemed fraudulent. The dispositive part of the
Decision of the IPO Director for Legal Affairs reads:
With the foregoing disquisition, Certificate of
Registration No. 56666 dated 17 December
1993 for the mark "IN-N-OUT" (the inside of the
letter "O" formed like a star) issued in favor of
Sehwani, Incorporated is hereby CANCELLED.
Consequently, respondents Sehwani, Inc. and
Benita’s Frites are hereby ordered to
permanently cease and desist from using the
mark "IN-N-OUT" and "IN-N-OUT BURGER
LOGO" on its goods and in its business. With
regards the mark "Double-Double," considering
that as earlier discussed, the mark has been
approved by this Office for publication and that
as shown by evidence, Complainant is the
owner of the said mark, Respondents are so
hereby ordered to permanently cease and desist
from using the mark Double-Double. NO
COSTS. 14
Both parties filed their respective Motions for
Reconsideration of the aforementioned Decision.
Respondents’ Motion for Reconsideration 15 and
petitioner’s Motion for Partial Reconsideration16 were
denied by the IPO Director for Legal Affairs in Resolution
No. 2004-1817 dated 28 October 2004 and Resolution
No. 2005-05 dated 25 April 2005,18 respectively.
Subsequent events would give rise to two cases before
this Court, G.R. No. 171053 and G.R. No. 179127, the
case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of
Resolution No. 2004-18 dated 28 October 2004 denying
their Motion for Reconsideration. Thus, on 18 November
2004, respondents filed an Appeal Memorandum with
IPO Director General Emma Francisco (Director General
Francisco). However, in an Order dated 7 December
2004, the appeal was dismissed by the IPO Director
General for being filed beyond the 15-day reglementary
period to appeal.
Respondents appealed to the Court of Appeals via a
Petition for Review under Rule 43 of the Rules of Court,
filed on 20 December 2004 and docketed as CA-G.R.
SP No. 88004, challenging the dismissal of their appeal
by the IPO Director General, which effectively affirmed
the Decision dated 22 December 2003 of the IPO
Director for Legal Affairs ordering the cancellation of the
registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and enjoining
respondents from using the same. In particular,
respondents based their Petition on the following
grounds:
THE IPO DIRECTOR GENERAL COMMITTED
GRAVE ERROR IN DISMISSING APPEAL NO.
14-2004-00004 ON A MERE TECHNICALITY
THE BUREAU OF LEGAL AFFAIR’S (SIC)
DECISION AND RESOLUTION (1)
CANCELLING RESPONDENT’S CERTIFICATE
OF REGISTRATION FOR THE MARK "IN-N-
OUT," AND (2) ORDERING PETITIONERS TO
38
PERMANENTLY CEASE AND DESIST FROM
USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS ARE CONTRARY TO LAW
AND/OR IS NOT SUPPORTED BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that
this Honorable Court give due course to this
petition, and thereafter order the Office of the
Director General of the Intellectual Property
Office to reinstate and give due course to
[respondent]’s Appeal No. 14-2004-00004.
Other reliefs, just and equitable under the
premises, are likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a
Decision denying respondents’ Petition in CA-G.R SP
No. 88004 and affirming the Order dated 7 December
2004 of the IPO Director General. The appellate court
confirmed that respondents’ appeal before the IPO
Director General was filed out of time and that it was
only proper to cancel the registration of the disputed
trademark in the name of respondent Sehwani,
Incorporated and to permanently enjoin respondents
from using the same. Effectively, the 22 December 2003
Decision of IPO Director of Legal Affairs was likewise
affirmed. On 10 November 2005, respondents moved for
the reconsideration of the said Decision. On 16 January
2006, the Court of Appeals denied their motion for
reconsideration.
Dismayed with the outcome of their petition before the
Court of Appeals, respondents raised the matter to the
Supreme Court in a Petition for Review under Rule 45 of
the Rules of Court, filed on 30 January 2006, bearing the
title Sehwani, Incorporated v. In-N-Out Burger and
docketed as G.R. No. 171053.19
This Court promulgated a Decision in G.R. No. 171053
on 15 October 2007,20 finding that herein respondents
failed to file their Appeal Memorandum before the IPO
Director General within the period prescribed by law and,
consequently, they lost their right to appeal. The Court
further affirmed the Decision dated 22 December 2003
of the IPO Director of Legal Affairs holding that herein
petitioner had the legal capacity to sue for the protection
of its trademarks, even though it was not doing business
in the Philippines, and ordering the cancellation of the
registration obtained by herein respondent Sehwani,
Incorporated of the internationally well-known marks of
petitioner, and directing respondents to stop using the
said marks. Respondents filed a Motion for
Reconsideration of the Decision of this Court in G.R. No.
171053, but it was denied with finality in a Resolution
dated 21 January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration
of the Decision dated 22 December 2003 of the IPO
Director for Legal Affairs, petitioner was able to file a
timely appeal before the IPO Director General on 27 May
2005.
During the pendency of petitioner’s appeal before the
IPO Director General, the Court of Appeals already
rendered on 21 October 2005 its Decision dismissing
respondents’ Petition in CA-G.R. SP No. 88004.

In a Decision dated 23 December 2005, IPO Director
General Adrian Cristobal, Jr. found petitioner’s appeal
meritorious and modified the Decision dated 22
December 2003 of the IPO Director of Legal Affairs. The
IPO Director General declared that respondents were
guilty of unfair competition. Despite respondents’ claims
that they had been using the mark since 1982, they only
started constructing their restaurant sometime in 2000,
after petitioner had already demanded that they desist
from claiming ownership of the mark "IN-N-OUT."
Moreover, the sole distinction of the mark registered in
the name of respondent Sehwani, Incorporated, from
those of the petitioner was the star inside the letter "O," a
minor difference which still deceived purchasers.
Respondents were not even actually using the star in
their mark because it was allegedly difficult to print. The
IPO Director General expressed his disbelief over the
respondents’ reasoning for the non-use of the star
symbol. The IPO Director General also considered
respondents’ use of petitioner’s registered mark "Double-
Double" as a sign of bad faith and an intent to mislead
the public. Thus, the IPO Director General ruled that
petitioner was entitled to an award for the actual
damages it suffered by reason of respondents’ acts of
unfair competition, exemplary damages, and attorney’s
fees.21 The fallo of the Decision reads:
WHEREFORE, premises considered, the [herein
respondents] are held guilty of unfair
competition. Accordingly, Decision No. 2003-02
dated 22 December 2003 is hereby MODIFIED
as follows:
[Herein Respondents] are hereby ordered to
jointly and severally pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED
TWELVE THOUSAND FIVE HUNDRED
SEVENTY FOUR AND 28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00);
3. Attorney’s fees and expenses of litigation in
the amount of FIVE HUNDRED THOUSAND
PESOS (P500,000.00).
All products of [herein respondents] including the
labels, signs, prints, packages, wrappers,
receptacles and materials used by them in
committing unfair competition should be without
compensation of any sort be seized and
disposed of outside the channels of commerce.
Let a copy of this Decision be furnished the
Director of Bureau of Legal Affairs for
appropriate action, and the records be returned
to her for proper disposition. Further, let a copy
of this Decision be furnished the Documentation,
Information and Technology Transfer Bureau for
their information and records purposes.22
Aggrieved, respondents were thus constrained to file on
11 January 2006 before the Court of Appeals another
Petition for Review under Rule 43 of the Rules of Court,
docketed as CA-G.R. SP No. 92785. Respondents
based their second Petition before the appellate court on
the following grounds:
39
THE IPO DIRECTOR GENERAL COMMITTED
GRAVE ERROR IN HOLDING PETITIONERS
LIABLE FOR UNFAIR COMPETITION AND IN
ORDERING THEM TO PAY DAMAGES AND
ATTORNEY’S FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED
GRAVE ERROR IN AFFIRMING THE BUREAU
OF LEGAL AFFAIR’S DECISION (1)
CANCELLING PETITIONER’S CERTIFICATE
OF REGISTRATION FOR THE MARK "IN-N-
OUT," AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM
USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS
Respondents assailed before the appellate court the
foregoing 23 December 2005 Decision of the IPO
Director General, alleging that their use of the disputed
mark was not tainted with fraudulent intent; hence, they
should not be held liable for damages. They argued that
petitioner had never entered into any transaction
involving its goods and services in the Philippines and,
therefore, could not claim that its goods and services
had already been identified in the mind of the public.
Respondents added that the disputed mark was not well-
known. Finally, they maintained that petitioner’s
complaint was already barred by laches.23
At the end of their Petition in CA-G.R. SP No. 92785,
respondents presented the following prayer:
WHEREFORE, [respondents herein] respectfully
pray that this Honorable Court:
(a) upon the filing of this petition, issue a
temporary restraining order enjoining the IPO
and [petitioner], their agents, successors and
assigns, from executing, enforcing and
implementing the IPO Director General’s
Decision dated 23 December 2005, which
modified the Decision No. 2003-02 dated 22
December 2003 of the BLA, until further orders
from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and
[petitioner], their agents, successors and
assigns, from executing, enforcing and
implementing the Decision dated 23 December
2005 of the Director General of the IPO in IPV
No. 10-2001-00004 and to maintain the status
quo ante pending the resolution of the merits of
this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision
dated 23 December 2005 of the Director
General of the IPO in IPV No. 10-2001-
00004 finding the [respondents] guilty of
unfair competition and awarding
damages and attorney’s fees to the
respondent
(ii) in lieu thereof, affirm Decision No.
2003-02 of the BLA dated 22 December
2003 and Resolution No. 2005-05 of the
BLA dated 25 April 2005, insofar as it
finds [respondents] not guilty of unfair
competition and hence not liable to the
 40

[petitioner] for damages and attorney’s
fees;
(iii) reverse Decision No. 2003-02 of the
BLA dated 22 December 2003, and
Resolution No. 2005-05 of the BLA
dated 25 April 2005, insofar as it upheld
[petitioner]’s legal capacity to sue; that
[petitioner]’s trademarks are well-known;
and that respondent has the exclusive
right to use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may
deemed just or equitable.24
On 18 July 2006, the Court of Appeals promulgated a
Decision25 in CA-G.R. SP No. 92785 reversing the
Decision dated 23 December 2005 of the IPO Director
General.
The Court of Appeals, in its Decision, initially addressed
petitioner’s assertion that respondents had committed
forum shopping by the institution of CA-G.R. SP No.
88004 and CA-G.R. SP No. 92785. It ruled that
respondents were not guilty of forum shopping,
distinguishing between the respondents’ two Petitions.
The subject of Respondents’ Petition in CA-G.R SP No.
88004 was the 7 December 2004 Decision of the IPO
Director General dismissing respondents’ appeal of the
22 December 2003 Decision of the IPO Director of Legal
Affairs. Respondents questioned therein the cancellation
of the trademark registration of respondent Sehwani,
Incorporated and the order permanently enjoining
respondents from using the disputed trademark.
Respondents’ Petition in CA-G.R. SP No. 92785 sought
the review of the 23 December 2005 Decision of the IPO
Director General partially modifying the 22 December
2003 Decision of the IPO Director of Legal Affairs.
Respondents raised different issues in their second
petition before the appellate court, mainly concerning the
finding of the IPO Director General that respondents
were guilty of unfair competition and the awarding of
actual and exemplary damages, as well as attorney’s
fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-
G.R. SP No. 92785 on jurisdictional grounds not raised
by the parties. The appellate court declared that Section
163 of the Intellectual Property Code specifically confers
upon the regular courts, and not the BLA-IPO, sole
jurisdiction to hear and decide cases involving provisions
of the Intellectual Property Code, particularly trademarks.
Consequently, the IPO Director General had no
jurisdiction to rule in its Decision dated 23 December
2005 on supposed violations of these provisions of the
Intellectual Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The
Decision dated 23 December 2005 rendered by
the Director General of the Intellectual Property
Office of the Philippines in Appeal No. 10-05-01
is REVERSED and SET ASIDE. Insofar as they
pertain to acts governed by Article 168 of R.A.
8293 and other sections enumerated in Section
163 of the same Code, respondent’s claims in its
Complaint docketed as IPV No. 10-2001-00004
are hereby DISMISSED.26
The Court of Appeals, in a Resolution dated 31 July
2007,27 denied petitioner’s Motion for Reconsideration of
its aforementioned Decision.
Hence, the present Petition, where petitioner raises the
following issues:
I
WHETHER OR NOT THE COURT OF
APPEALS ERRED IN ISSUING THE
QUESTIONED DECISIONDATED 18 JULY
2006 AND RESOLUTION DATED 31 JULY
2007 DECLARING THAT THE IPO HAS NO
JURISDICTION OVER ADMINISTRATIVE
COMPLAINTS FOR INTELLECTUAL
PROPERTY RIGHTS VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION
IS FORMALLY DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF
APPEALS ERRED IN ISSUING THE
QUESTIONED DECISIONDATED 18 JULY
2006 AND RESOLUTION DATED 31 JULY
2007 DECLARING THAT SEHWANI AND
BENITA ARE NOT GUILTY OF: (A)
SUBMITTING A PATENTLY FALSE
CERTIFICATION OF NON-FORUM
SHOPPING; AND (B) FORUM SHOPPING
PROPER.28
As previously narrated herein, on 15 October 2007,
during the pendency of the present Petition, this Court
already promulgated its Decision29 in G.R. No. 171053
on 15 October 2007, which affirmed the IPO Director
General’s dismissal of respondents’ appeal for being
filed beyond the reglementary period, and left the 22
December 2003 Decision of the IPO Director for Legal
Affairs, canceling the trademark registration of
respondent Sehwani, Incorporated and enjoining
respondents from using the disputed marks.
Before discussing the merits of this case, this Court must
first rule on the procedural flaws that each party has
attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification
executed by Atty. Edmund Jason Barranda of Villaraza
and Angangco, which petitioner attached to the present
Petition, is defective and should result in the dismissal of
the said Petition.
Respondents point out that the Secretary’s Certificate
executed by Arnold M. Wensinger on 20 August 2007,
stating that petitioner had authorized the lawyers of
Villaraza and Angangco to represent it in the present
Petition and to sign the Verification and Certification
against Forum Shopping, among other acts, was not
properly notarized. The jurat of the aforementioned
Secretary’s Certificate reads:
Subscribed and sworn to me this 20th day of
August 2007 in Irving California.

Rachel A. Blake (Sgd.)
Notary Public30
Respondents aver that the said Secretary’s Certificate
cannot properly authorize Atty. Barranda to sign the
Verification/Certification on behalf of petitioner because
the notary public Rachel A. Blake failed to state that: (1)
petitioner’s Corporate Secretary, Mr. Wensinger, was
known to her; (2) he was the same person who
acknowledged the instrument; and (3) he acknowledged
the same to be his free act and deed, as required under
Section 2 of Act No. 2103 and Landingin v. Republic of
the Philippines.31
Respondents likewise impugn the validity of the notarial
certificate of Atty. Aldrich Fitz B. Uy, on Atty. Baranda’s
Verification/Certification attached to the instant Petition,
noting the absence of (1) the serial number of the
commission of the notary public; (2) the office address of
the notary public; (3) the roll of attorneys’ number and
the IBP membership number; and (4) a statement that
the Verification/Certification was notarized within the
notary public’s territorial jurisdiction, as required under
the 2004 Rules on Notarial Practice. 32
Section 2 of Act No. 2103 and Landingin v. Republic of
the Philippines are not applicable to the present case.
The requirements enumerated therein refer to
documents which require an acknowledgement, and not
a mere jurat.
A jurat is that part of an affidavit in which the notary
certifies that before him/her, the document was
subscribed and sworn to by the executor. Ordinarily, the
language of the jurat should avow that the document
was subscribed and sworn to before the notary public. In
contrast, an acknowledgment is the act of one who has
executed a deed in going before some competent officer
or court and declaring it to be his act or deed. It involves
an extra step undertaken whereby the signor actually
declares to the notary that the executor of a document
has attested to the notary that the same is his/her own
free act and deed.33 A Secretary’s Certificate, as that
executed by petitioner in favor of the lawyers of the
Angangco and Villaraza law office, only requires
a jurat.34
Even assuming that the Secretary’s Certificate was
flawed, Atty. Barranda may still sign the Verification
attached to the Petition at bar. A pleading is verified by
an affidavit that the affiant has read the pleading and
that the allegations therein are true and correct of his
personal knowledge or based on authentic
records. 35 The party itself need not sign the verification.
A party’s representative, lawyer or any other person who
personally knows the truth of the facts alleged in the
pleading may sign the verification.36 Atty. Barranda, as
petitioner’s counsel, was in the position to verify the truth
and correctness of the allegations of the present
Petition. Hence, the Verification signed by Atty. Barranda
substantially complies with the formal requirements for
such.
Moreover, the Court deems it proper not to focus on the
supposed technical infirmities of Atty. Baranda’s
Verification. It must be borne in mind that the purpose of
requiring a verification is to secure an assurance that the
allegations of the petition has been made in good faith;
or are true and correct, not merely speculative. This
requirement is simply a condition affecting the form of
41
pleadings, and non-compliance therewith does not
necessarily render it fatally defective. Indeed, verification
is only a formal, not a jurisdictional requirement. In the
interest of substantial justice, strict observance of
procedural rules may be dispensed with for compelling
reasons.37The vital issues raised in the instant Petition
on the jurisdiction of the IPO Director for Legal Affairs
and the IPO Director General over trademark cases
justify the liberal application of the rules, so that the
Court may give the said Petition due course and resolve
the same on the merits.
This Court agrees, nevertheless, that the notaries public,
Rachel A. Blake and Aldrich Fitz B. Uy, were less than
careful with their jurats or notarial certificates. Parties
and their counsel should take care not to abuse the
Court’s zeal to resolve cases on their merits. Notaries
public in the Philippines are reminded to exert utmost
care and effort in complying with the 2004 Rules on
Notarial Practice. Parties and their counsel are further
charged with the responsibility of ensuring that
documents notarized abroad be in their proper form
before presenting said documents before Philippine
courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum
shopping in filing the Petition in CA-G.R. SP No. 92785,
following their earlier filing of the Petition in CA-G.R SP
No. 88004. Petitioner also asserts that respondents were
guilty of submitting to the Court of Appeals a patently
false Certification of Non-forum Shopping in CA-G.R. SP
No. 92785, when they failed to mention therein the
pendency of CA-G.R SP No. 88004.
Forum shopping is the institution of two or more actions
or proceedings grounded on the same cause on the
supposition that one or the other court would make a
favorable disposition. It is an act of malpractice and is
prohibited and condemned as trifling with courts and
abusing their processes. In determining whether or not
there is forum shopping, what is important is the vexation
caused the courts and parties-litigants by a party who
asks different courts and/or administrative bodies to rule
on the same or related causes and/or grant the same or
substantially the same reliefs and in the process creates
the possibility of conflicting decisions being rendered by
the different bodies upon the same issues.38
Forum shopping is present when, in two or more cases
pending, there is identity of (1) parties (2) rights or
causes of action and reliefs prayed for, and (3) the
identity of the two preceding particulars is such that any
judgment rendered in the other action, will, regardless of
which party is successful, amount to res judicata in the
action under consideration.39
After a cursory look into the two Petitions in CA-G.R. SP
No. 88004 and CA-G.R. SP No. 92785, it would at first
seem that respondents are guilty of forum shopping.
There is no question that both Petitions involved
identical parties, and raised at least one similar ground
for which they sought the same relief. Among the
grounds stated by the respondents for their Petition in
CA-G.R SP No. 88004 was that "[T]he Bureau of Legal
Affair’s (sic) Decision and Resolution (1) canceling
[herein respondent Sehwani, Incorporated]’s certificate
of registration for the mark ‘IN-N-OUT’ and (2) ordering
[herein respondents] to permanently cease and desist

from using the subject mark on its goods and business
are contrary to law and/or is (sic) not supported by
evidence."40 The same ground was again invoked by
respondents in their Petition in CA-G.R. SP No. 92785,
rephrased as follows: "The IPO Director General
committed grave error in affirming the Bureau of Legal
Affair’s (sic) Decision (1) canceling [herein respondent
Sehwani, Incorporated]’s certificate of registration for the
mark "IN-N-OUT," and (2) ordering [herein respondents]
to permanently cease and desist from using the subject
mark on its goods and business."41 Both Petitions, in
effect, seek the reversal of the 22 December 2003
Decision of the IPO Director of Legal Affairs.
Undoubtedly, a judgment in either one of these Petitions
affirming or reversing the said Decision of the IPO
Director of Legal Affairs based on the merits thereof
would bar the Court of Appeals from making a contrary
ruling in the other Petition, under the principle of res
judicata.
Upon a closer scrutiny of the two Petitions, however, the
Court takes notice of one issue which respondents did
not raise in CA-G.R. SP No. 88004, but can be found in
CA-G.R. SP No. 92785, i.e., whether respondents are
liable for unfair competition. Hence, respondents seek
additional reliefs in CA-G.R. SP No. 92785, seeking the
reversal of the finding of the IPO Director General that
they are guilty of unfair competition, and the nullification
of the award of damages in favor of petitioner resulting
from said finding. Undoubtedly, respondents could not
have raised the issue of unfair competition in CA-G.R.
SP No. 88004 because at the time they filed their
Petition therein on 28 December 2004, the IPO Director
General had not yet rendered its Decision dated 23
December 2005 wherein it ruled that respondents were
guilty thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that
they are not liable for unfair competition, it is only
predictable, although not necessarily legally tenable, for
respondents to reassert their right to register, own, and
use the disputed mark. Respondents again raise the
issue of who has the better right to the disputed mark,
because their defense from the award of damages for
unfair competition depends on the resolution of said
issue in their favor. While this reasoning may be legally
unsound, this Court cannot readily presume bad faith on
the part of respondents in filing their Petition in CA-G.R.
SP No. 92785; or hold that respondents breached the
rule on forum shopping by the mere filing of the second
petition before the Court of Appeals.
True, respondents should have referred to CA-G.R. SP
No. 88004 in the Certification of Non-Forum Shopping,
which they attached to their Petition in CA-G.R. SP No.
92785. Nonetheless, the factual background of this case
and the importance of resolving the jurisdictional and
substantive issues raised herein, justify the relaxation of
another procedural rule. Although the submission of a
certificate against forum shopping is deemed obligatory,
it is not jurisdictional.42 Hence, in this case in which such
a certification was in fact submitted, only it was
defective, the Court may still refuse to dismiss and,
instead, give due course to the Petition in light of
attendant exceptional circumstances.
The parties and their counsel, however, are once again
warned against taking procedural rules lightly. It will do
them well to remember that the Courts have taken a
stricter stance against the disregard of procedural rules,
especially in connection with the submission of the
42
certificate against forum shopping, and it will not hesitate
to dismiss a Petition for non-compliance therewith in the
absence of justifiable circumstances.
The Jurisdiction of the IPO
The Court now proceeds to resolve an important issue
which arose from the Court of Appeals Decision dated
18 July 2006 in CA-G.R. SP No. 92785. In the afore-
stated Decision, the Court of Appeals adjudged that the
IPO Director for Legal Affairs and the IPO Director
General had no jurisdiction over the administrative
proceedings below to rule on issue of unfair competition,
because Section 163 of the Intellectual Property Code
confers jurisdiction over particular provisions in the law
on trademarks on regular courts exclusively. According
to the said provision:
Section 163. Jurisdiction of Court.–All actions
under Sections 150, 155, 164, and 166 to 169
shall be brought before the proper courts with
appropriate jurisdiction under existing laws.
The provisions referred to in Section 163 are: Section
150 on License Contracts; Section 155 on Remedies on
Infringement; Section 164 on Notice of Filing Suit Given
to the Director; Section 166 on Goods Bearing Infringing
Marks or Trade Names; Section 167 on Collective
Marks; Section 168 on Unfair Competition, Rights,
Regulation and Remedies; and Section 169 on False
Designations of Origin, False Description or
Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code specifically
identifies the functions of the Bureau of Legal Affairs,
thus:
Section 10. The Bureau of Legal Affairs.–The
Bureau of Legal Affairs shall have the following
functions:
10.1 Hear and decide opposition to the
application for registration of
marks; cancellation of trademarks; subject to
the provisions of Section 64, cancellation of
patents and utility models, and industrial
designs; and petitions for compulsory licensing
of patents;
10.2 (a) Exercise original jurisdiction in
administrative complaints for violations of
laws involving intellectual property
rights; Provided, That its jurisdiction is
limited to complaints where the total
damages claimed are not less than Two
hundred thousand pesos
(P200,000): Provided, futher, That availment
of the provisional remedies may be granted
in accordance with the Rules of Court. The
Director of Legal Affairs shall have the power to
hold and punish for contempt all those who
disregard orders or writs issued in the course of
the proceedings.
(b) After formal investigation, the Director for
Legal Affairs may impose one (1) or more of the
following administrative penalties:

(i) The issuance of a cease and desist
order which shall specify the acts that
the respondent shall cease and desist
from and shall require him to submit a
compliance report within a reasonable
time which shall be fixed in the order;
(ii) The acceptance of a voluntary
assurance of compliance or
discontinuance as may be imposed.
Such voluntary assurance may include
one or more of the following:
(1) An assurance to comply with
the provisions of the intellectual
property law violated;
(2) An assurance to refrain from
engaging in unlawful and unfair
acts and practices subject of the
formal investigation
(3) An assurance to recall,
replace, repair, or refund the
money value of defective goods
distributed in commerce; and
(4) An assurance to reimburse
the complainant the expenses
and costs incurred in
prosecuting the case in the
Bureau of Legal Affairs.
The Director of Legal Affairs
may also require the respondent
to submit periodic compliance
reports and file a bond to
guarantee compliance of his
undertaking.
(iii) The condemnation or seizure of
products which are subject of the
offense. The goods seized hereunder
shall be disposed of in such manner as
may be deemed appropriate by the
Director of Legal Affairs, such as by
sale, donation to distressed local
governments or to charitable or relief
institutions, exportation, recycling into
other goods, or any combination thereof,
under such guidelines as he may
provide;
(iv) The forfeiture of paraphernalia and
all real and personal properties which
have been used in the commission of
the offense;
(v) The imposition of administrative fines
in such amount as deemed reasonable
by the Director of Legal Affairs, which
shall in no case be less than Five
thousand pesos (P5,000) nor more than
One hundred fifty thousand pesos
(P150,000). In addition, an additional
fine of not more than One thousand
pesos (P1,000) shall be imposed for
each day of continuing violation;
43
(vi) The cancellation of any permit,
license, authority, or registration
which may have been granted by the
Office, or the suspension of the validity
thereof for such period of time as the
Director of Legal Affairs may deem
reasonable which shall not exceed one
(1) year;
(vii) The withholding of any permit,
license, authority, or registration which is
being secured by the respondent from
the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or
sanctions.
10.3 The Director General may by Regulations
establish the procedure to govern the
implementation of this Section.43 (Emphasis
provided.)
Unquestionably, petitioner’s complaint, which seeks the
cancellation of the disputed mark in the name of
respondent Sehwani, Incorporated, and damages for
violation of petitioner’s intellectual property rights, falls
within the jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes
the appellate jurisdiction of the IPO Director General
over the decisions of the IPO Director of Legal Affairs, to
wit:
Section 7. The Director General and Deputies
Director General. 7.1 Fuctions.–The Director
General shall exercise the following powers and
functions:
xxxx
b) Exercise exclusive appellate jurisdiction over
all decisions rendered by the Director of Legal
Affairs, the Director of Patents, the Director of
Trademarks, and the Director of Documentation,
Information and Technology Transfer Bureau.
The decisions of the Director General in the
exercise of his appellate jurisdiction in respect of
the decisions of the Director of Patents, and the
Director of Trademarks shall be appealable to
the Court of Appeals in accordance with the
Rules of Court; and those in respect of the
decisions of the Director of Documentation,
Information and Technology Transfer Bureau
shall be appealable to the Secretary of Trade
and Industry;
The Court of Appeals erroneously reasoned that Section
10(a) of the Intellectual Property Code, conferring upon
the BLA-IPO jurisdiction over administrative complaints
for violations of intellectual property rights, is a general
provision, over which the specific provision of Section
163 of the same Code, found under Part III thereof
particularly governing trademarks, service marks, and
tradenames, must prevail. Proceeding therefrom, the
Court of Appeals incorrectly concluded that all actions
involving trademarks, including charges of unfair

competition, are under the exclusive jurisdiction of civil
courts.
Such interpretation is not supported by the provisions of
the Intellectual Property Code. While Section 163 thereof
vests in civil courts jurisdiction over cases of unfair
competition, nothing in the said section states that the
regular courts have sole jurisdiction over unfair
competition cases, to the exclusion of administrative
bodies. On the contrary, Sections 160 and 170, which
are also found under Part III of the Intellectual Property
Code, recognize the concurrent jurisdiction of civil courts
and the IPO over unfair competition cases. These two
provisions read:
Section 160. Right of Foreign Corporation to Sue
in Trademark or Service Mark Enforcement
Action.–Any foreign national or juridical person
who meets the requirements of Section 3 of this
Act and does not engage in business in the
Philippines may bring a civil or administrative
action hereunder for opposition, cancellation,
infringement, unfair competition, or false
designation of origin and false description,
whether or not it is licensed to do business in the
Philippines under existing laws.
xxxx
Section 170. Penalties.–Independent of the civil
and administrative sanctions imposed by law,
a criminal penalty of imprisonment from two (2)
years to five (5) years and a fine ranging from
Fifty thousand pesos (P50,000) to Two hundred
thousand pesos (P200,000), shall be imposed
on any person who is found guilty of committing
any of the acts mentioned in Section 155,
Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of
Legal Affairs had jurisdiction to decide the petitioner’s
administrative case against respondents and the IPO
Director General had exclusive jurisdiction over the
appeal of the judgment of the IPO Director of Legal
Affairs.
Unfair Competition
The Court will no longer touch on the issue of the validity
or propriety of the 22 December 2003 Decision of the
IPO Director of Legal Affairs which: (1) directed the
cancellation of the certificate of registration of
respondent Sehwani, Incorporated for the mark "IN-N-
OUT" and (2) ordered respondents to permanently
cease and desist from using the disputed mark on its
goods and business. Such an issue has already been
settled by this Court in its final and executory Decision
dated 15 October 2007 in G.R. No. 171053, Sehwani,
Incorporated v. In-N-Out Burger,44ultimately affirming the
foregoing judgment of the IPO Director of Legal Affairs.
That petitioner has the superior right to own and use the
"IN-N-OUT" trademarks vis-à-vis respondents is a
finding which this Court may no longer disturb under the
doctrine of conclusiveness of judgment. In
conclusiveness of judgment, any right, fact, or matter in
issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in
which judgment is rendered on the merits is conclusively
settled by the judgment therein and cannot again be
litigated between the parties and their privies whether or
44
not the claims, demands, purposes, or subject matters of
the two actions are the same.45
Thus, the only remaining issue for this Court to resolve is
whether the IPO Director General correctly found
respondents guilty of unfair competition for which he
awarded damages to petitioner.
The essential elements of an action for unfair
competition are (1) confusing similarity in the general
appearance of the goods and (2) intent to deceive the
public and defraud a competitor. The confusing similarity
may or may not result from similarity in the marks, but
may result from other external factors in the packaging
or presentation of the goods. The intent to deceive and
defraud may be inferred from the similarity of the
appearance of the goods as offered for sale to the
public. Actual fraudulent intent need not be shown.46
In his Decision dated 23 December 2005, the IPO
Director General ably explains the basis for his finding of
the existence of unfair competition in this case, viz:
The evidence on record shows that the [herein
respondents] were not using their registered
trademark but that of the [petitioner].
[Respondent] SEHWANI, INC. was issued a
Certificate of Registration for IN N OUT (with the
Inside of the Letter "O" Formed like a Star) for
restaurant business in 1993. The restaurant
opened only in 2000 but under the name IN-N-
OUT BURGER. Apparently, the [respondents]
started constructing the restaurant only after the
[petitioner] demanded that the latter desist from
claiming ownership of the mark IN-N-OUT and
voluntarily cancel their trademark registration.
Moreover, [respondents] are also using
[petitioner’s] registered mark Double-Double for
use on hamburger products. In fact, the burger
wrappers and the French fries receptacles the
[respondents] are using do not bear the mark
registered by the [respondent], but the
[petitioner’s] IN-N-OUT Burger’s name and
trademark IN-N-OUT with Arrow design.
There is no evidence that the [respondents]
were authorized by the [petitioner] to use the
latter’s marks in the business. [Respondents’]
explanation that they are not using their own
registered trademark due to the difficulty in
printing the "star" does not justify the
unauthorized use of the [petitioner’s] trademark
instead.
Further, [respondents] are giving their products
the general appearance that would likely
influence purchasers to believe that these
products are those of the [petitioner]. The
intention to deceive may be inferred from the
similarity of the goods as packed and offered for
sale, and, thus, action will lie to restrain such
unfair competition. x x x.
xxxx
[Respondents’] use of IN-N-OUT BURGER in
busineses signages reveals fraudulent intent to
deceive purchasers. Exhibit "GG," which shows
the business establishment of [respondents]
illustrates the imitation of [petitioner’s] corporate

name IN-N-OUT and signage IN-N-OUT
BURGER. Even the Director noticed it and held:
"We also note that In-N-Out Burger is
likewise, [petitioner’s] corporate name. It
has used the "IN-N-OUT" Burger name
in its restaurant business in Baldwin
Park, California in the United States of
America since 1948. Thus it has the
exclusive right to use the tradenems "In-
N-Out" Burger in the Philippines and the
respondents’ are unlawfully using and
appropriating the same."
The Office cannot give credence to the
[respondent’s] claim of good faith and that they
have openly and continuously used the subject
mark since 1982 and is (sic) in the process of
expanding its business. They contend that
assuming that there is value in the foreign
registrations presented as evidence by the
[petitioner], the purported exclusive right to the
use of the subject mark based on such foreign
registrations is not essential to a right of action
for unfair competition. [Respondents] also claim
that actual or probable deception and confusion
on the part of customers by reason of
respondents’ practices must always appear, and
in the present case, the BLA has found none.
This Office finds the arguments untenable.
In contrast, the [respondents] have the burden of
evidence to prove that they do not have
fraudulent intent in using the mark IN-N-OUT. To
prove their good faith, [respondents] could have
easily offered evidence of use of their registered
trademark, which they claimed to be using as
early as 1982, but did not.
[Respondents] also failed to explain why they
are using the marks of [petitioner] particularly
DOUBLE DOUBLE, and the mark IN-N-OUT
Burger and Arrow Design. Even in their listing of
menus, [respondents] used [Appellants’] marks
of DOUBLE DOUBLE and IN-N-OUT Burger and
Arrow Design. In addition, in the wrappers and
receptacles being used by the [respondents]
which also contained the marks of the
[petitioner], there is no notice in such wrappers
and receptacles that the hamburger and French
fries are products of the [respondents].
Furthermore, the receipts issued by the
[respondents] even indicate "representing IN-N-
OUT." These acts cannot be considered acts in
good faith. 47
Administrative proceedings are governed by the
"substantial evidence rule." A finding of guilt in an
administrative case would have to be sustained for as
long as it is supported by substantial evidence that the
respondent has committed acts stated in the complaint
or formal charge. As defined, substantial evidence is
such relevant evidence as a reasonable mind may
accept as adequate to support a conclusion.48 As
recounted by the IPO Director General in his decision,
there is more than enough substantial evidence to
support his finding that respondents are guilty of unfair
competition.
With such finding, the award of damages in favor of
petitioner is but proper. This is in accordance with
45
Section 168.4 of the Intellectual Property Code, which
provides that the remedies under Sections 156, 157 and
161 for infringement shall apply mutatis mutandis to
unfair competition. The remedies provided under Section
156 include the right to damages, to be computed in the
following manner:
Section 156. Actions, and Damages and
Injunction for Infringement.–156.1 The owner of
a registered mark may recover damages 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 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, then the court may award as damages
a 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 the present case, the Court deems it just and fair that
the IPO Director General computed the damages due to
petitioner by applying the reasonable percentage of 30%
to the respondents’ gross sales, and then doubling the
amount thereof on account of respondents’ actual intent
to mislead the public or defraud the petitioner,49 thus,
arriving at the amount of actual damages
of P212,574.28.
Taking into account the deliberate intent of respondents
to engage in unfair competition, it is only proper that
petitioner be awarded exemplary damages. Article 2229
of the Civil Code provides that such damages may be
imposed by way of example or correction for the public
good, such as the enhancement of the protection
accorded to intellectual property and the prevention of
similar acts of unfair competition. However, exemplary
damages are not meant to enrich one party or to
impoverish another, but to serve as a deterrent against
or as a negative incentive to curb socially deleterious
action.50 While there is no hard and fast rule in
determining the fair amount of exemplary damages, the
award of exemplary damages should be commensurate
with the actual loss or injury suffered.51 Thus, exemplary
damages of P500,000.00 should be reduced
to P250,000.00 which more closely approximates the
actual damages awarded.
In accordance with Article 2208(1) of the Civil Code,
attorney’s fees may likewise be awarded to petitioner
since exemplary damages are awarded to it. Petitioner
was compelled to protect its rights over the disputed
mark. The amount of P500,000.00 is more than
reasonable, given the fact that the case has dragged on
for more than seven years, despite the respondent’s
failure to present countervailing evidence. Considering
moreover the reputation of petitioner’s counsel, the
actual attorney’s fees paid by petitioner would far exceed
the amount that was awarded to it.52
IN VIEW OF THE FOREGOING, the instant Petition
is GRANTED. The assailed Decision of the Court of
Appeals in CA-G.R. SP No. 92785, promulgated on 18
July 2006, is REVERSED. The Decision of the IPO
Director General, dated 23 December 2005, is
 46

hereby REINSTATED IN PART, with the modification G.R. No. 108946 January 28, 1999
that the amount of exemplary damages awarded be
reduced to P250,000.00. FRANCISCO G. JOAQUIN, JR., and BJ
PRODUCTIONS, INC., petitioners,
SO ORDERED. vs.
HONORABLE FRANKLIN DRILON, GABRIEL ZOSA,
WILLIAM ESPOSO, FELIPE MEDINA, JR., and CASEY
FRANCISCO, respondents.

MENDOZA, J.:

This is a petition for certiorari. Petitioners seek to annul

the resolution of the Department of Justice, dated
August 12, 1992, in Criminal Case No. Q-92-27854,
entitled "Gabriel Zosa, et al. v. City Prosecutor of
Quezon City and Francisco Joaquin, Jr.," and its
resolution, dated December 3, 1992, denying petitioner
Joaquin's motion for reconsideration.

Petitioner BJ Productions, Inc. (BJPI) is the

holder/grantee of Certificate of Copyright No. M922,
dated January 28, 1971, of Rhoda and Me, a dating
game show aired from 1970 to 1977.

On June 28, 1973, petitioner BJPI submitted to the

National Library an addendum to its certificate of
copyright specifying the show's format and style of
presentation.

On July 14, 1991, while watching television, petitioner

Francisco Joaquin, Jr., president of BJPI, saw on RPN
Channel 9 an episode of It's a Date, which was produced
by IXL Productions, Inc. (IXL). On July 18, 1991, he
wrote a letter to private respondent Gabriel M. Zosa,
president and general manager of IXL, informing Zosa
that BJPI had a copyright to Rhoda and Me and
demanding that IXL discontinue airing It's a Date.

In a letter, dated July 19, 1991, private respondent Zosa

apologized to petitioner Joaquin and requested a
meeting to discuss a possible settlement. IXL, however,
continued airing It's a Date, prompting petitioner Joaquin
to send a second letter on July 25, 1991 in which he
reiterated his demand and warned that, if IXL did not
comply, he would endorse the matter to his attorneys for
proper legal action.

Meanwhile, private respondent Zosa sought to register

IXL's copyright to the first episode of It's a Date for which
it was issued by the National Library a certificate of
copyright August 14, 1991.

Upon complaint of petitioners, an information for

violation of P.D. No. 49 was filed against private
respondent Zosa together with certain officers of RPN
Channel 9, namely, William Esposo, Felipe Medina, and
Casey Francisco, in the Regional Trial Court of Quezon
City where it was docketed as Criminal Case No. 92-
27854 and assigned to Branch 104 thereof. However,
private respondent Zosa sought a review of the
resolution of the Assistant City Prosecutor before the
Department of Justice.

On August 12, 1992, respondent Secretary of Justice

Franklin M. Drilon reversed the Assistant City
Prosecutor's findings and directed him to move for the
dismissal of the case against private respondents. 1
 47

Petitioner Joaquin filed a motion for reconsideration, but reasonable ground to believe that a
his motion denied by respondent Secretary of Justice on crime has been committed and that the
December 3, 1992. Hence, this petition. Petitioners accused is probably guilty thereof, that
contend that: the accused was informed of the
complaint and of the evidence submitted
1. The public against him and that he was given an
respondent gravely opportunity to submit controverting
abused his discretion evidence. Otherwise, he shall
amounting to lack of recommend dismissal of the complaint.
jurisdiction — when he
invoked non- In either case, he shall forward the
presentation of the records of the case to the provincial or
master tape as being city fiscal or chief state prosecutor within
fatal to the existence of five (5) days from his resolution. The
probable cause to prove latter shall take appropriate action
infringement, despite thereon ten (10) days from receipt
the fact that private thereof, immediately informing the
respondents never parties of said action.
raised the same as a
controverted issue. No complaint or information may be filed
or dismissed by an investigating fiscal
2. The public without the prior written authority or
respondent gravely approval of the provincial or city fiscal or
abused his discretion chief state prosecutor.
amounting to lack of
jurisdiction when he Where the investigating assistant fiscal
arrogated unto himself recommends the dismissal of the case
the determination of but his findings are reversed by the
what is copyrightable — provincial or city fiscal or chief state
an issue which is prosecutor on the ground that a
exclusively within the probable cause exists, the latter may, by
jurisdiction of the himself, file the corresponding
regional trial court to information against the respondent or
assess in a proper direct any other assistant fiscal or state
proceeding. prosecutor to do so, without conducting
another preliminary investigation.
Both public and private respondents maintain that
petitioners failed to establish the existence of probable If upon petition by a proper party, the
cause due to their failure to present the copyrighted Secretary of Justice reverses the
master videotape of Rhoda and Me. They contend that resolution of the provincial or city fiscal
petitioner BJPI's copyright covers only a specific episode or chief state prosecutor, he shall direct
of Rhoda and Me and that the formats or concepts of the fiscal concerned to file the
dating game shows are not covered by copyright corresponding information without
protection under P.D. No. 49. conducting another preliminary
investigation or to dismiss or move for
Non-Assignment of Error. dismissal of the complaint or
information.
Petitioners claim that their failure to submit the
copyrighted master videotape of the television show In reviewing resolutions of prosecutors, the Secretary of
Rhoda and Me was not raised in issue by private Justice is not precluded from considering errors,
respondents during the preliminary investigation and, although unassigned, for the purpose of determining
therefore, it was error for the Secretary of Justice to whether there is probable cause for filing cases in court.
reverse the investigating prosecutor's finding of probable He must make his own finding, of probable cause and is
cause on this ground. not confined to the issues raised by the parties during
preliminary investigation. Moreover, his findings are not
A preliminary investigation falls under the authority of the subject to review unless shown to have been made with
state prosecutor who is given by law the power to direct grave abuse.
and control criminal
actions. 2 He is, however, subject to the control of the Opinion of the Secretary of Justice
Secretary of Justice. Thus, Rule 112, §4 of the Revised
Rules of Criminal Procedure, provides: Petitioners contend, however, that the determination of
the question whether the format or mechanics of a show
Sec. 4. Duty of investigating fiscal. — If is entitled to copyright protection is for the court, and not
the investigating fiscal finds cause to the Secretary of Justice, to make. They assail the
hold the respondent for trial, he shall following portion of the resolution of the respondent
prepare the resolution and Secretary of Justice:
corresponding information. He shall
certify under oath that he, or as shown [T]he essence of copyright infringement
by the record, an authorized officer, has is the copying, in whole or in part, of
personally examined the complainant copyrightable materials as defined and
and his witnesses, that there is enumerated in Section 2 of PD. No.

49. Apart from the manner in which it is
actually expressed, however, the idea of
a dating game show is, in the opinion of
this Office, a non-copyrightable material.
Ideas, concepts, formats, or schemes in
their abstract form clearly do not fall
within the class of works or materials
susceptible of copyright registration as
provided in PD. No. 49. 3(Emphasis
added.)
It is indeed true that the question whether the format or
mechanics of petitioners television show is entitled to
copyright protection is a legal question for the court to
make. This does not, however, preclude respondent
Secretary of Justice from making a preliminary
determination of this question in resolving whether there
is probable cause for filing the case in court. In doing so
in this case, he did not commit any grave error.
Presentation of Master Tape
Petitioners claim that respondent Secretary of Justice
gravely abused his discretion in ruling that the master
videotape should have been predented in order to
determine whether there was probable cause for
copyright infringement. They contend that 20th Century
Fox Film Corporation v. Court of Appeals, 4 on which
respondent Secretary of Justice relied in reversing the
resolution of the investigating prosecutor, is inapplicable
to the case at bar because in the present case, the
parties presented sufficient evidence which clearly
establish "linkage between the copyright show "Rhoda
and Me" and the infringing TV show "It's a Date." 5
The case of 20th Century Fox Film Corporation involved
raids conducted on various videotape outlets allegedlly
selling or renting out "pirated" videotapes. The trial court
found that the affidavits of NBI agents, given in support
of the application for the search warrant, were
insufficient without the master tape. Accordingly, the trial
court lifted the search warrants it had previously issued
against the defendants. On petition for review, this Court
sustained the action of the trial court and ruled: 6
The presentation of the master tapes of
the copyrighted films from which the
pirated films were allegedly copied, was
necessary for the validity of search
warrants against those who have in their
possession the pirated films. The
petitioner's argument to the effect that
the presentation of the master tapes at
the time of application may not be
necessary as these would be merely
evidentiary in nature and not
determinative of whether or not a
probable cause exists to justify the
issuance of the search warrants is not
meritorious. The court cannot presume
that duplicate or copied tapes were
necessarily reproduced from master
tapes that it owns.
The application for search warrants was
directed against video tape outlets which
allegedly were engaged in the
unauthorized sale and renting out of
copyrighted
RHODA AND ME films belonging to the
petitioner pursuant to P.D. 49.
Set 1
48
The essence of a copyright infringement
is the similarity or at least substantial
similarity of the purported pirated works
to the copyrighted work. Hence, the
applicant must present to the court the
copyrighted films to compare them with
the purchased evidence of the video
tapes allegedly pirated to determine
whether the latter is an unauthorized
reproduction of the former. This linkage
of the copyrighted films to the pirated
films must be established to satisfy the
requirements of probable cause. Mere
allegations as to the existence of the
copyrighted films cannot serve as basis
for the issuance of a search warrant.
This ruling was qualified in the later case
of Columbia Pictures, Inc. v. Court of
Appeals 7 in which it was held:
In fine, the supposed pronunciamento in
said case regarding the necessity for the
presentation of the master tapes of the
copyrighted films for the validity of
search warrants should at most be
understood to merely serve as a
guidepost in determining the existence
of probable cause in copyright
infringement cases where there is doubt
as to the true nexus between the master
tape and the printed copies. An
objective and careful reading of the
decision in said case could lead to no
other conclusion than that said directive
was hardly intended to be a sweeping
and inflexible requirement in all or
similar copyright infringement cases. . . 8
In the case at bar during the preliminary investigation,
petitioners and private respondents presented written
descriptions of the formats of their respective televisions
shows, on the basis of which the investigating
prosecutor ruled:
As may [be] gleaned from the evidence
on record, the substance of the
television productions complainant's
"RHODA AND ME" and Zosa's "IT'S A
DATE" is that two matches are made
between a male and a female, both
single, and the two couples are treated
to a night or two of dining and/or
dancing at the expense of the show. The
major concepts of both shows is the
same. Any difference appear mere
variations of the major concepts.
That there is an infringement on the
copyright of the show "RHODA AND
ME" both in content and in the execution
of the video presentation are established
because respondent's "IT'S A DATE" is
practically an exact copy of
complainant's "RHODA AND ME"
because of substantial similarities as
follows, to wit:
"IT'S A DATE"
Set 1

a. Unmarried participant of one gender (searcher)
appears on one side of a divider, while three (3)
unmarried participants of the other gender are on the
other side of the divider. This arrangement is done to
ensure that the searcher does not see the searchees.
b. Searcher asks a question to be answered by each of
the searchees. The purpose is to determine who among
the searchees is the most compatible with the searcher.
c. Searcher speculates on the match to the searchee.
d. Selection is made by the use of compute (sic)
methods, or by the way questions are answered, or
similar methods.
Set 2 Set 2
Same as above with the genders of the searcher and same
searchees interchanged. 9
Petitioners assert that the format of Rhoda and Me is a
product of ingenuity and skill and is thus entitled to
copyright protection. It is their position that the
presentation of a point-by-point comparison of the
formats of the two shows clearly demonstrates the nexus
between the shows and hence establishes the existence
of probable cause for copyright infringement. Such being
the case, they did not have to produce the master tape.
To begin with the format of a show is not copyrightable.
Section 2 of P.D. No. 49, 10 otherwise known as the
DECREE ON INTELLECTUAL PROPERTY, enumerates
the classes of work entitled to copyright protection, to
wit:
Sec. 2. The rights granted by this
Decree shall, from the moment of
creation, subsist with respect to any of
the following classes of works:
(A) Books, including composite and
cyclopedic works, manuscripts,
directories, and gazetteers:
(B) Periodicals, including pamphlets and
newspapers;
(C) Lectures, sermons, addresses,
dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical
compositions; choreographic works and
entertainments in dumb shows, the
acting form of which is fixed in writing or
otherwise;
(F) Musical compositions, with or without
words;
(G) Works of drawing, painting,
architecture, sculpture, engraving,
lithography, and other works of art;
models or designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or
models for articles of manufacture,
whether or not patentable, and other
works of applied art;
49
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a
scientific or technical character;
(I) Photographic works and works
produced by a process analogous to
photography lantern slides;
(M) Cinematographic works and works
produced by a process analogous to
cinematography or any process for
making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial illustrations
advertising copies, labels tags, and box
wraps;
(P) Dramatizations, translations,
adaptations, abridgements,
arrangements and other alterations of
literary, musical or artistic works or of
works of the Philippine government as
herein defined, which shall be protected
as provided in Section 8 of this Decree.
(Q) Collections of literary, scholarly, or
artistic works or of works referred to in
Section 9 of this Decree which by
reason of the selection and arrangement
of their contents constitute intellectual
creations, the same to be protected as
such in accordance with Section 8 of
this Decree.
(R) Other literary, scholarly, scientific
and artistic works.
This provision is substantially the same as §172 of the
INTELLECTUAL PROPERTY CODE OF PHILIPPINES
(R.A. No. 8293). 11 The format or mechanics of a
television show is not included in the list of protected
works in §2 of P.D. No. 49. For this reason, the
protection afforded by the law cannot be extended to
cover them.
Copyright, in the strict sense of the term,
is purely a statutory right. It is a new or
independent right granted by the statute,
and not simply a pre-existing right
regulated by the statute. Being a
statutory grant, the rights are only such
as the statute confers, and may be
obtained and enjoyed only with respect
to the subjects and by the persons and
on terms and conditions specified in the
statute. 12
Since . . . copyright in published works is
purely a statutory creation, a copyright
may be obtained only for a work falling
within the statutory enumeration or
description. 13
Regardless of the historical viewpoint, it
is authoritatively settled in the United
States that there is no copyright except

that which is both created and secured
by act of Congress . . . . . 14
P.D. No. 49, §2, in enumerating what are subject to
copyright, refers to finished works and not to concepts.
The copyright does not extend to an idea, procedure,
process, system, method of operation, concept,
principle, or discovery, regardless of the form in which it
is described, explained, illustrated, or embodied in such
work. 15 Thus, the new INTELLECTUAL PROPERTY
CODE OF THE PHILIPPINES provides:
Sec. 175. Unprotected Subject Matter.
— Notwithstanding the provisions of
Sections 172 and 173, no protection
shall extend, under this law, to any idea,
procedure, system, method or operation,
concept, principle, discovery or mere
data as such, even if they are
expressed, explained, illustrated or
embodied in a work; news of the day
and other miscellaneous facts having
the character of mere items of press
information; or any official text of a
legislative, administrative or legal
nature, as well as any official translation
thereof.
What then is the subject matter of petitioners' copyright?
This Court is of the opinion that petitioner BJPI's
copyright covers audio-visual recordings of each episode
of Rhoda and Me, as falling within the class of works
mentioned in P.D. 49, §2(M), to wit:
Cinematographic works and works
produced by a process analogous to
cinematography or any process for
making audio-visual recordings;
The copyright does not extend to the general
concept or format of its dating game show.
Accordingly, by the very nature of the subject of
petitioner BJPI's copyright, the investigating
prosecutor should have the opportunity to
compare the videotapes of the two shows.
Mere description by words of the general format of the
two dating game shows is insufficient; the presentation
of the master videotape in evidence was indispensable
to the determination of the existence of probable cause.
As aptly observed by respondent Secretary of Justice:
A television show includes more than
mere words can describe because it
involves a whole spectrum of visuals
and effects, video and audio, such that
no similarity or dissimilarity may be
found by merely describing the general
copyright/format of both dating game
shows.
WHEREFORE, the petition is hereby DISMISSED
SO ORDERED.1âwphi1.nêt
50
G.R. No. 175769-70 January 19, 2009
ABS-CBN BROADCASTING
CORPORATION, Petitioners,
vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G.
REYES, FRANCIS CHUA (ANG BIAO), MANUEL F.
ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M.
COLAYCO, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 assails the July 12,
2006 Decision2 of the Court of Appeals in CA-G.R. SP
Nos. 88092 and 90762, which affirmed the December
20, 2004 Decision of the Director-General of the
Intellectual Property Office (IPO) in Appeal No. 10-2004-
0002. Also assailed is the December 11, 2006
Resolution3 denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-
CBN) is licensed under the laws of the Republic of the
Philippines to engage in television and radio
broadcasting.4 It broadcasts television programs by
wireless means to Metro Manila and nearby provinces,
and by satellite to provincial stations through Channel 2
on Very High Frequency (VHF) and Channel 23 on Ultra
High Frequency (UHF). The programs aired over
Channels 2 and 23 are either produced by ABS-CBN or
purchased from or licensed by other producers.
ABS-CBN also owns regional television stations which
pattern their programming in accordance with perceived
demands of the region. Thus, television programs shown
in Metro Manila and nearby provinces are not
necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI)
is the operator of Dream Broadcasting System. It
delivers digital direct-to-home (DTH) television via
satellite to its subscribers all over the Philippines. Herein
individual respondents, Cesar G. Reyes, Francis Chua,
Manuel F. Abellada, Raul B. De Mesa, and Aloysius M.
Colayco, are members of PMSI’s Board of Directors.
PMSI was granted a legislative franchise under Republic
Act No. 86305 on May 7, 1998 and was given a
Provisional Authority by the National
Telecommunications Commission (NTC) on February 1,
2000 to install, operate and maintain a nationwide DTH
satellite service. When it commenced operations, it
offered as part of its program line-up ABS-CBN
Channels 2 and 23, NBN, Channel 4, ABC Channel 5,
GMA Channel 7, RPN Channel 9, and IBC Channel 13,
together with other paid premium program channels.
However, on April 25, 2001,6 ABS-CBN demanded for
PMSI to cease and desist from rebroadcasting Channels
2 and 23. On April 27, 2001,7 PMSI replied that the
rebroadcasting was in accordance with the authority
granted it by NTC and its obligation under NTC
Memorandum Circular No. 4-08-88,8 Section 6.2 of
which requires all cable television system operators
operating in a community within Grade “A” or “B”
contours to carry the television signals of the authorized
television broadcast stations.9

Thereafter, negotiations ensued between the parties in
an effort to reach a settlement; however, the
negotiations were terminated on April 4, 2002 by ABS-
CBN allegedly due to PMSI’s inability to ensure the
prevention of illegal retransmission and further
rebroadcast of its signals, as well as the adverse effect
of the rebroadcasts on the business operations of its
regional television stations.10
On May 13, 2002, ABS-CBN filed with the IPO a
complaint for “Violation of Laws Involving Property
Rights, with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction,”
which was docketed as IPV No. 10-2002-0004. It alleged
that PMSI’s unauthorized rebroadcasting of Channels 2
and 23 infringed on its broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the
IPO granted ABS-CBN’s application for a temporary
restraining order. On July 12, 2002, PMSI suspended its
retransmission of Channels 2 and 23 and likewise filed a
petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation
reiterating that it is subject to the must-carry rule under
Memorandum Circular No. 04-08-88. It also submitted a
letter dated December 20, 2002 of then NTC
Commissioner Armi Jane R. Borje to PMSI stating as
follows:
This refers to your letter dated December 16, 2002
requesting for regulatory guidance from this Commission
in connection with the application and coverage of NTC
Memorandum Circular No. 4-08-88, particularly Section
6 thereof, on mandatory carriage of television broadcast
signals, to the direct-to-home (DTH) pay television
services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable
television services are broadcast services, the only
difference being the medium of delivering such services
(i.e. the former by satellite and the latter by cable). Both
can carry broadcast signals to the remote areas, thus
enriching the lives of the residents thereof through the
dissemination of social, economic, educational
information and cultural programs.
The DTH pay television services of PMSI is equipped to
provide nationwide DTH satellite services. Concededly,
PMSI’s DTH pay television services covers very much
wider areas in terms of carriage of broadcast signals,
including areas not reachable by cable television
services thereby providing a better medium of
dissemination of information to the public.
In view of the foregoing and the spirit and intent of
NTC memorandum Circular No. 4-08-88, particularly
section 6 thereof, on mandatory carriage of
television broadcast signals, DTH pay television
services should be deemed covered by such NTC
Memorandum Circular.
For your guidance. (Emphasis added)11
On August 26, 2003, PMSI filed another Manifestation
with the BLA that it received a letter dated July 24, 2003
from the NTC enjoining strict and immediate compliance
with the must-carry rule under Memorandum Circular No.
04-08-88, to wit:
51
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications
Commission (NTC) received a letter dated July 17, 2003
from President/COO Rene Q. Bello of the International
Broadcasting Corporation (IBC-Channel 13) complaining
that your company, Dream Broadcasting System, Inc.,
has cut-off, without any notice or explanation
whatsoever, to air the programs of IBC-13, a free-to-air
television, to the detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite
operator, operating a direct-to-home (DTH)
broadcasting system, with a provisional authority
(PA) from the NTC, your company, along with cable
television operators, are mandated to strictly comply
with the existing policy of NTC on mandatory
carriage of television broadcast signals as provided
under Memorandum Circular No. 04-08-88, also
known as the Revised Rules and Regulations
Governing Cable Television System in the
Philippines.
This mandatory coverage provision under Section
6.2 of said Memorandum Circular, requires all cable
television system operators, operating in a
community within the Grade “A” or “B” contours to
“must-carry” the television signals of the authorized
television broadcast stations, one of which is IBC-
13. Said directive equally applies to your company
as the circular was issued to give consumers and
the public a wider access to more sources of news,
information, entertainment and other
programs/contents.
This Commission, as the governing agency vested by
laws with the jurisdiction, supervision and control over all
public services, which includes direct broadcast satellite
operators, and taking into consideration the paramount
interest of the public in general, hereby directs you to
immediately restore the signal of IBC-13 in your network
programs, pursuant to existing circulars and regulations
of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued
Memorandum Circular No. 10-10-2003, entitled
“Implementing Rules and Regulations Governing
Community Antenna/Cable Television (CATV) and Direct
Broadcast Satellite (DBS) Services to Promote
Competition in the Sector.” Article 6, Section 8 thereof
states:
As a general rule, the reception, distribution and/or
transmission by any CATV/DBS operator of any
television signals without any agreement with or
authorization from program/content providers are
prohibited.
On whether Memorandum Circular No. 10-10-2003
amended Memorandum Circular No. 04-08-88, the NTC
explained to PMSI in a letter dated November 3, 2003
that:
To address your query on whether or not the provisions
of MC 10-10-2003 would have the effect of amending

the provisions of MC 4-08-88 on mandatory carriage of
television signals, the answer is in the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains
valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed
direct-to-home satellite television service provider
authorized by this Commission, your company
continues to be bound by the guidelines provided
for under MC 04-08-88, specifically your obligation
under its mandatory carriage provisions, in addition
to your obligations under MC 10-10-2003. (Emphasis
added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a
decision14 finding that PMSI infringed the broadcasting
rights and copyright of ABS-CBN and ordering it to
permanently cease and desist from rebroadcasting
Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the
Office of the Director-General of the IPO which was
docketed as Appeal No. 10-2004-0002. On December
23, 2004, it also filed with the Court of Appeals a “Motion
to Withdraw Petition; Alternatively, Memorandum of the
Petition for Certiorari” in CA-G.R. SP No. 71597, which
was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO
rendered a decision15 in favor of PMSI, the dispositive
portion of which states:
WHEREFORE, premises considered, the instant appeal
is hereby GRANTED. Accordingly, Decision No. 2003-01
dated 22 December 2003 of the Director of Bureau of
Legal Affairs is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of
the Bureau of Legal Affairs for appropriate action, and
the records be returned to her for proper disposition. The
Documentation, Information and Technology Transfer
Bureau is also given a copy for library and reference
purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for
issuance of a temporary restraining order and writ of
preliminary injunction with the Court of Appeals, which
was docketed as CA-G.R. SP No. 88092.
On July 18, 2005, the Court of Appeals issued a
temporary restraining order. Thereafter, ABS-CBN filed a
petition for contempt against PMSI for continuing to
rebroadcast Channels 2 and 23 despite the restraining
order. The case was docketed as CA- G.R. SP No.
90762.
On November 14, 2005, the Court of Appeals ordered
the consolidation of CA-G.R. SP Nos. 88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court
of Appeals sustained the findings of the Director-General
52
of the IPO and dismissed both petitions filed by ABS-
CBN.17
ABS-CBN’s motion for reconsideration was denied,
hence, this petition.
ABS-CBN contends that PMSI’s unauthorized
rebroadcasting of Channels 2 and 23 is an infringement
of its broadcasting rights and copyright under the
Intellectual Property Code (IP Code);18that Memorandum
Circular No. 04-08-88 excludes DTH satellite television
operators; that the Court of Appeals’ interpretation of the
must-carry rule violates Section 9 of Article III 19 of the
Constitution because it allows the taking of property for
public use without payment of just compensation; that
the Court of Appeals erred in dismissing the petition for
contempt docketed as CA-G.R. SP No. 90762 without
requiring respondents to file comment.
Respondents, on the other hand, argue that PMSI’s
rebroadcasting of Channels 2 and 23 is sanctioned by
Memorandum Circular No. 04-08-88; that the must-carry
rule under the Memorandum Circular is a valid exercise
of police power; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need
to exercise its power of contempt.
After a careful review of the facts and records of this
case, we affirm the findings of the Director-General of
the IPO and the Court of Appeals.
There is no merit in ABS-CBN’s contention that PMSI
violated its broadcaster’s rights under Section 211 of the
IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of
Section 212, broadcasting organizations shall enjoy the
exclusive right to carry out, authorize or prevent any of
the following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBN’s
copyright under Section 177 of the IP Code which states
that copyright or economic rights shall consist of the
exclusive right to carry out, authorize or prevent the
public performance of the work (Section 177.6), and
other communication to the public of the work (Section
177.7).20
Section 202.7 of the IP Code defines broadcasting as
“the transmission by wireless means for the public
reception of sounds or of images or of representations
thereof; such transmission by satellite is also
‘broadcasting’ where the means for decrypting are
provided to the public by the broadcasting organization
or with its consent.”
On the other hand, rebroadcasting as defined in Article
3(g) of the International Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting
Organizations, otherwise known as the 1961 Rome
Convention, of which the Republic of the Philippines is a
signatory, 21 is “the simultaneous broadcasting by one

broadcasting organization of the broadcast of another
broadcasting organization.”
The Director-General of the IPO correctly found that
PMSI is not engaged in rebroadcasting and thus cannot
be considered to have infringed ABS-CBN’s
broadcasting rights and copyright, thus:
That the Appellant’s [herein respondent PMSI]
subscribers are able to view Appellee’s [herein petitioner
ABS-CBN] programs (Channels 2 and 23) at the same
time that the latter is broadcasting the same is
undisputed. The question however is, would the
Appellant in doing so be considered engaged in
broadcasting. Section 202.7 of the IP Code states that
broadcasting means
“the transmission by wireless means for the public
reception of sounds or of images or of representations
thereof; such transmission by satellite is also
‘broadcasting’ where the means for decrypting are
provided to the public by the broadcasting organization
or with its consent.”
Section 202.7 of the IP Code, thus, provides two
instances wherein there is broadcasting, to wit:
1. The transmission by wireless means for the
public reception of sounds or of images or of
representations thereof; and
2. The transmission by satellite for the public
reception of sounds or of images or of
representations thereof where the means for
decrypting are provided to the public by the
broadcasting organization or with its consent.
It is under the second category that Appellant’s DTH
satellite television service must be examined since it is
satellite-based. The elements of such category are as
follows:
1. There is transmission of sounds or images or
of representations thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the
public by the broadcasting organization or with
its consent.
It is only the presence of all the above elements can a
determination that the DTH is broadcasting and
consequently, rebroadcasting Appellee’s signals in
violation of Sections 211 and 177 of the IP Code, may
be arrived at.
Accordingly, this Office is of the view that the
transmission contemplated under Section 202.7 of the IP
Code presupposes that the origin of the signals is the
broadcaster. Hence, a program that is broadcasted is
attributed to the broadcaster. In the same manner, the
rebroadcasted program is attributed to the
rebroadcaster.
In the case at hand, Appellant is not the origin nor does
it claim to be the origin of the programs broadcasted by
53
the Appellee. Appellant did not make and transmit on its
own but merely carried the existing signals of the
Appellee. When Appellant’s subscribers view Appellee’s
programs in Channels 2 and 23, they know that the
origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of
broadcasting. When a broadcaster transmits, the signals
are scattered or dispersed in the air. Anybody may pick-
up these signals. There is no restriction as to its number,
type or class of recipients. To receive the signals, one is
not required to subscribe or to pay any fee. One only has
to have a receiver, and in case of television signals, a
television set, and to tune-in to the right
channel/frequency. The definition of broadcasting,
wherein it is required that the transmission is wireless, all
the more supports this discussion. Apparently, the
undiscriminating dispersal of signals in the air is possible
only through wireless means. The use of wire in
transmitting signals, such as cable television, limits the
recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not
enough that one wants to be connected and possesses
the equipment. The service provider, such as cable
television companies may choose its subscribers.
The only limitation to such dispersal of signals in the air
is the technical capacity of the transmitters and other
equipment employed by the broadcaster. While the
broadcaster may use a less powerful transmitter to limit
its coverage, this is merely a business strategy or
decision and not an inherent limitation when
transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the
signals in its widest area of coverage as possible. On
this score, it may be said that making public means that
accessibility is undiscriminating as long as it [is] within
the range of the transmitter and equipment of the
broadcaster. That the medium through which the
Appellant carries the Appellee’s signal, that is via
satellite, does not diminish the fact that it operates and
functions as a cable television. It remains that the
Appellant’s transmission of signals via its DTH satellite
television service cannot be considered within the
purview of broadcasting. x x x
xxxx
This Office also finds no evidence on record showing
that the Appellant has provided decrypting means to the
public indiscriminately. Considering the nature of this
case, which is punitive in fact, the burden of proving the
existence of the elements constituting the acts
punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no
rebroadcasting on the part of the Appellant of the
Appellee’s programs on Channels 2 and 23, as defined
under the Rome Convention.22
Under the Rome Convention, rebroadcasting is “the
simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting
organization.” The Working Paper23 prepared by the
Secretariat of the Standing Committee on Copyright and
Related Rights defines broadcasting organizations as
“entities that take the financial and editorial responsibility
for the selection and arrangement of, and investment in,
the transmitted content.”24 Evidently, PMSI would not
qualify as a broadcasting organization because it does

not have the aforementioned responsibilities imposed
upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI
merely carries such signals which the viewers receive in
its unaltered form. PMSI does not produce, select, or
determine the programs to be shown in Channels 2 and
23. Likewise, it does not pass itself off as the origin or
author of such programs. Insofar as Channels 2 and 23
are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With
regard to its premium channels, it buys the channels
from content providers and transmits on an as-is basis to
its viewers. Clearly, PMSI does not perform the functions
of a broadcasting organization; thus, it cannot be said
that it is engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of
Appeals also correctly found that PMSI’s services are
similar to a cable television system because the services
it renders fall under cable “retransmission,” as described
in the Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being
broadcast, it can be retransmitted to new audiences by
means of cable or wire. In the early days of cable
television, it was mainly used to improve signal
reception, particularly in so-called “shadow zones,” or to
distribute the signals in large buildings or building
complexes. With improvements in technology, cable
operators now often receive signals from satellites
before retransmitting them in an unaltered form to their
subscribers through cable.
48. In principle, cable retransmission can be either
simultaneous with the broadcast over-the-air or delayed
(deferred transmission) on the basis of a fixation or a
reproduction of a fixation. Furthermore, they might be
unaltered or altered, for example through replacement of
commercials, etc. In general, however, the term
“retransmission” seems to be reserved for such
transmissions which are both simultaneous and
unaltered.
49. The Rome Convention does not grant rights against
unauthorized cable retransmission. Without such a right,
cable operators can retransmit both domestic and
foreign over the air broadcasts simultaneously to their
subscribers without permission from the broadcasting
organizations or other rightholders and without obligation
to pay remuneration.25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting
organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection
does not extend to cable retransmission. The
retransmission of ABS-CBN’s signals by PMSI – which
functions essentially as a cable television – does not
therefore constitute rebroadcasting in violation of the
former’s intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not
absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
54
184.1. Notwithstanding the provisions of Chapter V, the
following acts shall not constitute infringement of
copyright:
xxxx
(h) The use made of a work by or under the direction or
control of the Government, by the National Library or by
educational, scientific or professional institutions where
such use is in the public interest and is compatible with
fair use;
The carriage of ABS-CBN’s signals by virtue of the must-
carry rule in Memorandum Circular No. 04-08-88 is
under the direction and control of the government though
the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and
broadcast services/facilities in the Philippines.26 The
imposition of the must-carry rule is within the NTC’s
power to promulgate rules and regulations, as public
safety and interest may require, to encourage a larger
and more effective use of communications, radio and
television broadcasting facilities, and to maintain
effective competition among private entities in these
activities whenever the Commission finds it reasonably
feasible.27 As correctly observed by the Director-General
of the IPO:
Accordingly, the “Must-Carry Rule” under NTC Circular
No. 4-08-88 falls under the foregoing category of
limitations on copyright. This Office agrees with the
Appellant [herein respondent PMSI] that the “Must-Carry
Rule” is in consonance with the principles and objectives
underlying Executive Order No. 436,28 to wit:
The Filipino people must be given wider access to more
sources of news, information, education, sports event
and entertainment programs other than those provided
for by mass media and afforded television programs to
attain a well informed, well-versed and culturally refined
citizenry and enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could
support or supplement the services provided by
television broadcast facilities, local and overseas, as the
national information highway to the countryside.29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will
prevent a situation whereby station owners and a few
networks would have unfettered power to make time
available only to the highest bidders, to communicate
only their own views on public issues, people, and to
permit on the air only those with whom they agreed –
contrary to the state policy that the (franchise) grantee
like the petitioner, private respondent and other TV
station owners, shall provide at all times sound and
balanced programming and assist in the functions of
public information and education.
This is for the first time that we have a structure that
works to accomplish explicit state policy goals.30
Indeed, intellectual property protection is merely a
means towards the end of making society benefit from
the creation of its men and women of talent and genius.
This is the essence of intellectual property laws, and it
explains why certain products of ingenuity that are
concealed from the public are outside the pale of

protection afforded by the law. It also explains why the
author or the creator enjoys no more rights than are
consistent with public welfare.31
Further, as correctly observed by the Court of Appeals,
the must-carry rule as well as the legislative franchises
granted to both ABS-CBN and PMSI are in consonance
with state policies enshrined in the Constitution,
specifically Sections 9,32 17,33 and 2434 of Article II on
the Declaration of Principles and State Policies.35
ABS-CBN was granted a legislative franchise under
Republic Act No. 7966, Section 1 of which authorizes it
“to construct, operate and maintain, for commercial
purposes and in the public interest, television and radio
broadcasting in and throughout the Philippines x x x.”
Section 4 thereof mandates that it “shall provide
adequate public service time to enable the government,
through the said broadcasting stations, to reach the
population on important public issues; provide at all
times sound and balanced programming; promote public
participation such as in community programming; assist
in the functions of public information and education x x
x.”
PMSI was likewise granted a legislative franchise under
Republic Act No. 8630, Section 4 of which similarly
states that it “shall provide adequate public service time
to enable the government, through the said broadcasting
stations, to reach the population on important public
issues; provide at all times sound and balanced
programming; promote public participation such as in
community programming; assist in the functions of public
information and education x x x.” Section 5, paragraph 2
of the same law provides that “the radio spectrum is a
finite resource that is a part of the national patrimony
and the use thereof is a privilege conferred upon the
grantee by the State and may be withdrawn anytime,
after due process.”
In Telecom. & Broadcast Attys. of the Phils., Inc. v.
COMELEC,36 the Court held that a franchise is a mere
privilege which may be reasonably burdened with some
form of public service. Thus:
All broadcasting, whether by radio or by television
stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more
individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a privilege
subject, among other things, to amendment by Congress
in accordance with the constitutional provision that “any
such franchise or right granted . . . shall be subject to
amendment, alteration or repeal by the Congress when
the common good so requires.”
xxxx
Indeed, provisions for COMELEC Time have been made
by amendment of the franchises of radio and television
broadcast stations and, until the present case was
brought, such provisions had not been thought of as
taking property without just compensation. Art. XII, §11
of the Constitution authorizes the amendment of
franchises for “the common good.” What better measure
can be conceived for the common good than one for free
air time for the benefit not only of candidates but even
more of the public, particularly the voters, so that they
will be fully informed of the issues in an election? “[I]t is
the right of the viewers and listeners, not the right of the
broadcasters, which is paramount.”
55
Nor indeed can there be any constitutional objection to
the requirement that broadcast stations give free air
time. Even in the United States, there are responsible
scholars who believe that government controls on
broadcast media can constitutionally be instituted to
ensure diversity of views and attention to public affairs to
further the system of free expression. For this purpose,
broadcast stations may be required to give free air time
to candidates in an election. Thus, Professor Cass R.
Sunstein of the University of Chicago Law School, in
urging reforms in regulations affecting the broadcast
industry, writes:
xxxx
In truth, radio and television broadcasting companies,
which are given franchises, do not own the airwaves and
frequencies through which they transmit broadcast
signals and images. They are merely given the
temporary privilege of using them. Since a franchise is a
mere privilege, the exercise of the privilege may
reasonably be burdened with the performance by the
grantee of some form of public service. x x x37
There is likewise no merit to ABS-CBN’s claim that
PMSI’s carriage of its signals is for a commercial
purpose; that its being the country’s top broadcasting
company, the availability of its signals allegedly
enhances PMSI’s attractiveness to potential
customers;38 or that the unauthorized carriage of its
signals by PMSI has created competition between its
Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove
that PMSI carried its signals for profit; or that such
carriage adversely affected the business operations of
its regional stations. Except for the testimonies of its
witnesses,[39] no studies, statistical data or information
have been submitted in evidence.
Administrative charges cannot be based on mere
speculation or conjecture. The complainant has the
burden of proving by substantial evidence the allegations
in the complaint.40 Mere allegation is not evidence, and
is not equivalent to proof.41
Anyone in the country who owns a television set and
antenna can receive ABS-CBN’s signals for free. Other
broadcasting organizations with free-to-air signals such
as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be
accessed for free. No payment is required to view the
said channels42 because these broadcasting networks
do not generate revenue from subscription from their
viewers but from airtime revenue from contracts with
commercial advertisers and producers, as well as from
direct sales.
In contrast, cable and DTH television earn revenues
from viewer subscription. In the case of PMSI, it offers its
customers premium paid channels from content
providers like Star Movies, Star World, Jack TV, and
AXN, among others, thus allowing its customers to go
beyond the limits of “Free TV and Cable TV.”43 It does
not advertise itself as a local channel carrier because
these local channels can be viewed with or without DTH
television.
Relevantly, PMSI’s carriage of Channels 2 and 23 is
material in arriving at the ratings and audience share of
ABS-CBN and its programs. These ratings help
commercial advertisers and producers decide whether to

buy airtime from the network. Thus, the must-carry rule
is actually advantageous to the broadcasting networks
because it provides them with increased viewership
which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals
imposes a burden to cable and DTH television providers
such as PMSI. PMSI uses none of ABS-CBN’s
resources or equipment and carries the signals and
shoulders the costs without any recourse of
charging.44 Moreover, such carriage of signals takes up
channel space which can otherwise be utilized for other
premium paid channels.
There is no merit to ABS-CBN’s argument that PMSI’s
carriage of Channels 2 and 23 resulted in competition
between its Metro Manila and regional stations. ABS-
CBN is free to decide to pattern its regional programming
in accordance with perceived demands of the region;
however, it cannot impose this kind of programming on
the regional viewers who are also entitled to the free-to-
air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBN’s
responsibilities is to scatter its signals to the widest area
of coverage as possible. That it should limit its signal
reach for the sole purpose of gaining profit for its
regional stations undermines public interest and
deprives the viewers of their right to access to
information.
Indeed, television is a business; however, the welfare of
the people must not be sacrificed in the pursuit of profit.
The right of the viewers and listeners to the most diverse
choice of programs available is paramount.45 The
Director-General correctly observed, thus:
The “Must-Carry Rule” favors both broadcasting
organizations and the public. It prevents cable television
companies from excluding broadcasting organization
especially in those places not reached by signal. Also,
the rule prevents cable television companies from
depriving viewers in far-flung areas the enjoyment of
programs available to city viewers. In fact, this Office
finds the rule more burdensome on the part of the cable
television companies. The latter carries the television
signals and shoulders the costs without any recourse of
charging. On the other hand, the signals that are carried
by cable television companies are dispersed and
scattered by the television stations and anybody with a
television set is free to pick them up.
With its enormous resources and vaunted technological
capabilities, Appellee’s [herein petitioner ABS-CBN]
broadcast signals can reach almost every corner of the
archipelago. That in spite of such capacity, it chooses to
maintain regional stations, is a business decision. That
the “Must-Carry Rule” adversely affects the profitability of
maintaining such regional stations since there will be
competition between them and its Metro Manila station is
speculative and an attempt to extrapolate the effects of
the rule. As discussed above, Appellant’s DTH satellite
television services is of limited subscription. There was
not even a showing on part of the Appellee the number
of Appellant’s subscribers in one region as compared to
non-subscribing television owners. In any event, if this
Office is to engage in conjecture, such competition
between the regional stations and the Metro Manila
station will benefit the public as such competition will
most likely result in the production of better television
programs.”46
56
All told, we find that the Court of Appeals correctly
upheld the decision of the IPO Director-General that
PMSI did not infringe on ABS-CBN’s intellectual property
rights under the IP Code. The findings of facts of
administrative bodies charged with their specific field of
expertise, are afforded great weight by the courts, and in
the absence of substantial showing that such findings
are made from an erroneous estimation of the evidence
presented, they are conclusive, and in the interest of
stability of the governmental structure, should not be
disturbed.47
Moreover, the factual findings of the Court of Appeals
are conclusive on the parties and are not reviewable by
the Supreme Court. They carry even more weight when
the Court of Appeals affirms the factual findings of a
lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBN’s contention that
the Memorandum Circular excludes from its coverage
DTH television services such as those provided by
PMSI. Section 6.2 of the Memorandum Circular requires
all cable television system operators operating in a
community within Grade “A” or “B” contours to carry the
television signals of the authorized television broadcast
stations.49 The rationale behind its issuance can be
found in the whereas clauses which state:
Whereas, Cable Television Systems or Community
Antenna Television (CATV) have shown their ability to
offer additional programming and to carry much
improved broadcast signals in the remote areas, thereby
enriching the lives of the rest of the population through
the dissemination of social, economic, educational
information and cultural programs;
Whereas, the national government supports the
promotes the orderly growth of the Cable Television
industry within the framework of a regulated fee
enterprise, which is a hallmark of a democratic society;
Whereas, public interest so requires that monopolies in
commercial mass media shall be regulated or prohibited,
hence, to achieve the same, the cable TV industry is
made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and
Executive Order 205 granting the National
Telecommunications Commission the authority to set
down rules and regulations in order to protect the public
and promote the general welfare, the National
Telecommunications Commission hereby promulgates
the following rules and regulations on Cable Television
Systems;
The policy of the Memorandum Circular is to carry
improved signals in remote areas for the good of the
general public and to promote dissemination of
information. In line with this policy, it is clear that DTH
television should be deemed covered by the
Memorandum Circular. Notwithstanding the different
technologies employed, both DTH and cable television
have the ability to carry improved signals and promote
dissemination of information because they operate and
function in the same way.
In its December 20, 2002 letter,50 the NTC explained that
both DTH and cable television services are of a similar
nature, the only difference being the medium of
delivering such services. They can carry broadcast
signals to the remote areas and possess the capability to

enrich the lives of the residents thereof through the
dissemination of social, economic, educational
information and cultural programs. Consequently, while
the Memorandum Circular refers to cable television, it
should be understood as to include DTH television which
provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v.
International Communication Corporation,51 we held:
The NTC, being the government agency entrusted with
the regulation of activities coming under its special and
technical forte, and possessing the necessary rule-
making power to implement its objectives, is in the best
position to interpret its own rules, regulations and
guidelines. The Court has consistently yielded and
accorded great respect to the interpretation by
administrative agencies of their own rules unless there is
an error of law, abuse of power, lack of jurisdiction or
grave abuse of discretion clearly conflicting with the
letter and spirit of the law.52
With regard to the issue of the constitutionality of the
must-carry rule, the Court finds that its resolution is not
necessary in the disposition of the instant case. One of
the essential requisites for a successful judicial inquiry
into constitutional questions is that the resolution of the
constitutional question must be necessary in deciding
the case.53 In Spouses Mirasol v. Court of Appeals,54 we
held:
As a rule, the courts will not resolve the constitutionality
of a law, if the controversy can be settled on other
grounds. The policy of the courts is to avoid ruling on
constitutional questions and to presume that the acts of
the political departments are valid, absent a clear and
unmistakable showing to the contrary. To doubt is to
sustain. This presumption is based on the doctrine of
separation of powers. This means that the measure had
first been carefully studied by the legislative and
executive departments and found to be in accord with
the Constitution before it was finally enacted and
approved.55
The instant case was instituted for violation of the IP
Code and infringement of ABS-CBN’s broadcasting
rights and copyright, which can be resolved without
going into the constitutionality of Memorandum Circular
No. 04-08-88. As held by the Court of Appeals, the only
relevance of the circular in this case is whether or not
compliance therewith should be considered
manifestation of lack of intent to commit infringement,
and if it is, whether such lack of intent is a valid defense
against the complaint of petitioner.56
The records show that petitioner assailed the
constitutionality of Memorandum Circular No. 04-08-88
by way of a collateral attack before the Court of Appeals.
In Philippine National Bank v. Palma,57 we ruled that for
reasons of public policy, the constitutionality of a law
cannot be collaterally attacked. A law is deemed valid
unless declared null and void by a competent court;
more so when the issue has not been duly pleaded in
the trial court.58
As a general rule, the question of constitutionality must
be raised at the earliest opportunity so that if not raised
in the pleadings, ordinarily it may not be raised in the
trial, and if not raised in the trial court, it will not be
considered on appeal.59 In Philippine Veterans Bank v.
Court of Appeals,60 we held:
57
We decline to rule on the issue of constitutionality as all
the requisites for the exercise of judicial review are not
present herein. Specifically, the question of
constitutionality will not be passed upon by the
Court unless, at the first opportunity, it is properly
raised and presented in an appropriate case,
adequately argued, and is necessary to a
determination of the case, particularly where the
issue of constitutionality is the very lis mota
presented.x x x61
Finally, we find that the dismissal of the petition for
contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu
proprio by the court by issuing an order or any other
formal charge requiring the respondent to show cause
why he should not be punished for contempt or (2) by
the filing of a verified petition, complying with the
requirements for filing initiatory pleadings.62
ABS-CBN filed a verified petition before the Court of
Appeals, which was docketed CA G.R. SP No. 90762,
for PMSI’s alleged disobedience to the Resolution and
Temporary Restraining Order, both dated July 18, 2005,
issued in CA-G.R. SP No. 88092. However, after the
cases were consolidated, the Court of Appeals did not
require PMSI to comment on the petition for contempt. It
ruled on the merits of CA-G.R. SP No. 88092 and
ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in
dismissing the petition for contempt without having
ordered respondents to comment on the same.
Consequently, it would have us reinstate CA-G.R. No.
90762 and order respondents to show cause why they
should not be held in contempt.
It bears stressing that the proceedings for punishment of
indirect contempt are criminal in nature. The modes of
procedure and rules of evidence adopted in contempt
proceedings are similar in nature to those used in
criminal prosecutions. 63 While it may be argued that the
Court of Appeals should have ordered respondents to
comment, the issue has been rendered moot in light of
our ruling on the merits. To order respondents to
comment and have the Court of Appeals conduct a
hearing on the contempt charge when the main case has
already been disposed of in favor of PMSI would be
circuitous. Where the issues have become moot, there is
no justiciable controversy, thereby rendering the
resolution of the same of no practical use or value.64
WHEREFORE, the petition is DENIED. The July 12,
2006 Decision of the Court of Appeals in CA-G.R. SP
Nos. 88092 and 90762, sustaining the findings of the
Director-General of the Intellectual Property Office and
dismissing the petitions filed by ABS-CBN Broadcasting
Corporation, and the December 11, 2006 Resolution
denying the motion for reconsideration, are AFFIRMED.
SO ORDERED.

G.R. No. L-36402 March 16, 1987
FILIPINO SOCIETY OF COMPOSERS, AUTHORS
AND PUBLISHERS, INC., plaintiff-appellant,
vs.
BENJAMIN TAN, defendant-appellee.
Lichauco, Picazo & Agcaoili Law Office for plaintiff-
appellant.
Ramon A. Nieves for defendant-appellee.
PARAS, J.:
An appeal was made to the Court of Appeals docketed
as CA-G.R. No. 46373-R * entitled Filipino Society of
Composers, Authors, Publishers, Inc., Plaintiff-Appellant
v. Benjamin Tan, Defendant-Appellee, from the decision
of the Court of First Instance of Manila, Branch VII in
Civil Case No. 71222 ** "Filipino Society of Composers,
Authors and Publishers, Inc., Plaintiff v. Benjamin Tan,
Defendant," which had dismissed plaintiffs' complaint
without special pronouncement as to costs.
The Court of Appeals, finding that the case involves pure
questions of law, certified the same to the Supreme
Court for final determination (Resolution, CA-G.R. No.
46373-R, Rollo, p. 36; Resolution of the Supreme Court
of February 16, 1973 in L-36402, Rollo, p. 38).
The undisputed facts of this case are as follows:
Plaintiff-appellant is a non-profit association of authors,
composers and publishers duly organized under the
Corporation Law of the Philippines and registered with
the Securities and Exchange Commission. Said
association is the owner of certain musical compositions
among which are the songs entitled: "Dahil Sa Iyo",
"Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao
Lamang" and "The Nearness Of You."
On the other hand, defendant-appellee is the operator of
a restaurant known as "Alex Soda Foundation and
Restaurant" where a combo with professional singers,
hired to play and sing musical compositions to entertain
and amuse customers therein, were playing and singing
the above-mentioned compositions without any license
or permission from the appellant to play or sing the
same. Accordingly, appellant demanded from the
appellee payment of the necessary license fee for the
playing and singing of aforesaid compositions but the
demand was ignored.
Hence, on November 7, 1967, appellant filed a complaint
with the lower court for infringement of copyright against
defendant-appellee for allowing the playing in defendant-
appellee's restaurant of said songs copyrighted in the
name of the former.
Defendant-appellee, in his answer, countered that the
complaint states no cause of action. While not denying
the playing of said copyrighted compositions in his
establishment, appellee maintains that the mere singing
and playing of songs and popular tunes even if they are
copyrighted do not constitute an infringement (Record on
Appeal, p. 11; Resolution, CA-G.R. NO. 46373-R, Rollo,
pp. 32-36) under the provisions of Section 3 of the
Copyright Law (Act 3134 of the Philippine Legislature).
58
The lower court, finding for the defendant, dismissed the
complaint (Record on Appeal, p. 25).
Plaintiff appealed to the Court of Appeals which as
already stated certified the case to the Supreme Court
for adjudication on the legal question involved.
(Resolution, Court of Appeals, Rollo, p. 36; Resolution of
the Supreme Court of February 18, 1973, Rollo, p. 38).
In its brief in the Court of Appeals, appellant raised the
following Assignment of Errors:
THE LOWER COURT ERRED IN HOLDING THAT THE
MUSICAL COMPOSITIONS OF THE APPELLANT
WERE IN THE NATURE OF PUBLIC PROPERTY
WHEN THEY WERE COPYRIGHTED OR
REGISTERED.
II
THE LOWER COURT ERRED IN HOLDING THAT THE
MUSICAL COMPOSITIONS OF THE APPELLANT
WERE PLAYED AND SUNG IN THE SODA FOUNTAIN
AND RESTAURANT OF THE APPELLEE BY
INDEPENDENT CONTRACTORS AND ONLY UPON
THE REQUEST OF CUSTOMERS.
III
THE LOWER COURT ERRED IN HOLDING THAT THE
PLAYING AND SINGING OF COPYRIGHTED MUSICAL
COMPOSITIONS IN THE SODA FOUNTAIN AND
RESTAURANT OF THE APPELLEE ARE NOT PUBLIC
PERFORMANCES FOR PROFIT OF THE SAID
COMPOSITIONS WITHIN THE MEANING AND
CONTEMPLATION OF THE COPYRIGHT LAW.
IV
THE LOWER COURT ERRED IN NOT HOLDING THAT
THE APPELLEE IS LIABLE TO THE APPELLANT FOR
FOUR (4) SEPARATE INFRINGEMENTS. (Brief for
Appellant, pp. A and B).
The petition is devoid of merit.
The principal issues in this case are whether or not the
playing and signing of musical compositions which have
been copyrighted under the provisions of the Copyright
Law (Act 3134) inside the establishment of the
defendant-appellee constitute a public performance for
profit within the meaning and contemplation of the
Copyright Law of the Philippines; and assuming that
there were indeed public performances for profit,
whether or not appellee can be held liable therefor.
Appellant anchors its claim on Section 3(c) of the
Copyright Law which provides:
SEC. 3. The proprietor of a copyright or
his heirs or assigns shall have the
exclusive right:
xxx xxx xxx
(c) To exhibit, perform, represent,
produce, or reproduce the copyrighted

work in any manner or by any method
whatever for profit or otherwise; if not
reproduced in copies for sale, to sell any
manuscripts or any record whatsoever
thereof;
xxx xxx xxx
It maintains that playing or singing a musical composition
is universally accepted as performing the musical
composition and that playing and singing of copyrighted
music in the soda fountain and restaurant of the appellee
for the entertainment of the customers although the latter
do not pay for the music but only for the food and drink
constitute performance for profit under the Copyright
Law (Brief for the Appellant, pp. 19-25).
We concede that indeed there were "public
performances for profit. "
The word "perform" as used in the Act has been applied
to "One who plays a musical composition on a piano,
thereby producing in the air sound waves which are
heard as music ... and if the instrument he plays on is a
piano plus a broadcasting apparatus, so that waves are
thrown out, not only upon the air, but upon the other,
then also he is performing the musical composition."
(Buck, et al. v. Duncan, et al.; Same Jewell La Salle
Realty Co., 32F. 2d. Series 367).
In relation thereto, it has been held that "The playing of
music in dine and dance establishment which was paid
for by the public in purchases of food and drink
constituted "performance for profit" within a Copyright
Law." (Buck, et al. v. Russon No. 4489 25 F. Supp. 317).
Thus, it has been explained that while it is possible in
such establishments for the patrons to purchase their
food and drinks and at the same time dance to the music
of the orchestra, the music is furnished and used by the
orchestra for the purpose of inducing the public to
patronize the establishment and pay for the
entertainment in the purchase of food and drinks. The
defendant conducts his place of business for profit, and
it is public; and the music is performed for profit (Ibid, p.
319). In a similar case, the Court ruled that "The
Performance in a restaurant or hotel dining room, by
persons employed by the proprietor, of a copyrighted
musical composition, for the entertainment of patrons,
without charge for admission to hear it, infringes the
exclusive right of the owner of the copyright." (Herbert v.
Shanley Co.; John Church Co. v. Hillard Hotel Co., et al.,
242 U.S. 590-591). In delivering the opinion of the Court
in said two cases, Justice Holmes elaborated thus:
If the rights under the copyright are
infringed only by a performance where
money is taken at the door, they are
very imperfectly protected.
Performances not different in kind from
those of the defendants could be given
that might compete with and even
destroy the success of the monopoly
that the law intends the plaintiffs to
have. It is enough to say that there is no
need to construe the statute so
narrowly. The defendants' performances
are not eleemosynary. They are part of
a total for which the public pays, and the
fact that the price of the whole is
attributed to a particular item which
those present are expected to order is
59
not important. It is true that the music is
not the sole object, but neither is the
food, which probably could be got
cheaper elsewhere. The object is a
repast in surroundings that to people
having limited power of conversation or
disliking the rival noise, give a luxurious
pleasure not to be had from eating a
silent meal. If music did not pay, it would
be given up. If it pays, it pays out of the
public's pocket. Whether it pays or not,
the purpose of employing it is profit, and
that is enough. (Ibid., p. 594).
In the case at bar, it is admitted that the patrons of the
restaurant in question pay only for the food and drinks
and apparently not for listening to the music. As found by
the trial court, the music provided is for the purpose of
entertaining and amusing the customers in order to
make the establishment more attractive and desirable
(Record on Appeal, p. 21). It will be noted that for the
playing and singing the musical compositions involved,
the combo was paid as independent contractors by the
appellant (Record on Appeal, p. 24). It is therefore
obvious that the expenses entailed thereby are added to
the overhead of the restaurant which are either
eventually charged in the price of the food and drinks or
to the overall total of additional income produced by the
bigger volume of business which the entertainment was
programmed to attract. Consequently, it is beyond
question that the playing and singing of the combo in
defendant-appellee's restaurant constituted performance
for profit contemplated by the Copyright Law. (Act 3134
amended by P.D. No. 49, as amended).
Nevertheless, appellee cannot be said to have infringed
upon the Copyright Law. Appellee's allegation that the
composers of the contested musical
compositions waived their right in favor of the general
public when they allowed their intellectual creations to
become property of the public domain before applying
for the corresponding copyrights for the same (Brief for
Defendant-Appellee, pp. 14-15) is correct.
The Supreme Court has ruled that "Paragraph 33 of
Patent Office Administrative Order No. 3 (as amended,
dated September 18, 1947) entitled 'Rules of Practice in
the Philippines Patent Office relating to the Registration
of Copyright Claims' promulgated pursuant to Republic
Act 165, provides among other things that an intellectual
creation should be copyrighted thirty (30) days after its
publication, if made in Manila, or within the (60) days if
made elsewhere, failure of which renders such creation
public property." (Santos v. McCullough Printing
Company, 12 SCRA 324-325 [1964]. Indeed, if the
general public has made use of the object sought to be
copyrighted for thirty (30) days prior to the copyright
application the law deems the object to have been
donated to the public domain and the same can no
longer be copyrighted.
A careful study of the records reveals that the song
"Dahil Sa Iyo" which was registered on April 20, 1956
(Brief for Appellant, p. 10) became popular in radios,
juke boxes, etc. long before registration (TSN, May 28,
1968, pp. 3-5; 25) while the song "The Nearness Of You"
registered on January 14, 1955 (Brief for Appellant, p.
10) had become popular twenty five (25) years prior to
1968, (the year of the hearing) or from 1943 (TSN, May
28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin"
and "Sapagkat Kami Ay Tao Lamang" both registered on

July 10, 1966, appear to have been known and sang by
the witnesses as early as 1965 or three years before the
hearing in 1968. The testimonies of the witnesses at the
hearing of this case on this subject were unrebutted by
the appellant. (Ibid, pp. 28; 29 and 30).
Under the circumstances, it is clear that the musical
compositions in question had long become public
property, and are therefore beyond the protection of the
Copyright Law.
PREMISES CONSIDERED, the appealed decision of the
Court of First Instance of Manila in Civil Case No. 71222
is hereby AFFIRMED.
SO ORDERED.
60
G.R. No. 131522 July 19, 1999
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N.
FERNANDO, petitioners,
vs.
FELICIDAD C. ROBLES and GOODWILL TRADING
CO., INC., respondents.
PARDO, J.:
The case before us is a petition for review
on certiorari1 to set aside the (a) decision or the Court of
Appeals2, and (b) the resolution denying petitioners'
motion for reconsideration,3 in which the appellate court
affirmed the trial court's dismissal of the complaint for
infringement and/or unfair competition and damages but
deleted the award for attorney's fees.1âwphi1.nêt
The facts are as follows:
Petitioners are authors and copyright owners of duly
issued certificates of copyright registration covering their
published works, produced through their combined
resources and efforts, entitled COLLEGE ENGLISH FOR
TODAY (CET for brevity), Books 1 and 2, and
WORKBOOK FOR COLLEGE FRESHMAN ENGLISH,
Series 1.
Respondent Felicidad Robles and Goodwill Trading Co.,
Inc. are the author/publisher and distributor/seller of
another published work entitled "DEVELOPING
ENGLISH PROFICIENCY" (DEP for brevity), Books 1
and 2 (1985 edition) which book was covered by
copyrights issued to them.
In the course of revising their published works,
petitioners scouted and looked around various
bookstores to check on other textbooks dealing with the
same subject matter. By chance they came upon the
book of respondent Robles and upon perusal of said
book they were surprised to see that the book was
strikingly similar to the contents, scheme of presentation,
illustrations and illustrative examples in their own book,
CET.
After an itemized examination and comparison of the two
books (CET and DEP), petitioners found that several
pages of the respondent's book are similar, if not all
together a copy of petitioners' book, which is a case of
plagiarism and copyright infringement.
Petitioners then made demands for damages against
respondents and also demanded that they cease and
desist from further selling and distributing to the general
public the infringed copies of respondent Robles' works.
However, respondents ignored the demands, hence, on
July 7, 1988; petitioners filed with the Regional Trial
Court, Makati, a complaint for "Infringement and/or unfair
competition with damages" 4 against private
respondents. 5
In the complaint, petitioners alleged that in 1985,
respondent Felicidad C. Robles being substantially
familiar with the contents of petitioners' works, and
without securing their permission, lifted, copied,
plagiarized and/or transposed certain portions of their
book CET. The textual contents and illustrations of CET

were literally reproduced in the book DEP. The
plagiarism, incorporation and reproduction of particular
portions of the book CET in the book DEP, without the
authority or consent of petitioners, and the
misrepresentations of respondent Robles that the same
was her original work and concept adversely affected
and substantially diminished the sale of the petitioners'
book and caused them actual damages by way of
unrealized income.
Despite the demands of the petitioners for respondents
to desist from committing further acts of infringement and
for respondent to recall DEP from the market,
respondents refused. Petitioners asked the court to
order the submission of all copies of the book DEP,
together with the molds, plates and films and other
materials used in its printing destroyed, and for
respondents to render an accounting of the proceeds of
all sales and profits since the time of its publication and
sale.
Respondent Robles was impleaded in the suit because
she authored and directly committed the acts of
infringement complained of, while respondent Goodwill
Trading Co., Inc. was impleaded as the publisher and
joint co-owner of the copyright certificates of registration
covering the two books authored and caused to be
published by respondent Robles with obvious
connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a
bill of particulars6 which the trial court approved on
August 17, 1988. Petitioners complied with the desired
particularization, and furnished respondent Robles the
specific portions, inclusive of pages and lines, of the
published and copyrighted books of the petitioners which
were transposed, lifted, copied and plagiarized and/or
otherwise found their way into respondent's book.
On August 1, 1988, respondent Goodwill Trading Co.,
Inc. filed its answer to the complaint7 and alleged that
petitioners had no cause of action against Goodwill
Trading Co., Inc. since it was not privy to the
misrepresentation, plagiarism, incorporation and
reproduction of the portions of the book of petitioners;
that there was an agreement between Goodwill and the
respondent Robles that Robles guaranteed Goodwill that
the materials utilized in the manuscript were her own or
that she had secured the necessary permission from
contributors and sources; that the author assumed sole
responsibility and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her
answer8, and denied the allegations of plagiarism and
copying that petitioners claimed. Respondent stressed
that (1) the book DEP is the product of her independent
researches, studies and experiences, and was not a
copy of any existing valid copyrighted book; (2) DEP
followed the scope and sequence or syllabus which are
common to all English grammar writers as
recommended by the Association of Philippine Colleges
of Arts and Sciences (APCAS), so any similarity between
the respondents book and that of the petitioners was due
to the orientation of the authors to both works and
standards and syllabus; and (3) the similarities may be
due to the authors' exercise of the "right to fair use of
copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on
the ground that bad faith and malice attended the filing
of the complaint, because petitioner Habana was
61
professionally jealous and the book DEP replaced CET
as the official textbook of the graduate studies
department of the Far Eastern University.9
During the pre-trial conference, the parties agreed to a
stipulation of
facts 10 and for the trial court to first resolve the issue of
infringement before disposing of the claim for damages.
After the trial on the merits, on April 23, 1993, the trial
court rendered its judgment finding thus:
WHEREFORE, premises considered,
the court hereby orders that the
complaint filed against defendants
Felicidad Robles and Goodwill Trading
Co., Inc. shall be DISMISSED; that said
plaintiffs solidarily reimburse defendant
Robles for P20,000.00 attorney's fees
and defendant Goodwill for P5,000.00
attorney's fees. Plaintiffs are liable for
cost of suit.
IT IS SO ORDERED.
Done in the City of Manila this 23rd day
of April, 1993.
(s/t) MARVIE R. ABRAHAM SINGSON
Assisting Judge
S. C. Adm. Order No. 124-92 11
On May 14, 1993, petitioners filed their notice of appeal
with the trial court 12, and on July 19, 1993, the court
directed its branch clerk of court to forward all the
records of the case to the Court of Appeals. 13
In the appeal, petitioners argued that the trial court
completely disregarded their evidence and fully
subscribed to the arguments of respondent Robles that
the books in issue were purely the product of her
researches and studies and that the copied portions
were inspired by foreign authors and as such not subject
to copyright. Petitioners also assailed the findings of the
trial court that they were animated by bad faith in
instituting the complaint. 14
On June 27, 1997, the Court of Appeals rendered
judgment in favor of respondents Robles and Goodwill
Trading Co., Inc. The relevant portions of the decision
state:
It must be noted, however, that similarity
of the allegedly infringed work to the
author's or proprietor's copyrighted work
does not of itself establish copyright
infringement, especially if the similarity
results from the fact that both works deal
with the same subject or have the same
common source, as in this case.
Appellee Robles has fully explained that
the portion or material of the book
claimed by appellants to have been
copied or lifted from foreign books. She
has duly proven that most of the topics
or materials contained in her book, with
particular reference to those matters
 62

claimed by appellants to have been
plagiarized were topics or matters
appearing not only in appellants and her
books but also in earlier books on
College English, including foreign
books, e.i. Edmund Burke's "Speech on
Conciliation", Boerigs' "Competence in
English" and Broughton's, "Edmund
Burke's Collection."
xxx xxx xxx
Appellant's reliance on the last
paragraph on Section II is misplaced. It
must be emphasized that they failed to
prove that their books were made
sources by appellee. 15
The Court of Appeals was of the view that the award of
attorneys' fees was not proper, since there was no bad
faith on the part of petitioners Habana et al. in instituting
the action against respondents.
177.3 The first public distribution of the
original and each copy of the work by
sale or other forms of transfer of
ownership;
177.4 Rental of the original or a copy of
an audiovisual or cinematographic work,
a work embodied in a sound recording,
a computer program, a compilation of
data and other materials or a musical
work in graphic form, irrespective of the
ownership of the original or the copy
which is the subject of the rental; (n)
177.5 Public display of the original or
copy of the work;
177.6 Public performance of the work;
and
177.7 Other communication to the public
of the work 19

On July 12, 1997, petitioners filed a motion for The law also provided for the limitations on copyright,
reconsideration, 16 however, the Court of Appeals denied thus:
the same in a Resolution 17 dated November 25, 1997.
Sec. 184.1 Limitations on copyright. —
Hence, this petition. Notwithstanding the provisions of
Chapter V, the following acts shall not
In this appeal, petitioners submit that the appellate court constitute infringement of copyright:
erred in affirming the trial court's decision.
(a) the recitation or
Petitioners raised the following issues: (1) whether or performance of a work,
not, despite the apparent textual, thematic and once it has been
sequential similarity between DEP and CET, lawfully made
respondents committed no copyright infringement; (2) accessible to the public,
whether or not there was animus furandi on the part of if done privately and
respondent when they refused to withdraw the copies of free of charge or if
CET from the market despite notice to withdraw the made strictly for a
same; and (3) whether or not respondent Robles abused charitable or religious
a writer's right to fair use, in violation of Section 11 of institution or society;
Presidential Decree No. 49. 18 [Sec. 10(1), P.D. No.
49]
We find the petition impressed with merit.
(b) The making of
The complaint for copyright infringement was filed at the quotations from a
time that Presidential Decree No. 49 was in force. At published work if they
present, all laws dealing with the protection of intellectual are compatible with fair
property rights have been consolidated and as the law use and only to the
now stands, the protection of copyrights is governed by extent justified for the
Republic Act No. 8293. Notwithstanding the change in purpose, including
the law, the same principles are reiterated in the new law quotations from
under Section 177. It provides for the copy or economic newspaper articles and
rights of an owner of a copyright as follows: periodicals in the form
of press
summaries; Provided,
Sec. 177. Copy or Economic rights. —
that the source and the
Subject to the provisions of chapter VIII,
name of the author, if
copyright or economic rights shall
consist of the exclusive right to carry appearing on the work
out, authorize or prevent the following are mentioned; (Sec. 11
third par. P.D. 49)
acts:

xxx xxx xxx

177.1 Reproduction of the
or substanlial portion of the work;
177.2 Dramatization, translation,
adaptation, abridgement, arrangement
or other transformation of the work;
work
(e) The inclusion of a work in a
publication, broadcast, or other
communication to the public, sound
recording of film, if such inclusion is
made by way of illustration for teaching
purposes and is compatible with fair

use: Provided, That the source and the
name of the author, if appearing in the
work is mentioned; 20
In the above quoted provisions, "work" has reference to
literary and artistic creations and this includes books and
other literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book
DEP that are similar if not identical with the text of CET.
On page 404 of petitioners' Book 1 of College English for
Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,
Manila 22
On page 73 of respondents Book 1 Developing English
Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on
parallelism or repetition of sentence structures, thus:
The proposition is peace. Not peace
through the medium of war; not peace to
be hunted through the labyrinth of
intricate and endless negotiations; not
peace to arise out of universal discord,
fomented from principle, in all parts of
the empire; not peace to depend on the
juridical determination of perplexing
questions, or the precise marking of the
boundary of a complex government. It is
simple peace; sought in its natural
course, and in its ordinary haunts. It is
peace sought in the spirit of peace, and
laid in principles purely pacific.
— Edmund Burke, "Speech on Criticism." 24
On page 100 of the book DEP 25, also in the topic of
parallel structure and repetition, the same example is
found in toto. The only difference is that petitioners
acknowledged the author Edmund Burke, and
respondents did not.
In several other pages 26 the treatment and manner of
presentation of the topics of DEP are similar if not a
rehash of that contained in CET.
We believe that respondent Robles' act of lifting from the
book of petitioners substantial portions of discussions
and examples, and her failure to acknowledge the same
in her book is an infringement of petitioners' copyrights.
When is there a substantial reproduction of a book? It
does not necessarily require that the entire copyrighted
work, or even a large portion of it, be copied. If so much
is taken that the value of the original work is substantially
63
diminished, there is an infringement of copyright and to
an injurious extent, the work is appropriated. 27
In determining the question of infringement, the amount
of matter copied from the copyrighted work is an
important consideration. To constitute infringement, it is
not necessary that the whole or even a large portion of
the work shall have been copied. If so much is taken that
the value of the original is sensibly diminished, or the
labors of the original author are substantially and to an
injurious extent appropriated by another, that is sufficient
in point of law to constitute piracy. 28
The essence of intellectual piracy should be essayed in
conceptual terms in order to underscore its gravity by an
appropriate understanding thereof. Infringement of a
copyright is a trespass on a private domain owned and
occupied by the owner of the copyright, and, therefore,
protected by law, and infringement of copyright, or
piracy, which is a synonymous term in this connection,
consists in the doing by any person, without the consent
of the owner of the copyright, of anything the sole right to
do which is conferred by statute on the owner of the
copyright. 29
The respondents' claim that the copied portions of the
book CET are also found in foreign books and other
grammar books, and that the similarity between her style
and that of petitioners can not be avoided since they
come from the same background and orientation may be
true. However, in this jurisdiction under Sec 184 of
Republic Act 8293 it is provided that:
Limitations on Copyright.
Notwithstanding the provisions of
Chapter V, the following shall not
constitute infringement of copyright:
xxx xxx xxx
(c) The making of
quotations from a
published work if they
are compatible with fair
use and only to the
extent justified for the
purpose, including
quotations from
newspaper articles and
periodicals in the form
of press
summaries: Provided,
That the source and the
name of the author, if
appearing on the work,
are mentioned.
A copy of a piracy is an infringement of the original, and
it is no defense that the pirate, in such cases, did not
know whether or not he was infringing any copyright; he
at least knew that what he was copying was not his, and
he copied at his peril. 30
The next question to resolve is to what extent can
copying be injurious to the author of the book being
copied. Is it enough that there are similarities in some
sections of the books or large segments of the books are
the same?
 64

In the case at bar, there is no question that petitioners remanded to the trial court for further proceedings to
presented several pages of the books CET and DEP that receive evidence of the parties to ascertain the damages
more or less had the same contents. It may be correct caused and sustained by petitioners and to render
that the books being grammar books may contain decision in accordance with the evidence submitted to it.
materials similar as to some technical contents with
other grammar books, such as the segment about the SO ORDERED.
"Author Card". However, the numerous pages that the
petitioners presented showing similarity in the style and
the manner the books were presented and the identical
examples can not pass as similarities merely because of
technical consideration.

The respondents claim that their similarity in style can be

attributed to the fact that both of them were exposed to
the APCAS syllabus and their respective academic
experience, teaching approach and methodology are
almost identical because they were of the same
background.

However, we believe that even if petitioners and

respondent Robles were of the same background in
terms of teaching experience and orientation, it is not an
excuse for them to be identical even in examples
contained in their books. The similarities in examples
and material contents are so obviously present in this
case. How can similar/identical examples not be
considered as a mark of copying?

We consider as an indicia of guilt or wrongdoing the act

of respondent Robles of pulling out from Goodwill
bookstores the book DEP upon learning of petitioners'
complaint while pharisaically denying petitioners'
demand. It was further noted that when the book DEP
was re-issued as a revised version, all the pages cited
by petitioners to contain portion of their book College
English for Today were eliminated.

In cases of infringement, copying alone is not what is

prohibited. The copying must produce an "injurious
effect". Here, the injury consists in that respondent
Robles lifted from petitioners' book materials that were
the result of the latter's research work and compilation
and misrepresented them as her own. She circulated the
book DEP for commercial use did not acknowledged
petitioners as her source.

Hence, there is a clear case of appropriation of

copyrighted work for her benefit that respondent Robles
committed. Petitioners' work as authors is the product of
their long and assiduous research and for another to
represent it as her own is injury enough. In copyrighting
books the purpose is to give protection to the intellectual
product of an author. This is precisely what the law on
copyright protected, under Section 184.1 (b). Quotations
from a published work if they are compatible with fair use
and only to the extent justified by the purpose, including
quotations from newspaper articles and periodicals in
the form of press summaries are allowed provided that
the source and the name of the author, if appearing on
the work, are mentioned.

In the case at bar, the least that respondent Robles

could have done was to acknowledge petitioners
Habana et. al. as the source of the portions of DEP. The
final product of an author's toil is her book. To allow
another to copy the book without appropriate
acknowledgment is injury enough.

WHEREFORE, the petition is hereby GRANTED. The

decision and resolution of the Court of Appeals in CA-G.
R. CV No. 44053 are SET ASIDE. The case is ordered