Consti Law Cases

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 139325
April 12, 2005
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf and on behalf
of the Class Plaintiffs in Class Action No. MDL 840, United States District Court of Hawaii, Petitioner,
vs.
HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E.
MARCOS, through its court appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R. Marcos and
Ferdinand Marcos, Jr., Respondents.
DECISION
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding out its bitter crop. While the restoration of freedom and the fundamental structures
and processes of democracy have been much lauded, according to a significant number, the changes, however, have not sufficiently healed the colossal damage wrought under
the oppressive conditions of the martial law period. The cries of justice for the tortured, the murdered, and the desaparecidos arouse outrage and sympathy in the hearts of the
fair-minded, yet the dispensation of the appropriate relief due them cannot be extended through the same caprice or whim that characterized the ill-wind of martial rule. The
damage done was not merely personal but institutional, and the proper rebuke to the iniquitous past has to involve the award of reparations due within the confines of the
restored rule of law.
The petitioners in this case are prominent victims of human rights violations 1 who, deprived of the opportunity to directly confront the man who once held absolute rule over this
country, have chosen to do battle instead with the earthly representative, his estate. The clash has been for now interrupted by a trial court ruling, seemingly comported to legal
logic, that required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to enforce a
judgment awarded them by a foreign court. There is an understandable temptation to cast the struggle within the simplistic confines of a morality tale, and to employ short-cuts
to arrive at what might seem the desirable solution. But easy, reflexive resort to the equity principle all too often leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will comfort those who maintain that our substantive and procedural laws, for all their perceived
ambiguity and susceptibility to myriad interpretations, are inherently fair and just. The relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in order to correct the legally infirm and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with the United States District Court (US District Court), District of Hawaii, against the Estate of
former Philippine President Ferdinand E. Marcos (Marcos Estate). The action was brought forth by ten Filipino citizens 2 who each alleged having suffered human rights abuses
such as arbitrary detention, torture and rape in the hands of police or military forces during the Marcos regime. 3 The Alien Tort Act was invoked as basis for the US District
Court's jurisdiction over the complaint, as it involved a suit by aliens for tortious violations of international law.4 These plaintiffs brought the action on their own behalf and on
behalf of a class of similarly situated individuals, particularly consisting of all current civilian citizens of the Philippines, their heirs and beneficiaries, who between 1972 and 1987
were tortured, summarily executed or had disappeared while in the custody of military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately ten
thousand (10,000) members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US Federal Rules of Civil Procedure, the provisions of which were invoked by the
plaintiffs. Subsequently, the US District Court certified the case as a class action and created three (3) sub-classes of torture, summary execution and disappearance
victims.5 Trial ensued, and subsequently a jury rendered a verdict and an award of compensatory and exemplary damages in favor of the plaintiff class. Then, on 3 February
1995, the US District Court, presided by Judge Manuel L. Real, rendered a Final Judgment (Final Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty
Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was eventually affirmed by the US Court of Appeals for
the Ninth Circuit, in a decision rendered on 17 December 1996.6
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati (Makati RTC) for the enforcement of the Final Judgment. They alleged that
they are members of the plaintiff class in whose favor the US District Court awarded damages. 7 They argued that since the Marcos Estate failed to file a petition for certiorari
with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the decision of the US District Court had become final and executory, and
hence should be recognized and enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules of Court then in force. 8
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the non-payment of the correct filing fees. It alleged that petitioners had only paid Four
Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact that they sought to enforce a monetary amount of damages in the amount of over Two and a
Quarter Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court Circular No. 7, pertaining to the proper computation and payment of docket fees. In
response, the petitioners claimed that an action for the enforcement of a foreign judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred Ten
Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141.9
On 9 September 1998, respondent Judge Santiago Javier Ranada10 of the Makati RTC issued the subject Orderdismissing the complaint without prejudice. Respondent judge
opined that contrary to the petitioners' submission, the subject matter of the complaint was indeed capable of pecuniary estimation, as it involved a judgment rendered by a
foreign court ordering the payment of definite sums of money, allowing for easy determination of the value of the foreign judgment. On that score, Section 7(a) of Rule 141 of the
Rules of Civil Procedure would find application, and the RTC estimated the proper amount of filing fees was approximately Four Hundred Seventy Two Million Pesos, which
obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied in an Order dated 28 July 1999. From this denial, petitioners filed a Petition for
Certiorari under Rule 65 assailing the twin orders of respondent judge.11 They prayed for the annulment of the questioned orders, and an order directing the reinstatement of
Civil Case No. 97-1052 and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the subject matter of the suit is the enforcement of a foreign judgment, and not an action for the
collection of a sum of money or recovery of damages. They also point out that to require the class plaintiffs to pay Four Hundred Seventy Two Million Pesos (P472,000,000.00)
in filing fees would negate and render inutile the liberal construction ordained by the Rules of Court, as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly
the inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which provides that "Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty," a mandate which is essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable, and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case. 12 It urged that the petition be granted and a judgment rendered, ordering the enforcement and
execution of the District Court judgment in accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in interpreting the
action for the execution of a foreign judgment as a new case, in violation of the principle that once a case has been decided between the same parties in one country on the
same issue with finality, it can no longer be relitigated again in another country.13 The CHR likewise invokes the principle of comity, and of vested rights.
The Court's disposition on the issue of filing fees will prove a useful jurisprudential guidepost for courts confronted with actions enforcing foreign judgments, particularly those
lodged against an estate. There is no basis for the issuance a limited pro hac vice ruling based on the special circumstances of the petitioners as victims of martial law, or on the
emotionally-charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge ignored the clear letter of the law when he concluded that the filing fee be computed
based on the total sum claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis for the computation of the filing fee of over P472 Million. The provision states:
SEC. 7. Clerk of Regional Trial Court.(a) For filing an action or a permissive counterclaim or money claim against an estate not based on judgment, or for filing with leave of court a
third-party, fourth-party, etc., complaint, or a complaint in intervention, and for all clerical services in the same time, if the total sum claimed, exclusive
of interest, or the started value of the property in litigation, is:
1. Less than P 100,00.00
P 500.00
2. P 100,000.00 or more but less than P 150,000.00
P 800.00
P 1,000.00
P 1,500.00
P 1,750.00
6. P 300,000.00 or more but not more than P 400,000.00
P 2,000.00
7. P 350,000.00 or more but not more than P400,000.00
P 2,250.00
8. For each P 1,000.00 in excess of P 400,000.00
P 10.00
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive counterclaims, third-party, etc. complaints and complaints-in-interventions, and on the
other, money claims against estates which are not based on judgment. Thus, the relevant question for purposes of the present petition is whether the action filed with the lower
court is a "money claim against an estate not based on judgment."
Petitioners' complaint may have been lodged against an estate, but it is clearly based on a judgment, the Final Judgment of the US District Court. The provision does not make
any distinction between a local judgment and a foreign judgment, and where the law does not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee is computed on the basis of the amount of the relief sought, or on the value of the property in
litigation. The filing fee for requests for extrajudicial foreclosure of mortgage is based on the amount of indebtedness or the mortgagee's claim. 14 In special proceedings involving
properties such as for the allowance of wills, the filing fee is again based on the value of the property.15 The aforecited rules evidently have no application to petitioners'
complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.(b) For filing
1.
Actions where the value

of the subject matter
cannot be estimated
2.
---
P 600.00
Special civil actions except

judicial foreclosure which
shall be governed by
paragraph (a) above
3.
All other actions not
---
P 600.00
involving property
---
P 600.00
In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall be alleged by the claimant and shall be the basis in computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed value or estimated value of the property shall be alleged by the claimant and shall be the
basis in computing the fees. Yet again, this provision does not apply in the case at bar. A real action is one where the plaintiff seeks the recovery of real property or an action
affecting title to or recovery of possession of real property.16 Neither the complaint nor the award of damages adjudicated by the US District Court involves any real property of
the Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the filing fees should be computed on the basis of the schematic table of Section 7(a), as the
action involved pertains to a claim against an estate based on judgment. What provision, if any, then should apply in determining the filing fees for an action to enforce a foreign
judgment?
To resolve this question, a proper understanding is required on the nature and effects of a foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. 17 This principle was prominently affirmed in the leading American
case of Hilton v. Guyot18 and expressly recognized in our jurisprudence beginning withIngenholl v. Walter E. Olsen & Co.19 The conditions required by the Philippines for
recognition and enforcement of a foreign judgment were originally contained in Section 311 of the Code of Civil Procedure, which was taken from the California Code of Civil
Procedure which, in turn, was derived from the California Act of March 11, 1872. 20Remarkably, the procedural rule now outlined in Section 48, Rule 39 of the Rules of Civil
Procedure has remained unchanged down to the last word in nearly a century. Section 48 states:
SEC. 48.
follows:
Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by
a subsequent title;
In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law
or fact.
There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an action in rem, the foreign judgment is deemed conclusive upon the
title to the thing, while in an action inpersonam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and their successors in interest by a
subsequent title.21 However, in both cases, the foreign judgment is susceptible to impeachment in our local courts on the grounds of want of jurisdiction or notice to the
party,22 collusion, fraud,23or clear mistake of law or fact.24 Thus, the party aggrieved by the foreign judgment is entitled to defend against the enforcement of such decision in the
local forum. It is essential that there should be an opportunity to challenge the foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy. 25
It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign judgment 26, even if such judgment has conclusive effect as in the case of in
rem actions, if only for the purpose of allowing the losing party an opportunity to challenge the foreign judgment, and in order for the court to properly determine its
efficacy.27 Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its validity.28
The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in the Philippines. But there is no question that the filing of a civil
complaint is an appropriate measure for such purpose. A civil action is one by which a party sues another for the enforcement or protection of a right, 29 and clearly an action to
enforce a foreign judgment is in essence a vindication of a right prescinding either from a "conclusive judgment upon title" or the "presumptive evidence of a right." 30 Absent
perhaps a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must be brought before the regular courts. 31
There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of a foreign judgment, and that arising from the facts or allegations
that occasioned the foreign judgment. They may pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to be
vindicated. For example, in a complaint for damages against a tortfeasor, the cause of action emanates from the violation of the right of the complainant through the act or
omission of the respondent. On the other hand, in a complaint for the enforcement of a foreign judgment awarding damages from the same tortfeasor, for the violation of the
same right through the same manner of action, the cause of action derives not from the tortious act but from the foreign judgment itself.
More importantly, the matters for proof are different. Using the above example, the complainant will have to establish before the court the tortious act or omission committed by
the tortfeasor, who in turn is allowed to rebut these factual allegations or prove extenuating circumstances. Extensive litigation is thus conducted on the facts, and from there
the right to and amount of damages are assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and not
the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or
mistake of fact or law. The limitations on review is in consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and
issues.32 Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous litigation, to safeguard against the harassment of defendants,
to insure that the task of courts not be increased by never-ending litigation of the same disputes, and in a larger sense to promote what Lord Coke in the Ferrer's Case of
1599 stated to be the goal of all law: "rest and quietness."33 If every judgment of a foreign court were reviewable on the merits, the plaintiff would be forced back on his/her
original cause of action, rendering immaterial the previously concluded litigation. 34
is incapable of pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and
purposes, the matter at hand is capable of pecuniary estimation, down to the last cent. In the assailed the enforcement of a foreign judgment Petitioners appreciate this
distinction, and rely upon it to support the proposition that the subject matter of the complaintOrder, the respondent judge pounced upon this point without equivocation:
The Rules use the term "where the value of the subject matter cannot be estimated." The subject matter of the present case is the judgment rendered by the
foreign court ordering defendant to pay plaintiffs definite sums of money, as and for compensatory damages. The Court finds that the value of the foreign judgment
can be estimated; indeed, it can even be easily determined. The Court is not minded to distinguish between the enforcement of a judgment and the amount of said
judgment, and separate the two, for purposes of determining the correct filing fees. Similarly, a plaintiff suing on promissory note for P1 million cannot be allowed to
pay only P400 filing fees (sic), on the reasoning that the subject matter of his suit is not the P1 million, but the enforcement of the promissory note, and that the
value of such "enforcement" cannot be estimated. 35
The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v.
Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining
the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation,
and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court
has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first
instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v. Scandia,36 from which the rule in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence
of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for
annulment of judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in
terms of money, and are cognizable exclusively by courts of first instance. 37
Petitioners go on to add that among the actions the Court has recognized as being incapable of pecuniary estimation include legality of conveyances and money
deposits,38 validity of a mortgage,39 the right to support,40validity of documents,41 rescission of contracts,42 specific performance,43 and validity or annulment of judgments.44 It is
urged that an action for enforcement of a foreign judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject matter of the action is undoubtedly the enforcement of a foreign judgment, the effect of a
providential award would be the adjudication of a sum of money. Perhaps in theory, such an action is primarily for "the enforcement of the foreign judgment," but there is a
certain obtuseness to that sort of argument since there is no denying that the enforcement of the foreign judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must examine its possible ramifications. Petitioners raise the point that a declaration that an
action for enforcement of foreign judgment may be capable of pecuniary estimation might lead to an instance wherein a first level court such as the Municipal Trial Court would
have jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction of first level courts, B.P. 129, such courts are not vested with jurisdiction over
actions for the enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil cases. Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases,
where the value of the personal property, estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where
such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of interest damages of whatever
kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That where there are several claims or causes of
action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of
action, irrespective of whether the causes of action arose out of the same or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed
Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That value of such
property shall be determined by the assessed value of the adjacent lots. 45
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter pertains to an assertion of rights and interests over property or a sum of money. But as
earlier pointed out, the subject matter of an action to enforce a foreign judgment is the foreign judgment itself, and the cause of action arising from the adjudication of such
judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a foreign judgment, even if capable of pecuniary estimation, would fall under the
jurisdiction of the Regional Trial Courts, thus negating the fears of the petitioners. Indeed, an examination of the provision indicates that it can be relied upon as jurisdictional
basis with respect to actions for enforcement of foreign judgments, provided that no other court or office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising jurisdiction or any court, tribunal, person or body exercising
judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court judgment is one capable of pecuniary estimation. But at the same time, it
is also an action based on judgment against an estate, thus placing it beyond the ambit of Section 7(a) of Rule 141. What provision then governs the proper computation of the
filing fees over the instant complaint? For this case and other similarly situated instances, we find that it is covered by Section 7(b)(3), involving as it does, "other actions not
involving property."
Notably, the amount paid as docket fees by the petitioners on the premise that it was an action incapable of pecuniary estimation corresponds to the same amount required for
"other actions not involving property." The petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge to have applied
instead a clearly inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which should disabuse the notion that the doctrine affirmed in this decision is grounded solely on the letter
of the procedural rule. We earlier adverted to the the internationally recognized policy of preclusion, 46 as well as the principles of comity, utility and convenience of nations47 as
the basis for the evolution of the rule calling for the recognition and enforcement of foreign judgments. The US Supreme Court in Hilton v. Guyot48 relied heavily on the concept
of comity, as especially derived from the landmark treatise of Justice Story in his Commentaries on the Conflict of Laws of 1834. 49 Yet the notion of "comity" has since been
criticized as one "of dim contours"50 or suffering from a number of fallacies.51Other conceptual bases for the recognition of foreign judgments have evolved such as the vested
rights theory or the modern doctrine of obligation.52
There have been attempts to codify through treaties or multilateral agreements the standards for the recognition and enforcement of foreign judgments, but these have not
borne fruition. The members of the European Common Market accede to the Judgments Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and rvision au fond.53 The most ambitious of these attempts is the Convention on the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague Conference of International Law.54 While it has not received the ratifications needed to have it take
effect,55 it is recognized as representing current scholarly thought on the topic. 56 Neither the Philippines nor the United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition and enforcement of foreign judgments or a universal treaty rendering it obligatory force, there
is consensus that the viability of such recognition and enforcement is essential. Steiner and Vagts note:
. . . The notion of unconnected bodies of national law on private international law, each following a quite separate path, is not one conducive to the growth of a
transnational community encouraging travel and commerce among its members. There is a contemporary resurgence of writing stressing the identity or similarity
of the values that systems of public and private international law seek to further a community interest in common, or at least reasonable, rules on these matters
in national legal systems. And such generic principles as reciprocity play an important role in both fields. 57
Salonga, whose treatise on private international law is of worldwide renown, points out:
Whatever be the theory as to the basis for recognizing foreign judgments, there can be little dispute that the end is to protect the reasonable expectations and
demands of the parties. Where the parties have submitted a matter for adjudication in the court of one state, and proceedings there are not tainted with irregularity,
they may fairly be expected to submit, within the state or elsewhere, to the enforcement of the judgment issued by the court. 58
There is also consensus as to the requisites for recognition of a foreign judgment and the defenses against the enforcement thereof. As earlier discussed, the exceptions
enumerated in Section 48, Rule 39 have remain unchanged since the time they were adapted in this jurisdiction from long standing American rules. The requisites and
exceptions as delineated under Section 48 are but a restatement of generally accepted principles of international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that "a valid judgment rendered in a foreign nation after a fair trial in a contested proceeding will be recognized in the United States," and on its face, the term "valid"
brings into play requirements such notions as valid jurisdiction over the subject matter and parties. 59 Similarly, the notion that fraud or collusion may preclude the enforcement of
a foreign judgment finds affirmation with foreign jurisprudence and commentators, 60 as well as the doctrine that the foreign judgment must not constitute "a clear mistake of law
or fact."61 And finally, it has been recognized that "public policy" as a defense to the recognition of judgments serves as an umbrella for a variety of concerns in international
practice which may lead to a denial of recognition.62
The viability of the public policy defense against the enforcement of a foreign judgment has been recognized in this jurisdiction. 63 This defense allows for the application of local
standards in reviewing the foreign judgment, especially when such judgment creates only a presumptive right, as it does in cases wherein the judgment is against a
person.64 The defense is also recognized within the international sphere, as many civil law nations adhere to a broad public policy exception which may result in a denial of
recognition when the foreign court, in the light of the choice-of-law rules of the recognizing court, applied the wrong law to the case. 65 The public policy defense can safeguard
against possible abuses to the easy resort to offshore litigation if it can be demonstrated that the original claim is noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the Philippines to recognize foreign judgments, or allow a procedure for the enforcement thereof.
However, generally accepted principles of international law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if they do not derive
from treaty obligations.66 The classical formulation in international law sees those customary rules accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a psychological element known as the opinion juris sive necessitates (opinion as to law or necessity).
Implicit in the latter element is a belief that the practice in question is rendered obligatory by the existence of a rule of law requiring it. 67
While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not been authoritatively established, the Court can assert with certainty
that such an undertaking is among those generally accepted principles of international law.68 As earlier demonstrated, there is a widespread practice among states accepting in
principle the need for such recognition and enforcement, albeit subject to limitations of varying degrees. The fact that there is no binding universal treaty governing the practice
is not indicative of a widespread rejection of the principle, but only a disagreement as to the imposable specific rules governing the procedure for recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition and enforcement is embodied in the rules of law, whether statutory or jurisprudential,
adopted in various foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed in its current form since the
early 1900s. Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural rules the viability of an action for enforcement of foreign
judgment, as well as the requisites for such valid enforcement, as derived from internationally accepted doctrines. Again, there may be distinctions as to the rules adopted by
each particular state,69 but they all prescind from the premise that there is a rule of law obliging states to allow for, however generally, the recognition and enforcement of a
foreign judgment. The bare principle, to our mind, has attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but
by virtue of the incorporation clause of the Constitution. Rules of procedure are promulgated by the Supreme Court, 70 and could very well be abrogated or revised by the high
court itself. Yet the Supreme Court is obliged, as are all State components, to obey the laws of the land, including generally accepted principles of international law which form
part thereof, such as those ensuring the qualified recognition and enforcement of foreign judgments. 71
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that there is a general right recognized within our body of laws, and affirmed by the
Constitution, to seek recognition and enforcement of foreign judgments, as well as a right to defend against such enforcement on the grounds of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exhorbitant assessment of docket fees is alien to generally accepted practices
and principles in international law. Indeed, there are grave concerns in conditioning the amount of the filing fee on the pecuniary award or the value of the property subject of the
foreign decision. Such pecuniary award will almost certainly be in foreign denomination, computed in accordance with the applicable laws and standards of the forum. 72 The
vagaries of inflation, as well as the relative low-income capacity of the Filipino, to date may very well translate into an award virtually unenforceable in this country, despite its
integral validity, if the docket fees for the enforcement thereof were predicated on the amount of the award sought to be enforced. The theory adopted by respondent judge and
the Marcos Estate may even lead to absurdities, such as if applied to an award involving real property situated in places such as the United States or Scandinavia where real
property values are inexorably high. We cannot very well require that the filing fee be computed based on the value of the foreign property as determined by the standards of the
country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes that the subject matter of an action for enforcement of a foreign judgment is the
foreign judgment itself, and not the right-duty correlatives that resulted in the foreign judgment. In this particular circumstance, given that the complaint is lodged against an
estate and is based on the US District Court's Final Judgment, this foreign judgment may, for purposes of classification under the governing procedural rule, be deemed as
subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving property." Thus, only the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that "[F]ree access to the courts and quasi-judicial bodies and adequate legal assistance
shall not be denied to any person by reason of poverty." Since the provision is among the guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable right.
However, now is not the occasion to elaborate on the parameters of this constitutional right. Given our preceding discussion, it is not necessary to utilize this provision in order to
grant the relief sought by the petitioners. It is axiomatic that the constitutionality of an act will not be resolved by the courts if the controversy can be settled on other grounds 73 or
unless the resolution thereof is indispensable for the determination of the case. 74
One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners
against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact. This ruling, decisive as it is on the question of filing fees and no other, does not render verdict on the enforceability of the Final Judgment before the
courts under the jurisdiction of the Philippines, or for that matter any other issue which may legitimately be presented before the trial court. Such issues are to be litigated before
the trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39. On the other hand, the speedy resolution of this claim by the trial court is
encouraged, and contumacious delay of the decision on the merits will not be brooked by this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby issued. No
costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 159938
March 31, 2006
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK
PHILIPPINES PROPERTIES, INC., Petitioners,
vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
DECISION
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the
Decision dated May 15, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution 2 of September 15, 2003 which effectively affirmed with modification an
earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat commenced by respondent
Developers Group of Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims ownership of said mark and logo in the Philippines on the strength of its prior
use thereof within the country. As DGCI stresses at every turn, it filed on October 18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) pursuant
to Sections 2 and 4 of Republic Act (RA) No. 166, 3 as amended, an application for registration covering the subject mark and logo. On May 31, 1983, the BPTTT issued in favor
of DGCI the corresponding certificate of registration therefor, i.e., Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S" logo in its restaurant
business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and hotel-related transactions since 1969. As far back as 1962, it adopted the
name "Shangri-La" as part of the corporate names of all companies organized under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used
the name "Shangri-La" in all Shangri-La hotels and hotel-related establishments around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong Kong and Singapore,
among other places, several companies that form part of the Shangri-La International Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc.,
and Makati Shangri-La Hotel and Resort, Inc. were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put up by the Kuok Group in
Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and used the distinctive lettering of the name "Shangri-La" as part of their trade
names.
From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the logo of the
Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as keep to the legendary Shangri-la theme with the mountains on top being
reflected on waters below and the connecting centre [sic] line serving as the horizon. This logo, which is a bold, striking definitive design, embodies both modernity and
sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently and continuously by all Shangri-La hotels and companies in their
paraphernalia, such as stationeries, envelopes, business forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the "Shangri-La" mark and "S" logo in the patent offices in different countries around
the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No. 3145, praying for the cancellation of the registration of the "Shangri-La"
mark and "S" logo issued to respondent DGCI on the ground that the same were illegally and fraudulently obtained and appropriated for the latter's restaurant business. They
also filed in the same office Inter Partes Case No. 3529, praying for the registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they advertised their hotels abroad since 1972 in numerous business, news,
and/or travel magazines widely circulated around the world, all readily available in Philippine magazines and newsstands. They, too, maintained reservations and booking
agents in airline companies, hotel organizations, tour operators, tour promotion organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for Infringement and Damages with the RTC of Quezon City against the herein
petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and
eventually raffled to Branch 99 of said court. The complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8) years, been the prior
exclusive user in the Philippines of the mark and logo in question and the registered owner thereof for its restaurant and allied services. As DGCI alleged in its complaint,
SLIHM, et al., in promoting and advertising their hotel and other allied projects then under construction in the country, had been using a mark and logo confusingly similar, if not
identical, with its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo, from using the "Shangri-La" mark and "S" logo in their hotels in
the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using the "Shangri-La" mark and "S" logo, adding that the legal and beneficial
ownership thereof pertained to SLIHM and that the Kuok Group and its related companies had been using this mark and logo since March 1962 for all their corporate names
and affairs. In this regard, they point to the Paris Convention for the Protection of Industrial Property as affording security and protection to SLIHM's exclusive right to said mark
and logo. They further claimed having used, since late 1975, the internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the hotels in their hotel
chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary Injunction enjoining the petitioners from using the subject mark and logo. The
preliminary injunction issue ultimately reached the Court in G.R. No. 104583 entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a decision 4 dated
March 8, 1993, the Court nullified the writ of preliminary injunction issued by the trial court and directed it to proceed with the main case and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on account of the pendency before the BPTTT of Inter Partes Case No. 3145 for
the cancellation of DGCI's certificate of registration. For its part, respondent DGCI filed a similar motion in that case, invoking in this respect the pendency of its infringement
case before the trial court. The parties' respective motions to suspend proceedings also reached the Court via their respective petitions in G.R. No. 114802, entitled Developers
Group of Companies, Inc. vs. Court of Appeals, et al. and G.R. No. 111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al., which
were accordingly consolidated.
In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of whether, despite the petitioners' institution of Inter Partes Case No. 3145 before the
BPTTT, herein respondent DGCI "can file a subsequent action for infringement with the regular courts of justice in connection with the same registered mark," ruled in the
affirmative, but nonetheless ordered the BPTTT to suspend further proceedings in said inter partes case and to await the final outcome of the main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone witness was Ramon Syhunliong, President and Chairman of DGCI's Board of
Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant businesses but only the restaurant business bears the name "Shangri-La"
and uses the same and the "S-logo" as service marks. The restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly known as the "Carvajal
Restaurant" until December 1982, when respondent took over said restaurant business.
2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La Hotel in Hong Kong as early as August 1982.
3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a piece of paper by a jeepney signboard artist with an office somewhere
in Balintawak. The unnamed artist supposedly produced the two designs after about two or three days from the time he (Syhunliong) gave the idea of the design
he had in mind.
4. On October 15, 1982, or before the unknown signboard artist supposedly created the "Shangri-La" and "S" designs, DGCI was incorporated with the primary
purpose of "owning or operating, or both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI filed an application for trademark registration of the mark "SHANGRILA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On said date, respondent DGCI amended its Articles of Incorporation to reflect the name of its
restaurant, known and operating under the style and name of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained Certificate of Registration
No. 31904 for the "Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's, use of the mark and logo in dispute constitutes an infringement of DGCI's right
thereto, came out with its decision6 on March 8, 1996 rendering judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et al.] -
a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in the name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees, assignees and other persons acting under their authority and with their permission, to
permanently cease and desist from using and/or continuing to use said mark and logo, or any copy, reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel and allied projects and services or in any other manner whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials and paraphernalia used by them and/or destroy any and all prints,
signs, advertisements or other materials bearing said mark and logo in their possession and/or under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of P2,000,000.00 as actual and compensatory damages, P500,000.00 as
attorney's fee and expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and Technology Transfer for his information and appropriate action in accordance with the
provisions of Section 25, Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003, 7 affirmed that of the lower court with the modification of deleting the award of attorney's fees.
The appellate court predicated its affirmatory action on the strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows that the bulk use of the tradename was abroad and not in the
Philippines (until 1987). Since the Kuok Group does not have proof of actual use in commerce in the Philippines (in accordance with Section 2 of R.A. No. 166), it
cannot claim ownership of the mark and logo in accordance with the holding in Kabushi Kaisha Isetan v. IAC 8, as reiterated in Philip Morris, Inc. v. Court of
Appeals.9
2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in the Philippines and the issuance of Certificate of Registration No.
31904.
3. The use of the mark or logo in commerce through the bookings made by travel agencies is unavailing since the Kuok Group did not establish any branch or
regional office in the Philippines. As it were, the Kuok Group was not engaged in commerce in the Philippines inasmuch as the bookings were made through travel
agents not owned, controlled or managed by the Kuok Group.
4. While the Paris Convention protects internationally known marks, R.A. No. 166 still requires use in commerce in the Philippines. Accordingly, and on the premise
that international agreements, such as Paris Convention, must yield to a municipal law, the question on the exclusive right over the mark and logo would still
depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally assailed Resolution of September 15, 2003. 10
As formulated by the petitioners, the issues upon which this case hinges are:
1. Whether the CA erred in finding that respondent had the right to file an application for registration of the "Shangri-La" mark and "S" logo although respondent
never had any prior actual commercial use thereof;
2. Whether the CA erred in finding that respondent's supposed use of the identical "Shangri-La" mark and "S" logo of the petitioners was not evident bad faith and
can actually ripen into ownership, much less registration;
3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations;
4. Whether the CA erred in refusing to consider that petitioners are entitled to protection under both R.A. No. 166, the old trademark law, and the Paris Convention
for the Protection of Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the right to legally own the "Shangri-La" mark and "S" logo by virtue of and despite their ownership by
the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent despite the absence of any evidence to support the same, and in failing to award relief in
favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our attention to, namely:
1. Whether the certification against forum-shopping submitted on behalf of the petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in nature hence improper for resolution in the instant petition for review on certiorari.
DGCI claims that the present petition for review should be dismissed outright for certain procedural defects, to wit: an insufficient certification against forum shopping and raising
pure questions of fact. On both counts, we find the instant petition formally and substantially sound.
In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners was
insufficient, and that he was not duly authorized to execute such document. Respondent further alleged that since petitioner SLIHM is a foreign entity based in Hong Kong, the
Director's Certificate executed by Mr. Madhu Rama Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and execute the certification
against forum shopping, should contain the authentication by a consular officer of the Philippines in Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum shopping may be signed, for and in behalf of a corporation, by a specifically
authorized lawyer who has personal knowledge of the facts required to be disclosed in such document. The reason for this is that a corporation can only exercise its powers
through its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly
authorized for the purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum shopping does not require any consular certification if the petitioner is a foreign
entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM furnished this Court with a consular certification dated October 29, 2003 authenticating the Director's
Certificate authorizing Atty. Lerma to execute the certification against forum shopping, together with petitioners' manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure questions of fact. It points out that in a petition for review under Rule 45 of the Rules of Court, the questions
that may properly be inquired into are strictly circumscribed by the express limitation that "the petition shall raise only questions of law which must be distinctly set forth." 13 We do
not, however, find that the issues involved in this petition consist purely of questions of fact. These issues will be dealt with as we go through the questions raised by the
petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for registration of the "Shangri-La" mark and "S" logo because it did not have prior actual
commercial use thereof. To respondent, such an argument raises a question of fact that was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant of the subject mark and logo in the Philippines. Taken in proper context, the trial court's
finding on "prior use" can only be interpreted to mean that respondent used the subject mark and logo in the country before the petitioners did. It cannot be construed as being a
factual finding that there was prior use of the mark and logo before registration.
Secondly, the question raised is not purely factual in nature. In the context of this case, it involves resolving whether a certificate of registration of a mark, and the presumption of
regularity in the performance of official functions in the issuance thereof, are sufficient to establish prior actual use by the registrant. It further entails answering the question of
whether prior actual use is required before there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to December 31, 1997, hence, the law in force at the time of respondent's
application for registration of trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law requires that before a trademark can be
registered, it must have been actually used in commerce and service for not less than two months in the Philippines prior to the filing of an application for its registration.
Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case. 14
Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v. Macagba, 15 are:
1. Registration in the Principal Register gives rise to a presumption of the validity of the registration, the registrant's ownership of the mark, and his right to the
exclusive use thereof. x x x
2. Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein pass on the issue of ownership, which may be
contested through opposition or interference proceedings, or, after registration, in a petition for cancellation. xxx
[Emphasis supplied]
1avvphil.et
Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails over the latter. For 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 pre-requisite to the acquisition of the right of ownership. 16
While the present law on trademarks17 has dispensed with the requirement of prior actual use at the time of registration, the law in force at the time of registration must be
applied, and thereunder it was held that as a condition precedent to registration of trademark, trade name or service mark, the same must have been in actual use in the
Philippines before the filing of the application for registration. 18 Trademark is a creation of use and therefore actual use is a pre-requisite to exclusive ownership and its
registration with the Philippine Patent Office is a mere administrative confirmation of the existence of such right. 19
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the
same. Registration merely creates a prima faciepresumption of the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use
thereof.20 Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to create the mark and logo submitted his designs only in
December 1982.21 This was two-and-a-half months after the filing of the respondent's trademark application on October 18, 1982 with the BPTTT. It was also only in December
1982 when the respondent's restaurant was opened for business.22 Respondent cannot now claim before the Court that the certificate of registration itself is proof that the twomonth prior use requirement was complied with, what with the fact that its very own witness testified otherwise in the trial court. And because at the time (October 18, 1982) the
respondent filed its application for trademark registration of the "Shangri-La" mark and "S" logo, respondent was not using these in the Philippines commercially, the registration
is void.
Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in evident bad faith and cannot therefore ripen into ownership, much less
registration. While the respondent is correct in saying that a finding of bad faith is factual, not legal, 23 hence beyond the scope of a petition for review, there are, however, noted
exceptions thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or impossible;24
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts; 26
4. When the findings of fact are conflicting;27 and
5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent. 28
And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel
before he caused the registration of the mark and logo, and surmised that he must have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor
of [petitioners'] hotel abroad at one time (September 27, 1982) establishes [petitioners'] allegation that he got the idea there. 29
Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have been copied, the CA tries to make it appear that the adoption of the same
mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a (a) remote beautiful imaginary place where life approaches perfection or (b)
imaginary mountain land depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and popular novel written in 1976. It is not impossible
that the parties, inspired by the novel, both adopted the mark for their business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old English print. 30
To jump from a recognition of the fact that the mark and logo must have been copied to a rationalization for the possibility that both the petitioners and the respondent
coincidentally chose the same name and logo is not only contradictory, but also manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old English"
print that the CA makes it out to be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the parties would come up with the exact
same lettering for the word "Shangri-La" and the exact same logo to boot. As correctly observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's trademark as his own, there may still be some doubt that the adoption is intentional. But if he copies not
only the word but also the word's exact font and lettering style and in addition, he copies also the logo portion of the trademark, the slightest doubt vanishes. It is then replaced
by the certainty that the adoption was deliberate, malicious and in bad faith. 31
It is truly difficult to understand why, of the millions of terms and combination of letters and designs available, the respondent had to choose exactly the same mark and logo as
that of the petitioners, if there was no intent to take advantage of the goodwill of petitioners' mark and logo. 32
One who has imitated the trademark of another cannot bring an action for infringement, particularly against the true owner of the mark, because he would be coming to court
with unclean hands.33 Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take advantage of the goodwill
established by the true owner.
This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time limit is
fixed for the cancellation of marks registered or used in bad faith.34 This is precisely why petitioners had filed an inter partes case before the BPTTT for the cancellation of
respondent's registration, the proceedings on which were suspended pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in nature, namely, whether the CA erred in overlooking petitioners' widespread
prior use of the "Shangri-La" mark and "S" logo in their operations. The question, however, is not whether there had been widespread prior use, which would have been factual,
but whether that prior use entitles the petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in nature.
It has already been established in the two courts below, and admitted by the respondent's president himself, that petitioners had prior widespread use of the mark and logo
abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies abroad used the name and logo for one purpose or another x x
x.35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo but held that such use did not confer to them ownership or exclusive right to
use them in the Philippines."36 To petitioners' mind, it was error for the CA to rule that their worldwide use of the mark and logo in dispute could not have conferred upon them
any right thereto. Again, this is a legal question which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons, corporations, partnerships or associations domiciled in the Philippines and
by persons, corporations, partnerships or associations domiciled in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said
trademarks trade names, or service marks are actually in use in commerce and services not less than two months in the Philippines before the time the applications for
registration are filed: And provided, further, That the country of which the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the
Philippines, and such fact is officially certified, with a certified true copy of the foreign law translated into the English language, by the government of the foreign country to the
Government of the Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone who lawfully produces or deals in merchandise of any kind or who engages in
any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to
his exclusive use a trademark, a trade name, or a servicemark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise,
business or services of others. The ownership or possession of a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as are other property rights known to this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the said trade name and "S" logo in the Philippines. Hence, consistent with its
finding that the bulk of the petitioners' evidence shows that the alleged use of the Shangri-La trade name was done abroad and not in the Philippines, it is understandable for
that court to rule in respondent's favor. Unfortunately, however, what the CA failed to perceive is that there is a crucial difference between the aforequoted Section 2 and Section
2-A of R.A. No. 166. For, while Section 2 provides for what is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for 2 months prior to the
application for registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same law sets out to define how one goes about acquiring
ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have
been so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a trademark must be within the Philippines. Hence,
under R.A. No. 166, as amended, one may be an owner of a mark due to actual use thereof but not yet have the right to register such ownership here due to failure to use it
within the Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2-month actual
use requirement. What is worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must not have been already appropriated (i.e., used) by
someone else. At the time of respondent DGCI's registration of the mark, the same was already being used by the petitioners, albeit abroad, of which DGCI's president was
fully aware.
It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo as a mere corporate name or as the name of their hotels, instead of using
them as a trademark or service mark, then such name and logo are not trademarks. The two concepts of corporate name or business name and trademark or service mark, are
not mutually exclusive. It is common, indeed likely, that the name of a corporation or business is also a trade name, trademark or service mark. Section 38 of R.A. No. 166
defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary is plainly apparent from the context - The term "trade name" includes
individual names and surnames, firm names, trade names, devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify their
business, vocations or occupations; the names or titles lawfully adopted and used by natural or juridical persons, unions, and any manufacturing, industrial, commercial,
agricultural or other organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his
goods and distinguish them from those manufactured, sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others
and includes without limitation the marks, names, symbols, titles, designations, slogans, character names, and distinctive features of radio or other advertising.
[Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be considered as having used the "Shangri-La" name and "S" logo as a tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm resolve of the Philippines to observe and follow the Paris Convention by
incorporating the relevant portions of the Convention such that persons who may question a mark (that is, oppose registration, petition for the cancellation thereof, sue for unfair
competition) include persons whose internationally well-known mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a mark that is sought to be registered or is actually registered. 37
However, while the Philippines was already a signatory to the Paris Convention, the IPC only took effect on January 1, 1988, and in the absence of a retroactivity clause, R.A.
No. 166 still applies.38 Under the prevailing law and jurisprudence at the time, the CA had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to internationally known marks as signatory to the Paris Convention, without regard as to whether the foreign
corporation is registered, licensed or doing business in the Philippines. It goes without saying that the same runs afoul to Republic Act No. 166, which requires the actual use in
commerce in the Philippines of the subject mark or devise. The apparent conflict between the two (2) was settled by the Supreme Court in this wise -
"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 (Mortensen 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 (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)." 39 [Emphasis
supplied]
Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity of lack of two-month prior use, as well as bad faith in
the respondent's registration of the mark, it is evident that the petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of
infringing a mark when they are actually the originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the enforcement of their rights as part of the Kuok Group of Companies and as
official repository, manager and operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party seeking relief to be the owner of the mark but "any person
who believes that he is or will be damaged by the registration of a mark or trade name." 40
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and
the Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is
ordered DISMISSED.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:

SUPREME COURT
Manila
EN BANC
G.R. No. 173034
October 9, 2007
PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF THE PHILIPPINES, petitioner,

vs.
HEALTH SECRETARY FRANCISCO T. DUQUE III; HEALTH UNDER SECRETARIES DR. ETHELYN P. NIETO, DR. MARGARITA M. GALON, ATTY. ALEXANDER A.
PADILLA, & DR. JADE F. DEL MUNDO; and ASSISTANT SECRETARIES DR. MARIO C. VILLAVERDE, DR. DAVID J. LOZADA, AND DR. NEMESIO T. GAKO,respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
The Court and all parties involved are in agreement that the best nourishment for an infant is mother's milk. There is nothing greater than for a mother to nurture her beloved
child straight from her bosom. The ideal is, of course, for each and every Filipino child to enjoy the unequaled benefits of breastmilk. But how should this end be attained?
Before the Court is a petition for certiorari under Rule 65 of the Rules of Court, seeking to nullify Administrative Order (A.O.) No. 2006-0012 entitled, Revised Implementing
Rules and Regulations of Executive Order No. 51, Otherwise Known as The "Milk Code," Relevant International Agreements, Penalizing Violations Thereof, and for
Other Purposes (RIRR). Petitioner posits that the RIRR is not valid as it contains provisions that are not constitutional and go beyond the law it is supposed to implement.
Named as respondents are the Health Secretary, Undersecretaries, and Assistant Secretaries of the Department of Health (DOH). For purposes of herein petition, the DOH is
deemed impleaded as a co-respondent since respondents issued the questioned RIRR in their capacity as officials of said executive agency.1
Executive Order No. 51 (Milk Code) was issued by President Corazon Aquino on October 28, 1986 by virtue of the legislative powers granted to the president under the
Freedom Constitution. One of the preambular clauses of the Milk Code states that the law seeks to give effect to Article 112 of the International Code of Marketing of Breastmilk
Substitutes (ICMBS), a code adopted by the World Health Assembly (WHA) in 1981. From 1982 to 2006, the WHA adopted several Resolutions to the effect that breastfeeding
should be supported, promoted and protected, hence, it should be ensured that nutrition and health claims are not permitted for breastmilk substitutes.
In 1990, the Philippines ratified the International Convention on the Rights of the Child. Article 24 of said instrument provides that State Parties should take appropriate
measures to diminish infant and child mortality, and ensure that all segments of society, specially parents and children, are informed of the advantages of breastfeeding.
On May 15, 2006, the DOH issued herein assailed RIRR which was to take effect on July 7, 2006.
However, on June 28, 2006, petitioner, representing its members that are manufacturers of breastmilk substitutes, filed the present Petition for Certiorari and Prohibition with
Prayer for the Issuance of a Temporary Restraining Order (TRO) or Writ of Preliminary Injunction.
The main issue raised in the petition is whether respondents officers of the DOH acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and in violation of the provisions of the Constitution in promulgating the RIRR. 3
On August 15, 2006, the Court issued a Resolution granting a TRO enjoining respondents from implementing the questioned RIRR.
After the Comment and Reply had been filed, the Court set the case for oral arguments on June 19, 2007. The Court issued an Advisory (Guidance for Oral Arguments) dated
June 5, 2007, to wit:
The Court hereby sets the following issues:
1. Whether or not petitioner is a real party-in-interest;
2. Whether Administrative Order No. 2006-0012 or the Revised Implementing Rules and Regulations (RIRR) issued by the Department of Health (DOH) is not
constitutional;
2.1 Whether the RIRR is in accord with the provisions of Executive Order No. 51 (Milk Code);
2.2 Whether pertinent international agreements 1 entered into by the Philippines are part of the law of the land and may be implemented by the DOH through the
RIRR; If in the affirmative, whether the RIRR is in accord with the international agreements;
2.3 Whether Sections 4, 5(w), 22, 32, 47, and 52 of the RIRR violate the due process clause and are in restraint of trade; and
2.4 Whether Section 13 of the RIRR on Total Effect provides sufficient standards.
_____________
1 (1) United Nations Convention on the Rights of the Child; (2) the WHO and Unicef "2002 Global Strategy on Infant and Young Child Feeding;" and (3) various
World Health Assembly (WHA) Resolutions.
The parties filed their respective memoranda.
The petition is partly imbued with merit.
On the issue of petitioner's standing
With regard to the issue of whether petitioner may prosecute this case as the real party-in-interest, the Court adopts the view enunciated in Executive Secretary v. Court of
Appeals,4 to wit:
The modern view is that an association has standing to complain of injuries to its members. This view fuses the legal identity of an association with that of its
members. An association has standing to file suit for its workers despite its lack of direct interest if its members are affected by the action. An
organization has standing to assert the concerns of its constituents.
xxxx
x x x We note that, under its Articles of Incorporation, the respondent was organized x x x to act as the representative of any individual, company, entity or
association on matters related to the manpower recruitment industry, and to perform other acts and activities necessary to accomplish the purposes embodied
therein. The respondent is, thus, the appropriate party to assert the rights of its members, because it and its members are in every practical sense
identical. x x x The respondent [association] is but the medium through which its individual members seek to make more effective the expression of
their voices and the redress of their grievances. 5 (Emphasis supplied)
which was reasserted in Purok Bagong Silang Association, Inc. v. Yuipco,6 where the Court ruled that an association has the legal personality to represent its members because
the results of the case will affect their vital interests.7
Herein petitioner's Amended Articles of Incorporation contains a similar provision just like in Executive Secretary, that the association is formed "to represent directly or through
approved representatives the pharmaceutical and health care industry before the Philippine Government and any of its agencies, the medical professions and the general
public."8 Thus, as an organization, petitioner definitely has an interest in fulfilling its avowed purpose of representing members who are part of the pharmaceutical and health
care industry. Petitioner is duly authorized9to take the appropriate course of action to bring to the attention of government agencies and the courts any grievance suffered by its
members which are directly affected by the RIRR. Petitioner, which is mandated by its Amended Articles of Incorporation to represent the entire industry, would be remiss in its
duties if it fails to act on governmental action that would affect any of its industry members, no matter how few or numerous they are. Hence, petitioner, whose legal identity is
deemed fused with its members, should be considered as a real party-in-interest which stands to be benefited or injured by any judgment in the present action.
On the constitutionality of the provisions of the RIRR
First, the Court will determine if pertinent international instruments adverted to by respondents are part of the law of the land.
Petitioner assails the RIRR for allegedly going beyond the provisions of the Milk Code, thereby amending and expanding the coverage of said law. The defense of the DOH is
that the RIRR implements not only the Milk Code but also various international instruments 10 regarding infant and young child nutrition. It is respondents' position that said
international instruments are deemed part of the law of the land and therefore the DOH may implement them through the RIRR.
The Court notes that the following international instruments invoked by respondents, namely: (1) The United Nations Convention on the Rights of the Child; (2) The International
Covenant on Economic, Social and Cultural Rights; and (3) the Convention on the Elimination of All Forms of Discrimination Against Women, only provide in general terms that
steps must be taken by State Parties to diminish infant and child mortality and inform society of the advantages of breastfeeding, ensure the health and well-being of families,
and ensure that women are provided with services and nutrition in connection with pregnancy and lactation. Said instruments do not contain specific provisions regarding the
use or marketing of breastmilk substitutes.
The international instruments that do have specific provisions regarding breastmilk substitutes are the ICMBS and various WHA Resolutions.
Under the 1987 Constitution, international law can become part of the sphere of domestic law either bytransformation or incorporation.11 The transformation method requires
that an international law be transformed into a domestic law through a constitutional mechanism such as local legislation. The incorporation method applies when, by mere
constitutional declaration, international law is deemed to have the force of domestic law.12
Treaties become part of the law of the land through transformation pursuant to Article VII, Section 21 of the Constitution which provides that "[n]o treaty or international
agreement shall be valid and effective unless concurred in by at least two-thirds of all the members of the Senate." Thus, treaties or conventional international law must go
through a process prescribed by the Constitution for it to be transformed into municipal law that can be applied to domestic conflicts. 13
The ICMBS and WHA Resolutions are not treaties as they have not been concurred in by at least two-thirds of all members of the Senate as required under Section 21, Article
VII of the 1987 Constitution.
However, the ICMBS which was adopted by the WHA in 1981 had been transformed into domestic law through local legislation, the Milk Code. Consequently, it is the Milk Code
that has the force and effect of law in this jurisdiction and not the ICMBS per se.
The Milk Code is almost a verbatim reproduction of the ICMBS, but it is well to emphasize at this point that the Code did not adopt the provision in the ICMBS absolutely
prohibiting advertising or other forms of promotion to the general public of products within the scope of the ICMBS. Instead, the Milk Code expressly provides that
advertising, promotion, or other marketing materials may be allowed if such materials are duly authorized and approved by the Inter-Agency Committee (IAC).
On the other hand, Section 2, Article II of the 1987 Constitution, to wit:
SECTION 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the
law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation and amity with all nations. (Emphasis supplied)
embodies the incorporation method.14
In Mijares v. Ranada,15 the Court held thus:
[G]enerally accepted principles of international law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if they do not
derive from treaty obligations. The classical formulation in international law sees those customary rules accepted as binding result from the combination [of] two
elements: the established, widespread, and consistent practice on the part of States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a belief that the practice in question is rendered obligatory by the existence of a rule
of law requiring it.16 (Emphasis supplied)
"Generally accepted principles of international law" refers to norms of general or customary international law which are binding on all states, 17 i.e., renunciation of war as an
instrument of national policy, the principle of sovereign immunity,18 a person's right to life, liberty and due process,19 and pacta sunt servanda,20 among others. The concept of
"generally accepted principles of law" has also been depicted in this wise:
Some legal scholars and judges look upon certain "general principles of law" as a primary source of international law because they have the "character of jus rationale" and
are "valid through all kinds of human societies." (Judge Tanaka in his dissenting opinion in the 1966 South West Africa Case, 1966 I.C.J. 296). O'Connell holds that certain
priniciples are part of international law because they are "basic to legal systems generally" and hence part of the jus gentium. These principles, he believes, are
established by a process of reasoning based on the common identity of all legal systems. If there should be doubt or disagreement, one must look to state practice and
determine whether the municipal law principle provides a just and acceptable solution. x x x 21 (Emphasis supplied)
Fr. Joaquin G. Bernas defines customary international law as follows:
Custom or customary international law means "a general and consistent practice of states followed by them from a sense of legal obligation [opinio juris]."
(Restatement) This statement contains the two basic elements of custom: the material factor, that is, how states behave, and the psychological
orsubjective factor, that is, why they behave the way they do.
xxxx
The initial factor for determining the existence of custom is the actual behavior of states. This includes several elements: duration, consistency, and generality of
the practice of states.
The required duration can be either short or long. x x x
xxxx
Duration therefore is not the most important element. More important is the consistency and the generality of the practice. x x x
xxxx
Once the existence of state practice has been established, it becomes necessary to determine why states behave the way they do. Do states behave the way they
do because they consider it obligatory to behave thus or do they do it only as a matter of courtesy? Opinio juris, or the belief that a certain form of
behavior is obligatory, is what makes practice an international rule. Without it, practice is not law.22 (Underscoring and Emphasis supplied)
Clearly, customary international law is deemed incorporated into our domestic system. 23
WHA Resolutions have not been embodied in any local legislation. Have they attained the status of customary law and should they then be deemed incorporated as part of the
law of the land?
The World Health Organization (WHO) is one of the international specialized agencies allied with the United Nations (UN) by virtue of Article 57, 24 in relation to Article 6325 of the
UN Charter. Under the 1946 WHO Constitution, it is the WHA which determines the policies of the WHO, 26 and has the power to adopt regulations concerning "advertising and
labeling of biological, pharmaceutical and similar products moving in international commerce," 27 and to "make recommendations to members with respect to any matter within
the competence of the Organization."28 The legal effect of its regulations, as opposed to recommendations, is quite different.
Regulations, along with conventions and agreements, duly adopted by the WHA bind member states thus:
Article 19. The Health Assembly shall have authority to adopt conventions or agreements with respect to any matter within the competence of the Organization. A
two-thirds vote of the Health Assembly shall be required for the adoption of such conventions or agreements, which shall come into force for each Member
when accepted by it in accordance with its constitutional processes.
Article 20. Each Member undertakes that it will, within eighteen months after the adoption by the Health Assembly of a convention or agreement, take action
relative to the acceptance of such convention or agreement. Each Member shall notify the Director-General of the action taken, and if it does not accept such
convention or agreement within the time limit, it will furnish a statement of the reasons for non-acceptance. In case of acceptance, each Member agrees to make
an annual report to the Director-General in accordance with Chapter XIV.
Article 21. The Health Assembly shall have authority to adopt regulations concerning: (a) sanitary and quarantine requirements and other procedures designed to
prevent the international spread of disease; (b) nomenclatures with respect to diseases, causes of death and public health practices; (c) standards with respect to
diagnostic procedures for international use; (d) standards with respect to the safety, purity and potency of biological, pharmaceutical and similar products moving in
international commerce; (e) advertising and labeling of biological, pharmaceutical and similar products moving in international commerce.
Article 22. Regulations adopted pursuant to Article 21 shall come into force for all Members after due notice has been given of their adoption by the Health
Assembly except for such Members as may notify the Director-General of rejection or reservations within the period stated in the notice. (Emphasis supplied)
On the other hand, under Article 23, recommendations of the WHA do not come into force for members, in the same way that conventions or agreements under Article 19
and regulations under Article 21 come into force. Article 23 of the WHO Constitution reads:
Article 23. The Health Assembly shall have authority to make recommendations to Members with respect to any matter within the competence of the
Organization. (Emphasis supplied)
The absence of a provision in Article 23 of any mechanism by which the recommendation would come into force for member states is conspicuous.
The former Senior Legal Officer of WHO, Sami Shubber, stated that WHA recommendations are generally not binding, but they "carry moral and political weight, as they
constitute the judgment on a health issue of the collective membership of the highest international body in the field of health." 29 Even the ICMBS itself was adopted as a mere
recommendation, as WHA Resolution No. 34.22 states:
"The Thirty-Fourth World Health Assembly x x x adopts, in the sense of Article 23 of the Constitution, the International Code of Marketing of Breastmilk
Substitutes annexed to the present resolution." (Emphasis supplied)
The Introduction to the ICMBS also reads as follows:
In January 1981, the Executive Board of the World Health Organization at its sixty-seventh session, considered the fourth draft of the code, endorsed it, and
unanimously recommended to the Thirty-fourth World Health Assembly the text of a resolution by which it would adopt the code in the form of a
recommendation rather than a regulation. x x x (Emphasis supplied)
The legal value of WHA Resolutions as recommendations is summarized in Article 62 of the WHO Constitution, to wit:
Art. 62. Each member shall report annually on the action taken with respect to recommendations made to it by the Organization, and with respect to conventions,
agreements and regulations.
Apparently, the WHA Resolution adopting the ICMBS and subsequent WHA Resolutions urging member states to implement the ICMBS are merely recommendatory and legally
non-binding. Thus, unlike what has been done with the ICMBS whereby the legislature enacted most of the provisions into law which is the Milk Code, the
subsequent WHA Resolutions,30 specifically providing for exclusive breastfeeding from 0-6 months, continued breastfeeding up to 24 months, and absolutely
prohibiting advertisements and promotions of breastmilk substitutes, have not been adopted as a domestic law.
It is propounded that WHA Resolutions may constitute "soft law" or non-binding norms, principles and practices that influence state behavior.31
"Soft law" does not fall into any of the categories of international law set forth in Article 38, Chapter III of the 1946 Statute of the International Court of Justice. 32 It is, however, an
expression of non-binding norms, principles, and practices that influence state behavior.33 Certain declarations and resolutions of the UN General Assembly fall under this
category.34 The most notable is the UN Declaration of Human Rights, which this Court has enforced in various cases, specifically, Government of Hongkong Special
Administrative Region v. Olalia,35 Mejoff v. Director of Prisons,36 Mijares v. Raada37 and Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies,
Inc..38
The World Intellectual Property Organization (WIPO), a specialized agency attached to the UN with the mandate to promote and protect intellectual property worldwide, has
resorted to soft law as a rapid means of norm creation, in order "to reflect and respond to the changing needs and demands of its constituents." 39 Other international
organizations which have resorted to soft law include the International Labor Organization and the Food and Agriculture Organization (in the form of the Codex Alimentarius).40
WHO has resorted to soft law. This was most evident at the time of the Severe Acute Respiratory Syndrome (SARS) and Avian flu outbreaks.
Although the IHR Resolution does not create new international law binding on WHO member states, it provides an excellent example of the power of
"soft law" in international relations. International lawyers typically distinguish binding rules of international law-"hard law"-from non-binding norms,
principles, and practices that influence state behavior-"soft law." WHO has during its existence generated many soft law norms, creating a "soft law
regime" in international governance for public health.
The "soft law" SARS and IHR Resolutions represent significant steps in laying the political groundwork for improved international cooperation on infectious
diseases. These resolutions clearly define WHO member states' normative duty to cooperate fully with other countries and with WHO in connection with infectious
disease surveillance and response to outbreaks.
This duty is neither binding nor enforceable, but, in the wake of the SARS epidemic, the duty is powerful politically for two reasons. First, the SARS
outbreak has taught the lesson that participating in, and enhancing, international cooperation on infectious disease controls is in a country's self-interest x x x if this
warning is heeded, the "soft law" in the SARS and IHR Resolution could inform the development of general and consistent state practice on infectious disease
surveillance and outbreak response, perhaps crystallizing eventually into customary international law on infectious disease prevention and control. 41
In the Philippines, the executive department implemented certain measures recommended by WHO to address the outbreaks of SARS and Avian flu by issuing Executive Order
(E.O.) No. 201 on April 26, 2003 and E.O. No. 280 on February 2, 2004, delegating to various departments broad powers to close down schools/establishments, conduct health
surveillance and monitoring, and ban importation of poultry and agricultural products.
It must be emphasized that even under such an international emergency, the duty of a state to implement the IHR Resolution was still considered not binding or enforceable,
although said resolutions had great political influence.
As previously discussed, for an international rule to be considered as customary law, it must be established that such rule is being followed by states because they consider it
obligatory to comply with such rules (opinio juris). Respondents have not presented any evidence to prove that the WHA Resolutions, although signed by most of the member
states, were in fact enforced or practiced by at least a majority of the member states; neither have respondents proven that any compliance by member states with said WHA
Resolutions was obligatory in nature.
Respondents failed to establish that the provisions of pertinent WHA Resolutions are customary international law that may be deemed part of the law of the land.
Consequently, legislation is necessary to transform the provisions of the WHA Resolutions into domestic law. The provisions of the WHA Resolutions cannot be considered
as part of the law of the land that can be implemented by executive agencies without the need of a law enacted by the legislature.
Second, the Court will determine whether the DOH may implement the provisions of the WHA Resolutions by virtue of its powers and functions under the Revised
Administrative Code even in the absence of a domestic law.
Section 3, Chapter 1, Title IX of the Revised Administrative Code of 1987 provides that the DOH shall define the national health policy and implement a national health plan
within the framework of the government's general policies and plans, and issue orders and regulations concerning the implementation of established health policies.
It is crucial to ascertain whether the absolute prohibition on advertising and other forms of promotion of breastmilk substitutes provided in some WHA Resolutions has been
adopted as part of the national health policy.
Respondents submit that the national policy on infant and young child feeding is embodied in A.O. No. 2005-0014, dated May 23, 2005. Basically, the Administrative Order
declared the following policy guidelines: (1) ideal breastfeeding practices, such as early initiation of breastfeeding, exclusive breastfeeding for the first six months, extended
breastfeeding up to two years and beyond; (2) appropriate complementary feeding, which is to start at age six months; (3) micronutrient supplementation; (4) universal salt
iodization; (5) the exercise of other feeding options; and (6) feeding in exceptionally difficult circumstances. Indeed, the primacy of breastfeeding for children is emphasized as a
national health policy. However, nowhere in A.O. No. 2005-0014 is it declared that as part of such health policy, the advertisement or promotion of breastmilk
substitutes should be absolutely prohibited.
The national policy of protection, promotion and support of breastfeeding cannot automatically be equated with a total ban on advertising for breastmilk substitutes.
In view of the enactment of the Milk Code which does not contain a total ban on the advertising and promotion of breastmilk substitutes, but instead, specifically creates an IAC
which will regulate said advertising and promotion, it follows that a total ban policy could be implemented only pursuant to a law amending the Milk Code passed by the
constitutionally authorized branch of government, the legislature.
Thus, only the provisions of the Milk Code, but not those of subsequent WHA Resolutions, can be validly implemented by the DOH through the subject RIRR.
Third, the Court will now determine whether the provisions of the RIRR are in accordance with those of the Milk Code.
In support of its claim that the RIRR is inconsistent with the Milk Code, petitioner alleges the following:
1. The Milk Code limits its coverage to children 0-12 months old, but the RIRR extended its coverage to "young children" or those from ages two years old and
beyond:
MILK CODE
RIRR
WHEREAS, in order to ensure that safe and adequate nutrition for

infants is provided, there is a need to protect and promote
breastfeeding and to inform the public about the proper use of
breastmilk substitutes and supplements and related products
through adequate, consistent and objective information and
appropriate regulation of the marketing and distribution of the said
substitutes, supplements and related products;
Section 2. Purpose These Revised Rules and Regulations are

hereby promulgated to ensure the provision of safe and adequate
nutrition for infants and young children by the promotion,
protection and support of breastfeeding and by ensuring the
proper use of breastmilk substitutes, breastmilk supplements and
related products when these are medically indicated and only
when necessary, on the basis of adequate information and
through appropriate marketing and distribution.
SECTION 4(e). "Infant" means a person falling within the age

bracket of 0-12 months.
Section 5(ff). "Young Child" means a person from the age of more
than twelve (12) months up to the age of three (3) years (36
months).
2. The Milk Code recognizes that infant formula may be a proper and possible substitute for breastmilk in certain instances; but the RIRR provides "exclusive
breastfeeding for infants from 0-6 months" and declares that "there is no substitute nor replacement for breastmilk":
MILK CODE
RIRR
WHEREAS, in order to ensure that safe and adequate nutrition

for infants is provided, there is a need to protect and promote
breastfeeding and to inform the public about the proper use of
breastmilk substitutes and supplements and related
products through adequate, consistent and objective information
and appropriate regulation of the marketing and distribution of the
said substitutes, supplements and related products;
Section 4. Declaration of Principles The following are the

underlying principles from which the revised rules and regulations
are premised upon:
a. Exclusive breastfeeding is for infants from 0 to six (6) months.
b. There is no substitute or replacement for breastmilk.
3. The Milk Code only regulates and does not impose unreasonable requirements for advertising and promotion; RIRR imposes an absolute ban on such activities
for breastmilk substitutes intended for infants from 0-24 months old or beyond, and forbids the use of health and nutritional claims. Section 13 of the RIRR, which
provides for a "total effect" in the promotion of products within the scope of the Code, is vague:
MILK CODE
RIRR
SECTION 6. The General Public and Mothers.
Section 4. Declaration of Principles The following are the

underlying principles from which the revised rules and regulations
are premised upon:
(a) No advertising, promotion or other marketing materials,

whether written, audio or visual, for products within the scope of
this Code shall be printed, published, distributed, exhibited and
broadcast unless such materials are duly authorized and
approved by an inter-agency committee created herein pursuant
to the applicable standards provided for in this Code.
xxxx
f. Advertising, promotions, or sponsor-shipsof infant formula,
breastmilk substitutes and other related products are prohibited.

Section 11. Prohibition No advertising, promotions,
sponsorships, or marketing materials and activities for breastmilk
substitutes intended for infants and young children up to twentyfour (24) months, shall be allowed, because they tend to convey
or give subliminal messages or impressions that undermine
breastmilk and breastfeeding or otherwise exaggerate breastmilk
substitutes and/or replacements, as well as related products
covered within the scope of this Code.
Section 13. "Total Effect" - Promotion of products within the
scope of this Code must be objective and should not equate or
make the product appear to be as good or equal to breastmilk or
breastfeeding in the advertising concept. It must not in any case
undermine breastmilk or breastfeeding. The "total effect" should
not directly or indirectly suggest that buying their product would
produce better individuals, or resulting in greater love, intelligence,
ability, harmony or in any manner bring better health to the baby
or other such exaggerated and unsubstantiated claim.
Section 15. Content of Materials. - The following shall not be
included in advertising, promotional and marketing materials:
a. Texts, pictures, illustrations or information which discourage or
tend to undermine the benefits or superiority of breastfeeding or
which idealize the use of breastmilk substitutes and milk
supplements. In this connection, no pictures of babies and
children together with their mothers, fathers, siblings,
grandparents, other relatives or caregivers (or yayas) shall be
used in any advertisements for infant formula and breastmilk
supplements;
b. The term "humanized," "maternalized," "close to mother's milk"
or similar words in describing breastmilk substitutes or milk
supplements;
c. Pictures or texts that idealize the use of infant and milk formula.
Section 16. All health and nutrition claims for products within the
scope of the Code are absolutely prohibited. For this purpose, any
phrase or words that connotes to increase emotional, intellectual
abilities of the infant and young child and other like phrases shall
not be allowed.
4. The RIRR imposes additional labeling requirements not found in the Milk Code:
MILK CODE
RIRR
SECTION 10. Containers/Label.
Section 26. Content Each container/label shall contain such

message, in both Filipino and English languages, and which
message cannot be readily separated therefrom, relative the
following points:
(a) Containers and/or labels shall be designed to provide the

necessary information about the appropriate use of the products,
and in such a way as not to discourage breastfeeding.
(a) The words or phrase "Important Notice" or "Government

Warning" or their equivalent;
(b) Each container shall have a clear, conspicuous and easily
readable and understandable message in Pilipino or English
printed on it, or on a label, which message can not readily become (b) A statement of the superiority of breastfeeding;
separated from it, and which shall include the following points:
(c) A statement that there is no substitute for breastmilk;
(i) the words "Important Notice" or their equivalent;
(ii) a statement of the superiority of breastfeeding;
(iii) a statement that the product shall be used only on the advice
of a health worker as to the need for its use and the proper
methods of use; and
(d) A statement that the product shall be used only on the advice
of a health worker as to the need for its use and the proper
methods of use;
(e) Instructions for appropriate prepara-tion, and a warning against
the health hazards of inappropriate preparation; and
(iv) instructions for appropriate preparation, and a warning against (f) The health hazards of unnecessary or improper use of infant
the health hazards of inappropriate preparation.
formula and other related products including information that
powdered infant formula may contain pathogenic microorganisms
and must be prepared and used appropriately.
5. The Milk Code allows dissemination of information on infant formula to health professionals; the RIRR totally prohibits such activity:
MILK CODE
RIRR
SECTION 7. Health Care System.
Section 22. No manufacturer, distributor, or representatives of

products covered by the Code shall be allowed to conduct or be
(b) No facility of the health care system shall be used for the
purpose of promoting infant formula or other products within the
scope of this Code. This Code does not, however, preclude the
dissemination of information to health professionals as provided in
Section 8(b).
involved in any activity on breastfeeding promotion, education and

production of Information, Education and Communication (IEC)
materials on breastfeeding, holding of or participating as speakers
in classes or seminars for women and children activities and to
avoid the use of these venues to market their brands or company
names.
SECTION 8. Health Workers. SECTION 16. All health and nutrition claims for products within
the scope of the Code are absolutely prohibited. For this purpose,
any phrase or words that connotes to increase emotional,
(b) Information provided by manufacturers and distributors to
intellectual abilities of the infant and young child and other like
health professionals regarding products within the scope of this
Code shall be restricted to scientific and factual matters and such phrases shall not be allowed.
information shall not imply or create a belief that bottle-feeding is
equivalent or superior to breastfeeding. It shall also include the
information specified in Section 5(b).
6. The Milk Code permits milk manufacturers and distributors to extend assistance in research and continuing education of health professionals; RIRR absolutely
forbids the same.
MILK CODE
RIRR
SECTION 8. Health Workers
Section 4. Declaration of Principles
(e) Manufacturers and distributors of products within the scope of The following are the underlying principles from which the revised
this Code may assist in the research, scholarships and continuing rules and regulations are premised upon:
education, of health professionals,in accordance with the rules
and regulations promulgated by the Ministry of Health.
i. Milk companies, and their representatives,should not form part
of any policymaking body or entity in relation to the advancement
of breasfeeding.
SECTION 22. No manufacturer, distributor, or representatives of
products covered by the Code shall be allowed to conduct or be
involved in any activity on breastfeeding promotion, education and
production of Information, Education and Communication (IEC)
materials on breastfeeding, holding of or participating as speakers
in classes or seminars for women and children activitiesand to
avoid the use of these venues to market their brands or company
names.
SECTION 32. Primary Responsibility of Health Workers - It is
the primary responsibility of the health workers to promote, protect
and support breastfeeding and appropriate infant and young child
feeding. Part of this responsibility is to continuously update their
knowledge and skills on breastfeeding. No assistance, support,
logistics or training from milk companies shall be permitted.
7. The Milk Code regulates the giving of donations; RIRR absolutely prohibits it.
MILK CODE
RIRR
Section 51. Donations Within the Scope of This Code Donations of products, materials, defined and covered under the
Milk Code and these implementing rules and regulations, shall be
strictly prohibited.
(f) Nothing herein contained shall prevent donations from

manufacturers and distributors of products within the scope of this
Code upon request by or with the approval of the Ministry of
Health.
Section 52. Other Donations By Milk Companies Not Covered
by this Code. - Donations of products, equipments, and the like,
not otherwise falling within the scope of this Code or these Rules,
given by milk companies and their agents, representatives,
whether in kind or in cash, may only be coursed through the Inter
Agency Committee (IAC), which shall determine whether such
donation be accepted or otherwise.
8. The RIRR provides for administrative sanctions not imposed by the Milk Code.
MILK CODE
RIRR
Section 46. Administrative Sanctions. The following

administrative sanctions shall be imposed upon any person,
juridical or natural, found to have violated the provisions of the
Code and its implementing Rules and Regulations:
a) 1st violation Warning;
b) 2nd violation Administrative fine of a minimum of Ten
Thousand (P10,000.00) to Fifty Thousand (P50,000.00) Pesos,

depending on the gravity and extent of the violation, including the
recall of the offending product;
c) 3rd violation Administrative Fine of a minimum of Sixty
Thousand (P60,000.00) to One Hundred Fifty Thousand
(P150,000.00) Pesos, depending on the gravity and extent of the
violation, and in addition thereto, the recall of the offending
product, and suspension of the Certificate of Product Registration
(CPR);
d) 4th violation Administrative Fine of a minimum of Two Hundred
Thousand (P200,000.00) to Five Hundred (P500,000.00)
Thousand Pesos, depending on the gravity and extent of the
violation; and in addition thereto, the recall of the product,
revocation of the CPR, suspension of the License to Operate
(LTO) for one year;
e) 5th and succeeding repeated violations Administrative Fine of
One Million (P1,000,000.00) Pesos, the recall of the offending
product, cancellation of the CPR, revocation of the License to
Operate (LTO) of the company concerned, including the
blacklisting of the company to be furnished the Department of
Budget and Management (DBM) and the Department of Trade
and Industry (DTI);
f) An additional penalty of Two Thou-sand Five Hundred
(P2,500.00) Pesos per day shall be made for every day the
violation continues after having received the order from the IAC or
other such appropriate body, notifying and penalizing the
company for the infraction.
For purposes of determining whether or not there is "repeated"
violation, each product violation belonging or owned by a
company, including those of their subsidiaries, are deemed to be
violations of the concerned milk company and shall not be based
on the specific violating product alone.
9. The RIRR provides for repeal of existing laws to the contrary.

The Court shall resolve the merits of the allegations of petitioner seriatim.
1. Petitioner is mistaken in its claim that the Milk Code's coverage is limited only to children 0-12 months old. Section 3 of the Milk Code states:
SECTION 3. Scope of the Code The Code applies to the marketing, and practices related thereto, of the following products: breastmilk substitutes, including
infant formula; other milk products, foods and beverages, including bottle-fed complementary foods, when marketed or otherwise represented to be suitable, with
or without modification, for use as a partial or total replacement of breastmilk; feeding bottles and teats. It also applies to their quality and availability, and to
information concerning their use.
Clearly, the coverage of the Milk Code is not dependent on the age of the child but on the kind of product being marketed to the public. The law treats infant formula, bottle-fed
complementary food, and breastmilk substitute as separate and distinct product categories.
Section 4(h) of the Milk Code defines infant formula as "a breastmilk substitute x x x to satisfy the normal nutritional requirements of infants up to between four to six months of
age, and adapted to their physiological characteristics"; while under Section 4(b), bottle-fed complementary food refers to "any food, whether manufactured or locally prepared,
suitable as a complement to breastmilk or infant formula, when either becomes insufficient to satisfy the nutritional requirements of the infant." An infant under Section 4(e) is a
person falling within the age bracket 0-12 months. It is the nourishment of this group of infants or children aged 0-12 months that is sought to be promoted and protected by the
Milk Code.
But there is another target group. Breastmilk substitute is defined under Section 4(a) as "any food being marketed or otherwise presented as a partial or total replacement for
breastmilk, whether or not suitable for that purpose."This section conspicuously lacks reference to any particular age-group of children. Hence, the provision of the
Milk Code cannot be considered exclusive for children aged 0-12 months. In other words, breastmilk substitutes may also be intended for young children more than 12
months of age. Therefore, by regulating breastmilk substitutes, the Milk Code also intends to protect and promote the nourishment of children more than 12 months old.
Evidently, as long as what is being marketed falls within the scope of the Milk Code as provided in Section 3, then it can be subject to regulation pursuant to said law, even if the
product is to be used by children aged over 12 months.
There is, therefore, nothing objectionable with Sections 242 and 5(ff)43 of the RIRR.
2. It is also incorrect for petitioner to say that the RIRR, unlike the Milk Code, does not recognize that breastmilk substitutes may be a proper and possible substitute for
breastmilk.
The entirety of the RIRR, not merely truncated portions thereof, must be considered and construed together. As held in De Luna v. Pascual,44 "[t]he particular words, clauses and
phrases in the Rule should not be studied as detached and isolated expressions, but the whole and every part thereof must be considered in fixing the meaning of any of its
parts and in order to produce a harmonious whole."
Section 7 of the RIRR provides that "when medically indicated and only when necessary, the use of breastmilk substitutes is proper if based on complete and updated
information." Section 8 of the RIRR also states that information and educational materials should include information on the proper use of infant formula when the use thereof is
needed.
Hence, the RIRR, just like the Milk Code, also recognizes that in certain cases, the use of breastmilk substitutes may be proper.
3. The Court shall ascertain the merits of allegations 345 and 446 together as they are interlinked with each other.
To resolve the question of whether the labeling requirements and advertising regulations under the RIRR are valid, it is important to deal first with the nature, purpose, and depth
of the regulatory powers of the DOH, as defined in general under the 1987 Administrative Code, 47 and as delegated in particular under the Milk Code.
Health is a legitimate subject matter for regulation by the DOH (and certain other administrative agencies) in exercise of police powers delegated to it. The sheer span of
jurisprudence on that matter precludes the need to further discuss it. .48 However, health information, particularly advertising materials on apparently non-toxic products like
breastmilk substitutes and supplements, is a relatively new area for regulation by the DOH. 49
As early as the 1917 Revised Administrative Code of the Philippine Islands, 50 health information was already within the ambit of the regulatory powers of the predecessor of
DOH.51 Section 938 thereof charged it with the duty to protect the health of the people, and vested it with such powers as "(g) the dissemination of hygienic information among
the people and especially the inculcation of knowledge as to the proper care of infantsand the methods of preventing and combating dangerous communicable diseases."
Seventy years later, the 1987 Administrative Code tasked respondent DOH to carry out the state policy pronounced under Section 15, Article II of the 1987 Constitution, which is
"to protect and promote the right to health of the people and instill health consciousness among them."52 To that end, it was granted under Section 3 of the Administrative
Code the power to "(6) propagate health information and educate the populationon important health, medical and environmental matters which have health implications." 53
When it comes to information regarding nutrition of infants and young children, however, the Milk Code specifically delegated to the Ministry of Health (hereinafter referred to as
DOH) the power to ensure that there is adequate, consistent and objective information on breastfeeding and use of breastmilk substitutes, supplements and related products;
and the power to control such information. These are expressly provided for in Sections 12 and 5(a), to wit:
SECTION 12. Implementation and Monitoring
xxxx
(b) The Ministry of Health shall be principally responsible for the implementation and enforcement of the provisions of this Code. For this purpose, the Ministry of
Health shall have the following powers and functions:
(1) To promulgate such rules and regulations as are necessary or proper for the implementation of this Code and the accomplishment of its purposes
and objectives.
xxxx
(4) To exercise such other powers and functions as may be necessary for or incidental to the attainment of the purposes and objectives of this Code.
SECTION 5. Information and Education
(a) The government shall ensure that objective and consistent information is provided on infant feeding, for use by families and those involved in the field of
infant nutrition. This responsibility shall cover the planning, provision, design and dissemination of information, and the control thereof, on infant nutrition.
(Emphasis supplied)
Further, DOH is authorized by the Milk Code to control the content of any information on breastmilk vis--visbreastmilk substitutes, supplement and related products, in the
following manner:
SECTION 5. x x x
(b) Informational and educational materials, whether written, audio, or visual, dealing with the feeding of infants and intended to reach pregnant women and
mothers of infants, shall include clear information on all the following points: (1) the benefits and superiority of breastfeeding; (2) maternal nutrition, and the
preparation for and maintenance of breastfeeding; (3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4) the difficulty of reversing the
decision not to breastfeed; and (5) where needed, the proper use of infant formula, whether manufactured industrially or home-prepared. When such materials
contain information about the use of infant formula, they shall include the social and financial implications of its use; the health hazards of
inappropriate foods or feeding methods; and, in particular, the health hazards of unnecessary or improper use of infant formula and other breastmilk
substitutes. Such materials shall not use any picture or text which may idealize the use of breastmilk substitutes.
SECTION 8. Health Workers
xxxx
(b) Information provided by manufacturers and distributors to health professionals regarding products within the scope of this Code shall be restricted to
scientific and factual matters, and such information shall not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding. It
shall also include the information specified in Section 5(b).
SECTION 10. Containers/Label
(a) Containers and/or labels shall be designed to provide the necessary information about the appropriate use of the products, and in such a way as not to
discourage breastfeeding.
xxxx
(d) The term "humanized," "maternalized" or similar terms shall not be used. (Emphasis supplied)
The DOH is also authorized to control the purpose of the information and to whom such information may be disseminated under Sections 6 through 9 of the Milk Code 54 to
ensure that the information that would reach pregnant women, mothers of infants, and health professionals and workers in the health care system is restricted to scientific and
factual matters and shall not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding.
It bears emphasis, however, that the DOH's power under the Milk Code to control information regarding breastmilk vis-a-vis breastmilk substitutes is not absolute as the power
to control does not encompass the power to absolutely prohibit the advertising, marketing, and promotion of breastmilk substitutes.
The following are the provisions of the Milk Code that unequivocally indicate that the control over information given to the DOH is not absolute and that absolute prohibition is
not contemplated by the Code:
a) Section 2 which requires adequate information and appropriate marketing and distribution of breastmilk substitutes, to wit:
SECTION 2. Aim of the Code The aim of the Code is to contribute to the provision of safe and adequate nutrition for infants by the protection and
promotion of breastfeeding and by ensuring the proper use of breastmilk substitutes and breastmilk supplements when these are necessary, on the
basis of adequate information and through appropriate marketing and distribution.
b) Section 3 which specifically states that the Code applies to the marketing of and practices related to breastmilk substitutes, including infant formula, and to
information concerning their use;
c) Section 5(a) which provides that the government shall ensure that objective and consistent information is provided on infant feeding;
d) Section 5(b) which provides that written, audio or visual informational and educational materials shall not use any picture or text which may idealize the use of
breastmilk substitutes and should include information on the health hazards of unnecessary or improper use of said product;
e) Section 6(a) in relation to Section 12(a) which creates and empowers the IAC to review and examine advertising, promotion, and other marketing materials;
f) Section 8(b) which states that milk companies may provide information to health professionals but such information should be restricted to factual and scientific
matters and shall not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding; and
g) Section 10 which provides that containers or labels should not contain information that would discourage breastfeeding and idealize the use of infant formula.
It is in this context that the Court now examines the assailed provisions of the RIRR regarding labeling and advertising.
Sections 1355 on "total effect" and 2656 of Rule VII of the RIRR contain some labeling requirements, specifically: a) that there be a statement that there is no substitute to
breastmilk; and b) that there be a statement that powdered infant formula may contain pathogenic microorganisms and must be prepared and used appropriately. Section 16 57 of
the RIRR prohibits all health and nutrition claims for products within the scope of the Milk Code, such as claims of increased emotional and intellectual abilities of the infant and
young child.
These requirements and limitations are consistent with the provisions of Section 8 of the Milk Code, to wit:
SECTION 8. Health workers xxxx
(b) Information provided by manufacturers and distributors to health professionals regarding products within the scope of this Code shall be restricted to
scientific and factual matters, and such informationshall not imply or create a belief that bottlefeeding is equivalent or superior to breastfeeding. It shall also
include the information specified in Section 5.58 (Emphasis supplied)
and Section 10(d)59 which bars the use on containers and labels of the terms "humanized," "maternalized," or similar terms.
These provisions of the Milk Code expressly forbid information that would imply or create a belief that there is any milk product equivalent to breastmilk or which is humanized or
maternalized, as such information would be inconsistent with the superiority of breastfeeding.
It may be argued that Section 8 of the Milk Code refers only to information given to health workers regarding breastmilk substitutes, not to containers and labels thereof.
However, such restrictive application of Section 8(b) will result in the absurd situation in which milk companies and distributors are forbidden to claim to health workers that their
products are substitutes or equivalents of breastmilk, and yet be allowed to display on the containers and labels of their products the exact opposite message. That askewed
interpretation of the Milk Code is precisely what Section 5(a) thereof seeks to avoid by mandating that all information regarding breastmilk vis-a-visbreastmilk substitutes
be consistent, at the same time giving the government control over planning, provision, design, and dissemination of information on infant feeding.
Thus, Section 26(c) of the RIRR which requires containers and labels to state that the product offered is not a substitute for breastmilk, is a reasonable means of enforcing
Section 8(b) of the Milk Code and deterring circumvention of the protection and promotion of breastfeeding as embodied in Section 2 60 of the Milk Code.
Section 26(f)61 of the RIRR is an equally reasonable labeling requirement. It implements Section 5(b) of the Milk Code which reads:
SECTION 5. x x x
xxxx
mothers of infants, shall include clear information on all the following points: x x x (5) where needed, the proper use of infant formula, whether manufactured
industrially or home-prepared. When such materials contain information about the use of infant formula, they shall include the social and financial implications of its
use; the health hazards of inappropriate foods or feeding methods; and, in particular, the health hazards of unnecessary or improper use of infant
formula and other breastmilk substitutes. Such materials shall not use any picture or text which may idealize the use of breastmilk substitutes. (Emphasis
supplied)
The label of a product contains information about said product intended for the buyers thereof. The buyers of breastmilk substitutes are mothers of infants, and Section 26 of
the RIRR merely adds a fair warning about the likelihood of pathogenic microorganisms being present in infant formula and other related products when these are prepared and
used inappropriately.
Petitioners counsel has admitted during the hearing on June 19, 2007 that formula milk is prone to contaminations and there is as yet no technology that allows production of
powdered infant formula that eliminates all forms of contamination. 62
Ineluctably, the requirement under Section 26(f) of the RIRR for the label to contain the message regarding health hazards including the possibility of contamination with
pathogenic microorganisms is in accordance with Section 5(b) of the Milk Code.
The authority of DOH to control information regarding breastmilk vis-a-vis breastmilk substitutes and supplements and related products cannot be questioned. It is its
intervention into the area of advertising, promotion, and marketing that is being assailed by petitioner.
In furtherance of Section 6(a) of the Milk Code, to wit:
(a) No advertising, promotion or other marketing materials, whether written, audio or visual, for products within the scope of this Code shall be printed, published,
distributed, exhibited and broadcast unless such materials are duly authorized and approved by an inter-agency committee created herein pursuant to the
applicable standards provided for in this Code.
the Milk Code invested regulatory authority over advertising, promotional and marketing materials to an IAC, thus:
SECTION 12. Implementation and Monitoring (a) For purposes of Section 6(a) of this Code, an inter-agency committee composed of the following members is hereby created:
Minister of Health
-------------------
Chairman
Minister of Trade and Industry
-------------------
Member
Minister of Justice
-------------------
Member
Minister of Social Services and Development
-------------------
Member
The members may designate their duly authorized representative to every meeting of the Committee.
The Committee shall have the following powers and functions:
(1) To review and examine all advertising. promotion or other marketing materials, whether written, audio or visual, on products within the scope of
this Code;
(2) To approve or disapprove, delete objectionable portions from and prohibit the printing, publication, distribution, exhibition and broadcast of, all
advertising promotion or other marketing materials, whether written, audio or visual, on products within the scope of this Code;
(3) To prescribe the internal and operational procedure for the exercise of its powers and functions as well as the performance of its duties and
responsibilities; and
(4) To promulgate such rules and regulations as are necessary or proper for the implementation of Section 6(a) of this Code. x x x
(Emphasis supplied)
However, Section 11 of the RIRR, to wit:
SECTION 11. Prohibition No advertising, promotions, sponsorships, or marketing materials and activities for breastmilk substitutes intended for infants and
young children up to twenty-four (24) months, shall be allowed, because they tend to convey or give subliminal messages or impressions that undermine
breastmilk and breastfeeding or otherwise exaggerate breastmilk substitutes and/or replacements, as well as related products covered within the scope of this
Code.
prohibits advertising, promotions, sponsorships or marketing materials and activities for breastmilk substitutes in line with the RIRRs declaration of principle under Section 4(f),
to wit:
SECTION 4. Declaration of Principles
xxxx
(f) Advertising, promotions, or sponsorships of infant formula, breastmilk substitutes and other related products are prohibited.
The DOH, through its co-respondents, evidently arrogated to itself not only the regulatory authority given to the IAC but also imposed absolute prohibition on advertising,
promotion, and marketing.
Yet, oddly enough, Section 12 of the RIRR reiterated the requirement of the Milk Code in Section 6 thereof for prior approval by IAC of all advertising, marketing and promotional
materials prior to dissemination.
Even respondents, through the OSG, acknowledged the authority of IAC, and repeatedly insisted, during the oral arguments on June 19, 2007, that the prohibition under Section
11 is not actually operational, viz:
SOLICITOR GENERAL DEVANADERA:
xxxx
x x x Now, the crux of the matter that is being questioned by Petitioner is whether or not there is an absolute prohibition on advertising making AO 2006-12
unconstitutional. We maintained that what AO 2006-12 provides is not an absolute prohibition because Section 11 while it states and it is entitled prohibition it
states that no advertising, promotion, sponsorship or marketing materials and activities for breast milk substitutes intended for infants and young children up to 24
months shall be allowed because this is the standard they tend to convey or give subliminal messages or impression undermine that breastmilk or breastfeeding x
x x.
We have to read Section 11 together with the other Sections because the other Section, Section 12, provides for the inter agency committee that is empowered to
process and evaluate all the advertising and promotion materials.
xxxx
What AO 2006-12, what it does, it does not prohibit the sale and manufacture, it simply regulates the advertisement and the promotions of breastfeeding milk
substitutes.
xxxx
Now, the prohibition on advertising, Your Honor, must be taken together with the provision on the Inter-Agency Committee that processes and evaluates because
there may be some information dissemination that are straight forward information dissemination. What the AO 2006 is trying to prevent is any material that will
undermine the practice of breastfeeding, Your Honor.
xxxx
ASSOCIATE JUSTICE SANTIAGO:
Madam Solicitor General, under the Milk Code, which body has authority or power to promulgate Rules and Regulations regarding the Advertising, Promotion and
Marketing of Breastmilk Substitutes?
Your Honor, please, it is provided that the Inter-Agency Committee, Your Honor.
xxxx
ASSOCIATE JUSTICE SANTIAGO:
x x x Don't you think that the Department of Health overstepped its rule making authority when it totally banned advertising and promotion under Section 11
prescribed the total effect rule as well as the content of materials under Section 13 and 15 of the rules and regulations?
Your Honor, please, first we would like to stress that there is no total absolute ban. Second, the Inter-Agency Committee is under the Department of Health, Your
Honor.
xxxx
ASSOCIATE JUSTICE NAZARIO:
x x x Did I hear you correctly, Madam Solicitor, that there is no absolute ban on advertising of breastmilk substitutes in the Revised Rules?
Yes, your Honor.
But, would you nevertheless agree that there is an absolute ban on advertising of breastmilk substitutes intended for children two (2) years old and younger?
It's not an absolute ban, Your Honor, because we have the Inter-Agency Committee that can evaluate some advertising and promotional materials, subject to the
standards that we have stated earlier, which are- they should not undermine breastfeeding, Your Honor.
xxxx
x x x Section 11, while it is titled Prohibition, it must be taken in relation with the other Sections, particularly 12 and 13 and 15, Your Honor, because it is recognized
that the Inter-Agency Committee has that power to evaluate promotional materials, Your Honor.
So in short, will you please clarify there's no absolute ban on advertisement regarding milk substitute regarding infants two (2) years below?
We can proudly say that the general rule is that there is a prohibition, however, we take exceptions and standards have been set. One of which is that, the InterAgency Committee can allow if the advertising and promotions will not undermine breastmilk and breastfeeding, Your Honor. 63
Sections 11 and 4(f) of the RIRR are clearly violative of the Milk Code.
However, although it is the IAC which is authorized to promulgate rules and regulations for the approval or rejection of advertising, promotional, or other marketing materials
under Section 12(a) of the Milk Code, said provision must be related to Section 6 thereof which in turn provides that the rules and regulations must be "pursuant to the
applicable standards provided for in this Code." Said standards are set forth in Sections 5(b), 8(b), and 10 of the Code, which, at the risk of being repetitious, and for easy
reference, are quoted hereunder:
xxxx
mothers of infants, shall include clear information on all the following points: (1) the benefits and superiority of breastfeeding; (2) maternal nutrition, and the
preparation for and maintenance of breastfeeding; (3) the negative effect on breastfeeding of introducing partial bottlefeeding; (4) the difficulty of reversing the
decision not to breastfeed; and (5) where needed, the proper use of infant formula, whether manufactured industrially or home-prepared. When such materials
contain information about the use of infant formula, they shall include the social and financial implications of its use; the health hazards of inappropriate foods of
feeding methods; and, in particular, the health hazards of unnecessary or improper use of infant formula and other breastmilk substitutes. Such materials shall not
use any picture or text which may idealize the use of breastmilk substitutes.
xxxx
SECTION 8. Health Workers.
xxxx
(b) Information provided by manufacturers and distributors to health professionals regarding products within the scope of this Code shall be restricted to scientific
and factual matters and such information shall not imply or create a belief that bottle feeding is equivalent or superior to breastfeeding. It shall also include the
information specified in Section 5(b).
xxxx
SECTION 10. Containers/Label
(a) Containers and/or labels shall be designed to provide the necessary information about the appropriate use of the products, and in such a way as not to
discourage breastfeeding.
(b) Each container shall have a clear, conspicuous and easily readable and understandable message in Pilipino or English printed on it, or on a label, which
message can not readily become separated from it, and which shall include the following points:
(i) the words "Important Notice" or their equivalent;
(ii) a statement of the superiority of breastfeeding;
(iii) a statement that the product shall be used only on the advice of a health worker as to the need for its use and the proper methods of use; and
(iv) instructions for appropriate preparation, and a warning against the health hazards of inappropriate preparation.
Section 12(b) of the Milk Code designates the DOH as the principal implementing agency for the enforcement of the provisions of the Code. In relation to such responsibility of
the DOH, Section 5(a) of the Milk Code states that:
(a) The government shall ensure that objective and consistent information is provided on infant feeding, for use by families and those involved in the field of
infant nutrition. This responsibility shall cover the planning, provision, design and dissemination of information, and the control thereof, on infant nutrition.
(Emphasis supplied)
Thus, the DOH has the significant responsibility to translate into operational terms the standards set forth in Sections 5, 8, and 10 of the Milk Code, by which the
IAC shall screen advertising, promotional, or other marketing materials.
It is pursuant to such responsibility that the DOH correctly provided for Section 13 in the RIRR which reads as follows:
SECTION 13. "Total Effect" - Promotion of products within the scope of this Code must be objective and should not equate or make the product appear to be as
good or equal to breastmilk or breastfeeding in the advertising concept. It must not in any case undermine breastmilk or breastfeeding. The "total effect" should not
directly or indirectly suggest that buying their product would produce better individuals, or resulting in greater love, intelligence, ability, harmony or in any manner
bring better health to the baby or other such exaggerated and unsubstantiated claim.
Such standards bind the IAC in formulating its rules and regulations on advertising, promotion, and marketing. Through that single provision, the DOH exercises control over the
information content of advertising, promotional and marketing materials on breastmilk vis-a-vis breastmilk substitutes, supplements and other related products. It also sets a
viable standard against which the IAC may screen such materials before they are made public.
In Equi-Asia Placement, Inc. vs. Department of Foreign Affairs,64 the Court held:
x x x [T]his Court had, in the past, accepted as sufficient standards the following: "public interest," "justice and equity," "public convenience and welfare," and
"simplicity, economy and welfare."65
In this case, correct information as to infant feeding and nutrition is infused with public interest and welfare.
4. With regard to activities for dissemination of information to health professionals, the Court also finds that there is no inconsistency between the provisions of the Milk Code
and the RIRR. Section 7(b)66 of the Milk Code, in relation to Section 8(b) 67 of the same Code, allows dissemination of information to health professionals but suchinformation is
restricted to scientific and factual matters.
Contrary to petitioner's claim, Section 22 of the RIRR does not prohibit the giving of information to health professionals on scientific and factual matters. What it prohibits
is the involvement of the manufacturer and distributor of the products covered by the Code in activities for the promotion, education and production of Information, Education
and Communication (IEC) materials regarding breastfeeding that are intended forwomen and children. Said provision cannot be construed to encompass even
the dissemination of information to health professionals, as restricted by the Milk Code.
5. Next, petitioner alleges that Section 8(e) 68 of the Milk Code permits milk manufacturers and distributors to extend assistance in research and in the continuing education of
health professionals, while Sections 22 and 32 of the RIRR absolutely forbid the same. Petitioner also assails Section 4(i) 69 of the RIRR prohibiting milk manufacturers' and
distributors' participation in any policymaking body in relation to the advancement of breastfeeding.
Section 4(i) of the RIRR provides that milk companies and their representatives should not form part of any policymaking body or entity in relation to the advancement of
breastfeeding. The Court finds nothing in said provisions which contravenes the Milk Code. Note that under Section 12(b) of the Milk Code, it is the DOH which shall be
principally responsible for the implementation and enforcement of the provisions of said Code. It is entirely up to the DOH to decide which entities to call upon or allow to be
part of policymaking bodies on breastfeeding. Therefore, the RIRR's prohibition on milk companies participation in any policymaking body in relation to the advancement of
breastfeeding is in accord with the Milk Code.
Petitioner is also mistaken in arguing that Section 22 of the RIRR prohibits milk companies from giving reasearch assistance and continuing education to health
professionals. Section 2270 of the RIRR does not pertain to research assistance to or the continuing education of health professionals; rather, it deals with breastfeeding
promotion and education for women and children. Nothing in Section 22 of the RIRR prohibits milk companies from giving assistance for research or continuing education to
health professionals; hence, petitioner's argument against this particular provision must be struck down.
It is Sections 971 and 1072 of the RIRR which govern research assistance. Said sections of the RIRR provide thatresearch assistance for health workers and researchers
may be allowed upon approval of an ethics committee, and with certain disclosure requirements imposed on the milk company and on the recipient of the research
award.
The Milk Code endows the DOH with the power to determine how such research or educational assistance may be given by milk companies or under what conditions health
workers may accept the assistance. Thus, Sections 9 and 10 of the RIRR imposing limitations on the kind of research done or extent of assistance given by milk companies are
completely in accord with the Milk Code.
Petitioner complains that Section 3273 of the RIRR prohibits milk companies from giving assistance, support, logistics or training to health workers. This provision is within the
prerogative given to the DOH under Section 8(e) 74 of the Milk Code, which provides that manufacturers and distributors of breastmilk substitutes may assist in researches,
scholarships and the continuing education, of health professionals in accordance with the rules and regulations promulgated by the Ministry of Health, now DOH.
6. As to the RIRR's prohibition on donations, said provisions are also consistent with the Milk Code. Section 6(f) of the Milk Code provides that donations may be made by
manufacturers and distributors of breastmilk substitutesupon the request or with the approval of the DOH. The law does not proscribe the refusal of donations. The Milk
Code leaves it purely to the discretion of the DOH whether to request or accept such donations. The DOH then appropriately exercised its discretion through Section 51 75 of the
RIRR which sets forth its policy not to request or approve donations from manufacturers and distributors of breastmilk substitutes.
It was within the discretion of the DOH when it provided in Section 52 of the RIRR that any donation from milk companies not covered by the Code should be coursed through
the IAC which shall determine whether such donation should be accepted or refused. As reasoned out by respondents, the DOH is not mandated by the Milk Code to accept
donations. For that matter, no person or entity can be forced to accept a donation. There is, therefore, no real inconsistency between the RIRR and the law because the Milk
Code does not prohibit the DOH from refusing donations.
7. With regard to Section 46 of the RIRR providing for administrative sanctions that are not found in the Milk Code, the Court upholds petitioner's objection thereto.
Respondent's reliance on Civil Aeronautics Board v. Philippine Air Lines, Inc.76 is misplaced. The glaring difference in said case and the present case before the Court is that, in
the Civil Aeronautics Board, the Civil Aeronautics Administration (CAA) was expressly granted by the law (R.A. No. 776) the power to impose fines and civil penalties, while
the Civil Aeronautics Board (CAB) was granted by the same law the power to review on appeal the order or decision of the CAA and to determine whether to impose, remit,
mitigate, increase or compromise such fine and civil penalties. Thus, the Court upheld the CAB's Resolution imposing administrative fines.
In a more recent case, Perez v. LPG Refillers Association of the Philippines, Inc.,77 the Court upheld the Department of Energy (DOE) Circular No. 2000-06-10
implementing Batas Pambansa (B.P.) Blg. 33. The circular provided for fines for the commission of prohibited acts. The Court found that nothing in the circular contravened the
law because the DOE was expressly authorized by B.P. Blg. 33 and R.A. No. 7638 to impose fines or penalties.
In the present case, neither the Milk Code nor the Revised Administrative Code grants the DOH the authority to fix or impose administrative fines. Thus, without any express
grant of power to fix or impose such fines, the DOH cannot provide for those fines in the RIRR. In this regard, the DOH again exceeded its authority by providing for such fines
or sanctions in Section 46 of the RIRR. Said provision is, therefore, null and void.
The DOH is not left without any means to enforce its rules and regulations. Section 12(b) (3) of the Milk Code authorizes the DOH to "cause the prosecution of the violators of
this Code and other pertinent laws on products covered by this Code." Section 13 of the Milk Code provides for the penalties to be imposed on violators of the provision of the
Milk Code or the rules and regulations issued pursuant to it, to wit:
SECTION 13. Sanctions
(a) Any person who violates the provisions of this Code or the rules and regulations issued pursuant to this Code shall, upon conviction, be punished by a
penalty of two (2) months to one (1) year imprisonment or a fine of not less than One Thousand Pesos (P1,000.00) nor more than Thirty Thousand Pesos
(P30,000.00) or both. Should the offense be committed by a juridical person, the chairman of the Board of Directors, the president, general manager, or the
partners and/or the persons directly responsible therefor, shall be penalized.
(b) Any license, permit or authority issued by any government agency to any health worker, distributor, manufacturer, or marketing firm or personnel for the practice
of their profession or occupation, or for the pursuit of their business, may, upon recommendation of the Ministry of Health, be suspended or revoked in the event of
repeated violations of this Code, or of the rules and regulations issued pursuant to this Code. (Emphasis supplied)
8. Petitioners claim that Section 57 of the RIRR repeals existing laws that are contrary to the RIRR is frivolous.
Section 57 reads:
SECTION 57. Repealing Clause - All orders, issuances, and rules and regulations or parts thereof inconsistent with these revised rules and implementing
regulations are hereby repealed or modified accordingly.
Section 57 of the RIRR does not provide for the repeal of laws but only orders, issuances and rules and regulations. Thus, said provision is valid as it is within the DOH's rulemaking power.
An administrative agency like respondent possesses quasi-legislative or rule-making power or the power to make rules and regulations which results in delegated legislation that
is within the confines of the granting statute and the Constitution, and subject to the doctrine of non-delegability and separability of powers. 78 Such express grant of rule-making
power necessarily includes the power to amend, revise, alter, or repeal the same. 79 This is to allow administrative agencies flexibility in formulating and adjusting the details and
manner by which they are to implement the provisions of a law,80 in order to make it more responsive to the times. Hence, it is a standard provision in administrative rules that
prior issuances of administrative agencies that are inconsistent therewith are declared repealed or modified.
In fine, only Sections 4(f), 11 and 46 are ultra vires, beyond the authority of the DOH to promulgate and in contravention of the Milk Code and, therefore, null and void. The rest
of the provisions of the RIRR are in consonance with the Milk Code.
Lastly, petitioner makes a "catch-all" allegation that:
x x x [T]he questioned RIRR sought to be implemented by the Respondents is unnecessary and oppressive, and is offensive to the due process clause of
the Constitution, insofar as the same is in restraint of trade and because a provision therein is inadequate to provide the public with a comprehensible basis to
determine whether or not they have committed a violation. 81 (Emphasis supplied)
Petitioner refers to Sections 4(f),82 4(i),83 5(w),84 11,85 22,86 32,87 46,88 and 5289 as the provisions that suppress the trade of milk and, thus, violate the due process clause of the
Constitution.
The framers of the constitution were well aware that trade must be subjected to some form of regulation for the public good. Public interest must be upheld over business
interests.90 In Pest Management Association of the Philippines v. Fertilizer and Pesticide Authority,91 it was held thus:
x x x Furthermore, as held in Association of Philippine Coconut Desiccators v. Philippine Coconut Authority,despite the fact that "our present Constitution
enshrines free enterprise as a policy, it nonetheless reserves to the government the power to intervene whenever necessary to promote the general
welfare." There can be no question that the unregulated use or proliferation of pesticides would be hazardous to our environment. Thus, in the aforecited case, the
Court declared that "free enterprise does not call for removal of protective regulations." x x x It must be clearly explained and proven by competent
evidence just exactly how such protective regulation would result in the restraint of trade. [Emphasis and underscoring supplied]
In this case, petitioner failed to show that the proscription of milk manufacturers participation in any policymaking body (Section 4(i)), classes and seminars for women and
children (Section 22); the giving of assistance, support and logistics or training (Section 32); and the giving of donations (Section 52) would unreasonably hamper the trade of
breastmilk substitutes. Petitioner has not established that the proscribed activities are indispensable to the trade of breastmilk substitutes. Petitioner failed to demonstrate that
the aforementioned provisions of the RIRR are unreasonable and oppressive for being in restraint of trade.
Petitioner also failed to convince the Court that Section 5(w) of the RIRR is unreasonable and oppressive. Said section provides for the definition of the term "milk company," to
wit:
SECTION 5 x x x. (w) "Milk Company" shall refer to the owner, manufacturer, distributor of infant formula, follow-up milk, milk formula, milk supplement, breastmilk
substitute or replacement, or by any other description of such nature, including their representatives who promote or otherwise advance their commercial interests
in marketing those products;
On the other hand, Section 4 of the Milk Code provides:
(d) "Distributor" means a person, corporation or any other entity in the public or private sector engaged in the business (whether directly or indirectly) of marketing
at the wholesale or retail level a product within the scope of this Code. A "primary distributor" is a manufacturer's sales agent, representative, national distributor or
broker.
xxxx
(j) "Manufacturer" means a corporation or other entity in the public or private sector engaged in the business or function (whether directly or indirectly or through an
agent or and entity controlled by or under contract with it) of manufacturing a products within the scope of this Code.
Notably, the definition in the RIRR merely merged together under the term "milk company" the entities defined separately under the Milk Code as "distributor" and
"manufacturer." The RIRR also enumerated in Section 5(w) the products manufactured or distributed by an entity that would qualify it as a "milk company," whereas in the Milk
Code, what is used is the phrase "products within the scope of this Code." Those are the only differences between the definitions given in the Milk Code and the definition as restated in the RIRR.
Since all the regulatory provisions under the Milk Code apply equally to both manufacturers and distributors, the Court sees no harm in the RIRR providing for just one term to
encompass both entities. The definition of "milk company" in the RIRR and the definitions of "distributor" and "manufacturer" provided for under the Milk Code are practically the
same.
The Court is not convinced that the definition of "milk company" provided in the RIRR would bring about any change in the treatment or regulation of "distributors" and
"manufacturers" of breastmilk substitutes, as defined under the Milk Code.
Except Sections 4(f), 11 and 46, the rest of the provisions of the RIRR are in consonance with the objective, purpose and intent of the Milk Code, constituting reasonable
regulation of an industry which affects public health and welfare and, as such, the rest of the RIRR do not constitute illegal restraint of trade nor are they violative of the due
process clause of the Constitution.
WHEREFORE, the petition is PARTIALLY GRANTED. Sections 4(f), 11 and 46 of Administrative Order No. 2006-0012 dated May 12, 2006 are declared NULL and VOID for
being ultra vires. The Department of Health and respondents are PROHIBITED from implementing said provisions.
The Temporary Restraining Order issued on August 15, 2006 is LIFTED insofar as the rest of the provisions of Administrative Order No. 2006-0012 is concerned.
SO ORDERED.
Puno, (Chief Justice), Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Corona, Carpio-Morales, Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr., Nachura,
Reyes, JJ., concur.

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Republic of the Philippines

April 12, 2005

1. Less than P 100,00.00

2. P 100,000.00 or more but less than P 150,000.00

3. P 150,000.00 or more but less than P 200,000.00

4. P 200,000.00 or more but less than P 250,000.00

5. P 250,000.00 or more but less than P 300,00.00

6. P 300,000.00 or more but not more than P 400,000.00

7. P 350,000.00 or more but not more than P400,000.00

8. For each P 1,000.00 in excess of P 400,000.00

Actions where the value

Special civil actions except

All other actions not

Republic of the Philippines

G.R. No. 159938

March 31, 2006

Costs against [petitioners].

SO ORDERED. [Words in brackets added.]

1. When the inference made is manifestly mistaken, absurd or impossible;24

2. When there is grave abuse of discretion;25

3. When the judgment is based on a misapprehension of facts; 26

4. When the findings of fact are conflicting;27 and

Republic of the Philippines

PHARMACEUTICAL AND HEALTH CARE ASSOCIATION OF THE PHILIPPINES, petitioner,

WHEREAS, in order to ensure that safe and adequate nutrition for

Section 2. Purpose These Revised Rules and Regulations are

SECTION 4(e). "Infant" means a person falling within the age

WHEREAS, in order to ensure that safe and adequate nutrition

Section 4. Declaration of Principles The following are the

SECTION 6. The General Public and Mothers.

Section 4. Declaration of Principles The following are the

(a) No advertising, promotion or other marketing materials,

breastmilk substitutes and other related products are prohibited.

SECTION 10. Containers/Label.

Section 26. Content Each container/label shall contain such

(a) Containers and/or labels shall be designed to provide the

(a) The words or phrase "Important Notice" or "Government

SECTION 7. Health Care System.

Section 22. No manufacturer, distributor, or representatives of

involved in any activity on breastfeeding promotion, education and

SECTION 8. Health Workers

Section 4. Declaration of Principles

SECTION 6. The General Public and Mothers.

(f) Nothing herein contained shall prevent donations from

Section 46. Administrative Sanctions. The following

Thousand (P10,000.00) to Fifty Thousand (P50,000.00) Pesos,

9. The RIRR provides for repeal of existing laws to the contrary.

Minister of Trade and Industry

Minister of Social Services and Development

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