Cases IPL

FIRST DIVISION
ELIDAD KHO and VIOLETA G.R. No. 150877

KHO,
Petitioners, Present:
PANGANIBAN, C.J.
- versus - Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
HON. ENRICO LANZANAS, CHICO-NAZARIO, JJ.
Presiding Judge of the Regional
Trial Court of Manila Branch 7 Promulgated:
and
SUMMERVILLE GENERAL
MERCHANDISING, May 4, 2006
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Culled from the records are the following antecedent facts:

Shun Yih Chemistry Factory (SYCF), a business existing and operating in Taiwan
and engaged in the manufacture and sale of Chin Chun Su Creams/Cosmetics,
appointed Young Factor Enterprises in the Philippines, owned and operated
by Quintin Cheng also known as Kho Seng Hiok, as its distributor of Chin Chun
Su products in the Philippines for a term of two years beginning 1978.
[1]
Quintin Cheng registered with the Bureau of Food and Drugs (BFAD) as
distributor of Chin Chun Su products. Quintin Cheng subsequently secured a
supplemental registration for Chin Chun Su and device.[2] This supplemental
registration was ordered cancelled by the Bureau of Patents, Trademarks and
Technology Transfer[3] on the ground of failure of the registrant to file the required
affidavit of non-use as required by Section 12 of Republic Act No. 166, as
amended.[4]
Notwithstanding this cancellation, Quintin Cheng executed on 30 January 1990 an

Assignment of a Registered Trademark[5] and a Supplementary Deed of
Assignment[6] dated25 November 1991 wherein he sold all his right, title, interest
and goodwill in the trademark Chin Chun Su and device to petitioner Elidad Kho.
In the meantime, animosity arose between SYCF and Quintin Cheng resulting in
the termination of their distributorship agreement on 30 October 1990.[7]
Consequently, on 30 November 1990, SYCF

appointed respondent Summerville General Merchandising, represented
by Ang Tiam Chay and Victor Chua, as its exclusive importer, re-packer and
distributor of Chin Chun Su products in the Philippines[8] for a period of five years
or until May 2005.
SYCF further executed a Special Power of Attorney dated 11 September 1991 in

favor of Summerville General Merchandising granting it the authority to file
complaints against usurpers of Chin Chun Su trademarks/tradename.[9]
From the foregoing incidents arose several judicial and quasi-

judicial proceedings.
1) Civil Case No. Q-91-10926 before the Regional Trial Court (RTC)
of Quezon City, Branch 90
On 20 December 1991, Elidad Kho/KEC Laboratory filed a Complaint for

Injunction and Damages against Ang Tiam Chay and Summerville General
Merchandising before the RTC of Quezon City, Branch 90, docketed as Civil Case
No. Q-91-10926. Plaintiff therein Elidad Kho/KEC Laboratory sought to enjoin
defendants Ang Tiam Chay and Summerville General Merchandising from using
the name Chin Chun Su in their cream products.
On 22 January 1993, a decision in Civil Case No. Q-91-10926 was rendered,

the dispositive portion of which provides:
ACCORDINGLY, judgment is hereby rendered:

1. Declaring that plaintiff is not legally authorized to use the trademark CHIN
CHUN SU and upholding the right of defendant Summerville General
Merchandising & Co. to use said trademark as authorized by
Shun Yih Chemistry Factory of Taiwan;
2. Declaring plaintiff to have the right to use the copyright claim on OVAL
FACIAL CREAM CONTAINER/CASE by virtue of Certificate of
Copyright Registration No. 3687 issued by the National Library on May
23, 1991;
3. No award of damages;
4. Counsels for plaintiff and defendants are awarded P75,000.00 each as attorneys
fees; and
5. Both parties to pay proportionate fees.[10]
Both parties appealed the RTC decision to the Court of Appeals, docketed as CA-
G.R. CV NO. 48043 entitled, Elidad C. Kho, doing business under the style of
KEC Cosmetic Laboratory v. Summerville General Merchandising and Co., et
al. In a decision[11] dated 22 November 1999, the appellate court
affirmed in toto the decision of the trial court.[12] Elidad Kho elevated the case to
this Court, docketed as G.R. No. 144100. In a resolution dated 28 August 2000, we
denied the petition. We held that:
The issue is who, between petitioner Elidad C. Kho and respondent Summerville
General Merchandising and Company has the better right to use the trademark
Chin Chun Su on their facial cream product?
We agree with both the Court of Appeals and the trial court that Summerville
General Merchandising and Company has the better right to use the trademark
Chin Chun Su on its facial cream product by virtue of the exclusive importation
and distribution rights given to it by Shun Yih Chemistry Factory of Taiwan on
November 20, 1990 after the latter cancelled and terminated on October 30, 1990
its Sole Distributorship Agreement with one Quintin Cheng, who assigned and
transferred his rights under said agreement to petitioner Elidad C. Kho on January
31, 1990.
As correctly held by the Court of Appeals, petitioner Kho is not the author of the
trademark Chin Chun Su and his only claim to the use of the trademark is based
on the Deed of Agreement executed in his favor by Quintin Cheng. By virtue
thereof, he registered the trademark in his name. The registration was a patent
nullity because petitioner is not the creator of the trademark Chin Chun Su and,
therefore, has no right to register the same in his name. Furthermore, the authority
of Quintin Cheng to be the sole distributor of Chin Chun Su in the Philippines had
already been terminated by Shun Yih Chemistry of Taiwan. Withal, he had no
right to assign or to transfer the same to petitioner Kho.
WHEREFORE, the instant petition is hereby denied due course.[13]
2) BFAD Cosmetic Case No. CM-040-91
At the other end of the spectrum, due to the proliferation of fake Chin Chun Su
products, Summerville General Merchandising filed a Complaint [14] before the
BFAD against KEC Cosmetic Laboratory owned by Elidad Kho.
In a resolution of the BFAD dated 4 February 1992, it ruled that:
WHEREFORE, the brand name clearance of CCS in favor of KEC is recalled and
cosmetic registration number DR-X6113-78 dtd 11/17/78 is TEMPORARILY
CANCELLED until KEC applies to change or amend the brand name CCS it is
now using. For this purpose, KEC is hereby ordered to retrieve all locally
produced Chin Chun Su Pearl Cream for relabelling as soon as the amendment of
its brand name has been approved by this Bureau with the corresponding amended
Certificate of Registration.
Summervilles application to register (renew or reinstate) CCS Medicated

Cream under DR-X6113-78 in the name of Shun Yih Chemistry Factory is
herewith approved for processing at BFAD-Product Services Division.[15]
3) Criminal Case No. 00-183261 before the RTC of Manila, Branch 1
This is the case filed before the RTC of Manila, Branch 1, entitled, People of the
Philippines v. Elidad and Violeta Kho and Roger Kho, pursuant to the DOJ
Resolution in I.S. No. 00A-02396 and I.S. No. 00B-10973, ordering the filing of a
criminal complaint against Elidad, Roger and Violeta Kho.[16]
Prior to the filing of Criminal Case No. 00-183261 before the RTC of Manila,
Branch 1, on 18 January 2000, Victor Chua, representing Summerville General
Merchandising, filed a Complaint for Unfair Competition, docketed as I.S. No.
00A-02396 entitled, Summerville General Merchandising, represented by Victor
Chua v. Elidad and Violeta Kho, before the Office of the City Prosecutor of
Manila.
Elidad and Violeta Kho filed their counter-affidavit in the Complaint for
Unfair Competition which served as their countercharge
against Ang Tiam Chay and Victor Chua, likewise for Unfair Competition,
docketed as I.S. No. OOB-10973.
On 29 March 2000, the Office of the City Prosecutor granted the consolidation of
both I.S. No. 00A-02396 and I.S. No. 00B-10973. On 25 April 2000, Assistant City
Prosecutor Rector Macapagal rendered a joint resolution dismissing both the
Complaint and countercharge. This resolution of dismissal was reversed by the
review resolution[17] dated 31 May 2000 issued by Assistant City Prosecutor
Elmer Calledo who directed the filing of an information against Elidad Kho,
Roger Kho and Violeta Kho for violation of Section 168.3(a) in relation to Sections
168 and 170, Republic Act No. 8293 (The Intellectual Property Code). [18] On 17
August 2000, Department of Justice (DOJ) Undersecretary Regis Puno issued a
resolution[19] dismissing the petition for review filed by Elidad and Violeta Kho and
upholding the ruling of Assistant City Prosecutor Calledo, directing the filing of
charges against the Khos. Elidad and Violeta Kho filed a motion for
reconsideration, and in a complete turnabout, on 28 September 2001, a
resolution[20] was issued by then DOJ Secretary Hernando Perez again dismissing
the Complaint and countercharge in I.S. No. 00A-02396 and I.S. No. 00B-10973
for lack of merit. Summerville General Merchandising accordingly filed a motion
for reconsideration of this DOJ resolution dated 20 September 2001.
In view of the latest DOJ resolution ordering the dismissal of the complaint of
Summerville General Merchandising against the Khos, the RTC of Manila, Branch
1, issued an Order dated 24 October 2001 directing the dismissal of the Complaint
in Criminal Case No. 00-183261.[21] Summerville General Merchandising filed
with the RTC of Manila, Branch 1, a motion for reconsideration of its Order of
dismissal of Criminal Case No. 00-183261. For their
part, Elidad and Violeta Kho also filed with the same court a supplemental motion
insisting that the Order dismissing Criminal Case No. 00-183261 cannot be set
aside because to do so would, in effect, reinstate the said criminal case and would
already constitute double jeopardy. Acting on these motions, the RTC of Manila,
Branch 1, issued an Order dated 21 August 2002 resolving the motions in the
following manner:
The foregoing duly established facts indubitably supports accuseds contention

that a re-filing [o]f the Information would put them in double jeopardy. As ruled
by the Supreme Court in Marcelo v. Court of Appeals, 235 SCRA 39, upon
withdrawal of the Information, which is the logical consequence of the grant of
the Motion to Withdraw, there no longer remained any case to dismiss.
Accordingly, finding merit in the Motion for Reconsideration, the same is hereby
granted.
The information against accused is hereby dismissed.
The Clerk of Court is hereby directed to return to the accused the cash bonds
posted by the latter for their provisional liberty upon presentation of the requisite
receipts.
The ruling renders the remaining incidents moot and academic.[22]
Thereafter, on 17 September 2002, the DOJ Secretary, Hernando B. Perez, granted

the pending motion of Summerville General Merchandising for reconsideration of
the DOJ resolution[23] dated 28 September 2001, which dismissed the Complaint
of movant Summerville General Merchandising in I.S. No. 00A-02396, and
accordingly issued another resolution vacating the questioned 28 September 2001
resolution and directing the City Prosecutor of Manila to continue with the
criminal prosecution of the Khos for Unfair Competition.
Elidad and Violeta Kho filed a motion for reconsideration of the resolution
dated 17 September 2002 before the DOJ. The DOJ,[24] thru the new Secretary
Simeon A. Datumanong denied that double jeopardy lies, in a resolution dated 17
July 2003, declared that:
After an evaluation of the record, we resolve to deny the motion for

reconsideration. For double jeopardy to attach, the following requirements must
be present: (1) upon a valid indictment; (2) before a competent court; (3) after
arraignment; (4) when a valid plea has been entered; and (5) when the defendant
was convicted, acquitted, or the case was dismissed or otherwise terminated
without the express consent of the accused. (People v. Court of Appeals, 308
SCRA 687). In the instant case, it appears that the case was terminated with the
express consent of the respondent, as the criminal case was dismissed upon the
express application of the accused. Her action in having the case dismissed
constitutes a waiver of her constitutional prerogative against double jeopardy as
she thereby prevented the court from proceeding to trial on the merits and
rendering a judgment of conviction against her.[25]
At odds with the final DOJ resolution, the RTC of Manila, Branch 1,
handling Criminal Case No. 00-183261, held in its Order dated 2 April 2003 that:
Considering the tenors of the orders of dismissal, whatever maybe the merits of
the Motion for Reconsideration, revival of the case is now barred by the
impregnable wall of double jeopardy.
ACCORDINGLY, the Motion for Reconsideration dated September 10,

2002 filed by the private prosecutor and subject of the Motion to Resolve is
hereby denied with finality.
The Clerk of Court is hereby directed to return to the accused the cash bond
posted by them for their provisional liberty upon presentation of the required
receipts.[26]
Thus, Summerville General Merchandising raised its case to the Court of Appeals,
docketed as CA-G.R. SP No. 77180, assailing the Order dated 24 October 2001 of
the RTC of Manila, Branch 1, dismissing Criminal Case No. 00-183261, as well as
the Orders dated 21 August 2002 and 2 April 2003 of the same court affirming its
previous order of dismissal.
In a decision of the Court of Appeals dated 26 May 2004 in CA-G.R. SP No.

77180,[27] the Court denied due course to the petition of Summerville General
Merchandising and affirmed the ruling of the trial court that, indeed, double
jeopardy has set in.
The decision of the Court of Appeals in CA-G.R. SP No. 77180 is now the subject
of a Petition for Review before this Court, docketed as G.R. No. 163741
entitled, Summerville General Merchandising and Co., Inc. v. Elidad Kho.[28]
4) Search Warrant No. 99-1520 before the RTC of Manila, Branch 7
Shortly before instituting Criminal Case No. 00-183261 against the Khos, or
on 7 January 2000, Summerville General Merchandising applied for the issuance
of a search warrant against the Spouses Elidad and Violeta Kho and Roger Kho,
since they persisted in manufacturing and selling Chin Chun Su products despite
the BFAD order directing them to refrain from doing so. The application was
docketed as Search Warrant No. 99-1520 before the RTC of Manila, Branch 7,
which was presided over by respondent herein, Judge Enrico A. Lanzanas. A
hearing on the application was held on 10 January 2000[29] and the search warrant
was issued against Elidad, Violeta and Roger Kho on the same day.[30] Its
enforcement led to the seizure of several Chin Chun Su products.[31]
On 17 January 2000, Elidad, Violeta and Roger Kho filed before the RTC of
Manila, Branch 7, a motion to quash the search warrant and for the return of the
items unlawfully seized. The motion was opposed by Summerville General
Merchandising.
In an Order[32] dated 3 April 2000, the RTC of Manila, Branch 7,

denied Elidad and Violeta Khos motion to quash and to return the seized articles
for lack of merit.[33]Elidad and Violeta Kho filed a motion for reconsideration and
motion to transfer the proceedings in RTC of Manila, Branch 7, to RTC of Manila,
Branch 1, citing Supreme Court Administrative Order 113-95 [34] designating the
RTC of Manila, Branch 1, as an Intellectual Property Court. The RTC of Manila,
Branch 7, denied these motions in an Order dated 5 June 2000,[35] explaining that:
Anent the Motion to Compel this Branch to transfer the case to Branch 1
of this Court, suffice it to say that the cases for violation of Arts. 188 and 189 of
the Revised Penal Code (now under the Intellectual Property Law) are those that
are already filed in court after the proper preliminary investigation and not cases
for application for search warrant involving probable violation of said
law. Supreme Court Administrative Circular No. 113-95 itself designates the
alluded court or branch thereof to try and decide which clearly excludes
cases/applications for search warrant which obviously does not involve trying and
deciding case for violation of the Intellectual Property law.
On respondents Motion for Reconsideration, the Court finds their

arguments therein a rehash of the issues and arguments raised in their Motion to
Quash.
WHEREFORE, for lack of merit, respondents Motion for Reconsideration

and Motion to Transfer, are hereby DENIED.[36]
Elidad and Violeta Kho filed a Petition for Certiorari and Preliminary
Mandatory Injunction,[37] docketed as CA-G.R. SP No. 60084, before the Court of
Appeals questioning the aforementioned Orders of the RTC of Manila, Branch 7. A
decision dated 6 August 2001[38] was rendered by the Court of Appeals denying the
petition. It upheld Search Warrant No. 99-1520 as having been validly issued and
properly executed and, thus, there is no basis for the return of the goods seized. A
motion for reconsideration filed by the Khos was denied by the Court of Appeals in
an Order dated 16 November 2001.[39]
Elidad and Violeta Kho filed a supplement to their Motion for Reconsideration
dated 20 November 2001[40] before the Court of Appeals in CA-G.R. SP No. 60084,
reiterating their prayer for the quashal of Search Warrant No. 99-1520 and the
return of the seized items. The Court of Appeals, in a resolution dated 4 December
2001,[41] merely noted the motion in view of its earlier resolution rendered on 16
November 2001 already denying Elidad and Violeta Khos Motion for
Reconsideration.
Pained by the decisions and orders of the trial court and appellate court,
petitioners Elidad and Violeta Kho filed the present petition praying that the
decision of the Court of Appeals in CA-G.R. SP No. 60084 dated 6 August 2001 be
reversed and set aside, and a new decision be issued granting the quashal of Search
Warrant No. 99-1520 and ordering the return of the items unlawfully seized.[42]
In their Memorandum, petitioners raise the following issues for resolution:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN

DISREGARDING THE WITHDRAWAL OF THE INFORMATION FOR
UNFAIR COMPETITION AGAINST THE PETITIONERS IN BRANCH 1
OF RTC-MANILA AS A RESULT OF THE RESOLUTION OF THE
DEPARTMENT OF JUSTICE FINDING NO PROBABLE CAUSE.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

NO GRAVE ABUSE OF DISCRETION WAS COMMITTED BY HONORABLE
JUDGE ENRICO LANZANAS IN FINDING THAT PROBABLE CAUSE
EXISTED AGAINST THE PETITIONERS FOR THE ISSUANCE OF SEARCH
WARRANT NO. 99-1520.

BRANCH 7 OF THE REGIONAL TRIAL COURT OF MANILA HAD
JURISDICTION TO ISSUE SEARCH WARRANT NO. 99-1520.

JUDGE ENRICO LANZANAS IN RULING THAT SEARCH WARRANT NO.
99-1520 WAS LAWFULLY EXECUTED.

JUDGE ENRICO LANZANAS IN NOT ORDERING THE RETURN OF THE
ITEMS SEIZED UNDER SEARCH WARRANT NO. 99-1520.[43]
The petition is devoid of merit.
As to the first issue, it must be noted that the dismissal of Criminal Case No.
00-183261 by the RTC of Manila, Branch 1, was initially by virtue of the
resolution of the DOJ dated 28 September 2001[44] ordering the dismissal of the
criminal case for unfair competition.
This order of dismissal, however, was again set aside by the DOJ in its resolution
dated 17 September 2002[45] directing that appropriate information for Unfair
Competition be filed against the Khos. The motion for reconsideration
of Elidad and Violeta Kho was denied by the DOJ in its resolution dated 17 July
2003.[46] This is the latest existing resolution of the DOJ on the matter, dated 17
July 2003, which affirmed the resolution of the then DOJ Secretary Hernando B.
Perez directing the City Prosecutor of Manila to file the appropriate information
against Elidad and Violeta Kho for Unfair Competition as defined and penalized
under Section 168.3(a), in relation to Sections 168 and 170 of Rep. Act No. 8293
or The Intellectual Property Code of the Philippines. Therefore, at the time of the
dismissal of Criminal Case No. 00-183261 by the RTC of Manila, Branch 1, on 24
October 2001, the DOJ resolution on I.S. No. 00A-02396 on which Criminal Case
No. 00-183261 is based has not been written finis as yet.
Taking into consideration these circumstances, the Court of Appeals did not
err in affirming the Order of the RTC of Manila, Branch 7, denying the motion to
quash filed by the herein petitioners because, subsequently, the DOJ still ordered
the filing of charges against Elidad and Violeta Kho.
As to whether the RTC of Manila, Branch 1, properly dismissed the criminal

case against the Khos despite the resolution of the DOJ ordering their criminal
prosecution, we cannot dwell more on the issue because it is already the subject of
G.R. No. 163741 before another division of this Court.
Issues two, three and four, on the other hand, boil down to the central issue of
whether or not the Court of Appeals erred in upholding the RTC of Manila, Branch
7, in its findings of probable cause to issue a search warrant. Also resting on how
we shall resolve the foregoing issue is the fifth and last issue in the Petition at bar
which questions the refusal by both the Court of Appeals and the RTC of Manila,
Branch 7, to return the seized items.
The issuance of Search Warrants is governed by Rule 126 of the Revised Rules of
Court reproduced below:
SECTION 1. Search warrant defined. A search warrant is an order in writing

issued in the name of the People of the Philippines, signed by a judge and directed
to a peace officer, commanding him to search for personal property described
therein and bring it before the court.
SEC. 2. Court where application for search warrant shall be filed. - An

application for search warrant shall be filed with the following:
a) Any court within whose territorial jurisdiction a crime

was committed.
b) For compelling reasons stated in the application,

any court within the judicial region where the crime was
committed if the place of the commission of the crime is known, or
any court within the judicial region where the warrant shall be
enforced.
However, if the criminal action has already been filed, the application
shall only be made in the court where the criminal action is pending.
SEC. 3. Personal property to be seized. A search warrant may be issued for the
search and seizure of personal property:
(a) Subject of the offense;
(b) Stolen or embezzled and other proceeds or fruits of the offense;

or
(c) Used or intended to be used as the means of committing an

offense.
SEC. 4. Requisites for issuing search warrant. A search warrant shall not issue
except upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing the
place to be searched and the things to be seized which may be anywhere in the
Philippines.
SEC.5. Examination of complainant; record. The judge must, before issuing the
warrant, personally examine in the form of searching questions and answers, in
writing and under oath, the complainant and the witnesses he may produce on
facts personally known to them and attach to the record their sworn statements
together with the affidavits submitted.
SEC. 6. Issuance and form of search warrant. If the judge is satisfied of the
existence of facts upon which the application is based or that there is probable
cause to believe that they exist, he shall issue the warrant, which must be
substantially in the form prescribed by these Rules.
What constitutes probable cause is well settled. In Microsoft Corporation
v. Maxicorp, Inc.,[47] we defined probable cause as follows:
Probable cause means such reasons, supported by facts and circumstances as will
warrant a cautious man in the belief that his action and the means taken in
prosecuting it are legally just and proper. Thus, probable cause for a search
warrant requires such facts and circumstances that would lead a reasonably
prudent man to believe that an offense has been committed and the objects sought
in connection with that offense are in the place to be searched.
xxxx
The determination of probable cause does not call for the application of rules and
standards of proof that a judgment of conviction requires after trial on the
merits. As implied by the words themselves, probable cause is concerned with
probability, not absolute or even moral certainty. The prosecution need not present
at this stage proof beyond reasonable doubt. The standards of judgment are those
of a reasonably prudent man, not the exacting calibrations of a judge after a full-
blown trial.
No law or rule states that probable cause requires a specific kind of evidence. No
formula or fixed rule for its determination exists. Probable cause is determined in
the light of conditions obtaining in a given situation. xxx
In Columbia Pictures, Inc. v. Court of Appeals,[48] we explained further that:
Although the term probable cause has been said to have a well-defined meaning
in the law, the term is exceedingly difficult to define, in this case, with any degree
of precision; indeed, no definition of it which would justify the issuance of a
search warrant can be formulated which would cover every state of facts which
might arise, and no formula or standard, or hard and fast rule, may be laid down
which may be applied to the facts of every situation. As to what acts constitute
probable cause seem incapable of definition. There is, of necessity, no exact test.
At best, the term probable cause has been understood to mean a reasonable
ground of suspicion, supported by circumstances sufficiently strong in themselves
to warrant a cautious man in the belief that the person accused is guilty of the
offense with which he is charged; or the existence of such facts and circumstances
as would excite an honest belief in a reasonable mind acting on all the facts and
circumstances within the knowledge of the magistrate that the charge made by the
applicant for the warrant is true.
Probable cause does not mean actual and positive cause, nor does it import
absolute certainty. The determination of the existence of probable cause is not
concerned with the question of whether the offense charged has been or is being
committed in fact, or whether the accused is guilty or innocent, but only whether
the affiant has reasonable grounds for his belief. The requirement is less than
certainty or proof, but more than suspicion or possibility.
In Philippine jurisprudence, probable cause has been uniformly defined as such

facts and circumstances which would lead a reasonable, discreet and prudent man
to believe that an offense has been committed, and that the objects sought in
connection with the offense are in the place sought to be searched. It being the
duty of the issuing officer to issue, or refuse to issue, the warrant as soon as
practicable after the application therefor is filed, the facts warranting the
conclusion of probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law and
jurisprudence, and not those that have yet to be crafted thereafter.
We also declared in People v. Chiu,[49] citing Malaloan v. Court of Appeals,

[50]
that a search warrant is merely a judicial process designed by the Rules to
respond only to an incident in the main case, if one has already been instituted, or
in anticipation thereof.
It bears repeating that the proceedings before the RTC of Manila, Branch 7,
was solely for the issuance of Search Warrant No. 99-1520, while the main case
against Elidadand Violeta Kho for violation of The Intellectual Property Code was
instituted only later on as Criminal Case No. 00-183261 before the RTC of Manila,
Branch 1. What is before us in the Petition at bar is the validity of the search
warrant issued in the proceedings in Search Warrant No. 99-1520.
A perspicacious examination of the records reveal that the RTC of Manila,

Branch 7, followed the prescribed procedure for the issuance of Search Warrant
No. 99-1520, namely, (1) the examination under oath or affirmation of the
Complainant and his witnesses and, in this case,
Judge Enrico A. Lanzanas personally examined complainant-policewoman
SPO4 Nedita Alvario Balagbis, and Mr. Victor Chua, the representative/officer of
Summerville General Merchandising, at the hearing on the application for Search
Warrant No. 99-1520 held on 10 January 2000; (2) an examination personally
conducted by then Presiding Judge Lanzanas, in the form of searching questions
and answers, in writing and under oath, of the complainant and witnesses on facts
personally known to them; and (3) the taking of sworn statements, together with
the affidavits submitted, which were duly attached to the records.[51]
In determining probable cause in the issuance of a search warrant, the oath
required must refer to the truth of the facts within the personal knowledge of the
applicant or his witnesses, because the purpose thereof is to convince the
committing magistrate, not the individual making the affidavit and seeking the
issuance of the warrant, of the existence of probable cause.[52]
From the affidavit dated 7 January 2000 of SPO4 Nedita Balagbis, in

support of the application for search warrant, she stated that Summerville General
Merchandising represented by Mr. Victor Chua sought the assistance of their police
station in connection with the proliferation of fake Chin Chun Su products. With
Victor Chua, they made a surveillance of two places,
namely 2407 Topacio Street and 2412 Raymundo Street both in San
Andres, Manila. Through this, they were able to verify that plastic containers were
being labeled with Chin Chun Su stickers filled with cream
at 2407 Topacio Street. On the other hand, in the affidavit dated 7 January 2000 of
Victor Chua, he stated that Summerville General Merchandising, being the
exclusive importer, distributor and dealer of Chin Chun Su products received
reliable information that persons going by the name of Elidad, Violeta and
Roger Kho were engaged in the illegal manufacture and sale of these
products. From the surveillance conducted with the help of SPO4 Balagbis, they
saw a tricycle full of containers taken to a house at 2412 Raymundo Street, San
Andres, Manila. It was at this address that Chin Chun Su stickers were being
affixed. The containers were thereafter taken to 2407 Topacio Street to be filled
with the cream product.
Clearly, probable cause existed for the issuance of the warrant as shown by
the affidavits of the above affiants who had personal knowledge of facts indicating
that an offense involving violation of intellectual property rights was being
committed and that the objects sought in connection with the offense are in the
place sought to be searched. The surveillance conducted by
SPO4 Nedita Balagbis on the basis of reliable information that Elidad, Violeta and
Roger Kho were engaged in the illegal manufacture and sale of fake Chin Chun Su
products enabled her to gain personal knowledge of the illegal activities of
the Khos.[53] This fact was sufficient justification for the examining judge, in this
case Judge Lanzanas, to conclude that there was probable cause for the issuance of
the search warrant.
At the hearing conducted by Judge Lanzanas, SPO4 Nedita Balagbis and

Victor Chua testified on the affidavits they separately executed, and essentially
stated therein upon inquiry by Judge Lanzanas that indeed several fake Chin Chun
Su products were loaded to a tricycle and brought to a warehouse
in Topacio Street.
In People v. Tee,[54] this Court held that:
It is presumed that a judicial function has been regularly performed, absent a

showing to the contrary. A magistrates determination of probable cause for the
issuance of a search warrant is paid great deference by a reviewing court, as long
as there was substantial basis for that determination. Substantial basis means that
the questions of the examining judge brought out such facts and circumstances as
would lead a reasonably discreet and prudent man to believe that an offense has
been committed, and the objects in connection with the offense sought to be
seized are in the place sought to be searched.
We cannot find any irregularity or abuse of discretion on the part of

Judge Lanzanas for issuing the assailed search warrant. On the contrary, we find
that he had complied with the procedural and substantive requirements for issuing
a search warrant. We are, therefore, bound to respect his finding of probable cause
for issuing Search Warrant No. 99-1520.
After declaring that Search Warrant No. 99-1520 was validly issued by the
RTC of Manila, Branch 7, then there is no reason for us to order the return of the
articles seized by virtue thereof.
WHEREFORE, the Decision of the Court of Appeals dated 6 August
2001 and Resolution dated 16 November 2001, denying the quashal of Search
Warrant No. 99-1520 and the return of the seized items, are hereby
AFFIRMED. Costs against petitioners.
SMITH KLINE BECKMAN CORPORATION, petitioner, vs. THE

HONORABLE COURT OF APPEALS and TRYCO PHARMA
CORPORATION, respondents.
DECISION
CARPIO-MORALES, J.:
Smith Kline Beckman Corporation (petitioner), a corporation existing by

virtue of the laws of the state of Pennsylvania, United States of America (U.S.)
and licensed to do business in the Philippines, filed on October 8, 1976, as
assignee, before the Philippine Patent Office (now Bureau of Patents,
Trademarks and Technology Transfer) an application for patent over an
invention entitled Methods and Compositions for Producing Biphasic
Parasiticide Activity Using Methyl 5 Propylthio-2-Benzimidazole
Carbamate. The application bore Serial No. 18989.
On September 24, 1981, Letters Patent No. 14561 for the aforesaid
[1]
invention was issued to petitioner for a term of seventeen (17) years.
The letters patent provides in its claims that the patented invention
[2]
consisted of a new compound named methyl 5 propylthio-2-benzimidazole

carbamate and the methods or compositions utilizing the compound as an
active ingredient in fighting infections caused by gastrointestinal parasites and
lungworms in animals such as swine, sheep, cattle, goats, horses, and even
pet animals.
Tryco Pharma Corporation (private respondent) is a domestic corporation

that manufactures, distributes and sells veterinary products including
Impregon, a drug that has Albendazole for its active ingredient and is claimed
to be effective against gastro-intestinal roundworms, lungworms, tapeworms
and fluke infestation in carabaos, cattle and goats.
Petitioner sued private respondent for infringement of patent and unfair

competition before the Caloocan City Regional Trial Court (RTC). It claimed
[3]
that its patent covers or includes the substance Albendazole such that private
respondent, by manufacturing, selling, using, and causing to be sold and used
the drug Impregon without its authorization, infringed Claims 2, 3, 4, 7, 8 and
9 of Letters Patent No. 14561 as well as committed unfair competition under
[4]
Article 189, paragraph 1 of the Revised Penal Code and Section 29 of

Republic Act No. 166 (The Trademark Law) for advertising and selling as its
own the drug Impregon although the same contained petitioners patented
Albendazole. [5]
On motion of petitioner, Branch 125 of the Caloocan RTC issued a

temporary restraining order against private respondent enjoining it from
committing acts of patent infringement and unfair competition. A writ of
[6]
preliminary injunction was subsequently issued. [7]
Private respondent in its Answer averred that Letters Patent No. 14561
[8]
does not cover the substance Albendazole for nowhere in it does that word
appear; that even if the patent were to include Albendazole, such substance is
unpatentable; that the Bureau of Food and Drugs allowed it to manufacture
and market Impregon with Albendazole as its known ingredient; that there is
no proof that it passed off in any way its veterinary products as those of
petitioner; that Letters Patent No. 14561 is null and void, the application for
the issuance thereof having been filed beyond the one year period from the
filing of an application abroad for the same invention covered thereby, in
violation of Section 15 of Republic Act No. 165 (The Patent Law); and that
petitioner is not the registered patent holder.
Private respondent lodged a Counterclaim against petitioner for such

amount of actual damages as may be proven; P1,000,000.00 in moral
damages; P300,000.00 in exemplary damages; and P150,000.00 in attorneys
fees.
Finding for private respondent, the trial court rendered a Decision dated
July 23, 1991, the dispositive portion of which reads:
[9]
WHEREFORE, in view of the foregoing, plaintiffs complaint should be, as it is

hereby, DISMISSED. The Writ of injunction issued in connection with the case is
hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office is hereby
declared null and void for being in violation of Sections 7, 9 and 15 of the Patents
Law.
Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is hereby
directed to cancel Letters Patent No. 14561 issued to the plaintiff and to publish such
cancellation in the Official Gazette.
Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual

damages and P100,000.00 attorneys fees as prayed for in its counterclaim but said
amount awarded to defendant is subject to the lien on correct payment of filing fees.
SO ORDERED. (Underscoring supplied)
On appeal, the Court of Appeals, by Decision of April 21, 1995, upheld [10]
the trial courts finding that private respondent was not liable for any
infringement of the patent of petitioner in light of the latters failure to show that
Albendazole is the same as the compound subject of Letters Patent No.
14561. Noting petitioners admission of the issuance by the U.S. of a patent for
Albendazole in the name of Smith Kline and French Laboratories which was
petitioners former corporate name, the appellate court considered the U.S.
patent as implying that Albendazole is different from methyl 5 propylthio-2-
benzimidazole carbamate. It likewise found that private respondent was not
guilty of deceiving the public by misrepresenting that Impregon is its product.
The appellate court, however, declared that Letters Patent No. 14561 was
not void as it sustained petitioners explanation that Patent Application Serial
No. 18989 which was filed on October 8, 1976 was a divisional application of
Patent Application Serial No. 17280 filed on June 17, 1975 with the Philippine
Patent Office, well within one year from petitioners filing on June 19, 1974 of
its Foreign Application Priority Data No. 480,646 in the U.S. covering the
same compound subject of Patent Application Serial No. 17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus ruled
that Patent Application Serial No. 18989 was deemed filed on June 17, 1995
or still within one year from the filing of a patent application abroad in
compliance with the one-year rule under Section 15 of the Patent Law. And it
rejected the submission that the compound in Letters Patent No. 14561 was
not patentable, citing the jurisprudentially established presumption that the
Patent Offices determination of patentability is correct. Finally, it ruled that
petitioner established itself to be the one and the same assignee of the patent
notwithstanding changes in its corporate name. Thus the appellate court
disposed:
WHEREFORE, the judgment appealed from is AFFIRMED

with the MODIFICATION that the orders for the nullification of
Letters Patent No. 14561 and for its cancellation are deleted
therefrom.
SO ORDERED.
Petitioners motion for reconsideration of the Court of Appeals decision

having been denied the present petition for review on certiorari was filed,
[11] [12]
assigning as errors the following:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT

ALBENDAZOLE, THE ACTIVE INGREDIENT IN TRYCOS IMPREGON DRUG, IS
INCLUDED IN PETITIONERS LETTERS PATENT NO. 14561, AND THAT
CONSEQUENTLY TRYCO IS ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN

AWARDING TO PRIVATE RESPONDENT TRYCO PHARMA CORPORATION
P330,000.00 ACTUAL DAMAGES AND P100,000.00 ATTORNEYS FEES.
Petitioner argues that under the doctrine of equivalents for determining

patent infringement, Albendazole, the active ingredient it alleges was
appropriated by private respondent for its drug Impregon, is substantially the
same as methyl 5 propylthio-2-benzimidazole carbamate covered by its patent
since both of them are meant to combat worm or parasite infestation in
animals. It cites the unrebutted testimony of its witness Dr. Godofredo C.
Orinion (Dr. Orinion) that the chemical formula in Letters Patent No. 14561
refers to the compound Albendazole.Petitioner adds that the two substances
substantially do the same function in substantially the same way to achieve
the same results, thereby making them truly identical. Petitioner thus submits
that the appellate court should have gone beyond the literal wordings used in
Letters Patent No. 14561, beyond merely applying the literal infringement test,
for in spite of the fact that the word Albendazole does not appear in petitioners
letters patent, it has ably shown by evidence its sameness with methyl 5
propylthio-2-benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine Patent
Office on account of which it was granted Letters Patent No. 14561 was
merely a divisional application of a prior application in the U. S. which granted
a patent for Albendazole. Hence, petitioner concludes that both methyl 5
propylthio-2-benzimidazole carbamate and the U.S.-patented Albendazole are
dependent on each other and mutually contribute to produce a single result,
thereby making Albendazole as much a part of Letters Patent No. 14561 as
the other substance is.
Petitioner concedes in its Sur-Rejoinder that although methyl 5

[13]
propylthio-2-benzimidazole carbamate is not identical with Albendazole, the

former is an improvement or improved version of the latter thereby making
both substances still substantially the same.
With respect to the award of actual damages in favor of private respondent

in the amount of P330,000.00 representing lost profits, petitioner assails the
same as highly speculative and conjectural, hence, without basis. It assails
too the award of P100,000.00 in attorneys fees as not falling under any of the
instances enumerated by law where recovery of attorneys fees is allowed.
In its Comment, private respondent contends that application of

[14]
the doctrine of equivalents would not alter the outcome of the case,
Albendazole and methyl 5 propylthio-2-benzimidazole carbamate being two
different compounds with different chemical and physical properties. It
stresses that the existence of a separate U.S. patent for Albendazole indicates
that the same and the compound in Letters Patent No. 14561 are different
from each other; and that since it was on account of a divisional application
that the patent for methyl 5 propylthio-2-benzimidazole carbamate was issued,
then, by definition of a divisional application, such a compound is just one of
several independent inventions alongside Albendazole under petitioners
original patent application.
As has repeatedly been held, only questions of law may be raised in a

petition for review on certiorari before this Court. Unless the factual findings of
the appellate court are mistaken, absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or contrary to the findings culled by the
court of origin, this Court does not review them.
[15]
From an examination of the evidence on record, this Court finds nothing

infirm in the appellate courts conclusions with respect to the principal issue of
whether private respondent committed patent infringement to the prejudice of
petitioner.
The burden of proof to substantiate a charge for patent infringement rests

on the plaintiff. In the case at bar, petitioners evidence consists primarily of
[16]
its Letters Patent No. 14561, and the testimony of Dr. Orinion, its general
manager in the Philippines for its Animal Health Products Division, by which it
sought to show that its patent for the compound methyl 5 propylthio-2-
benzimidazole carbamate also covers the substance Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation to

the other portions thereof, no mention is made of the compound
Albendazole. All that the claims disclose are:the covered invention, that is, the
compound methyl 5 propylthio-2-benzimidazole carbamate; the compounds
being anthelmintic but nontoxic for animals or its ability to destroy parasites
without harming the host animals; and the patented methods, compositions or
preparations involving the compound to maximize its efficacy against certain
kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is
bound thereby and may not claim anything beyond them. And so are the
[17]
courts bound which may not add to or detract from the claims matters not
expressed or necessarily implied, nor may they enlarge the patent beyond the
scope of that which the inventor claimed and the patent office allowed, even if
the patentee may have been entitled to something more than the words it had
chosen would include. [18]
It bears stressing that the mere absence of the word Albendazole in

Letters Patent No. 14561 is not determinative of Albendazoles non-inclusion in
the claims of the patent. While Albendazole is admittedly a chemical
compound that exists by a name different from that covered in petitioners
letters patent, the language of Letter Patent No. 14561 fails to yield anything
at all regarding Albendazole. And no extrinsic evidence had been adduced to
prove that Albendazole inheres in petitioners patent in spite of its omission
therefrom or that the meaning of the claims of the patent embraces the same.
While petitioner concedes that the mere literal wordings of its patent
cannot establish private respondents infringement, it urges this Court to apply
the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place

when a device appropriates a prior invention by incorporating its innovative
concept and, although with some modification and change, performs
substantially the same function in substantially the same way to achieve
substantially the same result. Yet again, a scrutiny of petitioners evidence
[19]
fails to convince this Court of the substantial sameness of petitioners patented

compound and Albendazole. While both compounds have the effect of
neutralizing parasites in animals, identity of result does not amount to
infringement of patent unless Albendazole operates in substantially the same
way or by substantially the same means as the patented compound, even
though it performs the same function and achieves the same result. In other
[20]
words, the principle or mode of operation must be the same or substantially

the same. [21]
The doctrine of equivalents thus requires satisfaction of the function-
means-and-result test, the patentee having the burden to show that all three
components of such equivalency test are met. [22]
As stated early on, petitioners evidence fails to explain how Albendazole is

in every essential detail identical to methyl 5 propylthio-2-benzimidazole
carbamate. Apart from the fact that Albendazole is an anthelmintic agent like
methyl 5 propylthio-2-benzimidazole carbamate, nothing more is asserted and
accordingly substantiated regarding the method or means by which
Albendazole weeds out parasites in animals, thus giving no information on
whether that method is substantially the same as the manner by which
petitioners compound works. The testimony of Dr. Orinion lends no support to
petitioners cause, he not having been presented or qualified as an expert
witness who has the knowledge or expertise on the matter of chemical
compounds.
As for the concept of divisional applications proffered by petitioner, it

comes into play when two or more inventions are claimed in a single
application but are of such a nature that a single patent may not be issued for
them. The applicant thus is required to divide, that is, to limit the claims to
[23]
whichever invention he may elect, whereas those inventions not elected may
be made the subject of separate applications which are called divisional
applications. What this only means is that petitioners methyl 5 propylthio-2-
[24]
benzimidazole carbamate is an invention distinct from the other inventions

claimed in the original application divided out, Albendazole being one of those
other inventions. Otherwise, methyl 5 propylthio-2-benzimidazole carbamate
would not have been the subject of a divisional application if a single patent
could have been issued for it as well as Albendazole.
The foregoing discussions notwithstanding, this Court does not sustain the
award of actual damages and attorneys fees in favor of private
respondent. The claimed actual damages of P330,000.00 representing lost
profits or revenues incurred by private respondent as a result of the issuance
of the injunction against it, computed at the rate of 30% of its
alleged P100,000.00 monthly gross sales for eleven months, were supported
by the testimonies of private respondents President and Executive Vice-
[25]
President that the average monthly sale of Impregon was P100,000.00 and
that sales plummeted to zero after the issuance of the injunction. While[26]
indemnification for actual or compensatory damages covers not only the loss
suffered (damnum emergens) but also profits which the obligee failed to
obtain (lucrum cessans or ganacias frustradas), it is necessary to prove the
actual amount of damages with a reasonable degree of certainty based on
competent proof and on the best evidence obtainable by the injured party.
The testimonies of private respondents officers are not the competent proof
[27]
or best evidence obtainable to establish its right to actual or compensatory

damages for such damages also require presentation of documentary
evidence to substantiate a claim therefor. [28]
In the same vein, this Court does not sustain the grant by the appellate
court of attorneys fees to private respondent anchored on Article 2208 (2) of
the Civil Code, private respondent having been allegedly forced to litigate as a
result of petitioners suit. Even if a claimant is compelled to litigate with third
persons or to incur expenses to protect its rights, still attorneys fees may not
be awarded where no sufficient showing of bad faith could be reflected in a
partys persistence in a case other than an erroneous conviction of the
righteousness of his cause. There exists no evidence on record indicating
[29]
that petitioner was moved by malice in suing private respondent.
This Court, however, grants private respondent temperate or moderate

damages in the amount of P20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary loss the amount of which
cannot, from the nature of the case, be established with certainty. [30]
WHEREFORE, the assailed decision of the Court of Appeals is hereby

AFFIRMED with MODIFICATION. The award of actual or compensatory
damages and attorneys fees to private respondent, Tryco Pharma
Corporation, is DELETED; instead, it is hereby awarded the amount
of P20,000.00 as temperate or moderate damages.
SO ORDERED.
G.R. No. 161295 June 29, 2005
JESSIE G. CHING, petitioner,

vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS, ALONTO
SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of WILAWARE PRODUCT
CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:

This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 70411
affirming the January 3, 2002 and February 14, 2002 Orders3 of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed
and set aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model,
described as "Leaf Spring Eye Bushing for Automobile" made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit
of the said work described therein as "Leaf Spring Eye Bushing for Automobile."4
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the
apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.5
After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the
officers and members of the Board of Directors of Wilaware Product Corporation. It was alleged that the respondents therein
reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293. The
applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official receipts.6
The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles. 7 In
the inventory submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 set
b) Mold for spring eye bushing front 1 set

c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190 with metal 1 set
g) Mold for vehicle bearing cushion 1 set8
The respondents filed a motion to quash the search warrants on the following grounds:
2. The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:
a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of automobiles meaning there (sic) are original parts that they
are designed to replace. Hence, they are not original.9
The respondents averred that the works covered by the certificates issued by the National Library are not artistic in nature; they are
considered automotive spare parts and pertain to technology. They aver that the models are not original, and as such are the proper
subject of a patent, not copyright.10
In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper forum in which to
articulate the issue of the validity of the copyrights issued to him. Citing the ruling of the Court in Malaloan v. Court of Appeals,11 the
petitioner stated that a search warrant is merely a judicial process designed by the Rules of Court in anticipation of a criminal case.
Until his copyright was nullified in a proper proceeding, he enjoys rights of a registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order12 granting the motion, and quashed the search warrant on its finding that there
was no probable cause for its issuance. The court ruled that the work covered by the certificates issued to the petitioner pertained to
solutions to technical problems, not literary and artistic as provided in Article 172 of the Intellectual Property Code.
His motion for reconsideration of the order having been denied by the trial courts Order of February 14, 2002, the petitioner filed a
petition for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and resolve the validity of the copyright
certificates issued to him by the National Library. He insisted that his works are covered by Sections 172.1 and 172.2 of the
Intellectual Property Code. The petitioner averred that the copyright certificates are prima facie evidence of its validity, citing the
ruling of the United States Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc.13 The petitioner asserted that
the respondents failed to adduce evidence to support their motion to quash the search warrants. The petitioner noted that
respondent William Salinas, Jr. was not being honest, as he was able to secure a similar copyright registration of a similar product
from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit any grave
abuse of its discretion in issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a
search warrant. In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:
"The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing and under oath, the complainant and any witness he may
produce, on facts personally known to them and attach to the record their sworn statements together with any affidavit submitted.
"In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance
or quashal of the search warrant."
In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the
offense of Violation of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act
8293, when the objects subject of the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative
works (Sec. 173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first
place, the item subject of the petition is not entitled to be protected by the law on copyright, how can there be any violation? 14
The petitioners motion for reconsideration of the said decision suffered the same fate. The petitioner forthwith filed the present
petition for review on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not
in a search warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding to
quash a search warrant for allegedly infringing items, the RTC committed a grave abuse of its discretion when it declared that his
works are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of
the Philippines, which took effect on January 1, 1998, provides in no uncertain terms that copyright protection automatically attaches
to a work by the sole fact of its creation, irrespective of its mode or form of expression, as well as of its content, quality or
purpose.15 The law gives a non-inclusive definition of "work" as referring to original intellectual creations in the literary and artistic
domain protected from the moment of their creation; and includes original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design and other works of applied art under Section 172.1(h) of R.A. No. 8293. lawphil.net
As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise,
encompasses works which may have a bearing on the utility aspect to which the petitioners utility designs were classified.
Moreover, according to the petitioner, what the Copyright Law protects is the authors intellectual creation, regardless of whether it is
one with utilitarian functions or incorporated in a useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent
bars or invalidates its registration under the Law on Copyright. The test of protection for the aesthetic is not beauty and utility, but art
for the copyright and invention of original and ornamental design for design patents. 16 In like manner, the fact that his utility designs
or models for articles of manufacture have been expressed in the field of automotive parts, or based on something already in the
public domain does not automatically remove them from the protection of the Law on Copyright.17
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed by
an author who claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable
suspicion of the commission of the offense. It is not equivalent to absolute certainty or a finding of actual and positive cause. 18 He
assists that the determination of probable cause does not concern the issue of whether or not the alleged work is copyrightable. He
maintains that to justify a finding of probable cause in the issuance of a search warrant, it is enough that there exists a reasonable
suspicion of the commission of the offense.
The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of
overturning this presumption is on the alleged infringers, the respondents herein. But this burden cannot be carried in a hearing on a
proceeding to quash the search warrants, as the issue therein is whether there was probable cause for the issuance of the search
warrant. The petitioner concludes that the issue of probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution to the
problem of wear and tear in automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil
resistant soft texture plastic material strong enough to endure pressure brought about by the vibration of the counter bearing and
thus brings bushings. Such work, the respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The
respondents posit that a technical solution in any field of human activity which is novel may be the subject of a patent, and not of a
copyright. They insist that the certificates issued by the National Library are only certifications that, at a point in time, a certain work
was deposited in the said office. Furthermore, the registration of copyrights does not provide for automatic protection. Citing Section
218.2(b) of R.A. No. 8293, the respondents aver that no copyright is said to exist if a party categorically questions its existence and
legality. Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit of work is not
conclusive as to copyright outlay or the time of copyright or the right of the copyright owner. The respondents maintain that a
copyright exists only when the work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioners utility models are copyrightable and, if so,
whether he is the owner of a copyright over the said models. It bears stressing that upon the filing of the application for search
warrant, the RTC was duty-bound to determine whether probable cause existed, in accordance with Section 4, Rule 126 of the
Rules of Criminal Procedure:
SEC. 4. Requisite for issuing search warrant. A search warrant shall not issue but upon probable cause in connection with one
specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and, particularly, describing the place to be searched and the things to be seized.
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the determination of probable cause,
the court must necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one
already issued by the court. Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a
reasonably cautious and prudent man to believe that an offense has been committed or is being committed. Besides, in Section 3,
Rule 126 of the Rules of Criminal Procedure, a search warrant may be issued for the search and seizure of personal property (a)
subject of the offense; (b) stolen or embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used as the
means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court cannot
abdicate its constitutional obligation by refusing to determine whether an offense has been committed. 20 The absence of probable
cause will cause the outright nullification of the search warrant. 21
For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the
petitioner-applicant was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted
material; and (b) the copyrighted material was being copied and distributed by the respondents. Thus, the ownership of a valid
copyright is essential.22
Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was
not copied, and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least
same minimal degree of creativity.23 Copying is shown by proof of access to copyrighted material and substantial similarity between
the two works.24 The applicant must thus demonstrate the existence and the validity of his copyright because in the absence of
copyright protection, even original creation may be freely copied. 25
By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under R.A. No. 8293
against the respondents, the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the
validity of the copyright which he claimed he had over the utility models. The petitioner cannot seek relief from the RTC based on his
claim that he was the copyright owner over the utility models and, at the same time, repudiate the courts jurisdiction to ascertain the
validity of his claim without running afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other
evidence.26 A copyright certificate provides prima facie evidence of originality which is one element of copyright validity. It
constitutes prima facie evidence of both validity and ownership27 and the validity of the facts stated in the certificate.28 The
presumption of validity to a certificate of copyright registration merely orders the burden of proof. The applicant should not ordinarily
be forced, in the first instance, to prove all the multiple facts that underline the validity of the copyright unless the respondent,
effectively challenging them, shifts the burden of doing so to the applicant. 29 Indeed, Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if the defendant
does not put in issue the question whether copyright subsists in the work or other subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright
if he claims to be the owner of the copyright and the defendant does not put in issue the question of his ownership.
A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt on
the question. In such a case, validity will not be presumed.30
To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the petitioner-
applicant submitted to the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and
September 4, 2001, respectively, issued by the National Library covering work identified as Leaf Spring Eye Bushing for Automobile
and Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works, hereinafter referred to as "works," are original intellectual
creations in the literary and artistic domain protected from the moment of their creation and shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other
works of applied art.
Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic creation with utilitarian functions
or incorporated in a useful article, whether made by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf
Spring Eye Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial
bore that is centrally located and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding
the peripheral walls of said body, with the bushing made of plastic that is either polyvinyl chloride or polypropylene. 31 Likewise, the
Vehicle Bearing Cushion is illustrated as a bearing cushion comprising a generally semi-circular body having a central hole to
secure a conventional bearing and a plurality of ridges provided therefore, with said cushion bearing being made of the same plastic
materials.32 Plainly, these are not literary or artistic works. They are not intellectual creations in the literary and artistic domain, or
works of applied art. They are certainly not ornamental designs or one having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The central inquiry is
whether the article is a work of art.33 Works for applied art include all original pictorials, graphics, and sculptural works that are
intended to be or have been embodied in useful article regardless of factors such as mass production, commercial exploitation, and
the potential availability of design patent protection.34
As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having
an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information. Indeed, while works
of applied art, original intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are
not.35 A useful article may be copyrightable only if and only to the extent that such design incorporates pictorial, graphic, or sculptural
features that can be identified separately from, and are capable of existing independently of the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the authors intellectual creation,
regardless of whether it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is
protected by copyright law. However, the law refers to a "work of applied art which is an artistic creation." It bears stressing that
there is no copyright protection for works of applied art or industrial design which have aesthetic or artistic features that cannot be
identified separately from the utilitarian aspects of the article. 36 Functional components of useful articles, no matter how artistically
designed, have generally been denied copyright protection unless they are separable from the useful article. 37
In this case, the petitioners models are not works of applied art, nor artistic works. They are utility models, useful articles, albeit with
no artistic design or value. Thus, the petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber bushings after
a time, upon subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of
the leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant
soft texture plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure
brought about by the up and down movement of said leaf spring.
Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the
rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can
be made using simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to
reinforce the plastic eye bushing when in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when
taken in conjunction with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is
shown a utility model for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a
cylindrical metal jacket 14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the
metal jacket 14 acts with the leaf-spring eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not
be directly in contact with steel, but rather the metal jacket, making the life of the bushing 10 longer than those without the metal
jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard
polypropylene plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and
replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17
to reinforce the inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting
the leaf spring and the automobiles chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction. Said
another embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14 may
also be applied to this embodiment as an option thereof.38
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These rubber bushings
after a time, upon subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling
of the center bearing.
The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture
plastic material which causes cushion to the propellers center bearing, yet strong enough to endure pressure brought about by the
vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using
simple and ordinary molding equipment.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when
taken in conjunction with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and
Figure 2 is a sectional view thereof.

Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown
a utility model for a vehicle-bearing cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not
shown). As shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is
strong, durable and capable of enduring severe pressure from the center bearing brought about by the rotating movement of the
propeller shaft of the vehicle.39
A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable. It may be, or
may relate to, a product, or process, or an improvement of any of the aforesaid.40Essentially, a utility model refers to an invention in
the mechanical field. This is the reason why its object is sometimes described as a device or useful object.41 A utility model varies
from an invention, for which a patent for invention is, likewise, available, on at least three aspects: first, the requisite of "inventive
step"42 in a patent for invention is not required; second, the maximum term of protection is only seven years43 compared to a patent
which is twenty years,44 both reckoned from the date of the application; and third, the provisions on utility model dispense with its
substantive examination45 and prefer for a less complicated system.
Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the
Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that must
characterize authentic works of applied art. They are not even artistic creations with incidental utilitarian functions or works
incorporated in a useful article. In actuality, the personal properties described in the search warrants are mechanical works, the
principal function of which is utility sansany aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase "other
literary, scholarly, scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which
states that "where a statute describes things of a particular class or kind accompanied by words of a generic character, the generic
word will usually be limited to things of a similar nature with those particularly enumerated, unless there be something in the context
of the state which would repel such inference,"46 the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable,
being not of the same kind and nature as the works enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright
registration and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed, in Joaquin, Jr. v.
Drilon47 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,48 the Court ruled that:
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not
simply a pre-existing right regulated by it. Being a statutory grant, the rights are only such as the statute confers, and may be
obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.
Accordingly, it can cover only the works falling within the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for
violation of copyright laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,50 the Court
ruled that "these copyright and patent rights are completely distinct and separate from one another, and the protection afforded by
one cannot be used interchangeably to cover items or works that exclusively pertain to the others." The Court expounded further,
thus:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark
is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods. In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their creation. Patentable inventions, on the
other hand, refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.
The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein51 to buttress his petition. In that
case, the artifacts involved in that case were statuettes of dancing male and female figures made of semi-vitreous china. The
controversy therein centered on the fact that although copyrighted as "works of art," the statuettes were intended for use and used
as bases for table lamps, with electric wiring, sockets and lampshades attached. The issue raised was whether the statuettes were
copyright protected in the United States, considering that the copyright applicant intended primarily to use them as lamp bases to be
made and sold in quantity, and carried such intentions into effect. At that time, the Copyright Office interpreted the 1909 Copyright
Act to cover works of artistic craftsmanship insofar as their form, but not the utilitarian aspects, were concerned. After reviewing the
history and intent of the US Congress on its copyright legislation and the interpretation of the copyright office, the US Supreme
Court declared that the statuettes were held copyrightable works of art or models or designs for works of art. The High Court ruled
that:
"Works of art (Class G) (a) In General. This class includes works of artistic craftsmanship, in so far as their form but not their
mechanical or utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works
belonging to the fine arts, such as paintings, drawings and sculpture. "
So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that
would allow the registration of such a statuette as is in question here.52
The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not beauty and utility but art for the copyright
and the invention of original and ornamental design for design patents." Significantly, the copyright office promulgated a rule to
implement Mazer to wit:
[I]f "the sole intrinsic function of an article is its utility, the fact that the work is unique and attractively shaped will not qualify it as a
work of art."
In this case, the bushing and cushion are not works of art. They are, as the petitioner himself admitted, utility models which may be
the subject of a patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit. The assailed Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October
15, 2001 are ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.
G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A., (now known as
PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson & Hedges (Canada)
Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of the following
issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch 166, in
its Civil Case No. 47374, which dismissed the complaint for trademark infringement and damages thereat commenced by
the petitioners against respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is, per
Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office (PPO), the registered owner of the
trademark "MARK VII" for cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the
registered owner of the trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as
can be seen in Trademark Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company
Fabriques de Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and
Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines,
manufactures and sells cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their respective
trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark and Damages against
respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are foreign corporations
not doing business in the Philippines and are suing on an isolated transaction. xxx they averred that the countries in which they are
domiciled grant xxx to corporate or juristic persons of the Philippines the privilege to bring action for infringement, xxx without need
of a license to do business in those countries. [Petitioners] likewise manifested [being registered owners of the trademark "MARK
VII" and "MARK TEN" for cigarettes as evidenced by the corresponding certificates of registration and an applicant for the
registration of the trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the aforementioned trademarks in
their respective countries of origin and that, by virtue of the long and extensive usage of the same, these trademarks have already
gained international fame and acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the
[respondent], without any previous consent from any of the [petitioners], manufactured and sold cigarettes bearing the identical
and/or confusingly similar trademark "MARK" xxx Accordingly, they argued that [respondents] use of the trademark "MARK" in its
cigarette products have caused and is likely to cause confusion or mistake, or would deceive purchasers and the public in general
into buying these products under the impression and mistaken belief that they are buying [petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris Convention, for
brevity), to which the Philippines is a signatory xxx, [petitioners] pointed out that upon the request of an interested party, a country of
the Union may prohibit the use of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging
to a person entitled to the benefits of the said Convention. They likewise argued that, in accordance with Section 21-A in relation to
Section 23 of Republic Act 166, as amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of
preliminary injunction which should be made permanent to enjoin perpetually the [respondent] from violating [petitioners] right to the
exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred [among other things] xxx that "MARK" is
a common word, which cannot particularly identify a product to be the product of the [petitioners] xxx
xxx
lawphil.net
xxx xxx.
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners] prayer for the issuance of
a writ of preliminary injunction was negatively resolved by the court in an Order xxx dated March 28, 1973. [The incidental issue of
the propriety of an injunction would eventually be elevated to the CA and would finally be resolved by the Supreme Court in its
Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated November 3, 1999 dismissing the
complaint and counterclaim after making a finding that the [respondent] did not commit trademark infringement against the
[petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to institute the instant action, the trial court opined
that [petitioners] failure to present evidence to support their allegation that their respective countries indeed grant Philippine
corporations reciprocal or similar privileges by law xxx justifies the dismissal of the complaint xxx. It added that the testimonies of
[petitioners] witnesses xxx essentially declared that [petitioners] are in fact doing business in the Philippines, but [petitioners] failed
to establish that they are doing so in accordance with the legal requirement of first securing a license. Hence, the court declared that
[petitioners] are barred from maintaining any action in Philippine courts pursuant to Section 133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners] trademarks by the [respondent] was likewise answered xxx in
the negative. It expounded that "in order for a name, symbol or device to constitute a trademark, it must, either by itself or by
association, point distinctly to the origin or ownership of the article to which it is applied and be of such nature as to permit an
exclusive appropriation by one person". Applying such principle to the instant case, the trial court was of the opinion that the words
"MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or in combination of each other do not by themselves or by
association point distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying public could not be
deceived into believing that [respondents] "MARK" cigarettes originated either from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated that the general
rule is that an infringement exists if the resemblance is so close that it deceives or is likely to deceive a customer exercising ordinary
caution in his dealings and induces him to purchase the goods of one manufacturer in the belief that they are those of another. xxx.
The trial court ruled that the [petitioners] failed to pass these tests as it neither presented witnesses or purchasers attesting that they
have bought [respondents] product believing that they bought [petitioners] "MARK VII", "MARK TEN" or "LARK", and have also
failed to introduce in evidence a specific magazine or periodical circulated locally, which promotes and popularizes their products in
the Philippines. It, moreover, elucidated that the words consisting of the trademarks allegedly infringed by [respondent] failed to
show that they have acquired a secondary meaning as to identify them as [petitioners] products. Hence, the court ruled that the
[petitioners] cannot avail themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating that, since the [petitioners] filed the
action in the belief that they were aggrieved by what they perceived to be an infringement of their trademark, no wrongful act or
omission can be attributed to them. xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed trademark infringement, petitioners
went on appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of their legal capacity to sue in
this country for trademark infringement, nevertheless affirmed the trial courts decision on the underlying issue of respondents
liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not qualify as well-known marks entitled
to protection even without the benefit of actual use in the local market and that the similarities in the trademarks in question are
insufficient as to cause deception or confusion tantamount to infringement. Consequently, as regards the third issue, there is
likewise no basis for the award of damages prayed for by the appellants herein.4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally challenged Resolution of May 30, 2003, petitioners
are now with this Court via this petition for review essentially raising the following issues: (1) whether or not petitioners, as Philippine
registrants of trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed
trademark infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence liable for damages.
In its Comment,5 respondent, aside from asserting the correctness of the CAs finding on its liability for trademark infringement and
damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of fact and law
contrary to the prescription against raising factual questions in a petition for review on certiorari filed before the Court. A question of
law exists when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the
doubt or difference arises as to the truth or falsity of alleged facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts. 7 Unless the factual findings of the
appellate court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary to the findings
culled by the court of origin,8 we will not disturb them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the CA is correct is
one of law.9 But, even if we consider and accept as pure questions of law the issues raised in this petition, still, the Court is not
inclined to disturb the conclusions reached by the appellate court, the established rule being that all doubts shall be resolved in favor
of the correctness of such conclusions.10
Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with law and
established jurisprudence in arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt in by
others.11 Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge
Co.:12
The protection of trademarks is the laws recognition of the psychological function of symbols. If it is true that we live by symbols, it
is no less true that we purchase goods by them. A trade-mark is a merchandising short-cut which induces a purchaser to select what
he wants, or what he has been led to believe what he wants. The owner of a mark exploits this human propensity by making every
effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed,
the aim is the same - to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which
it appears. Once this is attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism
of the symbol he has created, the owner can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark rights in this country,
specifically, the right to sue for trademark infringement in Philippine courts and be accorded protection against unauthorized use of
their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate nationals of member-countries of
the Paris Union, they can sue before Philippine courts for infringement of trademarks, or for unfair competition, without need of
obtaining registration or a license to do business in the Philippines, and without necessity of actually doing business in the
Philippines. To petitioners, these grievance right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No.
166, as amended, or the Trademark Law, but also by Article 2 of the Paris Convention for the Protection of Industrial Property,
otherwise known as the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the certificates of
registration of their trademarks. The marks "MARK TEN" and "LARK" were registered on the basis of actual use in accordance with
Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a 2-month pre-registration use in local commerce and trade
while the registration of "MARK VII" was on the basis of registration in the foreign country of origin pursuant to Section 37 of the
same law wherein it is explicitly provided that prior use in commerce need not be alleged. 15
Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that cigarettes bearing
their trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products,
Inc.,16 petitioners state that such availability and sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in the country in
view of the Philippines adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS Agreement and the
enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the fame of a
trademark may be acquired through promotion or advertising with no explicit requirement of actual use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must be emphasized that their
standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought to be pointed out, however, that the
appellate court qualified its holding with a statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of
Appeals and Fortune Tobacco Corporation,17 that such right to sue does not necessarily mean protection of their registered marks in
the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of their trademarks in
the Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages denied non-registrants or ordinary
users, like respondent. But while petitioners enjoy the statutory presumptions arising from such registration, 19 i.e., as to the validity of
the registration, ownership and the exclusive right to use the registered marks, they may not successfully sue on the basis alone of
their respective certificates of registration of trademarks. For, petitioners are still foreign corporations. As such, they ought, as a
condition to availment of the rights and privileges vis--vis their trademarks in this country, to show proof that, on top of Philippine
registration, their country grants substantially similar rights and privileges to Filipino citizens pursuant to Section 21-A 20 of R.A. No.
166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity requirement is a condition sine qua non
to filing a suit by a foreign corporation which, unless alleged in the complaint, would justify dismissal thereof, a mere allegation that
the suit is being pursued under Section 21-A of R.A. No. 166 not being sufficient. In a subsequent case,22 however, the Court held
that where the complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said Section 21-
A would suffice, because the reciprocal agreement between the two countries is embodied and supplied by the Paris Convention
which, being considered part of Philippine municipal laws, can be taken judicial notice of in infringement suits. 23
As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are, together with the
Philippines, members of the Paris Union does not automatically entitle petitioners to the protection of their trademarks in this country
absent actual use of the marks in local commerce and trade.
True, the Philippines adherence to the Paris Convention24 effectively obligates the country to honor and enforce its provisions25 as
regards the protection of industrial property of foreign nationals in this country. However, any protection accorded has to be made
subject to the limitations of Philippine laws.26 Hence, despite Article 2 of the Paris Convention which substantially provides that (1)
nationals of member-countries shall have in this country rights specially provided by the Convention as are consistent with Philippine
laws, and enjoy the privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile
requirement in the country where protection is claimed shall be required of persons entitled to the benefits of the Union for the
enjoyment of any industrial property rights,27 foreign nationals must still observe and comply with the conditions imposed by
Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29 thereof, mandates actual use of the marks and/or
emblems in local commerce and trade before they may be registered and ownership thereof acquired, the petitioners cannot,
therefore, dispense with the element of actual use. Their being nationals of member-countries of the Paris Union does not alter the
legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and Philip Morris v. Court of
Appeals and Fortune Tobacco Corporation33 on the importance of actual commercial use of a trademark in the Philippines
notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention relied upon by private respondent and Sec. 21-A of the Trademark Law were
sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the requirements of actual use in the
Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal.
Xxx. Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
International Law are given a standing equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement but the question of whether they have an
exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign
corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using its
trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it
may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use of such
trademark in local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark.
The certificate of registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark.
Evidence of non-usage of the mark rebuts the presumption of trademark ownership,34 as what happened here when petitioners no
less admitted not doing business in this country.35
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or
exclusive ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group of Companies,
Inc.36 trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive ownership; registration is only an
administrative confirmation of the existence of the right of ownership of the mark, but does not perfect such right; actual use thereof
is the perfecting ingredient.37
Petitioners reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different factual milieu. There,
we ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in, business in the Philippines,
may actually earn reputation or goodwill for its goods in the country. But unlike in the instant case, evidence of actual sales of
Converse rubber shoes, such as sales invoices, receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein having been filed
in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January 1, 1998
without a provision as to its retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when the suit for infringement was
filed, the Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by actual use thereof in
the country accords the registrant only the standing to sue for infringement in Philippine courts. Entitlement to protection of such
trademark in the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy of color ably imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business, or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondents mark "MARK" for cigarettes is confusingly or deceptively
similar with their duly registered "MARK VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To them, the word "MARK"
would likely cause confusion in the trade, or deceive purchasers, particularly as to the source or origin of respondents cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement. 40 But likelihood of confusion is a relative concept, the
particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in trademark
infringement cases, more than in other kinds of litigation, precedents must be evaluated in the light of each particular case. 41
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and the holistic
test.42 The dominancy test43 sets sight on the similarity of the prevalent features of the competing trademarks that might cause
confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the
marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers. 44
In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of confusion resulting in
infringement arising from the respondents use of the trademark "MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear on the
products,46 the striking dissimilarities are significant enough to warn any purchaser that one is different from the other. Indeed,
although the perceived offending word "MARK" is itself prominent in petitioners trademarks "MARK VII" and "MARK TEN," the entire
marking system should be considered as a whole and not dissected, because a discerning eye would focus not only on the
predominant word but also on the other features appearing in the labels. Only then would such discerning observer draw his
conclusion whether one mark would be confusingly similar to the other and whether or not sufficient differences existed between the
marks.47
This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three cigarette brands of the petitioners,
correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark serves as a tool to
point out distinctly the origin or ownership of the goods to which it is affixed,48 the likelihood of confusion tantamount to infringement
appears to be farfetched. The reason for the origin and/or ownership angle is that unless the words or devices do so point out the
origin or ownership, the person who first adopted them cannot be injured by any appropriation or imitation of them by others, nor can
the public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does not point to the origin
or ownership of the cigarettes to which they apply, the local buying public could not possibly be confused or deceived that
respondents "MARK" is the product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be
overlooked, no actual commercial use of petitioners marks in local commerce was proven. There can thus be no occasion for the
public in this country, unfamiliar in the first place with petitioners marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable circumstances in
determining likelihood of confusion. Del Monte Corp. v. CA50 dealt with another, where we instructed to give due regard to the
"ordinary purchaser," thus:
The question is not whether the two articles are distinguishable by their label when set side by side but whether the general
confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result
in his confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under
the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the
touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the "ordinarily
intelligent buyer" considering the type of product involved.51
It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who are already
predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with his brand and discriminating as
well. We, thus, concur with the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao Bok, 52 that the "ordinary purchaser"
in this case means "one accustomed to buy, and therefore to some extent familiar with, the goods in question."
Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point to Section 22 of R.A.
No. 166, as amended. As argued, actual use of trademarks in local commerce is, under said section, not a requisite before an
aggrieved trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by another, it being sufficient
that he had registered the trademark or trade-name with the IP Office. In fine, petitioners submit that respondent is liable for
infringement, having manufactured and sold cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly
similar with their duly registered trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the elements of trademark infringement in
accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54 and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine
Patent Office,
(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee. lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and "LARK" for cigarettes in
the Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners judicial admission of not doing
business in this country effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known and/or have acquired
goodwill in the Philippines so as to be entitled to protection even without actual use in this country in accordance with Article 6bis 55 of
the Paris Convention. As correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners] products are indeed well-known in the
Philippines, either through actual sale of the product or through different forms of advertising. This finding is supported by the fact
that appellants admit in their Complaint that they are not doing business in the Philippines, hence, admitting that their products are
not being sold in the local market. We likewise see no cogent reason to disturb the trial courts finding that the appellants failed to
establish that their products are widely known by local purchasers as "(n)o specific magazine or periodical published in the
Philippines, or in other countries but circulated locally" have been presented by the appellants during trial. The appellants also were
not able to show the length of time or the extent of the promotion or advertisement made to popularize their products in the
Philippines.56
Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts
having peremptorily found allegations of infringement on the part of respondent to be without basis. As we said time and time again,
factual determinations of the trial court, concurred in by the CA, are final and binding on this Court. 57
For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to respondents use of its
mark and for petitioners failure to demonstrate confusing similarity between said trademarks, the dismissal of their basic complaint
for infringement and the concomitant plea for damages must be affirmed. The law, the surrounding circumstances and the equities
of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of Appeals are
AFFIRMED.
Costs against the petitioners.
SO ORDERED.
CANON KABUSHIKI KAISHA, petitioner, vs. COURT OF APPEALS and

NSR RUBBER CORPORATION, respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a petition for review that seeks to set aside the Decision dated
[1]
February 21, 1995 of the Court of Appeals in CA-GR SP No. 30203, entitled
"Canon Kabushiki Kaisha vs. NSR Rubber Corporation" and its Resolution
dated June 27, 1995 denying the motion for reconsideration of herein
petitioner Canon Kabushiki Kaisha (petitioner).
On January 15, 1985, private respondent NSR Rubber Corporation (private

respondent) filed an application for registration of the mark CANON for
sandals in the Bureau of Patents, Trademarks, and Technology Transfer
(BPTTT). A Verified Notice of Opposition was filed by petitioner, a foreign
corporation duly organized and existing under the laws of Japan, alleging that
it will be damaged by the registration of the trademark CANON in the name of
private respondent. The case was docketed as Inter Partes Case No. 3043.
Petitioner moved to declare private respondent in default for its failure to file
its answer within the prescribed period. The BPTTT then declared private
respondent in default and allowed petitioner to present its evidence ex-parte.
Based on the records, the evidence presented by petitioner consisted of its

certificates of registration for the mark CANON in various countries covering
goods belonging to class 2 (paints, chemical products, toner, and dye stuff).
Petitioner also submitted in evidence its Philippine Trademark Registration
No. 39398, showing its ownership over the trademark CANON also under
class 2.
On November 10, 1992, the BPTTT issued its decision dismissing the
opposition of petitioner and giving due course to private respondents
application for the registration of the trademark CANON. On February 16,
1993, petitioner appealed the decision of the BPTTT with public respondent
Court of Appeals that eventually affirmed the decision of BPTTT. Hence, this
petition for review.
Petitioner anchors this instant petition on these grounds:

A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE
MARK CANON BECAUSE IT IS ITS TRADEMARK AND IS USED
ALSO FOR FOOTWEAR.
B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON

FOR FOOTWEAR IS TO PREVENT PETITIONER FROM USING
CANON FOR VARIOUS KINDS OF FOOTWEAR, WHEN IN
FACT, PETITIONER HAS EARLIER USED SAID MARK FOR
SAID GOODS.
C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO

EXCLUSIVELY USE CANON TO PREVENT CONFUSION OF
BUSINESS.
D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE

OF CANON BECAUSE IT FORMS PART OF ITS CORPORATE
NAME, PROTECTED BY THE PARIS CONVENTION. [2]
The BPTTT and the Court of Appeals share the opinion that the trademark
"CANON" as used by petitioner for its paints, chemical products, toner, and
dyestuff, can be used by private respondent for its sandals because the
products of these two parties are dissimilar. Petitioner protests the
appropriation of the mark CANON by private respondent on the ground that
petitioner has used and continues to use the trademark CANON on its wide
range of goods worldwide. Allegedly, the corporate name or tradename of
petitioner is also used as its trademark on diverse goods including footwear
and other related products like shoe polisher and polishing agents. To lend
credence to its claim, petitioner points out that it has branched out in its
business based on the various goods carrying its trademark CANON , [3]
including footwear which petitioner contends covers sandals, the goods for
which private respondent sought to register the mark CANON. For petitioner,
the fact alone that its trademark CANON is carried by its other products like
footwear, shoe polisher and polishing agents should have precluded the
BPTTT from giving due course to the application of private respondent.
We find the arguments of petitioner to be unmeritorious. Ordinarily, the

ownership of a trademark or tradename is a property right that the owner is
entitled to protect as mandated by the Trademark Law. However, when a
[4] [5]
trademark is used by a party for a product in which the other party does not
deal, the use of the same trademark on the latters product cannot be validly
objected to.[6]
A review of the records shows that with the order of the BPTTT declaring
private respondent in default for failure to file its answer, petitioner had every
opportunity to present ex-parte all of its evidence to prove that its certificates
of registration for the trademark CANON cover footwear. The certificates of
registration for the trademark CANON in other countries and in the Philippines
as presented by petitioner, clearly showed that said certificates of registration
cover goods belonging to class 2 (paints, chemical products, toner, dyestuff).
On this basis, the BPTTT correctly ruled that since the certificate of
registration of petitioner for the trademark CANON covers class 2 (paints,
chemical products, toner, dyestuff), private respondent can use the trademark
CANON for its goods classified as class 25 (sandals). Clearly, there is a world
of difference between the paints, chemical products, toner, and dyestuff of
petitioner and the sandals of private respondent.
Petitioner counters that notwithstanding the dissimilarity of the products of the

parties, the trademark owner is entitled to protection when the use of by the
junior user "forestalls the normal expansion of his business". Petitioners
[7]
opposition to the registration of its trademark CANON by private respondent

rests upon petitioners insistence that it would be precluded from using the
mark CANON for various kinds of footwear, when in fact it has earlier used
said mark for said goods. Stretching this argument, petitioner claims that it is
possible that the public could presume that petitioner would also produce a
wide variety of footwear considering the diversity of its products marketed
worldwide.
We do not agree. Even in this instant petition, except for its bare assertions,
petitioner failed to attach evidence that would convince this Court that
petitioner has also embarked in the production of footwear products. We quote
with approval the observation of the Court of Appeals that:
"The herein petitioner has not made known that it intends to

venture into the business of producing sandals. This is clearly
shown in its Trademark Principal Register (Exhibit "U") where the
products of the said petitioner had been clearly and specifically
described as "Chemical products, dyestuffs, pigments, toner
developing preparation, shoe polisher, polishing agent". It would
be taxing ones credibility to aver at this point that the production
of sandals could be considered as a possible "natural or normal
expansion" of its business operation". [8]
In Faberge, Incorporated vs. Intermediate Appellate Court, the Director of

[9]
patents allowed the junior user to use the trademark of the senior user on the
ground that the briefs manufactured by the junior user, the product for which
the trademark BRUTE was sought to be registered, was unrelated and non-
competing with the products of the senior user consisting of after shave lotion,
shaving cream, deodorant, talcum powder, and toilet soap. The senior user
vehemently objected and claimed that it was expanding its trademark to briefs
and argued that permitting the junior user to register the same trademark
would allow the latter to invade the senior users exclusive domain. In
sustaining the Director of Patents, this Court said that since "(the senior user)
has not ventured in the production of briefs, an item which is not listed in its
certificate of registration, (the senior user), cannot and should not be allowed
to feign that (the junior user) had invaded (the senior users) exclusive
domain." We reiterated the principle that the certificate of registration confers
[10]
upon the trademark owner the exclusive right to use its own symbol only to
those goods specified in the certificate, subject to the conditions and
limitations stated therein. Thus, the exclusive right of petitioner in this case to
[11]
use the trademark CANON is limited to the products covered by its certificate
of registration.
Petitioner further argues that the alleged diversity of its products all over the
world makes it plausible that the public might be misled into thinking that there
is some supposed connection between private respondents goods and
petitioner. Petitioner is apprehensive that there could be confusion as to the
origin of the goods, as well as confusion of business, if private respondent is
allowed to register the mark CANON. In such a case, petitioner would
allegedly be immensely prejudiced if private respondent would be permitted to
take "a free ride on, and reap the advantages of, the goodwill and reputation
of petitioner Canon". In support of the foregoing arguments, petitioner
[12]
invokes the rulings in Sta. Ana vs. Maliwat , Ang vs. Teodoro and Converse
[13] [14]
Rubber Corporation vs. Universal Rubber Products, Inc. . [15]
The likelihood of confusion of goods or business is a relative concept, to be

determined only according to the particular, and sometimes peculiar,
circumstances of each case. Indeed, in trademark law cases, even more
[16]
than in other litigation, precedent must be studied in the light of the facts of the
particular case. Contrary to petitioners supposition, the facts of this case will
[17]
show that the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro and Converse
Rubber Corporation vs. Universal Rubber Products, Inc. are hardly in point.
The just cited cases involved goods that were confusingly similar, if not
identical, as in the case of Converse Rubber Corporation vs. Universal
Rubber Products, Inc. Here, the products involved are so unrelated that the
public will not be misled that there is the slightest nexus between petitioner
and the goods of private respondent.
In cases of confusion of business or origin, the question that usually arises is

whether the respective goods or services of the senior user and the junior
user are so related as to likely cause confusion of business or origin, and
thereby render the trademark or tradenames confusingly similar. Goods are
[18]
related when they belong to the same class or have the same descriptive
properties; when they possess the same physical attributes or essential
characteristics with reference to their form, composition, texture or quality.
They may also be related because they serve the same purpose or are sold
[19]
in grocery stores. [20]
Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled
that the petroleum products on which the petitioner therein used the
trademark ESSO, and the product of respondent, cigarettes are "so foreign to
each other as to make it unlikely that purchasers would think that petitioner is
the manufacturer of respondents goods" . Moreover, the fact that the goods
[21]
involved therein flow through different channels of trade highlighted their

dissimilarity, a factor explained in this wise:
"The products of each party move along and are disposed through
different channels of distribution. The (petitioners) products are
distributed principally through gasoline service and lubrication
stations, automotive shops and hardware stores. On the other
hand, the (respondents) cigarettes are sold in sari-sari stores,
grocery store, and other small distributor outlets. (Respondents)
cigarettes are even peddled in the streets while (petitioners) gasul
burners are not. Finally, there is a marked distinction between oil
and tobacco, as well as between petroleum and cigarettes.
Evidently, in kind and nature the products of (respondent) and of
(petitioner) are poles apart."[22]
Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner
that carry the trademark CANON are unrelated to sandals, the product of
private respondent. We agree with the BPTTT, following the Esso doctrine,
when it noted that the two classes of products in this case flow through
different trade channels. The products of petitioner are sold through special
chemical stores or distributors while the products of private respondent are
sold in grocery stores, sari-sari stores and department stores. Thus, the
[23]
evident disparity of the products of the parties in the case at bar renders
unfounded the apprehension of petitioner that confusion of business or origin
might occur if private respondent is allowed to use the mark CANON.
In its bid to bar the registration of private respondent of the mark CANON,
petitioner invokes the protective mantle of the Paris Convention. Petitioner
asserts that it has the exclusive right to the mark CANON because it forms
part of its corporate name or tradename, protected by Article 8 of the Paris
Convention, to wit:
"A tradename shall be protected in all the countries of the Union

without the obligation of filing or registration, whether or not it
forms part of a trademark."
Public respondents BPTTT and the Court of Appeals allegedly committed an

oversight when they required petitioner to prove that its mark is a well-known
mark at the time the application of private respondent was filed. Petitioner
questions the applicability of the guidelines embodied in the Memorandum of
then Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October
25, 1983 which according to petitioner implements Article 6bis of the Paris
Convention, the provision referring to the protection of trademarks. The
memorandum reads:
"a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or

copyright or anything else;
c) the mark must be for use in the same or similar class of goods;
d) the person claiming must be the owner of the mark."

According to petitioner, it should not be required to prove that its trademark is
well-known and that the products are not similar as required by the quoted
memorandum. Petitioner emphasizes that the guidelines in the memorandum
of Ongpin implement Article 6bis of the Paris Convention, the provision for the
protection of trademarks, not tradenames. Article 6bis of the Paris Convention
states:
(1)....The countries of the Union undertake, either administratively

if their legislation so permits, or at the request of an interested
party, to refuse or to cancel the registration and to prohibit the use
of a trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be
well-known in that country as being already the mark of a person
entitled to the benefits of the present Convention and used for
identical or similar goods. These provisions shall also apply when
the essential part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create confusion
therewith.
(2)....A period of at least five years from the date of registration

shall be allowed for seeking the cancellation of such a mark. The
countries of the Union may provide for a period within which the
prohibition of use must be sought.
(3)....No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks or used in bad faith."
Petitioner insists that what it seeks is the protection of Article 8 of the Paris
Convention, the provision that pertains to the protection of tradenames.
Petitioner believes that the appropriate memorandum to consider is that
issued by the then Minister of Trade and Industry, Luis Villafuerte, directing the
Director of patents to:
"reject all pending applications for Philippine registration of

signature and other world famous trademarks by applicants other
than the original owners or users."
As far as petitioner is concerned, the fact that its tradename is at risk would
call for the protection granted by Article 8 of the Paris Convention. Petitioner
calls attention to the fact that Article 8, even as embodied in par. 6, sec. 37 of
RA 166, mentions no requirement of similarity of goods. Petitioner claims that
the reason there is no mention of such a requirement, is "because there is a
difference between the referent of the name and that of the mark" and that
[24]
"since Art. 8 protects the tradename in the countries of the Union, such as
Japan and the Philippines, Petitioners tradename should be protected here." [25]
We cannot uphold petitioners position.
The term "trademark" is defined by RA 166, the Trademark Law, as including

"any word, name, symbol, emblem, sign or device or any combination thereof
adopted and used by a manufacturer or merchant to identify his goods and
distinguish them for those manufactured, sold or dealt in by
others." Tradename is defined by the same law as including "individual
[26]
names and surnames, firm names, tradenames, 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." Simply put, a trade name refers to the business and its goodwill;
[27]
a trademark refers to the goods. [28]
The Convention of Paris for the Protection of Industrial Property, otherwise

known as the Paris Convention, of which both the Philippines and Japan, the
country of petitioner, are signatories , is a multilateral treaty that seeks to
[29]
protect industrial property consisting of patents, utility models, industrial

designs, trademarks, service marks, trade names and indications of source or
appellations of origin, and at the same time aims to repress unfair competition.
We agree with public respondents that the controlling doctrine with respect
[30]
to the applicability of Article 8 of the Paris Convention is that established

in Kabushi Kaisha Isetan vs. Intermediate Appellate Court. As pointed out by
[31]
the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention,

this Office believes that there is no automatic protection afforded
an entity whose tradename is alleged to have been infringed
through the use of that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court,
et. al., G.R. No. 75420, 15 November 1991, the Honorable
Supreme Court held that:
The Paris Convention for the Protection of Industrial

Property does not automatically exclude all countries
of the world which have signed it from using a
tradename which happens to be used in one country.
To illustrate if a taxicab or bus company in a town in
the United Kingdom or India happens to use the
tradename "Rapid Transportation", it does not
necessarily follow that "Rapid" can no longer be
registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in the Treaty of Paris for the
Protection of Intellectual Property regarding well-known marks
and possible application thereof in this case. Petitioner, as this
office sees it, is trying to seek refuge under its protective mantle,
claiming that the subject mark is well known in this country at the
time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon.

Roberto V. Ongpin, issued a memorandum dated 25 October
1983 to the Director of Patents, a set of guidelines in the
implementation of Article 6bis (sic) of the Treaty of Paris. These
conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or

copyright or anything else;
c ) the mark must be for use in the same or similar kinds of goods;
and
d) the person claiming must be the owner of the mark (The

Parties Convention Commentary on the Paris Convention. Article
by Dr. Bogsch, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)
From the set of facts found in the records, it is ruled that the
Petitioner failed to comply with the third requirement of the said
memorandum that is the mark must be for use in the same or
similar kinds of goods. The Petitioner is using the mark "CANON"
for products belonging to class 2 (paints, chemical products) while
the Respondent is using the same mark for sandals (class 25).
Hence, Petitioners contention that its mark is well-known at the
time the Respondent filed its application for the same mark should
fail. "
[32]
Petitioner assails the application of the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court to this case. Petitioner points out that in the case
of Kabushi Kaisha Isetan vs. Intermediate Appellate Court, petitioner therein
was found to have never at all conducted its business in the Philippines unlike
herein petitioner who has extensively conducted its business here and also
had its trademark registered in this country. Hence, petitioner submits that this
factual difference renders inapplicable our ruling in the case of Kabushi
Kaisha Isetan vs. Intermediate Appellate Court that Article 8 of the Paris
Convention does not automatically extend protection to a tradename that is in
danger of being infringed in a country that is also a signatory to said
treaty. This contention deserves scant consideration. Suffice it to say that the
just quoted pronouncement in the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court, was made independent of the factual finding
that petitioner in said case had not conducted its business in this country.
WHEREFORE, in view of the foregoing, the instant petition for review on

certiorari is DENIED for lack of merit.
SO ORDERED.
BERRIS AGRICULTURAL
G.R. No. 183404
CO., INC.,
Petitioner,
Present:
VELASCO, JR., J.,*

- versus - NACHURA,**
Acting Chairperson,
LEONARDO-DE CASTRO,***
BRION,**** and
MENDOZA, JJ.
NORVY ABYADANG,
Respondent. Promulgated:
October 13, 2010
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
This petition for review[1] on certiorari under Rule 45 of the Rules

of Court seeks the reversal of the Decision dated April 14,
2008[2] and the Resolution dated June 18, 2008[3]of the Court of
Appeals (CA) in CA-G.R. SP No. 99928.
The antecedents
On January 16, 2004, respondent Norvy A. Abyadang (Abyadang),
proprietor of NS Northern Organic Fertilizer, with address at No.
43 Lower QM, Baguio City, filed with the Intellectual Property
Office (IPO) a trademark application for the mark NS D-10 PLUS
for use in connection with Fungicide (Class 5) with active
ingredient 80% Mancozeb. The application, under Application
Serial No. 4-2004-00450, was given due course and was published
in the IPO e-Gazette for opposition on July 28, 2005.
On August 17, 2005, petitioner Berris Agricultural Co., Inc.

(Berris), with business address in Barangay Masiit, Calauan,
Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA) a
Verified Notice of Opposition[4] against the mark under application
allegedly because NS D-10 PLUS is similar and/or confusingly
similar to its registered trademark D-10 80 WP, also used for
Fungicide (Class 5) with active ingredient 80% Mancozeb. The
opposition was docketed as IPC No. 14-2005-00099.
After an exchange of pleadings, on April 28, 2006, Director

Estrellita Beltran-Abelardo (Director Abelardo) of the IPO-BLA
issued Decision No. 2006-24[5] (BLA decision), the dispositive
portion of which reads
WHEREFORE, viewed in the light of all the

foregoing, this Bureau finds and so holds that
Respondent-Applicants mark NS D-10 PLUS is
confusingly similar to the Opposers mark and as such, the
opposition is hereby SUSTAINED. Consequently,
trademark application bearing Serial No. 4-2004-00450
for the mark NS D-10 PLUS filed on January 16, 2004 by
Norvy A. Ab[yada]ng covering the goods fungicide under
Class 5 of the International Classification of goods is, as it
is hereby, REJECTED.
Let the filewrapper of the trademark NS D-10 PLUS
subject matter under consideration be forwarded to the
Administrative, Financial and Human Resources
Development Services Bureau (AFHRDSB) for appropriate
action in accordance with this Order with a copy to be
furnished the Bureau of Trademark (BOT) for information
and to update its records.
SO ORDERED.[6]
Abyadang filed a motion for reconsideration, and Berris, in turn,

filed its opposition to the motion.
On August 2, 2006, Director Abelardo issued Resolution No. 2006-

09(D)[7] (BLA resolution), denying the motion for reconsideration
and disposing as follows
IN VIEW OF THE FOREGOING, the Motion for

Reconsideration filed by the Respondent-Applicant is
hereby DENIED FOR LACK OF MERIT. Consequently,
Decision No. 2006-24 dated April 28, 2006 STANDS.
Let the filewrapper of the trademark NS D-10 PLUS

subject matter under consideration be forwarded to the
Bureau of Trademarks for appropriate action in
accordance with this Resolution.
SO ORDERED.[8]
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the
Office of the Director General, Intellectual Property Philippines
(IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties respective memoranda, Director

General Adrian S. Cristobal, Jr. of the IPPDG rendered a decision
dated July 20, 2007,[9] ruling as follows
Wherefore, premises considered[,] the appeal is

hereby DENIED. Accordingly, the appealed Decision of the
Director is hereby AFFIRMED.
Let a copy of this Decision as well as the trademark

application and records be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate
action. Further, let also the Directors of the Bureau of
Trademarks, the Administrative, Financial and Human
Resources Development Services Bureau, and the library
of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for
information, guidance, and records purposes.
SO ORDERED.[10]
Undeterred, Abyadang filed a petition for review [11] before the CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG
decision. It held
In sum, the petition should be granted due to the

following reasons: 1) petitioners mark NS D-10 PLUS is not
confusingly similar with respondents trademark D-10 80
WP; 2) respondent failed to establish its ownership of the
mark D-10 80 WP and 3) respondents trademark
registration for D-10 80 WP may be cancelled in the
present case to avoid multiplicity of suits.
WHEREFORE, the petition is GRANTED. The

decision dated July 20, 2007 of the IPO Director General in
Appeal No. 14-06-13 (IPC No. 14-2005-00099)
is REVERSED and SET ASIDE, and a new one is entered
giving due course to petitioners application for
registration of the mark NS D-10 PLUS, and canceling
respondents trademark registration for D-10 80 WP.
SO ORDERED.[12]
Berris filed a Motion for Reconsideration, but in its June 18, 2008
Resolution, the CA denied the motion for lack of merit. Hence, this
petition anchored on the following arguments
I. The Honorable Court of Appeals finding that there

exists no confusing similarity between Petitioners
and respondents marks is based on
misapprehension of facts, surmise and conjecture
and not in accord with the Intellectual Property Code
and applicable Decisions of this Honorable Court
[Supreme Court].
II. The Honorable Court of Appeals Decision reversing
and setting aside the technical findings of the
Intellectual Property Office even without a finding or,
at the very least, an allegation of grave abuse of
discretion on the part of said agency is not in accord
with law and earlier pronouncements of this
Honorable Court [Supreme Court].
III. The Honorable Court of Appeals Decision ordering

the cancellation of herein Petitioners duly registered
and validly existing trademark in the absence of a
properly filed Petition for Cancellation before the
Intellectual Property Office is not in accord with the
Intellectual Property Code and applicable Decisions
of this Honorable Court [Supreme Court].[13]
The basic law on trademark, infringement, and unfair

competition is Republic Act (R.A.) No. 8293[14] (Intellectual
Property Code of the Philippines), specifically Sections 121 to 170
thereof. It took effect on January 1, 1998. Prior to its effectivity,
the applicable law was R.A. No. 166,[15] as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its

entirety R.A. No. 166, but merely provided in Section 239.1 [16] that
Acts and parts of Acts inconsistent with it were repealed. In other
words, only in the instances where a substantial and irreconcilable
conflict is found between the provisions of R.A. No. 8293 and of
R.A. No. 166 would the provisions of the latter be deemed
repealed.
R.A. No. 8293 defines a mark as any visible sign capable of

distinguishing the goods (trademark) or services (service mark) of
an enterprise and shall include a stamped or marked container of
goods.[17] It also defines a collective mark as any visible sign
designated as such in the application for registration and capable
of distinguishing the origin or any other common characteristic,
including the quality of goods or services of different enterprises
which use the sign under the control of the registered owner of
the collective mark.[18]
On the other hand, R.A. No. 166 defines a trademark as any

distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from
those manufactured, sold, or dealt by another. [19] A trademark,
being a special property, is afforded protection by law. But for one
to enjoy this legal protection, legal protection ownership of the
trademark should rightly be established.
The ownership of a trademark is acquired by its registration

and its actual use by the manufacturer or distributor of the goods
made available to the purchasing public.Section 122 [20] of R.A. No.
8293 provides that the rights in a mark shall be acquired by
means of its valid registration with the IPO. A certificate of
registration of a mark, once issued, constitutes prima
facie evidence of the validity of the registration, of the registrants
ownership of the mark, and of the registrants exclusive right to
use the same in connection with the goods or services and those
that are related thereto specified in the certificate. [21] R.A. No.
8293, however, requires the applicant for registration or the
registrant to file a declaration of actual use (DAU) of the mark,
with evidence to that effect, within three (3) years from the filing
of the application for registration; otherwise, the application shall
be refused or the mark shall be removed from the register. [22] In
other words, the prima facie presumption brought about by the
registration of a mark may be challenged and overcome, in an
appropriate action, by proof of the nullity of the registration or of
non-use of the mark, except when excused. [23] Moreover, the
presumption may likewise be defeated by evidence of prior use by
another person, i.e., it will controvert a claim of legal
appropriation or of ownership based on registration by a
subsequent user.This is because a trademark is a creation of use
and belongs to one who first used it in trade or commerce. [24]
The determination of priority of use of a mark is a question
of fact. Adoption of the mark alone does not suffice. One may
make advertisements, issue circulars, distribute price lists on
certain goods, but these alone will not inure to the claim of
ownership of the mark until the goods bearing the mark are sold
to the public in the market. Accordingly, receipts, sales invoices,
and testimonies of witnesses as customers, or orders of buyers,
best prove the actual use of a mark in trade and commerce
during a certain period of time.[25]
In the instant case, both parties have submitted proof to
support their claim of ownership of their respective trademarks.
Culled from the records, Berris, as oppositor to Abyadangs

application for registration of his trademark, presented the
following evidence: (1) its trademark application dated November
29, 2002[26] with Application No. 4-2002-0010272; (2) its IPO
certificate of registration dated October 25, 2004, [27] with
Registration No. 4-2002-010272 and July 8, 2004 as the date of
registration; (3) a photocopy of its packaging [28] bearing the mark
D-10 80 WP; (4) photocopies of its sales invoices and official
receipts;[29] and (5) its notarized DAU dated April 23, 2003,
[30]
stating that the mark was first used on June 20, 2002, and
indicating that, as proof of actual use, copies of official receipts or
sales invoices of goods using the mark were attached as Annex B.
On the other hand, Abyadangs proofs consisted of the

following: (1) a photocopy of the packaging [31] for his marketed
fungicide bearing mark NS D-10 PLUS; (2) Abyadangs Affidavit
dated February 14, 2006,[32] stating among others that the mark
NS D-10 PLUS was his own creation derived from: N for Norvy, his
name; S for Soledad, his wifes name; D the first letter for
December, his birth month; 10 for October, the 10 th month of the
year, the month of his business name registration; and PLUS to
connote superior quality; that when he applied for registration,
there was nobody applying for a mark similar to NS D-10 PLUS;
that he did not know of the existence of Berris or any of its
products; that D-10 could not have been associated with Berris
because the latter never engaged in any commercial activity to
sell D-10 80 WP fungicide in the local market; and that he could
not have copied Berris mark because he registered his packaging
with the Fertilizer and Pesticide Authority (FPA) ahead of Berris;
(3) Certification dated December 19, 2005[33] issued by the FPA,
stating that NS D-10 PLUS is owned and distributed by NS
Northern Organic Fertilizer, registered with the FPA since May 26,
2003, and had been in the market since July 30, 2003; (4)
Certification dated October 11, 2005[34] issued by the FPA, stating
that, per monitoring among dealers in Region I and in the
Cordillera Administrative Region registered with its office, the
Regional Officer neither encountered the fungicide with mark D-
10 80 WP nor did the FPA provincial officers from the same area
receive any report as to the presence or sale of Berris product; (5)
Certification dated March 14, 2006[35] issued by the FPA, certifying
that all pesticides must be registered with the said office pursuant
to Section 9[36] of Presidential Decree (P.D.) No. 1144 [37] and
Section 1, Article II of FPA Rules and Regulations No. 1, Series of
1977; (6) Certification dated March 16, 2006 [38] issued by the FPA,
certifying that the pesticide D-10 80 WP was registered by Berris
on November 12, 2004; and (7) receipts from Sunrise Farm
Supply[39] in La Trinidad, Benguet of the sale of Abyadangs goods
referred to as D-10 and D-10+.
Based on their proffered pieces of evidence, both Berris and

Abyadang claim to be the prior user of their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark D-10
80 WP since June 20, 2002, even before it filed for its registration
with the IPO on November 29, 2002, as shown by its DAU which
was under oath and notarized, bearing the stamp of the Bureau of
Trademarks of the IPO on April 25, 2003,[40] and which stated that
it had an attachment as Annex B sales invoices and official
receipts of goods bearing the mark. Indeed, the DAU, being a
notarized document, especially when received in due course by
the IPO, is evidence of the facts it stated and has the presumption
of regularity, entitled to full faith and credit upon its face. Thus,
the burden of proof to overcome the presumption of authenticity
and due execution lies on the party contesting it, and the
rebutting evidence should be clear, strong, and convincing as to
preclude all controversy as to the falsity of the certificate. [41] What
is more, the DAU is buttressed by the Certification dated April 21,
2006[42] issued by the Bureau of Trademarks that Berris mark is
still valid and existing.
Hence, we cannot subscribe to the contention of Abyadang

that Berris DAU is fraudulent based only on his assumption that
Berris could not have legally used the mark in the sale of its
goods way back in June 2002 because it registered the product
with the FPA only on November 12, 2004. As correctly held by the
IPPDG in its decision on Abyadangs appeal, the question of
whether or not Berris violated P.D. No. 1144, because it sold its
product without prior registration with the FPA, is a distinct and
separate matter from the jurisdiction and concern of the
IPO. Thus, even a determination of violation by Berris of P.D. No.
1144 would not controvert the fact that it did submit evidence
that it had used the mark D-10 80 WP earlier than its FPA
registration in 2004.
Furthermore, even the FPA Certification dated October 11,

2005, stating that the office had neither encountered nor received
reports about the sale of the fungicide D-10 80 WP within Region I
and the Cordillera Administrative Region, could not negate the
fact that Berris was selling its product using that mark in 2002,
especially considering that it first traded its goods in Calauan,
Laguna, where its business office is located, as stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the
owner of the mark D-10 80 WP. As such, Berris has in its favor the
rights conferred by Section 147 of R.A. No. 8293, which provides
Sec. 147. Rights Conferred.
147.1. The owner of a registered mark shall have the

exclusive right to prevent all third parties not having the
owners consent from using in the course of trade identical
or similar signs or containers for goods or services which
are identical or similar to those in respect of which the
trademark is registered where such use would result in a
likelihood of confusion. In case of the use of an identical
sign for identical goods or services, a likelihood of
confusion shall be presumed.
147.2. The exclusive right of the owner of a well-

known mark defined in Subsection 123.1(e) which is
registered in the Philippines, shall extend to goods and
services which are not similar to those in respect of which
the mark is registered: Provided, That use of that mark in
relation to those goods or services would indicate a
connection between those goods or services and the
owner of the registered mark: Provided, further, That the
interests of the owner of the registered mark are likely to
be damaged by such use.
Now, we confront the question, Is Abyadangs mark NS D-10

PLUS confusingly similar to that of Berris D-10 80 WP such that
the latter can rightfully prevent the IPO registration of the former?
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark
cannot be registered if it is identical with a registered mark
belonging to a different proprietor with an earlier filing or priority
date, with respect to: (1) the same goods or services; (2) closely
related goods or services; or (3) near resemblance of such mark
as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion,

jurisprudence has developed teststhe Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the competing
trademarks that might cause confusion, mistake, and deception in
the mind of the purchasing public.Duplication or imitation is not
necessary; neither is it required that the mark sought to be
registered suggests an effort to imitate. Given more consideration
are the aural and visual impressions created by the marks on the
buyers of goods, giving little weight to factors like prices, quality,
sales outlets, and market segments. [43]
In contrast, the Holistic or Totality Test necessitates a

consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining
confusing similarity. The discerning eye of the observer must
focus not only on the predominant words but also on the other
features appearing on both labels so that the observer may draw
conclusion on whether one is confusingly similar to the other. [44]
Comparing Berris mark D-10 80 WP with Abyadangs mark NS

D-10 PLUS, as appearing on their respective packages, one cannot
but notice that both have a common component which is D-
10. On Berris package, the D-10 is written with a bigger font than
the 80 WP. Admittedly, the D-10 is the dominant feature of the
mark. The D-10, being at the beginning of the mark, is what is
most remembered of it. Although, it appears in Berris certificate
of registration in the same font size as the 80 WP, its dominancy
in the D-10 80 WP mark stands since the difference in the form
does not alter its distinctive character. [45]
Applying the Dominancy Test, it cannot be gainsaid that

Abyadangs NS D-10 PLUS is similar to Berris D-10 80 WP, that
confusion or mistake is more likely to occur.Undeniably, both
marks pertain to the same type of goods fungicide with 80%
Mancozeb as an active ingredient and used for the same group of
fruits, crops, vegetables, and ornamental plants, using the same
dosage and manner of application. They also belong to the same
classification of goods under R.A. No. 8293. Both depictions of D-
10, as found in both marks, are similar in size, such that this
portion is what catches the eye of the purchaser. Undeniably, the
likelihood of confusion is present.
This likelihood of confusion and mistake is made more

manifest when the Holistic Test is applied, taking into
consideration the packaging, for both use the same type of
material (foil type) and have identical color schemes (red, green,
and white); and the marks are both predominantly red in color,
with the same phrase BROAD SPECTRUM FUNGICIDE written
underneath.
Considering these striking similarities, predominantly the D-

10, the buyers of both products, mainly farmers, may be misled
into thinking that NS D-10 PLUS could be an upgraded formulation
of the D-10 80 WP.
Moreover, notwithstanding the finding of the IPPDG that the

D-10 is a fanciful component of the trademark, created for the
sole purpose of functioning as a trademark, and does not give the
name, quality, or description of the product for which it is used,
nor does it describe the place of origin, such that the degree of
exclusiveness given to the mark is closely restricted, [46] and
considering its challenge by Abyadang with respect to the
meaning he has given to it, what remains is the fact that Berris is
the owner of the mark D-10 80 WP, inclusive of its dominant
feature D-10, as established by its prior use, and prior registration
with the IPO. Therefore, Berris properly opposed and the IPO
correctly rejected Abyadangs application for registration of the
mark NS D-10 PLUS.
Verily, the protection of trademarks as intellectual property

is intended not only to preserve the goodwill and reputation of the
business established on the goods bearing the mark through
actual use over a period of time, but also to safeguard the public
as consumers against confusion on these goods. [47] On this matter
of particular concern, administrative agencies, such as the IPO, by
reason of their special knowledge and expertise over matters
falling under their jurisdiction, are in a better position to pass
judgment thereon. Thus, their findings of fact in that regard are
generally accorded great respect, if not finality by the courts, as
long as they are supported by substantial evidence, even if such
evidence might not be overwhelming or even preponderant. It is
not the task of the appellate court to weigh once more the
evidence submitted before the administrative body and to
substitute its own judgment for that of the administrative agency
in respect to sufficiency of evidence.[48]
Inasmuch as the ownership of the mark D-10 80 WP fittingly

belongs to Berris, and because the same should not have been
cancelled by the CA, we consider it proper not to belabor anymore
the issue of whether cancellation of a registered mark may be
done absent a petition for cancellation.
WHEREFORE, the petition is GRANTED. The assailed

Decision dated April 14, 2008 and Resolution dated June 18, 2008
of the Court of Appeals in CA-G.R. SP No. 99928
are REVERSED and SET ASIDE. Accordingly, the Decision No.
2006-24 dated April 28, 2006 and the Resolution No. 2006-09(D)
dated August 2, 2006 in IPC No. 14-2005-00099, and the Decision
dated July 20, 2007 in Appeal No. 14-06-13
are REINSTATED. Costs against respondent.
SO ORDERED.
G.R. No. 194307 November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE GMBH),Petitioner,

vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari are the Court of Appeals (CA) Decision dated June 25, 2010 and Resolution dated
1 2 3
October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual Property Office (IPO) Director Generals
Decision dated December 22, 2009 that allowed the registration of various trademarks in favor of petitioner Birkenstock
4
Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark registrations before
the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling under Class
25 of the International Classification of Goods and Services (Nice Classification) with filing date of March 11, 1994; (b)
"BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A
FOOT, CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing
date of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL
AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-095043 for goods falling under Class 10 of
the Nice Classification with filing date of September 5, 1994 (subject applications). 5
However, registration proceedings of the subject applications were suspended in view of an existing registration of the mark
"BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993 (Registration No. 56334) in the name of
Shoe Town International and Industrial Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo Marketing
Corporation. In this regard, on May 27, 1997 petitioner filed a petition for cancellation of Registration No. 56334 on the ground that it
6
is the lawful and rightful owner of the Birkenstock marks (Cancellation Case). During its pendency, however, respondent and/or its
7
predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No. 56334 on
or before October 21, 2004, thereby resulting in the cancellation of such mark. Accordingly, the cancellation case was dismissed for
8 9
being moot and academic. 10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject applications in the IPO e-
Gazette on February 2, 2007. In response, respondent filed three (3) separate verified notices of oppositions to the subject
11
applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116, claiming, inter alia, that: (a)
12
it, together with its predecessor-in-interest, has been using Birkenstock marks in the Philippines for more than 16 years through the
mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject applications are identical to the one covered by
Registration No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on November 15, 1991, respondents
predecessor-in-interest likewise obtained a Certificate of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d)
while respondent and its predecessor-in-interest failed to file the 10th Yea r DAU, it continued the use of "BIRKENSTOCK AND
DEVICE" in lawful commerce; and (e) to record its continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it
has filed TASN 4-2006-010273 as a " re-application " of its old registration, Registration No. 56334. On November 13, 2007, the
13
Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the aforesaid inter partes cases (Consolidated
Opposition Cases). 14
The Ruling of the BLA

In its Decision dated May 28, 2008, the BLA of the IPO sustained respondents opposition, thus, ordering the rejection of the
15
subject applications. It ruled that the competing marks of the parties are confusingly similar since they contained the word
"BIRKENSTOCK" and are used on the same and related goods. It found respondent and its predecessor-in-interest as the prior user
and adopter of "BIRKENSTOCK" in the Philippines, while on the other hand, petitioner failed to present evidence of actual use in the
trade and business in this country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior right over
the mark was lost, as proof of continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA
likewise opined that petitioners marks are not well -known in the Philippines and internationally and that the various certificates of
registration submitted by petitioners were all photocopies and, therefore, not admissible as evidence. 16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA, thus allowing the
17
registration of the subject applications. He held that with the cancellation of Registration No. 56334 for respondents failure to file the
10th Year DAU, there is no more reason to reject the subject applications on the ground of prior registration by another
proprietor. More importantly, he found that the evidence presented proved that petitioner is the true and lawful owner and prior user
18
of "BIRKENSTOCK" marks and thus, entitled to the registration of the marks covered by the subject applications. The IPO Director
19
General further held that respondents copyright for the word "BIRKENSTOCK" is of no moment since copyright and trademark are
different forms of intellectual property that cannot be interchanged. 20
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a petition for review with the CA.
Ruling of the CA
In its Decision dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and reinstated that of the
21
BLA. It disallowed the registration of the subject applications on the ground that the marks covered by such applications "are
confusingly similar, if not outright identical" with respondents mark. It equally held that respondents failure to file the 10th Year
22
DAU for Registration No. 56334 "did not deprive petitioner of its ownership of the BIRKENSTOCK mark since it has submitted
substantial evidence showing its continued use, promotion and advertisement thereof up to the present." It opined that when
23
respondents predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is neither an existing registration
nor a pending application for the same and thus, it cannot be said that it acted in bad faith in adopting and starting the use of such
mark. Finally, the CA agreed with respondent that petitioners documentary evidence, being mere photocopies, were submitted in
24
violation of Section 8.1 of Office Order No. 79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration dated July 20, 2010, which was, however, denied in a Resolution dated
25 26
October 27, 2010. Hence, this petition. 27
Issues Before the Court
The primordial issue raised for the Courts resolution is whether or not the subject marks should be allowed registration in the name
of petitioner.
The Courts Ruling
The petition is meritorious.
A. Admissibility of Petitioners Documentary Evidence.
In its Comment dated April 29, 2011, respondent asserts that the documentary evidence submitted by petitioner in the Consolidated
28
Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings, which
requires certified true copies of documents and evidence presented by parties in lieu of originals. As such, they should be deemed
29
inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration. A
strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to
enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every
party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of
technicalities." "Indeed, the primordial policy is a faithful observance of [procedural rules], and their relaxation or suspension should
30
only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure prescribed." This is especially true with quasi-judicial and administrative
31
bodies, such as the IPO, which are not bound by technical rules of procedure. On this score, Section 5 of the Rules on Inter Partes
32
Proceedings provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not
be bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such
mode of proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive
disposition of cases, and which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis
and underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated Opposition Cases, it
should be noted that the IPO had already obtained the originals of such documentary evidence in the related Cancellation Case
earlier filed before it. Under this circumstance and the merits of the instant case as will be subsequently discussed, the Court holds
that the IPO Director Generals relaxation of procedure was a valid exercise of his discretion in the interest of substantial justice. 33
Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.
B. Registration and ownership of "BIRKENSTOCK."
Republic Act No. (RA) 166, the governing law for Registration No. 56334, requires the filing of a DAU on specified periods, to wit:
34 35
Section 12. Duration. Each certificate of registration shall remain in force for twenty years: Provided, That registrations under the
provisions of this Act shall be cancelled by the Director, unless within one year following the fifth, tenth and fifteenth anniversaries of
the date of issue of the certificate of registration, the registrant shall file in the Patent Office an affidavit showing that the mark or
trade-name is still in use or showing that its non-use is due to special circumstance which excuse such non-use and is not due to
any intention to abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or refusal thereof and, if a refusal,
the reasons therefor. (Emphasis and underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in the automatic
cancellation of registration of a trademark. In turn, such failure is tantamount to the abandonment or withdrawal of any right or
interest the registrant has over his trademark. 36
In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the requisite period, or on
or before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn any right or interest over the mark
"BIRKENSTOCK." Neither can it invoke Section 236 of the IP Code which pertains to intellectual property rights obtained under
37
previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."
Under Section 2 of RA 166, which is also the law governing the subject applications, in order to register a trademark, one must be
38
the owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to the application
for registration. Section 2-A of the same law sets out to define how one goes about acquiring ownership thereof. Under the same
39
section, 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. Significantly, to be an owner, Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet
have the right to register such ownership here due to the owners failure to use the same in the Philippines for two (2) months prior
to registration.
40
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership. If the applicant is not the
1wphi1
owner of the trademark, he has no right to apply for its registration. Registration merely creates a prima facie presumption of the
validity of the registration, of the registrants ownership of the trademark, and of the exclusive right to the use thereof. Such
presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence
to the contrary.41
Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that
confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property rights which
cannot be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true
and lawful owner. The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of actual
and real ownership of a trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang is instructive on this point:
42
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made
available to the purchasing public. x x x A certificate of registration of a mark, once issued, constitutes prima facie evidence of the
validity of the registration, of the registrants ownership of the mark, and of the registrants exclusive right to use the same in
connection with the goods or services and those that are related thereto specified in the certificate. x x x In other words, the prima
facie presumption brought about by the registration of a mark may be challenged and overcome in an appropriate action, x x x by
evidence of prior use by another person, i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by
a subsequent user. This is because a trademark is a creation of use and belongs to one who first used it in trade or
commerce. (Emphasis and underscoring supplied)
43
In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It submitted evidence relating
to the origin and history of "BIRKENSTOCK" and its use in commerce long before respondent was able to register the same here in
the Philippines. It has sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann
Birkenstock, a shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in
the manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the
petitioner. Petitioner also submitted various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it
has used such mark in different countries worldwide, including the Philippines. 44
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented copies of sales
invoices and advertisements, which are not conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these
merely show the transactions made by respondent involving the same. 45
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the mark "BIRKENSTOCK"
and entitled to its registration, and that respondent was in bad faith in having it registered in its name. In this regard, the Court
quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark BIRKENSTOCK.
BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very remote that two persons did coin the
same or identical marks. To come up with a highly distinct and uncommon mark previously appropriated by another, for use in the
same line of business, and without any plausible explanation, is incredible. The field from which a person may select a trademark is
practically unlimited. As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and
combinations of letters and designs available, [respondent] had to come up with a mark identical or so closely similar to the
[petitioners] if there was no intent to take advantage of the goodwill generated by the [petitioners] mark. Being on the same line of
business, it is highly probable that the [respondent] knew of the existence of BIRKENSTOCK and its use by the [petitioner], before
[respondent] appropriated the same mark and had it registered in its name. 46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27, 2010 of the Court of
Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009 of the
IPO Director General is hereby REINSTATED.
SO ORDERED.
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
Resolution2 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 "SHANGRI-LA 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. IAC8, 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
two-month 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.
G.R. No. 166115 February 2, 2007
McDONALDS CORPORATION, Petitioner,

vs.
MACJOY FASTFOOD CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, herein petitioner McDonalds Corporation seeks the
reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier decision of the Intellectual Property Office (IPO) which rejected herein
respondent MacJoy FastFood Corporations application for registration of the trademark "MACJOY & DEVICE"; and
2. Resolution dated 12 November 20042 denying the petitioners motion for reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation engaged in the sale of fast food products in
Cebu City, filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the Intellectual Property Office
(IPO), an application, thereat identified as Application Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE"
for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under classes 29
and 30 of the International Classification of Goods.
Petitioner McDonalds Corporation, a corporation duly organized and existing under the laws of the State of Delaware, USA, filed a
verified Notice of Opposition3 against the respondents application claiming that the trademark "MACJOY & DEVICE" so resembles
its corporate logo, otherwise known as the Golden Arches or "M" design, and its marks "McDonalds," McChicken," "MacFries,"
"BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known as the MCDONALDS marks) such that
when used on identical or related goods, the trademark applied for would confuse or deceive purchasers into believing that the
goods originate from the same source or origin. Likewise, the petitioner alleged that the respondents use and adoption in bad faith
of the "MACJOY & DEVICE" mark would falsely tend to suggest a connection or affiliation with petitioners restaurant services and
food products, thus, constituting a fraud upon the general public and further cause the dilution of the distinctiveness of petitioners
registered and internationally recognized MCDONALDS marks to its prejudice and irreparable damage. The application and the
opposition thereto was docketed as Inter Partes Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner and averred that it has used the mark "MACJOY" for the past
many years in good faith and has spent considerable sums of money for said marks extensive promotion in tri-media, especially in
Cebu City where it has been doing business long before the petitioner opened its outlet thereat sometime in 1992; and that its use of
said mark would not confuse affiliation with the petitioners restaurant services and food products because of the differences in the
design and detail of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that the predominance of the letter "M," and the prefixes "Mac/Mc" in
both the "MACJOY" and the "MCDONALDS" marks lead to the conclusion that there is confusing similarity between them especially
since both are used on almost the same products falling under classes 29 and 30 of the International Classification of Goods, i.e.,
food and ingredients of food, sustained the petitioners opposition and rejected the respondents application, viz:
WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE for use in fried chicken and chicken barbecue,
burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is hereby, SUSTAINED. Accordingly, Application
Serial No. 75274 of the herein Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to the Administrative, Financial and Human Resources
Development Bureau for appropriate action in accordance with this Decision, with a copy to be furnished the Bureau of Trademarks
for information and to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO denied the motion in its Order5 of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary Injunction 6 under Rule 43 of the
Rules of Court, whereat its appellate recourse was docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks "MACJOY" and "MCDONALDS," the CA, in its herein assailed Decision 7 dated
July 29, 2004, reversed and set aside the appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING ASIDE the Decision of the
IPO dated 28 December 1998 and its Order dated 14 January 2000 and ORDERING the IPO to give due course to petitioners
Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless the glaring and drastic differences and variations in style of the two
trademarks and even decreed that these pronounced differences are "miniscule" and considered them to have been "overshadowed
by the appearance of the predominant features" such as "M," "Mc," and "Mac" appearing in both MCDONALDS and MACJOY
marks. Instead of taking into account these differences, the IPO unreasonably shrugged off these differences in the device, letters
and marks in the trademark sought to be registered. The IPO brushed aside and ignored the following irrefutable facts and
circumstances showing differences between the marks of MACJOY and MCDONALDS. They are, as averred by the petitioner [now
respondent]:
1. The word "MacJoy" is written in round script while the word "McDonalds" is written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings sprouting on both sides,
while the word "McDonalds" comes with an arches "M" in gold colors, and absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while "McDonalds" is written in red, yellow and black
color combination;
4. The faade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A, show that [respondents]
restaurant is set also in the same bold, brilliant and noticeable color scheme as that of its wrappers, containers, cups, etc.,
while [petitioners] restaurant is in yellow and red colors, and with the mascot of "Ronald McDonald" being prominently
displayed therein." (Words in brackets supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its similarly challenged Resolution 8 of November 12, 2004, the CA
denied the motion, as it further held:
Whether a mark or label of a competitor resembles another is to be determined by an inspection of the points of difference and
resemblance as a whole, and not merely the points of resemblance. The articles and trademarks employed and used by the
[respondent] Macjoy Fastfood Corporation are so different and distinct as to preclude any probability or likelihood of confusion or
deception on the part of the public to the injury of the trade or business of the [petitioner] McDonalds Corporation. The "Macjoy &
Device" mark is dissimilar in color, design, spelling, size, concept and appearance to the McDonalds marks. (Words in brackets
supplied.)
Hence, the petitioners present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS "MACJOY & DEVICE" MARK IS NOT CONFUSINGLY
SIMILAR TO PETITIONERS "McDONALDS MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS
BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT IN DETERMINING THE EXISTENCE OF CONFUSING
SIMILARITY BETWEEN COMPETING MARKS.
A. The McDonalds Marks belong to a well-known and established "family of marks" distinguished by the use of the prefix
"Mc" and/or "Mac" and the corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioners McDonalds Marks and the Respondents
"Macjoy & Device" mark. As such, the marks are confusingly similar under the Dominancy Test.
C. Petitioners McDonalds Marks are well-known and world-famous marks which must be protected under the Paris
Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED 28 DECEMBER 1998 AND ITS
ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE.
In its Comment,9 the respondent asserts that the petition should be dismissed outright for being procedurally defective: first,
because the person who signed the certification against forum shopping in behalf of the petitioner was not specifically authorized to
do so, and second, because the petition does not present a reviewable issue as what it challenges are the factual findings of the
CA. In any event, the respondent insists that the CA committed no reversible error in finding no confusing similarity between the
trademarks in question.
The petition is impressed with merit.
Contrary to respondents claim, the petitioners Managing Counsel, Sheila Lehr, was specifically authorized to sign on behalf of the
petitioner the Verification and Certification10 attached to the petition. As can be gleaned from the petitioners Board of Directors
Resolution dated December 5, 2002, as embodied in the Certificate of the Assistant Secretary dated December 21, 2004, 11 Sheila
Lehr was one of those authorized and empowered "to execute and deliver for and on behalf of [the petitioner] all documents as may
be required in connection with x x x the protection and maintenance of any foreign patents, trademarks, trade-names, and
copyrights owned now or hereafter by [the petitioner], including, but not limited to, x x x documents required to institute opposition or
cancellation proceedings against conflicting trademarks, and to do such other acts and things and to execute such other documents
as may be necessary and appropriate to effect and carry out the intent of this resolution." Indeed, the afore-stated authority given to
Lehr necessarily includes the authority to execute and sign the mandatorily required certification of non-forum shopping to support
the instant petition for review which stemmed from the "opposition proceedings" lodged by the petitioner before the IPO.
Considering that the person who executed and signed the certification against forum shopping has the authority to do so, the
petition, therefore, is not procedurally defective.
As regards the respondents argument that the petition raises only questions of fact which are not proper in a petition for review,
suffice it to say that the contradictory findings of the IPO and the CA constrain us to give due course to the petition, this being one of
the recognized exceptions to Section 1, Rule 45 of the Rules of Court. True, this Court is not the proper venue to consider factual
issues as it is not a trier of facts.12 Nevertheless, when the factual findings of the appellate court are mistaken, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court of origin, 13 as here, this
Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a "trademark" as any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof adopted and used by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt in by others.14
Under the same law, the registration of a trademark is subject to the provisions of Section 4 thereof, paragraph (d) of which is
pertinent to this case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks on the principal register. There is hereby established a
register of trademarks, tradenames and service-marks which shall be known as the principal register. The owner of the trade-mark,
trade-name or service-mark used to distinguish his goods, business or services of others shall have the right to register the same on
the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the Philippines or a mark
or trade-name previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in
connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity between the MCDONALDS marks of the petitioner and the
respondents "MACJOY & DEVICE" trademark when applied to Classes 29 and 30 of the International Classification of Goods, i.e.,
food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the holistic
test.15 The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause
confusion or deception.16 In contrast, the holistic test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.17 Under the latter test, a comparison of the words is
not the only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there was confusing similarity between the two (2) trademarks in question
as it took note of the appearance of the predominant features "M", "Mc" and/or "Mac" in both the marks. In reversing the conclusion
reached by the IPO, the CA, while seemingly applying the dominancy test, in fact actually applied the holistic test. The appellate
court ruled in this wise:
Applying the Dominancy test to the present case, the IPO should have taken into consideration the entirety of the two marks instead
of simply fixing its gaze on the single letter "M" or on the combinations "Mc" or "Mac". A mere cursory look of the subject marks will
reveal that, save for the letters "M" and "c", no other similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted for the IPO to consider the prefix "Mac" as the predominant feature
and the rest of the designs in [respondents] mark as details. Taking into account such paramount factors as color, designs, spelling,
sound, concept, sizes and audio and visual effects, the prefix "Mc" will appear to be the only similarity in the two completely different
marks; and it is the prefix "Mc" that would thus appear as the miniscule detail. When pitted against each other, the two marks reflect
a distinct and disparate visual impression that negates any possible confusing similarity in the mind of the buying public. (Words in
brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be the one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits.19 In such cases, even more than in any other litigation, precedent must be studied
in the light of the facts of the particular case.20 That is the reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.21
While we agree with the CAs detailed enumeration of differences between the two (2) competing trademarks herein involved, we
believe that the holistic test is not the one applicable in this case, the dominancy test being the one more suitable. In recent cases
with a similar factual milieu as here, the Court has consistently used and applied the dominancy test in determining confusing
similarity or likelihood of confusion between competing trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the trademark "Big Mak" was found to be confusingly similar
with the "Big Mac" mark of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than the holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly similar. Under the dominancy test, courts give greater weight to
the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural and visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the dominancy test, concluded that the use by the
respondent therein of the word "MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion with therein
petitioners coffee products "MASTER ROAST" and "MASTER BLEND" and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing
similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the
marks in controversy as they are encountered in the marketplace. The totality or holistic test only relies on visual comparisons
between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that herein petitioners "MCDONALDS" and respondents
"MACJOY" marks are confusingly similar with each other such that an ordinary purchaser can conclude an association or relation
between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features. The first
letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which they are depicted i.e. in an
arch-like, capitalized and stylized manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of the consuming public.
Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big Mac" and
the rest of the MCDONALDS marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondents trademark
application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International Classification of
Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are similar if not identical to those covered by the respondents
application.
Thus, we concur with the IPOs findings that:
In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both McDonalds marks and the
MACJOY & DEVICE" easily attract the attention of would-be customers. Even non-regular customers of their fastfood restaurants
would readily notice the predominance of the "M" design, "Mc/Mac" prefixes shown in both marks. Such that the common
awareness or perception of customers that the trademarks McDonalds mark and MACJOY & DEVICE are one and the same, or an
affiliate, or under the sponsorship of the other is not far-fetched.
The differences and variations in styles as the device depicting a head of chicken with cap and bowtie and wings sprouting on both
sides of the chicken head, the heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in contrast to the arch-like "M"
and the one-styled gothic letters in McDonalds marks are of no moment. These minuscule variations are overshadowed by the
appearance of the predominant features mentioned hereinabove.
Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in both marks, the inevitable conclusion is there is
confusing similarity between the trademarks Mc Donalds marks and "MACJOY AND DEVICE" especially considering the fact that
both marks are being used on almost the same products falling under Classes 29 and 30 of the International Classification of Goods
i.e. Food and ingredients of food.
With the existence of confusing similarity between the subject trademarks, the resulting issue to be resolved is who, as between the
parties, has the rightful claim of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law. However, once registered, not
only the marks validity but also the registrants ownership thereof is prima facie presumed.26
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision regarding the protection of industrial property of
foreign nationals in this country as embodied in the Paris Convention 28 under which the Philippines and the petitioners domicile, the
United States, are adherent-members, the petitioner was able to register its MCDONALDS marks successively, i.e., "McDonalds" in
04 October, 197129 ; the corporate logo which is the "M" or the golden arches design and the "McDonalds" with the "M" or golden
arches design both in 30 June 197730 ; and so on and so forth.31
On the other hand, it is not disputed that the respondents application for registration of its trademark "MACJOY & DEVICE" was
filed only on March 14, 1991 albeit the date of first use in the Philippines was December 7, 1987.32
Hence, from the evidence on record, it is clear that the petitioner has duly established its ownership of the mark/s.
Respondents contention that it was the first user of the mark in the Philippines having used "MACJOY & DEVICE" on its restaurant
business and food products since December, 1987 at Cebu City while the first McDonalds outlet of the petitioner thereat was
opened only in 1992, is downright unmeritorious. For the requirement of "actual use in commerce x x x in the Philippines" before one
may register a trademark, trade-name and service mark under the Trademark Law33 pertains to the territorial jurisdiction of the
Philippines and is not only confined to a certain region, province, city or barangay.
Likewise wanting in merit is the respondents claim that the petitioner cannot acquire ownership of the word "Mac" because it is a
personal name which may not be monopolized as a trademark as against others of the same name or surname. As stated earlier,
once a trademark has been registered, the validity of the mark is prima facie presumed. In this case, the respondent failed to
overcome such presumption. We agree with the observations of the petitioner regarding the respondents explanation that the word
"MACJOY" is based on the name of its presidents niece, Scarlett Yu Carcell. In the words of the petitioner:
First of all, Respondent failed to present evidence to support the foregoing claim which, at best, is a mere self-serving assertion.
Secondly, it cannot be denied that there is absolutely no connection between the name "Scarlett Yu Carcel" and "MacJoy" to merit
the coinage of the latter word. Even assuming that the word "MacJoy" was chosen as a term of endearment, fondness and affection
for a certain Scarlett Yu Carcel, allegedly the niece of Respondents president, as well as to supposedly bring good luck to
Respondents business, one cannot help but wonder why out of all the possible letters or combinations of letters available to
Respondent, its president had to choose and adopt a mark with the prefix "Mac" as the dominant feature thereof. A more plausible
explanation perhaps is that the niece of Respondents president was fond of the food products and services of the Respondent, but
that is beside the point." 34
By reason of the respondents implausible and insufficient explanation as to how and why out of the many choices of words it could
have used for its trade-name and/or trademark, it chose the word "MACJOY," the only logical conclusion deducible therefrom is that
the respondent would want to ride high on the established reputation and goodwill of the MCDONALDs marks, which, as applied to
petitioners restaurant business and food products, is undoubtedly beyond question.
Thus, the IPO was correct in rejecting and denying the respondents application for registration of the trademark "MACJOY &
DEVICE." As this Court ruled in Faberge Inc. v. IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and Villapanta: 36
When one applies for the registration of a trademark or label which is almost the same or very closely resembles one already used
and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the
owner and user of a previously registered label or trademark, this not only to avoid confusion on the part of the public, but also to
protect an already used and registered trademark and an established goodwill.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision and Resolution of the Court of Appeals in CA-
G.R. SP NO. 57247, are REVERSED and SET ASIDE and the Decision of the Intellectual Property Office in Inter Partes Case No.
3861 is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
MANUEL C. ESPIRITU, JR., AUDIE G.R. No. 170891
LLONA, FREIDA F. ESPIRITU,
CARLO F. ESPIRITU, RAFAEL F.
ESPIRITU, ROLANDO M. MIRABUNA,
HERMILYN A. MIRABUNA, KIM
ROLAND A. MIRABUNA, KAYE
ANN A. MIRABUNA, KEN RYAN A.
MIRABUNA, JUANITO P. DE
CASTRO, GERONIMA A. ALMONITE
and MANUEL C. DEE, who are the
officers and directors of BICOL GAS

REFILLING PLANT CORPORATION,
Petitioners, Present:
Carpio, J., Chairperson,
- versus - Leonardo-De Castro,

Brion,
Del Castillo, and
Abad, JJ.
PETRON CORPORATION and
CARMEN J. DOLOIRAS, doing
business under the name KRISTINA Promulgated:
PATRICIA ENTERPRISES,
Respondents. November 24, 2009
x ----------------------------------------------------------------------------------------
x
DECISION
ABAD, J.:
This case is about the offense or offenses that arise from the
reloading of the liquefied petroleum gas cylinder container of one
brand with the liquefied petroleum gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed

liquefied petroleum gas (LPG) in cylinder tanks that carried its
trademark Gasul.[1] Respondent Carmen J. Doloiras owned and
operated Kristina Patricia Enterprises (KPE), the exclusive
distributor of Gasul LPGs in the whole of Sorsogon. [2] Jose Nelson
Doloiras (Jose) served as KPEs manager.
Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in

the business of selling and distributing LPGs in Sorsogon but
theirs carried the trademark Bicol Savers Gas.Petitioner Audie
Llona managed Bicol Gas.
In the course of trade and competition, any given distributor

of LPGs at times acquired possession of LPG cylinder tanks
belonging to other distributors operating in the same area. They
called these captured cylinders. According to Jose, KPEs manager,
in April 2001 Bicol Gas agreed with KPE for the swapping of
captured cylinders since one distributor could not refill captured
cylinders with its own brand of LPG. At one time, in the course of
implementing this arrangement, KPEs Jose visited the Bicol Gas
refilling plant. While there, he noticed several Gasul tanks in Bicol
Gas possession. He requested a swap but Audie Llona of Bicol Gas
replied that he first needed to ask the permission of the Bicol Gas
owners. That permission was given and they had a swap involving
around 30 Gasul tanks held by Bicol Gas in exchange for assorted
tanks held by KPE.
KPEs Jose noticed, however, that Bicol Gas still had a number
of Gasul tanks in its yard. He offered to make a swap for these but
Llona declined, saying the Bicol Gas owners wanted to send those
tanks to Batangas. Later Bicol Gas told Jose that it had no more
Gasul tanks left in its possession. Jose observed on almost a daily
basis, however, that Bicol Gas trucks which plied the streets of
the province carried a load of Gasul tanks. He noted that KPEs
volume of sales dropped significantly from June to July 2001.
On August 4, 2001 KPEs Jose saw a particular Bicol Gas truck

on the Maharlika Highway. While the truck carried mostly Bicol
Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and
one 50-kg Shellane tank. Jose followed the truck and when it
stopped at a store, he asked the driver, Jun Leorena, and the Bicol
Gas sales representative, Jerome Misal, about the Gasul tank in
their truck. They said it was empty but, when Jose turned open its
valve, he noted that it was not. Misal and Leorena then admitted
that the Gasul and Shellane tanks on their truck belonged to a
customer who had them filled up by Bicol Gas. Misal then
mentioned that his manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint [3] for

violations of Republic Act (R.A.) 623 (illegally filling up registered
cylinder tanks), as amended, and Sections 155 (infringement of
trade marks) and 169.1 (unfair competition) of the Intellectual
Property Code (R.A. 8293). The complaint charged the following:
Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and
several John and Jane Does, described as the directors, officers,
and stockholders of Bicol Gas. These directors, officers, and
stockholders were eventually identified during the preliminary
investigation.
Subsequently, the provincial prosecutor ruled that there was

probable cause only for violation of R.A. 623 (unlawfully filling up
registered tanks) and that only the four Bicol Gas employees,
Mirabena, Misal, Leorena, and petitioner Llona, could be
charged. The charge against the other petitioners who were the
stockholders and directors of the company was dismissed.
Dissatisfied, Petron and KPE filed a petition for review with

the Office of the Regional State Prosecutor, Region V, which
initially denied the petition but partially granted it on motion for
reconsideration. The Office of the Regional State Prosecutor
ordered the filing of additional informations against the four
employees of Bicol Gas for unfair competition. It ruled, however,
that no case for trademark infringement was present. The
Secretary of Justice denied the appeal of Petron and KPE and their
motion for reconsideration.
Undaunted, Petron and KPE filed a special civil action

for certiorari with the Court of Appeals[4] but the Bicol Gas
employees and stockholders concerned opposed it, assailing the
inadequacy in its certificate of non-forum shopping, given that
only Atty. Joel Angelo C. Cruz signed it on behalf of Petron. In its
Decision[5] dated October 17, 2005, the Court of Appeals ruled,
however, that Atty. Cruzs certification constituted sufficient
compliance. As to the substantive aspect of the case, the Court of
Appeals reversed the Secretary of Justices ruling. It held that
unfair competition does not necessarily absorb trademark
infringement. Consequently, the court ordered the filing of
additional charges of trademark infringement against the
concerned Bicol Gas employees as well.
Since the Bicol Gas employees presumably acted under the

direct order and control of its owners, the Court of Appeals also
ordered the inclusion of the stockholders of Bicol Gas in the
various charges, bringing to 16 the number of persons to be
charged, now including petitioners Manuel C. Espiritu, Jr., Freida F.
Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna,
Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A.
Mirabuna, Ken Ryan A. Mirabuna, Juanito P. de Castro, Geronima A.
Almonite, and Manuel C. Dee (together with Audie Llona),
collectively, petitioners Espiritu, et al. The court denied the
motion for reconsideration of these employees and stockholders
in its Resolution dated January 6, 2006, hence, the present
petition for review[6] before this Court.
The Issues Presented
The petition presents the following issues:
1. Whether or not the certificate of non-forum

shopping that accompanied the petition filed with the
Court of Appeals, signed only by Atty. Cruz on behalf of
Petron, complied with what the rules require;
2. Whether or not the facts of the case warranted

the filing of charges against the Bicol Gas people for:
a) Filling up the LPG tanks registered to

another manufacturer without the latters
consent in violation of R.A. 623, as amended;
b) Trademark infringement consisting in

Bicol Gas use of a trademark that is
confusingly similar to Petrons registered
Gasul trademark in violation of section 155
also of R.A. 8293; and
c) Unfair competition consisting in

passing off Bicol Gas-produced LPGs for
Petron-produced Gasul LPG in violation of
Section 168.3 of R.A. 8293.
The Courts Rulings

First. Petitioners Espiritu, et al. point out that the certificate
of non-forum shopping that respondents KPE and Petron attached
to the petition they filed with the Court of Appeals was
inadequate, having been signed only by Petron, through Atty.
Cruz.
But, while procedural requirements such as that of submittal

of a certificate of non-forum shopping cannot be totally
disregarded, they may be deemed substantially complied with
under justifiable circumstances.[7] One of these circumstances is
where the petitioners filed a collective action in which they share
a common interest in its subject matter or raise a common cause
of action. In such a case, the certification by one of the petitioners
may be deemed sufficient.[8]
Here, KPE and Petron shared a common cause of action

against petitioners Espiritu, et al., namely, the violation of their
proprietary rights with respect to the use of Gasul tanks and
trademark. Furthermore, Atty. Cruz said in his certification that he
was executing it for and on behalf of the Corporation, and co-
petitioner Carmen J. Doloiras.[9] Thus, the object of the
requirement to ensure that a party takes no recourse to multiple
forums was substantially achieved. Besides, the failure of KPE to
sign the certificate of non-forum shopping does not render the
petition defective with respect to Petron which signed it through
Atty. Cruz.[10] The Court of Appeals, therefore, acted correctly in
giving due course to the petition before it.
Second. The Court of Appeals held that under the facts of

the case, there is probable cause that petitioners Espiritu, et al.
committed all three crimes: (a) illegally filling up an LPG tank
registered to Petron without the latters consent in violation of R.A.
623, as amended; (b) trademark infringement which consists in
Bicol Gas use of a trademark that is confusingly similar to Petrons
registered Gasul trademark in violation of Section 155 of R.A.
8293; and (c) unfair competition which consists in petitioners
Espiritu, et al. passing off Bicol Gas-produced LPGs for Petron-
produced Gasul LPG in violation of Section 168.3 of R.A. 8293.
Here, the complaint adduced at the preliminary investigation

shows that the one 50-kg Petron Gasul LPG tank found on the
Bicol Gas truck belonged to [a Bicol Gas] customer who had the
same filled up by BICOL GAS.[11] In other words, the customer had
that one Gasul LPG tank brought to Bicol Gas for refilling and the
latter obliged.
R.A. 623, as amended,[12] punishes any person who, without

the written consent of the manufacturer or seller of gases
contained in duly registered steel cylinders or tanks, fills the steel
cylinder or tank, for the purpose of sale, disposal or trafficking,
other than the purpose for which the manufacturer or seller
registered the same. This was what happened in this case,
assuming the allegations of KPEs manager to be true. Bicol Gas
employees filled up with their firms gas the tank registered to
Petron and bearing its mark without the latters written
authority. Consequently, they may be prosecuted for that offense.
But, as for the crime of trademark infringement, Section 155

of R.A. 8293 (in relation to Section 170 [13]) provides that it is
committed by any person who shall, without the consent of the
owner of the registered mark:
1. Use in commerce any reproduction, counterfeit, copy or colorable

imitation of a registered mark or the same container or a dominant feature thereof
in connection with the sale, offering for sale, distribution, advertising of any
goods or services including other preparatory steps necessary to carry out the sale
of any goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive; or
2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a
dominant feature thereof and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive.
KPE and Petron have to show that the alleged infringer, the
responsible officers and staff of Bicol Gas, used Petrons Gasul
trademark or a confusingly similar trademark on Bicol Gas tanks
with intent to deceive the public and defraud its competitor as to
what it is selling.[14] Examples of this would be the acts of an
underground shoe manufacturer in Malabon producing Nike
branded rubber shoes or the acts of a local shirt company with no
connection to La Coste, producing and selling shirts that bear the
stitched logos of an open-jawed alligator.
Here, however, the allegations in the complaint do not show

that Bicol Gas painted on its own tanks Petrons Gasul trademark
or a confusingly similar version of the same to deceive its
customers and cheat Petron. Indeed, in this case, the one tank
bearing the mark of Petron Gasul found in a truck full of Bicol Gas
tanks was a genuine Petron Gasul tank, more of a captured
cylinder belonging to competition. No proof has been shown that
Bicol Gas has gone into the business of distributing imitation
Petron Gasul LPGs.
As to the charge of unfair competition, Section 168.3 (a) of

R.A. 8293 (also in relation to Section 170) describes the acts
constituting the offense as follows:
168.3. In particular, and without in any way limiting the scope of

protection against unfair competition, the following shall be deemed guilty of
unfair competition:
(a) Any person, who is selling his goods
and gives them the general appearance of
goods of another manufacturer or dealer,
either as to the goods themselves or in the
wrapping of the packages in which they are
contained, or the devices or words thereon, or
in any other feature of their appearance, which
would be likely to influence purchasers to
believe that the goods offered are those of a
manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise
clothes the goods with such appearance as
shall deceive the public and defraud another of
his legitimate trade, or any subsequent vendor
of such goods or any agent of any vendor
engaged in selling such goods with a like
purpose;
Essentially, what the law punishes is the act of giving ones

goods the general appearance of the goods of another, which
would likely mislead the buyer into believing that such goods
belong to the latter. Examples of this would be the act of
manufacturing or selling shirts bearing the logo of an alligator,
similar in design to the open-jawed alligator in La Coste shirts,
except that the jaw of the alligator in the former is closed, or the
act of a producer or seller of tea bags with red tags showing the
shadow of a black dog when his competitor is producing or selling
popular tea bags with red tags showing the shadow of a black cat.
Here, there is no showing that Bicol Gas has been giving its
LPG tanks the general appearance of the tanks of Petrons
Gasul. As already stated, the truckfull of Bicol Gas tanks that the
KPE manager arrested on a road in Sorsogon just happened to
have mixed up with them one authentic Gasul tank that belonged
to Petron.
The only point left is the question of the liability of the
stockholders and members of the board of directors of Bicol Gas
with respect to the charge of unlawfully filling up a steel cylinder
or tank that belonged to Petron. The Court of Appeals ruled that
they should be charged along with the Bicol Gas employees who
were pointed to as directly involved in overt acts constituting the
offense.
Bicol Gas is a corporation. As such, it is an entity separate

and distinct from the persons of its officers, directors, and
stockholders. It has been held, however, that corporate officers or
employees, through whose act, default or omission the
corporation commits a crime, may themselves be individually
held answerable for the crime.[15]
Jose claimed in his affidavit that, when he negotiated the

swapping of captured cylinders with Bicol Gas, its manager,
petitioner Audie Llona, claimed that he would be consulting with
the owners of Bicol Gas about it. Subsequently, Bicol Gas declined
the offer to swap cylinders for the reason that the owners wanted
to send their captured cylinders to Batangas. The Court of
Appeals seized on this as evidence that the employees of Bicol
Gas acted under the direct orders of its owners and that the
owners of Bicol Gas have full control of the operations of the
business.[16]
The owners of a corporate organization are its stockholders

and they are to be distinguished from its directors and
officers. The petitioners here, with the exception of Audie Llona,
are being charged in their capacities as stockholders of Bicol
Gas. But the Court of Appeals forgets that in a corporation, the
management of its business is generally vested in its board of
directors, not its stockholders.[17] Stockholders are basically
investors in a corporation. They do not have a hand in running the
day-to-day business operations of the corporation unless they are
at the same time directors or officers of the corporation. Before a
stockholder may be held criminally liable for acts committed by
the corporation, therefore, it must be shown that he had
knowledge of the criminal act committed in the name of the
corporation and that he took part in the same or gave his consent
to its commission, whether by action or inaction.
The finding of the Court of Appeals that the employees could

not have committed the crimes without the consent, [abetment],
permission, or participation of the owners of Bicol Gas [18] is a
sweeping speculation especially since, as demonstrated above,
what was involved was just one Petron Gasul tank found in a truck
filled with Bicol Gas tanks.Although the KPE manager heard
petitioner Llona say that he was going to consult the owners of
Bicol Gas regarding the offer to swap additional captured
cylinders, no indication was given as to which Bicol Gas
stockholders Llona consulted. It would be unfair to charge all the
stockholders involved, some of whom were proved to be minors.
[19]
No evidence was presented establishing the names of the
stockholders who were charged with running the operations of
Bicol Gas. The complaint even failed to allege who among the
stockholders sat in the board of directors of the company or
served as its officers.
The Court of Appeals of course specifically mentioned

petitioner stockholder Manuel C. Espiritu, Jr. as the registered
owner of the truck that the KPE manager brought to the police for
investigation because that truck carried a tank of Petron
Gasul. But the act that R.A. 623 punishes is the unlawful filling up
of registered tanks of another. It does not punish the act of
transporting such tanks. And the complaint did not allege that the
truck owner connived with those responsible for filling up that
Gasul tank with Bicol Gas LPG.
WHEREFORE, the Court REVERSES and SETS ASIDE the

Decision of the Court of Appeals in CA-G.R. SP 87711 dated
October 17, 2005 as well as its Resolution dated January 6, 2006,
the Resolutions of the Secretary of Justice dated March 11, 2004
and August 31, 2004, and the Order of the Office of the Regional
State Prosecutor, Region V, dated February 19, 2003. The
Court REINSTATES the Resolution of the Office of the Provincial
Prosecutor of Sorsogon in I.S. 2001-9231 (inadvertently referred in
the Resolution itself as I.S. 2001-9234), dated February 26,
2002. The names of petitioners Manuel C. Espiritu, Jr., Freida F.
Espititu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna,
Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A.
Mirabuna, Ken Ryan A. Mirabuna, Juanito P. De Castro, Geronima
A. Almonite and Manuel C. Dee are ORDERED excluded from the
charge.
SO ORDERED.
SKECHERS, U.S.A., INC., Petitioner, G.R. No. 164321
- versus - Present:
INTER PACIFIC INDUSTRIAL

TRADING CORP., and/or INTER CARPIO, J., Chairperson,
PACIFIC TRADING CORP. and/or NACHURA,
STRONG SPORTS GEAR CO., PERALTA,
LTD., and/or STRONGSHOES ABAD, and
WAREHOUSE and/or STRONG MENDOZA, JJ.
FASHION SHOES TRADING and/or
TAN TUAN HONG and/or VIOLETA
T. MAGAYAGA and/or JEFFREY R.
MORALES and/or any of its other
proprietor/s, directors, officers,
employees and/or occupants of its
premises located at S-7, Ed & Joes
Commercial Arcade, No. 153 Quirino
Avenue, Paraaque City,
Respondents.
x----------------------------------------------x
TRENDWORKS INTERNATIONAL
CORPORATION,
Petitioner-Intervenor,
- versus
INTER PACIFIC INDUSTRIAL

TRADING CORP. and/or INTER
PACIFIC TRADING CORP. and/or
STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES
WAREHOUSE and/or STRONG Promulgated:
FASHION SHOES TRADING and/or March 23, 2011
TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or
JEFFREY R. MORALES and/or any
of its other proprietor/s,
directors, officers, employees and/or
occupants of its premises located at S-
7, Ed & Joes Commercial Arcade, No.
153 Quirino Avenue, Paraaque City,
Respondents.
x--------------------------------------------------x
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for Reconsideration[1] filed by petitioner and
petitioner-intervenor from the Decision rendered in favor of respondents,
dated November 30, 2006.
At the outset, a brief narration of the factual and procedural antecedents that
transpired and led to the filing of the motions is in order.
The present controversy arose when petitioner filed with Branch 24 of the
Regional Trial Court (RTC) of Manila an application for the issuance of search
warrants against an outlet and warehouse operated by respondents for infringement
of trademark under Section 155, in relation to Section 170 of Republic Act No.
8293, otherwise known as the Intellectual Property Code of the Philippines.[2] In
the course of its business, petitioner has registered the trademark
SKECHERS[3] and the trademark S (within an oval design) [4] with the Intellectual
Property Office (IPO).
Two search warrants[5] were issued by the RTC and were served on the premises of
respondents. As a result of the raid, more than 6,000 pairs of shoes bearing the S
logo were seized.
Later, respondents moved to quash the search warrants, arguing that there was no
confusing similarity between petitioners Skechers rubber shoes and its Strong
rubber shoes.
On November 7, 2002, the RTC issued an Order [6] quashing the search warrants
and directing the NBI to return the seized goods. The RTC agreed with respondents
view that Skechers rubber shoes and Strong rubber shoes have glaring differences
such that an ordinary prudent purchaser would not likely be misled or confused in
purchasing the wrong article.
Aggrieved, petitioner filed a petition for certiorari[7] with the Court of Appeals
(CA) assailing the RTC Order. On November 17, 2003, the CA issued a
Decision[8] affirming the ruling of the RTC.
Subsequently, petitioner filed the present petition[9] before this Court which puts
forth the following assignment of errors:
A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION IN CONSIDERING MATTERS OF
DEFENSE IN A CRIMINAL TRIAL FOR TRADEMARK
INFRINGEMENT IN PASSING UPON THE VALIDITY OF THE
SEARCH WARRANT WHEN IT SHOULD HAVE LIMITED
ITSELF TO A DETERMINATION OF WHETHER THE TRIAL
COURT COMMITTED GRAVE ABUSE OF DISCRETION IN
QUASHING THE SEARCH WARRANTS.
B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN FINDING THAT RESPONDENTS
ARE NOT GUILTY OF TRADEMARK INFRINGEMENT IN THE
CASE WHERE THE SOLE TRIABLE ISSUE IS THE EXISTENCE
OF PROBABLE CAUSE TO ISSUE A SEARCH WARRANT.[10]
In the meantime, petitioner-intervenor filed a Petition-in-Intervention [11] with
this Court claiming to be the sole licensed distributor of Skechers products here in
the Philippines.
On November 30, 2006, this Court rendered a Decision [12] dismissing the
petition.
Both petitioner and petitioner-intervenor filed separate motions for

reconsideration.
In petitioners motion for reconsideration, petitioner moved for a

reconsideration of the earlier decision on the following grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS

OF THIS CASE DUE TO THE SIGNIFICANCE AND
REPERCUSSIONS OF ITS DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH
THE UNAUTHORIZED REPRODUCTIONS OF THE S
TRADEMARK OWNED BY PETITIONER WERE INTENDED
FOR DISTRIBUTION IN THE PHILIPPINE MARKET TO THE
DETRIMENT OF PETITIONER RETURNING THE GOODS TO
RESPONDENTS WILL ADVERSELY AFFECT THE GOODWILL
AND REPUTATION OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT OF
APPEALS BOTH ACTED WITH GRAVE ABUSE OF
DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-
EVALUATE THE EVIDENCE PRESENTED DURING THE
SEARCH WARRANT APPLICATION PROCEEDINGS.
(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS
CASE, AS IT IS BASED ON A DIFFERENT FACTUAL MILIEU.
PRELIMINARY FINDING OF GUILT (OR ABSENCE
THEREOF) MADE BY THE SEARCH WARRANT COURT AND
THE COURT OF APPEALS WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS
DISCRETION. THE LAW IS CLEAR. THE DOMINANCY TEST
SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF
JURISDICTION.[13]
On the other hand, petitioner-intervenors motion for reconsideration raises

the following errors for this Courts consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH WARRANT

COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE IN ADOPTING THE ALREADY-
REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE
OF CONFUSING SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH WARRANT
COURT ACTED CONTRARY TO LAW IN HOLDING THAT
THERE IS NO PROBABLE CAUSE FOR TRADEMARK
INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL
COURTS DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS WHEN IT UPHELD
THE QUASHAL OF THE SEARCH WARRANT ON THE
BASIS SOLELY OF A FINDING THAT THERE IS NO
CONFUSING SIMILARITY.[14]
A perusal of the motions submitted by petitioner and petitioner-intervenor

would show that the primary issue posed by them dwells on the issue of whether or
not respondent is guilty of trademark infringement.
After a thorough review of the arguments raised herein, this Court

reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair competition is

Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No. 8293 states:
Remedies; Infringement. Any person who shall, without the

consent of the owner of the registered mark:
155.1. Use in commerce any reproduction,

counterfeit, copy, or colorable imitation of a registered
mark or the same container or a dominant feature
thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of
any goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or
to deceive; or
155.2. Reproduce, counterfeit, copy or colorably

imitate a registered mark or a dominant feature
thereof and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used
in commerce upon or in connection with the sale, offering
for sale, distribution, or advertising of goods or services on
or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive, shall be
liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the
infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or
services using the infringing material.[15]
The essential element of infringement under R.A. No. 8293 is that the infringing
mark is likely to cause confusion. In determining similarity and likelihood of
confusion, jurisprudence has developed tests the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the
prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it required that the mark sought
to be registered suggests an effort to imitate. Given more consideration are the
aural and visual impressions created by the marks on the buyers of goods, giving
little weight to factors like prices, quality, sales outlets, and market segments.[16]
In contrast, the Holistic or Totality Test necessitates a consideration of the

entirety of the marks as applied to the products, including the labels and packaging,
in determining confusing similarity. The discerning eye of the observer must focus
not only on the predominant words, but also on the other features appearing on
both labels so that the observer may draw conclusion on whether one is
confusingly similar to the other.[17]
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz.: (1) confusion of goods
(product confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where, although the goods of
the parties are different, the product, the mark of which registration is applied for
by one party, is such as might reasonably be assumed to originate with the
registrant of an earlier product, and the public would then be deceived either into
that belief or into the belief that there is some connection between the two parties,
though inexistent.[18]
Applying the Dominancy Test to the case at bar, this Court finds that the use
of the stylized S by respondent in its Strong rubber shoes infringes on the mark
already registered by petitioner with the IPO. While it is undisputed that
petitioners stylized S is within an oval design, to this Courts mind, the dominant
feature of the trademark is the stylized S, as it is precisely the stylized S which
catches the eye of the purchaser. Thus, even if respondent did not use an oval
design, the mere fact that it used the same stylized S, the same being the dominant
feature of petitioners trademark, already constitutes infringement under the
Dominancy Test.
This Court cannot agree with the observation of the CA that the use of the
letter S could hardly be considered as highly identifiable to the products of
petitioner alone. The CA even supported its conclusion by stating that the letter S
has been used in so many existing trademarks, the most popular of which is the
trademark S enclosed by an inverted triangle, which the CA says is identifiable to
Superman. Such reasoning, however, misses the entire point, which is that
respondent had used a stylized S, which is the same stylized S which petitioner has
a registered trademark for. The letter S used in the Superman logo, on the other
hand, has a block-like tip on the upper portion and a round elongated tip on the
lower portion. Accordingly, the comparison made by the CA of the letter S used in
the Superman trademark with petitioners stylized S is not appropriate to the case at
bar.
Furthermore, respondent did not simply use the letter S, but it appears to this
Court that based on the font and the size of the lettering, the stylized S utilized by
respondent is the very same stylized S used by petitioner; a stylized S which is
unique and distinguishes petitioners trademark. Indubitably, the likelihood of
confusion is present as purchasers will associate the respondents use of the stylized
S as having been authorized by petitioner or that respondents product is connected
with petitioners business.
Both the RTC and the CA applied the Holistic Test in ruling that respondent
had not infringed petitioners trademark. For its part, the RTC noted the following
supposed dissimilarities between the shoes, to wit:
1. The mark S found in Strong Shoes is not enclosed in an oval design.

2. The word Strong is conspicuously placed at the backside and insoles.
3. The hang tags and labels attached to the shoes bears the word Strong
for respondent and Skechers U.S.A. for private complainant;
4. Strong shoes are modestly priced compared to the costs of Skechers
Shoes.[19]
While there may be dissimilarities between the appearances of the shoes,

to this Courts mind such dissimilarities do not outweigh the stark and blatant
similarities in their general features. As can be readily observed by simply
comparing petitioners Energy[20] model and respondents Strong[21] rubber shoes,
respondent also used the color scheme of blue, white and gray utilized by
petitioner. Even the design and wavelike pattern of the midsole and outer sole of
respondents shoes are very similar to petitioners shoes, if not exact patterns
thereof. At the side of the midsole near the heel of both shoes are two elongated
designs in practically the same location. Even the outer soles of both shoes have
the same number of ridges, five at the back and six in front. On the side of
respondents shoes, near the upper part, appears the stylized S, placed in the exact
location as that of the stylized S on petitioners shoes. On top of the "tongue" of
both shoes appears the stylized S in practically the same location and size.
Moreover, at the back of petitioners shoes, near the heel counter, appears Skechers
Sport Trail written in white lettering. However, on respondents shoes appears
Strong Sport Trail noticeably written in the same white lettering, font size,
direction and orientation as that of petitioners shoes. On top of the heel collar of
petitioners shoes are two grayish-white semi-transparent circles. Not surprisingly,
respondents shoes also have two grayish-white semi-transparent circles in the exact
same location.
Based on the foregoing, this Court is at a loss as to how the RTC and the
CA, in applying the holistic test, ruled that there was no colorable imitation, when
it cannot be any more clear and apparent to this Court that there is colorable
imitation. The dissimilarities between the shoes are too trifling and frivolous that
it is indubitable that respondents products will cause confusion and mistake in the
eyes of the public. Respondents shoes may not be an exact replica of petitioners
shoes, but the features and overall design are so similar and alike that confusion is
highly likely.
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc.,

[22]
this Court, in a case for unfair competition, had opined that even if not all the
details are identical, as long as the general appearance of the two products are such
that any ordinary purchaser would be deceived, the imitator should be liable,
to wit:
From said examination, We find the shoes manufactured by

defendants to contain, as found by the trial court, practically all the
features of those of the plaintiff Converse Rubber Corporation and
manufactured, sold or marketed by plaintiff Edwardson Manufacturing
Corporation, except for their respective brands, of course. We fully agree
with the trial court that "the respective designs, shapes, the colors of the
ankle patches, the bands, the toe patch and the soles of the two products
are exactly the same ... (such that) at a distance of a few meters, it is
impossible to distinguish "Custombuilt" from "Chuck Taylor." These
elements are more than sufficient to serve as basis for a charge of unfair
competition. Even if not all the details just mentioned were identical,
with the general appearances alone of the two products, any ordinary, or
even perhaps even a not too perceptive and discriminating customer
could be deceived, and, therefore, Custombuilt could easily be passed off
for Chuck Taylor. Jurisprudence supports the view that under such
circumstances, the imitator must be held liable. x x x [23]
Neither can the difference in price be a complete defense in trademark

infringement. In McDonalds Corporation v. L.C. Big Mak Burger. Inc.,[24] this
Court held:
Modern law recognizes that the protection to which the owner of

a trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be misled
into thinking that the complaining party has extended his business into
the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the
normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577). x x x[25]
Indeed, the registered trademark owner may use its mark on the same or
similar products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market. [26] The
purchasing public might be mistaken in thinking that petitioner had ventured into a
lower market segment such that it is not inconceivable for the public to think that
Strong or Strong Sport Trail might be associated or connected with petitioners
brand, which scenario is plausible especially since both petitioner and respondent
manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is intended not

only to preserve the goodwill and reputation of the business established on the
goods bearing the mark through actual use over a period of time, but also to
safeguard the public as consumers against confusion on these goods. [27] While
respondents shoes contain some dissimilarities with petitioners shoes, this Court
cannot close its eye to the fact that for all intents and purpose, respondent had
deliberately attempted to copy petitioners mark and overall design and features of
the shoes. Let it be remembered, that defendants in cases of infringement do not
normally copy but only make colorable changes.[28] The most successful form of
copying is to employ enough points of similarity to confuse the public, with
enough points of difference to confuse the courts.[29]
WHEREFORE, premises considered, the Motion for Reconsideration

is GRANTED. The Decision dated November 30,
2006 is RECONSIDERED and SET ASIDE.
SO ORDERED.
TANDUAY DISTILLERS, INC., G.R. NO. 164324
Petitioner,
PRESENT:
- versus - PUNO, C.J., CHAIRPERSON,

CARPIO,
CORONA,
LEONARDO-DE CASTRO,
GINEBRA SAN MIGUEL, INC., AND
RESPONDENT. BERSAMIN, JJ.
PROMULGATED:
AUGUST 14, 2009
X--------------------------------------------------X
DECISION
CARPIO, J.:
The Case
TANDUAY DISTILLERS, INC. (TANDUAY) FILED THIS PETITION FOR
REVIEW ON CERTIORARI[1] ASSAILING THE COURT OF APPEALS
DECISION DATED 9 JANUARY 2004[2] AS WELL AS THE RESOLUTION
DATED 2 JULY 2004[3] IN CA-G.R. SP NO. 79655 DENYING THE MOTION
FOR RECONSIDERATION. IN THE ASSAILED DECISION, THE COURT OF
APPEALS (CA) AFFIRMED THE REGIONAL TRIAL COURTS
ORDERS[4] DATED 23 SEPTEMBER 2003 AND 17 OCTOBER 2003 WHICH
RESPECTIVELY GRANTED GINEBRA SAN MIGUEL, INC.S (SAN MIGUEL)
PRAYER FOR THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER
(TRO) AND WRIT OF PRELIMINARY INJUNCTION. THE REGIONAL TRIAL
COURT OF MANDALUYONG CITY, BRANCH 214 (TRIAL COURT),
ENJOINED TANDUAY FROM COMMITTING THE ACTS COMPLAINED OF,
AND, SPECIFICALLY, TO CEASE AND DESIST FROM MANUFACTURING,
DISTRIBUTING, SELLING, OFFERING FOR SALE, ADVERTISING, OR
OTHERWISE USING IN COMMERCE THE MARK GINEBRA, AND
MANUFACTURING, PRODUCING, DISTRIBUTING, OR OTHERWISE
DEALING IN GIN PRODUCTS WHICH HAVE THE GENERAL
APPEARANCE OF, AND WHICH ARE CONFUSINGLY SIMILAR WITH, SAN
MIGUELS MARKS, BOTTLE DESIGN, AND LABEL FOR ITS GIN
PRODUCTS.[5]
THE FACTS
Tanduay, a corporation organized and existing under Philippine laws, has been
engaged in the liquor business since 1854. In 2002, Tanduay developed a new gin
product distinguished by its sweet smell, smooth taste, and affordable price.
Tanduay claims that it engaged the services of an advertising firm to develop a
brand name and a label for its new gin product. The brand name eventually chosen
was Ginebra Kapitan with the representation of a revolutionary Kapitan on
horseback as the dominant feature of its label. Tanduay points out that the label
design of Ginebra Kapitan in terms of color scheme, size and arrangement of text,
and other label features were precisely selected to distinguish it from the leading
gin brand in the Philippine market, Ginebra San Miguel. Tanduay also states that
the Ginebra Kapitan bottle uses a resealable twist cap to distinguish it from
Ginebra San Miguel and other local gin products with bottles which use the crown
cap or tansan.[6]
AFTER FILING THE TRADEMARK APPLICATION FOR GINEBRA

KAPITAN WITH THE INTELLECTUAL PROPERTY OFFICE (IPO) AND
AFTER SECURING THE APPROVAL OF THE PERMIT TO MANUFACTURE
AND SELL GINEBRA KAPITAN FROM THE BUREAU OF INTERNAL
REVENUE, TANDUAY BEGAN SELLING GINEBRA KAPITAN IN
NORTHERN AND SOUTHERN LUZON AREAS IN MAY 2003. IN JUNE 2003,
GINEBRA KAPITAN WAS ALSO LAUNCHED IN METRO MANILA.[7]
ON 13 AUGUST 2003, TANDUAY RECEIVED A LETTER FROM SAN

MIGUELS COUNSEL. THE LETTER INFORMED TANDUAY TO
IMMEDIATELY CEASE AND DESIST FROM USING THE MARK GINEBRA
AND FROM COMMITTING ACTS THAT VIOLATE SAN MIGUELS
INTELLECTUAL PROPERTY RIGHTS.[8]
ON 15 AUGUST 2003, SAN MIGUEL FILED A COMPLAINT FOR
TRADEMARK INFRINGEMENT, UNFAIR COMPETITION AND DAMAGES,
WITH APPLICATIONS FOR ISSUANCE OF TRO AND WRIT OF
PRELIMINARY INJUNCTION AGAINST TANDUAY BEFORE THE
REGIONAL TRIAL COURT OF MANDALUYONG. THE CASE WAS
RAFFLED TO BRANCH 214 AND DOCKETED AS IP CASE NO. MC-03-01
AND CIVIL CASE NO. MC-03-073.[9]
ON 25 AND 29 AUGUST AND 4 SEPTEMBER 2003, THE TRIAL COURT

CONDUCTED HEARINGS ON THE TRO. SAN MIGUEL SUBMITTED FIVE
AFFIDAVITS, BUT ONLY ONE AFFIANT, MERCEDES ABAD, WAS
PRESENTED FOR CROSS-EXAMINATION BECAUSE THE TRIAL COURT
RULED THAT SUCH EXAMINATION WOULD BE INCONSISTENT WITH
THE SUMMARY NATURE OF A TRO HEARING.[10] SAN MIGUEL
SUBMITTED THE FOLLOWING PIECES OF EVIDENCE:[11]
1. Affidavit of Mercedes Abad, President and Managing Director of

the research firm NFO Trends, Inc. (NFO Trends), to present, among
others, market survey results which prove that gin drinkers associate
the term Ginebra with San Miguel, and that the consuming public is
being misled that Ginebra Kapitan is a product of San Miguel;
2. MARKET SURVEY RESULTS CONDUCTED BY NFO TRENDS TO
DETERMINE THE BRAND ASSOCIATIONS OF THE MARK GINEBRA AND
TO PROVE THAT THE CONSUMING PUBLIC IS CONFUSED AS TO THE
MANUFACTURER OF GINEBRA KAPITAN;
3. AFFIDAVIT OF RAMON CRUZ, SAN MIGUELS GROUP PRODUCT
MANAGER, TO PROVE, AMONG OTHERS, THE PRIOR RIGHT OF SAN
MIGUEL TO THE MARK GINEBRA AS SHOWN IN VARIOUS
APPLICATIONS FOR, AND REGISTRATIONS OF, TRADEMARKS THAT
CONTAIN THE MARK GINEBRA. HIS AFFIDAVIT INCLUDED
DOCUMENTS SHOWING THAT THE MARK GINEBRA HAS BEEN USED
ON SAN MIGUELS GIN PRODUCTS SINCE 1834;
4. AFFIDAVITS OF LEOPOLDO GUANZON, JR., SAN MIGUELS TRADE
AND PROMO MERCHANDISING HEAD FOR NORTH LUZON AREA, AND
JUDERICK CRESCINI, SAN MIGUELS DISTRICT SALES SUPERVISOR FOR
SOUTH LUZON-EAST AREA, TO PROVE, AMONG OTHERS, THAT
TANDUAYS SALESMEN OR DISTRIBUTORS MISREPRESENT GINEBRA
KAPITAN AS SAN MIGUELS PRODUCT AND THAT NUMEROUS
RETAILERS OF SAN MIGUELS GIN PRODUCTS ARE CONFUSED AS TO
THE MANUFACTURER OF GINEBRA KAPITAN; AND
5. AFFIDAVIT OF JOSE REGINALD PASCUAL, SAN MIGUELS DISTRICT
SALES SUPERVISOR FOR THE NORTH-GREATER MANILA AREA, TO
PROVE, AMONG OTHERS, THAT GIN DRINKERS CONFUSE SAN MIGUEL
TO BE THE MANUFACTURER OF GINEBRA KAPITAN DUE TO THE USE
OF THE DOMINANT FEATURE GINEBRA.
Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which
motion was denied by the trial court. Tanduay presented witnesses who affirmed
their affidavits in open court, as follows:[12]
1. RAMONCITO BUGIA, GENERAL SERVICES MANAGER OF
TANDUAY. ATTACHED TO HIS AFFIDAVIT WERE VARIOUS
CERTIFICATES OF REGISTRATION OF TRADEMARKS
CONTAINING THE WORD GINEBRA OBTAINED BY TANDUAY
AND OTHER LIQUOR COMPANIES, TO PROVE THAT THE
WORD GINEBRA IS REQUIRED TO BE DISCLAIMED BY THE
IPO. THE AFFIDAVIT ALSO ATTESTED THAT THERE ARE
OTHER LIQUOR COMPANIES USING THE WORD GINEBRA AS
PART OF THEIR TRADEMARKS FOR GIN PRODUCTS ASIDE
FROM SAN MIGUEL AND TANDUAY.
2. HERBERT ROSALES, VICE PRESIDENT OF J. SALCEDO AND
ASSOCIATES, INC., THE ADVERTISING AND PROMOTIONS COMPANY
HIRED BY TANDUAY TO DESIGN THE LABEL OF GINEBRA KAPITAN.
HIS AFFIDAVIT ATTESTED THAT THE LABEL WAS DESIGNED TO MAKE
IT LOOK ABSOLUTELY DIFFERENT FROM THE GINEBRA SAN MIGUEL
LABEL.
ON 23 SEPTEMBER 2003, THE TRIAL COURT ISSUED A TRO

PROHIBITING TANDUAY FROM MANUFACTURING, SELLING AND
ADVERTISING GINEBRA KAPITAN.[13] THE DISPOSITIVE PORTION
READS IN PART:
WHEREFORE, the application for temporary restraining order is hereby

GRANTED and made effective immediately. Plaintiff is directed to post
a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5)
days from issuance hereof, otherwise, this restraining order shall lose its
efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons
and agents acting for and in behalf are enjoined to cease and desist from
manufacturing, distributing, selling, offering for sale and/or advertising
or otherwise using in commerce the mark GINEBRA KAPITAN which
employs, thereon, or in the wrappings, sundry items, cartons and
packages thereof, the mark GINEBRA as well as from using the bottle
design and labels for its gin products during the effectivity of this
temporary restraining order unless a contrary order is issued by this
Court.[14]
On 3 October 2003, Tanduay filed a petition for certiorari with the CA. [15] Despite
Tanduays Urgent Motion to Defer Injunction Hearing, the trial court continued to
conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why
no writ of preliminary injunction should be issued. [16] On 17 October 2003, the trial
court granted San Miguels application for the issuance of a writ of preliminary
injunction.[17] The dispositive portion of the Order reads:
WHEREFORE, the plaintiffs application for a writ of preliminary

injunction is GRANTED. Upon plaintiffs filing of an injunctive bond
executed to the defendant in the amount of P20,000,000.00
(TWENTY MILLION) PESOS, let a Writ of Preliminary Injunction
issue enjoining the defendant, its employees, agents, representatives,
dealers, retailers or assigns, and any all persons acting on its behalf,
from committing the acts complained of, and, specifically, to cease
and desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using in commerce the mark GINEBRA, and
manufacturing, producing, distributing or otherwise dealing in gin
products which have the general appearance of, and which are
confusingly similar with, plaintiffs marks, bottle design and label for
its gin products.
SO ORDERED.[18]
On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the

injunction order. On 10 November 2003, the CA issued a TRO enjoining the trial
court from implementing its injunction order and from further proceeding with the
case.[19] On 23 December 2003, the CA issued a resolution directing the parties to
appear for a hearing on 6 January 2004 to determine the need for the issuance of a
writ of preliminary injunction.[20]
ON 9 JANUARY 2004, THE CA RENDERED A DECISION DISMISSING

TANDUAYS PETITION AND SUPPLEMENTAL PETITION. ON 28 JANUARY
2004, TANDUAY MOVED FOR RECONSIDERATION WHICH WAS DENIED
IN A RESOLUTION DATED 2 JULY 2004.[21]
AGGRIEVED BY THE DECISION DISMISSING THE PETITION AND

SUPPLEMENTAL PETITION AND BY THE RESOLUTION DENYING THE
MOTION FOR RECONSIDERATION, TANDUAY ELEVATED THE CASE
BEFORE THIS COURT.
THE TRIAL COURTS ORDERS
In the Order dated 23 September 2003, the trial court stated that during the
hearings conducted on 25 and 29 August and on 4 and 11 September 2003, the
following facts have been established:
1. San Miguel has registered the trademark Ginebra

San Miguel;
2. THERE IS A CLOSE RESEMBLANCE BETWEEN
GINEBRA SAN MIGUEL AND GINEBRA KAPITAN;
3. THE CLOSE SIMILARITY BETWEEN GINEBRA SAN
MIGUEL AND GINEBRA KAPITAN MAY GIVE RISE TO
CONFUSION OF GOODS SINCE SAN MIGUEL AND
TANDUAY ARE COMPETITORS IN THE BUSINESS OF
MANUFACTURING AND SELLING LIQUORS; AND
GINEBRA, WHICH IS A WELL-KNOWN TRADEMARK, WAS ADOPTED BY
TANDUAY TO BENEFIT FROM THE REPUTATION AND ADVERTISEMENT
OF THE ORIGINATOR OF THE MARK GINEBRA SAN MIGUEL, AND TO
CONVEY TO THE PUBLIC THE IMPRESSION OF SOME SUPPOSED
CONNECTION BETWEEN THE MANUFACTURER OF THE GIN PRODUCT
SOLD UNDER THE NAME GINEBRA SAN MIGUEL AND THE NEW GIN
PRODUCT GINEBRA KAPITAN.[22]
Based on these facts, the trial court concluded that San Miguel had demonstrated a
clear, positive, and existing right to be protected by a TRO. Otherwise, San Miguel
would suffer irreparable injury if infringement would not be enjoined. Hence, the
trial court granted the application for a TRO and set the hearing for preliminary
injunction.[23]
IN THE ORDER DATED 17 OCTOBER 2003, THE TRIAL COURT GRANTED

THE APPLICATION FOR A WRIT OF PRELIMINARY INJUNCTION. THE
TRIAL COURT RULED THAT WHILE A CORPORATION ACQUIRES A
TRADE NAME FOR ITS PRODUCT BY CHOICE, IT SHOULD NOT SELECT
A NAME THAT IS CONFUSINGLY SIMILAR TO ANY OTHER NAME
ALREADY PROTECTED BY LAW OR IS PATENTLY DECEPTIVE,
CONFUSING, OR CONTRARY TO EXISTING LAW.[24]
THE TRIAL COURT POINTED OUT THAT SAN MIGUEL AND ITS
PREDECESSORS HAVE CONTINUOUSLY USED GINEBRA AS THE
DOMINANT FEATURE OF ITS GIN PRODUCTS SINCE 1834. ON THE
OTHER HAND, TANDUAY FILED ITS TRADEMARK APPLICATION FOR
GINEBRA KAPITAN ONLY ON 7 JANUARY 2003. THE TRIAL COURT
DECLARED THAT SAN MIGUEL IS THE PRIOR USER AND REGISTRANT
OF GINEBRA WHICH HAS BECOME CLOSELY ASSOCIATED TO ALL OF
SAN MIGUELS GIN PRODUCTS, THEREBY GAINING POPULARITY AND
GOODWILL FROM SUCH NAME.[25]
THE TRIAL COURT NOTED THAT WHILE THE SUBJECT TRADEMARKS

ARE NOT IDENTICAL, IT IS OBVIOUSLY CLEAR THAT THE WORD
GINEBRA IS THE DOMINANT FEATURE IN THE TRADEMARKS. THE
TRIAL COURT STATED THAT THERE IS A STRONG INDICATION THAT
CONFUSION IS LIKELY TO OCCUR SINCE ONE WOULD INEVITABLY BE
LED TO CONCLUDE THAT BOTH PRODUCTS ARE AFFILIATED WITH
SAN MIGUEL DUE TO THE DISTINCTIVE MARK GINEBRA WHICH IS
READILY IDENTIFIED WITH SAN MIGUEL. THE TRIAL COURT
CONCLUDED THAT ORDINARY PURCHASERS WOULD NOT EXAMINE
THE LETTERINGS OR FEATURES PRINTED ON THE LABEL BUT WOULD
SIMPLY BE GUIDED BY THE PRESENCE OF THE DOMINANT MARK
GINEBRA. ANY DIFFERENCE WOULD PALE IN SIGNIFICANCE IN THE
FACE OF EVIDENT SIMILARITIES IN THE DOMINANT FEATURES AND
OVERALL APPEARANCE OF THE PRODUCTS. THE TRIAL COURT
EMPHASIZED THAT THE DETERMINATIVE FACTOR WAS WHETHER THE
USE OF SUCH MARK WOULD LIKELY CAUSE CONFUSION ON THE PART
OF THE BUYING PUBLIC, AND NOT WHETHER IT WOULD ACTUALLY
CAUSE CONFUSION ON THE PART OF THE PURCHASERS. THUS,
TANDUAYS CHOICE OF GINEBRA AS PART OF THE TRADEMARK OF
GINEBRA KAPITAN TENDED TO SHOW TANDUAYS INTENTION TO RIDE
ON THE POPULARITY AND ESTABLISHED GOODWILL OF GINEBRA SAN
MIGUEL.[26]
THE TRIAL COURT HELD THAT TO CONSTITUTE TRADEMARK

INFRINGEMENT, IT WAS NOT NECESSARY THAT EVERY WORD SHOULD
BE APPROPRIATED; IT WAS SUFFICIENT THAT ENOUGH BE TAKEN TO
DECEIVE THE PUBLIC IN THE PURCHASE OF A PROTECTED ARTICLE.[27]
THE TRIAL COURT CONCEDED TO TANDUAYS ASSERTION THAT THE

TERM GINEBRA IS A GENERIC WORD; HENCE, IT IS NON-REGISTRABLE
BECAUSE GENERIC WORDS ARE BY LAW FREE FOR ALL TO USE.
HOWEVER, THE TRIAL COURT RELIED ON THE PRINCIPLE THAT EVEN
IF A WORD IS INCAPABLE OF APPROPRIATION AS A TRADEMARK, THE
WORD MAY STILL ACQUIRE A PROPRIETARY CONNOTATION THROUGH
LONG AND EXCLUSIVE USE BY A BUSINESS ENTITY WITH REFERENCE
TO ITS PRODUCTS. THE PURCHASING PUBLIC WOULD ASSOCIATE THE
WORD TO THE PRODUCTS OF A BUSINESS ENTITY. THE WORD THUS
ASSOCIATED WOULD BE ENTITLED TO PROTECTION AGAINST
INFRINGEMENT AND UNFAIR COMPETITION. THE TRIAL COURT HELD
THAT THIS PRINCIPLE COULD BE MADE TO APPLY TO THIS CASE
BECAUSE SAN MIGUEL HAS SHOWN THAT IT HAS ESTABLISHED
GOODWILL OF CONSIDERABLE VALUE, SUCH THAT ITS GIN PRODUCTS
HAVE ACQUIRED A WELL-KNOWN REPUTATION AS JUST GINEBRA. IN
ESSENCE, THE WORD GINEBRA HAS BECOME A POPULAR BY-WORD
AMONG THE CONSUMERS AND THEY HAD CLOSELY ASSOCIATED IT
WITH SAN MIGUEL.[28]
ON THE OTHER HAND, THE TRIAL COURT HELD THAT TANDUAY
FAILED TO SUBSTANTIATE ITS CLAIM AGAINST THE ISSUANCE OF THE
INJUNCTIVE RELIEF.[29]
THE RULING OF THE COURT OF APPEALS
In resolving the petition and supplemental petition, the CA stated that it is

constrained to limit itself to the determination of whether the TRO and the writ of
preliminary injunction were issued by the trial court with grave abuse of discretion
amounting to lack of jurisdiction.[30]
TO WARRANT THE ISSUANCE OF A TRO, THE CA RULED THAT THE

AFFIDAVITS OF SAN MIGUELS WITNESSES AND THE FACT THAT THE
REGISTERED TRADEMARK GINEBRA SAN MIGUEL EXISTS ARE
ENOUGH TO MAKE A FINDING THAT SAN MIGUEL HAS A CLEAR AND
UNMISTAKABLE RIGHT TO PREVENT IRREPARABLE INJURY BECAUSE
GIN DRINKERS CONFUSE SAN MIGUEL TO BE THE MANUFACTURER OF
GINEBRA KAPITAN.[31]
THE CA ENUMERATED THE REQUISITES FOR AN INJUNCTION: (1)
THERE MUST BE A RIGHT IN ESSE OR THE EXISTENCE OF A RIGHT TO
BE PROTECTED AND (2) THE ACT AGAINST WHICH THE INJUNCTION IS
TO BE DIRECTED IS A VIOLATION OF SUCH RIGHT. THE CA STATED
THAT THE TRADEMARKS GINEBRA SAN MIGUEL AND GINEBRA
KAPITAN ARE NOT IDENTICAL, BUT IT IS CLEAR THAT THE WORD
GINEBRA IS THE DOMINANT FEATURE IN BOTH TRADEMARKS. THERE
WAS A STRONG INDICATION THAT CONFUSION WAS LIKELY TO
OCCUR. ONE WOULD BE LED TO CONCLUDE THAT BOTH PRODUCTS
ARE AFFILIATED WITH SAN MIGUEL BECAUSE THE DISTINCTIVE
MARK GINEBRA IS IDENTIFIED WITH SAN MIGUEL. IT IS THE MARK
WHICH DRAWS THE ATTENTION OF THE BUYER AND LEADS HIM TO
CONCLUDE THAT THE GOODS ORIGINATED FROM THE SAME
MANUFACTURER.[32]
THE CA OBSERVED THAT THE GIN PRODUCTS OF GINEBRA SAN

MIGUEL AND GINEBRA KAPITAN POSSESS THE SAME PHYSICAL
ATTRIBUTES WITH REFERENCE TO THEIR FORM, COMPOSITION,
TEXTURE, OR QUALITY. THE CA UPHELD THE TRIAL COURTS RULING
THAT SAN MIGUEL HAS SUFFICIENTLY ESTABLISHED ITS RIGHT TO
PRIOR USE AND REGISTRATION OF THE MARK GINEBRA AS A
DOMINANT FEATURE OF ITS TRADEMARK. GINEBRA HAS BEEN
IDENTIFIED WITH SAN MIGUELS GOODS, THEREBY, IT ACQUIRED A
RIGHT IN SUCH MARK, AND IF ANOTHER INFRINGED THE
TRADEMARK, SAN MIGUEL COULD INVOKE ITS PROPERTY RIGHT.[33]
The Issue
The central question for resolution is whether San Miguel is entitled to the writ of
preliminary injunction granted by the trial court as affirmed by the CA. For this
reason, we shall deal only with the questioned writ and not with the merits of the
case pending before the trial court.
The Ruling of the Court
Clear and Unmistakable Right
SECTION 1, RULE 58 OF THE RULES OF COURT DEFINES A

PRELIMINARY INJUNCTION AS AN ORDER GRANTED AT ANY STAGE OF
A PROCEEDING PRIOR TO THE JUDGMENT OR FINAL ORDER,
REQUIRING A PARTY OR A COURT, AGENCY, OR A PERSON TO REFRAIN
FROM A PARTICULAR ACT OR ACTS.
A PRELIMINARY INJUNCTION IS A PROVISIONAL REMEDY FOR THE
PROTECTION OF SUBSTANTIVE RIGHTS AND INTERESTS. IT IS NOT A
CAUSE OF ACTION IN ITSELF BUT MERELY AN ADJUNCT TO THE MAIN
CASE. ITS OBJECTIVE IS TO PREVENT A THREATENED OR
CONTINUOUS IRREPARABLE INJURY TO SOME OF THE PARTIES
BEFORE THEIR CLAIMS CAN BE THOROUGHLY INVESTIGATED AND
ADVISEDLY ADJUDICATED. IT IS RESORTED TO ONLY WHEN THERE IS
A PRESSING NEED TO AVOID INJURIOUS CONSEQUENCES WHICH
CANNOT BE REMEDIED UNDER ANY STANDARD COMPENSATION.[34]
Section 3, Rule 58 of the Rules of Court provides:
SECTION 3. GROUNDS FOR ISSUANCE OF A WRIT OF

PRELIMINARY INJUNCTION.A PRELIMINARY INJUNCTION MAY
BE GRANTED WHEN IT IS ESTABLISHED:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained
of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the
rights of the applicant respecting the subject of the action or proceeding, and tending
to render the judgment ineffectual.
Before an injunctive writ is issued, it is essential that the following requisites are
present: (1) the existence of a right to be protected and (2) the acts against which
the injunction is directed are violative of the right. The onus probandi is on the
movant to show that the invasion of the right sought to be protected is material and
substantial, that the right of the movant is clear and unmistakable, and that there is
an urgent and paramount necessity for the writ to prevent serious damage.[35]
San Miguel claims that the requisites for the valid issuance of a writ of preliminary
injunction were clearly established. The clear and unmistakable right to the
exclusive use of the mark Ginebra was proven through the continuous use of
Ginebra in the manufacture, distribution, marketing and sale of gin products
throughout the Philippines since 1834. To the gin-drinking public, the word
Ginebra does not simply indicate a kind of beverage; it is now synonymous with
San Miguels gin products.[36]
San Miguel contends that Ginebra can be appropriated as a trademark, and there
was no error in the trial courts provisional ruling based on the evidence on record.
Assuming that Ginebra is a generic word which is proscribed to be registered as a
trademark under Section 123.1(h)[37] of Republic Act No. 8293 or the Intellectual
Property Code (IP Code),[38] it can still be appropriated and registered as a
trademark under Section 123.1(j)[39] in relation to Section 123.2[40] of the IP Code,
considering that Ginebra is also a mark which designates the kind of goods
produced by San Miguel.[41] San Miguel alleges that although Ginebra, the Spanish
word for gin, may be a term originally incapable of exclusive appropriation,
jurisprudence dictates that the mark has become distinctive of San Miguels
products due to its substantially exclusive and continuous use as the dominant
feature of San Miguels trademarks since 1834. Hence, San Miguel is entitled to a
finding that the mark is deemed to have acquired a secondary meaning. [42] San
Miguel states that Tanduay failed to present any evidence to disprove its claims;
thus, there is no basis to set aside the grant of the TRO and writ of preliminary
injunction.[43]
San Miguel states that its disclaimer of the word Ginebra in some of its registered
marks is without prejudice to, and did not affect, its existing or future rights over
Ginebra, especially since Ginebra has demonstrably become distinctive of San
Miguels products.[44] San Miguel adds that it did not disclaim Ginebra in all of its
trademark registrations and applications like its registration for Ginebra Cruz de
Oro, Ginebra Ka Miguel, Ginebra San Miguel bottle, Ginebra San Miguel, and
Barangay Ginebra.[45]
Tanduay asserts that not one of the requisites for the valid issuance of a preliminary
injunction is present in this case. Tanduay argues that San Miguel cannot claim the
exclusive right to use the generic word Ginebra for its gin products based on its
registration of the composite marks Ginebra San Miguel, Ginebra S. Miguel 65,
and La Tondea Cliq! Ginebra Mix, because in all of these registrations, San Miguel
disclaimed any exclusive right to use the non-registrable word Ginebra for gin
products.[46] Tanduay explains that the word Ginebra, which is disclaimed by San
Miguel in all of its registered trademarks, is an unregistrable component of the
composite mark Ginebra San Miguel. Tanduay argues that this disclaimer further
means that San Miguel does not have an exclusive right to the generic word
Ginebra.[47] Tanduay states that the word Ginebra does not indicate the source of the
product, but it is merely descriptive of the name of the product itself and not the
manufacturer thereof.[48]
Tanduay submits that it has been producing gin products under the brand names
Ginebra 65, Ginebra Matador, and Ginebra Toro without any complaint from San
Miguel. Tanduay alleges that San Miguel has not filed any complaint against other
liquor companies which use Ginebra as part of their brand names such as Ginebra
Pinoy, a registered trademark of Webengton Distillery; Ginebra Presidente and
Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and
Ginebra Lucky Nine and Ginebra Santiago as registered trademarks of Distileria
Limtuaco & Co., Inc.[49] Tanduay claims that the existence of these products, the
use and registration of the word Ginebra by other companies as part of their
trademarks belie San Miguels claim that it has been the exclusive user of the
trademark containing the word Ginebra since 1834.
Tanduay argues that before a court can issue a writ of preliminary injunction, it is
imperative that San Miguel must establish a clear and unmistakable right that is
entitled to protection. San Miguels alleged exclusive right to use the generic word
Ginebra is far from clear and unmistakable. Tanduay claims that the injunction
issued by the trial courtwas based on its premature conclusion that Ginebra
Kapitan infringes Ginebra San Miguel.[50]
In Levi Strauss & Co. v. Clinton Apparelle, Inc.,[51] we held:
While the matter of the issuance of a writ of preliminary injunction is

addressed to the sound discretion of the trial court, this discretion
must be exercised based upon the grounds and in the manner provided
by law. The exercise of discretion by the trial court in injunctive
matters is generally not interfered with save in cases of manifest
abuse. And to determine whether there was grave abuse of discretion,
a scrutiny must be made of the bases, if any, considered by the trial
court in granting injunctive relief. Be it stressed that injunction is the
strong arm of equity which must be issued with great caution and
deliberation, and only in cases of great injury where there is no
commensurate remedy in damages.[52]
The CA upheld the trial courts ruling that San Miguel has sufficiently established
its right to prior use and registration of the word Ginebra as a dominant feature of
its trademark.The CA ruled that based on San Miguels extensive, continuous, and
substantially exclusive use of the word Ginebra, it has become distinctive of San
Miguels gin products; thus, a clear and unmistakable right was shown.
We hold that the CA committed a reversible error. The issue in the main case is San
Miguels right to the exclusive use of the mark Ginebra. The two trademarks
Ginebra San Miguel and Ginebra Kapitan apparently differ when taken as a whole,
but according to San Miguel, Tanduay appropriates the word Ginebra which is a
dominant feature of San Miguels mark.
It is not evident whether San Miguel has the right to prevent other business entities
from using the word Ginebra. It is not settled (1) whether Ginebra is indeed the
dominant feature of the trademarks, (2) whether it is a generic word that as a
matter of law cannot be appropriated, or (3) whether it is merely a descriptive word
that may be appropriated based on the fact that it has acquired a secondary
meaning.
The issue that must be resolved by the trial court is whether a word like Ginebra
can acquire a secondary meaning for gin products so as to prohibit the use of the
word Ginebra by other gin manufacturers or sellers. This boils down to whether the
word Ginebra is a generic mark that is incapable of appropriation by gin
manufacturers.
In Asia Brewery, Inc. v. Court of Appeals,[53] the Court ruled that pale pilsen are
generic words, pale being the actual name of the color and pilsen being the type of
beer, a light bohemian beer with a strong hops flavor that originated in Pilsen City
in Czechoslovakia and became famous in the Middle Ages, and hence incapable of
appropriation by any beer manufacturer.[54] Moreover, Section 123.1(h) of the IP
Code states that a mark cannot be registered if it consists exclusively of signs that
are generic for the goods or services that they seek to identify.
In this case, a cloud of doubt exists over San Miguels exclusive right relating to the
word Ginebra. San Miguels claim to the exclusive use of the word Ginebra is
clearly still in dispute because of Tanduays claim that it has, as others have, also
registered the word Ginebra for its gin products. This issue can be resolved only
after a full-blown trial.
In Ong Ching Kian Chuan v. Court of Appeals,[55] we held that in the absence of
proof of a legal right and the injury sustained by the movant, the trial courts order
granting the issuance of an injunctive writ will be set aside, for having been issued
with grave abuse of discretion.
We find that San Miguels right to injunctive relief has not been clearly and
unmistakably demonstrated. The right to the exclusive use of the word Ginebra has
yet to be determined in the main case. The trial courts grant of the writ of
preliminary injunction in favor of San Miguel, despite the lack of a clear and
unmistakable right on its part, constitutes grave abuse of discretion amounting to
lack of jurisdiction.
Prejudging the Merits of the Case
Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary
injunction, has prejudged the merits of the case since nothing is left to be decided
by the trial court except the amount of damages to be awarded to San Miguel.[56]
San Miguel claims that neither the CA nor the trial court prejudged the merits of
the case. San Miguel states that the CA did not rule on the ultimate correctness of
the trial courts evaluation and appreciation of the evidence before it, but merely
found that the assailed Orders of the trial court are supported by the evidence on
record and that Tanduay was not denied due process. [57] San Miguel argues that the
CA only upheld the trial courts issuance of the TRO and writ of preliminary
injunction upon a finding that there was sufficient evidence on record, as well as
legal authorities, to warrant the trial courts preliminary findings of fact.[58]
The instructive ruling in Manila International Airport Authority v. Court of
Appeals[59] states:
Considering the far-reaching effects of a writ of preliminary injunction,

the trial court should have exercised more prudence and judiciousness in
its issuance of the injunction order. We remind trial courts that while
generally the grant of a writ of preliminary injunction rests on the sound
discretion of the court taking cognizance of the case, extreme caution
must be observed in the exercise of such discretion. The discretion of the
court a quo to grant an injunctive writ must be exercised based on the
grounds and in the manner provided by law. Thus, the Court declared
in Garcia v. Burgos:
It has been consistently held that there is no power the

exercise of which is more delicate, which requires greater
caution, deliberation and sound discretion, or more
dangerous in a doubtful case, than the issuance of an
injunction. It is the strong arm of equity that should never
be extended unless to cases of great injury, where courts of
law cannot afford an adequate or commensurate remedy in
damages.
Every court should remember that an injunction is a

limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately. It should be
granted only when the court is fully satisfied that the law
permits it and the emergency demands it. (Emphasis in the
original)
WE BELIEVE THAT THE ISSUED WRIT OF PRELIMINARY INJUNCTION,

IF ALLOWED, DISPOSES OF THE CASE ON THE MERITS AS IT
EFFECTIVELY ENJOINS THE USE OF THE WORD GINEBRA WITHOUT
THE BENEFIT OF A FULL-BLOWN TRIAL. IN RIVAS V. SECURITIES AND
EXCHANGE COMMISSION,[60]WE RULED THAT COURTS SHOULD AVOID
ISSUING A WRIT OF PRELIMINARY INJUNCTION WHICH WOULD IN
EFFECT DISPOSE OF THE MAIN CASE WITHOUT TRIAL. THE ISSUANCE
OF THE WRIT OF PRELIMINARY INJUNCTION HAD THE EFFECT OF
GRANTING THE MAIN PRAYER OF THE COMPLAINT SUCH THAT THERE
IS PRACTICALLY NOTHING LEFT FOR THE TRIAL COURT TO TRY
EXCEPT THE PLAINTIFFS CLAIM FOR DAMAGES.
Irreparable Injury
TANDUAY POINTS OUT THAT THE SUPPOSED DAMAGES THAT SAN
MIGUEL WILL SUFFER AS A RESULT OF TANDUAYS INFRINGEMENT OR
UNFAIR COMPETITION CANNOT BE CONSIDERED IRREPARABLE
BECAUSE THE DAMAGES ARE SUSCEPTIBLE OF MATHEMATICAL
COMPUTATION. TANDUAY INVOKES SECTION 156.1 OF THE IP
CODE[61] AS THE BASIS FOR THE COMPUTATION OF DAMAGES.[62]
SAN MIGUEL AVERS THAT IT STANDS TO SUFFER IRREPARABLE

INJURY IF THE MANUFACTURE AND SALE OF TANDUAYS GINEBRA
KAPITAN ARE NOT ENJOINED. SAN MIGUEL CLAIMS THAT THE ROUGH
ESTIMATE OF THE DAMAGES[63] IT WOULD INCUR IS SIMPLY A GUIDE
FOR THE TRIAL COURT IN COMPUTING THE APPROPRIATE DOCKET
FEES. SAN MIGUEL ASSERTS THAT THE FULL EXTENT OF THE
DAMAGE IT WOULD SUFFER IS DIFFICULT TO MEASURE WITH ANY
REASONABLE ACCURACY BECAUSE IT HAS INVESTED HUNDREDS OF
MILLIONS OVER A PERIOD OF 170 YEARS TO ESTABLISH GOODWILL
AND REPUTATION NOW BEING ENJOYED BY THE GINEBRA SAN
MIGUEL MARK.[64] SAN MIGUEL REFUTES TANDUAYS CLAIM THAT THE
INJURY WHICH SAN MIGUEL STANDS TO SUFFER CAN BE MEASURED
WITH REASONABLE ACCURACY AS THE LEGAL FORMULA TO
DETERMINE SUCH INJURY IS PROVIDED IN SECTION 156.1 OF THE IP
CODE. SAN MIGUEL REASONS THAT IF TANDUAYS CLAIM IS UPHELD,
THEN THERE WOULD NEVER BE A PROPER OCCASION TO ISSUE A
WRIT OF PRELIMINARY INJUNCTION IN RELATION TO COMPLAINTS
FOR INFRINGEMENT AND UNFAIR COMPETITION, AS THE INJURY
WHICH THE OWNER OF THE MARK SUFFERS, OR STANDS TO SUFFER,
WILL ALWAYS BE SUSCEPTIBLE OF MATHEMATICAL COMPUTATION.[65]
IN LEVI STRAUSS & CO. V. CLINTON APPARELLE, INC.,[66] THIS COURT

UPHELD THE APPELLATE COURTS RULING THAT THE DAMAGES LEVI
STRAUSS & CO. HAD SUFFERED OR CONTINUES TO SUFFER MAY BE
COMPENSATED IN TERMS OF MONETARY CONSIDERATION. THIS
COURT, QUOTING GOVERNMENT SERVICE INSURANCE SYSTEM V.
FLORENDO,[67] HELD:
x x x a writ of injunction should never issue when an action for damages would
adequately compensate the injuries caused. The very foundation of the jurisdiction
to issue the writ of injunction rests in the probability of irreparable injury,
inadequacy of pecuniary compensation and the prevention of the multiplicity of
suits, and where facts are not shown to bring the case within these conditions, the
relief of injunction should be refused.
Based on the affidavits and market survey report submitted during the injunction
hearings, San Miguel has failed to prove the probability of irreparable injury which
it will stand to suffer if the sale of Ginebra Kapitan is not enjoined. San Miguel has
not presented proof of damages incapable of pecuniary estimation. At most, San
Miguel only claims that it has invested hundreds of millions over a period of 170
years to establish goodwill and reputation now being enjoyed by the Ginebra San
Miguel mark such that the full extent of the damage cannot be measured with
reasonable accuracy. Without the submission of proof that the damage is
irreparable and incapable of pecuniary estimation, San Miguels claim cannot be the
basis for a valid writ of preliminary injunction.
WHEREFORE, WE GRANT THE PETITION. WE SET ASIDE THE
DECISION OF THE COURT OF APPEALS DATED 9 JANUARY 2004 AND
THE RESOLUTION DATED 2 JULY 2004 IN CA-G.R. SP NO. 79655. WE
DECLARE VOID THE ORDER DATED 17 OCTOBER 2003 AND THE
CORRESPONDING WRIT OF PRELIMINARY INJUNCTION ISSUED BY
BRANCH 214 OF THE REGIONAL TRIAL COURT OF MANDALUYONG
CITY IN IP CASE NO. MC-03-01 AND CIVIL CASE NO. MC-03-073.
THE REGIONAL TRIAL COURT OF MANDALUYONG CITY, BRANCH 214,

IS DIRECTED TO CONTINUE EXPEDITIOUSLY WITH THE TRIAL TO
RESOLVE THE MERITS OF THE CASE.
SO ORDERED.
15. Case Digest:
G.R. No. 192294 November 21, 2012
GREAT WHITE SHARK ENTERPRISES, INC., Petitioner,

vs.
DANILO M. CARALDE, JR., Respondent.
TOPIC: Registrability, Dominancy Test

FACTS:
Caralde, respondent, filed before the Bureau of Legal Affairs (BLA) IPO a trademark
application for SHARK & LOGO for his manufactured goods consisting of slippers,
shoes and sandals. This was opposed by the petitioner, Great White Shark
Enterprises, Inc. (Great White Shark), a foreign corporation domiciled in Florida, USA
and was issued a Certificate Registration for trademark application for clothing,
headgear and footwear, including socks, shoes and its components in the
Philippines. Petitioner alleges among other things that there is a confusing similarity
between the two (2) marks which is likely to deceive or confuse the purchasing
public into believing that respondents goods are produced by or originated from the
petitioner, or are under its sponsorship, to the petitioners damage and prejudice;
that since petitioner was first in applying for registration of the mark, the same
should be favoured with respondents mark to be denied of its application.
BLA Director ruled in favour of petitioner. The BLA observed that prominent in both
marks are the illustration of a shark, that although there are some differences,
dominant features are of such degree that overall it creates an impression of
striking similarity with one another.
IPO Director General on appeal by respondent, affirmed the decision by the BLA
Director that there is indeed confusing similarity between the two mark; that there
is similarity between the two marks as to content, word, sound and meaning barring
respondents registration under Sec 123.1(d) of RA 8293 of the IP Code.
The Court of Appeals, upon petition for review by respondent, reversed and set
aside the decision by the BLA Director and IPO Director General on its finding that
there is in fact no confusing similarity between the two marks; that respondents
mark is more fanciful and colourful and contains several elements which are easily
distinguishable from that on the petitioner.
The case was then elevated to the Supreme Court by petitioner, hence this petition.
ISSUES:
1. WON the two (2) marks can be considered identical, applying Sec. 123.1(d) of
the IP Code, which is likely to deceive or cause confusion.
HELD:
No. The two marks are not identical and there is no confusing similarity likely to
deceive or cause confusion between them.
A trademark device is susceptible to registration if it is crafted fancifully or

arbitrarily and is capable of identifying and distinguishing the goods of one
manufacturer or seller from those of another. Apart from its commercial
utility, the benchmark of trademark registrability is distinctiveness. (Thus,
a generic figure, as that of a shark in this case, if employed and designed in
a distinctive manner, can be a registrable trademark device, subject to the
provisions of the IP Code.)In connection with the registrability of trademarks,
Section 123.1(d) of the IP Codeprovides, among others, a mark which
cannot be registered, to wit:
Section 123.Registrability.
123.1 A mark cannot be registered if it:
(d) Is identical with a registered mark belonging to a different

proprietor or a mark with an earlier filing or priority date, in
respect of:
(i) The same goods or services, or

(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be

likely to deceive or cause confusion;
xxx
The mark will therefore be registrable if it is distinct or if it does not nearly

resembles another mark to deceive or cause confusion.
The court used Dominancy Test (although Holistic or TotalityTestwas

defined in the case, this was not used in the analysis) for this purpose and
confirmed that there is no confusing similarity between the marks; that,
further, there was a distinct visual and aural differences between them.
In Great White Shark's "GREG NORMAN LOGO," there is an

outline of a shark formed with the use of green, yellow, blue
and red16lines/strokes; The shark in Caralde's "SHARK & LOGO"
mark17 is illustrated in l et t er s outlined in the form of a shark
with the letter "S" forming the head, the letter "H" forming the
fins, the letters "A" and "R" forming the body, and the letter "K"
forming the tail. In addition, the latter mark includes several
more elements such as the word "SHARK" in a different font
underneath the shark outline, layers of waves, and a tree on the
right side, and liberally used the color blue with some parts in
red, yellow, green and white. 18 The whole design is enclosed in
an elliptical shape with two linings.
The visual dissimilarities between the two (2) marks are evident and
significant, negating the possibility of confusion in the minds of the ordinary
purchaser, especially considering the distinct aural difference between the
marks.
APPENDIX
1. Great White Shark (GWS) also alleged that its trademark is a world famous
and well-known mark since its mark registered in different countries, in order
to better his position that Caralde just copied GWSs mark to be able to ride
on its goodwill. Both BLA Director and IPO Director General however found
the same without merit due to insufficiency of evidence. IPO Dir-Gen further
noted that it failed to meet the other criteria under Rule 102of the Rules
and Regulations on Trademarks, Service Marks, Trade Names and
Marked or Stamped Containersto be considered as well-known. Finally,
SC no longer ruled on this matter (,being mooted,) since it already found that
there was no confusing similarity between the two marks.
2. The Dominancy Test focuses on the similarity of the dominant features
of the competing trademarks that might cause confusion, mistake, and
deception in the mind of the ordinary purchaser, and gives more
consideration to the aural and visual impressions created by the marks on
the buyers of goods, giving little weight to factors like prices, quality, sales
outlets, and market segments.
The Holistic or Totality Test considers the entirety of the marks as applied
to the products, including the labels and packaging, and focuses not only on
the predominant words but also on the other features appearing on both
labels to determine whether one is confusingly similar to the other 14 as to
mislead the ordinary purchaser. The "ordinary purchaser" refers to one
"accustomed to buy, and therefore to some extent familiar with, the goods in
question."15
3. Copy of the trademarks in the case
FIRST DIVISION
G.R. No. 188225 : November 28, 2012
SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.
G.R. No. 198728
SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.
DECISION
SERENO, C.J.:
These are Petitions for Review on Certiorari under Rule 45 of the Rules of Court. The petition docketed as G.R. No. 188225 assails the
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 103846 dated 11 March 2009. The CA Decision nullified the Orders dated 12
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February 20082 and 11 April 20083 of the Regional Trial Court (RTC) of Makati, Branch 149. The RTC Orders had denied the Motion to
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Dismiss and/or Withdraw Information filed against respondents for unfair competition (violation of Section 168 in relation to Section
170)4 under Republic Act No. (R.A.) 8293 (Intellectual Property Code of the Philippines).
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On the other hand, the petition docketed as G.R. No. 198728 assails the Decision 5 in CA-G.R. SP No. 111903 dated 29 September 2011,
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which affirmed the RTC Orders dated 29 July 20096 and 19 October 2009,7 this time quashing the Information against respondents.
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Respondents Imelda and Rodrigo are spouses who own RGP Footwear Manufacturing (RGP), which supplies ladies shoes to Shoe Mart
(SM).8 They met petitioner when she sold them business-class plane tickets to the United States in 2002. 9 She was also interested in doing
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business with SM, and they suggested that she form a partnership with their daughter Sunshine, nicknamed Sasay.10 rll
Petitioner and Sunshine formed Sasays Closet Co. (SCC), a partnership registered with the Securities and Exchange Commission on 17
October 2002. SCC was engaged in the supply, trading, retailing of garments such as underwear, childrens wear, womens and mens wear, and
other incidental activities related thereto.11 rll
For its products, SCC used the trademark "Naturals with Design," which it filed with the Intellectual Property Office on 24 August 2005 and
registered on 26 February 2007.12 These products were primarily supplied to SM, 13 which assigned to them the vendor code "190501" for
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purposes of identification.14 rll
SCC used the facilities and equipment owned by RGP, as well as the latters business address (No. 72 Victoria Subdivision, Barangay Dela Paz,
Bin, Laguna), which was also the residential address of respondents. 15 rll
In August 2003, Sunshine pulled out of the partnership, because she was hired to work in an international school. 16 Respondent Imelda took rll
over Sunshines responsibilities in the partnership.17 rll
On 14 December 2005, petitioner sent an email to respondent Imelda asking to be reimbursed for expenses incurred in the formers travel to
China.18 Respondent Imelda replied the following day, stating that the partnership could not reimburse petitioner, because the trip was
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personal and not business-related.19 In the same email, respondent Imelda vented her frustration over the fact that she, together with
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respondent Rodrigo, had been doing all the work for SCC and incurring expenses that they did not charge to the
partnership.20 Respondent Imelda then informed petitioner of the formers decision to dissolve the partnership. 21 Despite the objections of
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petitioner to the dissolution of SCC, various amounts were paid to her by respondents from January to April 2006 representing her share in
the partnership assets.22 rll
Meanwhile, on 27 March 2006, petitioner established Tezares Enterprise, a sole proprietorship engaged in supplying and trading of clothing
and accessories except footwear.23 Also in March 2006, she discovered that underwear products bearing the brand "Naturals" were being sold
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in SM with vendor code "180195."24 This code was registered to RGP,25 a fact confirmed by test buys conducted by her lawyers on 13 and 14
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May 2006.26 rll
On 5 June 2006, a search warrant for unfair competition under Section 168 in relation to Section 170 of R.A. 8293 was issued by the RTC of
Manila, Branch 24, against respondents at their address. 27 The search warrant called for the seizure of womens undergarments bearing the rll
brand "Naturals," as well as equipment and papers having the vendor code "180195" or the inscription "RGP." The search warrant was
implemented on the same day. However, it was quashed by the same court on 20 October 2006 upon motion of respondents. The trial court
ruled that respondents did not pass off "Naturals" as the brand of another manufacturer. On the contrary, they used the brand in the honest
belief that they owned SCC, the owner of the brand.
On 9 June 2006, petitioner filed a criminal complaint for unfair competition against respondents and Sunshine before the City Prosecution
Office of Makati City.28 Assistant City Prosecutor Imelda P. Saulog found probable cause to indict respondents for unfair competition. 29 She
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ruled that they had clearly passed off the "Naturals" brand as RGPs even if the brand was owned by SCC. According to the prosecutor, SCC
was indeed dissolved when respondent Imelda manifested her intention to cease from the partnership in an email sent to petitioner on 15
December 2005.30 The prosecutor said, however, that it remained operational, since the process of winding up its business had not been
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completed. Thus, SCC remained the owner of the "Naturals" brand, and petitioner being a legitimate partner thereof had a right to file the
complaint against respondents. The prosecutor found no probable cause against Sunshine, as it was established that she had withdrawn from
SCC as of August 2003.
The indictment was raffled to RTC Makati City, Branch 149. On 23 October 2006, it issued an Order finding probable cause for the issuance of
a warrant of arrest against respondents.31 rll
Respondents filed a petition for review of the prosecutors resolution before the Department of Justice (DOJ), which on 13 December 2006
issued its own Resolution32 reversing the finding of existence of probable cause against them. Contrary to the prosecutors finding, the DOJ
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found that SCC had effectively wound up the latters partnership affairs on 24 April 2006 when petitioner was reimbursed for her trip to China.
That was the last of the payments made to her to cover her share in the partnership affairs, which started after respondent Imelda
manifested her intention to cease from the partnership business on 15 December 2005. Thus, when the criminal complaint for unfair
competition was filed on 9 June 2006, there was "no longer any competition, unfair or otherwise, involving the partnership." 33 rll
Furthermore, the DOJ ruled that even if SCC had not yet terminated its business and therefore still existed, respondents had the right to use
the "Naturals" brand, as they were already the exclusive owners of SCC following the completion of payments of petitioners share in the
partnership affairs. Also, the establishment by petitioner of Tezares Enterprise which directly competed with SCC in terms of products and its
subsequent accreditation as supplier of intimate apparel for SM in April 2006 were regarded by the DOJ as apparent indications that she no
longer had any share in SCC. Thus, the petition for review was granted, and the city prosecutor of Makati was ordered to withdraw the
Information against respondents for unfair competition.
The DOJ denied the motion for reconsideration filed by petitioner on 28 March 2007. 34 Hence, she filed a petition for certiorari before the CA, rll
where it was docketed as CA-G.R. SP No. 98861. In her petition, she questioned the DOJ Resolution, but later withdrew the same on 6
December 2007 for an unknown reason.35 rll
Following the directive of the DOJ, the prosecutor filed before the RTC of Makati City, Branch 149, a Motion to Dismiss and/or Withdraw
Information on 3 April 2007.36 The trial court denied the motion in an Order37 dated 12 February 2008. It maintained the correctness of its
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finding of existence of probable cause in the case and ruled that the findings of the DOJ would be better appreciated and evaluated in the
course of the trial.
Respondents moved for reconsideration,38 but their motion was denied39 by the RTC. Aggrieved, they filed a Petition for Certiorari (with
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Prayer for the Issuance of a Temporary Restraining Order and thereafter a Preliminary Injunction) 40 before the CA. They argued that probable rll
cause for the issuance of a warrant of arrest is different from probable cause for holding a person for trial. The first is the function of the
judge, while the second is the prosecutors.41 Thus, respondents claimed that it was wrong for Presiding Judge Cesar O. Untalan to deny the
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prosecutors motion to dismiss for lack of probable cause on the basis of the judges own finding that there was probable cause to issue a
warrant of arrest against respondents. Furthermore, the Judge Untalan based his finding solely on the evidence submitted by petitioner
without evaluating the evidence of respondents.
In the first assailed Decision in CA-G.R. SP No. 10384642 dated 11 March 2009, the CA granted the petition. It found that the trial judge
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committed grave abuse of discretion amounting to lack or excess of jurisdiction when he denied the prosecutors motion to dismiss for lack of
probable cause. The CA sustained the position of respondents that the finding of probable cause for the filing of an information is an executive
function lodged with the prosecutor. It also found that the trial judge did not make an independent assessment of the evidence on record in
determining the existence of probable cause for the offense of unfair competition, as opposed to the exhaustive study made by the DOJ
before arriving at its finding of lack of probable cause.
The CA also ruled that in determining probable cause, the essential elements of the crime charged must be considered, for their absence
would mean that there is no criminal offense. In determining probable cause for unfair competition, the question is "whether or not the
offenders by the use of deceit or any other means contrary to good faith passes off the goods manufactured by him or in which he deals, or
his business, or services for those of the one having established such goodwill, or who shall commit any acts calculated to produce said
result."43 The CA affirmed the findings of the DOJ and the RTC of Manila, Branch 24 that respondents used the "Naturals" brand because they
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believed that they were the owners of SCC, which owned the brand. Furthermore, the partnership had been terminated as of April 2006;
hence, the filing of the criminal complaint on 9 June 2006 could no longer prosper. Even if SCC had not yet terminated its business,
respondents, having bought petitioner out of SCC, were already its exclusive owners and, as such, had the right to use the "Naturals" brand.
According to the CA, the filing of the criminal complaint for unfair competition was nothing but an offshoot of the misunderstanding and
quarrel that arose when respondents initially refused to reimburse the expenses incurred by petitioner in her trip to China and further
escalated when respondent Imelda decided to dissolve SCC.
Petitioner moved for reconsideration44 of the CA Decision, but the motion was denied on 1 June 2009. 45 She then brought the matter before
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this Court via a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court and docketed as G.R. No. 188225. 46 Without giving rll
due course to the petition, the Court required 47 respondents to comment thereon. Upon their compliance, 48 petitioner was required49 to file a
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reply,50 which was later received on 11 December 2009. On 19 May 2011, she filed her Memorandum. 51
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Meanwhile, following the promulgation of the Decision in CA-G.R. SP No. 103846, respondents filed an Urgent Motion to Dismiss the criminal
complaint for unfair competition before the RTC on 1 April 2009. 52 The motion was duly opposed by petitioner, arguing that the CA Decision
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had not yet attained finality in view of her pending petition before this Court; thus, the motion was premature. 53 The RTC denied the motion rll
to dismiss for lack of merit.54 However, upon motion for reconsideration55 filed by respondents, it issued the Order dated 29 July
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200956 ordering the quashal of the Information against them. The trial court issued another Order on 19 October 2009 57 denying petitioners
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Motion for Reconsideration.58 rll
Petitioner filed a Petition for Certiorari59 before the CA on the ground that the trial judge committed grave abuse of discretion amounting to
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lack or excess of jurisdiction when he quashed the Information against respondents based on a CA Decision that was not yet final and
executory, being the subject of a petition still pending before this Court.
On 29 September 2011, the CA issued the second assailed Decision in CA-G.R. SP No. 111903 affirming the RTC Orders dated 29 July 2009
and 19 October 2009. The appellate court ruled that while its Decision in CA-G.R. SP No. 103846 was still under review before this Court,
neithercourt had issued a restraining order or injunction that would prevent the RTC from implementing the said Decision ordering the
dismissal of the information against respondents. Furthermore, the CA ruled that since petitioner had withdrawn her petition in CA-G.R. SP
No. 98861 questioning the DOJ Resolution, the issue of whether there was probable cause had "already been resolved with finality in the
negative."60 Thus, the trial court cannot be faulted for following the CA directive to dismiss the Information against respondents.
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Opting not to file a motion for reconsideration,61 petitioner again comes before us on a Petition for Review on Certiorari questioning the
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Decision in CA-G.R. SP No. 111903. 62 In her petition docketed as G.R. No. 198728, she argues that Presiding Judge Cesar O. Untalan
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committed grave abuse of discretion amounting to lack or excess of jurisdiction when he dismissed the criminal case against respondents for
unfair competition based on CA findings that were not yet final. The trial judge was fully aware that those findings were still subject to a
pending petition before this Court.
On 23 November 2011, the Court consolidated G.R. Nos. 198728 and 188225. 63 rll
ISSUE
Despite the extensive legal battle that petitioner and respondents have waged heretofore, these petitions will be settled simply through a
ruling on whether there exists probable cause to indict respondents for unfair competition (violation of Section 168 in relation to Section 170)
under R.A. 8293.
OUR RULING
No probable cause to indict respondents
At the outset, it is worth noting that Judge Untalan acted well within the exercise of his judicial discretion when he denied the Motion to
Dismiss and/or Withdraw Information filed by the prosecution. His finding that there was probable cause to indict respondents for unfair
competition, and that the findings of the DOJ would be better appreciated in the course of a trial, was based on his own evaluation of the
evidence brought before him. It was an evaluation that was required of him as a judge.
Thus, in Yambot v. Armovit,64 this Court reiterated the mandate of judges to make a personal evaluation of records submitted in support of
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criminal complaints filed before their respective salas:chanroble svirtuallawlibrary
Crespo v. Mogul instructs in a very clear manner that once a complaint or information is filed in court, any disposition of the case as to its
dismissal, or the conviction or acquittal of the accused, rests on the sound discretion of the said court, as it is the best and sole judge of what
to do with the case before it. While the resolution of the prosecutorial arm is persuasive, it is not binding on the court. It may therefore grant
or deny at its option a motion to dismiss or to withdraw the information based on its own assessment of the records of the preliminary
investigation submitted to it, in the faithful exercise of judicial discretion and prerogative, and not out of subservience to the prosecutor.65 x xrll
x. (Emphasis supplied)
Judge Untalan stood firm on this finding in his denial of the motion for reconsideration and even initially after the CA had made a ruling on the
matter. He only performed a task he was called upon to do, and his judgment on the matter although erroneous cannot be regarded as
capricious and whimsical. Thus, he did not commit grave abuse of discretion amounting to lack or excess of jurisdiction.
However, while we recognize that Judge Untalan did not commit grave abuse of discretion, we take note of his apparent loss of steam when
he issued the Order dated 29 July 2009 granting respondents motion for reconsideration of his earlier ruling denying the Urgent Motion to
Dismiss. The good judge yielded, even though he was well aware that the CA Decision had not yet attained finality pending review by this
Court.
We now rule on the issue of probable cause.
Probable cause, for purposes of filing a criminal information, is described as "such facts as are sufficient to engender a well-founded belief
that a crime has been committed and the respondent is probably guilty thereof, and should be held for trial." 66 rll
Thus, the determination of the existence of probable cause necessitates the prior determination of whether a crime or an offense was
committed in the first place. Here, we find that there was no probable cause to indict respondents, because the crime of unfair competition
was not committed.
In positing that respondents were guilty of unfair competition, petitioner makes a lot of the fact that they used the vendor code of RGP in
marketing the "Naturals" products. She argues that they passed off the "Naturals" products, which they marketed under RGP, as those of
SCC; thus, they allegedly prejudiced the rights of SCC as owner of the trademark. She also claims that she has the personality to prosecute
respondents for unfair competition on behalf of SCC.
When Judge Untalan denied the Motion to Dismiss and/or Withdraw Information filed by the prosecution and thereby sustained the position of
petitioner, his error lay in the fact that his focus on the crime of unfair competition was unwarranted. In this case, much more important than
the issue of protection of intellectual property is the change of ownership of SCC. The arguments of petitioner have no basis, because
respondents are the exclusive owners of SCC, of which she is no longer a partner.
Based on the findings of fact of the CA and the DOJ, respondents have completed the payments of the share of petitioner in the partnership
affairs. Having bought her out of SCC, respondents were already its exclusive owners who, as such, had the right to use the "Naturals" brand.
The use of the vendor code of RGP was resorted to only for the practical purpose of ensuring that SMs payments for the "Naturals" products
would go to respondents, who were the actual suppliers.
Furthermore, even if we were to assume that the issue of protection of intellectual property is paramount in this case, the criminal complaint
for unfair competition against respondents cannot prosper, for the elements of the crime were not present. We have enunciated in CCBPI v.
Gomez67 that the key elements of unfair competition are "deception, passing off and fraud upon the public." 68 No deception can be imagined
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to have been foisted on the public through different vendor codes, which are used by SM only for the identification of suppliers products. blrlllbrr
WHEREFORE, the Decisions dated 11 March 2009 in CA-G.R. SP No. 103846 and 29 September 2011 in CA-G.R. SP No. 111903, finding lack
of probable cause for respondents alleged violation of Section 168 in relation to Section 170 of Republic Act No. 8293 (unfair competition), are
AFFIRMED. The Information against respondents for unfair competition is
DISMISSED.
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LEVI STRAUSS & CO., G.R. No. 138900

& LEVI STRAUSS (PHILS.),
INC., Present:
Petitioners,
PUNO,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
TINGA, and
CLINTON APPARELLE, INC., NAZARIO, JJ.
Respondent.
Promulgated:
September 20, 2005
x----------------------------------------------------------------------x
DECISION
TINGA, J.:
Before us is a petition for review on certiorari [1] under Rule 45 of the

1997 Rules of Civil Procedure filed by Levi Strauss & Co. (LS & Co.)
and Levi Strauss (Philippines), Inc. (LSPI) assailing the Court of
Appeals Decision[2] and Resolution[3] respectively dated 21 December
1998 and 10 May 1999. The questioned Decision granted
respondents prayer for a writ of preliminary injunction in
its Petition[4] and set aside the trial courts orders dated 15 May
1998[5] and 4 June 1998[6] which respectively granted petitioners
prayer for the issuance of a temporary restraining order (TRO) and
application for the issuance of a writ of preliminary injunction.
This case stemmed from the Complaint[7] for Trademark
Infringement, Injunction and Damages filed by petitioners LS & Co.
and LSPI against respondent Clinton Apparelle, Inc. (Clinton
Aparelle) together with an alternative defendant, Olympian
Garments, Inc. (Olympian Garments), before the Regional Trial
Court of Quezon City, Branch 90.[8] The Complaint was docketed as
Civil Case No. Q-98-34252, entitled Levi Strauss & Co. and Levi
Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or Olympian
Garments, Inc.
The Complaint alleged that LS & Co., a foreign corporation duly

organized and existing under the laws of the State of Delaware,
U.S.A., and engaged in the apparel business, is the owner by prior
adoption and use since 1986 of the internationally famous Dockers
and Design trademark. This ownership is evidenced by its valid and
existing registrations in various member countries of the Paris
Convention. In the Philippines, it has a Certificate of Registration
No. 46619 in the Principal Register for use of said trademark on
pants, shirts, blouses, skirts, shorts, sweatshirts and jackets under
Class 25.[9]
The Dockers and Design trademark was first used in the Philippines
in or about May 1988, by LSPI, a domestic corporation engaged in
the manufacture, sale and distribution of various products bearing
trademarks owned by LS & Co. To date, LSPI continues to
manufacture and sell Dockers Pants with the Dockers and Design
trademark.[10]
LS & Co. and LSPI further alleged that they discovered the presence
in the local market of jeans under the brand name Paddocks using
a device which is substantially, if not exactly, similar to the Dockers
and Design trademark owned by and registered in the name of LS &
Co., without its consent. Based on their information and belief, they
added, Clinton Apparelle manufactured and continues to
manufacture such Paddocks jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or just
one of impleaded defendants are behind the manufacture and sale
of the Paddocks jeans complained of, they brought this suit under
Section 13, Rule 3[11] of the 1997 Rules of Civil Procedure.[12]
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining

order be immediately issued restraining defendants, their officers,
employees, agents, representatives, dealers, retailers or assigns
from committing the acts herein complained of, and, specifically,
for the defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns, to cease and
desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using denims, jeans or pants with the
design herein complained of as substantially, if not exactly similar,
to plaintiffs Dockers and Design trademark.
2. That after notice and hearing, and pending trial on the merits, a
writ of preliminary injunction be issued enjoining defendants, their
officers, employees, agents, dealers, retailers, or assigns from
manufacturing, distributing, selling, offering for sale, advertising,
jeans the design herein complained of as substantially, if not
exactly similar, to plaintiffs Dockers and Design trademark.
3. That after trial on the merits, judgment be rendered as follows:
a. Affirming and making permanent the writ of preliminary

injunction;
b. Ordering that all infringing jeans in the possession of either or

both defendants as the evidence may warrant, their officers,
employees, agents, retailers, dealers or assigns, be delivered to the
Honorable Court of plaintiffs, and be accordingly destroyed;[13]
Acting on the prayer for the issuance of a TRO, the trial court
issued an Order[14] setting it for hearing on 5 May 1998. On said
date, as respondent failed to appear despite notice and the other
defendant, Olympian Garments, had yet to be notified, the hearing
was re-scheduled on 14 May 1998.[15]
On 14 May 1998, neither Clinton Apparelle nor Olympian Garments

appeared. Clinton Apparelle claimed that it was not notified of such
hearing. Only Olympian Garments allegedly had been issued with
summons. Despite the absence of the defendants, the hearing on
the application for the issuance of a TRO continued. [16]
The following day, the trial court issued an Order[17] granting the
TRO applied for, the pertinent portions of which state:
Considering the absence of counsel/s for the defendant/s during

the summary hearing scheduled on May 5, 1998 and also during
the re-scheduled summary hearing held on May 14, 1998 set for
the purpose of determining whether or not a Temporary
Restraining Order shall be issued, this Court allowed the counsel
for the plaintiffs to present on May 14, 1998 their
arguments/evidences in support of their application. After hearing
the arguments presented by the counsel for the plaintiffs during
the summary hearing, this Court is of the considered and humble
view that grave injustice and irreparable injury to the plaintiffs
would arise before the matter of whether or not the application for
the issuance of a Writ of Preliminary Injunction can be heard, and
that, in the interest of justice, and in the meantime, a Temporary
Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued

restraining the defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing the
acts complained of in the verified Complaint, and specifically, for
the defendants, their officers, employees, agents, representatives,
dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising
or otherwise using denims, jeans or pants with the design
complained of in the verified Complaint as substantially, if not
exactly similar, to plaintiffs Dockers and Design trademark; until
after the application/prayer for the issuance of a Writ of
Preliminary Injunction is heard/resolved, or until further orders
from this Court.
The hearing on the application for the issuance of a Writ of

Preliminary Injunction as embodied in the verified Complaint is set
on May 26, 1998 (Tuesday) at 2:00 P.M. which setting is
intransferable in character considering that the lifetime of this
Temporary Restraining Order is twenty (20) days from date hereof.
[18]
On 4 June 1998, the trial court issued

another Order[19] granting the writ of preliminary injunction, to wit:
ORDER
This resolves the plaintiffs application or prayer for the issuance of

a writ of preliminary injunction as embodied in the verified
complaint in this case. Parenthetically, this Court earlier issued a
temporary restraining order. (see Order dated May 15,
1998; see also Order dated May 26, 1998)
After a careful perusal of the contents of the pleadings and

documents on record insofar as they are pertinent to the issue
under consideration, this Court finds that at this point in time, the
plaintiffs appear to be entitled to the relief prayed for and this
Court is of the considered belief and humble view that, without
necessarily delving on the merits, the paramount interest of justice
will be better served if the status quo shall be maintained and that
an injunction bond of P2,500,000.00 appears to be in order.
(see Sections 3 and 4, Rule 58, 1997 Rules of Civil Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs prayer for the

issuance of a writ of preliminary injunction is GRANTED.
Accordingly, upon the plaintiffs filing, within ten (10) days from
their receipt hereof, an injunction bond of P2,500,000.00 executed
to the defendants to the effect that the plaintiffs will pay all
damages the defendants may sustain by reason of this injunction
in case the Court should finally decide that the plaintiffs are not
entitled thereto, let a writ of preliminary injunction issue enjoining
or restraining the commission of the acts complained of in the
verified Complaint in this case, and specifically, for the defendants,
their officers, employees, agents, representatives, dealers and
retailers or assigns or persons acting in their behalf to cease and
desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using, denims, jeans or pants with the
design complained of in the verified Complaint in this case, which
is substantially, if not exactly, similar to plaintiffs DOCKERS and
DESIGN trademark or logo as covered by the Bureau of Patents,
Trademarks and Technology Transfer Certificate of Registration No.
46619, until after this case shall have been decided on the merits
and/or until further orders from this Court.[20]
The evidence considered by the trial court in granting

injunctive relief were as follows: (1) a certified true copy of the
certificate of trademark registration for Dockers and Design; (2) a
pair of DOCKERS pants bearing the Dockers and Design
trademark; (3) a pair of Paddocks pants bearing respondents
assailed logo; (4) the Trends MBL Survey Report purportedly
proving that there was confusing similarity between two marks; (5)
the affidavit of one Bernabe Alajar which recounted petitioners prior
adoption, use and registration of the Dockers and Design
trademark; and (6) the affidavit of one Mercedes Abad of Trends
MBL, Inc. which detailed the methodology and procedure used in
their survey and the results thereof.[21]
Clinton Apparelle thereafter filed a Motion to Dismiss[22] and a Motion

for Reconsideration[23] of the Order granting the writ of preliminary
injunction. Meantime, the trial court issued an Order[24] approving
the bond filed by petitioners.
On 22 June 1998, the trial court required[25] the parties to file their
respective citation of authorities/ jurisprudence/Supreme Court
decisions on whether or not the trial court may issue the writ of
preliminary injunction pending the resolution of the Motion for
Reconsideration and the Motion to Dismiss filed by respondent.
On 2 October 1998, the trial court denied Clinton Apparelles Motion

to Dismiss and Motion for Reconsideration in an Omnibus Order,
[26]
the pertinent portions of which provide:
After carefully going over the contents of the pleadings in relation

to pertinent portions of the records, this Court is of the considered
and humble view that:
On the first motion, the arguments raised in the plaintiffs

aforecited Consolidated Opposition appears to be meritorious. Be
that as it may, this Court would like to emphasize, among other
things, that the complaint states a cause of action as provided
under paragraphs 1 to 18 thereof.
On the second motion, the arguments raised in the plaintiffs

aforecited Consolidated Opposition likewise appear to be impressed
with merit. Besides, there appears to be no strong and cogent
reason to reconsider and set aside this Courts Order dated June 4,
1998 as it has been shown so far that the trademark or logo of
defendants is substantially, if not exactly, similar to plaintiffs
DOCKERS and DESIGN trademark or logo as covered by BPTTT
Certificate of Registration No. 46619 even as the BPTTT Certificate
of Registration No. 49579 of Clinton Apparelle, Inc. is only for the
mark or word PADDOCKS (see Records, p. 377) In any event, this
Court had issued an Order dated June 18, 1998 for the issuance
of the writ of preliminary injunction after the plaintiffs filed the
required bond of P2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To

Dismiss and Motion For Reconsideration are both DENIED
for lack of merit, and accordingly, this Courts Order dated
June 18, 1998 for the issuance of the writ of preliminary
injunction is REITERATED so the writ of preliminary
injunction could be implemented unless the
implementation thereof is restrained by the Honorable
Court of Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on 8

October 1998.[27]
Thus, Clinton Apparelle filed with the Court of Appeals

a Petition[28] for certiorari, prohibition and mandamus with prayer
for the issuance of a temporary restraining order and/or writ of
preliminary injunction, assailing the orders of the trial court dated
15 May 1998, 4 June 1998 and 2 October 1998.
On 20 October 1998, the Court of Appeals issued

a Resolution[29] requiring herein petitioners to file their comment on
the Petition and at the same time issued the prayed-for temporary
restraining order.
The appellate court rendered on 21 December 1998 its now

assailed Decision granting Clinton Apparelles petition. The Court of
Appeals held that the trial court did not follow the procedure
required by law for the issuance of a temporary restraining order as
Clinton Apparelle was not duly notified of the date of the summary
hearing for its issuance. Thus, the Court of Appeals ruled that the
TRO had been improperly issued.[30]
The Court of Appeals also held that the issuance of the writ of
preliminary injunction is questionable. In its opinion, herein
petitioners failed to sufficiently establish its material and
substantial right to have the writ issued. Secondly, the Court of
Appeals observed that the survey presented by petitioners to
support their contentions was commissioned by petitioners. The
Court of Appeals remarked that affidavits taken ex-parte are
generally considered to be inferior to testimony given in open court.
The appellate court also considered that the injury petitioners have
suffered or are currently suffering may be compensated in terms of
monetary consideration, if after trial, a final judgment shall be
rendered in their favor.[31]
In addition, the Court of Appeals strongly believed that the

implementation of the questioned writ would effectively shut down
respondents business, which in its opinion should not be
sanctioned. The Court of Appeals thus set aside the orders of the
trial court dated 15 May 1998 and 4 June 1998, respectively
issuing a temporary restraining order and granting the issuance of
a writ of preliminary injunction.
With the denial of their Motion for Reconsideration,[32] petitioners are

now before this Court seeking a review of the appellate
courts Decision and Resolution. LS & Co. and LSPI claim that the
Court of Appeals committed serious error in: (1) disregarding the
well-defined limits of the writ of certiorari that questions on the
sufficiency of evidence are not to be resolved in such a petition; (2)
in holding that there was no confusion between the two marks; (3)
in ruling that the erosion of petitioners trademark is not protectable
by injunction; (4) in ignoring the procedure previously agreed on by
the parties and which was adopted by the trial court; and (5) in
declaring that the preliminary injunction issued by the trial court
will lead to the closure of respondents business.
In its Comment,[33] Clinton Apparelle maintains that only questions
of law may be raised in an appeal by certiorari under Rule 45 of the
Rules of Court. It asserts that the question of whether the Court of
Appeals erred in: (1) disregarding the survey evidence; (2) ruling
that there was no confusion between the two marks; and (c) finding
that the erosion of petitioners trademark may not be protected by
injunction, are issues not within the ambit of a petition for review
on certiorari under Rule 45. Clinton Apparelle also contends that
the Court of Appeals acted correctly when it overturned the writ of
preliminary injunction issued by the trial court. It believes that the
issued writ in effect disturbed the status quoand disposed of the
main case without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary

injunction by the trial court was proper and whether the Court of
Appeals erred in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary

injunction as an order granted at any stage of an action prior to the
judgment or final order requiring a party or a court, agency or a
person to refrain from a particular act or acts. Injunction is
accepted as the strong arm of equity or a transcendent remedy to be
used cautiously as it affects the respective rights of the parties, and
only upon full conviction on the part of the court of its extreme
necessity. An extraordinary remedy, injunction is designed to
preserve or maintain the status quo of things and is generally
availed of to prevent actual or threatened acts until the merits of
the case can be heard.[34] It may be resorted to only by a litigant for
the preservation or protection of his rights or interests and for no
other purpose during the pendency of the principal action. [35] It is
resorted to only when there is a pressing necessity to avoid
injurious consequences, which cannot be remedied under any
standard compensation. The resolution of an application for a writ
of preliminary injunction rests upon the existence of an emergency
or of a special recourse before the main case can be heard in due
course of proceedings.[36]
Section 3, Rule 58, of the Rules of Court enumerates the grounds

for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A

preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission
or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance, or non-performance of the

act or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or

is attempting to do, or is procuring or suffering to be done, some
act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to
render the judgment ineffectual.
Under the cited provision, a clear and positive right especially

calling for judicial protection must be shown. Injunction is not a
remedy to protect or enforce contingent, abstract, or future rights; it
will not issue to protect a right not in esse and which may never
arise, or to restrain an act which does not give rise to a cause of
action. There must exist an actual right. [37] There must be a patent
showing by the complaint that there exists a right to be protected
and that the acts against which the writ is to be directed are
violative of said right.[38]
There are generally two kinds of preliminary injunction: (1) a

prohibitory injunction which commands a party to refrain from
doing a particular act; and (2) a mandatory injunction which
commands the performance of some positive act to correct a wrong
in the past.[39]
The Court of Appeals did not err in reviewing proof adduced by

petitioners to support its application for the issuance of the writ.
While the matter of the issuance of a writ of preliminary injunction
is addressed to the sound discretion of the trial court, this
discretion must be exercised based upon the grounds and in the
manner provided by law. The exercise of discretion by the trial court
in injunctive matters is generally not interfered with save in cases of
manifest abuse.[40] And to determine whether there was abuse of
discretion, a scrutiny must be made of the bases, if any, considered
by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with
great caution and deliberation, and only in cases of great injury
where there is no commensurate remedy in damages. [41]
In the present case, we find that there was scant justification for
the issuance of the writ of preliminary injunction.
Petitioners anchor their legal right to Dockers and Design

trademark on the Certificate of Registration issued in their favor by
the Bureau of Patents, Trademarks and Technology
Transfer. According to Section 138 of Republic Act No. 8293, [42] this

Certificate of Registration is prima facie evidence of the validity of

the registration, the registrants ownership of the mark and of the
exclusive right to use the same in connection with the goods or
services and those that are related thereto specified in the
certificate. Section 147.1 of said law likewise grants the owner of
the registered mark the exclusive right to prevent all third parties
not having the owners consent from using in the course of trade
identical or similar signs for goods or services which are identical or
similar to those in respect of which the trademark is registered if
such use results in a likelihood of confusion.
However, attention should be given to the fact that petitioners

registered trademark consists of two elements: (1) the word mark
Dockers and (2) the wing-shaped design or logo. Notably, there is
only one registration for both features of the trademark giving the
impression that the two should be considered as a single unit.
Clinton Apparelles trademark, on the other hand, uses the
Paddocks word mark on top of a logo which according to petitioners
is a slavish imitation of the Dockers design. The two trademarks
apparently differ in their word marks (Dockers and Paddocks), but
again according to petitioners, they employ similar or identical
logos. It could thus be said that respondent only appropriates
petitioners logo and not the word mark Dockers; it uses only a
portion of the registered trademark and not the whole.
Given the single registration of the trademark Dockers and Design

and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the
challenged Paddocks device is far from clear. Stated otherwise, it is
not evident whether the single registration of the trademark
Dockers and Design confers on the owner the right to prevent the
use of a fraction thereof in the course of trade. It is also unclear
whether the use without the owners consent of a portion of a
trademark registered in its entirety constitutes material or
substantial invasion of the owners right.
It is likewise not settled whether the wing-shaped logo, as opposed
to the word mark, is the dominant or central feature of petitioners
trademarkthe feature that prevails or is retained in the minds of the
publican imitation of which creates the likelihood of deceiving the
public and constitutes trademark infringement. [43] In sum, there are
vital matters which have yet and may only be established through a
full-blown trial.
From the above discussion, we find that petitioners right to

injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined. Petitioners also
failed to show proof that there is material and substantial invasion
of their right to warrant the issuance of an injunctive writ. Neither
were petitioners able to show any urgent and permanent necessity
for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for
injunctive relief, urging that the erosion or dilution of their
trademark is protectable. They assert that a trademark owner does
not have to wait until the mark loses its distinctiveness to obtain
injunctive relief, and that the mere use by an infringer of a
registered mark is already actionable even if he has not yet profited
thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous

mark to identify and distinguish goods or services, regardless of the
presence or absence of: (1) competition between the owner of the
famous mark and other parties; or (2) likelihood of confusion,
mistake or deception. Subject to the principles of equity, the owner
of a famous mark is entitled to an injunction against another
persons commercial use in commerce of a mark or trade name, if
such use begins after the mark has become famous and causes
dilution of the distinctive quality of the mark. This is intended to
protect famous marks from subsequent uses that blur
distinctiveness of the mark or tarnish or disparage it. [44]
Based on the foregoing, to be eligible for protection from dilution,

there has to be a finding that: (1) the trademark sought to be
protected is famous and distinctive; (2) the use by respondent of
Paddocks and Design began after the petitioners mark became
famous; and (3) such subsequent use defames petitioners mark. In
the case at bar, petitioners have yet to establish whether Dockers
and Design has acquired a strong degree of distinctiveness and
whether the other two elements are present for their cause to fall
within the ambit of the invoked protection. TheTrends MBL Survey
Report which petitioners presented in a bid to establish that there
was confusing similarity between two marks is not sufficient proof
of any dilution that the trial court must enjoin.
The Court also finds that the trial courts order granting the writ did
not adequately detail the reasons for the grant, contrary to our
ruling inUniversity of the Philippines v. Hon. Catungal Jr., [45] wherein
we held that:
The trial court must state its own findings of fact and cite
particular law to justify grant of preliminary injunction. Utmost
care in this regard is demanded.[46]
The trial court in granting the injunctive relief tersely

ratiocinated that the plaintiffs appear to be entitled to the relief
prayed for and this Court is of the considered belief and humble
view that, without necessarily delving on the merits, the paramount
interest of justice will be better served if the status quo shall be
maintained. Clearly, this statement falls short of the requirement
laid down by the above-quoted case. Similarly, in Developers Group
of Companies, Inc. v. Court of Appeals,[47] we held that it was not
enough for the trial court, in its order granting the writ, to simply
say that it appeared after hearing that plaintiff is entitled to the
relief prayed for.
In addition, we agree with the Court of Appeals in its holding that

the damages the petitioners had suffered or continue to suffer may
be compensated in terms of monetary consideration. As held
in Government Service Insurance System v. Florendo:[48]
a writ of injunction should never have been issued when an action

for damages would adequately compensate the injuries caused.
The very foundation of the jurisdiction to issue the writ of
injunction rests in the probability of irreparable injury, inadequacy
of pecuniary estimation and the prevention of the multiplicity of
suits, and where facts are not shown to bring the case within these
conditions, the relief of injunction should be refused.[49]
We also believe that the issued injunctive writ, if allowed, would

dispose of the case on the merits as it would effectively enjoin the
use of the Paddocks device without proof that there is basis for
such action. The prevailing rule is that courts should avoid issuing
a writ of preliminary injunction that would in effect dispose of the
main case without trial.[50] There would be a prejudgment of the
main case and a reversal of the rule on the burden of proof since it
would assume the proposition which petitioners are inceptively
bound to prove.[51]
Parenthetically, we find no flaw in the Court of Appeals disquisition

on the consequences of the issued injunction. An exercise of
caution, we believe that such reflection is necessary to weigh the
alleged entitlement to the writ vis--vis its possible effects. The
injunction issued in the instant case is of a serious nature as it
tends to do more than to maintain the status quo. In fact, the
assailed injunction if sustained would bring about the result
desired by petitioners without a trial on the merits.
Then again, we believe the Court of Appeals overstepped its

authority when it declared that the alleged similarity as to the two
logos is hardly confusing to the public. The only issue brought
before the Court of Appeals through respondents Petition under
Rule 65 of the Rules of Court involved the grave abuse of discretion
allegedly committed by the trial court in granting the TRO and the
writ of preliminary injunction. The appellate court in making such a
statement went beyond that issue and touched on the merits of the
infringement case, which remains to be decided by the trial court.
In our view, it was premature for the Court of Appeals to declare
that there is no confusion between the two devices or logos. That
matter remains to be decided on by the trial court.
Finally, we have no contention against the procedure adopted by the

trial court in resolving the application for an injunctive writ and we
believe that respondent was accorded due process. Due process, in
essence, is simply an opportunity to be heard. And in applications
for preliminary injunction, the requirement of hearing and prior
notice before injunction may issue has been relaxed to the point
that not all petitions for preliminary injunction must undergo a
trial-type hearing, it being a hornbook doctrine that a formal or
trial-type hearing is not at all times and in all instances essential to
due process. Due process simply means giving every contending
party the opportunity to be heard and the court to consider every
piece of evidence presented in their favor. Accordingly, this Court
has in the case of Co v. Calimag, Jr.,[52] rejected a claim of denial of
due process where such claimant was given the opportunity to be
heard, having submitted his counter-affidavit and memorandum in
support of his position.[53]
After a careful consideration of the facts and arguments of the

parties, the Court finds that petitioners did not adequately prove
their entitlement to the injunctive writ. In the absence of proof of a
legal right and the injury sustained by the applicant, an order of
the trial court granting the issuance of an injunctive writ will be set
aside for having been issued with grave abuse of discretion.
[54]
Conformably, the Court of Appeals was correct in setting aside
the assailed orders of the trial court.
WHEREFORE, the instant petition is DENIED. The Decision of the
Court of Appeals dated 21 December 1998 and its Resolution dated
10 May 1999 are AFFIRMED. Costs against petitioners.
SO ORDERED.
THIRD DIVISION
WILLIAM C. YAO, SR., G.R. No. 168306

LUISA C. YAO, RICHARD
C. YAO, WILLIAM C. YAO
JR., and ROGER C. YAO, Present:
Petitioners,
YNARES-SANTIAGO,
Chairperson,
-versus AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
THE PEOPLE OF THE
PHILIPPINES, PETRON
CORPORATION and
PILIPINAS SHELL
PETROLEUM CORP., and
its Principal, SHELL INTL Promulgated:
PETROLEUM CO. LTD.,
Respondents. June 19, 2007
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court,
petitioners William C. Yao, Sr., Luisa C. Yao, Richard C. Yao, William C. Yao, Jr.,
and Roger C. Yao pray for the reversal of the Decision dated 30 September 2004,
[2]
and Resolution dated 1 June 2005, of the Court of Appeals in CA G.R. SP No.
79256,[3] affirming the two Orders, both dated 5 June 2003, of the Regional Trial
Court (RTC), Branch 17, Cavite City, relative to Search Warrants No. 2-2003 and
No. 3-2003.[4] In the said Orders, theRTC denied the petitioners Motion to Quash
Search Warrant[5] and Motion for the Return of the Motor Compressor
and Liquified Petroleum Gas (LPG) Refilling Machine.[6]
The following are the facts:
Petitioners are incorporators and officers of MASAGANA GAS

CORPORATION (MASAGANA), an entity engaged in the refilling, sale and
distribution of LPG products. Private respondents Petron Corporation (Petron)
and Pilipinas Shell Petroleum Corporation (Pilipinas Shell) are two of the largest
bulk suppliers and producers of LPG in the Philippines. Their LPG products are
sold under the marks GASUL and SHELLANE, respectively. Petron is the
registered owner in the Philippines of the trademarks GASUL and GASUL
cylinders used for its LPG products. It is the sole entity in
the Philippines authorized to allow refillers and distributors to refill, use, sell, and
distribute GASUL LPG containers, products and its trademarks. Pilipinas Shell, on
the other hand, is the authorized user in the Philippines of the tradename,
trademarks, symbols, or designs of its principal, Shell International Petroleum
Company Limited (Shell International), including the marks SHELLANE and
SHELL device in connection with the production, sale and distribution of
SHELLANE LPGs. It is the only corporation in the Philippines authorized to
allow refillers and distributors to refill, use, sell and distribute SHELLANE LPG
containers and products.[7]
On 3 April 2003, National Bureau of Investigation (NBI)

agent Ritche N. Oblanca (Oblanca) filed two applications for search warrant with
the RTC, Branch 17, CaviteCity, against petitioners and other occupants of the
MASAGANA compound located at Governors
Drive, Barangay Lapidario, Trece Martires, Cavite City, for alleged violation of
Section 155, in relation to Section 170 of Republic Act No. 8293, otherwise known
as The Intellectual Property Code of the Philippines.[8] The two applications for
search warrant uniformly alleged that per information, belief, and personal
verification of Oblanca, the petitioners are actually producing, selling, offering for
sale and/or distributing LPG products using steel cylinders owned by, and bearing
the tradenames, trademarks, and devices of Petron and Pilipinas Shell, without
authority and in violation of the rights of the said entities.
In his two separate affidavits[9] attached to the two applications for search
warrant, Oblanca alleged:
1. [That] on 11 February 2003, the National Bureau of
Investigation (NBI) received a letter-complaint from
Atty. Bienvenido I. Somera Jr. of Villaraza and Angangco, on behalf of
among others, [Petron Corporation (PETRON)] and Pilipinas Shell
Petroleum Corporation (PSPC), the authorized representative of Shell
International Petroleum Company Limited (Shell International),
requesting assistance in the investigation and, if warranted, apprehension
and prosecution of certain persons and/or establishments suspected of
violating the intellectual property rights [of PETRON] and of PSPC and
Shell International.
2. [That] on the basis of the letter-complaint, I, together

with Agent Angelo Zarzoso, was assigned as the NBI agent on the
case.
3. [That] prior to conducting the investigation on the

reported illegal activities, he reviewed the certificates of trademark
registrations issued in favor of [PETRON], PSPC and Shell
International as well as other documents and other evidence obtained
by the investigative agency authorized by [PETRON], PSPC and Shell
International to investigate and cause the investigation of persons and
establishments violating the rights of [PETRON], PSPC and Shell
International, represented by Mr. Bernabe C. Alajar. Certified copies of
the foregoing trademark registrations are attached hereto as Annexes A
to :E.
4. [That] among the establishments alleged to be

unlawfully refilling and unlawfully selling and distributing
[Gasul LPG and] Shellane products is Masagana Gas Corporation
(MASAGANA). Based on Securities and Exchange Commission
Records, MASAGANA has its principal office address
at 9775 Kamagong Street, San
Antonio Village, Makati, MetroManila. The incorporators and
directors of MASAGANA are William C. Yao, Sr., Luisa C. Yao,
Richard C. Yao, William C. Yao, Jr., and Roger C. Yao. x x x.
5. I confirmed that MASAGANA is not authorized to use

[PETRON and] Shellane LPG cylinders and its trademarks
and tradenames or to be refillers or distributors of [PETRON
and] Shellane LPGs.
6. I went to MASAGANAs refilling station located at

Governors
Drive, Barangay Lapidario, Trece Martires City (sic), Cavite to
investigate its activities. I confirmed that MASAGANA is indeed
engaged in the unauthorized refilling, sale and/or distribution of
[Gasul and] Shellane LPG cylinders. I found out that MASAGANA
delivery trucks with Plate Nos. UMN-971, PEZ-612, WTE-527, XAM-
970 and WFC-603 coming in and out of the refilling plant located at
the aforementioned address contained multi-brand LPG cylinders
including [Gasul and] Shellane. x x x.
7. [That] on 13 February 2003, I conducted a test-buy

accompanied by Mr. Bernabe C. Alajar. After asking the purpose of
our visit, MASAGANAs guard allowed us to enter the MASAGANA
refilling plant to purchase GASUL and SHELLANE LPGs. x x x. We
were issued an order slip which we presented to the cashiers office
located near the refilling station. After paying the amount
x x x covering the cost of the cylinders and their contents, they were
issued Cash Invoice No. 56210 dated February 13, 2003. We were,
thereafter, assisted by the plant attendant in choosing empty GASUL
and SHELLANE 11 kg. cylinders, x x x were brought to the refilling
station [and filled in their presence.] I noticed that no valve seals were
placed on the cylinders.
[That] while inside the refilling plant doing the test-buy, I noticed that
stockpiles of multi-branded cylinders including GASUL and
SHELLANE cylinders were stored near the refilling station. I also
noticed that the total land area of the refilling plant is about 7,000 to
10,000 square meters. At the corner right side of the compound
immediately upon entering the gate is a covered area where the
maintenance of the cylinders is taking place. Located at the back right
corner of the compound are two storage tanks while at the left side also
at the corner portion is another storage tank. Several meters and
fronting the said storage tank is where the refilling station and the
office are located. It is also in this storage tank where the elevated blue
water tank depicting MASAGANA CORP. is located. About eleven
(11) refilling pumps and stock piles of multi-branded cylinders
including Shellane and GASUL are stored in the refilling station. At
the left side of the entrance gate is the guard house with small door for
the pedestrians and at the right is a blue steel gate used for incoming
and outgoing vehicles.
8. [That] on 27 February 2003, I conducted another test-

buy accompanied by Mr. Bernabe C. Alajar. x x x After choosing the
cylinders, we were issued an order slip which we presented to the
cashier. Upon payment, Cash Invoice No. 56398 was issued covering
the cost of both GASUL and SHELLANE LPG cylinders and their
contents. x x x Both cylinders were refilled in our presence and no
valve seals were placed on the cylinders.
Copies of the photographs of the delivery trucks, LPG cylinders and

registration papers were also attached to the aforementioned affidavits.[10]
Bernabe C. Alajar (Alajar), owner of Able Research and Consulting Services

Inc., was hired by Petron and Pilipinas Shell to assist them in carrying out their
Brand Protection Program. Alajar accompanied Oblanca during the surveillance of
and test-buys at the refilling plant of MASAGANA. He also executed two separate
affidavits corroborating the statements of Oblanca. These were annexed to the two
applications for search warrant.[11]
After conducting the preliminary examination on Oblanca and Alajar, and
upon reviewing their sworn affidavits and other attached documents,
Judge Melchor Q.C. Sadang (Judge Sadang), Presiding Judge of the RTC, Branch
17, Cavite City, found probable cause and correspondingly issued Search Warrants
No. 2-2003 and No. 3-2003.[12]The search warrants commanded any peace officer
to make an immediate search of the MASAGANA compound and to seize the
following items:
Under Search Warrant No. 2-2003:
a. Empty/filled LPG cylinder tanks/containers, bearing

the tradename SHELLANE, SHELL (Device) of Pilipinas Shell
Petroleum Corporation and the trademarks and other devices
owned by Shell International Petroleum Company, Ltd.;
b. Machinery and/or equipment being used or intended to be used

for the purpose of illegally refilling LPG cylinders belonging
to Pilipinas Shell Petroleum Corporation bearing the
latters tradename as well as the marks belonging to Shell
International Petroleum Company, Ltd., enumerated hereunder:
1. Bulk/Bullet LPG storage tanks;

2. Compressor/s (for pneumatic refilling system);
3. LPG hydraulic pump/s;
4. LPG refilling heads/hoses and appurtenances or LPG
filling assembly;
5. LPG pipeline gate valve or ball valve and handles and
levers;
6. LPG weighing scales; and
7. Seals simulating the shell trademark.
c. Sales invoices, ledgers, journals, official receipts, purchase
orders, and all other books of accounts, inventories and
documents pertaining to the production, sale and/or distribution of
the aforesaid goods/products.
d. Delivery truck bearing Plate Nos. WTE-527, XAM-970 and

WFC-603, hauling trucks, and/or other delivery trucks or vehicles
or conveyances being used or intended to be used for the purpose
of selling and/or distributing the above-mentioned counterfeit
products.
Under Search Warrant No. 3-2003:
a. Empty/filled LPG cylinder tanks/containers,

bearing Petron Corporations (Petron) tradename and
its tradename GASUL and other devices owned and/or used
exclusively by Petron;
b. Machinery and/or equipment being used or intended to be used

for the purpose of illegally refilling LPG cylinders belonging
to Petron enumerated hereunder;
1. Bulk/Bullet LPG storage tanks;

2. Compressor/s (for pneumatic filling system);
3. LPG hydraulic pump/s;
4. LPG filling heads/hoses and appurtenances or LPG filling
assembly;
5. LPG pipeline gate valve or ball valve and handles levers;
6. LPG weighing scales; and
7. Seals bearing the Petron mark;
c. Sales invoices, ledgers, journals, official receipts, purchase

orders, and all other books of accounts, inventories and
documents pertaining to the production, sale and/or distribution of
the aforesaid goods/products; and
d. Delivery trucks bearing Plate Nos. UMN-971, PEZ-612 and

WFC-603, hauling trucks, and/or other delivery trucks or vehicles
or conveyances being used for the purpose of selling and/or
distributing the above-mentioned counterfeit products.
Upon the issuance of the said search warrants, Oblanca and several NBI
operatives immediately proceeded to the MASAGANA compound and served the
search warrants on petitioners.[13] After searching the premises of MASAGANA,
the following articles described in Search Warrant No. 2-2003 were seized:
a. Thirty-eight (38) filled 11 kg. LPG cylinders, bearing

the tradename of Pilipinas Shell Petroleum Corporation and the
trademarks and other devices owned by Shell International
Petroleum Company, Ltd.;
b. Thirty-nine (39) empty 11 kg. LPG cylinders, bearing
c. Eight (8) filled 50 kg. LPG cylinders, bearing

d. Three (3) empty 50 kg. LPG cylinders, bearing

e. One (1) set of motor compressor for filling system.
Pursuant to Search Warrant No. 3-2003, the following articles were also
seized:
a. Six (6) filled 11 kg. LPG cylinders without seal,

bearing Petrons tradename and its trademark GASUL and other
devices owned and/or used exclusively by Petron;
b. Sixty-three (63) empty 11 kg. LPG cylinders,

c. Seven (7) tampered 11 kg. LPG cylinders,

d. Five (5) tampered 50 kg. LPG cylinders,

devices owned and/or used exclusively by Petron with tampered
GASUL logo;
e. One (1) set of motor compressor for filling system; and

f. One (1) set of LPG refilling machine.
On 22 April 2003, petitioners filed with the RTC a Motion to Quash Search
Warrants No. 2-2003 and No. 3-2003[14] on the following grounds:
1. There is no probable cause for the issuance of the search

warrant and the conditions for the issuance of a search
warrant were not complied with;
2. Applicant NBI Agent Ritchie N. Oblanca and his

witness Bernabe C. Alajar do not have any authority to
apply for a search warrant. Furthermore, they committed
perjury when they alleged in their sworn statements that
they conducted a test-buy on two occasions;
3. The place to be searched was not specified in the Search

Warrant as the place has an area of 10,000 square meters
(one hectare) more or less, for which reason the place to
be searched must be indicated with particularity;
4. The search warrant is characterized as a general warrant

as the items to be seized as mentioned in the search
warrant are being used in the conduct of the lawful
business of respondents and the same are not being used
in refilling Shellane and Gasul LPGs.
On 30 April 2003, MASAGANA, as third party claimant, filed with the

RTC a Motion for the Return of Motor Compressor and LPG Refilling Machine.
[15]
It claimed that it is the owner of the said motor compressor and LPG refilling
machine; that these items were used in the operation of its legitimate business;
and that their seizure will jeopardize its business interests.
On 5 June 2003, the RTC issued two Orders, one of which denied the
petitioners Motion to Quash Search Warrants No. 2-2003 and No. 3-2003, and
the other one also denied the Motion for the Return of Motor Compressor and
LPG Refilling Machine of MASAGANA, for lack of merit.[16]
With respect to the Order denying the petitioners motion to quash Search
Warrants No. 2-2003 and No. 3-2003, the RTC held that based on the testimonies
of Oblancaand Alajar, as well as the documentary evidence consisting of
receipts, photographs, intellectual property and corporate registration papers,
there is probable cause to believe that petitioners are engaged in the business of
refilling or using cylinders which bear the trademarks or devices
of Petron and Pilipinas Shell in the place sought to be searchedand that such
activity is probably in violation of Section 155 in relation to Section 170 of
Republic Act No. 8293.
It also ruled that Oblanca and Alajar had personal knowledge of the acts
complained of since they were the ones who monitored the activities of and
conducted test-buys on MASAGANA; that the search warrants in question are
not general warrants because the compound searched are solely used and
occupied by MASAGANA, and as such, there was no need to particularize the
areas within the compound that would be searched; and that the items to be
seized in the subject search warrants were sufficiently described with
particularity as the same was limited to cylinder tanks bearing the trademarks
GASUL and SHELLANE.
As regards the Order denying the motion of MASAGANA for the return of
its motor compressor and LPG refilling machine, the RTC resolved that
MASAGANA cannot be considered a third party claimant whose rights were
violated as a result of the seizure since the evidence disclosed that petitioners are
stockholders of MASAGANA and that they conduct their business through the
same juridical entity. It maintained that to rule otherwise would result in the
misapplication and debasement of the veil of corporate fiction. It also stated that
the veil of corporate fiction cannot be used as a refuge from liability.
Further, the RTC ratiocinated that ownership by another person or entity of

the seized items is not a ground to order its return; that in seizures pursuant to a
search warrant, what is important is that the seized items were used or intended
to be used as means of committing the offense complained of; that by its very
nature, the properties sought to be returned in the instant case appear to be related
to and intended for the illegal activity for which the search warrants were applied
for; and that the items seized are instruments of an offense.
Petitioners filed Motions for Reconsideration of the assailed Orders, [17] but
these were denied by the RTC in its Order dated 21 July 2003 for lack of
compelling reasons.[18]
Subsequently, petitioners appealed the two Orders of the RTC to the Court
of Appeals via a special civil action for certiorari under Rule 65 of the Rules of
Court.[19] On30 September 2004, the Court of Appeals promulgated its Decision
affirming the Orders of the RTC.[20] It adopted in essence the bases and reasons of
the RTC in its two Orders. The decretal portion thereof reads:
Based on the foregoing, this Court finds no reason to disturb the

assailed Orders of the respondent judge. Grave abuse of discretion has
not been proven to exist in this case.
WHEREFORE, the petition is hereby DISMISSED for lack of

merit. The assailed orders both dated June 5, 2003 are hereby
AFFIRMED.
Petitioners filed a Motion for Reconsideration [21] of the Decision of the

Court of Appeals, but this was denied in its Resolution dated 1 June 2005 for lack
of merit.[22]
Petitioners filed the instant petition on the following grounds:
I.
THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE PRESIDING JUDGE OF RTC CAVITE CITY HAD
SUFFICIENT BASIS IN DECLARING THE EXISTENCE OF
PROBABLE CAUSE;
II.

THAT NBI AGENT (RITCHIE OBLANCA) CAN APPLY FOR THE
SEARCH WARRANTS NOTHWITHSTANDING HIS LACK OF
AUTHORITY;
III.

THAT THE REQUIREMENT OF GIVING A PARTICULAR
DESCRIPTION OF THE PLACE TO BE SEARCHED WAS
COMPLIED WITH;
IV.

THAT THE APPLICATIONS AND THE SEARCH WARRANTS
THEMSELVES SHOW NO AMBIGUITY OF THE ITEMS TO BE
SEIZED;
V.

THAT THE COMPLAINT IS DIRECTED AGAINST MASAGANA
GAS CORPORATION, ACTING THROUGH ITS OFFICERS AND
DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY
NOT BE CONSIDERED AS THIRD PARTY CLAIMANT WHOSE
RIGHTS WERE VIOLATED AS A RESULT OF THE SEIZURE.[23]
Apropos the first issue, petitioners allege that Oblanca and Alajar had no
personal knowledge of the matters on which they testified;
that Oblanca and Alajar lied to Judge Sadang when they stated under oath that they
were the ones who conducted the test-buys on two different occasions; that the
truth of the matter is that Oblanca and Alajar never made the purchases personally;
that the transactions were undertaken by other persons namely, Nikko Javier and
G. Villanueva as shown in the Entry/Exit Slips of MASAGANA; and that even if it
were true that Oblanca and Alajar asked Nikko Javier and G. Villanueva to conduct
the test-buys, the information relayed by the latter two to the former was mere
hearsay.[24]
Petitioners also contend that if Oblanca and Alajar had indeed used different
names in purchasing the LPG cylinders, they should have mentioned it in their
applications for search warrants and in their testimonies during the preliminary
examination; that it was only after the petitioners had submitted to the RTC the
entry/exit slips showing different personalities who made the purchases
that Oblanca and Alajar explained that they had to use different names in order to
avoid detection; that Alajar is not connected with either of the private respondents;
that Alajar was not in a position to inform the RTC as to the distinguishing
trademarks of SHELLANE and GASUL; that Oblanca was not also competent to
testify on the marks allegedly infringed by petitioners; that Judge Sadang failed to
ask probing questions on the distinguishing marks of SHELLANE and GASUL;
that the findings of the Brand Protection Committee of Pilipinas Shell were not
submitted nor presented to the RTC; that although
Judge Sadang examined Oblanca and Alajar, the former did not ask exhaustive
questions; and that the questions Judge Sadang asked were merely rehash of the
contents of the affidavits of Oblanca and Alajar.[25]
These contentions are devoid of merit.
Article III, Section 2, of the present Constitution states the requirements

before a search warrant may be validly issued, to wit:
Section 2. The right of the people to be secure in their persons,

houses, papers, and effects against unreasonable searches and seizures of
whatever nature and for any purpose shall be inviolable, and no
search warrant or warrant of arrest shall issue except upon probable
cause to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he
may produce, and particularly describing the place to be searched
and the persons or things to be seized. (emphasis supplied).
Section 4 of Rule 126 of the Revised Rules on Criminal Procedure, provides

with more particularity the requisites in issuing a search warrant, viz:
SEC. 4. Requisites for issuing search warrant. A search warrant

shall not issue except upon probable cause in connection with one
specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the
Philippines.
According to the foregoing provisions, a search warrant can be issued only

upon a finding of probable cause. Probable cause for search warrant means such
facts and circumstances which would lead a reasonably discreet and prudent man
to believe that an offense has been committed and that the objects sought in
connection with the offense are in the place to be searched.[26]
The facts and circumstances being referred thereto pertain to facts, data or
information personally known to the applicant and the witnesses he may present.
[27]
The applicant or his witnesses must have personal knowledge of the
circumstances surrounding the commission of the offense being complained
of. Reliable information is insufficient. Mere affidavits are not enough, and the
judge must depose in writing the complainant and his witnesses.[28]
Section 155 of Republic Act No. 8293 identifies the acts constituting
trademark infringement, thus:
SEC. 155. Remedies; Infringement. Any person who shall,

without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or

colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services
on or in connection with which such use is likely to cause confusion, or
to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a

registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for sale,
distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the registrant
for the remedies hereinafter set forth: Provided, That the infringement
takes place at the moment any of the acts stated in Subsection 155.1 or
this subsection are committed regardless of whether there is actual sale
of goods or services using the infringing material.
As can be gleaned in Section 155.1, mere unauthorized use of a container

bearing a registered trademark in connection with the sale, distribution or
advertising of goods or services which is likely to cause confusion, mistake or
deception among the buyers/consumers can be considered as trademark
infringement.
In his sworn affidavits,[29] Oblanca stated that before conducting an
investigation on the alleged illegal activities of MASAGANA, he reviewed the
certificates of trademark registrations issued by the Philippine Intellectual Property
Office in favor of Petron and Pilipinas Shell; that he confirmed
from Petron and Pilipinas Shell that MASAGANA is not authorized to sell, use,
refill or distribute GASUL and SHELLANE LPG cylinder containers; that he
and Alajar monitored the activities of MASAGANA in its refilling plant station
located within its compound at Governors
Drive, Barangay Lapidario, Trece Martires, Cavite City; that, using different
names, they conducted two test-buys therein where they purchased LPG cylinders
bearing the trademarks GASUL and SHELLANE; that the said GASUL and
SHELLANE LPG cylinders were refilled in their presence by the MASAGANA
employees; that while they were inside the MASAGANA compound, he noticed
stock piles of multi-branded cylinders including GASUL and SHELLANE LPG
cylinders; and that they observed delivery trucks loaded with GASUL and
SHELLANE LPG cylinders coming in and out of the MASAGANA compound and
making deliveries to various retail outlets. These allegations were corroborated
by Alajar in his separate affidavits.
In support of the foregoing statements, Oblanca also submitted the following

documentary and object evidence:
1. Certified true copy of the Certificate of Registration No. 44046

for SHELL (DEVICE) in the name of Shell International;


4. Certified true copy of the Certificate of Registration No. R-2813

for SHELL in the name of Shell International;

for SHELLANE in the name of Shell International;

for the mark GASUL in the name of Petron;
7. Certified true copy of the Certificate of Registration No. C-147
for GASUL CYLINDER CONTAINING LIQUEFIED
PETROLEUM GAS in the name of Petron;

for the mark GASUL AND DEVICE in the name of Petron;
9. Certified true copy of the Articles of Incorporation of Masagana;
10. Certified true copy of the By-laws of Masagana;
11. Certified true copy of the latest General Information Sheet

of Masagana on file with the Securities and Exchange
Commission;
12. Pictures of delivery trucks coming in and out of Masagana while

it delivered Gasul and Shellane LPG;
13. Cash Invoice No. 56210 dated 13 February 2003 issued

by Masagana for the Gasul and Shellane LPG purchased by
Agent Oblanca and witness Alajar;
14. Pictures of the Shellane and Gasul LPGs covered by Cash

Invoice No. 56210 purchased from Masagana by
Agent Oblanca and witness Alajar;
15. Cash Invoice No. 56398 dated 27 February 2003 issued

by Masagana for the Gasul and Shellane LPG purchased by
Agent Oblanca and witness Alajar; and
16. Pictures of the Shellane and Gasul LPGs covered by Cash

Invoice No. 56398 purchased from Masagana by
Agent Oblanca and witness Alajar. [30]
Extant from the foregoing testimonial, documentary and object evidence is

that Oblanca and Alajar have personal knowledge of the fact that petitioners,
through MASAGANA, have been using the LPG cylinders bearing the marks
GASUL and SHELLANE without permission from Petron and Pilipinas Shell, a
probable cause for trademark infringement. Both Oblanca and Alajar were clear
and insistent that they were the very same persons who monitored the activities of
MASAGANA; that they conducted test-buys thereon; and that in order to avoid
suspicion, they used different names during the test-buys. They also personally
witnessed the refilling of LPG cylinders bearing the marks GASUL and
SHELLANE inside the MASAGANA refilling plant station and the deliveries of
these refilled containers to some outlets using mini-trucks.
Indeed, the aforesaid facts and circumstances are sufficient to establish

probable cause. It should be borne in mind that the determination of probable cause
does not call for the application of the rules and standards of proof that a judgment
of conviction requires after trial on the merits. As the term implies, probable cause
is concerned with probability, not absolute or even moral certainty. The standards
of judgment are those of a reasonably prudent man, not the exacting calibrations of
a judge after a full blown trial.[31]
The fact that Oblanca and Alajar used different names in the purchase
receipts do not negate personal knowledge on their part. It is a common practice of
the law enforcers such as NBI agents during covert investigations to use different
names in order to conceal their true identities. This is reasonable and
understandable so as not to endanger the life of the undercover agents and to
facilitate the lawful arrest or apprehension of suspected violators of the law.
Petitioners contention that Oblanca and Alajar should have mentioned the
fact that they used different names in their respective affidavits and during the
preliminary examination is puerile. The argument is too vacuous to merit serious
consideration. There is nothing in the provisions of law concerning the issuance of
a search warrant which directly or indirectly mandates that the applicant of the
search warrant or his witnesses should state in their affidavits the fact that they
used different names while conducting undercover investigations, or to divulge
such fact during the preliminary examination. In the light of other more material
facts which needed to be established for a finding of probable cause, it is not
difficult to believe that Oblanca and Alajar failed to mention that they used aliases
in entering the MASAGANA compound due to mere oversight.
It cannot be gainfully said that Oblanca and Alajar are not competent to
testify on the trademarks infringed by the petitioners. As earlier
discussed, Oblanca declared under oath that before conducting an investigation on
the alleged illegal activities of MASAGANA, he reviewed the certificates of
trademark registrations issued by the Philippine Intellectual Property Office in
favor of Petron and Pilipinas Shell. These certifications of trademark registrations
were attached by Oblanca in his applications for the search warrants. Alajar, on the
other hand, works as a private investigator and, in fact, owns a private
investigation and research/consultation firm. His firm was hired and authorized,
pursuant to the Brand Protection Program of Petron and Pilipinas Shell, to verify
reports that MASAGANA is involved in the illegal sale and refill of GASUL and
SHELLANE LPG cylinders.[32] As part of the job, he studied and familiarized
himself with the registered trademarks of GASUL and SHELLANE, and the
distinct features of the LPG cylinders bearing the same trademarks before
conducting surveillance and test-buys on MASAGANA.[33] He also submitted
to Oblanca several copies of the same registered trademark registrations and
accompanied Oblanca during the surveillance and test-buys.
As to whether the form and manner of questioning made by

Judge Sadang complies with the requirements of law, Section 5 of Rule 126 of the
Revised Rules on Criminal Procedure, prescribes the rules in the examination of
the complainant and his witnesses when applying for search warrant, to wit:
SEC. 5. Examination of complainant; record.- The judge must,

before issuing the warrant, personally examine in the form of searching
questions and answers, in writing under oath, the complainant and the
witnesses he may produce on facts personally known to them and attach
to the record their sworn statements, together with the affidavits
submitted.
The searching questions propounded to the applicant and the witnesses

depend largely on the discretion of the judge. Although there is no hard-andfast
rule governing how a judge should conduct his investigation, it is axiomatic that
the examination must be probing and exhaustive, not merely routinary, general,
peripheral, perfunctory or pro forma.The judge must not simply rehash the
contents of the affidavit but must make his own inquiry on the intent and
justification of the application.[34]
After perusing the Transcript of Stenographic Notes of the preliminary

examination, we found the questions of Judge Sadang to be sufficiently probing,
not at all superficial and perfunctory.[35] The testimonies
of Oblanca and Alajar were consistent with each other and their narration of facts
was credible. As correctly found by the Court of Appeals:
This Court is likewise not convinced that respondent Judge failed

to ask probing questions in his determination of the existence of
probable cause. This Court has thoroughly examined the Transcript of
Stenographic Notes taken during the investigation conducted by the
respondent Judge and found that respondent Judge lengthily inquired
into the circumstances of the case. For instance, he required the NBI
agent to confirm the contents of his affidavit, inquired as to where the
test-buys were conducted and by whom, verified whether PSPC and
PETRON have registered trademarks or tradenames, required the NBI
witness to explain how the test-buys were conducted and to describe the
LPG cylinders purchased from Masagana Gas Corporation, inquired why
the applications for Search Warrant were filed in Cavite City considering
that Masagana Gas Corporation was located in Trece Martires, Cavite,
inquired whether the NBI Agent has a sketch of the place and if there
was any distinguishing sign to identify the place to be searched, and
inquired about their alleged tailing and monitoring of the delivery
trucks. x x x.[36]
Since probable cause is dependent largely on the opinion and findings of the
judge who conducted the examination and who had the opportunity to question the
applicant and his witnesses, the findings of the judge deserves great weight. The
reviewing court can overturn such findings only upon proof that the judge
disregarded the facts before him or ignored the clear dictates of reason. [37] We find
no compelling reason to disturb Judge Sadangs findings herein.
Anent the second issue, petitioners argue that Judge Sadang failed to
require Oblanca to show his authority to apply for search warrants; that Oblanca is
a member of the Anti-Organized Crime and not that of the Intellectual Property
Division of the NBI; that all complaints for infringement should be investigated by
the Intellectual Property Division of the NBI; that it is highly irregular that an
agent not assigned to the Intellectual Property Division would apply for a search
warrant and without authority from the NBI Director; that the alleged letter-
complaint of Atty. Bienvenido Somera, Jr. of Villaraza and Angangco Law Office
was not produced in court; that Judge Sadang did not require Oblanca to produce
the alleged letter-complaint which is material and relevant to the determination of
the existence of probable cause; and that Petron and Pilipinas Shell, being two
different corporations, should have issued a board resolution authorizing
the Villaraza and Angangco Law Office to apply for search warrant in their behalf.
[38]
We reject these protestations.

The authority of Oblanca to apply for the search warrants in question is
clearly discussed and explained in his affidavit, viz:
[That] on 11 February 2003, the National Bureau of Investigation (NBI)

received a letter-complaint from Atty. Bienvenido I. Somera, Jr.
of Villaraza and Angangco, on behalf of among
others, Petron Corporation (PETRON) [and Pilipinas Shell Petroleum
Corporation (PSPC), the authorized representative of Shell International
Petroleum Company Limited (SHELL INTERNATIONAL)] requesting
assistance in the investigation and, if warranted, apprehension and
prosecution of certain persons and/or establishments suspected of
violating the intellectual property rights of PETRON [and of PSPC and
Shell International.]
11. [That] on the basis of the letter-complaint, I, together with Agent

Angelo Zarzoso, was assigned as the NBI agent on the case. [39]
The fact that Oblanca is a member of the Anti-Organized Crime Division

and not that of the Intellectual Property Division does not abrogate his authority to
apply for search warrant. As aptly stated by the RTC and the Court of Appeals,
there is nothing in the provisions on search warrant under Rule 126 of the Revised
Rules on Criminal Procedure, which specifically commands that the applicant law
enforcer must be a member of a division that is assigned or related to the subject
crime or offense before the application for search warrant may be acted upon. The
petitioners did not also cite any law, rule or regulation mandating such
requirement. At most, petitioners may only be referring to the administrative
organization and/or internal rule or practice of the NBI. However, not only did
petitioners failed to establish the existence thereof, but they also did not prove that
such administrative organization and/or internal rule or practice are inviolable.
Neither is the presentation of the letter-complaint of Atty. Somera and board

resolutions from Petron and Pilipinas Shell required or necessary in determining
probable cause. As heretofore discussed, the affidavits of Oblanca and Alajar,
coupled with the object and documentary evidence they presented, are sufficient to
establish probable cause. It can also be presumed that Oblanca, as an NBI agent, is
a public officer who had regularly performed his official duty.[40] He would not
have initiated an investigation on MASAGANA without a proper complaint.
Furthermore, Atty. Somera did not step up to deny his letter-complaint.
Regarding the third issue, petitioners posit that the applications for search
warrants of Oblanca did not specify the particular area to be searched, hence,
giving the raiding team wide latitude in determining what areas they can search.
They aver that the search warrants were general warrants, and are
therefore violative of the Constitution. Petitioners also assert that since the
MASAGANA compound is about 10,000.00 square meters with several structures
erected on the lot, the search warrants should have defined the areas to be
searched.
The long standing rule is that a description of the place to be searched is

sufficient if the officer with the warrant can, with reasonable effort, ascertain and
identify the place intended and distinguish it from other places in the community.
Any designation or description known to the locality that points out the place to the
exclusion of all others, and on inquiry leads the officers unerringly to it, satisfies
the constitutional requirement.[41]
Moreover, in the determination of whether a search warrant describes the

premises to be searched with sufficient particularity, it has been held that the
executing officers prior knowledge as to the place intended in the warrant is
relevant. This would seem to be especially true where the executing officer is the
affiant on whose affidavit the warrant had been issued, and when he knows that the
judge who issued the warrant intended the compound described in the affidavit.[42]
The search warrants in question commanded any peace officer to make an

immediate search on MASAGANA compound located at Governors
Drive, Barangay Lapidario, Trece Martires, Cavite City. It appears that the raiding
team had ascertained and reached MASAGANA compound without difficulty
since MASAGANA does not have any other offices/plants
in Trece Martires, Cavite City. Moreover, Oblanca, who was with the raiding team,
was already familiar with the MASAGANA compound as he and Alajar had
monitored and conducted test-buys thereat.
Even if there are several structures inside the MASAGANA compound,

there was no need to particularize the areas to be searched because, as correctly
stated by Petronand Pilipinas Shell, these structures constitute the essential and
necessary components of the petitioners business and cannot be treated separately
as they form part of one entire compound. The compound is owned and used solely
by MASAGANA. What the case law merely requires is that, the place to be
searched can be distinguished in relation to the other places in the community.
Indubitably, this requisite was complied with in the instant case.
As to the fourth issue, petitioners asseverate that the search warrants did not
indicate with particularity the items to be seized since the search warrants merely
described the items to be seized as LPG cylinders bearing the trademarks GASUL
and SHELLANE without specifying their sizes.
A search warrant may be said to particularly describe the things to be seized

when the description therein is as specific as the circumstances will ordinarily
allow; or when the description expresses a conclusion of fact not of law by which
the warrant officer may be guided in making the search and seizure; or when the
things described are limited to those which bear direct relation to the offense for
which the warrant is being issued.[43]
While it is true that the property to be seized under a warrant must be

particularly described therein and no other property can be taken thereunder, yet
the description is required to be specific only in so far as the circumstances will
ordinarily allow. The law does not require that the things to be seized must be
described in precise and minute details as to leave no room for doubt on the part of
the searching authorities; otherwise it would be virtually impossible for the
applicants to obtain a search warrant as they would not know exactly what kind of
things they are looking for. Once described, however, the articles subject of the
search and seizure need not be so invariant as to require absolute concordance, in
our view, between those seized and those described in the warrant. Substantial
similarity of those articles described as a class or specie would suffice.[44]
Measured against this standard, we find that the items to be seized under the
search warrants in question were sufficiently described with particularity. The
articles to be confiscated were restricted to the following: (1) LPG cylinders
bearing the trademarks GASUL and SHELLANE; (2) Machines and equipments
used or intended to be used in the illegal refilling of GASUL and SHELLANE
cylinders. These machines were also specifically enumerated and listed in the
search warrants; (3) Documents which pertain only to the production, sale and
distribution of the GASUL and SHELLANE LPG cylinders; and (4) Delivery
trucks bearing Plate Nos. WTE-527, XAM-970 and WFC-603, hauling trucks,
and/or other delivery trucks or vehicles or conveyances being used or intended to
be used for the purpose of selling and/or distributing GASUL and SHELLANE
LPG cylinders.[45]
Additionally, since the described items are clearly limited only to those
which bear direct relation to the offense, i.e., violation of section 155 of Republic
Act No. 8293, for which the warrant was issued, the requirement of particularity of
description is satisfied.
Given the foregoing, the indication of the accurate sizes of the GASUL and
SHELLANE LPG cylinders or tanks would be unnecessary.
Finally, petitioners claim that MASAGANA has the right to intervene and to
move for the return of the seized items; that the items seized by the raiding team
were being used in the legitimate business of MASAGANA; that the raiding team
had no right to seize them under the guise that the same were being used in
refilling GASUL and SHELLANE LPG cylinders; and that there being no action
for infringement filed against them and/or MASAGANA from the seizure of the
items up to the present, it is only fair that the seized articles be returned to the
lawful owner in accordance with Section 20 of A.M. No. 02-1-06-SC.
It is an elementary and fundamental principle of corporation law that a

corporation is an entity separate and distinct from its stockholders, directors or
officers. However, when the notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, the law will regard the
corporation as an association of persons,or in the case of two corporations merge
them into one.[46] In other words, the law will not recognize the separate corporate
existence if the corporation is being used pursuant to the foregoing unlawful
objectives. This non-recognition is sometimes referred to as the doctrine of
piercing the veil of corporate entity or disregarding the fiction of corporate entity.
Where the separate corporate entity is disregarded, the corporation will be treated
merely as an association of persons and the stockholders or members will be
considered as the corporation, that is, liability will attach personally or directly to
the officers and stockholders.[47]
As we now find, the petitioners, as directors/officers of MASAGANA, are

utilizing the latter in violating the intellectual property rights
of Petron and Pilipinas Shell. Thus, petitioners collectively and MASAGANA
should be considered as one and the same person for liability purposes.
Consequently, MASAGANAs third party claim serves no refuge for petitioners.
Even if we were to sustain the separate personality of MASAGANA from

that of the petitioners, the effect will be the same. The law does not require that the
property to be seized should be owned by the person against whom the search
warrants is directed. Ownership, therefore, is of no consequence, and it is sufficient
that the person against whom the warrant is directed has control or possession of
the property sought to be seized.[48] Hence, even if, as petitioners claimed, the
properties seized belong to MASAGANA as a separate entity, their seizure
pursuant to the search warrants is still valid.
Further, it is apparent that the motor compressor, LPG refilling machine and
the GASUL and SHELL LPG cylinders seized were the corpus delicti, the body or
substance of the crime, or the evidence of the commission of trademark
infringement. These were the very instruments used or intended to be used by the
petitioners in trademark infringement. It is possible that, if returned to
MASAGANA, these items will be used again in violating the intellectual property
rights of Petron and Pilipinas Shell.[49] Thus, the RTC was justified in denying the
petitioners motion for their return so as to prevent the petitioners and/or
MASAGANA from using them again in trademark infringement.
Petitioners reliance on Section 20 of A.M. No. 02-1-06-SC,[50] is not tenable.

As correctly observed by the Solicitor General, A.M. 02-1-06-SC is not applicable
in the present case because it governs only searches and seizures in civil actions for
infringement of intellectual property rights.[51] The offense complained of herein is
for criminal violation of Section 155 in relation to Section 170 [52] of Republic Act
No. 8293.
WHEREFORE, the petition is DENIED. The Decision and Resolution of

the Court of Appeals in CA-G.R. SP No. 79256, dated 30 September 2004 and 1
June 2005, respectively, are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
______________
COFFEE PARTNERS, INC., G.R. No. 169504

Petitioner,
Present:
CARPIO, J., Chairperson,
VELASCO, JR.,*
DEL CASTILLO,
- versus - ABAD, and
PEREZ, JJ.
SAN FRANCISCO COFFEE & Promulgated:
ROASTERY, INC.,
Respondent. March 3, 2010
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DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the 15 June 2005 Decision[2] and the 1 September
2005 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 80396. In its 15 June
2005 Decision, the Court of Appeals set aside the 22 October 2003 Decision [4] of
the Office of the Director General-Intellectual Property Office and reinstated the 14
August 2002 Decision[5] of the Bureau of Legal Affairs-Intellectual Property Office.
In its 1 September 2005 Resolution, the Court of Appeals denied petitioners motion
for reconsideration and respondents motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of

establishing and maintaining coffee shops in the country. It registered with the
Securities and Exchange Commission (SEC) in January 2001. It has a franchise
agreement[6] with Coffee Partners Ltd. (CPL), a business entity organized and
existing under the laws of British Virgin Islands, for a non-exclusive right to
operate coffee shops in the Philippines using trademarks designed by CPL such as
SAN FRANCISCO COFFEE.
Respondent is a local corporation engaged in the wholesale and retail sale of

coffee. It registered with the SEC in May 1995. It registered the business name
SAN FRANCISCO COFFEE & ROASTERY, INC. with the Department of Trade
and Industry (DTI) in June 1995. Respondent had since built a customer base that
included Figaro Company, Tagaytay Highlands, Fat Willys, and other coffee
companies.
In 1998, respondent formed a joint venture company with Boyd Coffee USA under
the company name Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI
engaged in the processing, roasting, and wholesale selling of coffee. Respondent
later embarked on a project study of setting up coffee carts in malls and other
commercial establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about to open a coffee
shop under the name SAN FRANCISCO COFFEE in Libis, Quezon City.
According to respondent, petitioners shop caused confusion in the minds of the
public as it bore a similar name and it also engaged in the business of selling
coffee. Respondent sent a letter to petitioner demanding that the latter stop using
the name SAN FRANCISCO COFFEE. Respondent also filed a complaint with the
Bureau of Legal Affairs-Intellectual Property Office (BLA-IPO) for infringement
and/or unfair competition with claims for damages.
In its answer, petitioner denied the allegations in the complaint. Petitioner alleged
it filed with the Intellectual Property Office (IPO) applications for registration of
the mark SAN FRANCISCO COFFEE & DEVICE for class 42 in 1999 and for
class 35 in 2000. Petitioner maintained its mark could not be confused with
respondents trade name because of the notable distinctions in their appearances.
Petitioner argued respondent stopped operating under the trade name SAN
FRANCISCO COFFEE when it formed a joint venture with Boyd Coffee USA.
Petitioner contended respondent did not cite any specific acts that would lead one
to believe petitioner had, through fraudulent means, passed off its mark as that of
respondent, or that it had diverted business away from respondent.
Mr. David Puyat, president of petitioner corporation, testified that the coffee shop
in Libis, Quezon City opened sometime in June 2001 and that another coffee shop
would be opened in Glorietta Mall, Makati City. He stated that the coffee shop was
set up pursuant to a franchise agreement executed in January 2001 with CPL, a
British Virgin Island Company owned by Robert Boxwell. Mr. Puyat said he
became involved in the business when one Arthur Gindang invited him to invest in
a coffee shop and introduced him to Mr. Boxwell. For his part, Mr. Boxwell
attested that the coffee shop SAN FRANCISCO COFFEE has branches in
Malaysia and Singapore. He added that he formed CPL in 1997 along with two
other colleagues, Shirley Miller John and Leah Warren, who were former managers
of Starbucks Coffee Shop in the United States. He said they decided to invest in a
similar venture and adopted the name SAN FRANCISCO COFFEE from the
famous city in California where he and his former colleagues once lived and where
special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioners trademark
infringed on respondents trade name. It ruled that the right to the exclusive use of a
trade name with freedom from infringement by similarity is determined from
priority of adoption. Since respondent registered its business name with the DTI in
1995 and petitioner registered its trademark with the IPO in 2001 in the Philippines
and in 1997 in other countries, then respondent must be protected from
infringement of its trade name.
The BLA-IPO also held that respondent did not abandon the use of its trade name
as substantial evidence indicated respondent continuously used its trade name in
connection with the purpose for which it was organized. It found that although
respondent was no longer involved in blending, roasting, and distribution of coffee
because of the creation of BCCPI, it continued making plans and doing research on
the retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that
for abandonment to exist, the disuse must be permanent, intentional, and voluntary.
The BLA-IPO held that petitioners use of the trademark SAN FRANCISCO
COFFEE will likely cause confusion because of the exact similarity in sound,
spelling, pronunciation, and commercial impression of the words SAN
FRANCISCO which is the dominant portion of respondents trade name and
petitioners trademark. It held that no significant difference resulted even with a
diamond-shaped figure with a cup in the center in petitioner's trademark because
greater weight is given to words the medium consumers use in ordering coffee
products.
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability.
It found that petitioner adopted the trademark SAN FRANCISCO COFFEE
because of the authority granted to it by its franchisor. The BLA-IPO held there
was no evidence of intent to defraud on the part of petitioner.
The BLA-IPO also dismissed respondents claim of actual damages because its
claims of profit loss were based on mere assumptions as respondent had not even
started the operation of its coffee carts. The BLA-IPO likewise dismissed
respondents claim of moral damages, but granted its claim of attorneys fees.
Both parties moved for partial reconsideration. Petitioner protested the finding of
infringement, while respondent questioned the denial of actual damages. The BLA-
IPO denied the parties partial motion for reconsideration. The parties appealed to
the Office of the Director General-Intellectual Property Office (ODG-IPO).
The Ruling of the Office of the Director General-

Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that
petitioners use of the trademark SAN FRANCISCO COFFEE did not infringe on
respondent's trade name. The ODG-IPO found that respondent had stopped using
its trade name after it entered into a joint venture with Boyd Coffee USA in 1998
while petitioner continuously used the trademark since June 2001 when it opened
its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user
of a trade name in good faith and a prior user who had stopped using such trade
name, it would be inequitable to rule in favor of the latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003
decision of the ODG-IPO in so far as it ruled that there was no infringement. It
reinstated the 14 August 2002 decision of the BLA-IPO finding infringement. The
appellate court denied respondents claim for actual damages and retained the
award of attorneys fees. In its 1 September 2005 Resolution, the Court of Appeals
denied petitioners motion for reconsideration and respondents motion for partial
reconsideration.
The Issue
The sole issue is whether petitioners use of the trademark SAN FRANCISCO
COFFEE constitutes infringement of respondents trade name SAN
FRANCISCO COFFEE & ROASTERY, INC., even if the trade name is not
registered with the Intellectual Property Office (IPO).
The Courts Ruling
The petition has no merit.

Petitioner contends that when a trade name is not registered, a suit for infringement
is not available. Petitioner alleges respondent has abandoned its trade name.
Petitioner points out that respondents registration of its business name with the
DTI expired on 16 June 2000 and it was only in 2001 when petitioner opened a
coffee shop in Libis, Quezon City that respondent made a belated effort to seek the
renewal of its business name registration. Petitioner stresses respondents failure to
continue the use of its trade name to designate its goods negates any allegation of
infringement. Petitioner claims no confusion is likely to occur between its
trademark and respondents trade name because of a wide divergence in the
channels of trade, petitioner serving ready-made coffee while respondent is in
wholesale blending, roasting, and distribution of coffee. Lastly, petitioner avers the
proper noun San Francisco and the generic word coffee are not capable of
exclusive appropriation.
Respondent maintains the law protects trade names from infringement even if they
are not registered with the IPO. Respondent claims Republic Act No. 8293 (RA
8293)[7]dispensed with registration of a trade name with the IPO as a requirement
for the filing of an action for infringement. All that is required is that the trade
name is previously used in trade or commerce in the Philippines. Respondent
insists it never abandoned the use of its trade name as evidenced by its letter to
petitioner demanding immediate discontinuation of the use of its trademark and by
the filing of the infringement case. Respondent alleges petitioners trademark is
confusingly similar to respondents trade name. Respondent stresses ordinarily
prudent consumers are likely to be misled about the source, affiliation, or
sponsorship of petitioners coffee.
As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO

found that respondent continued to make plans and do research on the retailing of
coffee and the establishment of coffee carts, which negates abandonment. This
finding was upheld by the Court of Appeals, which further found that while
respondent stopped using its trade name in its business of selling coffee, it
continued to import and sell coffee machines, one of the services for which the use
of the business name has been registered. The binding effect of the factual findings
of the Court of Appeals on this Court applies with greater force when both the
quasi-judicial body or tribunal like the BLA-IPO and the Court of Appeals are in
complete agreement on their factual findings. It is also settled that absent any
circumstance requiring the overturning of the factual conclusions made by the
quasi-judicial body or tribunal, particularly if affirmed by the Court of Appeals, the
Court necessarily upholds such findings of fact.[8]
Coming now to the main issue, in Prosource International, Inc. v. Horphag
Research Management SA,[9] this Court laid down what constitutes infringement of
an unregistered trade name, thus:
(1) The trademark being infringed is registered in the

Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied,
or colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the
sale, offering for sale, or advertising of any goods, business or services;
or the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles, or advertisements intended to be used
upon or in connection with such goods, business, or services;
(4) The use or application of the infringing mark or trade name is likely to cause
confusion or mistake or to deceive purchasers or others as to the goods or services
themselves or as to the source or origin of such goods or services or the identity of
such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee
thereof.[10] (Emphasis supplied)
Clearly, a trade name need not be registered with the IPO before an infringement
suit may be filed by its owner against the owner of an infringing trademark. All
that is required is that the trade name is previously used in trade or commerce in
the Philippines.[11]
Section 22 of Republic Act No. 166,[12] as amended, required registration of a trade

name as a condition for the institution of an infringement suit, to wit:
Sec. 22. Infringement, what constitutes. Any person who shall

use, without the consent of the registrant, any reproduction,
counterfeit, copy, or colorable imitation of any registered mark or trade
name in connection with the sale, offering for sale, or advertising of any
goods, business or services on or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy, or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit, copy, or
colorable imitation to labels, signs, prints, packages, wrappers,
receptacles, or advertisements intended to be used upon or in connection
with such goods, business, or services, shall be liable to a civil action
by the registrant for any or all of the remedies herein provided.
(Emphasis supplied)
HOWEVER, RA 8293, WHICH TOOK EFFECT ON 1 JANUARY 1998, HAS

DISPENSED WITH THE REGISTRATION REQUIREMENT. SECTION 165.2
OF RA 8293 CATEGORICALLY STATES THAT TRADE NAMES SHALL BE
PROTECTED, EVEN PRIOR TO OR WITHOUT REGISTRATION WITH THE
IPO, AGAINST ANY UNLAWFUL ACT INCLUDING ANY SUBSEQUENT
USE OF THE TRADE NAME BY A THIRD PARTY, WHETHER AS A TRADE
NAME OR A TRADEMARK LIKELY TO MISLEAD THE PUBLIC. THUS:
SEC. 165.2 (A) NOTWITHSTANDING ANY LAWS OR

REGULATIONS PROVIDING FOR ANY OBLIGATION TO
REGISTER TRADE NAMES, SUCH NAMES SHALL BE
PROTECTED, EVEN PRIOR TO OR WITHOUT
REGISTRATION, AGAINST ANY UNLAWFUL ACT COMMITTED
BY THIRD PARTIES.
(B) IN PARTICULAR, ANY SUBSEQUENT USE OF A TRADE NAME BY A
THIRD PARTY, WHETHER AS A TRADE NAME OR A MARK OR COLLECTIVE
MARK, OR ANY SUCH USE OF A SIMILAR TRADE NAME OR MARK, LIKELY
TO MISLEAD THE PUBLIC, SHALL BE DEEMED UNLAWFUL. (EMPHASIS
SUPPLIED)
IT IS THE LIKELIHOOD OF CONFUSION THAT IS THE GRAVAMEN OF

INFRINGEMENT. BUT THERE IS NO ABSOLUTE STANDARD FOR
LIKELIHOOD OF CONFUSION. ONLY THE PARTICULAR, AND
SOMETIMES PECULIAR, CIRCUMSTANCES OF EACH CASE CAN
DETERMINE ITS EXISTENCE. THUS, IN INFRINGEMENT CASES,
PRECEDENTS MUST BE EVALUATED IN THE LIGHT OF EACH
PARTICULAR CASE.[13]
IN DETERMINING SIMILARITY AND LIKELIHOOD OF CONFUSION, OUR

JURISPRUDENCE HAS DEVELOPED TWO TESTS: THE DOMINANCY
TEST AND THE HOLISTIC TEST. THE DOMINANCY TEST FOCUSES ON
THE SIMILARITY OF THE PREVALENT FEATURES OF THE COMPETING
TRADEMARKS THAT MIGHT CAUSE CONFUSION AND DECEPTION,
THUS CONSTITUTING INFRINGEMENT. IF THE COMPETING
TRADEMARK CONTAINS THE MAIN, ESSENTIAL, AND DOMINANT
FEATURES OF ANOTHER, AND CONFUSION OR DECEPTION IS LIKELY
TO RESULT, INFRINGEMENT OCCURS. EXACT DUPLICATION OR
IMITATION IS NOT REQUIRED. THE QUESTION IS WHETHER THE USE
OF THE MARKS INVOLVED IS LIKELY TO CAUSE CONFUSION OR
MISTAKE IN THE MIND OF THE PUBLIC OR TO DECEIVE CONSUMERS. [14]
IN CONTRAST, THE HOLISTIC TEST ENTAILS A CONSIDERATION OF

THE ENTIRETY OF THE MARKS AS APPLIED TO THE PRODUCTS,
INCLUDING THE LABELS AND PACKAGING, IN DETERMINING
CONFUSING SIMILARITY.[15] THE DISCERNING EYE OF THE OBSERVER
MUST FOCUS NOT ONLY ON THE PREDOMINANT WORDS BUT ALSO ON
THE OTHER FEATURES APPEARING ON BOTH MARKS IN ORDER THAT
THE OBSERVER MAY DRAW HIS CONCLUSION WHETHER ONE IS
CONFUSINGLY SIMILAR TO THE OTHER.[16]
APPLYING EITHER THE DOMINANCY TEST OR THE HOLISTIC TEST,

PETITIONERS SAN FRANCISCO COFFEE TRADEMARK IS A CLEAR
INFRINGEMENT OF RESPONDENTS SAN FRANCISCO COFFEE &
ROASTERY, INC. TRADE NAME. THE DESCRIPTIVE WORDS SAN
FRANCISCO COFFEE ARE PRECISELY THE DOMINANT FEATURES OF
RESPONDENTS TRADE NAME. PETITIONER AND RESPONDENT ARE
ENGAGED IN THE SAME BUSINESS OF SELLING COFFEE, WHETHER
WHOLESALE OR RETAIL. THE LIKELIHOOD OF CONFUSION IS HIGHER
IN CASES WHERE THE BUSINESS OF ONE CORPORATION IS THE SAME
OR SUBSTANTIALLY THE SAME AS THAT OF ANOTHER CORPORATION.
IN THIS CASE, THE CONSUMING PUBLIC WILL LIKELY BE CONFUSED
AS TO THE SOURCE OF THE COFFEE BEING SOLD AT PETITIONERS
COFFEE SHOPS. PETITIONERS ARGUMENT THAT SAN FRANCISCO IS
JUST A PROPER NAME REFERRING TO THE FAMOUS CITY IN
CALIFORNIA AND THAT COFFEE IS SIMPLY A GENERIC TERM, IS
UNTENABLE. RESPONDENT HAS ACQUIRED AN EXCLUSIVE RIGHT TO
THE USE OF THE TRADE NAME SAN FRANCISCO COFFEE & ROASTERY,
INC. SINCE THE REGISTRATION OF THE BUSINESS NAME WITH THE
DTI IN 1995. THUS, RESPONDENTS USE OF ITS TRADE NAME FROM
THEN ON MUST BE FREE FROM ANY INFRINGEMENT BY SIMILARITY.
OF COURSE, THIS DOES NOT MEAN THAT RESPONDENT HAS
EXCLUSIVE USE OF THE GEOGRAPHIC WORD SAN FRANCISCO OR THE
GENERIC WORD COFFEE. GEOGRAPHIC OR GENERIC WORDS ARE
NOT, PER SE, SUBJECT TO EXCLUSIVE APPROPRIATION. IT IS ONLY THE
COMBINATION OF THE WORDS SAN FRANCISCO COFFEE, WHICH IS
RESPONDENTS TRADE NAME IN ITS COFFEE BUSINESS, THAT IS
PROTECTED AGAINST INFRINGEMENT ON MATTERS RELATED TO THE
COFFEE BUSINESS TO AVOID CONFUSING OR DECEIVING THE PUBLIC.
IN PHILIPS EXPORT B.V. V. COURT OF APPEALS,[17] THIS COURT HELD

THAT A CORPORATION HAS AN EXCLUSIVE RIGHT TO THE USE OF ITS
NAME. THE RIGHT PROCEEDS FROM THE THEORY THAT IT IS A FRAUD
ON THE CORPORATION WHICH HAS ACQUIRED A RIGHT TO THAT
NAME AND PERHAPS CARRIED ON ITS BUSINESS THEREUNDER, THAT
ANOTHER SHOULD ATTEMPT TO USE THE SAME NAME, OR THE SAME
NAME WITH A SLIGHT VARIATION IN SUCH A WAY AS TO INDUCE
PERSONS TO DEAL WITH IT IN THE BELIEF THAT THEY ARE DEALING
WITH THE CORPORATION WHICH HAS GIVEN A REPUTATION TO THE
NAME.[18]
THIS COURT IS NOT JUST A COURT OF LAW, BUT ALSO OF EQUITY. WE

CANNOT ALLOW PETITIONER TO PROFIT BY THE NAME AND
REPUTATION SO FAR BUILT BY RESPONDENT WITHOUT RUNNING
AFOUL OF THE BASIC DEMANDS OF FAIR PLAY. NOT ONLY THE LAW
BUT EQUITY CONSIDERATIONS HOLD PETITIONER LIABLE FOR
INFRINGEMENT OF RESPONDENTS TRADE NAME.
THE COURT OF APPEALS WAS CORRECT IN SETTING ASIDE THE 22

OCTOBER 2003 DECISION OF THE OFFICE OF THE DIRECTOR GENERAL-
INTELLECTUAL PROPERTY OFFICE AND IN REINSTATING THE 14
AUGUST 2002 DECISION OF THE BUREAU OF LEGAL AFFAIRS-
INTELLECTUAL PROPERTY OFFICE.
WHEREFORE, WE DENY THE PETITION FOR REVIEW. WE AFFIRM THE

15 JUNE 2005 DECISION AND 1 SEPTEMBER 2005 RESOLUTION OF THE
COURT OF APPEALS IN CA-G.R. SP NO. 80396.
COSTS AGAINST PETITIONER.
SO ORDERED.
SECOND DIVISION
SOCIETE DES PRODUITS G.R. No. 172276
NESTLE, S.A.,
Petitioner,
Present:

NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.
MARTIN T. DY, JR., Promulgated:

Respondent. August 8, 2010
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DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The
petition challenges the 1 September 2005 Decision and 4 April 2006 Resolution of
the Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy,
Jr. (Dy, Jr.) not liable for trademark infringement. The Court of Appeals reversed
the 18 September 1998 Decision of the Regional Trial Court (RTC), Judicial
Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation

organized under the laws of Switzerland. It manufactures food products and
beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7
April 1969 by the then Bureau of Patents, Trademarks and Technology Transfer,
Nestle owns the NAN trademark for its line of infant powdered milk products,
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified
under Class 6 diatetic preparations for infant feeding.
Nestle distributes and sells its NAN milk products all over the Philippines. It has
been investing tremendous amounts of resources to train its sales force and to
promote the NAN milk products through advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia
and repacks the powdered milk into three sizes of plastic packs bearing the name
NANNY.The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50
and P39.90, respectively. NANNY is is also classified under Class 6 full cream
milk for adults in [sic] all ages. Dy, Jr. distributes and sells the powdered milk
in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using
NANNY and to undertake that he would stop infringing the NAN trademark. Dy,
Jr. did not act on Nestles request. On 1 March 1990, Nestle filed before the RTC,
Judicial Region 7, Branch 31, Dumaguete City, a complaint against Dy, Jr. for
infringement. Dy, Jr. filed a motion to dismiss alleging that the complaint did not
state a cause of action. In its 4 June 1990 order, the trial court dismissed the
complaint. Nestle appealed the 4 June 1990 order to the Court of Appeals. In its 16
February 1993 Resolution, the Court of Appeals set aside the 4 June 1990 order
and remanded the case to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the
trial court a motion to transfer the case to the RTC, Judicial Region 7, Branch
9, Cebu City, which was designated as a special court for intellectual property
rights.
The RTCs Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
infringement. The trial court held:
If determination of infringement shall only be limited on whether or not the mark
used would likely cause confusion or mistake in the minds of the buying public or
deceive customers, such in [sic] the most considered view of this forum would
be highly unlikely to happen in the instant case. This is because upon comparison
of the plaintiffs NAN and defendants NANNY, the following features would
reveal the absence of any deceptive tendency in defendants NANNY: (1) all NAN
products are contained tin cans [sic], while NANNY are contained in plastic
packs;(2) the predominant colors used in the labels of NAN products
are blue and white, while the predominant colors in the plastic packings of
NANNY are blue and green; (3) the labels of NAN products have at the bottom
portion an elliptical shaped figure containing inside it a drawing of nestling birds,
which is overlapped by the trade-name Nestle, while the plastic packs of NANNY
have a drawing of milking cows lazing on a vast green field, back-dropped with
snow covered mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in small and
irregular style of letters with curved ends; and (5) all NAN products are milk
formulas intended for use of [sic] infants, while NANNY is an instant full cream
powdered milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant case cannot be
proven with the use of the test of dominancy because the deceptive tendency of
the unregistered trademark NANNY is not apparent from the essential features of
the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971,
Aug. 31, 1982, the Supreme Court took the occasion of discussing what is implied
in the definition of infringement when it stated: Implicit in this definition is the
concept that the goods must be so related that there is likelihood either of
confusion of goods or business. x x x But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related that
the public may be, or is actually, deceived and misled that they came from the
same maker or manufacturer. For non-competing goods may be those which,
though they are not in actual competition, are so related to each other that it might
reasonably be assumed that they originate from one manufacturer. Non-competing
goods may also be those which, being entirely unrelated, could not reasonably be
assumed to have a common source. In the former case of related goods, confusion
of business could arise out of the use of similar marks; in the latter case of non-
related goods, it could not.
Furthermore, in said case the Supreme Court as well discussed on when goods
may become so related for purposes of infringement when it stated: Goods are
related when they belong to the same class or have same descriptive properties;
when they possess the same physical attributes or essential characteristics with
reference to their form, composition, texture or quality. They may also be related
because they serve the same purpose or are sold in grocery stores. x x x
Considering that defendants NANNY belongs to the same class as that of

plaintiffs NAN because both are food products, the defendants unregistered trade
mark NANNY should be held an infringement to plaintiffs registered trademark
NAN because defendants use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word nanny means a childs nurse,
there might result the not so remote probability that defendants NANNY may be
confused with infant formula NAN despite the aparent [sic] disparity between the
features of the two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals Ruling

In its 1 September 2005 Decision, the Court of Appeals reversed the trial courts 18
September 1998 Decision and found Dy, Jr. not liable for infringement. The Court
of Appeals held:
[T]he trial court appeared to have made a finding that there is no colorable
imitation of the registered mark NAN in Dys use of NANNY for his own milk
packs. Yet it did not stop there. It continued on applying the concept of related
goods.
The Supreme Court utlilized the concept of related goods in the said case
of Esso Standard Easter, Inc. versus Court of Appeals, et al. wherein two
contending parties used the same trademark ESSO for two different goods, i.e.
petroleum products and cigarettes. It rules that there is infringement of trademark
involving two goods bearing the same mark or label, even if the said goods are
non-competing, if and only if they are so related that the public may be, or is
actually, deceived that they originate from the one maker or manufacturer. Since
petroleum products and cigarettes, in kind and nature, flow through different trade
channels, and since the possibility of confusion is unlikely in the general
appearances of each mark as a whole, the Court held in this case that they cannot
be so related in the context of infringement.
In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellees NAN and defendant-
appellants NANNY belong to the same class being food products, the
unregistered NANNY should be held an infringement of Nestles NAN because
the use of NANNY would imply that it came from the manufacturer of NAN. Said
court went on to elaborate further: since the word NANNY means a childs nurse,
there might result the not so remote probability that defendants NANNY may be
confused with infant formula NAN despite the aparent (sic) disparity between the
features of the two products as discussed above.
The trial courts application of the doctrine laid down by the Supreme Court in
the Esso Standard case aforementioned and the cases cited therein is quite
misplaced. The goods of the two contending parties in those cases bear similar
marks or labels: Esso for petroleum products and cigarettes, Selecta for biscuits
and milk, X-7 for soap and perfume, lipstick and nail polish. In the instant case,
two dissimilar marks are involved plaintiff-appellees NAN and defendant-
appellants NANNY. Obviously, the concept of related goods cannot be utilized in
the instant case in the same way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, precedent must be studied in the light of the facts of the
particular case. Each case must be decided on its own merits. In the more recent
case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the High Court
further stressed that due to the peculiarity of the facts of each infringement case, a
judicial forum should not readily apply a certain test or standard just because of
seeming similarities. The entire panoply of elements constituting the relevant
factual landscape should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the word
NAN is contained in the word NANNY, there are more glaring dissimilarities in
the entirety of their trademarks as they appear in their respective labels and also in
relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other. Even the trial court found these
glaring dissimilarities as above-quoted. We need not add more of these factual
dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are
all infant preparations, while NANNY is a full cream milk for adults in [sic] all
ages. NAN milk products are sold in tin cans and hence, far expensive than the
full cream milk NANNY sold in three (3) plastic packs containing 80, 180 and
450 grams and worth P8.90, P17.50 and P39.90 per milk pack.The labels of NAN
products are of the colors blue and white and have at the bottom portion an
elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name Nestle. On the other hand, the plastic packs
NANNY have a drawing of milking cows lazing on a vast green field, back-
dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like
block letters, while the word NANNY are [sic] all in small and irregular style of
letters with curved ends. With these material differences apparent in the
packaging of both milk products, NANNY full cream milk cannot possibly be an
infringement of NAN infant milk.
Moreover, NAN infant milk preparation is more expensive than NANNY instant
full cream milk. The cheaper price of NANNY would give, at the very first
instance, a considerable warning to the ordinary purchaser on whether he is
buying an infant milk or a full cream milk for adults. A cursory examination of
the packaging would confirm the striking differences between the products in
question.
In view of the foregoing, we find that the mark NANNY is not confusingly
similar to NAN. Dy therefore cannot be held liable for infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court
of Appeals denied the motion for lack of merit. Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Courts Ruling
Section 22 of Republic Act (R.A.) No. 166, as amended, states:

Infringement, what constitutes. Any person who shall use, without the consent of
the registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or others
as to the source or origin of such goods or services, or identity of such business;
or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name
and apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein provided.
Section 155 of R.A. No. 8293 states:

Remedies; Infringement. Any person who shall, without the consent of the owner
of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable

imitation of a registered mark or the same container or a dominant feature thereof
in connection with the sale, offering for sale, distribution, advertising of any
goods or services including other preparatory steps necessary to carry out the sale
of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a

dominant feature thereof and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake,
or to deceive, shall be liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the infringement takes place at
the moment any of the acts stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of goods or services using the
infringing material.
In Prosource International, Inc. v. Horphag Research Management SA, the Court
laid down the elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A,
and 20 thereof, the following constitute the elements of trademark infringement:
(a) A trademark actually used in commerce in the Philippines and

registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale,

offering for sale, or advertising of any goods, business or services
or in connection with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or
such trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or
services as to likely cause confusion or mistake or to deceive
purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark

registrant or assignee.
On the other hand, the elements of infringement under R.A. No. 8293 are as
follows:
The trademark being infringed is registered in the

Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;
The trademark or trade name is reproduced, counterfeited,

copied, or colorably imitated by the infringer;
The infringing mark or trade name is used in connection

with the sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark or trade name is
applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with
such goods, business or services;
The use or application of the infringing mark or trade name

is likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or
origin of such goods or services or the idenity of such business;
and
It is without the consent of the trademark or trade name

owner or the assignee thereof.
Among the elements, the element of likelihood of confusion is the gravamen of

trademark infringement. There are two types of confusion in trademark
infringement: confusion of goods and confusion of business. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, the Court
distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion of goods in which
event the ordinarily prudent purchaser would be induced to purchase one product
in the belief that he was purchasing the other. In which case, defendants goods are
then bought as the plaintiffs, and the poorer quality of the former reflects
adversely on the plaintiffs reputation. The other is the confusion of business: Here
though the goods of the parties are different, the defendants product is such as
might reasonably be assumed to originate with the plaintiff, and the public would
then be deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not exist.
There are two tests to determine likelihood of confusion: the dominancy test and
holistic test. The dominancy test focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might cause
confusion. Infringement takes place when the competing trademark contains the
essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive
purchasers.
The holistic test considers the entirety of the marks, including labels and
packaging, in determining confusing similarity. The focus is not only on the
predominant words but also on the other features appearing on the labels.
In cases involving trademark infringement, no set of rules can be deduced. Each

case must be decided on its own merits. Jurisprudential precedents must be studied
in the light of the facts of each particular case. In McDonalds Corporation
v. MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one trademark is

confusingly similar to another, no set rules can be deduced because each case
must be decided on its merits. In such cases, even more than in any other
litigation, precedent must be studied in the light of the facts of the particular
case. That is the reason why in trademark cases, jurisprudential precedents should
be applied only to a case if they are specifically in point.
In the light of the facts of the present case, the Court holds that the dominancy test
is applicable. In recent cases with similar factual milieus, the Court has
consistently applied the dominancy test. In Prosource International, Inc., the Court
applied the dominancy test in holding that PCO-GENOLS is confusingly similar to
PYCNOGENOL. The Court held:
The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-
GENOL. Applying the test, the trial court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the

same suffix GENOL which on evidence, appears to be merely
descriptive and furnish no indication of the origin of the article and
hence, open for trademark registration by the plaintiff through
combination with another word or phrase such as PYCNOGENOL,
Exhibits A to A-3.Furthermore, although the letters Y between P
and C, N between O and C and S after L are missing in the
[petitioners] mark PCO-GENOLS, nevertheless, when the two
words are pronounced, the sound effects are confusingly similar
not to mention that they are both described by their manufacturers
as a food supplement and thus, identified as such by their public
consumers. And although there were dissimilarities in the
trademark due to the type of letters used as well as the size, color
and design employed on their individual packages/bottles, still the
close relationship of the competing products name is sounds as
they were pronounced, clearly indicates that purchasers could be
misled into believing that they are the same and/or originates from
a common source and manufacturer.
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural effects of the words
and letters contained in the marks in determining the issue of confusing
similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited
in McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court held:
The following random list of confusingly similar sounds in the

matter of trademarks, culled from Nims, Unfair Competition and
Trade Marks, 1947, Vol. 1, will reinforce our view that
SALONPAS and LIONPAS are confusingly similar in sound: Gold
Dust and Gold Drop; Jantzen and Jass-Sea; Silver Flash and
Supper Flash; Cascarete and Celborite; Celluloid and Cellonite;
Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and Meje;
Kotex and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book
Trade-Mark Law and Practice, pp. 419-421, cities [sic], as
coming within the purview of the idem sonans rule, Yusea and U-
C-A, Steinway Pianos and Steinberg Pianos, and Seven-Up and
Lemon-Up.In Co Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Condura are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67
Phil. 795 that the name Lusolin is an infringement of the
trademark Sapolin, as the sound of the two names is almost the
same.
In McDonalds Corporation v. MacJoy Fastfood Corporation, the Court applied the

dominancy test in holding that MACJOY is confusingly similar
to MCDONALDS. The Court held:
While we agree with the CAs detailed enumeration of differences between the two
(2) competing trademarks herein involved, we believe that the holistic test is not
the one applicable in this case, the dominancy test being the one more suitable. In
recent cases with a similar factual milieu as here, the Court has consistently used
and applied the dominancy test in determining confusing similarity or likelihood
of confusion between competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court finds that herein
petitioners MCDONALDS and respondents MACJOY marks are are confusingly
similar with each other that an ordinary purchaser can conclude an association or
relation between the marks.
To begin with, both marks use the corporate M design logo and the prefixes Mc
and/or Mac as dominant features. x x x
For sure, it is the prefix Mc, and abbreviation of Mac, which visually and aurally
catches the attention of the consuming public. Verily, the word MACJOY attracts
attention the same way as did McDonalds, MacFries, McSpaghetti, McDo, Big
Mac and the rest of the MCDONALDS marks which all use the prefixes Mc
and/or Mac.
Besides and most importantly, both trademarks are used in the sale
of fastfood products. Indisputably, the respondents trademark application for the
MACJOY & DEVICE trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque,
burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are similar if not
identical to those covered by the respondents application.
In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court applied the
dominancy test in holding that BIG MAK is confusingly similar to BIG MAC. The
Court held:
This Court x x x has relied on the dominancy test rather than the holistic test. The
dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product
arising from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:
x x x It has been consistently held that the question of infringement

of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication
or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White
Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in
cases of infringement of trademarks is whether the use of the
marks involved would be likely to cause confusion or mistakes in
the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; x x x)
xxxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of
the Intellectual Property Code which defines infringement as the colorable
imitation of a registered mark x x xor a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use of the
Big Mak mark results in likelihood of confusion. First, Big Mak sounds exactly
the same as Big Mac. Second, the first word in Big Mak is exactly the same as the
first word in Big Mac. Third, the first two letters in Mak are the same as the first
two letters in Mac. Fourth, the last letter Mak while a k sounds the same as c
when the word Mak is pronounced. Fifth, in Filipino, the letter k replaces c in
spelling, thus Caloocan is spelled Kalookan.
In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the
dominancy test in holding that FLAVOR MASTER is confusingly similar to
MASTER ROAST and MASTER BLEND. The Court held:
While this Court agrees with the Court of Appeals detailed enumeration of
differences between the respective trademarks of the two coffee products, this
Court cannot agree that totality test is the one applicable in this case. Rather, this
Court believes that the dominancy test is more suitable to this case in light of its
peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only
on the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:
From the evidence at hand, it is sufficiently established that the

word MASTER is the dominant feature of opposers mark. The
word MASTER is printed across the middle portion of the label in
bold letters almost twice the size of the printed word
ROAST. Further, the word MASTER has always been given
emphasis in the TV and radio commercials and other
advertisements made in promoting the product. x x x In due time,
because of these advertising schemes the mind of the buying public
had come to learn to associate the word MASTER with
the opposers goods.
x x x. It is the observation of this Office that much of the

dominance which the word MASTER has acquired
through Opposers advertising schemes is carried over when the
same is incorporated into respondent-applicants trademark
FLAVOR MASTER. Thus, when one looks at the label bearing the
trademark FLAVOR MASTER (exh. 4) ones attention is easily
attracted to the word MASTER, rather than to the dissimilarities
that exist. Therefore, the possibility of confusion as to the goods
which bear the competing marks or as to the origins thereof is not
farfetched.
Applying the dominancy test in the present case, the Court finds that NANNY is
confusingly similar to NAN. NAN is the prevalent feature of Nestles line of infant
powdered milk products. It is written in bold letters and used in all products. The
line consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY
contains the prevalent feature NAN. The first three letters of NANNY are exactly
the same as the letters of NAN. When NAN and NANNY are pronounced, the
aural effect is confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the
aural effect of the letters contained in the marks. In Marvex Commercial Company,
Inc. v. Petra Hawpia & Company, the Court held:
It is our considered view that the trademarks SALONPAS and LIONPAS are
confusingly similar in sound.
Both these words have the same suffix, PAS, which is used to denote a plaster that
adheres to the body with curative powers. PAS, being merely descriptive,
furnishes no indication of the origin of the article and therefore is open for
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31,
1966) and may properly become the subject of a trademark by combination with
another word or phrase.
xxxx
The following random list of confusingly similar sounds in the matter of

trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1,
will reinforce our view that SALONPAS and LIONPAS are confusingly similar in
sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver Flash and Supper
Flash; Cascarete and Celborite; Celluloid and Cellonite; Chartreuse
and Charseurs; Cutex and Cuticlean; Hebe and Meje; Kotex
and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-Mark Law and
Practice, pp. 419-421, cities [sic], as coming within the purview of
the idem sonans rule, Yusea and U-C-A, Steinway Pianos and Steinberg Pianos,
and Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents, this Court
unequivocally said that Celdura and Condura are confusingly similar in sound;
this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name Lusolin is an infringement of the trademark Sapolin, as the sound of the two
names is almost the same.
The scope of protection afforded to registered trademark owners is not limited to

protection from infringers with identical goods. The scope of protection extends to
protection from infringers with related goods, and to market areas that are the
normal expansion of business of the registered trademark owners. Section 138 of
R.A. No. 8293 states:
Certificates of Registration. A certificate of registration of a mark shall be prima

facie evidence of validity of the registration, the registrants ownership of the
mark, and of the registrants exclusive right to use the same in connection with the
goods or services and those that are related thereto specified in the
certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, Non-competing
goods may be those which, though they are not in actual competition, are so related
to each other that it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out of the use of
similar marks. In that case, the Court enumerated factors in determining whether
goods are related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the goods,
with reference to their form, composition, texture or quality; and (4) style of
distribution and marketing of the goods, including how the goods are displayed and
sold.
NANNY and NAN have the same classification, descriptive properties and
physical attributes. Both are classified under Class 6, both are milk products, and
both are in powder form. Also, NANNY and NAN are displayed in the same
section of stores the milk section.
The Court agrees with the lower courts that there are differences between NAN and
NANNY: (1) NAN is intended for infants while NANNY is intended for children
past their infancy and for adults; and (2) NAN is more expensive than
NANNY. However, as the registered owner of the NAN mark, Nestle should be
free to use its mark on similar products, in different segments of the market, and at
different price levels. In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the
Court held that the scope of protection afforded to registered trademark owners
extends to market areas that are the normal expansion of business:
xxx
Even respondents use of the Big Mak mark on non-hamburger food products
cannot excuse their infringement of petitioners registered mark, otherwise
registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the
market. The Court has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a

trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by
a junior appropriator of a trade-mark or trade-name is likely to lead
to a confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or
is in any way connected with the activities of the infringer; or when
it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577). (Emphasis supplied)
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005

Decision and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No.
62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial
Court, Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
SO ORDERED.
DERMALINE, INC., G.R. No. 190065

Petitioner,
Present:
CARPIO, J.,
- versus - Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
MYRA PHARMACEUTICALS, INC., Promulgated:

Respondent.
August 16, 2010
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
This is a petition for review on certiorari[1] seeking to reverse and set aside the
Decision dated August 7, 2009[2] and the Resolution dated October 28, 2009[3] of
the Court of Appeals (CA) in CA-G.R. SP No. 108627.
The antecedent facts and proceedings
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the
Intellectual Property Office (IPO) an application for registration of the trademark
DERMALINE DERMALINE, INC. (Application No. 4-2006011536). The
application was published for Opposition in the IPO E-Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified

Opposition[4] alleging that the trademark sought to be registered by Dermaline so
resembles its trademark DERMALIN and will likely cause confusion, mistake and
deception to the purchasing public. Myra said that the registration of Dermalines
trademark will violate Section 123[5] of Republic Act (R.A.) No. 8293 (Intellectual
Property Code of the Philippines). It further alleged that Dermalines use and
registration of its applied trademark will diminish the distinctiveness and dilute the
goodwill of Myras DERMALIN, registered with the IPO way back July 8, 1986,
renewed for ten (10) years on July 8, 2006. Myrahas been extensively using
DERMALIN commercially since October 31, 1977, and said mark is still valid and
subsisting.
Myra claimed that, despite Dermalines attempt to differentiate its applied mark, the
dominant feature is the term DERMALINE, which is practically identical with its
own DERMALIN, more particularly that the first eight (8) letters of the marks are
identical, and that notwithstanding the additional letter E by Dermaline, the
pronunciation for both marks are identical. Further, both marks have three (3)
syllables each, with each syllable identical in sound and appearance, even if the
last syllable of DERMALINE consisted of four (4) letters while DERMALIN
consisted only of three (3).
Myra also pointed out that Dermaline applied for the same mark DERMALINE on
June 3, 2003 and was already refused registration by the IPO. By filing this new
application for registration, Dermaline appears to have engaged in a fishing
expedition for the approval of its mark. Myra argued that its intellectual property
right over its trademark is protected under Section 147[6] of R.A. No. 8293.
Myra asserted that the mark DERMALINE DERMALINE, INC. is aurally similar
to its own mark such that the registration and use of Dermalines applied mark will
enable it to obtain benefit from Myras reputation, goodwill and advertising and
will lead the public into believing that Dermaline is, in any way, connected
to Myra. Myra added that even if the subject application was under Classification
44[7] for various skin treatments, it could still be connected to the DERMALIN
mark under Classification 5[8] for pharmaceutical products, since ultimately these
goods are very closely related.
In its Verified Answer,[9] Dermaline countered that a simple comparison of the

trademark DERMALINE DERMALINE, INC. vis--vis Myras DERMALIN
trademark would show that they have entirely different features and distinctive
presentation, thus it cannot result in confusion, mistake or deception on the part of
the purchasing public. Dermaline contended that, in determining if the subject
trademarks are confusingly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the goods to which
they are attached, including the other features appearing in both labels. It claimed
that there were glaring and striking dissimilarities between the two trademarks,
such that its trademark DERMALINE DERMALINE, INC. speaks for itself (Res
ipsa loquitur). Dermaline further argued that there could not be any relation
between its trademark for health and beauty services from Myras trademark
classified under medicinal goods against skin disorders.
The parties failed to settle amicably. Consequently, the preliminary conference was
terminated and they were directed to file their respective position papers.[10]
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-
70[11] sustaining Myras opposition pursuant to Section 123.1(d) of R.A. No.
8293. It disposed
WHEREFORE, the Verified Opposition is, as it is, hereby

SUSTAINED. Consequently, Application Serial No. 4-2006-011536 for
the mark DERMALINE, DERMALINE, INC. Stylized Wordmark for
Dermaline, Inc. under class 44 covering the aforementioned goods filed
on 21 October 2006, is as it is hereby, REJECTED.
Let the file wrapper of DERMALINE, DERMALINE, INC. Stylized

Wordmark subject matter of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this
Decision.
SO ORDERED.[12]
Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under
Resolution No. 2009-12(D)[13] dated January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General of the

IPO. However, in an Order[14] dated April 17, 2009, the appeal was dismissed for
being filed out of time.
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order
dated April 17, 2009 and the rejection of Dermalines application for registration of
trademark.The CA likewise denied Dermalines motion for reconsideration; hence,
this petition raising the issue of whether the CA erred in upholding the IPOs
rejection of Dermalines application for registration of trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or device,

or any combination thereof, adopted and used by a manufacturer or merchant on
his goods to identify and distinguish them from those manufactured, sold, or dealt
by others.[15] Inarguably, it is an intellectual property deserving protection by
law. In trademark controversies, each case must be scrutinized according to its
peculiar circumstances, such that jurisprudential precedents should only be made to
apply if they are specifically in point.[16]
As Myra correctly posits, as a registered trademark owner, it has the right under
Section 147 of R.A. No. 8293 to prevent third parties from using a trademark, or
similar signs or containers for goods or services, without its consent, identical or
similar to its registered trademark, where such use would result in a likelihood of
confusion.
In determining likelihood of confusion, case law has developed two (2) tests, the
Dominancy Test and the Holistic or Totality Test.
The Dominancy Test focuses on the similarity of the prevalent features of

the competing trademarks that might cause confusion or deception. [17] It is applied
when the trademark sought to be registered contains the main, essential and
dominant features of the earlier registered trademark, and confusion or deception is
likely to result. Duplication or imitation is not even required; neither is it necessary
that the label of the applied mark for registration should suggest an effort to
imitate. The important issue is whether the use of the marks involved would likely
cause confusion or mistake in the mind of or deceive the ordinary purchaser, or one
who is accustomed to buy, and therefore to some extent familiar with, the goods in
question.[18] Given greater consideration are the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets, and market segments. [19] The test of dominancy is now
explicitly incorporated into law in Section 155.1 of R.A. No. 8293 which provides
155.1. Use in commerce any reproduction, counterfeit, copy,

or colorable imitation of a registered mark or the same container or
a dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services
on or in connection with which such use is likely to cause confusion, or
to cause mistake, or to deceive; (emphasis supplied)
On the other hand, the Holistic Test entails a consideration of the entirety of
the marks as applied to the products, including labels and packaging, in
determining confusing similarity. The scrutinizing eye of the observer must focus
not only on the predominant words but also on the other features appearing in both
labels so that a conclusion may be drawn as to whether one is confusingly similar
to the other.[20]
Relative to the question on confusion of marks and trade names,

jurisprudence has noted two (2) types of confusion, viz: (1) confusion of goods
(product confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where, although the goods of
the parties are different, the product, the mark of which registration is applied for
by one party, is such as might reasonably be assumed to originate with the
registrant of an earlier product, and the public would then be deceived either into
that belief or into the belief that there is some connection between the two parties,
though inexistent.[21]
In rejecting the application of Dermaline for the registration of its mark

DERMALINE DERMALINE, INC., the IPO applied the Dominancy Test. It
declared that both confusion of goods and service and confusion of business or of
origin were apparent in both trademarks. It also noted that, per Bureau Decision
No. 2007-179 dated December 4, 2007, it already sustained the opposition
of Myra involving the trademark DERMALINE of Dermaline under Classification
5. The IPO also upheld Myras right under Section 138 of R.A. No. 8293, which
provides that a certification of registration of a mark is prima facie evidence of the
validity of the registration, the registrants ownership of the mark, and of the
registrants exclusive right to use the same in connection with the goods and those
that are related thereto specified in the certificate.
We agree with the findings of the IPO. As correctly applied by the IPO in
this case, while there are no set rules that can be deduced as what constitutes a
dominant feature with respect to trademarks applied for registration; usually, what
are taken into account are signs, color, design, peculiar shape or name, or some
special, easily remembered earmarks of the brand that readily attracts and catches
the attention of the ordinary consumer.[22]
Dermalines insistence that its applied trademark DERMALINE DERMALINE,

INC. had differences too striking to be mistaken from Myras DERMALIN cannot,
therefore, be sustained. While it is true that the two marks are presented differently
Dermalines mark is written with the first DERMALINE in script going diagonally
upwards from left to right, with an upper case D followed by the rest of the letters
in lower case, and the portion DERMALINE, INC. is written in upper case letters,
below and smaller than the long-hand portion; while Myras mark DERMALIN is
written in an upright font, with a capital D and followed by lower case letters the
likelihood of confusion is still apparent. This is because they are almost spelled in
the same way, except for Dermalines mark which ends with the letter E, and they
are pronounced practically in the same manner in three (3) syllables, with the
ending letter E in Dermalines mark pronounced silently. Thus, when an ordinary
purchaser, for example, hears an advertisement of Dermalines applied trademark
over the radio, chances are he will associate it with Myras registered mark.
Further, Dermalines stance that its product belongs to a separate and different
classification from Myras products with the registered trademark does not
eradicate the possibility of mistake on the part of the purchasing public to associate
the former with the latter, especially considering that both classifications pertain to
treatments for the skin.
Indeed, the registered trademark owner may use its mark on the same or similar
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market. The
Court is cognizant that the registered trademark owner enjoys protection in product
and market areas that are the normal potential expansion of his business. Thus, we
have held
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior appropriator
of a trade-mark or trade-name is likely to lead to a confusion of source,
as where prospective purchasers would be misled into thinking that
the complaining party has extended his business into the field (see
148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577).
[23]
(Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is connected to or associated
with Myra, such that, considering the current proliferation of health and beauty
products in the market, the purchasers would likely be misled that Myra has
already expanded its business through Dermaline from merely carrying
pharmaceutical topical applications for the skin to health and beauty services.
Verily, when one applies for the registration of a trademark or label which is almost
the same or that very closely resembles one already used and registered by another,
the application should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously registered label or
trademark. This is intended not only to avoid confusion on the part of the public,
but also to protect an already used and registered trademark and an established
goodwill.[24]
Besides, the issue on protection of intellectual property, such as trademarks, is

factual in nature. The findings of the IPO, upheld on appeal by the same office, and
further sustained by the CA, bear great weight and deserves respect from this
Court. Moreover, the decision of the IPO had already attained finality when
Dermaline failed to timely file its appeal with the IPO Office of the Director
General.
WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and
the Resolution dated October 28, 2009 of the Court of Appeals in CA-G.R. SP No.
108627 are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 180677 February 18, 2013

VICTORIO P. DIAZ, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the offense of
infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing mark is not likely to
cause confusion. Thereby, the evidence of the State does not satisfy the quantum of proof beyond reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and November 22, 2007,2whereby the Court
of Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the appellant's brief, and
denied his motion for reconsideration. Thereby, the decision rendered on February 13, 2006 in Criminal Case No. 00-0318 and
Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City (RTC) convicting him for two counts of
infringement of trademark were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Pias City, charging Diaz with violation of
Section 155, in relation to Section 170, of Republic Act No. 8293, also known as the Intellectual Property Code of the
Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court,
the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and
there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying and
colorably imitating Levis registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit
patches and jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans, which likely caused
confusion, mistake, and /or deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVIS, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage
and prejudice of LEVIS.
CONTRARY TO LAW.4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court,
the abovenamed accused, with criminal intent to defraud Levis Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and
there, willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying and
colorably imitating Levis registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE
BRAND, TWO HORSE PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE
ARCUATE/TAB/TWO HORSE PATCH, and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit
patches and jeans, including other preparatory steps necessary to carry out the sale of said patches and jeans, which likely caused
confusion, mistake, and /or deceived the general consuming public, without the consent, permit or authority of the registered owner,
LEVIS, thus depriving and defrauding the latter of its right to the exclusive use of its trademarks and legitimate trade, to the damage
and prejudice of LEVIS.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on June 21, 2000.6
1.
Evidence of the Prosecution

Levi Strauss and Company (Levis), a foreign corporation based in the State of Delaware, United States of America, had been
engaged in the apparel business. It is the owner of trademarks and designs of Levis jeans like LEVIS 501, the arcuate design, the
two-horse brand, the two-horse patch, the two-horse patch with pattern arcuate, and the composite tab arcuate. LEVIS 501 has the
following registered trademarks, to wit: (1) the leather patch showing two horses pulling a pair of pants; (2) the arcuate pattern with
the inscription "LEVI STRAUSS & CO;" (3) the arcuate design that refers to "the two parallel stitching curving downward that are
being sewn on both back pockets of a Levis Jeans;" and (4) the tab or piece of cloth located on the structural seam of the right back
pocket, upper left side. All these trademarks were registered in the Philippine Patent Office in the 1970s, 1980s and early part of
1990s.7
Levi Strauss Philippines, Inc. (Levis Philippines) is a licensee of Levis. After receiving information that Diaz was selling counterfeit
LEVIS 501 jeans in his tailoring shops in Almanza and Talon, Las Pias City, Levis Philippines hired a private investigation group to
verify the information. Surveillance and the purchase of jeans from the tailoring shops of Diaz established that the jeans bought from
the tailoring shops of Diaz were counterfeit or imitations of LEVIS 501. Levis Philippines then sought the assistance of the National
Bureau of Investigation (NBI) for purposes of applying for a search warrant against Diaz to be served at his tailoring shops. The
search warrants were issued in due course. Armed with the search warrants, NBI agents searched the tailoring shops of Diaz and
seized several fake LEVIS 501 jeans from them. Levis Philippines claimed that it did not authorize the making and selling of the
seized jeans; that each of the jeans were mere imitations of genuine LEVIS 501 jeans by each of them bearing the registered
trademarks, like the arcuate design, the tab, and the leather patch; and that the seized jeans could be mistaken for original LEVIS
501 jeans due to the placement of the arcuate, tab, and two-horse leather patch.8
2.
Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.
Diaz stated that he did not manufacture Levis jeans, and that he used the label "LS Jeans Tailoring" in the jeans that he made and
sold; that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops received clothes for
sewing or repair; that his shops offered made-to-order jeans, whose styles or designs were done in accordance with instructions of
the customers; that since the time his shops began operating in 1992, he had received no notice or warning regarding his
operations; that the jeans he produced were easily recognizable because the label "LS Jeans Tailoring," and the names of the
customers were placed inside the pockets, and each of the jeans had an "LSJT" red tab; that "LS" stood for "Latest Style;" and that
the leather patch on his jeans had two buffaloes, not two horses.9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of
twice violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in Criminal Case Nos. 00-0318 & 00-
0319, respectively, and hereby sentences him to suffer in each of the cases the penalty of imprisonment of TWO (2) YEARS
of prision correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as maximum, as well as pay a fine of P50,000.00
for each of the herein cases, with subsidiary imprisonment in case of insolvency, and to suffer the accessory penalties provided for
by law.
Also, accused Diaz is hereby ordered to pay to the private complainant Levis Strauss (Phils.), Inc. the following, thus:
1. P50,000.00 in exemplary damages; and
2. P222,000.00 as and by way of attorneys fees.
Costs de officio.
SO ORDERED.10
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellants brief on time
despite being granted his requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.
Issue
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE ON
TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE PETITIONER FOR LATE
FILING OF APPELLANTS BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellants brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellants brief in the CA "within forty-five (45)
days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the record, seven (7) copies
of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee." Section
1(e) of Rule 50 of the Rules of Court grants to the CA the discretion to dismiss an appeal either motu proprio or on motion of the
appellee should the appellant fail to serve and file the required number of copies of the appellants brief within the time provided by
the Rules of Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the appellants
brief is not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies of the appellants brief
within the time provided by the Rules of Court does not have the immediate effect of causing the outright dismissal of the appeal.
This means that the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of which the CA may still allow the
appeal to proceed despite the late filing of the appellants brief, when the circumstances so warrant its liberality. In deciding to
dismiss the appeal, then, the CA is bound to exercise its sound discretion upon taking all the pertinent circumstances into due
consideration.
The records reveal that Diazs counsel thrice sought an extension of the period to file the appellants brief. The first time was on
March 12, 2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA granted his motion under
its resolution of March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the counsel filed another motion, seeking
an additional 15 days. The CA allowed the counsel until April 25, 2007 to serve and file the appellants brief. On April 25, 2007, the
counsel went a third time to the CA with another request for 15 days. The CA still granted such third motion for extension, giving the
counsel until May 10, 2007. Notwithstanding the liberality of the CA, the counsel did not literally comply, filing the appellants brief
only on May 28, 2007, which was the 18th day beyond the third extension period granted.
Under the circumstances, the failure to file the appellants brief on time rightly deserved the outright rejection of the appeal. The acts
of his counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware that the Rules of Court fixed
the periods to file pleadings and equally significant papers like the appellants brief with the lofty objective of avoiding delays in the
administration of justice.
Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA on appeal
because of the failure of his counsel to serve and file the appellants brief on time despite the grant of several extensions the
counsel requested. Diaz was convicted and sentenced to suffer two indeterminate sentences that would require him to spend time in
detention for each conviction lasting two years, as minimum, to five years, as maximum, and to pay fines totaling P100,000.00 (with
subsidiary imprisonment in case of his insolvency). His personal liberty is now no less at stake. This reality impels us to look beyond
the technicality and delve into the merits of the case to see for ourselves if the appeal, had it not been dismissed, would have been
worth the time of the CA to pass upon. After all, his appellants brief had been meanwhile submitted to the CA. While delving into the
merits of the case, we have uncovered a weakness in the evidence of guilt that cannot be simply ignored and glossed over if we
were to be true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence tendered by
Diazs counsel to justify the belated filing of the appellants brief as unworthy of serious consideration, Diaz should not be made to
suffer the dire consequence. Any accused in his shoes, with his personal liberty as well as his personal fortune at stake, expectedly
but innocently put his fullest trust in his counsels abilities and professionalism in the handling of his appeal. He thereby delivered his
fate to the hands of his counsel. Whether or not those hands were efficient or trained enough for the job of handling the appeal was
a learning that he would get only in the end. Likelier than not, he was probably even unaware of the three times that his counsel had
requested the CA for extensions. If he were now to be left to his unwanted fate, he would surely suffer despite his innocence. How
costly a learning it would be for him! That is where the Court comes in. It is most important for us as dispensers of justice not to
allow the inadvertence or incompetence of any counsel to result in the outright deprivation of an appellants right to life, liberty or
property.13
We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line, the people
whose futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of professionalism of any
member of the Law Profession. They reasonably expect a just result in every litigation. The courts must give them that just result.
That assurance is the peoples birthright. Thus, we have to undo Diazs dire fate.
Even as we now set aside the CAs rejection of the appeal of Diaz, we will not remand the records to the CA for its review. In an
appeal of criminal convictions, the records are laid open for review. To avoid further delays, therefore, we take it upon ourselves to
review the records and resolve the issue of guilt, considering that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:
Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a
civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of
goods or services using the infringing material.
The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following:
1. The trademark being infringed is registered in the Intellectual Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;
3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or others
as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such
business; and
5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee thereof. 14
As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement. 15 There are two tests to
determine likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of these tests was
explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:
x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the competing trademarks that
might cause confusion. Infringement takes place when the competing trademark contains the essential features of another. Imitation
or an effort to imitate is unnecessary. The question is whether the use of the marks is likely to cause confusion or deceive
purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is
not only on the predominant words but also on the other features appearing on the labels.16
As to what test should be applied in a trademark infringement case, we said in McDonalds Corporation v. Macjoy Fastfood
Corporation17 that:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits. In such cases, even more than in any other litigation, precedent must be studied
in the light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged trademark infringement of
jeans products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the United States of America,
claimed that Emerald Garments trademark of "STYLISTIC MR. LEE" that it used on its jeans products was confusingly similar to the
"LEE" trademark that H.D. Lee used on its own jeans products. Applying the holistic test, the Court ruled that there was no
infringement.
The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in relation to
jeans products. Accordingly, the jeans trademarks of Levis Philippines and Diaz must be considered as a whole in determining the
likelihood of confusion between them. The maong pants or jeans made and sold by Levis Philippines, which included LEVIS 501,
were very popular in the Philippines. The consuming public knew that the original LEVIS 501 jeans were under a foreign brand and
quite expensive. Such jeans could be purchased only in malls or boutiques as ready-to-wear items, and were not available in
tailoring shops like those of Diazs as well as not acquired on a "made-to-order" basis. Under the circumstances, the consuming
public could easily discern if the jeans were original or fake LEVIS 501, or were manufactured by other brands of jeans. Confusion
and deception were remote, for, as the Court has observed in Emerald Garments:
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary household items
like catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive. Accordingly, the casual buyer
is predisposed to be more cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception, then,
is less likely. In Del Monte Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of
the goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As
a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he
does in purchasing a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and
analytical investigation. But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great care....
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk for generic
jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable and familiar with his
preference and will not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the "ordinary purchaser" was
defined as one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with an established design
and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design which has been counterfeited, and who must be
indifferent between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the
ordinary intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase. 19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His trademark was
visually and aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original jeans under the
trademark LEVIS 501. The word "LS" could not be confused as a derivative from "LEVI STRAUSS" by virtue of the "LS" being
connected to the word "TAILORING", thereby openly suggesting that the jeans bearing the trademark "LS JEANS TAILORING"
came or were bought from the tailoring shops of Diaz, not from the malls or boutiques selling original LEVIS 501 jeans to the
consuming public.
There were other remarkable differences between the two trademarks that the consuming public would easily perceive. Diaz aptly
noted such differences, as follows:
The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private complainant but the evidence
will show that there was no such design in the seized jeans. Instead, what is shown is "buffalo design." Again, a horse and a
buffalo are two different animals which an ordinary customer can easily distinguish. x x x.
The prosecution further alleged that the red tab was copied by the accused. However, evidence will show that the red tab used by
the private complainant indicates the word "LEVIS" while that of the accused indicates the letters "LSJT" which means LS JEANS
TAILORING. Again, even an ordinary customer can distinguish the word LEVIS from the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accused cater to
different classes of customers and flow through the different channels of trade. The customers of the private complainant are mall
goers belonging to class A and B market group while that of the accused are those who belong to class D and E market who can
only afford Php 300 for a pair of made-toorder pants.20 x x x.
Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING" was a registered trademark of
Diaz. He had registered his trademark prior to the filing of the present cases. 21 The Intellectual Property Office would certainly not
have allowed the registration had Diazs trademark been confusingly similar with the registered trademark for LEVIS 501 jeans.
Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks involved. Thereby, the
evidence of guilt did not satisfy the quantum of proof required for a criminal conviction, which is proof beyond reasonable doubt.
According to Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not mean such a degree of proof as,
excluding possibility of error, produces absolute certainty. Moral certainty only is required, or that degree of proof which produces
conviction in an unprejudiced mind. Consequently, Diaz should be acquitted of the charges.
WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark charged in Criminal
Case No. 00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof beyond reasonable doubt.
No pronouncement on costs of suit.
SO ORDERED.
G.R. No. 182147 December 15, 2010
ARNEL U. TY, MARIE ANTONETTE TY, JASON ONG, WILLY DY, and ALVIN TY, Petitioners,
vs.
NBI SUPERVISING AGENT MARVIN E. DE JEMIL, PETRON GASUL DEALERS ASSOCIATION, and TOTALGAZ DEALERS
ASSOCIATION, Respondents.
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, petitioners seek the reversal of the Decision 1 dated September 28, 2007 of
the Court of Appeals (CA) in CA-G.R. SP No. 98054, which reversed and set aside the Resolutions dated October 9, 20062 and
December 14, 20063 of the Secretary of Justice, and reinstated the November 7, 2005 Joint Resolution 4 of the Office of the Chief
State Prosecutor. Petitioners assail also the CA Resolution5 dated March 14, 2008, denying their motion for reconsideration.
The Facts
Petitioners are stockholders of Omni Gas Corporation (Omni) as per Omnis General Information Sheet 6 (GIS) dated March 6, 2004
submitted to the Securities and Exchange Commission (SEC). Omni is in the business of trading and refilling of Liquefied Petroleum
Gas (LPG) cylinders and holds Pasig City Mayors Permit No. RET-04-001256 dated February 3, 2004.
The case all started when Joaquin Guevara Adarlo & Caoile Law Offices (JGAC Law Offices) sent a letter dated March 22, 2004 7 to
the NBI requesting, on behalf of their clients Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc., and
Totalgaz Dealers Association, Inc., for the surveillance, investigation, and apprehension of persons or establishments in Pasig City
that are engaged in alleged illegal trading of petroleum products and underfilling of branded LPG cylinders in violation of Batas
Pambansa Blg. (BP) 33,8 as amended by Presidential Decree No. (PD) 1865.9
Earlier, the JGAC Law Offices was furnished by several petroleum producers/brand owners their respective certifications on the
dealers/plants authorized to refill their respective branded LPG cylinders, to wit: (1) On October 3, 2003, Pilipinas Shell Petroleum
Corporation (Pilipinas Shell) issued a certification10 of the list of entities duly authorized to refill Shellane LPG cylinders; (2) on
December 4, 2003, Petron Corporation (Petron) issued a certification11 of their dealers in Luzon, Visayas, and Mindanao authorized
to refill Petron Gasul LPG cylinders; and (3) on January 5, 2004, Total (Philippines) Corporation (Total) issued two certifications 12 of
the refilling stations and plants authorized to refill their Totalgaz and Superkalan Gaz LPG cylinders.
Agents De Jemil and Kawada attested to conducting surveillance of Omni in the months of March and April 2004 and doing a test-
buy on April 15, 2004. They brought eight branded LPG cylinders of Shellane, Petron Gasul, Totalgaz, and Superkalan Gaz to Omni
for refilling. The branded LPG cylinders were refilled, for which the National Bureau of Investigation (NBI) agents paid PhP 1,582 as
evidenced by Sales Invoice No. 9004013 issued by Omni on April 15, 2004. The refilled LPG cylinders were without LPG valve seals
and one of the cylinders was actually underfilled, as found by LPG Inspector Noel N. Navio of the Liquefied Petroleum Gas Industry
Association (LPGIA) who inspected the eight branded LPG cylinders on April 23, 2004 which were properly marked by the NBI after
the test-buy.
The NBIs test-buy yielded positive results for violations of BP 33, Section 2(a) in relation to Secs. 3(c) and 4, i.e., refilling branded
LPG cylinders without authority; and Sec. 2(c) in relation to Sec. 4, i.e., underdelivery or underfilling of LPG cylinders. Thus, on April
28, 2004, Agent De Jemil filed an Application for Search Warrant (With Request for Temporary Custody of the Seized Items) 14 before
the Regional Trial Court (RTC) in Pasig City, attaching, among others, his affidavit15 and the affidavit of Edgardo C. Kawada,16 an NBI
confidential agent.
On the same day of the filing of the application for search warrants on April 28, 2004, the RTC, Branch 167 in Pasig City issued
Search Warrants No. 262417 and 2625.18 The NBI served the warrants the next day or on April 29, 2004 resulting in the seizure of
several items from Omnis premises duly itemized in the NBIs Receipt/Inventory of Property/Item Seized. 19 On May 25, 2004, Agent
De Jemil filed his Consolidated Return of Search Warrants with Ex-Parte Motion to Retain Custody of the Seized Items 20 before the
RTC Pasig City.
Subsequently, Agent De Jemil filed before the Department of Justice (DOJ) his Complaint-Affidavits against petitioners for:
(1) Violation of Section 2(a), in relation to Sections 3(c) and 4, of B.P. Blg. 33, as amended by P.D. 1865;21 and (2) Violation of
Section 2(c), in relation to Section 4, of B.P. Blg. 33, as amended by P.D. 1865,22docketed as I.S. Nos. 2004-616 and 2004-618,
respectively.
During the preliminary investigation, petitioners submitted their Joint Counter-Affidavit, 23 which was replied24 to by Agent De Jemil
with a corresponding rejoinder25 from petitioners.
The Ruling of the Office of the Chief State Prosecutor

in I.S. No. 2004-616 and I.S. No. 2004-618
On November 7, 2005, the 3rd Assistant City Prosecutor Leandro C. Catalo of Manila issued a Joint Resolution, 26later approved by
the Chief State Prosecutor Jovencito R. Zuo upon the recommendation of the Head of the Task Force on Anti-Intellectual Property
Piracy (TFAIPP), Assistant Chief State Prosecutor Leah C. Tanodra-Armamento, finding probable cause to charge petitioners with
violations of pertinent sections of BP 33, as amended, resolving as follows:
WHEREFORE, premises considered, it is hereby recommended that two (2) Informations for violations of Section 2 [a] (illegal
trading in petroleum and/or petroleum products) and Section 2 [c] (underfilling of LPG cylinders), both of Batas Pambansa Bilang 33,
as amended, be filed against respondents [herein petitioners] ARNEL TY, MARIE ANTONETTE TY, JASON ONG, WILLY DY and
ALVIN TY.27
Assistant City Prosecutor Catalo found the existence of probable cause based on the evidence submitted by Agent De Jemil
establishing the fact that Omni is not an authorized refiller of Shellane, Petron Gasul, Totalgaz and Superkalan Gaz LPG cylinders.
Debunking petitioners contention that the branded LPG cylinders are already owned by consumers who are free to do with them as
they please, the law is clear that the stamped markings on the LPG cylinders show who are the real owners thereof and they cannot
be refilled sans authority from Pilipinas Shell, Petron or Total, as the case may be. On the underfilling of one LPG cylinder, the
findings of LPG Inspector Navio of the LPGIA were uncontroverted by petitioners.
Petitioners motion for reconsideration,28 was denied through a Resolution29 by the Office of the Chief State Prosecutor issued on
May 3, 2006.
In time, petitioners appealed to the Office of the Secretary of Justice. 30
The Ruling of the DOJ Secretary

in I.S. No. 2004-616 and I.S. No. 2004-618
On October 9, 2006, the Office of the Secretary of Justice issued a Resolution31 reversing and setting aside the November 7, 2005
Joint Resolution of the Office of the Chief State Prosecutor, the dispositive portion of which reads:
WHEREFORE, the assailed resolution is hereby REVERSED and SET ASIDE. The Chief State Prosecutor is directed to cause the
withdrawal of the informations for violations of Sections 2(a) and 2(c) of B.P. Blg. 33, as amended by P.D. 1865, against respondents
Arnel Ty, Mari Antonette Ty, Jason Ong, Willy Dy and Alvin Ty and report the action taken within ten (10) days from receipt hereof.
SO ORDERED.32
The Office of the Secretary of Justice viewed, first, that the underfilling of one of the eight LPG cylinders was an isolated incident
and cannot give rise to a conclusion of underfilling, as the phenomenon may have been caused by human error, oversight or
technical error. Being an isolated case, it ruled that there was no showing of a clear pattern of deliberate underfilling. Second, on the
alleged violation of refilling branded LPG cylinders sans written authority, it found no sufficient basis to hold petitioners responsible
for violation of Sec. 2 (c) of BP 33, as amended, since there was no proof that the branded LPG cylinders seized from Omni belong
to another company or firm, holding that the simple fact that the LPG cylinders with markings or stamps of other petroleum
producers cannot by itself prove ownership by said firms or companies as the consumers who take them to Omni fully owned them
having purchased or acquired them beforehand.
Agent De Jemil moved but was denied reconsideration33 through another Resolution34 dated December 14, 2006 prompting him to
repair to the CA via a petition for certiorari35 under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 98054.
The Ruling of the CA
The Office of the Solicitor General (OSG), in its Comment36 on Agent De Jemils appeal, sought the dismissal of the latters petition
viewing that the determination by the Office of the Secretary of Justice of probable cause is entitled to respect owing to the exercise
of his prerogative to prosecute or not.
On August 31, 2007, Petron filed a Motion to Intervene and to Admit Attached Petition-in-Intervention 37 and Petition-in-
Intervention38 before the CA in CA-G.R. SP No. 98054. And much earlier, the Nationwide Association of Consumers, Inc. (NACI) also
filed a similar motion.
On September 28, 2007, the appellate court rendered the assailed Decision39 revoking the resolutions of the Office of the Secretary
of Justice and reinstated the November 7, 2005 Joint Resolution of the Office of the Chief State Prosecutor. The fallo reads:
WHEREFORE, the instant petition is GRANTED. The assailed resolutions dated October 9, 2006 and December 14, 2006 are
hereby REVERSED and SET ASIDE. The Joint Resolution dated November 7, 2005 of the Office of the Chief State Prosecutor
finding probable cause against private respondents Arnel Ty, Marie Antonette Ty, Jason Ong, Willy Dy, and Alvin Ty is
hereby REINSTATED.
SO ORDERED.40
Citing Sec. 1 (1) and (3) of BP 33, as amended, which provide for the presumption of underfilling, the CA held that the actual
underfilling of an LPG cylinder falls under the prohibition of the law which does not require for the underfilling to be substantial and
deliberate.
Moreover, the CA found strong probable violation of "refilling of another companys or firms cylinders without such companys or
firms written authorization" under Sec. 3 (c) of BP 33, as amended. The CA relied on the affidavits of Agents De Jemil and Kawada,
the certifications from various LPG producers that Omni is not authorized to refill their branded LPG cylinders, the results of the test-
buy operation as attested to by the NBI agents and confirmed by the examination of LPG Inspector Navio of the LPGIA, the letter-
opinion41 of the Department of Energy (DOE) to Pilipinas Shell confirming that branded LPG cylinders are properties of the
companies whose stamp markings appear thereon, and Department Circular No. 2000-05-00742 of the DOE on the required stamps
or markings by the manufacturers of LPG cylinders.
After granting the appeal of Agent De Jemil, however, the motions to intervene filed by Petron and NACI were simply noted by the
appellate court.
Petitioners motion for reconsideration was rebuffed by the CA through the equally assailed March 14, 2008 Resolution. 43
Thus, the instant petition.
The Issues
I. WHETHER OR NOT RESPONDENTS WERE ENTITLED TO THE SPECIAL CIVIL ACTION OF CERTIORARI IN THE
COURT OF APPEALS.
II. WHETHER OR NOT UNDER THE CIRCUMSTANCES THERE WAS PROBABLE CAUSE TO BELIEVE THAT
PETITIONERS VIOLATED SECTION 2(A) OF BATAS PAMBANSA BLG. 33, AS AMENDED.
III. WHETHER OR NOT UNDER THE CIRCUMSTANCES THERE WAS PROBABLE CAUSE TO BELIEVE THAT
PETITIONERS VIOLATED SECTION 2(C) OF BATAS PAMBANSA BLG. 33, AS AMENDED.
IV. WHETHER OR NOT PETITIONERS CAN BE HELD LIABLE UNDER BATAS PAMBANSA BLG. 33, AS AMENDED,
FOR BEING MERE DIRECTORS, NOT ACTUALLY IN CHARGE OF THE MANAGEMENT OF THE BUSINESS AFFAIRS
OF THE CORPORATION.44
The foregoing issues can be summarized into two core issues: first, whether probable cause exists against petitioners for violations
of Sec. 2 (a) and (c) of BP 33, as amended; and second, whether petitioners can be held liable therefor. We, however, will tackle at
the outset the sole procedural issue raised: the propriety of the petition for certiorari under Rule 65 availed of by public respondent
Agent De Jemil to assail the resolutions of the Office of the Secretary of Justice.
Petrons Comment-in-Intervention
On April 14, 2009, Petron entered its appearance by filing a Motion for Leave to Intervene and to Admit Comment-in-
Intervention45 and its Comment-in-Intervention [To petition for Review on Certiorari dated 13 May 2008].46 It asserted vested interest
in the seizure of several Gasul LPG cylinders and the right to prosecute petitioners for unauthorized refilling of its branded LPG
cylinders by Omni. Petitioners duly filed their Comment/Opposition47 to Petrons motion to intervene. It is clear, however, that Petron
has substantial interest to protect in so far as its business relative to the sale and refilling of Petron Gasul LPG cylinders is
concerned, and therefore its intervention in the instant case is proper.
The Courts Ruling
We partially grant the petition.
Procedural Issue: Petition for Certiorari under Rule 65 Proper
Petitioners raise the sole procedural issue of the propriety of the legal remedy availed of by public respondent Agent De Jemil. They
strongly maintain that the Office of the Secretary of Justice properly assumed jurisdiction and did not gravely abuse its discretion in
its determination of lack of probable causethe exercise thereof being its sole prerogativewhich, they lament, the appellate court
did not accord proper latitude. Besides, they assail the non-exhaustion of administrative remedies when Agent De Jemil immediately
resorted to court action through a special civil action for certiorari under Rule 65 before the CA without first appealing the resolutions
of the Office of the Secretary of Justice to the Office of the President (OP).
We cannot agree with petitioners.
For one, while it is the consistent principle in this jurisdiction that the determination of probable cause is a function that belongs to
the public prosecutor48 and, ultimately, to the Secretary of Justice, who may direct the filing of the corresponding information or move
for the dismissal of the case;49 such determination is subject to judicial review where it is established that grave abuse of discretion
tainted the determination.
For another, there is no question that the Secretary of Justice is an alter ego of the President who may opt to exercise or not to
exercise his or her power of review over the formers determination in criminal investigation cases. As aptly noted by Agent De
Jemil, the determination of probable cause by the Secretary of Justice is, under the doctrine of qualified political agency, presumably
that of the Chief Executive unless disapproved or reprobated by the latter.
Chan v. Secretary of Justice50 delineated the proper remedy from the determination of the Secretary of Justice. Therein, the Court,
after expounding on the policy of non-interference in the determination of the existence of probable cause absent any showing of
arbitrariness on the part of the public prosecutor and the Secretary of Justice, however, concluded, citing Alcaraz v.
Gonzalez51 and Preferred Home Specialties, Inc. v. Court of Appeals,52 that an aggrieved party from the resolution of the Secretary of
Justice may directly resort to judicial review on the ground of grave abuse of discretion, thus:
x x x [T]he findings of the Justice Secretary may be reviewed through a petition for certiorari under Rule 65 based on the allegation
that he acted with grave abuse of discretion. This remedy is available to the aggrieved party.53 (Emphasis supplied.)
It is thus clear that Agent De Jemil, the aggrieved party in the assailed resolutions of the Office of the Secretary of Justice, availed of
and pursued the proper legal remedy of a judicial review through a petition for certiorari under Rule 65 in assailing the latters finding
of lack of probable cause on the ground of grave abuse of discretion.
First Core Issue: Existence of Probable Cause
Petitioners contend that there is no probable cause that Omni violated Sec. 2 (a), in relation to Secs. 3 (c) and 4 of BP 33, as
amended, prohibiting the refilling of another companys or firms LPG cylinders without its written authorization. First, the branded
LPG cylinders seized were not traded by Omni as its representative annotated in the NBI receipt of seized items that the filled LPG
cylinders came from customers trucks and the empty ones were taken from the warehouse or swapping section of the refilling plant
and not from the refilling section. Second, the branded LPG cylinders are owned by end-user customers and not by the major
petroleum companies, i.e., Petron, Pilipinas Shell and Total. And even granting arguendo that Omni is selling these LPG cylinders,
still there cannot be a prima facie case of violation since there is no proof that the refilled branded LPG cylinders are owned by
another company or firm.
Third, granting that Petron, Total and Pilipinas Shell still own their respective branded LPG cylinders already sold to consumers, still
such fact will not bind third persons, like Omni, who is not privy to the agreement between the buying consumers and said major
petroleum companies. Thus, a subsequent transfer by the customers of Petron, Total and Pilipinas Shell of the duly marked or
stamped LPG cylinders through swapping, for example, will effectively transfer ownership of the LPG cylinders to the transferee, like
Omni.
Fourth, LPG cylinder exchange or swapping is a common industry practice that the DOE recognizes. They point to a series of
meetings conducted by the DOE for institutionalizing the validity of swapping of all and any kind of LPG cylinders among the
industry players. The meetings resulted in a draft Memorandum of Agreement (MOA) which unfortunately was not signed due to the
withdrawal of petroleum major players Petron, Total and Pilipinas Shell. Nonetheless, the non-signing of the MOA does not diminish
the fact of the recognized industry practice of cylinder exchange or swapping. Relying on Republic Act No. (RA) 8479, 54 petitioners
maintain that said law promotes and encourages the entry of new participants in the petroleum industry such as Omni. And in
furtherance of this mandate is the valid practice of cylinder exchange or swapping in the LPG industry.
We are not persuaded by petitioners strained rationalizations.
Probable violation of Sec. 2 (a) of BP 33, amended
First. The test-buy conducted on April 15, 2004 by the NBI agents, as attested to by their respective affidavits, tends to show that
Omni illegally refilled the eight branded LPG cylinders for PhP 1,582. This is a clear violation of Sec. 2 (a), in relation to Secs. 3 (c)
and 4 of BP 33, as amended. It must be noted that the criminal complaints, as clearly shown in the complaint-affidavits of Agent De
Jemil, are not based solely on the seized items pursuant to the search warrants but also on the test-buy earlier conducted by the
NBI agents.
Second. The written certifications from Pilipinas Shell, Petron and Total show that Omni has no written authority to refill LPG
cylinders, embossed, marked or stamped Shellane, Petron Gasul, Totalgaz and Superkalan Gaz. In fact, petitioners neither dispute
this nor claim that Omni has authority to refill these branded LPG cylinders.
Third. Belying petitioners contention, the seized items during the service of the search warrants tend to show that Omni illegally
refilled branded LPG cylinders without authority.
On April 29, 2004, the NBI agents who served the search warrants on Omni seized the following:
Quantity/Unit Description
7 LPG cylinders Totalgaz, 11.0 kg [filled]
1 LPG cylinder Petron Gasul, 11.0 kg [filled]
1 LPG cylinder Shellane, 11.0 kg [filled]
29 LPG cylinders Superkalan Gaz, 2.7 kg [empty]
17 LPG cylinders Petron Gasul, 11.0 kg [emptly]
8 LPG cylinders Marked as Omnigas with Shell emboss, 11.0 kg [empty]
5 LPG cylinders Marked as Omnigas with Totalgaz emboss, 11.0 kg [empty]
23 LPG cylinders Shellane, 11.0 kg [empty]

3 LPG cylinders Marked as Omnigas with Gasul emboss, 11.0 kg [empty]
21 LPG cylindersTotalgaz, 11.0 kg [empty]
The foregoing list is embodied in the NBIs Receipt/Inventory of Property/Item Seized 55 signed by NBI Agent Edwin J. Roble who
served and implemented the search warrants. And a copy thereof was duly received by Atty. Allan U. Ty, representative of Omni,
who signed the same "under protest" and made the annotation at the bottom part thereon: "The above items/cylinders were taken at
customers trucks and the empty cylinders taken at the warehouse (swapping section) of the company." 56
Even considering that the filled LPG cylinders were indeed already loaded on customers trucks when confiscated, yet the fact that
these refilled LPG cylinders consisting of nine branded LPG cylinders, specifically Totalgaz, Petron Gasul and Shellane, tends to
show that Omni indeed refilled these branded LPG cylinders without authorization from Total, Petron and Pilipinas Shell. Such a fact
is bolstered by the test-buy conducted by Agent De Jemil and NBI confidential agent Kawada: Omnis unauthorized refilling of
branded LPG cylinders, contrary to Sec. 2 (a) in relation to Sec. 3 (c) of BP 33, as amended. Said provisos provide:
Sec. 2. Prohibited Acts.The following acts are prohibited and penalized:
(a) Illegal trading in petroleum and/or petroleum products;
xxxx
Sec. 3. Definition of terms.For the purpose of this Act, the following terms shall be construed to mean:
Illegal trading in petroleum and/or petroleum products
xxxx
(c) Refilling of liquefied petroleum gas cylinders without authority from said Bureau, or refilling of another companys or firms
cylinders without such companys or firms written authorization; (Emphasis supplied.)
As petitioners strongly argue, even if the branded LPG cylinders were indeed owned by customers, such fact does not authorize
Omni to refill these branded LPG cylinders without written authorization from the brand owners Pilipinas Shell, Petron and Total.
In Yao, Sr. v. People,57 a case involving criminal infringement of property rights under Sec. 155 of RA 8293,58 in affirming the courts a
quos determination of the presence of probable cause, this Court held that from Sec. 155.1 59 of RA 8293 can be gleaned that "mere
unauthorized use of a container bearing a registered trademark in connection with the sale, distribution or advertising of goods or
services which is likely to cause confusion, mistake or deception among the buyers/consumers can be considered as trademark
infringement."60 The Court affirmed the presence of infringement involving the unauthorized sale of Gasul and Shellane LPG
cylinders and the unauthorized refilling of the same by Masagana Gas Corporation as duly attested to and witnessed by NBI agents
who conducted the surveillance and test-buys.
Similarly, in the instant case, the fact that Omni refilled various branded LPG cylinders even if owned by its customers but without
authority from brand owners Petron, Pilipinas Shell and Total shows palpable violation of BP 33, as amended. As aptly noted by the
Court in Yao, Sr. v. People, only the duly authorized dealers and refillers of Shellane, Petron Gasul and, by extension, Total may
refill these branded LPG cylinders. Our laws sought to deter the pernicious practices of unscrupulous businessmen.
Fourth. The issue of ownership of the seized branded LPG cylinders is irrelevant and hence need no belaboring. BP 33, as
amended, does not require ownership of the branded LPG cylinders as a condition sine qua non for the commission of offenses
involving petroleum and petroleum products. Verily, the offense of refilling a branded LPG cylinder without the written consent of the
brand owner constitutes the offense regardless of the buyer or possessor of the branded LPG cylinder.
After all, once a consumer buys a branded LPG cylinder from the brand owner or its authorized dealer, said consumer is practically
free to do what he pleases with the branded LPG cylinder. He can simply store the cylinder once it is empty or he can even destroy
it since he has paid a deposit for it which answers for the loss or cost of the empty branded LPG cylinder. Given such fact, what the
law manifestly prohibits is the refilling of a branded LPG cylinder by a refiller who has no written authority from the brand owner.
Apropos, a refiller cannot and ought not to refill branded LPG cylinders if it has no written authority from the brand owner.1avvphi1
Besides, persuasive are the opinions and pronouncements by the DOE: brand owners are deemed owners of their duly embossed,
stamped and marked LPG cylinders even if these are possessed by customers or consumers. The Court recognizes this right
pursuant to our laws, i.e., Intellectual Property Code of the Philippines. Thus the issuance by the DOE Circular No. 2000-05-
007,61 the letter-opinion62 dated December 9, 2004 of then DOE Secretary Vincent S. Perez addressed to Pilipinas Shell, the June 6,
2007 letter63 of then DOE Secretary Raphael P.M. Lotilla to the LPGIA, and DOE Department Circular No. 2007-10-000764 on LPG
Cylinder Ownership and Obligations Related Thereto issued on October 13, 2007 by DOE Secretary Angelo T. Reyes.
Fifth. The ownership of the seized branded LPG cylinders, allegedly owned by Omni customers as petitioners adamantly profess, is
of no consequence.
The law does not require that the property to be seized should be owned by the person against whom the search warrants is
directed. Ownership, therefore, is of no consequence, and it is sufficient that the person against whom the warrant is directed has
control or possession of the property sought to be seized.65 Petitioners cannot deny that the seized LPG cylinders were in the
possession of Omni, found as they were inside the Omni compound.
In fine, we also note that among those seized by the NBI are 16 LPG cylinders bearing the embossed brand names
of Shellane, Gasul and Totalgaz but were marked as Omnigas. Evidently, this pernicious practice of tampering or changing the
appearance of a branded LPG cylinder to look like another brand violates the brand owners property rights as infringement under
Sec. 155.1 of RA 8293. Moreover, tampering of LPG cylinders is a mode of perpetrating the criminal offenses under BP 33, as
amended, and clearly enunciated under DOE Circular No. 2000-06-010 which provided penalties on a per cylinder basis for each
violation.
Foregoing considered, in the backdrop of the quantum of evidence required to support a finding of probable cause, we agree with
the appellate court and the Office of the Chief State Prosecutor, which conducted the preliminary investigation, that there exists
probable cause for the violation of Sec. 2 (a) in relation to Sec. 3 (c) of BP 33, as amended. Probable cause has been defined as
the existence of such facts and circumstances as would excite belief in a reasonable mind, acting on the facts within the knowledge
of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. 66 After all, probable cause need not
be based on clear and convincing evidence of guilt, as the investigating officer acts upon reasonable beliefprobable cause implies
probability of guilt and requires more than bare suspicion but less than evidence which would justify a conviction. 67
Probable violation of Sec. 2 (c) of BP 33, as amended
Anent the alleged violation of Sec. 2 (c) in relation to Sec. 4 of BP 33, as amended, petitioners strongly argue that there is no
probable cause for said violation based upon an underfilling of a lone cylinder of the eight branded LPG cylinders refilled during the
test-buy. Besides, they point out that there was no finding of underfilling in any of the filled LPG cylinders seized during the service
of the search warrants. Citing DOEs Bureau of Energy Utilization Circular No. 85-3-348, they maintain that some deviation is
allowed from the exact filled weight. Considering the fact that an isolated underfilling happened in so many LPG cylinders filled,
petitioners are of the view that such is due to human or equipment error and does not in any way constitute deliberate underfilling
within the contemplation of the law.
Moreover, petitioners cast aspersion on the report and findings of LPG Inspector Navio of the LPGIA by assailing his independence
for being a representative of the major petroleum companies and that the inspection he conducted was made without the presence
of any DOE representative or any independent body having technical expertise in determining LPG cylinder underfilling beyond the
authorized quantity.
Again, we are not persuaded.
Contrary to petitioners arguments, a single underfilling constitutes an offense under BP 33, as amended by PD 1865, which clearly
criminalizes these offenses. In Perez v. LPG Refillers Association of the Philippines, Inc.,68 the Court affirmed the validity of DOE
Circular No. 2000-06-010 which provided penalties on a per cylinder basis for each violation, thus:
B.P. Blg. 33, as amended, criminalizes illegal trading, adulteration, underfilling, hoarding, and overpricing of petroleum products.
Under this general description of what constitutes criminal acts involving petroleum products, the Circular merely lists the various
modes by which the said criminal acts may be perpetrated, namely: no price display board, no weighing scale, no tare weight or
incorrect tare weight markings, no authorized LPG seal, no trade name, unbranded LPG cylinders, no serial number, no
distinguishing color, no embossed identifying markings on cylinder, underfilling LPG cylinders, tampering LPG cylinders, and
unauthorized decanting of LPG cylinders. These specific acts and omissions are obviously within the contemplation of the law,
which seeks to curb the pernicious practices of some petroleum merchants.69 (Emphasis supplied.)
Moreover, in denying the motion for reconsideration of the LPG Refillers Association of the Philippines, Inc., the Court upheld the
basis of said DOE Circular No. 2000-06-010 on the imposition of penalties on a per cylinder basis, thus:
Respondents position is untenable. The Circular is not confiscatory in providing penalties on a per cylinder basis. Those penalties
do not exceed the ceiling prescribed in Section 4 of B.P. Blg. 33, as amended, which penalizes "any person who commits any
act [t]herein prohibited." Thus, violation on a per cylinder basis falls within the phrase "any act" as mandated in Section 4. To provide
the same penalty for one who violates a prohibited act in B.P. Blg. 33, as amended, regardless of the number of cylinders involved
would result in an indiscriminate, oppressive and impractical operation of B.P. Blg. 33, as amended. The equal protection clause
demands that "all persons subject to such legislation shall be treated alike, under like circumstances and conditions, both in the
privileges conferred and in the liabilities imposed."70
The Court made it clear that a violation, like underfilling, on a per cylinder basis falls within the phrase of any actas mandated under
Sec. 4 of BP 33, as amended. Ineluctably, the underfilling of one LPG cylinder constitutes a clear violation of BP 33, as amended.
The finding of underfilling by LPG Inspector Navio of the LPGIA, as aptly noted by Manila Assistant City Prosecutor Catalo who
conducted the preliminary investigation, was indeed not controverted by petitioners.
On the issue of manifest bias and partiality, suffice it to say that aside from the allegation by petitioners, they have not shown that
LPG Inspector Navio is neither an expert nor qualified to determine underfilling. Besides, it must be noted that the inspection by LPG
Inspector Navio was conducted in the presence of NBI agents on April 23, 2004 who attested to that fact through their affidavits.
Moreover, no rules require and petitioners have not cited any that the inspection be conducted in the presence of DOE
representatives.
Second Core Issue: Petitioners Liability for Violations
Sec. 4 of BP 33, as amended, provides for the penalties and persons who are criminally liable, thus:
Sec. 4. Penalties. Any person who commits any act herein prohibited shall, upon conviction, be punished with a fine of not less
than twenty thousand pesos (P20,000) but not more than fifty thousand pesos (P50,000), or imprisonment of at least two (2) years
but not more than five (5) years, or both, in the discretion of the court. In cases of second and subsequent conviction under this Act,
the penalty shall be both fine and imprisonment as provided herein. Furthermore, the petroleum and/or petroleum products, subject
matter of the illegal trading, adulteration, shortselling, hoarding, overpricing or misuse, shall be forfeited in favor of the Government:
Provided, That if the petroleum and/or petroleum products have already been delivered and paid for, the offended party shall be
indemnified twice the amount paid, and if the seller who has not yet delivered has been fully paid, the price received shall be
returned to the buyer with an additional amount equivalent to such price; and in addition, if the offender is an oil company, marketer,
distributor, refiller, dealer, sub-dealer and other retail outlets, or hauler, the cancellation of his license.
Trials of cases arising from this Act shall be terminated within thirty (30) days after arraignment.
When the offender is a corporation, partnership, or other juridical person, the president, the general manager, managing partner,
or such other officer charged with the management of the business affairs thereof, or employee responsible for the violation shall be
criminally liable; in case the offender is an alien, he shall be subject to deportation after serving the sentence.
If the offender is a government official or employee, he shall be perpetually disqualified from office. (Emphasis supplied.)
Relying on the third paragraph of the above statutory proviso, petitioners argue that they cannot be held liable for any perceived
violations of BP 33, as amended, since they are mere directors of Omni who are not in charge of the management of its business
affairs. Reasoning that criminal liability is personal, liability attaches to a person from his personal act or omission but not from the
criminal act or negligence of another. Since Sec. 4 of BP 33, as amended, clearly provides and enumerates who are criminally
liable, which do not include members of the board of directors of a corporation, petitioners, as mere members of the board of
directors who are not in charge of Omnis business affairs, maintain that they cannot be held liable for any perceived violations of BP
33, as amended. To bolster their position, they attest to being full-time employees of various firms as shown by the Certificates of
Employment71 they submitted tending to show that they are neither involved in the day-to-day business of Omni nor managing it.
Consequently, they posit that even if BP 33, as amended, had been violated by Omni they cannot be held criminally liable thereof
not being in any way connected with the commission of the alleged violations, and, consequently, the criminal complaints filed
against them based solely on their being members of the board of directors as per the GIS submitted by Omni to SEC are grossly
discriminatory.
On this point, we agree with petitioners except as to petitioner Arnel U. Ty who is indisputably the President of Omni.
It may be noted that Sec. 4 above enumerates the persons who may be held liable for violations of the law, viz: (1) the president, (2)
general manager, (3) managing partner, (4) such other officer charged with the management of the business affairs of the
corporation or juridical entity, or (5) the employee responsible for such violation. A common thread of the first four enumerated
officers is the fact that they manage the business affairs of the corporation or juridical entity. In short, they are operating officers of a
business concern, while the last in the list is self-explanatory.
It is undisputed that petitioners are members of the board of directors of Omni at the time pertinent. There can be no quibble that the
enumeration of persons who may be held liable for corporate violators of BP 33, as amended, excludes the members of the board of
directors. This stands to reason for the board of directors of a corporation is generally a policy making body. Even if the corporate
powers of a corporation are reposed in the board of directors under the first paragraph of Sec. 2372 of the Corporation Code, it is of
common knowledge and practice that the board of directors is not directly engaged or charged with the running of the recurring
business affairs of the corporation. Depending on the powers granted to them by the Articles of Incorporation, the members of the
board generally do not concern themselves with the day-to-day affairs of the corporation, except those corporate officers who are
charged with running the business of the corporation and are concomitantly members of the board, like the President. Section
2573 of the Corporation Code requires the president of a corporation to be also a member of the board of directors.
Thus, the application of the legal maxim expressio unius est exclusio alterius, which means the mention of one thing implies the
exclusion of another thing not mentioned. If a statute enumerates the thing upon which it is to operate, everything else must
necessarily and by implication be excluded from its operation and effect. 74 The fourth officer in the enumerated list is the catch-all
"such other officer charged with the management of the business affairs" of the corporation or juridical entity which is a factual issue
which must be alleged and supported by evidence.
A scrutiny of the GIS reveals that among the petitioners who are members of the board of directors are the following who are
likewise elected as corporate officers of Omni: (1) Petitioner Arnel U. Ty (Arnel) as President; (2) petitioner Mari Antonette Ty as
Treasurer; and (3) petitioner Jason Ong as Corporate Secretary. Sec. 4 of BP 33, as amended, clearly indicated firstly the president
of a corporation or juridical entity to be criminally liable for violations of BP 33, as amended.
Evidently, petitioner Arnel, as President, who manages the business affairs of Omni, can be held liable for probable violations by
Omni of BP 33, as amended. The fact that petitioner Arnel is ostensibly the operations manager of Multi-Gas Corporation, a family
owned business, does not deter him from managing Omni as well. It is well-settled that where the language of the law is clear and
unequivocal, it must be taken to mean exactly what it says.75 As to the other petitioners, unless otherwise shown that they are
situated under the catch-all "such other officer charged with the management of the business affairs," they may not be held liable
under BP 33, as amended, for probable violations. Consequently, with the exception of petitioner Arnel, the charges against other
petitioners must perforce be dismissed or dropped.
WHEREFORE, premises considered, we PARTIALLY GRANT the instant petition. Accordingly, the assailed September 28, 2007
Decision and March 14, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 98054
are AFFIRMED with MODIFICATION that petitioners Mari Antonette Ty, Jason Ong, Willy Dy and Alvin Ty are excluded from the two
Informations charging probable violations of Batas Pambansa Bilang 33, as amended. The Joint Resolution dated November 7,
2005 of the Office of the Chief State Prosecutor is modified accordingly.
No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
SUPERIOR COMMERCIAL G.R. No. 169974
ENTERPRISES, INC.,
Petitioner,
Present:

- versus -
BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
KUNNAN ENTERPRISES
LTD. AND SPORTS
CONCEPT & DISTRIBUTOR, Promulgated:
INC., April 20, 2010
Respondents. -- -
x-------------------------------------------------------------------------------
----------x
DECISION
BRION, J.:
We review in this petition for review on certiorari[1] the

(1) decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
60777 that reversed the ruling of the Regional Trial Court of
Quezon City, Branch 85 (RTC),[3] and dismissed the petitioner
Superior Commercial Enterprises, Inc.s (SUPERIOR) complaint for
trademark infringement and unfair competition (with prayer for
preliminary injunction) against the respondents Kunnan
Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor,
Inc. (SPORTS CONCEPT); and (2) the CA resolution [4] that denied
SUPERIORs subsequent motion for reconsideration. The RTC
decision that the CA reversed found the respondents liable for
trademark infringement and unfair competition, and ordered them
to pay SUPERIOR P2,000,000.00 in damages, P500,000.00 as
attorneys fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR[5] filed a complaint for

trademark infringement and unfair competition with preliminary
injunction against KUNNAN[6] and SPORTS CONCEPT[7] with the
RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the

owner of the trademarks, trading styles, company names and
business names[8] KENNEX,[9] KENNEX & DEVICE,[10] PRO
KENNEX[11] and PRO-KENNEX (disputed trademarks).[12] Second, it
also asserted its prior use of these trademarks, presenting as
evidence of ownership the Principal and Supplemental
Registrations of these trademarks in its
name. Third, SUPERIOR also alleged that it extensively sold and
advertised sporting goods and products covered by its trademark
registrations. Finally, SUPERIOR presented as evidence of its
ownership of the disputed trademarks the preambular clause of
the Distributorship Agreement dated October 1, 1982
(Distributorship Agreement) it executed with KUNNAN, which
states:
Whereas, KUNNAN intends to acquire the

ownership of KENNEX trademark registered by the
[sic] Superior in the Philippines. Whereas, the
[sic] Superior is desirous of having been appointed [sic]
as the sole distributor by KUNNAN in the territory of
the Philippines. [Emphasis supplied.][13]
In its defense, KUNNAN disputed SUPERIORs claim of
ownership and maintained that SUPERIOR as mere distributor
from October 6, 1982 until December 31, 1991fraudulently
registered the trademarks in its name. KUNNAN alleged that
it was incorporated in 1972, under the name KENNEX Sports
Corporation for the purpose of manufacturing and selling
sportswear and sports equipment; it commercially marketed its
products in different countries, including the Philippines since
1972.[14] It created and first used PRO KENNEX, derived from its
original corporate name, as a distinctive trademark for its
products in 1976. KUNNAN also alleged that it registered the PRO
KENNEX trademark not only in the Philippines but also in 31 other
countries, and widely promoted the KENNEX and PRO KENNEX
trademarks through worldwide advertisements in print media and
sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial

distributorship agreement with another company, [15] KUNNAN
appointed SUPERIOR as its exclusive distributor in
the Philippines under a Distributorship Agreement whose
pertinent provisions state: [16]
Whereas, KUNNAN intends to acquire ownership of

KENNEX trademark registered by the Superior in
the Philippines. Whereas, the Superior is desirous of
having been appointed [sic] as the sole distributor
by KUNNAN in the territory of the Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement,

will appoint the sole distributorship right to
Superior in the Philippines, and this Agreement
could be renewed with the consent of both parties
upon the time of expiration.
2. The Superior, in accordance with this
Agreement, shall assign the ownership of
KENNEX trademark, under the registration of
Patent Certificate No. 4730 dated 23 May 1980 to
KUNNAN on the effects [sic] of its ten (10) years
contract of distributorship, and it is required that
the ownership of the said trademark shall be genuine,
complete as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other

third parties will be permitted to supply the KENNEX
PRODUCTS in the Philippines except only to
the Superior. If KUNNAN violates this stipulation, the
transfer of the KENNEX trademark shall be null and
void.
4. If there is a necessity, the Superior will be appointed,

for the protection of interest of both parties, as the
agent in the Philippines with full power to exercise and
granted the power of attorney, to pursue any case of
Pirating, Infringement and Counterfeiting the [sic]
KENNEX trade mark in the Philippine territory.
5. The Superior will be granted from [sic] KUNNANs

approval before making and selling any KENNEX
products made in the Philippines and the other
countries, and if this is the situation, KUNNAN is
entitled to have a royalty of 5%-8% of FOB as the right.
6. Without KUNNANs permission, the Superior cannot

procure other goods supply under KENNEX brand of
which are not available to supply [sic] by
KUNNAN. However, in connection with the sporting
goods, it is permitted that the Superior can procure
them under KENNEX brand of which are not available
to be supplied by KUNNAN. [Emphasis supplied.]
Even though this Agreement clearly stated that SUPERIOR

was obligated to assign the ownership of the KENNEX trademark
to KUNNAN, the latter claimed that the Certificate of Registration
for the KENNEX trademark remained with SUPERIOR because
Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIORs President
and General Manager, misled KUNNANs officers into believing that
KUNNAN was not qualified to hold the same due to the many
requirements set by the Philippine Patent Office that KUNNAN
could not meet.[17] KUNNAN further asserted
that SUPERIOR deceived it into assigning its applications for
registration of the PRO KENNEX trademark in favor of SUPERIOR,
through an Assignment Agreement dated June 14, 1983 whose
pertinent provisions state:[18]
1. In consideration of the distributorship relationship

between KUNNAN and Superior, KUNNAN, who is the
seller in the distributorship relationship, agrees to
assign the following trademark applications owned
by itself in the Philippines to Superior who is the
buyer in the distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is

still the real and truthful owner of the
abovementioned trademarks, and shall agree that
it will not use the right of the abovementioned
trademarks to do anything which is unfavourable
or harmful to KUNNAN.
3. Superior agrees that it will return back the

abovementioned trademarks to KUNNAN without
hesitation at the request of KUNNAN at any
time. KUNNAN agrees that the cost for the concerned
assignment of the abovementioned trademarks shall be
compensated by KUNNAN.
4. Superior agrees that the abovementioned

trademarks when requested by KUNNAN shall be clean
and without any incumbency.
5. Superior agrees that after the assignment of the

abovementioned trademarks, it shall have no right to
reassign or license the said trademarks to any other
parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement

and unfair competition case before the RTC, KUNNAN filed
with the now defunct Bureau of Patents, Trademarks and
Technology Transfer[19] separate Petitions for the
Cancellation of Registration Trademark Nos. 41032, SR
6663, 40326, 39254, 4730 and 49998, docketed as Inter
Partes Cases Nos. 3709, 3710, 3811, 3812, 3813 and 3814, as
well as Opposition to Application Serial Nos. 84565 and
84566, docketed as Inter Partes Cases Nos. 4101 and 4102
(Consolidated Petitions for Cancellation) involving the KENNEX
and PRO KENNEX trademarks.[20] In essence, KUNNAN filed the
Petition for Cancellation and Opposition on the ground that
SUPERIOR fraudulently registered and appropriated the disputed
trademarks; as mere distributor and not as lawful owner, it
obtained the registrations and assignments of the disputed
trademarks in violation of the terms of the Distributorship
Agreement and Sections 2-A and 17 of Republic Act No. 166, as
amended.[21]
On December 3, 1991, upon the termination of its
distributorship agreement with SUPERIOR, KUNNAN appointed
SPORTS CONCEPT as its new distributor.Subsequently, KUNNAN
also caused the publication of a Notice and Warning in the Manila
Bulletins January 29, 1993 issue, stating that (1) it is the owner of
the disputed trademarks; (2) it terminated its Distributorship
Agreement with SUPERIOR; and (3) it appointed SPORTS CONCEPT
as its exclusive distributor. This notice prompted SUPERIOR to file
its Complaint for Infringement of Trademark and Unfair
Competition with Preliminary Injunction against KUNNAN. [22]
The RTC Ruling
On March 31, 1998, the RTC issued its decision [23] holding KUNNAN
liable for trademark infringement and unfair competition. The RTC
also issued a writ of preliminary injunction enjoining KUNNAN and
SPORTS CONCEPT from using the disputed trademarks.
The RTC found that SUPERIOR sufficiently proved that it was

the first user and owner of the disputed trademarks in the
Philippines, based on the findings of the Director of Patents in
Inter Partes Case No. 1709 and 1734 that SUPERIOR was rightfully
entitled to register the mark KENNEX as user and owner thereof. It
also considered the Whereas clause of the Distributorship
Agreement, which categorically stated that KUNNAN intends to
acquire ownership of [the] KENNEX trademark registered
by SUPERIORin the Philippines. According to the RTC, this clause
amounts to KUNNANs express recognition of SUPERIORs
ownership of the KENNEX trademarks.[24]
KUNNAN and SPORTS CONCEPT appealed the RTCs decision to the

CA where the appeal was docketed as CA-G.R. CV No.
60777. KUNNAN maintained that SUPERIORwas merely its
distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on
its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed

on December 19, 2003 a Manifestation and Motion praying that
the decision of the Bureau of Legal Affairs (BLA) of the
Intellectual Property Office (IPO), dated October 30, 2003,
in the Consolidated Petitions for Cancellation be made of
record and be considered by the CA in resolving the case.
[25]
The BLA ruled in this decision
In the case at bar, Petitioner-Opposer (Kunnan) has

overwhelmingly and convincingly established its rights to
the mark PRO KENNEX. It was proven that actual use by
Respondent-Registrant is not in the concept of an owner
but as a mere distributor (Exhibits I, S to S-1, P and P-1
and Q and Q-2) and as enunciated in the case of Crisanta
Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, a mere
distributor of a product bearing a trademark, even if
permitted to use said trademark has no right to and
cannot register the said trademark.
WHEREFORE, there being sufficient evidence to prove
that the Petitioner-Opposer (KUNNAN) is the prior user
and owner of the trademark PRO-KENNEX, the
consolidated Petitions for Cancellation and the Notices of
Opposition are hereby GRANTED. Consequently, the
trademark PRO-KENNEX bearing Registration Nos.
41032, 40326, 39254, 4730, 49998 for the mark PRO-
KENNEX issued in favor of Superior Commercial
Enterprises, Inc., herein Respondent-Registrant under the
Principal Register and SR No. 6663 are
hereby CANCELLED. Accordingly, trademark application
Nos. 84565 and 84566, likewise for the registration of the
mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of

these cases be forwarded to the Administrative Finance
and Human Resources Development Services Bureau
(AFHRDSB) for appropriate action in accordance with this
Decision and a copy thereof be furnished the Bureau of
Trademarks (BOT) for information and update of its
record.[26]
On February 4, 2005, KUNNAN again filed another

Manifestation requesting that the IPO Director Generals
decision on appeal dated December 8, 2004,
denying SUPERIORs appeal, be given weight in the disposition
of the case.[27] The dispositive portion of the decision reads: [28]
WHEREFORE, premises considered, there is no

cogent reason to disturb Decision No. 2003-35 dated 30
October 2003 rendered by the Director of the Bureau of
Legal Affairs.Accordingly, the instant appeal is DENIED
and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director

Generals ruling before the Court of Appeals on a petition for
review under Rule 43 of the Rules of Court, docketed as CAG.R. SP
No. 87928 (Registration Cancellation Case). On August 30, 2007,
the CA rendered its decision dismissing SUPERIORs petition.[29] On
December 3, 2007, the CA decision was declared final and
executory and entry of judgment was accordingly
made. Hence, SUPERIORs registration of the disputed
trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV

No. 60777, reversing and setting aside the RTCs decision of March
31, 1998.[30] It dismissed SUPERIORs Complaint for Infringement of
Trademark and Unfair Competition with Preliminary Injunction on
the ground that SUPERIOR failed to establish by preponderance of
evidence its claim of ownership over the KENNEX and PRO
KENNEX trademarks. The CA found the Certificates of Principal
and Supplemental Registrations and the whereas clause of the
Distributorship Agreement insufficient to support SUPERIORs
claim of ownership over the disputed trademarks.
The CA stressed that SUPERIORs possession of the

aforementioned Certificates of Principal Registration does not
conclusively establish its ownership of the disputed trademarks as
dominion over trademarks is not acquired by the fact of
registration alone;[31] at best, registration merely raises a
presumption of ownership that can be rebutted by contrary
evidence.[32] The CA further emphasized that the Certificates of
Supplemental Registration issued in SUPERIORs name do not even
enjoy the presumption of ownership accorded to registration in
the principal register; it does not amount to a prima
facie evidence of the validity of registration or of the registrants
exclusive right to use the trademarks in connection with the
goods, business, or services specified in the certificate. [33]
In contrast with the failure of SUPERIORs evidence, the CA

found that KUNNAN presented sufficient evidence to
rebut SUPERIORs presumption of ownership over the
trademarks. KUNNAN established that SUPERIOR, far from being
the rightful owner of the disputed trademarks, was merely
KUNNANs exclusive distributor. This conclusion was based on
three pieces of evidence that, to the CA, clearly established
that SUPERIOR had no proprietary interest over the disputed
trademarks.
First, the CA found that the Distributorship Agreement,

considered in its entirety, positively confirmed
that SUPERIOR sought to be the KUNNANs exclusive
distributor.The CA based this conclusion on the following
provisions of the Distributorship Agreement:
(1) that SUPERIOR was desirous of [being] appointed as

the sole distributor by KUNNAN in the territory of
the Philippines;
(2) that KUNNAN will appoint the sole distributorship right

to Superior in the Philippines; and
(3) that no third parties will be permitted to supply
KENNEX PRODUCTS in the Philippines except only
to Superior.
The CA thus emphasized that the RTC erred in unduly relying

on the first whereas clause, which states that KUNNAN intends to
acquire ownership of [the] KENNEX trademark registered by
SUPERIOR in the Philippines without considering the entirety of
the Distributorship Agreement indicating that SUPERIOR had been
merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express

undertaking in the Assignment Agreement to acknowledge
that KUNNAN is still the real and truthful owner of the [PRO
KENNEX] trademarks, and that it shall agree that it will not use
the right of the abovementioned trademarks to do anything which
is unfavourable or harmful to KUNNAN. To the CA, these provisions
are clearly inconsistent with SUPERIORs claim of ownership of the
disputed trademarks. The CA also observed that although the
Assignment Agreement was a private document, its authenticity
and due execution was proven by the similarity of Mr. Tan Bon
Diongs signature in the Distributorship Agreement and the
Assignment Agreement.
Third, the CA also took note of SUPERIORs Letter dated

November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the sole and exclusive licensee and
distributor in the Philippines of all its KENNEX and PRO-KENNEX
products. Attached to the letter was an agreement with KUNNAN,
identifying the latter as the foreign manufacturer of all KENNEX
products. The CA concluded that in this
letter, SUPERIOR acknowledged its status as a distributor in its
dealings with KUNNAN, and even in its transactions with third
persons.
Based on these reasons, the CA ruled that SUPERIOR was a
mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is
based on ownership. Citing Section 4 of Republic Act No.
166[34] and established jurisprudence,[35] the CA held
that SUPERIOR as an exclusive distributor did not acquire any
proprietary interest in the principals (KUNNANs) trademark.
The CA denied SUPERIORs motion for reconsideration for lack of

merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN

HOLDING THAT PETITIONER SUPERIOR IS NOT THE TRUE
AND RIGHTFUL OWNER OF THE TRADEMARKS KENNEX
AND PRO-KENNEX IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF

APPEALS ERRED IN HOLDING THAT
PETITIONER SUPERIOR IS A MERE DISTRIBUTOR OF
RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF

APPEALS ERRED IN REVERSING AND SETTING ASIDE
THE DECISION OF THE REGIONAL TRIAL COURT OF
QUEZON CITY IN CIVIL CASE NO. Q-93-14888, LIFTING
THE PRELIMINARY INJUNCTION ISSUED AGAINST
RESPONDENTS KUNNAN AND SPORTS CONCEPT AND
DISMISSING THE COMPLAINT FOR INFRINGEMENT OF
TRADEMARK AND UNFAIR COMPETITION WITH
PRELIMINARY INJUNCTION
THE COURTS RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in the Registration
Cancellation Case on the present case. This decision - rendered after the CA
decision for trademark infringement and unfair competition in CA-G.R. CV No.
60777 (root of the present case) - states:
As to whether respondent Kunnan was able to overcome the

presumption of ownership in favor of Superior, the former sufficiently
established the fraudulent registration of the questioned trademarks
by Superior. The Certificates of Registration No. SR-4730
(Supplemental Register) and 33487 (Principal Register) for the
KENNEX trademark were fraudulently obtained by
petitioner Superior. Even before PROKENNEX products were imported
by Superior into the Philippines, the same already enjoyed popularity in
various countries and had been distributed worldwide, particularly
among the sports and tennis enthusiasts since 1976. Riding on the said
popularity, Superior caused the registration thereof in
the Philippines under its name when it knew fully well that it did not
own nor did it manufacture the PROKENNEX
products. Superior claimed ownership of the subject marks and failed to
disclose in its application with the IPO that it was merely a distributor of
KENNEX and PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of

Registration Nos. SR-4730 and 33487 to Kunnan in exchange for the
appointment by the latter as its exclusive distributor, Superior however
breached its obligation and failed to assign the same to Kunnan. In a
letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong,
misrepresented to Kunnan that the latter cannot own trademarks in
the Philippines. Thus, Kunnan was misled into assigning to Superior its
(Kunnans) own application for the disputed trademarks. In the same
assignment document, however. Superior was bound to ensure that the
PROKENNEX trademarks under Registration Nos. 40326, 39254, and
49998 shall be returned to Kunnan clean and without any incumbency
when requested by the latter.
In fine, We see no error in the decision of the Director General of the

IPO which affirmed the decision of the Director of the Bureau of Legal
Affairs canceling the registration of the questioned marks in the name of
petitioner Superior and denying its new application for registration, upon
a finding that Superior is not the rightful owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the KENNEX and PRO

KENNEX trademarks should be cancelled because SUPERIOR was not the
owner of, and could not in the first place have validly registered these
trademarks. Thus, as of the finality of the CA decision on December 3, 2007,
these trademark registrations were effectively cancelled and SUPERIOR was no
longer the registrant of the disputed trademarks.
Section 22 of Republic Act No. 166, as amended (RA 166),

[36]
the law applicable to this case, defines trademark
infringement as follows:
Section 22. Infringement, what constitutes. Any person

who [1] shall use, without the consent of
the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or
services, or identity of such business; or [2] reproduce,
counterfeit, copy, or colorably imitate any such mark or
trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such
goods, business or services, shall be liable to a civil action
by the registrant for any or all of the
remedies herein provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a
case for infringement. Corollary to this, Section 19 of RA 166 provides that any
right conferred upon the registrant under the provisions of RA 166[37] terminates
when the judgment or order of cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a case for
cancellation has been made out he shall order the cancellation of the registration.
The order shall not become effective until the period for appeal has elapsed, or if
appeal is taken, until the judgment on appeal becomes final. When the order or
judgment becomes final, any right conferred by such registration upon the
registrant or any person in interest of record shall terminate. Notice of
cancellation shall be published in the Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a

trademark has the effect of depriving the registrant of protection from infringement
from the moment judgment or order of cancellation has become final.[38]
In the present case, by operation of law, specifically Section 19 of RA 166,

the trademark infringement aspect of SUPERIORs case has been rendered moot
and academic in view of the finality of the decision in the Registration
Cancellation Case. In short, SUPERIOR is left without any cause of action for
trademark infringement since the cancellation of registration of a trademark
deprived it of protection from infringement from the moment judgment or order of
cancellation became final. To be sure, in a trademark infringement, title to the
trademark is indispensable to a valid cause of action and such title is shown by its
certificate of registration.[39] With its certificates of registration over the disputed
trademarks effectively cancelled with finality, SUPERIORs case for trademark
infringement lost its legal basis and no longer presented a valid cause of action.
Even assuming that SUPERIORs case for trademark infringement had not been
rendered moot and academic, there can be no infringement committed by
KUNNAN who was adjudged with finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to the cancellation of
the registration of the disputed trademarks, SUPERIOR as a mere distributor and
not the owner cannot assert any protection from trademark infringement as it had
no right in the first place to the registration of the disputed trademarks. In fact,
jurisprudence holds that in the absence of any inequitable conduct on the part of
the manufacturer, an exclusive distributor who employs the trademark of the
manufacturer does not acquire proprietary rights of the manufacturer, and a
registration of the trademark by the distributor as such belongs to the
manufacturer, provided the fiduciary relationship does not terminate before
application for registration is filed.[40] Thus, the CA in the Registration Cancellation
Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no

right to register the questioned mark in its name. Well-entrenched in our
jurisdiction is the rule that the right to register a trademark should be
based on ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for the registration
of the same. Under the Trademark Law, only the owner of the trademark,
trade name or service mark used to distinguish his goods, business or
service from the goods, business or service of others is entitled to
register the same.An exclusive distributor does not acquire any
proprietary interest in the principals trademark and cannot register it in
his own name unless it is has been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIORs
present case for trademark infringement. The doctrine of res judicata embraces two
(2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39,
Section 47, and the second is "conclusiveness of judgment" under paragraph (c)
thereof.
In the present case, the second concept conclusiveness of judgment

applies. Under the concept of res judicata by conclusiveness of judgment, a final
judgment or decree on the merits by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits on points and matters
determined in the former suit.[41] Stated differently, facts and issues actually and
directly resolved in a former suit cannot again be raised in any future case between
the same parties, even if the latter suit may involve a different cause of action.
[42]
This second branch of the principle of res judicata bars the re-litigation of
particular facts or issues in another litigation between the same parties on a
different claim or cause of action.[43]
Because the Registration Cancellation Case and the present case involve the
same parties, litigating with respect to and disputing the same trademarks, we are
bound to examine how one case would affect the other. In the present case, even if
the causes of action of the Registration Cancellation Case (the cancellation of
trademark registration) differs from that of the present case (the improper or
unauthorized use of trademarks), the final judgment in the Registration
Cancellation Case is nevertheless conclusive on the particular facts and issues that
are determinative of the present case.
To establish trademark infringement, the following elements must be

proven: (1) the validity of plaintiffs mark; (2) the plaintiffs ownership of the
mark; and (3) the use of the mark or its colorable imitation by the alleged infringer
results in likelihood of confusion.[44]
Based on these elements, we find it immediately obvious that the second

element the plaintiffs ownership of the mark was what the Registration
Cancellation Case decided with finality. On this element depended the validity of
the registrations that, on their own, only gave rise to the presumption of, but was
not conclusive on, the issue of ownership.[45]
In no uncertain terms, the appellate court in the Registration Cancellation

Case ruled that SUPERIOR was a mere distributor and could not have been
the owner, and was thus an invalid registrant of the disputed
trademarks. Significantly, these are the exact terms of the ruling the CA arrived at
in the present petition now under our review. Thus, whether with one or the other,
the ruling on the issue of ownership of the trademarks is the same. Given, however,
the final and executory ruling in the Registration Cancellation Case on the issue of
ownership that binds us and the parties, any further discussion and review of the
issue of ownership although the current CA ruling is legally correct and can stand
on its own merits becomes a pointless academic discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor
the CA made any factual findings with respect to the issue of
unfair competition. In its Complaint, SUPERIOR alleged that:[46]
17. In January 1993, the plaintiff learned that the

defendant Kunnan Enterprises, Ltd., is intending to
appoint the defendant Sports Concept and Distributors,
Inc. as its alleged distributor for sportswear and sporting
goods bearing the trademark PRO-KENNEX. For this
reason, on January 20, 1993, the plaintiff, through
counsel, wrote the defendant Sports Concept and
Distributors Inc. advising said defendant that the
trademark PRO-KENNEX was registered and owned by the
plaintiff herein.
18. The above information was affirmed by an

announcement made by the defendants in The Manila
Bulletin issue of January 29, 1993, informing the public
that defendant Kunnan Enterprises, Ltd. has appointed
the defendant Sports Concept and Distributors, Inc. as its
alleged distributor of sportswear and sporting goods and
equipment bearing the trademarks KENNEX and PRO-
KENNEX which trademarks are owned by and registered
in the name of plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained
herein, were designed to and are of the nature so as to
create confusion with the commercial activities of plaintiff
in the Philippines and is liable to mislead the public as to
the nature and suitability for their purposes of plaintiffs
business and the defendants acts are likely to discredit
the commercial activities and future growth of plaintiffs
business.
From jurisprudence, unfair competition has been defined as

the passing off (or palming off) or attempting to pass off upon the
public of the goods or business of one person as the goods or
business of another with the end and probable effect of deceiving
the public. The essential elements of unfair competition[47] are (1)
confusing similarity in the general appearance of the goods; and
(2) intent to deceive the public and defraud a competitor. [48]
Jurisprudence also formulated the following true test of

unfair competition: whether the acts of the defendant have the
intent of deceiving or are calculated to deceive the ordinary buyer
making his purchases under the ordinary conditions of the
particular trade to which the controversy relates. One of the
essential requisites in an action to restrain unfair competition is
proof of fraud; the intent to deceive, actual or probable must be
shown before the right to recover can exist. [49]
In the present case, no evidence exists showing that

KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those
of SUPERIOR. In addition, there is no evidence of bad faith or
fraud imputable to KUNNAN in using the disputed trademarks.
Specifically, SUPERIOR failed to adduce any evidence to show that
KUNNAN by the above-cited acts intended to deceive the public
as to the identity of the goods sold or of the manufacturer of the
goods sold. InMcDonalds Corporation v. L.C. Big Mak Burger, Inc.,
[50]
we held that there can be trademark infringement without
unfair competition such as when the infringer discloses on
the labels containing the mark that he manufactures the
goods, thus preventing the public from being deceived
that the goods originate from the trademark owner. In this
case, no issue of confusion arises because the same
manufactured products are sold; only the ownership of the
trademarks is at issue. Furthermore, KUNNANs January 29, 1993
notice by its terms prevents the public from being deceived that
the goods originated from SUPERIOR since the notice clearly
indicated that KUNNAN is the manufacturer of the goods bearing
the trademarks KENNEX and PRO KENNEX. This notice states in
full:[51]
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the

internationally-renowned trademarks KENNEX and PRO KENNEX for
sportswear and sporting goods and equipment.Kunnan Enterprises Ltd.
has registered the trademarks KENNEX and PRO KENNEX in the
industrial property offices of at least 31 countries worldwide where
KUNNAN Enterprises Ltd. has been selling its sportswear and sporting
goods and equipment bearing the KENNEX and PRO KENNEX
trademarks.
Kunnan Enterprises Ltd. further informs the public that it had

terminated its Distributorship Agreement with Superior Commercial
Enterprises, Inc. on December 31, 1991. As a result, Superior
Commercial Enterprises, Inc. is no longer authorized to sell
sportswear and sporting goods and equipment manufactured by
Kunnan Enterprises Ltd. and bearing the trademarks KENNEX
and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND

DISTRIBUTORS, INC. as its exclusive Philippine distributor of
sportswear and sporting goods and equipment bearing the trademarks
KENNEX and PRO KENNEX. The public is advised to buy sporting
goods and equipment bearing these trademarks only from SPORTS
CONCEPT AND DISTRIBUTORS, INC. to ensure that the products
they are buying are manufactured by Kunnan Enterprises Ltd.
[Emphasis supplied.]
Finally, with the established ruling that KUNNAN is the rightful owner of
the trademarks of the goods that SUPERIOR asserts are being unfairly sold by
KUNNAN under trademarks registered in SUPERIORs name, the latter is left with
no effective right to make a claim. In other words, with the CAs final ruling in the
Registration Cancellation Case, SUPERIORs case no longer presents a valid cause
of action. For this reason, the unfair competition aspect of the SUPERIORs case
likewise falls.
WHEREFORE, premises considered,

we DENY Superior Commercial Enterprises, Inc.s petition for
review on certiorari for lack of merit. Cost against
petitionerSuperior Commercial Enterprises, Inc.
SO ORDERED.
G.R. No. 194062 June 17, 2013
REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N. TY, ORLANDO REYES, FERRER SUAZO and ALVIN U.
TV, Petitioners,
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and SHELL INTERNATIONAL PETROLEUM
COMPANY LIMITED, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioners seeking the reversal of the
Decision1 dated July 2, 2010, and Resolution2 dated October 11, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 106385.
Stripped of non-essentials, the facts of the case, as summarized by the CA, are as follows:
Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum Corporation ("Shell" for brevity) are two of the
largest bulk suppliers and producers of LPG in the Philippines. Petron is the registered owner in the Philippines of the trademarks
GASUL and GASUL cylinders used for its LGP products. It is the sole entity in the Philippines authorized to allow refillers and
distributors to refill, use, sell, and distribute GASUL LPG containers, products and its trademarks.
Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the tradename, trademarks, symbols or designs of its
principal, Shell International Petroleum Company Limited, including the marks SHELLANE and SHELL device in connection with the
production, sale and distribution of SHELLANE LPGs. It is the only corporation in the Philippines authorized to allow refillers and
distributors to refill, use, sell and distribute SHELLANE LGP containers and products. Private respondents, on the other hand, are
the directors and officers of Republic Gas Corporation ("REGASCO" for brevity), an entity duly licensed to engage in, conduct and
carry on, the business of refilling, buying, selling, distributing and marketing at wholesale and retail of Liquefied Petroleum Gas
("LPG").
LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc. and Totalgaz
Dealers Association, received reports that certain entities were engaged in the unauthorized refilling, sale and distribution of LPG
cylinders bearing the registered tradenames and trademarks of the petitioners. As a consequence, on February 5, 2004, Genesis
Adarlo (hereinafter referred to as Adarlo), on behalf of the aforementioned dealers associations, filed a letter-complaint in the
National Bureau of Investigation ("NBI") regarding the alleged illegal trading of petroleum products and/or underdelivery or
underfilling in the sale of LPG products.
Acting on the said letter-complaint, NBI Senior Agent Marvin E. De Jemil (hereinafter referred to as "De Jemil") was assigned to
verify and confirm the allegations contained in the letter-complaint. An investigation was thereafter conducted, particularly within the
areas of Caloocan, Malabon, Novaliches and Valenzuela, which showed that several persons and/or establishments, including
REGASCO, were suspected of having violated provisions of Batas Pambansa Blg. 33 (B.P. 33). The surveillance revealed that
REGASCO LPG Refilling Plant in Malabon was engaged in the refilling and sale of LPG cylinders bearing the registered marks of
the petitioners without authority from the latter. Based on its General Information Sheet filed in the Securities and Exchange
Commission, REGASCOs members of its Board of Directors are: (1) Arnel U. Ty President, (2) Marie Antoinette Ty Treasurer,
(3) Orlando Reyes Corporate Secretary, (4) Ferrer Suazo and (5) Alvin Ty (hereinafter referred to collectively as private
respondents).
De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with the former and a confidential
asset going undercover. They brought with them four (4) empty LPG cylinders bearing the trademarks of SHELLANE and GASUL
and included the same with the purchase of J&S, a REGASCOs regular customer. Inside REGASCOs refilling plant, they witnessed
that REGASCOs employees carried the empty LPG cylinders to a refilling station and refilled the LPG empty cylinders. Money was
then given as payment for the refilling of the J&Ss empty cylinders which included the four LPG cylinders brought in by De Jemil
and his companion. Cash Invoice No. 191391 dated February 19, 2004 was issued as evidence for the consideration paid.
After leaving the premises of REGASCO LPG Refilling Plant in Malabon, De Jemil and the other NBI operatives proceeded to the
NBI headquarters for the proper marking of the LPG cylinders. The LPG cylinders refilled by REGASCO were likewise found later to
be underrefilled.
Thus, on March 5, 2004, De Jemil applied for the issuance of search warrants in the Regional Trial Court, Branch 24, in the City of
Manila against the private respondents and/or occupants of REGASCO LPG Refilling Plant located at Asucena Street, Longos,
Malabon, Metro Manila for alleged violation of Section 2 (c), in relation to Section 4, of B.P. 33, as amended by PD 1865. In his
sworn affidavit attached to the applications for search warrants, Agent De Jemil alleged as follows:
"x x x.
"4. Respondents REGASCO LPG Refilling Plant-Malabon is not one of those entities authorized to refill LPG cylinders bearing the
marks of PSPC, Petron and Total Philippines Corporation. A Certification dated February 6, 2004 confirming such fact, together with
its supporting documents, are attached as Annex "E" hereof.
6. For several days in the month of February 2004, the other NBI operatives and I conducted surveillance and investigation on
respondents REGASCO LPG refilling Plant-Malabon. Our surveillance and investigation revealed that respondents REGASCO
LPG Refilling Plant-Malabon is engaged in the refilling and sale of LPG cylinders bearing the marks of Shell International, PSPC and
Petron.
x x x.
8. The confidential asset and I, together with the other operatives of the NBI, put together a test-buy operation. On February 19,
2004, I, together with the confidential asset, went undercover and executed our testbuy operation. Both the confidential assets and I
brought with us four (4) empty LPG cylinders branded as Shellane and Gasul. x x x in order to have a successful test buy, we
decided to "ride-on" our purchases with the purchase of Gasul and Shellane LPG by J & S, one of REGASCOs regular customers.
9. We proceeded to the location of respondents REGASCO LPG Refilling Plant-Malabon and asked from an employee of
REGASCO inside the refilling plant for refill of the empty LPG cylinders that we have brought along, together with the LPG cylinders
brought by J & S. The REGASCO employee, with some assistance from other employees, carried the empty LPG cylinders to a
refilling station and we witnessed the actual refilling of our empty LPG cylinders.
10. Since the REGASCO employees were under the impression that we were together with J & S, they made the necessary refilling
of our empty LPG cylinders alongside the LPG cylinders brought by J & S. When we requested for a receipt, the REGASCO
employees naturally counted our LPG cylinders together with the LPG cylinders brought by J & S for refilling. Hence, the amount
stated in Cash Invoice No. 191391 dated February 19, 2004, equivalent to Sixteen Thousand Two Hundred Eighty-Six and 40/100
(Php16,286.40), necessarily included the amount for the refilling of our four (4) empty LPG cylinders. x x x.
11. After we accomplished the purchase of the illegally refilled LPG cylinders from respondents REGASCO LPG Refilling Plant-
Malabon, we left its premises bringing with us the said LPG cylinders. Immediately, we proceeded to our headquarters and made
the proper markings of the illegally refilled LPG cylinders purchased from respondents REGASCO LPG Refilling Plant-Malabon by
indicating therein where and when they were purchased. Since REGASCO is not an authorized refiller, the four (4) LPG cylinders
illegally refilled by respondents REGASCO LPG Refilling Plant-Malabon, were without any seals, and when weighed, were
underrefilled. Photographs of the LPG cylinders illegally refilled from respondents REGASCO LPG Refilling Plant-Malabon are
attached as Annex "G" hereof. x x x."
After conducting a personal examination under oath of Agent De Jemil and his witness, Joel Cruz, and upon reviewing their sworn
affidavits and other attached documents, Judge Antonio M. Eugenio, Presiding Judge of the RTC, Branch 24, in the City of Manila
found probable cause and correspondingly issued Search Warrants Nos. 04-5049 and 04-5050.
Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and other NBI operatives immediately
proceeded to the REGASCO LPG Refilling Station in Malabon and served the search warrants on the private respondents. After
searching the premises of REGASCO, they were able to seize several empty and filled Shellane and Gasul cylinders as well as
other allied paraphernalia.
Subsequently, on January 28, 2005, the NBI lodged a complaint in the Department of Justice against the private respondents for
alleged violations of Sections 155 and 168 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines.
On January 15, 2006, Assistant City Prosecutor Armando C. Velasco recommended the dismissal of the complaint. The prosecutor
found that there was no proof introduced by the petitioners that would show that private respondent REGASCO was engaged in
selling petitioners products or that it imitated and reproduced the registered trademarks of the petitioners. He further held that he
saw no deception on the part of REGASCO in the conduct of its business of refilling and marketing LPG. The Resolution issued by
Assistant City Prosecutor Velasco reads as follows in its dispositive portion:
"WHEREFORE, foregoing considered, the undersigned finds the evidence against the respondents to be insufficient to form a well-
founded belief that they have probably committed violations of Republic Act No. 9293. The DISMISSAL of this case is hereby
respectfully recommended for insufficiency of evidence."
On appeal, the Secretary of the Department of Justice affirmed the prosecutors dismissal of the complaint in a Resolution dated
September 18, 2008, reasoning therein that:
"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent specifically for refilling. Refilling the same empty
cylinders is by no means an offense in itself it being the legitimate business of Regasco to engage in the refilling and marketing of
liquefied petroleum gas. In other words, the empty cylinders were merely filled by the employees of Regasco because they were
brought precisely for that purpose. They did not pass off the goods as those of complainants as no other act was done other than to
refill them in the normal course of its business.
"In some instances, the empty cylinders were merely swapped by customers for those which are already filled. In this case, the end-
users know fully well that the contents of their cylinders are not those produced by complainants. And the reason is quite simple it
is an independent refilling station.
"At any rate, it is settled doctrine that a corporation has a personality separate and distinct from its stockholders as in the case of
herein respondents. To sustain the present allegations, the acts complained of must be shown to have been committed by
respondents in their individual capacity by clear and convincing evidence. There being none, the complaint must necessarily fail. As
it were, some of the respondents are even gainfully employed in other business pursuits. x x x."3
Dispensing with the filing of a motion for reconsideration, respondents sought recourse to the CA through a petition for certiorari.
In a Decision dated July 2, 2010, the CA granted respondents certiorari petition. The fallo states:
WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby GRANTED. The assailed Resolution dated
September 18, 2008 of the Department of Justice in I.S. No. 2005-055 is hereby REVERSED and SET ASIDE.
SO ORDERED.4
Petitioners then filed a motion for reconsideration. However, the same was denied by the CA in a Resolution dated October 11,
2010.
Accordingly, petitioners filed the instant Petition for Review on Certiorari raising the following issues for our resolution:
Whether the Petition for Certiorari filed by RESPONDENTS should have been denied outright.
Whether sufficient evidence was presented to prove that the crimes of Trademark Infringement and Unfair Competition as defined
and penalized in Section 155 and Section 168 in relation to Section 170 of Republic Act No. 8293 (The Intellectual Property Code of
the Philippines) had been committed.
Whether probable cause exists to hold INDIVIDUAL PETITIONERS liable for the offense charged. 5
Let us discuss the issues in seriatim.
Anent the first issue, the general rule is that a motion for reconsideration is a condition sine qua non before a certiorari petition may
lie, its purpose being to grant an opportunity for the court a quo to correct any error attributed to it by re-examination of the legal and
factual circumstances of the case.6
However, this rule is not absolute as jurisprudence has laid down several recognized exceptions permitting a resort to the special
civil action for certiorari without first filing a motion for reconsideration, viz.:
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or
are the same as those raised and passed upon in the lower court.
(c) Where there is an urgent necessity for the resolution of the question and any further delay would prejudice the
interests of the Government or of the petitioner or the subject matter of the petition is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is
improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to object; and,
(i) Where the issue raised is one purely of law or public interest is involved.7
In the present case, the filing of a motion for reconsideration may already be dispensed with considering that the questions raised in
this petition are the same as those that have already been squarely argued and passed upon by the Secretary of Justice in her
assailed resolution.
Apropos the second and third issues, the same may be simplified to one core issue: whether probable cause exists to hold
petitioners liable for the crimes of trademark infringement and unfair competition as defined and penalized under Sections 155 and
168, in relation to Section 170 of Republic Act (R.A.) No. 8293.
Section 155 of R.A. No. 8293 identifies the acts constituting trademark infringement as follows:
Section 155. Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:
155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark of the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to
155.2 Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or
services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a
civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of
goods or services using the infringing material.8
From the foregoing provision, the Court in a very similar case, made it categorically clear that the mere unauthorized use of a
container bearing a registered trademark in connection with the sale, distribution or advertising of goods or services which is likely to
cause confusion, mistake or deception among the buyers or consumers can be considered as trademark infringement. 9
Here, petitioners have actually committed trademark infringement when they refilled, without the respondents consent, the LPG
containers bearing the registered marks of the respondents. As noted by respondents, petitioners acts will inevitably confuse the
consuming public, since they have no way of knowing that the gas contained in the LPG tanks bearing respondents marks is in
reality not the latters LPG product after the same had been illegally refilled. The public will then be led to believe that petitioners are
authorized refillers and distributors of respondents LPG products, considering that they are accepting empty containers of
respondents and refilling them for resale.
As to the charge of unfair competition, Section 168.3, in relation to Section 170, of R.A. No. 8293 describes the acts constituting
unfair competition as follows:
Section 168. Unfair Competition, Rights, Regulations and Remedies. x x x.
168.3 In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed
guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either
as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in
any other feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose;
xxxx
Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment
from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos
(P200,000), shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155, Section
168 and Subsection 169.1.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public
of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving the
public.10
Passing off (or palming off) takes place where the defendant, by imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the impression that they are buying that of his competitors. Thus, the
defendant gives his goods the general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor.11
In the present case, respondents pertinently observed that by refilling and selling LPG cylinders bearing their registered marks,
petitioners are selling goods by giving them the general appearance of goods of another manufacturer.
What's more, the CA correctly pointed out that there is a showing that the consumers may be misled into believing that the LPGs
contained in the cylinders bearing the marks "GASUL" and "SHELLANE" are those goods or products of the petitioners when, in
fact, they are not. Obviously, the mere use of those LPG cylinders bearing the trademarks "GASUL" and "SHELLANE" will give the
LPGs sold by REGASCO the general appearance of the products of the petitioners.
In sum, this Court finds that there is sufficient evidence to warrant the prosecution of petitioners for trademark infringement and
unfair competition, considering that petitioner Republic Gas Corporation, being a corporation, possesses a personality separate and
distinct from the person of its officers, directors and stockholders.12Petitioners, being corporate officers and/or directors, through
whose act, default or omission the corporation commits a crime, may themselves be individually held answerable for the
crime.13 Veritably, the CA appropriately pointed out that petitioners, being in direct control and supervision in the management and
conduct of the affairs of the corporation, must have known or are aware that the corporation is engaged in the act of refilling LPG
cylinders bearing the marks of the respondents without authority or consent from the latter which, under the circumstances, could
probably constitute the crimes of trademark infringement and unfair competition. The existence of the corporate entity does not
shield from prosecution the corporate agent who knowingly and intentionally caused the corporation to commit a crime. Thus,
petitioners cannot hide behind the cloak of the separate corporate personality of the corporation to escape criminal liability. A
corporate officer cannot protect himself behind a corporation where he is the actual, present and efficient actor.14
WHEREFORE, premises considered, the petition is hereby DENIED and the Decision dated July 2, 2010 and Resolution dated
October 11, 2010 of the Court of Appeals in CA-G.R. SP No. 106385 are AFFIRMED.
SO ORDERED.
FIRST DIVISION
G.R. No. 212705, September 10, 2014
ROBERTO CO, Petitioner, v. KENG HUAN JERRY YEUNG AND EMMA YEUNG, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September 16, 2013 and
the Resolution3 dated May 29, 2014 of the Court of Appeals (CA) in CA-G.R. CV No. 93679 which affirmed
the Decision4 dated October 27, 2008 of the Regional Trial Court of Quezon City, Branch 90 (RTC), finding
petitioner Roberto Co (Co), among others, guilty of unfair competition and, thus, liable for damages to
respondents KengHuan Jerry Yeung and Emma Yeung (Sps. Yeung).
The Facts
At the core of the controversy is the product Greenstone Medicated Oil Item No. 16 (Greenstone) which is
manufactured by Greenstone Pharmaceutical, a traditional Chinese medicine manufacturing firm based in
Hong Kong and owned by KengHuan Jerry Yeung (Yeung), and is exclusively imported and distributed in the
Philippines by Taka Trading owned by Yeungs wife, Emma Yeung (Emma). 5 cralawred
On July 27, 2000, Sps. Yeung filed a civil complaint for trademark infringement and unfair competition
before the RTC against Ling Na Lau, her sister Pinky Lau (the Laus), and Co for allegedly conspiring in the
sale of counterfeit Greenstone products to the public. In the complaint, Sps. Yeung averred that on April 24,
2000, Emmas brother, Jose Ruivivar III (Ruivivar), bought a bottle of Greenstone from Royal Chinese Drug
Store (Royal) in Binondo, Manila, owned by Ling Na Lau. However, when he used the product, Ruivivar
doubted its authenticity considering that it had a different smell, and the heat it produced was not as strong
as the original Greenstone he frequently used. Having been informed by Ruivivar of the same, Yeung,
together with his son, John Philip, went to Royal on May 4, 2000 to investigate the matter, and, there, found
seven (7) bottles of counterfeit Greenstone on display for sale. He was then told by Pinky Lau (Pinky) the
stores proprietor that the items came from Co of KiaoAn Chinese Drug Store. According to Pinky, Co
offered the products on April 28, 2000 as Tienchi Fong Sap Oil Greenstone (Tienchi) which she eventually
availed from him. Upon Yeungs prodding, Pinky wrote a note stating these events. 6 cralawred
In defense, Co denied having supplied counterfeit items to Royal and maintained that the stocks of
Greenstone came only from Taka Trading. Meanwhile, the Laus denied selling Greenstone and claimed that
the seven (7) items of Tienchi were left by an unidentified male person at the counter of their drug store and
that when Yeung came and threatened to report the matter to the authorities, the items were surrendered
to him. As to Pinkys note, it was claimed that she was merely forced by Yeung to sign the same. 7 cralawre d
The RTC Ruling
In a Decision8 dated October 27, 2008, the RTC ruled in favor of Sps. Yeung, and accordingly ordered Co and
the Laus to pay Sps. Yeung: (a) P300,000.00 as temperate damages; (b) P200,000.00 as moral damages;
(c) P100,000.00 as exemplary damages; (d) P100,000.00 as attorneys fees; and (e) costs of suit.9 cralawred
It found that the Sps. Yeung had proven by preponderance of evidence that the Laus and Co committed
unfair competition through their conspiracy to sell counterfeit Greenstone products that resulted in confusion
and deception not only to the ordinary purchaser, like Ruivivar, but also to the public. 10 It, however, did not
find the Laus and Co liable for trademark infringement as there was no showing that the trademark
Greenstone was registered at the time the acts complained of occurred, i.e., in May 2000.11 Dissatisfied,
the Laus and Co appealed to the CA.
The CA Ruling
In a Decision12 dated September 16, 2013, the CA affirmed the RTC Decision, pointing out that in the matter
of credibility of witnesses, the findings of the trial court are given great weight and the highest degree of
respect.13Accordingly, it sustained the RTCs finding of unfair competition, considering that Sps. Yeungs
evidence preponderated over that of the Laus and Co which was observed to be shifty and contradictory.
Resultantly, all awards of damages in favor of Sps. Yeung were upheld. 14 cralawred
The Laus and Co respectively moved for reconsideration but were, however, denied in a Resolution 15dated
May 29, 2014, hence, Co filed the instant petition. On the other hand, records are bereft of any showing that
the Laus instituted any appeal before this Court.
The Issue Before the Court
The sole issue for the Courts resolution is whether or not the CA correctly upheld Cos liability for unfair
competition.
The Courts Ruling
The petition is without merit.
The Courts review of the present case is via a petition for review under Rule 45 of the Rules of Court, which
generally bars any question pertaining to the factual issues raised. The well-settled rule is that questions of
fact are not reviewable in petitions for review under Rule 45, subject only to certain exceptions, among
them, the lack of sufficient support in evidence of the trial courts judgment or the appellate courts
misapprehension of the adduced facts.16 cralawre d
Co, who mainly interposes a denial of the acts imputed against him, fails to convince the Court that any of
the exceptions exists so as to warrant a review of the findings of facts in this case. Factual findings of the
RTC, when affirmed by the CA, are entitled to great weight and respect by the Court and are deemed final
and conclusive when supported by the evidence on record. 17 The Court finds that both the RTC and the CA
fully considered the evidence presented by the parties, and have adequately explained the legal and
evidentiary reasons in concluding that Co committed acts of unfair competition.
Unfair competition is defined as the passing off (or palming off) or attempting to pass off upon the public of
the goods or business of one person as the goods or business of another with the end and probable effect of
deceiving the public. This takes place where the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the public that the goods are those of his
competitor.18cralawre d
Here, it has been established that Co conspired with the Laus in the sale/distribution of counterfeit
Greenstone products to the public, which were even packaged in bottles identical to that of the original,
thereby giving rise to the presumption of fraudulent intent. 19 In light of the foregoing definition, it is thus
clear that Co, together with the Laus, committed unfair competition, and should, consequently, be held liable
therefor. To this end, the Court finds the award of P300,000.00 as temperate damages to be appropriate in
recognition of the pecuniary loss suffered by Sps. Yeung, albeit its actual amount cannot, from the nature of
the case, as it involves damage to goodwill, be proved with certainty.20 The awards of moral and exemplary
damages, attorneys fees, and costs of suit are equally sustained for the reasons already fully-explained by
the courts a quo in their decisions.
Although liable for unfair competition, the Court deems it apt to clarify that Co was properly exculpated from
the charge of trademark infringement considering that the registration of the trademark Greenstone
essential as it is in a trademark infringement case was not proven to have existed during the time the acts
complained of were committed, i.e., in May 2000.In this relation, the distinctions between suits for
trademark infringement and unfair competition prove useful: (a) the former is the unauthorized use of a
trademark, whereas the latter is the passing off of ones goods as those of another; (b) fraudulent intent is
unnecessary in the former, while it is essential in the latter; and (c) in the former, prior registration of the
trademark is a pre-requisite to the action, while it is not necessary in the latter.21
cralawred
WHEREFORE, the petition is DENIED. The Decision dated September 16, 2013 and the Resolution dated
May 29, 2014 of the Court of Appeals in CA-G.R. CV No. 93679 are hereby AFFIRMED.
SO ORDERED. cralawla w library
G.R. No. 190706 July 21, 2014
SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG GRAND TOWER

CORPORATION) and SHANG PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS,
INC.), Petitioners,
vs.
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari is the Decision dated December 18, 2009 of the
1 2
Court of Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the
Decision dated September 3, 2008 of the Intellectual Property Office (IPO) Director-General. The
3
CA: (a) affirmed the denial of the application for registration of the mark "ST. FRANCIS TOWERS"
filed by petitioners Shang Properties Realty Corporation and Shang Properties, Inc. (petitioners); ( b)
found petitioners to have committed unfair competition for using the marks "THE ST. FRANCIS
TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"; (c) ordered petitioners to cease and
desist from using "ST. FRANCIS" singly or as part of a composite mark; and (d) ordered petitioners
to jointly and severally pay respondent St. Francis Square Development Corporation (respondent) a
fine in the amount of P200,000.00.
The Facts
Respondent a domestic corporation engaged in the real estate business and the developer of the
St. Francis Square Commercial Center, built sometime in 1992, located at Ortigas Center,
Mandaluyong City, Metro Manila (Ortigas Center) filed separate complaints against petitioners
4
before the IPO - Bureau of Legal Affairs (BLA), namely: (a) an intellectual property violation case for
unfair competition, false or fraudulent declaration, and damages arising from petitioners use and
filing of applications for the registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE," docketed as IPV Case No. 10-2005-00030 (IPV Case); and (b) an
inter partes case opposing the petitioners application for registration of the mark "THE ST. FRANCIS
TOWERS" for use relative to the latters business, particularly the construction of permanent
buildings or structures for residential and office purposes, docketed as Inter PartesCase No. 14-
2006-00098 (St. Francis Towers IP Case); and (c) an inter partes case opposing the petitioners
application for registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE," docketed as IPC
No. 14-2007-00218 (St. Francis Shangri-La IP Case). 5
In its complaints, respondent alleged that it has used the mark "ST. FRANCIS" to identify its
numerous property development projects located at Ortigas Center, such as the aforementioned St.
Francis Square Commercial Center, a shopping mall called the "St. Francis Square," and a mixed-
use realty project plan thatincludes the St. Francis Towers. Respondent added that as a result of its
continuous use of the mark "ST. FRANCIS" in its real estate business,it has gained substantial
goodwill with the public that consumers and traders closely identify the said mark with its property
development projects. Accordingly, respondent claimed that petitioners could not have the mark
"THE ST. FRANCIS TOWERS" registered in their names, and that petitioners use of the marks "THE
ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as false or fraudulent declaration. 6
Petitioners denied committing unfair competition and false or fraudulent declaration, maintaining that
they could register the mark "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE" under their names. They contended that respondent is barred from claiming ownership and
exclusive use ofthe mark "ST. FRANCIS" because the same is geographically descriptive ofthe
goods or services for which it is intended to be used. This is because respondents as well as
7
petitioners real estate development projects are locatedalong the streets bearing the name "St.
Francis," particularly, St. FrancisAvenue and St. Francis Street (now known as Bank Drive), both
8
within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision in the IPV Case, and found that petitioners
9
committed acts of unfair competition against respondent by its use of the mark "THE ST. FRANCIS
TOWERS" but not with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, however,
refused to award damages in the latters favor, considering that there was no evidence presented to
substantiate the amount of damages it suffered due to the formers acts. The BLA found that "ST.
FRANCIS," being a name of a Catholic saint, may be considered as an arbitrary mark capable of
registration when used in real estate development projects as the name has no direct connection or
significance when used in association with real estate. The BLA neither deemed "ST. FRANCIS" as a
geographically descriptive mark, opiningthat there is no specific lifestyle, aura, quality or
characteristic that the real estate projects possess except for the fact that they are located along St.
Francis Avenueand St. Francis Street (now known as Bank Drive), Ortigas Center. In this light, the
BLA found that while respondents use of the mark "ST. FRANCIS" has not attained exclusivity
considering that there are other real estate development projects bearing the name "St. Francis" in
other areas, it must nevertheless be pointed out that respondent has been known to be the only
10
real estate firm to transact business using such name within the Ortigas Center vicinity. Accordingly,
the BLA considered respondent to have gained goodwill and reputation for its mark, which therefore
entitles it to protection against the use by other persons, at least, to those doing business within the
Ortigas Center. 11
Meanwhile, on March 28, 2007, the BLA rendered a Decision in the St. Francis Towers IP Case,
12
denying petitioners application for registration of the mark "THE ST. FRANCIS TOWERS." Excluding
the word "TOWERS" in view of petitioners disclaimer thereof, the BLA ruled that petitioners cannot
register the mark "THE ST. FRANCIS" since it is confusingly similar to respondents"ST. FRANCIS"
marks which are registered with the Department of Trade and Industry(DTI). It held that respondent
had a better right over the use of the mark "ST. FRANCIS" because of the latters appropriation and
continuous usage thereof for a long period of time. A little over a year after, or on March 31, 2008,
13
the BLA then rendered a Decision in the St. Francis Shangri-La IP Case, allowing petitioners
14
application for registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It found that
respondent cannot preclude petitioners from using the mark "ST. FRANCIS" as the records show
that the formers use thereof had not been attended with exclusivity. More importantly, it found that
petitioners had adequately appended the word "Shangri-La" to its composite mark to distinguish it
from that of respondent, in which case, the former had removed any likelihood of confusion that may
arise from the contemporaneous use by both parties of the mark "ST. FRANCIS."
Both parties appealed the decision in the IPV Case, while petitioners appealed the decision in the St.
Francis Towers IP Case. Due to the identity of the parties and issues involved, the IPO Director-
General ordered the consolidation of the separate appeals. Records are, however, bereft of any
15
showing that the decision in the St. Francis Shangri-La IP Casewas appealed by either party and,
thus, is deemed to have lapsed into finality.
The IPO Director-General Ruling
In a Decision dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr.
16
affirmedthe rulings of the BLA that: (a) petitioners cannot register the mark "THEST. FRANCIS
TOWERS"; and (b) petitioners are not guilty of unfair competition in its use of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." However, the IPO DirectorGeneral reversed the BLAs findingthat
petitioners committed unfair competition through their use of the mark "THE ST. FRANCIS
TOWERS," thus dismissing such charge. He foundthat respondent could not be entitled to the
exclusive use of the mark "ST. FRANCIS," even at least to the locality where it conducts its business,
because it is a geographically descriptive mark, considering that it was petitioners as well as
respondents intention to use the mark "ST. FRANCIS"in order to identify, or at least associate, their
real estate development projects/businesses with the place or location where they are
situated/conducted, particularly, St. Francis Avenue and St. Francis Street (now known as Bank
Drive), Ortigas Center. He further opined that respondents registration of the name "ST. FRANCIS"
with the DTI is irrelevant since what should be controlling are the trademark registrations with the
IPO itself. Also, the IPO Director-General held that since the parties are both engaged in the real
17
estate business, it would be "hard to imagine that a prospective buyer will be enticed to buy, rent or
purchase [petitioners] goods or servicesbelieving that this is owned by [respondent] simply because
of the name ST. FRANCIS. The prospective buyer would necessarily discuss things with the
representatives of [petitioners] and would readily know that this does not belong to [respondent]." 18
Disagreeing solely with the IPO Director-Generals ruling on the issue of unfair competition (the bone
of contention in the IPV Case), respondent elevated the sameto the CA.
In contrast, records do not show that either party appealed the IPO Director-Generals ruling on the
issue ofthe registrability of the mark "THE ST. FRANCIS TOWERS" (the bone of contention in the St.
Francis Towers IP Case). As such, said pronouncement isalso deemed to have lapsed into finality.
The CA Ruling
In a Decision dated December 18, 2009, the CA found petitioners guilty of unfair competition not
19
only withrespect to their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the mark "THE
ST. FRANCIS SHANGRI-LA PLACE." Accordingly, itordered petitioners to cease and desist from
using "ST. FRANCIS" singly or as part of a composite mark, as well as to jointly and severally pay
respondent a fine in the amount of P200,000.00.
The CA did not adhere to the IPO Director-Generals finding that the mark "ST. FRANCIS" is
geographically descriptive, and ruled that respondent which has exclusively and continuously used
the mark "ST. FRANCIS" for more than a decade, and,hence, gained substantial goodwill and
reputation thereby is very muchentitled to be protected against the indiscriminate usage by other
companies of the trademark/name it has so painstakingly tried to establish and maintain. Further, the
CA stated that even on the assumption that "ST. FRANCIS" was indeed a geographically descriptive
mark, adequateprotection must still begiven to respondent pursuant to the Doctrine of Secondary
Meaning. 20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into finality, the sole issue thus left for
the Courts resolution is whether or not petitioners are guilty of unfair competition in using the marks
"THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE."
The Courts Ruling
Section 168 of Republic Act No. 8293, otherwise known as the "Intellectual Property Code of the
21
Philippines" (IP Code), provides for the rules and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection against unfair competition. It states that
"[a]person who has identified in the mind of the public the goods he manufacturesor deals in, his
business or services from those of others, whether or not a registered mark is employed, has a
property right in the goodwill of the said goods, business or services so identified, which will be
protected inthe same manner as other property rights."
Section 168.2proceeds to the core of the provision, describing forthwith who may be found guilty of
and subject to an action of unfair competition that is, "[a]ny person who shall employ deception or
any other means contrary to good faith by which he shall pass off the goods manufactured by him or
in which he deals, or his business, or services for those of the one having established such goodwill,
or who shall commit any acts calculated to produce said result x x x."
Without limiting its generality, Section 168.3goes on to specify examples of acts which are
considered as constitutive of unfair competition, viz.:
168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person who is selling his goods and gives them the general appearance of goods of
another manufacturer or dealer, either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer, other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor ofsuch goods or any
agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to
induce the false belief that such person is offering the service of another who has identified
such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the goods,
business or services of another.
Finally, Section 168.4 dwells on a matter of procedure by stating that the "[t]he remedies provided by
Sections 156, 157, and 161 shall apply mutatis mutandis."
22 23 24
The statutory attribution of the unfair competition concept is wellsupplemented by jurisprudential

pronouncements. In the recent case of Republic Gas Corporation v. Petron Corporation, the Court
25
has echoed the classic definition of the term which is "the passing off (or palming off) or attempting
to pass off upon the public of the goods or business of one person as the goods or business of
another with the end and probable effect of deceiving the public. Passing off (or palming off) takes
place where the defendant, by imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the impression that they are buying that
of his competitors. [In other words], the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the publicthat the goods are those of his
competitor." The "true test" of unfair competition has thus been "whether the acts of the defendant
26
have the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions of theparticular trade to which the controversy relates." Based on the
foregoing, it is therefore essential to prove the existence of fraud, or the intent to deceive, actual or
probable, determined through a judicious scrutiny of the factual circumstances attendant to a
27
particular case. 28
Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair competition.
The CAscontrary conclusion was faultily premised on its impression that respondenthad the right to
the exclusive use of the mark "ST. FRANCIS," for which the latter had purportedly established
considerable goodwill. What the CA appears to have disregarded or been mistaken in its disquisition,
however, is the geographicallydescriptive nature of the mark "ST. FRANCIS" which thus bars its
exclusive appropriability, unless a secondary meaning is acquired. As deftly explained in the U.S.
case of Great Southern Bank v. First Southern Bank: "[d]escriptive geographical terms are inthe
29
public domain in the sense that every seller should have the right to inform customers of the
geographical origin of his goods. A geographically descriptive term is any noun or adjective that
designates geographical location and would tend to be regarded by buyers as descriptive of the
geographic location of origin of the goods or services. A geographically descriptive term can indicate
any geographic location on earth, such as continents, nations, regions, states, cities, streets and
addresses, areas of cities, rivers, and any other location referred to by a recognized name. In order
to determine whether or not the geographic term in question is descriptively used, the following
question is relevant: (1) Is the mark the name of the place or region from which the goods actually
come? If the answer is yes, then the geographic term is probably used in a descriptive sense, and
secondary meaning is required for protection." 30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., it was held that secondary
31
meaningis established when a descriptive mark no longer causes the public to associate the goods
with a particular place, but to associate the goods with a particular source.In other words, it is not
enough that a geographically-descriptive mark partakes of the name of a place known generally to
the public to be denied registration as it is also necessary to show that the public would make a
goods/place association that is, to believe that the goods for which the mark is sought to be
registered originatein that place. To hold sucha belief, it is necessary, of course, that the purchasers
1wphi1
perceive the mark as a place name, from which the question of obscurity or remoteness then comes
to the fore. The more a geographical area is obscure and remote, it becomes less likely that the
32
public shall have a goods/place association with such area and thus, the mark may not be deemed
as geographically descriptive. However, where there is no genuine issue that the geographical
significance of a term is its primary significanceand where the geographical place is neither obscure
nor remote, a public association of the goods with the place may ordinarily be presumed from the
fact that the applicants own goods come from the geographical place named in the mark. 33
Under Section 123.2 of the IP Code, specific requirements have to be met in order to conclude that
34
a geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary
meaning must have arisen as a result of substantial commercial use of a mark in the Philippines; (b)
such use must result in the distinctiveness of the mark insofar as the goods or theproducts are
concerned; and (c) proof of substantially exclusive and continuous commercial use in the Philippines
for five (5) years beforethe date on which the claim of distinctiveness is made. Unless secondary
meaning has been established, a geographically-descriptive mark, dueto its general public domain
classification, is perceptibly disqualified from trademark registration. Section 123.1(j) of the IP Code
states this rule as follows:
SEC. 123. Registrability.
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof indications that may serve in trade to designate the kind, quality,
quantity, intended purpose, value, geographical origin, time or production of the goods or rendering
of the services, or other characteristics of the goods or services; (Emphasis supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA that petitioners committed unfair
competition due to the mistaken notion that petitioner had established goodwill for the mark "ST.
FRANCIS" precisely because said circumstance, by and of itself, does not equateto fraud under the
parameters of Section 168 of the IP Code as above-cited. In fact, the records are bereft of any
showing thatpetitioners gave their goods/services the general appearance that it was respondent
which was offering the same to the public. Neither did petitioners employ any means to induce the
public towards a false belief that it was offering respondents goods/services. Nor did petitioners
make any false statement or commit acts tending to discredit the goods/services offered by
respondent. Accordingly, the element of fraud which is the core of unfair competition had not been
established.
Besides, respondent was not able toprove its compliance with the requirements stated in Section
123.2 of the IP Code to be able to conclude that it acquired a secondary meaning and, thereby, an
exclusive right to the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly pointed
out, geographically-descriptive of the location in which its realty developments have been built, i.e.,
St. Francis Avenue and St. Francis Street (now known as "Bank Drive"). Verily, records would reveal
that while it is true that respondent had been using the mark "ST. FRANCIS" since 1992, its use
thereof has been merely confined to its realty projects within the Ortigas Center, as specifically
mentioned.As its use of the mark is clearly limited to a certain locality, it cannot be said thatthere was
substantial commercial use of the same recognizedall throughout the country. Neither is there any
showing of a mental recognition in buyers and potential buyers minds that products connected with
the mark "ST. FRANCIS" are associated with the same source that is, the enterprise of
35
respondent. Thus, absent any showing that there exists a clear goods/service-association between
the realty projects located in the aforesaid area and herein respondent as the developer thereof, the
latter cannot besaid to have acquired a secondary meaning as to its use of the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had been acquired, said finding only
accords respondents protectional qualification under Section 168.1 of the IP Code as above quoted.
Again, this does not automatically trigger the concurrence of the fraud element required under
Section 168.2 of the IP Code, as exemplified by the acts mentioned in Section 168.3 of the same.
Ultimately, as earlier stated, there can be no unfair competition without this element. In this respect,
considering too the notoriety of the Shangri-La brand in the real estate industry which dilutes
petitioners' propensity to merely ride on respondent's goodwill, the more reasonable conclusion is
that the former's use of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE" was meant only to identify, or at least associate, their real estate project/s
with its geographical location. As aptly observed by the IPO DirectorGeneral: 36
In the case at hand, the parties are business competitors engaged in real estate or property
development, providing goods and services directly connected thereto. The "goods" or "products" or
"services" are real estate and the goods and the services attached to it or directly related to it, like
sale or lease of condominium units, offices, and commercial spaces, such as restaurants, and other
businesses. For these kinds of goods or services there can be no description of its geographical
origin as precise and accurate as that of the name of the place where they are situated. (Emphasis
and underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby grants the instant petition, and, thus,
exonerates petitioners from the charge of unfair competition in the IPV Case. As the decisions in the
Inter Partes Cases were not appealed, the registrability issues resolved therein are hereby deemed
to have attained finality and, therefore, are now executory.
WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of the Court of
Appeals in CA-G.R. SP No. 105425 is hereby REVERSED and SET ASIDE. Accordingly, the
Decision dated September 3, 2008 of the Intellectual Property Office-Director General is
REINSTATED.
SO ORDERED.
SECOND DIVISION [G.R. No. 119280. August 10, 2006.] UNILEVER PHILIPPINES
(PRC), INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and PROCTER AND
GAMBLE PHILIPPINES, INC., respondents. D E C I S I O N CORONA, J p: In this petition
for review under Rule 45 of the Rules of Court, petitioner assails the February 24,
1995 decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 35242 entitled
"Unilever Philippines (PRC), Inc. v. Honorable Fernando V. Gorospe, Jr. and Procter
and Gamble Philippines, Inc. (P&GP)" which affirmed the issuance by the court a quo
of a writ of preliminary injunction against it. The writ enjoined petitioner from using
and airing, until further orders of the court, certain television commercials for its
laundry products claimed to be identical or similar to its "double tug" or "tac-tac"
key visual. 2 Petitioner alleges that the writ of preliminary injunction was issued by
the trial court (and affirmed by the CA) without any evidence of private
respondent's clear and unmistakable right to the writ. Petitioner further contends
that the preliminary injunction issued against it already disposed of the main case
without trial, thus denying petitioner of any opportunity to present evidence on its
behalf. AcHEaS The antecedents show that on August 24, 1994, private respondent
Procter and Gamble Phils., Inc. filed a complaint for injunction with damages and a
prayer for temporary restraining order and/or writ of preliminary injunction against
petitioner Unilever, alleging that: 1.5. As early as 1982, a P&G subsidiary in Italy
used a key visual in the advertisement of its laundry detergent and bleaching
products. This key visual known as the "double-tug" or "tactac" demonstration
shows the fabric being held by both hands and stretched sideways. 1.6. The "tac-
tac" was conceptualized for P&G by the advertising agency Milano and Gray of Italy
in 1982. The "tac-tac" was used in the same year in an advertisement entitled "All
aperto" to demonstrate the effect on fabrics of one of P&GP's products, a liquid
bleach called "Ace." xxx xxx xxx 1.7. Since then, P&G has used the "tac-tac" key
visual in the advertisement of its products. In fact, in 1986, in Italy, the "tac-tac" key
visual was used in the television commercial for "Ace" entitled "Kite." 1.8. P&G has
used the same distinctive "tac-tac" key visual to local consumers in the Philippines.
HCATEa xxx xxx xxx 1 1.10. Substantially and materially imitating the aforesaid
"tac-tac" key visual of P&GP and in blatant disregard of P&GP's intellectual property
rights, Unilever on 24 July 1993 started airing a 60 second television commercial
"TVC" of its "Breeze Powerwhite" laundry product called "Porky." The said TVC
included a stretching visual presentation and sound effects almost [identical] or
substantially similar to P&GP's "tac-tac" key visual. xxx xxx xxx 1.14. On July 15,
1994, P&GP aired in the Philippines, the same "Kite" television advertisement it
used in Italy in 1986, merely dubbing the Italian language with Filipino for the same
produce "Ace" bleaching liquid which P&GP now markets in the Philippines. 1.15. On
August 1, 1994, Unilever filed a Complaint with the Advertising Board of the
Philippines to prevent P&GP from airing the "Kite" television advertisement. 3 On
August 26, 1994, Judge Gorospe issued an order granting a temporary restraining
order and setting it for hearing on September 2, 1994 for Unilever to show cause
why the writ of preliminary injunction should not issue. During the hearing on
September 2, 1994, P&GP received Unilever's answer with opposition to preliminary
injunction. P&GP filed its reply to Unilever's opposition to a preliminary injunction on
September 6, 1994. HDTcEI During the hearing on September 9, 1994, Judge
Gorospe ordered petitioner to submit a surrejoinder. P&GP received Unilever's
rejoinder to reply on September 13, 1994. The following day, on September 14,
1994, P&GP filed its sur-reply to Unilever's rejoinder. On September 19, 1994, P&GP
received a copy of the order dated September 16, 1994 ordering the issuance of a
writ of preliminary injunction and fixing a bond of P100,000. On the same date,
P&GP filed the required bond issued by Prudential Guarantee and Assurance, Inc. On
September 21, 1994, petitioner appealed to the CA assigning the following errors
allegedly committed by the court a quo, to wit: PUBLIC RESPONDENT HAD ACTED
WITHOUT OR IN EXCESS OF JURISDICTION AND WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE WRIT OF PRELIMINARY
INJUNCTION IN VIOLATION OF THE RULES ON EVIDENCE AND PROCEDURE,
PARTICULARLY OF SEC. 3 (a), RULE 58 OF THE REVISED RULES OF COURT AND OF
THE PREVAILING JURISPRUDENCE. PUBLIC RESPONDENT IN ISSUING THE VOID
ORDER DATED SEPTEMBER 16, 1994, HAD, IN EFFECT, ALREADY PREJUDGED THE
MERITS OF THE MAIN CASE. PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER
ACCORDING RELIEF TO A NONPARTY IN CIVIL CASE NO. 94-2434 WITHOUT
JURISDICTION. THEDcS PUBLIC RESPONDENT IN ISSUING THE VOID ORDER HAD
DEPRIVED PETITIONER OF SUBSTANTIVE AND PROCEDURAL DUE PROCESS; PUBLIC
RESPONDENT HAD FORECLOSED PETITIONER'S RIGHT AND THE OPPORTUNITY TO
CROSS-EXAMINE PROCTER'S WITNESSES ABAD AND HERBOSA. 4 2 On February 24,
1995, the CA rendered its decision finding that Judge Gorospe did not act with grave
abuse of discretion in issuing the disputed order. The petition for certiorari was thus
dismissed for lack of merit. After a careful perusal of the records, we agree with the
CA and affirm its decision in toto: ECcaDT Petitioner does not deny that the
questioned TV advertisements are substantially similar to P&GP's "double tug" or
"tac-tac" key visual. However, it submits that P&GP is not entitled to the relief
demanded, which is to enjoin petitioner from airing said TV advertisements, for the
reason that petitioner has Certificates of Copyright Registration for which
advertisements while P&GP has none with respect to its "double-tug" or "tac-tac"
key visual. In other words, it is petitioner's contention that P&GP is not entitled to
any protection because it has not registered with the National Library the very TV
commercials which it claims have been infringed by petitioner. We disagree. Section
2 of PD 49 stipulates that the copyright for a work or intellectual creation subsists
from the moment of its creation. Accordingly, the creator acquires copyright for his
work right upon its creation . . . Contrary to petitioner's contention, the intellectual
creator's exercise and enjoyment of copyright for his work and the protection given
by law to him is not contingent or dependent on any formality or registration.
Therefore, taking the material allegations of paragraphs 1.3 to 1.5 of P&GP's
verified Complaint in the context of PD 49, it cannot be seriously doubted that at
least, for purposes of determining whether preliminary injunction should issue
during the pendency of the case, P&GP is entitled to the injunctive relief prayed for
in its Complaint. aDHScI The second ground is likewise not well-taken. As adverted
to earlier, the provisional remedy of preliminary injunction will not issue unless it is
shown in the verified complaint that plaintiff is probably entitled to the relief
demanded, which consists in whole or in part in restraining the commission or
continuance of the acts complained of. In view of such requirement, the court has to
make a tentative determination if the right sought to be protected exists and
whether the act against which the writ is to be directed is violative of such right.
Certainly, the court's determination as to the propriety of issuing the writ cannot be
taken as a prejudgment of the merits of the case because it is tentative in nature
and the writ may be dissolved during or after the trial if the court finds that plaintiff
was not entitled to it. . . xxx xxx xxx Obviously, the determination made by the
court a quo was only for purposes of preliminary injunction, without passing upon
the merits of the case, which cannot be done until after a fullblown hearing is
conducted. The third ground is patently unmeritorious. As alleged in the Complaint
P&GP is a subsidiary of Procter and Gamble Company (P&G) for which the "double
tug" or "tac-tac" key visual was conceptualized or created. In that capacity, P&GP
used the said TV advertisement in the Philippines to promote its products. As such
subsidiary, P&GP is definitely within the protective mantle of the statute (Sec. 6, PD
49). 3 Finally, We find the procedure adopted by the court a quo to be in order. . .
The record clearly shows that respondent Judge followed the (procedure provided
for in Section 5, Rule 58, as amended by BP 224, and Paragraph A(8) of the Interim
Rules). In fact, the court a quo set the incident for hearing on September 2, 1994, at
which date petitioner was ordered to show cause why the writ should not be issued.
Petitioner filed an Opposition to the application for preliminary injunction. The same
incident was again set for hearing on September 9, 1994, during which the parties
made some manifestations in support of their respective positions. Subsequent to
such hearing petitioner filed a Reply to P&GP's Rejoinder to its Opposition. Under
the foregoing circumstances, it is absurd to even suggest that petitioner was not
given its day in court in the matter of the issuance of the preliminary injunctive
relief. SHIETa xxx xxx xxx There was of course extreme urgency for the court a quo
to act on plaintiff's application for preliminary injunction. The airing of TV
commercials is necessarily of limited duration only. Without such temporary relief,
any permanent injunction against the infringing TV advertisements of which P&GP
may possibly succeed in getting after the main case is finally adjudicated could be
illusory if by then such advertisements are no longer used or aired by petitioner. It is
therefore not difficult to perceive the possible irreparable damage which P&GP may
suffer if respondent Judge did not act promptly on its application for preliminary
injunction. 5 Preliminary injunction is a provisional remedy intended to provide
protection to parties for the preservation of their rights or interests during the
pendency of the principal action. 6 Thus, Section 1, Rule 58 of the Rules of Court
provides: TaHDAS Section 1. Preliminary injunction defined; classes. A preliminary
injunction is an order granted at any stage of an action or proceeding prior to the
judgment or final order, requiring a party or a court, agency or a person to refrain
from a particular act or acts. It may also require the performance of a particular act
or acts, in which case it shall be known as a preliminary mandatory injunction.
Injunction is resorted to only when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard compensation. 7 As
correctly ruled by the CA, there was an extreme urgency to grant the preliminary
injunction prayed for by P&GP considering that TV commercials are aired for a
limited period of time only. In fact, this Court takes note of the fact that the TV
commercial in issue the Kite TV advertisement is no longer aired today, more
than 10 years after the injunction was granted on September 16, 1994. The sole
objective of a writ of preliminary injunction is to preserve the status quo until the
merits of the case can be heard fully. 8 A writ of preliminary injunction is generally
based solely on initial and incomplete evidence. 9 Thus, it was impossible for the
court a quo to fully dispose of the case, as claimed by petitioner, without all the
evidence needed for the full resolution of the same. To date, the main case still has
to be resolved by the trial court. DISaEA 4 The issuance of a preliminary injunction
rests entirely on the discretion of the court and is generally not interfered with
except in cases of manifest abuse. 10 There was no such abuse in the case at bar,
especially because petitioner was given all the opportunity to oppose the
application for injunction. The fact was, it failed to convince the court why the
injunction should not be issued. Thus, in Santos v. Court of Appeals, 11 we held that
no grave abuse of discretion can be attributed to a judge or body issuing a writ of
preliminary injunction where a party has not been deprived of its day in court as it
was heard and it exhaustively presented all its arguments and defenses.
WHEREFORE, the petition is hereby DENIED. Costs against petitioner. SO ORDERED.
Puno, Sandoval-Gutierrez and Azcuna, JJ., concur. Garcia, J., took no part. 5 THIRD
DIVISION [G.R. No. 166337. March 7, 2005.] BAYANIHAN MUSIC PHILIPPINES, INC.,
petitioner, vs. BMG RECORDS (PILIPINAS) AND JOSE MARI CHAN, ET AL., respondent.
Gentlemen: Quoted hereunder, for your information, is a resolution of the Third
Division of this Court dated March 7, 2005. ASIDTa Subject of this petition for review
on certiorari is the Decision dated December 14, 2004 1 of the Court of Appeals in
CA-G.R. SP No. 69626, upholding the Order dated August 24, 2001 of the Regional
Trial Court at Quezon City, Branch 90, which found no merit in petitioner's
application for the issuance of a writ of preliminary injunction, along with the Order
dated January 10, 2002, which denied petitioner's motion for reconsideration. On
July 16, 1973, private respondent Jose Mari Chan (Chan) entered into a contract with
petitioner Bayanihan Music Philippines, Inc. (Bayanihan), whereunder the former
assigned to the latter all his rights, interests and participation over his musical
composition "Can We Just Stop and Talk A While". On March 11, 1976, the parties
entered into a similar contract over Chan's other musical composition entitled
"Afraid For Love To Fade". On the strength of the abovementioned contracts,
Bayanihan applied for and was granted by the National Library a Certificate of
Copyright Registration for each of the two musical compositions, thus: November
19, 1973, for the song "Can We Just Stop and Talk A While" and on May 21, 1980, for
the song "Afraid for Love To Fade." SaIHDA Apparently, without the knowledge and
consent of petitioner Bayanihan, Chan authorized his co-respondent BMG Records
(Pilipinas) [BMG] to record and distribute the aforementioned musical compositions
in a then recently released album of singer Lea Salonga. In separate letters both
dated December 7, 1999, petitioner Bayanihan informed respondents Chan and
BMG of its existing copyrights over the subject musical compositions and the
alleged violation of such right by the two. Demands were made on both to settle the
matter with Bayanihan. However no settlement was reached by the parties. Hence,
on August 8, 2000, Bayanihan filed with the Regional Trial Court at Quezon City a
complaint against Chan and BMG for violation of Section 216 of Republic Act No.
8293, otherwise known as the Intellectual Property Code of the Philippines, with a
prayer for the issuance of Temporary Restraining Order (TRO) and/or writ of
preliminary injunction, enjoining respondent BMG from further recording and
distributing the subject musical compositions in whatever form of musical products,
and Chan from further granting any authority to record and distribute the same
musical compositions. In its answer, BMG contended, among others, that: (1) the
acts of recording and publication sought to be enjoined had already been
consummated, thereby rendering moot Bayanihan's 6 prayer for TRO and/or
preliminary injunction; and (2) there is no clear showing that petitioner Bayanihan
would be greatly damaged by the refusal of the prayed for TRO and/or preliminary
injunction. BMG also pleaded a cross-claim against its co-respondent Chan for
violation of his warranty that his musical compositions are free from claims of third
persons, and a counterclaim for damages against petitioner Bayanihan. Chan, for
his part, filed his own answer to the complaint, thereunder alleging that: (1) it was
never his intention to divest himself of all his rights and interest over the musical
compositions in question; (2) the contracts he entered into with Bayanihan are mere
music publication agreements giving Bayanihan, as assignee, the power to
administer his copyright over his two songs and to act as the exclusive publisher
thereof; (3) he was not cognizant of the application made by and the subsequent
grant of copyrights to Bayanihan; and (4) Bayanihan was remissed in its obligations
under the contracts because it failed to effectively advertise his musical
compositions for almost twenty (20) years, hence, he caused the rescission of said
contracts in 1997. Chan also included in his answer a counterclaim for damages
against Bayanihan. DHEaTS After hearing the parties, the lower court came out with
an order denying Bayanihan's prayer for TRO, saying, thus: After carefully
considering the arguments and evaluating the evidence presented by counsels, this
Court finds that the plaintiff has not been able to show its entitlement to the relief of
TRO as prayed for in its verified complaint (see Section 4, Rule 58 of the 1997 Rules
of Civil Procedure, as amended), hence, this Court is of the considered and humble
view that the ends of justice shall be served better if the aforecited application is
denied. IN VIEW OF THE FOREGOING, the aforecited application or prayer for the
issuance of a TRO is denied. SO ORDERED. Thereafter, the same court, in its
subsequent Order dated August 24, 2001, 2 likewise denied Bayanihan's prayer for
a writ of preliminary injunction, to wit: After carefully going over the pleadings and
the pertinent portions of the records insofar as they are pertinent to the issue under
consideration, this Court finds that the plaintiff has not been able to show its
entitlement to the relief of preliminary injunction as prayed for in its verified
complaint (see Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended),
hence, this Court is of the considered and humble view that the ends of justice shall
be served better if the aforecited application is denied. (see also Order dated July
16, 2001). IN VIEW OF THE FOREGOING, the application or prayer for the issuance of
a writ of preliminary injunction is denied. SO ORDERED. 7 Its motion for a
reconsideration of the same order having been likewise denied by the trial court in
its next Order of January 10, 2002, 3 petitioner Bayanihan then went to the Court of
Appeals on a petition for certiorari, thereat docketed as CA-G.R. SP No. 69626,
imputing grave abuse of discretion on the part of the trial court in issuing the Orders
of August 24, 2001 and January 10, 2001, denying its prayers for a writ of
preliminary injunction and motion for reconsideration, respectively. In the herein
assailed Decision dated December 14, 2004, the Court of Appeals upheld the
challenged orders of the trial court and accordingly dismissed Bayanihan petition,
thus: WHEREFORE, finding neither flaw of jurisdiction nor taint of grave abuse of
discretion in the issuance of the assailed Orders of the respondent court dated
August 24, 2001 and January 10, 2002, the instant petition is DISMISSED. No costs.
SO ORDERED. 4 Hence, Bayanihan's present recourse. It is petitioner's submission
that the appellate court committed reversible error when it dismissed its petition for
certiorari and upheld the trial court's denial of its application for a writ of
preliminary injunction. Petitioner insists that as assignee of the copyrights over the
musical compositions in question, it has a clear legal right to a writ of preliminary
injunction; that respondents BMG and Chan violated its copyrights over the same
musical compositions; that despite knowledge by respondent BMG of petitioner's
copyrights over the said musical compositions, BMG continues to record and
distribute the same, to petitioner's great and irreparable injury. DaTEIc We DENY. We
have constantly reminded courts that there is no power, the exercise of which is
more delicate and requires greater caution, deliberation and sound discretion, or
which is more dangerous in a doubtful case, than the issuance of an injunction. A
court should, as much as possible, avoid issuing the writ which would effectively
dispose of the main case without trial. Here, nothing is more evident than the trial
court's abiding awareness of the extremely difficult balancing act it had to perform
in dealing with petitioner's prayer for injunctive reliefs. Conscious, as evidently it is,
of the fact that there is manifest abuse of discretion in the issuance of an injunctive
writ if the following requisites provided for by law are not present: (1) there must be
a right in esse or the existence of a right to be protected; and (2) the act against
which the injunction is to be directed is a violation of such right, 5 the trial court
threaded the correct path in denying petitioner's prayer therefor. For, such a writ
should only be granted if a party is clearly entitled thereto. 6 Of course, while a
clear showing of the right to an injunctive writ is necessary albeit its existence need
not be conclusively established, 7 as the evidence required therefor need not be
conclusive or complete, still, for an applicant, like petitioner Bayanihan, to be
entitled to the writ, he is required to show that he has the ostensible right to the
final, relief prayed for in its 8 complaint. 8 Here, the trial court did not find ample
justifications for the issuance of the writ prayed for by petitioner. Unquestionably,
respondent Chan, being undeniably the composer and author of the lyrics of the two
(2) songs, is protected by the mere fact alone that he is the creator thereof,
conformably with Republic Act No. 8293, otherwise known as the Intellectual
Property Code, Section 172.2 of which reads: 172.2. Works are protected by the sole
fact of their creation, irrespective of their mode or form of expression, as well as of
their content, quality and purpose. IEAaST An examination of petitioner's verified
complaint in light of the two (2) contracts sued upon and the evidence it adduced
during the hearing on the application for preliminary injunction, yields not the
existence of the requisite right protectable by the provisional relief but rather a
lingering doubt on whether there is or there is no such right. The two contracts
between petitioner and Chan relative to the musical compositions subject of the suit
contain the following identical stipulations: 7. It is also hereby agreed to by the
parties herein that in the event the PUBLISHER [petitioner herein] fails to use in any
manner whatsoever within two (2) years any of the compositions covered by this
contract, then such composition may be released in favor of the WRITER and
excluded from this contract and the PUBLISHER shall execute the necessary release
in writing in favor of the WRITER upon request of the WRITER; xxx xxx xxx 9. This
contract may be renewed for a period of two-and-one-half (2 1/2) years at the
option of the PUBLISHER. Renewal may be made by the PUBLISHER by advising the
WRITER of such renewal in writing at least five (5) days before the expiration of this
contract. 9 It would thus appear that the two (2) contracts expired on October 1,
1975 and March 11, 1978, respectively, there being neither an allegation, much less
proof, that petitioner Bayanihan ever made use of the compositions within the two-
year period agreed upon by the parties. Anent the copyrights obtained by petitioner
on the basis of the selfsame two (2) contracts, suffice it to say that such purported
copyrights are not presumed to subsist in accordance with Section 218[a] and [b],
of the Intellectual Property Code, 10 because respondent Chan had put in issue the
existence thereof. It is noted that Chan revoked and terminated said contracts,
along with others, on July 30, 1997, or almost two years before petitioner Bayanihan
wrote its sort of complaint/demand letter dated December 7, 1999 regarding the
recent "use/recording of the songs 'Can We Just Stop and Talk A While' and 'Afraid
for Love to Fade,"' or almost three (3) years before petitioner filed its complaint on
August 8, 2000, therein praying, inter alia, for injunctive relief. By then, it would
appear that petitioner had no more right that is protectable by injunction. AIDcTE 9
Lastly, petitioner's insinuation that the trial court indulged in generalizations and
was rather skimpy in dishing out its reasons for denying its prayer for provisional
injunctive relief, the same deserves scant consideration. For sure, the manner by
which the trial court crafted its challenged orders is quite understandable, lest it be
subjected to a plausible suspicion of having prejudged the merits of the main case.
IcEaST WHEREFORE, petition is hereby DENIED. SO ORDERED. Very truly yours,
(SGD.) LUCITA ABJELINA SORIANO Clerk of Court 10 THIRD DIVISION [G.R. Nos.
175769-70. January 19, 2009.] ABS-CBN BROADCASTING CORPORATION, petitioner,
vs. PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG
BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO,
respondents. DECISION YNARES-SANTIAGO, J p: This petition for review on certiorari
1 assails the July 12, 2006 Decision 2 of the Court of Appeals in CA-G.R. SP Nos.
88092 and 90762, which affirmed the December 20, 2004 Decision of the Director-
General of the Intellectual Property Office (IPO) in Appeal No. 10-2004- 0002. Also
assailed is the December 11, 2006 Resolution 3 denying the motion for
reconsideration. TaISEH Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
licensed under the laws of the Republic of the Philippines to engage in television
and radio broadcasting. 4 It broadcasts television programs by wireless means to
Metro Manila and nearby provinces, and by satellite to provincial stations through
Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High Frequency
(UHF). The programs aired over Channels 2 and 23 are either produced by ABS-CBN
or purchased from or licensed by other producers. 2009jur ABS-CBN also owns
regional television stations which pattern their programming in accordance with
perceived demands of the region. Thus, television programs shown in Metro Manila
and nearby provinces are not necessarily shown in other provinces. cDIHES
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream
Broadcasting System. It delivers digital direct-to-home (DTH) television via satellite
to its subscribers all over the Philippines. Herein individual respondents, Cesar G.
Reyes, Francis Chua, Manuel F. Abellada, Raul B. de Mesa, and Aloysius M. Colayco,
are members of PMSI's Board of Directors. PMSI was granted a legislative franchise
under Republic Act No. 8630 5 on May 7, 1998 and was given a Provisional Authority
by the National Telecommunications Commission (NTC) on February 1, 2000 to
install, operate and maintain a nationwide DTH satellite service. When it
commenced operations, it offered as part of its program line-up ABS-CBN Channels
2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC
Channel 13, together with other paid premium program channels. CTSHDI However,
on April 25, 2001, 6 ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001, 7 PMSI replied that the
rebroadcasting 11 was in accordance with the authority granted it by NTC and its
obligation under NTC Memorandum Circular No. 4-08-88, 8 Section 6.2 of which
requires all cable television system operators operating in a community within
Grade "A" or "B" contours to carry the television signals of the authorized television
broadcast stations. 9 HDAaIc Thereafter, negotiations ensued between the parties in
an effort to reach a settlement; however, the negotiations were terminated on April
4, 2002 by ABS-CBN allegedly due to PMSI's inability to ensure the prevention of
illegal retransmission and further rebroadcast of its signals, as well as the adverse
effect of the rebroadcasts on the business operations of its regional television
stations. 10 2009jur On May 13, 2002, ABS-CBN filed with the IPO a complaint for
"Violation of Laws Involving Property Rights, with Prayer for the Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction", which was
docketed as IPV No. 10-2002-0004. It alleged that PMSI's unauthorized
rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and
copyright. EACIcH On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO
granted ABS-CBN's application for a temporary restraining order. On July 12, 2002,
PMSI suspended its retransmission of Channels 2 and 23 and likewise filed a petition
for certiorari with the Court of Appeals, which was docketed as CA-G.R. SP No.
71597. STaCIA Subsequently, PMSI filed with the BLA a Manifestation reiterating that
it is subject to the mustcarry rule under Memorandum Circular No. 04-08-88. It also
submitted a letter dated December 20, 2002 of then NTC Commissioner Armi Jane
R. Borje to PMSI stating as follows: This refers to your letter dated December 16,
2002 requesting for regulatory guidance from this Commission in connection with
the application and coverage of NTC Memorandum Circular No. 4-08-88, particularly
Section 6 thereof, on mandatory carriage of television broadcast signals, to the
direct-to-home (DTH) pay television services of Philippine Multi-Media System, Inc.
(PMSI). IcESaA Preliminarily, both DTH pay television and cable television services
are broadcast services, the only difference being the medium of delivering such
services (i.e., the former by satellite and the latter by cable). Both can carry
broadcast signals to the remote areas, thus enriching the lives of the residents
thereof through the dissemination of social, economic, educational information and
cultural programs. ITSacC The DTH pay television services of PMSI is equipped to
provide nationwide DTH satellite services. Concededly, PMSI's DTH pay television
services covers very much wider areas in terms of carriage of broadcast signals,
including areas not reachable by cable television services thereby providing a better
medium of dissemination of information to the public. In view of the foregoing and
the spirit and intent of NTC memorandum Circular No. 4-08-88, particularly section 6
thereof, on mandatory carriage of television broadcast signals, DTH pay television
services should be deemed covered by such NTC Memorandum Circular. ACaTIc 12
For your guidance. (Emphasis added) 11 On August 26, 2003, PMSI filed another
Manifestation with the BLA that it received a letter dated July 24, 2003 from the NTC
enjoining strict and immediate compliance with the mustcarry rule under
Memorandum Circular No. 04-08-88, to wit: Dear Mr. Abellada: Last July 22, 2003,
the National Telecommunications Commission (NTC) received a letter dated July 17,
2003 from President/COO Rene Q. Bello of the International Broadcasting
Corporation (IBC-Channel 13) complaining that your company, Dream Broadcasting
System, Inc., has cutoff, without any notice or explanation whatsoever, to air the
programs of IBC-13, a free-to-air television, to the detriment of the public. IHCESD
We were told that, until now, this has been going on. Please be advised that as a
direct broadcast satellite operator, operating a direct-to-home (DTH) broadcasting
system, with a provisional authority (PA) from the NTC, your company, along with
cable television operators, are mandated to strictly comply with the existing policy
of NTC on mandatory carriage of television broadcast signals as provided under
Memorandum Circular No. 04-08-88, also known as the Revised Rules and
Regulations Governing Cable Television System in the Philippines. This mandatory
coverage provision under Section 6.2 of said Memorandum Circular, requires all
cable television system operators, operating in a community within the Grade "A" or
"B" contours to "must-carry" the television signals of the authorized television
broadcast stations, one of which is IBC-13. Said directive equally applies to your
company as the circular was issued to give consumers and the public a wider
access to more sources of news, information, entertainment and other
programs/contents. This Commission, as the governing agency vested by laws with
the jurisdiction, supervision and control over all public services, which includes
direct broadcast satellite operators, and taking into consideration the paramount
interest of the public in general, hereby directs you to immediately restore the
signal of IBC-13 in your network programs, pursuant to existing circulars and
regulations of the Commission. CcSTHI For strict compliance. (Emphasis added) 12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-
2003, entitled "Implementing Rules and Regulations Governing Community
Antenna/Cable Television (CATV) and Direct Broadcast Satellite (DBS) Services to
Promote Competition in the Sector". Article 6, Section 8 thereof states: ADTCaI As a
general rule, the reception, distribution and/or transmission by any CATV/DBS
operator of any television signals without any agreement with or authorization from
program/content providers are prohibited. 13 On whether Memorandum Circular No.
10-10-2003 amended Memorandum Circular No. 04-08- 88, the NTC explained to
PMSI in a letter dated November 3, 2003 that: To address your query on whether or
not the provisions of MC 10-10-2003 would have the effect of amending the
provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is
in the negative. ATEHDc xxx xxx xxx The Commission maintains that, MC 4-08-88
remains valid, subsisting and enforceable. Please be advised, therefore, that as duly
licensed direct-to-home satellite television service provider authorized by this
Commission, your company continues to be bound by the guidelines provided for
under MC 04-08-88, specifically your obligation under its mandatory carriage
provisions, in addition to your obligations under MC 10-10-2003. (Emphasis added)
ETDaIC Please be guided accordingly. 13 On December 22, 2003, the BLA rendered
a decision 14 finding that PMSI infringed the broadcasting rights and copyright of
ABS-CBN and ordering it to permanently cease and desist from rebroadcasting
Channels 2 and 23. On February 6, 2004, PMSI filed an appeal with the Office of the
Director-General of the IPO which was docketed as Appeal No. 10-2004-0002. On
December 23, 2004, it also filed with the Court of Appeals a "Motion to Withdraw
Petition; Alternatively, Memorandum of the Petition for Certiorari " in CA-G.R. SP No.
71597, which was granted in a resolution dated February 17, 2005. CITaSA On
December 20, 2004, the Director-General of the IPO rendered a decision 15 in favor
of PMSI, the dispositive portion of which states: WHEREFORE, premises considered,
the instant appeal is hereby GRANTED. Accordingly, Decision No. 2003-01 dated 22
December 2003 of the Director of Bureau of Legal Affairs is hereby REVERSED and
SET ASIDE. cDTHIE Let a copy of this Decision be furnished the Director of the
Bureau of Legal Affairs for appropriate action, and the records be returned to her for
proper disposition. The Documentation, Information and Technology Transfer Bureau
is also given a copy for library and reference purposes. SO ORDERED. 16 Thus, ABS-
CBN filed a petition for review with prayer for issuance of a temporary restraining
order and writ of preliminary injunction with the Court of Appeals, which was
docketed as CAG.R. SP No. 88092. 14 On July 18, 2005, the Court of Appeals issued
a temporary restraining order. Thereafter, ABSCBN filed a petition for contempt
against PMSI for continuing to rebroadcast Channels 2 and 23 despite the
restraining order. The case was docketed as CA- G.R. SP No. 90762. AacSTE On
November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP
Nos. 88092 and 90762. In the assailed Decision dated July 12, 2006, the Court of
Appeals sustained the findings of the Director-General of the IPO and dismissed
both petitions filed by ABS-CBN. 17 ABS-CBN's motion for reconsideration was
denied, hence, this petition. ABS-CBN contends that PMSI's unauthorized
rebroadcasting of Channels 2 and 23 is an infringement of its broadcasting rights
and copyright under the Intellectual Property Code (IP Code); 18 that Memorandum
Circular No. 04-08-88 excludes DTH satellite television operators; that the Court of
Appeals' interpretation of the must-carry rule violates Section 9 of Article III 19 of
the Constitution because it allows the taking of property for public use without
payment of just compensation; that the Court of Appeals erred in dismissing the
petition for contempt docketed as CA-G.R. SP No. 90762 without requiring
respondents to file comment. IcHSCT Respondents, on the other hand, argue that
PMSI's rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular
No. 04-08-88; that the must-carry rule under the Memorandum Circular is a valid
exercise of police power; and that the Court of Appeals correctly dismissed CA-G.R.
SP No. 90762 since it found no need to exercise its power of contempt. After a
careful review of the facts and records of this case, we affirm the findings of the
DirectorGeneral of the IPO and the Court of Appeals. aETADI There is no merit in
ABS-CBN's contention that PMSI violated its broadcaster's rights under Section 211
of the IP Code which provides in part: Chapter XIV BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. Subject to the provisions of Section 212, broadcasting
organizations shall enjoy the exclusive right to carry out, authorize or prevent any of
the following acts: AcIaST 211.1. The rebroadcasting of their broadcasts; xxx xxx
xxx Neither is PMSI guilty of infringement of ABS-CBN's copyright under Section 177
of the IP Code which states that copyright or economic rights shall consist of the
exclusive right to carry out, authorize or prevent the public performance of the work
(Section 177.6), and other communication to the public of the work (Section 177.7).
20 15 Section 202.7 of the IP Code defines broadcasting as "the transmission by
wireless means for the public reception of sounds or of images or of representations
thereof; such transmission by satellite is also 'broadcasting' where the means for
decrypting are provided to the public by the broadcasting organization or with its
consent". EAcCHI On the other hand, rebroadcasting as defined in Article 3 (g) of the
International Convention for the Protection of Performers, Producers of Phonograms
and Broadcasting Organizations, otherwise known as the 1961 Rome Convention, of
which the Republic of the Philippines is a signatory, 21 is "the simultaneous
broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization". cSTHAC The Director-General of the IPO correctly found
that PMSI is not engaged in rebroadcasting and thus cannot be considered to have
infringed ABS-CBN's broadcasting rights and copyright, thus: That the Appellant's
[herein respondent PMSI] subscribers are able to view Appellee's [herein petitioner
ABS-CBN] programs (Channels 2 and 23) at the same time that the latter is
broadcasting the same is undisputed. The question however is, would the Appellant
in doing so be considered engaged in broadcasting. Section 202.7 of the IP Code
states that broadcasting means "the transmission by wireless means for the public
reception of sounds or of images or of representations thereof; such transmission by
satellite is also 'broadcasting' where the means for decrypting are provided to the
public by the broadcasting organization or with its consent." ETDAaC Section 202.7
of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:
THIASE 1. The transmission by wireless means for the public reception of sounds or
of images or of representations thereof; and 2. The transmission by satellite for the
public reception of sounds or of images or of representations thereof where the
means for decrypting are provided to the public by the broadcasting organization or
with its consent. It is under the second category that Appellant's DTH satellite
television service must be examined since it is satellite-based. The elements of such
category are as follows: HIETAc 1. There is transmission of sounds or images or of
representations thereof; 2. The transmission is through satellite; 3. The transmission
is for public reception; and 4. The means for decrypting are provided to the public
by the broadcasting organization or with its consent. DEacIT 16 It is only the
presence of all the above elements can a determination that the DTH is
broadcasting and consequently, rebroadcasting Appellee's signals in violation of
Sections 211 and 177 of the IP Code, may be arrived at. Accordingly, this Office is of
the view that the transmission contemplated under Section 202.7 of the IP Code
presupposes that the origin of the signals is the broadcaster. Hence, a program that
is broadcasted is attributed to the broadcaster. In the same manner, the
rebroadcasted program is attributed to the rebroadcaster. DCcIaE In the case at
hand, Appellant is not the origin nor does it claim to be the origin of the programs
broadcasted by the Appellee. Appellant did not make and transmit on its own but
merely carried the existing signals of the Appellee. When Appellant's subscribers
view Appellee's programs in Channels 2 and 23, they know that the origin thereof
was the Appellee. Aptly, it is imperative to discern the nature of broadcasting. When
a broadcaster transmits, the signals are scattered or dispersed in the air. Anybody
may pick-up these signals. There is no restriction as to its number, type or class of
recipients. To receive the signals, one is not required to subscribe or to pay any fee.
One only has to have a receiver, and in case of television signals, a television set,
and to tune-in to the right channel/frequency. The definition of broadcasting,
wherein it is required that the transmission is wireless, all the more supports this
discussion. Apparently, the undiscriminating dispersal of signals in the air is possible
only through wireless means. The use of wire in transmitting signals, such as cable
television, limits the recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not enough that one wants to be
connected and possesses the equipment. The service provider, such as cable
television companies may choose its subscribers. TcDIaA The only limitation to such
dispersal of signals in the air is the technical capacity of the transmitters and other
equipment employed by the broadcaster. While the broadcaster may use a less
powerful transmitter to limit its coverage, this is merely a business strategy or
decision and not an inherent limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of
coverage as possible. On this score, it may be said that making public means that
accessibility is undiscriminating as long as it [is] within the range of the transmitter
and equipment of the broadcaster. That the medium through which the Appellant
carries the Appellee's signal, that is via satellite, does not diminish the fact that it
operates and functions as a cable television. It remains that the Appellant's
transmission of signals via its DTH satellite television service cannot be considered
within the purview of broadcasting. . . . xxx xxx xxx This Office also finds no
evidence on record showing that the Appellant has provided decrypting means to
the public indiscriminately. Considering the nature of this case, which is punitive in
fact, the burden of proving the existence of the elements constituting the acts
punishable rests on the shoulder of the complainant. aEACcS 17 Accordingly, this
Office finds that there is no rebroadcasting on the part of the Appellant of the
Appellee's programs on Channels 2 and 23, as defined under the Rome Convention.
22 Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting
by one broadcasting organization of the broadcast of another broadcasting
organization." The Working Paper 23 prepared by the Secretariat of the Standing
Committee on Copyright and Related Rights defines broadcasting organizations as
"entities that take the financial and editorial responsibility for the selection and
arrangement of, and investment in, the transmitted content". 24 Evidently, PMSI
would not qualify as a broadcasting organization because it does not have the
aforementioned responsibilities imposed upon broadcasting organizations, such as
ABSCBN. EADCHS ABS-CBN creates and transmits its own signals; PMSI merely
carries such signals which the viewers receive in its unaltered form. PMSI does not
produce, select, or determine the programs to be shown in Channels 2 and 23.
Likewise, it does not pass itself off as the origin or author of such programs. Insofar
as Channels 2 and 23 are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With regard to its premium
channels, it buys the channels from content providers and transmits on an as-is
basis to its viewers. Clearly, PMSI does not perform the functions of a broadcasting
organization; thus, it cannot be said that it is engaged in rebroadcasting Channels 2
and 23. The Director-General of the IPO and the Court of Appeals also correctly
found that PMSI's services are similar to a cable television system because the
services it renders fall under cable "retransmission", as described in the Working
Paper, to wit: cDIHES (G) Cable Retransmission 47. When a radio or television
program is being broadcast, it can be retransmitted to new audiences by means of
cable or wire. In the early days of cable television, it was mainly used to improve
signal reception, particularly in so-called "shadow zones", or to distribute the signals
in large buildings or building complexes. With improvements in technology, cable
operators now often receive signals from satellites before retransmitting them in an
unaltered form to their subscribers through cable. 48. In principle, cable
retransmission can be either simultaneous with the broadcast overthe-air or delayed
(deferred transmission) on the basis of a fixation or a reproduction of a fixation.
Furthermore, they might be unaltered or altered, for example through replacement
of commercials, etc. In general, however, the term "retransmission" seems to be
reserved for such transmissions which are both simultaneous and unaltered. aEACcS
49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both domestic
and foreign over the air broadcasts simultaneously to their subscribers without
permission from the broadcasting organizations or other rightholders and without
obligation to pay remuneration. 25 (Emphasis added) 18 Thus, while the Rome
Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable
retransmission. The retransmission of ABS-CBN's signals by PMSI which functions
essentially as a cable television does not therefore constitute rebroadcasting in
violation of the former's intellectual property rights under the IP Code. ISAcHD It
must be emphasized that the law on copyright is not absolute. The IP Code provides
that: Sec. 184. Limitations on Copyright. 184.1. Notwithstanding the provisions of
Chapter V, the following acts shall not constitute infringement of copyright: xxx xxx
xxx (h) The use made of a work by or under the direction or control of the
Government, by the National Library or by educational, scientific or professional
institutions where such use is in the public interest and is compatible with fair use;
EHTCAa The carriage of ABS-CBN's signals by virtue of the must-carry rule in
Memorandum Circular No. 04-08-88 is under the direction and control of the
government through the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and broadcast services/facilities
in the Philippines. 26 The imposition of the must-carry rule is within the NTC's power
to promulgate rules and regulations, as public safety and interest may require, to
encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities
in these activities whenever the Commission finds it reasonably feasible. 27 As
correctly observed by the Director-General of the IPO: IHCacT Accordingly, the
"Must-Carry Rule" under NTC Circular No. 4-08-88 falls under the foregoing category
of limitations on copyright. This Office agrees with the Appellant [herein respondent
PMSI] that the "Must-Carry Rule" is in consonance with the principles and objectives
underlying Executive Order No. 436, 28 to wit: The Filipino people must be given
wider access to more sources of news, information, education, sports event and
entertainment programs other than those provided for by mass media and afforded
television programs to attain a well informed, well-versed and culturally refined
citizenry and enhance their socio-economic growth: TEcADS WHEREAS, cable
television (CATV) systems could support or supplement the services provided by
television broadcast facilities, local and overseas, as the national information
highway to the countryside. 29 The Court of Appeals likewise correctly observed
that: [T]he very intent and spirit of the NTC Circular will prevent a situation whereby
station owners and a few networks would have unfettered power to make time
available only to the highest bidders, to communicate only their own views on
public issues, people, and to permit on the air 19 only those with whom they agreed
contrary to the state policy that the (franchise) grantee like the petitioner, private
respondent and other TV station owners, shall provide at all times sound and
balanced programming and assist in the functions of public information and
education. AEHTIC This is for the first time that we have a structure that works to
accomplish explicit state policy goals. 30 Indeed, intellectual property protection is
merely a means towards the end of making society benefit from the creation of its
men and women of talent and genius. This is the essence of intellectual property
laws, and it explains why certain products of ingenuity that are concealed from the
public are outside the pale of protection afforded by the law. It also explains why the
author or the creator enjoys no more rights than are consistent with public welfare.
31 HADTEC Further, as correctly observed by the Court of Appeals, the must-carry
rule as well as the legislative franchises granted to both ABS-CBN and PMSI are in
consonance with state policies enshrined in the Constitution, specifically Sections 9,
32 17, 33 and 24 34 of Article II on the Declaration of Principles and State Policies.
35 TcIaHC ABS-CBN was granted a legislative franchise under Republic Act No. 7966,
Section 1 of which authorizes it "to construct, operate and maintain, for commercial
purposes and in the public interest, television and radio broadcasting in and
throughout the Philippines . . . ." Section 4 thereof mandates that it "shall provide
adequate public service time to enable the government, through the said
broadcasting stations, to reach the population on important public issues; provide at
all times sound and balanced programming; promote public participation such as in
community programming; assist in the functions of public information and
education . . . ." PMSI was likewise granted a legislative franchise under Republic Act
No. 8630, Section 4 of which similarly states that it "shall provide adequate public
service time to enable the government, through the said broadcasting stations, to
reach the population on important public issues; provide at all times sound and
balanced programming; promote public participation such as in community
programming; assist in the functions of public information and education . . . ."
Section 5, paragraph 2 of the same law provides that "the radio spectrum is a finite
resource that is a part of the national patrimony and the use thereof is a privilege
conferred upon the grantee by the State and may be withdrawn anytime, after due
process". TDcAIH In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, 36
the Court held that a franchise is a mere privilege which may be reasonably
burdened with some form of public service. Thus: All broadcasting, whether by radio
or by television stations, is licensed by the government. Airwave frequencies have
to be allocated as there are more individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a privilege subject, among other things, to
amendment by Congress in accordance with the constitutional provision that "any
such franchise or right granted . . . shall be subject to amendment, alteration or
repeal by the Congress when the common good so requires". ECAaTS 20 xxx xxx
xxx Indeed, provisions for COMELEC Time have been made by amendment of the
franchises of radio and television broadcast stations and, until the present case was
brought, such provisions had not been thought of as taking property without just
compensation. Art. XII, 11 of the Constitution authorizes the amendment of
franchises for "the common good". What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but
even more of the public, particularly the voters, so that they will be fully informed of
the issues in an election? "[I]t is the right of the viewers and listeners, not the right
of the broadcasters, which is paramount". HaEcAC Nor indeed can there be any
constitutional objection to the requirement that broadcast stations give free air
time. Even in the United States, there are responsible scholars who believe that
government controls on broadcast media can constitutionally be instituted to ensure
diversity of views and attention to public affairs to further the system of free
expression. For this purpose, broadcast stations may be required to give free air
time to candidates in an election. Thus, Professor Cass R. Sunstein of the University
of Chicago Law School, in urging reforms in regulations affecting the broadcast
industry, writes: TAHcCI xxx xxx xxx In truth, radio and television broadcasting
companies, which are given franchises, do not own the airwaves and frequencies
through which they transmit broadcast signals and images. They are merely given
the temporary privilege of using them. Since a franchise is a mere privilege, the
exercise of the privilege may reasonably be burdened with the performance by the
grantee of some form of public service. . . . 37 There is likewise no merit to ABS-
CBN's claim that PMSI's carriage of its signals is for a commercial purpose; that its
being the country's top broadcasting company, the availability of its signals
allegedly enhances PMSI's attractiveness to potential customers; 38 or that the
unauthorized carriage of its signals by PMSI has created competition between its
Metro Manila and regional stations. SITCEA ABS-CBN presented no substantial
evidence to prove that PMSI carried its signals for profit; or that such carriage
adversely affected the business operations of its regional stations. Except for the
testimonies of its witnesses, 39 no studies, statistical data or information have been
submitted in evidence. Administrative charges cannot be based on mere
speculation or conjecture. The complainant has the burden of proving by substantial
evidence the allegations in the complaint. 40 Mere allegation is not evidence, and is
not equivalent to proof. 41 EHcaAI Anyone in the country who owns a television set
and antenna can receive ABS-CBN's signals for free. Other broadcasting
organizations with free-to-air signals such as GMA-7, RPN-9, ABC- 5, and IBC-13 can
likewise be accessed for free. No payment is required to view the said channels 42
because these broadcasting networks do not generate revenue from subscription 21
from their viewers but from airtime revenue from contracts with commercial
advertisers and producers, as well as from direct sales. In contrast, cable and DTH
television earn revenues from viewer subscription. In the case of PMSI, it offers its
customers premium paid channels from content providers like Star Movies, Star
World, Jack TV, and AXN, among others, thus allowing its customers to go beyond
the limits of "Free TV and Cable TV". 43 It does not advertise itself as a local channel
carrier because these local channels can be viewed with or without DTH television.
CDTHSI Relevantly, PMSI's carriage of Channels 2 and 23 is material in arriving at
the ratings and audience share of ABS-CBN and its programs. These ratings help
commercial advertisers and producers decide whether to buy airtime from the
network. Thus, the must-carry rule is actually advantageous to the broadcasting
networks because it provides them with increased viewership which attracts
commercial advertisers and producers. On the other hand, the carriage of free-to-air
signals imposes a burden to cable and DTH television providers such as PMSI. PMSI
uses none of ABS-CBN's resources or equipment and carries the signals and
shoulders the costs without any recourse of charging. 44 Moreover, such carriage of
signals takes up channel space which can otherwise be utilized for other premium
paid channels. aSDHCT There is no merit to ABS-CBN's argument that PMSI's
carriage of Channels 2 and 23 resulted in competition between its Metro Manila and
regional stations. ABS-CBN is free to decide to pattern its regional programming in
accordance with perceived demands of the region; however, it cannot impose this
kind of programming on the regional viewers who are also entitled to the free-to-air
channels. It must be emphasized that, as a national broadcasting organization, one
of ABS-CBN's responsibilities is to scatter its signals to the widest area of coverage
as possible. That it should limit its signal reach for the sole purpose of gaining profit
for its regional stations undermines public interest and deprives the viewers of their
right to access to information. Indeed, television is a business; however, the welfare
of the people must not be sacrificed in the pursuit of profit. The right of the viewers
and listeners to the most diverse choice of programs available is paramount. 45 The
Director-General correctly observed, thus: DHEcCT The "Must-Carry Rule" favors
both broadcasting organizations and the public. It prevents cable television
companies from excluding broadcasting organization especially in those places not
reached by signal. Also, the rule prevents cable television companies from depriving
viewers in far-flung areas the enjoyment of programs available to city viewers. In
fact, this Office finds the rule more burdensome on the part of the cable television
companies. The latter carries the television signals and shoulders the costs without
any recourse of charging. On the other hand, the signals that are carried by cable
television companies are dispersed and scattered by the television stations and
anybody with a television set is free to pick them up. HCDAac With its enormous
resources and vaunted technological capabilities, Appellee's [herein petitioner ABS-
CBN] broadcast signals can reach almost every corner of the archipelago. That in
spite of such capacity, it chooses to maintain regional stations, is a business
decision. That 22 the "Must-Carry Rule" adversely affects the profitability of
maintaining such regional stations since there will be competition between them
and its Metro Manila station is speculative and an attempt to extrapolate the effects
of the rule. As discussed above, Appellant's DTH satellite television services is of
limited subscription. There was not even a showing on part of the Appellee the
number of Appellant's subscribers in one region as compared to non-subscribing
television owners. In any event, if this Office is to engage in conjecture, such
competition between the regional stations and the Metro Manila station will benefit
the public as such competition will most likely result in the production of better
television programs." 46 All told, we find that the Court of Appeals correctly upheld
the decision of the IPO DirectorGeneral that PMSI did not infringe on ABS-CBN's
intellectual property rights under the IP Code. The findings of facts of administrative
bodies charged with their specific field of expertise, are afforded great weight by the
courts, and in the absence of substantial showing that such findings are made from
an erroneous estimation of the evidence presented, they are conclusive, and in the
interest of stability of the governmental structure, should not be disturbed. 47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties
and are not reviewable by the Supreme Court. They carry even more weight when
the Court of Appeals affirms the factual findings of a lower fact-finding body, 48 as
in the instant case. There is likewise no merit to ABS-CBN's contention that the
Memorandum Circular excludes from its coverage DTH television services such as
those provided by PMSI. Section 6.2 of the Memorandum Circular requires all cable
television system operators operating in a community within Grade "A" or "B"
contours to carry the television signals of the authorized television broadcast
stations. 49 The rationale behind its issuance can be found in the whereas clauses
which state: EaCSTc Whereas, Cable Television Systems or Community Antenna
Television (CATV) have shown their ability to offer additional programming and to
carry much improved broadcast signals in the remote areas, thereby enriching the
lives of the rest of the population through the dissemination of social, economic,
educational information and cultural programs; TIHDAa Whereas, the national
government supports the promotes the orderly growth of the Cable Television
industry within the framework of a regulated fee enterprise, which is a hallmark of a
democratic society; Whereas, public interest so requires that monopolies in
commercial mass media shall be regulated or prohibited, hence, to achieve the
same, the cable TV industry is made part of the broadcast media; Whereas,
pursuant to Act 3846 as amended and Executive Order 205 granting the National
Telecommunications Commission the authority to set down rules and regulations in
order to protect the public and promote the general welfare, the National
Telecommunications Commission hereby promulgates the following rules and
regulations on Cable Television Systems; SaIEcA 23 The policy of the Memorandum
Circular is to carry improved signals in remote areas for the good of the general
public and to promote dissemination of information. In line with this policy, it is clear
that DTH television should be deemed covered by the Memorandum Circular.
Notwithstanding the different technologies employed, both DTH and cable television
have the ability to carry improved signals and promote dissemination of information
because they operate and function in the same way. ICDSca In its December 20,
2002 letter, 50 the NTC explained that both DTH and cable television services are of
a similar nature, the only difference being the medium of delivering such services.
They can carry broadcast signals to the remote areas and possess the capability to
enrich the lives of the residents thereof through the dissemination of social,
economic, educational information and cultural programs. Consequently, while the
Memorandum Circular refers to cable television, it should be understood as to
include DTH television which provides essentially the same services. In Eastern
Telecommunications Philippines, Inc. v. International Communication Corporation, 51
we held: The NTC, being the government agency entrusted with the regulation of
activities coming under its special and technical forte, and possessing the necessary
rule-making power to implement its objectives, is in the best position to interpret its
own rules, regulations and guidelines. The Court has consistently yielded and
accorded great respect to the interpretation by administrative agencies of their own
rules unless there is an error of law, abuse of power, lack of jurisdiction or grave
abuse of discretion clearly conflicting with the letter and spirit of the law. 52 SEcADa
With regard to the issue of the constitutionality of the must-carry rule, the Court
finds that its resolution is not necessary in the disposition of the instant case. One of
the essential requisites for a successful judicial inquiry into constitutional questions
is that the resolution of the constitutional question must be necessary in deciding
the case. 53 In Spouses Mirasol v. Court of Appeals, 54 we held: As a rule, the courts
will not resolve the constitutionality of a law, if the controversy can be settled on
other grounds. The policy of the courts is to avoid ruling on constitutional questions
and to presu
that the acts of the political departments are valid, absent a clear and unmistakable
showing to the contrary. To doubt is to sustain. This presumption is based on the
doctrine of separation of powers. This means that the measure had first been
carefully studied by the legislative and executive departments and found to be in
accord with the Constitution before it was finally enacted and approved. 55 caIETS
The instant case was instituted for violation of the IP Code and infringement of ABS-
CBN's broadcasting rights and copyright, which can be resolved without going into
the constitutionality of Memorandum Circular No. 04-08-88. As held by the Court of
Appeals, the only relevance of the circular in this case is whether or not compliance
therewith should be considered manifestation of lack of intent to commit
infringement, and if it is, whether such lack of intent is a valid defense against the
complaint of petitioner. 56 24 The records show that petitioner assailed the
constitutionality of Memorandum Circular No. 04- 08-88 by way of a collateral attack
before the Court of Appeals. In Philippine National Bank v. Palma, 57 we ruled that
for reasons of public policy, the constitutionality of a law cannot be collaterally
attacked. A law is deemed valid unless declared null and void by a competent court;
more so when the issue has not been duly pleaded in the trial court. 58 As a general
rule, the question of constitutionality must be raised at the earliest opportunity so
that if not raised in the pleadings, ordinarily it may not be raised in the trial, and if
not raised in the trial court, it will not be considered on appeal. 59 In Philippine
Veterans Bank v. Court of Appeals, 60 we held: We decline to rule on the issue of
constitutionality as all the requisites for the exercise of judicial review are not
present herein. Specifically, the question of constitutionality will not be passed upon
by the Court unless, at the first opportunity, it is properly raised and presented in an
appropriate case, adequately argued, and is necessary to a determination of the
case, particularly where the issue of constitutionality is the very lis mota
presented. . . . 61 EHSIcT Finally, we find that the dismissal of the petition for
contempt filed by ABS-CBN is in order. Indirect contempt may either be initiated (1)
motu proprio by the court by issuing an order or any other formal charge requiring
the respondent to show cause why he should not be punished for contempt or (2)
by the filing of a verified petition, complying with the requirements for filing
initiatory pleadings. 62 ABS-CBN filed a verified petition before the Court of Appeals,
which was docketed CA G.R. SP No. 90762, for PMSI's alleged disobedience to the
Resolution and Temporary Restraining Order, both dated July 18, 2005, issued in CA-
G.R. SP No. 88092. However, after the cases were consolidated, the Court of
Appeals did not require PMSI to comment on the petition for contempt. It ruled on
the merits of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.
acEHSI ABS-CBN argues that the Court of Appeals erred in dismissing the petition
for contempt without having ordered respondents to comment on the same.
Consequently, it would have us reinstate CA-G.R. No. 90762 and order respondents
to show cause why they should not be held in contempt. It bears stressing that the
proceedings for punishment of indirect contempt are criminal in nature. The modes
of procedure and rules of evidence adopted in contempt proceedings are similar in
nature to those used in criminal prosecutions. 63 While it may be argued that the
Court of Appeals should have ordered respondents to comment, the issue has been
rendered moot in light of our ruling on the merits. To order respondents to comment
and have the Court of Appeals conduct a hearing on the contempt charge when the
main case has already been disposed of in favor of PMSI would be circuitous. Where
the issues have become moot, there is no justiciable controversy, thereby rendering
the resolution of the same of no practical use or value. 64 aTcSID 25 WHEREFORE,
the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-G.R.
SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the
Intellectual Property Office and dismissing the petitions filed by ABS-CBN
Broadcasting Corporation, and the December 11, 2006 Resolution denying the
motion for reconsideration, are AFFIRMED. 2009jur SO ORDERED. Austria-Martinez,
Chico-Nazario, Nachura and Leonardo-de Castro, * JJ., concur. 2009jur 26
G.R. No. 175769-70 January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioners,

vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO),
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of Appeals in
CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the Director-
General of the Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also assailed is the
December 11, 2006 Resolution3 denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting. 4 It broadcasts television
programs by wireless means to Metro Manila and nearby provinces, and by satellite to provincial
stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High Frequency
(UHF). The programs aired over Channels 2 and 23 are either produced by ABS-CBN or purchased
from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in accordance with
perceived demands of the region. Thus, television programs shown in Metro Manila and nearby
provinces are not necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting
System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers all over the
Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul
B. De Mesa, and Aloysius M. Colayco, are members of PMSIs Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 8630 5 on May 7, 1998 and was
given a Provisional Authority by the National Telecommunications Commission (NTC) on February 1,
2000 to install, operate and maintain a nationwide DTH satellite service. When it commenced
operations, it offered as part of its program line-up ABS-CBN Channels 2 and 23, NBN, Channel 4,
ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13, together with other paid
premium program channels.
However, on April 25, 2001,6 ABS-CBN demanded for PMSI to cease and desist from rebroadcasting
Channels 2 and 23. On April 27, 2001,7 PMSI replied that the rebroadcasting was in accordance with
the authority granted it by NTC and its obligation under NTC Memorandum Circular No. 4-08-
88,8 Section 6.2 of which requires all cable television system operators operating in a community
within Grade A or B contours to carry the television signals of the authorized television broadcast
stations.9
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the
negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSIs inability to
ensure the prevention of illegal retransmission and further rebroadcast of its signals, as well as the
adverse effect of the rebroadcasts on the business operations of its regional television stations. 10
On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving Property
Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary
Injunction, which was docketed as IPV No. 10-2002-0004. It alleged that PMSIs unauthorized
rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBNs application for a
temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2
and 23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed as
CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the must-carry
rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated December 20, 2002
of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance from this
Commission in connection with the application and coverage of NTC Memorandum Circular No. 4-
08-88, particularly Section 6 thereof, on mandatory carriage of television broadcast signals, to the
direct-to-home (DTH) pay television services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast services, the only
difference being the medium of delivering such services (i.e. the former by satellite and the latter by
cable). Both can carry broadcast signals to the remote areas, thus enriching the lives of the
residents thereof through the dissemination of social, economic, educational information and cultural
programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite services.
Concededly, PMSIs DTH pay television services covers very much wider areas in terms of carriage
of broadcast signals, including areas not reachable by cable television services thereby providing a
better medium of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,
particularly section 6 thereof, on mandatory carriage of television broadcast signals, DTH pay
television services should be deemed covered by such NTC Memorandum Circular.
For your guidance. (Emphasis added)11
On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated
July 24, 2003 from the NTC enjoining strict and immediate compliance with the must-carry rule
under Memorandum Circular No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated July
17, 2003 from President/COO Rene Q. Bello of the International Broadcasting Corporation (IBC-
Channel 13) complaining that your company, Dream Broadcasting System, Inc., has cut-off, without
any notice or explanation whatsoever, to air the programs of IBC-13, a free-to-air television, to the
detriment of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator, operating a direct-to-home

(DTH) broadcasting system, with a provisional authority (PA) from the NTC, your company,
along with cable television operators, are mandated to strictly comply with the existing policy
of NTC on mandatory carriage of television broadcast signals as provided under
Memorandum Circular No. 04-08-88, also known as the Revised Rules and Regulations
Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum Circular, requires
all cable television system operators, operating in a community within the Grade A or B
contours to must-carry the television signals of the authorized television broadcast
stations, one of which is IBC-13. Said directive equally applies to your company as the
circular was issued to give consumers and the public a wider access to more sources of
news, information, entertainment and other programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction, supervision and
control over all public services, which includes direct broadcast satellite operators, and taking into
consideration the paramount interest of the public in general, hereby directs you to immediately
restore the signal of IBC-13 in your network programs, pursuant to existing circulars and regulations
of the Commission.
For strict compliance. (Emphasis added)12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled
Implementing Rules and Regulations Governing Community Antenna/Cable Television (CATV) and
Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector. Article 6, Section 8
thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of any
television signals without any agreement with or authorization from program/content providers are
prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88,
the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would have the effect of
amending the provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is in
the negative.
xxxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite television service
provider authorized by this Commission, your company continues to be bound by the
guidelines provided for under MC 04-08-88, specifically your obligation under its mandatory
carriage provisions, in addition to your obligations under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision14 finding that PMSI infringed the broadcasting
rights and copyright of ABS-CBN and ordering it to permanently cease and desist from
rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO which
was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the Court of
Appeals a Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for Certiorari in
CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision 15 in favor of PMSI, the
dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly, Decision
No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal Affairs is hereby
REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for appropriate
action, and the records be returned to her for proper disposition. The Documentation, Information
and Technology Transfer Bureau is also given a copy for library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining order
and writ of preliminary injunction with the Court of Appeals, which was docketed as CA-G.R. SP No.
88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-CBN
filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2 and 23 despite
the restraining order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos. 88092
and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the
Director-General of the IPO and dismissed both petitions filed by ABS-CBN. 17
ABS-CBNs motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSIs unauthorized rebroadcasting of Channels 2 and 23 is an

infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Code);18that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators; that
the Court of Appeals interpretation of the must-carry rule violates Section 9 of Article III 19 of the
Constitution because it allows the taking of property for public use without payment of just
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as
CA-G.R. SP No. 90762 without requiring respondents to file comment.
Respondents, on the other hand, argue that PMSIs rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the Memorandum
Circular is a valid exercise of police power; and that the Court of Appeals correctly dismissed CA-
G.R. SP No. 90762 since it found no need to exercise its power of contempt.
After a careful review of the facts and records of this case, we affirm the findings of the Director-
General of the IPO and the Court of Appeals.
There is no merit in ABS-CBNs contention that PMSI violated its broadcasters rights under Section
211 of the IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall
enjoy the exclusive right to carry out, authorize or prevent any of the following acts:
211.1. The rebroadcasting of their broadcasts;
xxxx
Neither is PMSI guilty of infringement of ABS-CBNs copyright under Section 177 of the IP Code
which states that copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the public performance of the work (Section 177.6), and other communication to
the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as the transmission by wireless means for the
public reception of sounds or of images or of representations thereof; such transmission by satellite
is also broadcasting where the means for decrypting are provided to the public by the broadcasting
organization or with its consent.
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise
known as the 1961 Rome Convention, of which the Republic of the Philippines is a signatory, 21 is
the simultaneous broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization.
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and
thus cannot be considered to have infringed ABS-CBNs broadcasting rights and copyright, thus:
That the Appellants [herein respondent PMSI] subscribers are able to view Appellees [herein
petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter is broadcasting
the same is undisputed. The question however is, would the Appellant in doing so be considered
engaged in broadcasting. Section 202.7 of the IP Code states that broadcasting means
the transmission by wireless means for the public reception of sounds or of images or of
representations thereof; such transmission by satellite is also broadcasting where the means for
decrypting are provided to the public by the broadcasting organization or with its consent.
Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:
1. The transmission by wireless means for the public reception of sounds or of images or of
representations thereof; and
2. The transmission by satellite for the public reception of sounds or of images or of

representations thereof where the means for decrypting are provided to the public by the
broadcasting organization or with its consent.
It is under the second category that Appellants DTH satellite television service must be examined
since it is satellite-based. The elements of such category are as follows:
1. There is transmission of sounds or images or of representations thereof;

2. The transmission is through satellite;
3. The transmission is for public reception; and
4. The means for decrypting are provided to the public by the broadcasting organization or
with its consent.
It is only the presence of all the above elements can a determination that the DTH is broadcasting
and consequently, rebroadcasting Appellees signals in violation of Sections 211 and 177 of the IP
Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under Section 202.7 of the
IP Code presupposes that the origin of the signals is the broadcaster. Hence, a program that is
broadcasted is attributed to the broadcaster. In the same manner, the rebroadcasted program is
attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of the programs
broadcasted by the Appellee. Appellant did not make and transmit on its own but merely carried the
existing signals of the Appellee. When Appellants subscribers view Appellees programs in Channels
2 and 23, they know that the origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits, the
signals are scattered or dispersed in the air. Anybody may pick-up these signals. There is no
restriction as to its number, type or class of recipients. To receive the signals, one is not required to
subscribe or to pay any fee. One only has to have a receiver, and in case of television signals, a
television set, and to tune-in to the right channel/frequency. The definition of broadcasting, wherein it
is required that the transmission is wireless, all the more supports this discussion. Apparently, the
undiscriminating dispersal of signals in the air is possible only through wireless means. The use of
wire in transmitting signals, such as cable television, limits the recipients to those who are
connected. Unlike wireless transmissions, in wire-based transmissions, it is not enough that one
wants to be connected and possesses the equipment. The service provider, such as cable television
companies may choose its subscribers.
The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters
and other equipment employed by the broadcaster. While the broadcaster may use a less powerful
transmitter to limit its coverage, this is merely a business strategy or decision and not an inherent
limitation when transmission is through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of coverage as
possible. On this score, it may be said that making public means that accessibility is undiscriminating
as long as it [is] within the range of the transmitter and equipment of the broadcaster. That the
medium through which the Appellant carries the Appellees signal, that is via satellite, does not
diminish the fact that it operates and functions as a cable television. It remains that the Appellants
transmission of signals via its DTH satellite television service cannot be considered within the
purview of broadcasting. x x x
xxxx
This Office also finds no evidence on record showing that the Appellant has provided decrypting
means to the public indiscriminately. Considering the nature of this case, which is punitive in fact, the
burden of proving the existence of the elements constituting the acts punishable rests on the
shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the
Appellees programs on Channels 2 and 23, as defined under the Rome Convention. 22
Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization. The Working Paper 23 prepared
by the Secretariat of the Standing Committee on Copyright and Related Rights defines broadcasting
organizations as entities that take the financial and editorial responsibility for the selection and
arrangement of, and investment in, the transmitted content.24 Evidently, PMSI would not qualify as a
broadcasting organization because it does not have the aforementioned responsibilities imposed
upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the
viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs to
be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such
programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With regard to its premium channels, it buys the
channels from content providers and transmits on an as-is basis to its viewers. Clearly, PMSI does
not perform the functions of a broadcasting organization; thus, it cannot be said that it is engaged in
rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs services
are similar to a cable television system because the services it renders fall under cable
retransmission, as described in the Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new audiences
by means of cable or wire. In the early days of cable television, it was mainly used to improve signal
reception, particularly in so-called shadow zones, or to distribute the signals in large buildings or
building complexes. With improvements in technology, cable operators now often receive signals
from satellites before retransmitting them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or
delayed (deferred transmission) on the basis of a fixation or a reproduction of a fixation.
Furthermore, they might be unaltered or altered, for example through replacement of commercials,
etc. In general, however, the term retransmission seems to be reserved for such
transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without
such a right, cable operators can retransmit both domestic and foreign over the air broadcasts
simultaneously to their subscribers without permission from the broadcasting organizations or other
rightholders and without obligation to pay remuneration. 25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit
the rebroadcasting of its broadcast, however, this protection does not extend to cable
retransmission. The retransmission of ABS-CBNs signals by PMSI which functions essentially as a
cable television does not therefore constitute rebroadcasting in violation of the formers intellectual
property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute
infringement of copyright:
xxxx
(h) The use made of a work by or under the direction or control of the Government, by the National
Library or by educational, scientific or professional institutions where such use is in the public
interest and is compatible with fair use;
The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular No. 04-
08-88 is under the direction and control of the government though the NTC which is vested with
exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast
services/facilities in the Philippines.26 The imposition of the must-carry rule is within the NTCs power
to promulgate rules and regulations, as public safety and interest may require, to encourage a larger
and more effective use of communications, radio and television broadcasting facilities, and to
maintain effective competition among private entities in these activities whenever the Commission
finds it reasonably feasible.27 As correctly observed by the Director-General of the IPO:
Accordingly, the Must-Carry Rule under NTC Circular No. 4-08-88 falls under the foregoing
category of limitations on copyright. This Office agrees with the Appellant [herein respondent PMSI]
that the Must-Carry Rule is in consonance with the principles and objectives underlying Executive
Order No. 436,28 to wit:
The Filipino people must be given wider access to more sources of news, information, education,
sports event and entertainment programs other than those provided for by mass media and afforded
television programs to attain a well informed, well-versed and culturally refined citizenry and
enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could support or supplement the services provided by
television broadcast facilities, local and overseas, as the national information highway to the
countryside.29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a
few networks would have unfettered power to make time available only to the highest bidders, to
communicate only their own views on public issues, people, and to permit on the air only those with
whom they agreed contrary to the state policy that the (franchise) grantee like the petitioner,
private respondent and other TV station owners, shall provide at all times sound and balanced
programming and assist in the functions of public information and education.
This is for the first time that we have a structure that works to accomplish explicit state policy goals. 30
Indeed, intellectual property protection is merely a means towards the end of making society benefit
from the creation of its men and women of talent and genius. This is the essence of intellectual
property laws, and it explains why certain products of ingenuity that are concealed from the public
are outside the pale of protection afforded by the law. It also explains why the author or the creator
enjoys no more rights than are consistent with public welfare. 31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative
franchises granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in
the Constitution, specifically Sections 9,32 17,33 and 2434 of Article II on the Declaration of Principles
and State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which
authorizes it to construct, operate and maintain, for commercial purposes and in the public interest,
television and radio broadcasting in and throughout the Philippines x x x. Section 4 thereof
mandates that it shall provide adequate public service time to enable the government, through the
said broadcasting stations, to reach the population on important public issues; provide at all times
sound and balanced programming; promote public participation such as in community programming;
assist in the functions of public information and education x x x.
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which
similarly states that it shall provide adequate public service time to enable the government, through
the said broadcasting stations, to reach the population on important public issues; provide at all
times sound and balanced programming; promote public participation such as in community
programming; assist in the functions of public information and education x x x. Section 5, paragraph
2 of the same law provides that the radio spectrum is a finite resource that is a part of the national
patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be
withdrawn anytime, after due process.
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a franchise is a
mere privilege which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a privilege subject, among other things, to amendment by
Congress in accordance with the constitutional provision that any such franchise or right granted . . .
shall be subject to amendment, alteration or repeal by the Congress when the common good so
requires.
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio
and television broadcast stations and, until the present case was brought, such provisions had not
been thought of as taking property without just compensation. Art. XII, 11 of the Constitution
authorizes the amendment of franchises for the common good. What better measure can be
conceived for the common good than one for free air time for the benefit not only of candidates but
even more of the public, particularly the voters, so that they will be fully informed of the issues in an
election? [I]t is the right of the viewers and listeners, not the right of the broadcasters, which is
paramount.
Nor indeed can there be any constitutional objection to the requirement that broadcast stations give
free air time. Even in the United States, there are responsible scholars who believe that government
controls on broadcast media can constitutionally be instituted to ensure diversity of views and
attention to public affairs to further the system of free expression. For this purpose, broadcast
stations may be required to give free air time to candidates in an election. Thus, Professor Cass R.
Sunstein of the University of Chicago Law School, in urging reforms in regulations affecting the
broadcast industry, writes:
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not own the
airwaves and frequencies through which they transmit broadcast signals and images. They are
merely given the temporary privilege of using them. Since a franchise is a mere privilege, the
exercise of the privilege may reasonably be burdened with the performance by the grantee of some
form of public service. x x x37
There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a commercial
purpose; that its being the countrys top broadcasting company, the availability of its signals allegedly
enhances PMSIs attractiveness to potential customers;38 or that the unauthorized carriage of its
signals by PMSI has created competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that
such carriage adversely affected the business operations of its regional stations. Except for the
testimonies of its witnesses,[39] no studies, statistical data or information have been submitted in
evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has
the burden of proving by substantial evidence the allegations in the complaint. 40 Mere allegation is
not evidence, and is not equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBNs signals for
free. Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and
IBC-13 can likewise be accessed for free. No payment is required to view the said
channels42 because these broadcasting networks do not generate revenue from subscription from
their viewers but from airtime revenue from contracts with commercial advertisers and producers, as
well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI, it
offers its customers premium paid channels from content providers like Star Movies, Star World,
Jack TV, and AXN, among others, thus allowing its customers to go beyond the limits of Free TV
and Cable TV.43 It does not advertise itself as a local channel carrier because these local channels
can be viewed with or without DTH television.
Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and audience
share of ABS-CBN and its programs. These ratings help commercial advertisers and producers
decide whether to buy airtime from the network. Thus, the must-carry rule is actually advantageous
to the broadcasting networks because it provides them with increased viewership which attracts
commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television
providers such as PMSI. PMSI uses none of ABS-CBNs resources or equipment and carries the
signals and shoulders the costs without any recourse of charging. 44 Moreover, such carriage of
signals takes up channel space which can otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23 resulted in
competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its
regional programming in accordance with perceived demands of the region; however, it cannot
impose this kind of programming on the regional viewers who are also entitled to the free-to-air
channels. It must be emphasized that, as a national broadcasting organization, one of ABS-CBNs
responsibilities is to scatter its signals to the widest area of coverage as possible. That it should limit
its signal reach for the sole purpose of gaining profit for its regional stations undermines public
interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the
pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs
available is paramount.45 The Director-General correctly observed, thus:
The Must-Carry Rule favors both broadcasting organizations and the public. It prevents cable
television companies from excluding broadcasting organization especially in those places not
reached by signal. Also, the rule prevents cable television companies from depriving viewers in far-
flung areas the enjoyment of programs available to city viewers. In fact, this Office finds the rule
more burdensome on the part of the cable television companies. The latter carries the television
signals and shoulders the costs without any recourse of charging. On the other hand, the signals
that are carried by cable television companies are dispersed and scattered by the television stations
and anybody with a television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellees [herein petitioner
ABS-CBN] broadcast signals can reach almost every corner of the archipelago. That in spite of such
capacity, it chooses to maintain regional stations, is a business decision. That the Must-Carry Rule
adversely affects the profitability of maintaining such regional stations since there will be competition
between them and its Metro Manila station is speculative and an attempt to extrapolate the effects of
the rule. As discussed above, Appellants DTH satellite television services is of limited subscription.
There was not even a showing on part of the Appellee the number of Appellants subscribers in one
region as compared to non-subscribing television owners. In any event, if this Office is to engage in
conjecture, such competition between the regional stations and the Metro Manila station will benefit
the public as such competition will most likely result in the production of better television programs. 46
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General
that PMSI did not infringe on ABS-CBNs intellectual property rights under the IP Code. The findings
of facts of administrative bodies charged with their specific field of expertise, are afforded great
weight by the courts, and in the absence of substantial showing that such findings are made from an
erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability
of the governmental structure, should not be disturbed. 47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not
reviewable by the Supreme Court. They carry even more weight when the Court of Appeals affirms
the factual findings of a lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBNs contention that the Memorandum Circular excludes from its
coverage DTH television services such as those provided by PMSI. Section 6.2 of the Memorandum
Circular requires all cable television system operators operating in a community within Grade A or
B contours to carry the television signals of the authorized television broadcast stations. 49 The
rationale behind its issuance can be found in the whereas clauses which state:
Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their
ability to offer additional programming and to carry much improved broadcast signals in the remote
areas, thereby enriching the lives of the rest of the population through the dissemination of social,
economic, educational information and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the Cable Television
industry within the framework of a regulated fee enterprise, which is a hallmark of a democratic
society;
Whereas, public interest so requires that monopolies in commercial mass media shall be regulated
or prohibited, hence, to achieve the same, the cable TV industry is made part of the broadcast
media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National
Telecommunications Commission the authority to set down rules and regulations in order to protect
the public and promote the general welfare, the National Telecommunications Commission hereby
promulgates the following rules and regulations on Cable Television Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of
the general public and to promote dissemination of information. In line with this policy, it is clear that
DTH television should be deemed covered by the Memorandum Circular. Notwithstanding the
different technologies employed, both DTH and cable television have the ability to carry improved
signals and promote dissemination of information because they operate and function in the same
way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television services are
of a similar nature, the only difference being the medium of delivering such services. They can carry
broadcast signals to the remote areas and possess the capability to enrich the lives of the residents
thereof through the dissemination of social, economic, educational information and cultural
programs. Consequently, while the Memorandum Circular refers to cable television, it should be
understood as to include DTH television which provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation, 51 we

held:
The NTC, being the government agency entrusted with the regulation of activities coming under its
special and technical forte, and possessing the necessary rule-making power to implement its
objectives, is in the best position to interpret its own rules, regulations and guidelines. The Court has
consistently yielded and accorded great respect to the interpretation by administrative agencies of
their own rules unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of
discretion clearly conflicting with the letter and spirit of the law.52
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its
resolution is not necessary in the disposition of the instant case. One of the essential requisites for a
successful judicial inquiry into constitutional questions is that the resolution of the constitutional
question must be necessary in deciding the case. 53 In Spouses Mirasol v. Court of Appeals,54 we
held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on
other grounds. The policy of the courts is to avoid ruling on constitutional questions and to presume
that the acts of the political departments are valid, absent a clear and unmistakable showing to the
contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of powers.
This means that the measure had first been carefully studied by the legislative and executive
departments and found to be in accord with the Constitution before it was finally enacted and
approved.55
The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs
broadcasting rights and copyright, which can be resolved without going into the constitutionality of
Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance of the
circular in this case is whether or not compliance therewith should be considered manifestation of
lack of intent to commit infringement, and if it is, whether such lack of intent is a valid defense
against the complaint of petitioner.56
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-88
by way of a collateral attack before the Court of Appeals. In Philippine National Bank v. Palma,57 we
ruled that for reasons of public policy, the constitutionality of a law cannot be collaterally attacked. A
law is deemed valid unless declared null and void by a competent court; more so when the issue has
not been duly pleaded in the trial court.58
As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if
not raised in the pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial
court, it will not be considered on appeal.59 In Philippine Veterans Bank v. Court of Appeals,60 we
held:
We decline to rule on the issue of constitutionality as all the requisites for the exercise of judicial
review are not present herein. Specifically, the question of constitutionality will not be passed
upon by the Court unless, at the first opportunity, it is properly raised and presented in an
appropriate case, adequately argued, and is necessary to a determination of the case,
particularly where the issue of constitutionality is the very lis mota presented.x x x61
Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any
other formal charge requiring the respondent to show cause why he should not be punished for
contempt or (2) by the filing of a verified petition, complying with the requirements for filing initiatory
pleadings.62
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No.
90762, for PMSIs alleged disobedience to the Resolution and Temporary Restraining Order, both
dated July 18, 2005, issued in CA-G.R. SP No. 88092. However, after the cases were consolidated,
the Court of Appeals did not require PMSI to comment on the petition for contempt. It ruled on the
merits of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without
having ordered respondents to comment on the same. Consequently, it would have us reinstate CA-
G.R. No. 90762 and order respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature.
The modes of procedure and rules of evidence adopted in contempt proceedings are similar in
nature to those used in criminal prosecutions. 63 While it may be argued that the Court of Appeals
should have ordered respondents to comment, the issue has been rendered moot in light of our
ruling on the merits. To order respondents to comment and have the Court of Appeals conduct a
hearing on the contempt charge when the main case has already been disposed of in favor of PMSI
would be circuitous. Where the issues have become moot, there is no justiciable controversy,
thereby rendering the resolution of the same of no practical use or value. 64
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-
G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the Intellectual
Property Office and dismissing the petitions filed by ABS-CBN Broadcasting Corporation, and the
December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.
SO ORDERED.

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FIRST DIVISION

ELIDAD KHO and VIOLETA G.R. No. 150877

Culled from the records are the following antecedent facts:

Notwithstanding this cancellation, Quintin Cheng executed on 30 January 1990 an

Consequently, on 30 November 1990, SYCF

SYCF further executed a Special Power of Attorney dated 11 September 1991 in

From the foregoing incidents arose several judicial and quasi-

On 20 December 1991, Elidad Kho/KEC Laboratory filed a Complaint for

On 22 January 1993, a decision in Civil Case No. Q-91-10926 was rendered,

ACCORDINGLY, judgment is hereby rendered:

5. Both parties to pay proportionate fees.[10]

WHEREFORE, the instant petition is hereby denied due course.[13]

2) BFAD Cosmetic Case No. CM-040-91

In a resolution of the BFAD dated 4 February 1992, it ruled that:

Summervilles application to register (renew or reinstate) CCS Medicated

3) Criminal Case No. 00-183261 before the RTC of Manila, Branch 1

The foregoing duly established facts indubitably supports accuseds contention

The information against accused is hereby dismissed.

The ruling renders the remaining incidents moot and academic.[22]

Thereafter, on 17 September 2002, the DOJ Secretary, Hernando B. Perez, granted

After an evaluation of the record, we resolve to deny the motion for

ACCORDINGLY, the Motion for Reconsideration dated September 10,

In a decision of the Court of Appeals dated 26 May 2004 in CA-G.R. SP No.

4) Search Warrant No. 99-1520 before the RTC of Manila, Branch 7

In an Order[32] dated 3 April 2000, the RTC of Manila, Branch 7,

On respondents Motion for Reconsideration, the Court finds their

WHEREFORE, for lack of merit, respondents Motion for Reconsideration

In their Memorandum, petitioners raise the following issues for resolution:

WHETHER OR NOT THE COURT OF APPEALS ERRED IN

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT

The petition is devoid of merit.

As to whether the RTC of Manila, Branch 1, properly dismissed the criminal

SECTION 1. Search warrant defined. A search warrant is an order in writing

SEC. 2. Court where application for search warrant shall be filed. - An

a) Any court within whose territorial jurisdiction a crime

b) For compelling reasons stated in the application,

(a) Subject of the offense;

(b) Stolen or embezzled and other proceeds or fruits of the offense;

(c) Used or intended to be used as the means of committing an

In Columbia Pictures, Inc. v. Court of Appeals,[48] we explained further that:

In Philippine jurisprudence, probable cause has been uniformly defined as such

We also declared in People v. Chiu,[49] citing Malaloan v. Court of Appeals,

A perspicacious examination of the records reveal that the RTC of Manila,

From the affidavit dated 7 January 2000 of SPO4 Nedita Balagbis, in

At the hearing conducted by Judge Lanzanas, SPO4 Nedita Balagbis and

In People v. Tee,[54] this Court held that:

It is presumed that a judicial function has been regularly performed, absent a

We cannot find any irregularity or abuse of discretion on the part of

SMITH KLINE BECKMAN CORPORATION, petitioner, vs. THE

Smith Kline Beckman Corporation (petitioner), a corporation existing by

invention was issued to petitioner for a term of seventeen (17) years.

consisted of a new compound named methyl 5 propylthio-2-benzimidazole

Tryco Pharma Corporation (private respondent) is a domestic corporation

Petitioner sued private respondent for infringement of patent and unfair

Article 189, paragraph 1 of the Revised Penal Code and Section 29 of

On motion of petitioner, Branch 125 of the Caloocan RTC issued a

preliminary injunction was subsequently issued. [7]

Private respondent lodged a Counterclaim against petitioner for such

WHEREFORE, in view of the foregoing, plaintiffs complaint should be, as it is

Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual

SO ORDERED. (Underscoring supplied)