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Republic Act No.

8293 June 6, 1997

AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND ESTABLISHING THE


INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR ITS POWERS AND FUNCTIONS, AND
FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress


assembled::

PART I
THE INTELLECTUAL PROPERTY OFFICE

Section 1. Title. - This Act shall be known as the "Intellectual Property Code of the Philippines."

Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual and
industrial property system is vital to the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures market access for our products. It
shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens
to their intellectual property and creations, particularly when beneficial to the people, for such
periods as provided in this Act.

The use of intellectual property bears a social function. To this end, the State shall promote the
diffusion of knowledge and information for the promotion of national development and progress and
the common good.

It is also the policy of the State to streamline administrative procedures of registering patents,
trademarks and copyright, to liberalize the registration on the transfer of technology, and to enhance
the enforcement of intellectual property rights in the Philippines. (n)

G.R. No. 114508 November 19, 1999


PRIBHDAS J. MIRPURI, petitioner,
vs.
COURT OF APPEALS, DIRECTOR OF PATENTS and the BARBIZON CORPORATION, respondents.

PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which the Philippines bound itself to honor
and enforce in this country. As to whether or not the treaty affords protection to a foreign corporation against a Philippine applicant
for the registration of a similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J. Mirpuri, filed an application with the
Bureau of Patents for the registration of the trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar alleged
that she had been manufacturing and selling these products under the firm name "L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business under the laws of New York, U.S.A., opposed
the application. It claimed that:
The mark BARBIZON of respondent-applicant is confusingly similar to the trademark BARBIZON which opposer
owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its business reputation and
goodwill will suffer great and irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON which resembles the trademark used and
owned by opposer, constitutes an unlawful appropriation of a mark previously used in the Philippines and not
abandoned and therefore a statutory violation of Section 4 (d) of Republic Act No. 166, as amended. 1
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the pleadings, the parties submitted the
case for decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and giving due course to Escobar's
application, thus:
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly, Application Serial No. 19010
for the registration of the trademark BARBIZON, of respondent Lolita R. Escobar, is given due course.
IT IS SO ORDERED. 2
This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate of registration for the
trademark "Barbizon." The trademark was "for use in "brassieres and lady's underwear garments like panties." 3

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Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J. Mirpuri who, under his firm name then,
the "Bonito Enterprises," was the sole and exclusive distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the trademark required under Section 12 of
Republic Act (R.A.) No. 166, the Philippine Trademark Law. Due to this failure, the Bureau of Patents cancelled Escobar's certificate
of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed his own application for registration of
Escobar's trademark. Escobar later assigned her application to herein petitioner and this application was opposed by private
respondent. The case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June 1933 and has then used it
on various kinds of wearing apparel. On August 14, 1934, Opposer obtained from the United States Patent
Office a more recent registration of the said mark under Certificate of Registration No. 316,161. On March 1,
1949, Opposer obtained from the United States Patent Office a more recent registration for the said trademark
under Certificate of Registration No. 507,214, a copy of which is herewith attached as Annex "A." Said
Certificate of Registration covers the following goods wearing apparel: robes, pajamas, lingerie, nightgowns
and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and Bee design and used the
said mark in various kinds of wearing apparel. On March 15, 1977, Opposer secured from the United States
Patent Office a registration of the said mark under Certificate of Registration No. 1,061,277, a copy of which is
herein enclosed as Annex "B." The said Certificate of Registration covers the following goods: robes, pajamas,
lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a Representation of a
Woman and thereafter used the said trademark on various kinds of wearing apparel. Opposer obtained from the
United States Patent Office registration of the said mark on April 5, 1983 under Certificate of Registration No.
1,233,666 for the following goods: wearing apparel: robes, pajamas, nightgowns and lingerie. A copy of the said
certificate of registration is herewith enclosed as Annex "C."
(d) All the above registrations are subsisting and in force and Opposer has not abandoned the use of the said
trademarks. In fact, Opposer, through a wholly-owned Philippine subsidiary, the Philippine Lingerie Corporation,
has been manufacturing the goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-applicant's misappropriation of
Opposer's BARBIZON trademark, Philippine Lingerie Corporation is prevented from selling its goods in the local
market, to the damage and prejudice of Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been used in many countries, including the
Philippines, for at least 40 years and has enjoyed international reputation and good will for their quality. To
protect its registrations in countries where the goods covered by the registrations are being sold, Opposer has
procured the registration of the trademark BARBIZON in the following countries: Australia, Austria, Abu Dhabi,
Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia, Denmark, Ecuador, France, West Germany,
Greece, Guatemala, Hongkong, Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New
Zealand, Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and Iran, among
others;
(f) To enhance its international reputation for quality goods and to further promote goodwill over its name, marks
and products, Opposer has extensively advertised its products, trademarks and name in various publications
which are circulated in the United States and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one Lolita R. Escobar under
Registration No. 21920, issued on September 11, 1974, in violation of Article 189 (3) of the Revised Penal Code
and Section 4 (d) of the Trademark Law. Herein respondent applicant acquired by assignment the "rights" to the
said mark previously registered by Lolita Escobar, hence respondent-applicant's title is vitiated by the same
fraud and criminal act. Besides, Certificate of Registration No. 21920 has been cancelled for failure of either
Lolita Escobar or herein respondent-applicant, to seasonably file the statutory affidavit of use. By applying for a
re-registration of the mark BARBIZON subject of this opposition, respondent-applicant seeks to perpetuate the
fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON and Representation of a
Woman trademarks qualify as well-known trademarks entitled to protection under Article 6bis of the Convention
of Paris for the Protection of Industrial Property and further amplified by the Memorandum of the Minister of
Trade to the Honorable Director of Patents dated October 25, 1983 [sic], 4 Executive Order No. 913 dated
October 7, 1963 and the Memorandum of the Minister of Trade and Industry to the Honorable Director of
Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's BARBIZON trademark and
constitutes the dominant part of Opposer's two other marks namely, BARBIZON and Bee design and
BARBIZON and a Representation of a Woman. The continued use by respondent-applicant of Opposer's
trademark BARBIZON on goods belonging to Class 25 constitutes a clear case of commercial and criminal
piracy and if allowed registration will violate not only the Trademark Law but also Article 189 of the Revised
Penal Code and the commitment of the Philippines to an international treaty. 5
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon International." Petitioner registered the
name with the Department of Trade and Industry (DTI) for which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for cancellation of petitioner's business
name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of registration, and declared private
respondent the owner and prior user of the business name "Barbizon International." Thus:
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WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner and prior user of the
business name "BARBIZON INTERNATIONAL" under Certificate of Registration No. 87-09000 dated March 10,
1987 and issued in the name of respondent, is [sic] hereby ordered revoked and cancelled. . . . . 6
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of Patents. On June 18, 1992, the Director
rendered a decision declaring private respondent's opposition barred by res judicata and giving due course to petitioner's application
for registration, to wit:
WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby DECLARED BARRED by res
judicata and is hereby DISMISSED. Accordingly, Application Serial No. 45011 for trademark BARBIZON filed by
Pribhdas J. Mirpuri is GIVEN DUE COURSE.
SO ORDERED. 7
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of
Appeals reversed the Director of Patents finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and ordered that the
case be remanded to the Bureau of Patents for further proceedings, viz:
WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director of Patents in Inter Partes
Case No. 2049 is hereby SET ASIDE; and the case is hereby remanded to the Bureau of Patents for further
proceedings, in accordance with this pronouncement. No costs. 8
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 686
RENDERED ON JUNE 18, 1974, ANNEX C HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE
CASE BEFORE THE DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE PRINCIPLE OFRES
JUDICATA IN DISMISSING PRIVATE RESPONDENT BARBIZON'S OPPOSITION TO PETITIONER'S
APPLICATION FOR REGISTRATION FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO
CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A "JUDGMENT ON THE MERITS" REQUIRED A "HEARING
WHERE BOTH PARTIES ARE SUPPOSED TO ADDUCE EVIDENCE" AND WHETHER THE JOINT
SUBMISSION OF THE PARTIES TO A CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS
WITHOUT PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN THE MEANING OF
"JUDGMENT ON THE MERITS" AS ONE OF THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY CANCELLING
PETITIONER'S FIRM NAME "BARBIZON INTERNATIONAL" AND WHICH DECISION IS STILL PENDING
RECONSIDERATION NEVER OFFERED IN EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF
THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC TRADE) BUT ON THE
BASIS OF THE PARIS CONVENTION AND THE TRADEMARK LAW (R.A. 166) WHICH IS WITHIN THE
ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DIRECTOR OF PATENTS. 10
Before ruling on the issues of the case, there is need for a brief background on the function and historical development of
trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others. 11 This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of the
Philippines, which defines a "trademark" as "any visible sign capable of distinguishing goods." 12 In Philippine jurisprudence, the
function of a trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has
been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and
sale of an inferior and different article as his product. 13
Modern authorities on trademark law view trademarks as performing three distinct functions: (1) they indicate origin or ownership of
the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize. 14
Symbols have been used to identify the ownership or origin of articles for several centuries. 15 As early as 5,000 B.C., markings on
pottery have been found by archaeologists. Cave drawings in southwestern Europe show bison with symbols on their
flanks. 16 Archaeological discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious
stones, glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These marks were affixed by the
creator or maker of the article, or by public authorities as indicators for the payment of tax, for disclosing state monopoly, or devices
for the settlement of accounts between an entrepreneur and his workmen. 17
In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's marks,
tanner's marks, watermarks on paper, etc. 18 Every guild had its own mark and every master belonging to it had a special mark of his
own. The marks were not trademarks but police marks compulsorily imposed by the sovereign to let the public know that the goods
were not "foreign" goods smuggled into an area where the guild had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan. 19 For a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired
from many sources and the marks enabled them to identify and reclaim their goods upon recovery after shipwreck or piracy. 20
With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to create or continue
monopoly but to give the customer an index or guarantee of quality. 21 It was in the late 18th century when the industrial revolution
gave rise to mass production and distribution of consumer goods that the mark became an important instrumentality of trade and
commerce. 22 By this time, trademarks did not merely identify the goods; they also indicated the goods to be of satisfactory quality,
and thereby stimulated further purchases by the consuming public. 23 Eventually, they came to symbolize the goodwill and business
reputation of the owner of the product and became a property right protected by law. 24 The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his goods as another's, from getting another's business or
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injuring his reputation by unfair means, and, from defrauding the public." 25 Subsequently, England and the United States enacted
national legislation on trademarks as part of the law regulating unfair trade. 26 It became the right of the trademark owner to exclude
others from the use of his mark, or of a confusingly similar mark where confusion resulted in diversion of trade or financial injury. At
the same time, the trademark served as a warning against the imitation or faking of products to prevent the imposition of fraud upon
the public.27
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for the actual creation and
protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for
further satisfaction. In other words, the mark actually sells the goods. 28 The mark has become the "silent salesman," the conduit
through which direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways
never anticipated that it has become a more convincing selling point than even the quality of the article to which it refers. 29 In the
last half century, the unparalleled growth of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions where the owner does not actually
manufacture or sell the product itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to zones
where the marked article has been fixed in the public mind through advertising. 30 Whether in the print, broadcast or electronic
communications medium, particularly on the Internet, 31 advertising has paved the way for growth and expansion of the product by
creating and earning a reputation that crosses over borders, virtually turning the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming that "Barbizon" products have been sold
in the Philippines since 1970. Petitioner developed this market by working long hours and spending considerable sums of money on
advertisements and promotion of the trademark and its products. Now, almost thirty years later, private respondent, a foreign
corporation, "swaggers into the country like a conquering hero," usurps the trademark and invades petitioner's market. 32 Justice and
fairness dictate that private respondent be prevented from appropriating what is not its own. Legally, at the same time, private
respondent is barred from questioning petitioner's ownership of the trademark because of res judicata. 33
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by
judgment. 34 In res judicata, the judgment in the first action is considered conclusive as to every matter offered and received therein,
as to any other admissible matter which might have been offered for that purpose, and all other matters that could have been
adjudged therein. 35 Res judicata is an absolute bar to a subsequent action for the same cause; and its requisites are: (a) the former
judgment or order must be final; (b) the judgment or order must be one on the merits; (c) it must have been rendered by a court
having jurisdiction over the subject matter and parties; (d) there must be between the first and second actions, identity of parties, of
subject matter and of causes of action. 36
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with petitioner. Both claim that all the four
elements of res judicata have been complied with: that the judgment in IPC No. 686 was final and was rendered by the Director of
Patents who had jurisdiction over the subject matter and parties; that the judgment in IPC No. 686 was on the merits; and that the
lack of a hearing was immaterial because substantial issues were raised by the parties and passed upon by the Director of
Patents. 37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
Neither party took testimony nor adduced documentary evidence. They submitted the case for decision based
on the pleadings which, together with the pertinent records, have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer would probably be damaged
by the registration of the trademark BARBIZON sought by the respondent-applicant on the ground that it so
resembles the trademark BARBIZON allegedly used and owned by the former to be "likely to cause confusion,
mistake or to deceive purchasers."
On record, there can be no doubt that respondent-applicant's sought-to-be-registered trademark BARBIZON is
similar, in fact obviously identical, to opposer's alleged trademark BARBIZON, in spelling and pronunciation.
The only appreciable but very negligible difference lies in their respective appearances or manner of
presentation. Respondent-applicant's trademark is in bold letters (set against a black background), while that of
the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or commerce in the Philippines
prior to the date of application for the registration of the identical mark BARBIZON by the respondent-applicant.
However, the allegation of facts in opposer's verified notice of opposition is devoid of such material information.
In fact, a reading of the text of said verified opposition reveals an apparent, if not deliberate, omission of the
date (or year) when opposer's alleged trademark BARBIZON was first used in trade in the Philippines (see par.
No. 1, p. 2, Verified Notice of Opposition, Rec.). Thus, it cannot here and now be ascertained whether opposer's
alleged use of the trademark BARBIZON could be prior to the use of the identical mark by the herein
respondent-applicant, since the opposer attempted neither to substantiate its claim of use in local commerce
with any proof or evidence. Instead, the opposer submitted the case for decision based merely on the
pleadings.
On the other hand, respondent-applicant asserted in her amended application for registration that she first used
the trademark BARBIZON for brassiere (or "brasseire") and ladies underwear garments and panties as early as
March 3, 1970. Be that as it may, there being no testimony taken as to said date of first use, respondent-
applicant will be limited to the filing date, June 15, 1970, of her application as the date of first use (Rule 173,
Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable damage by the
registration of the respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly, Application Serial No.
19010, for the registration of the trademark BARBIZON of respondent Lolita R. Escobar, is given due course. 38
The decision in IPC No. 686 was a judgment on the merits and it was error for the Court of Appeals to rule that it was not. A
judgment is on the merits when it determines the rights and liabilities of the parties based on the disclosed facts, irrespective of
formal, technical or dilatory objections. 39 It is not necessary that a trial should have been conducted. If the court's judgment is
general, and not based on any technical defect or objection, and the parties had a full legal opportunity to be heard on their
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respective claims and contentions, it is on the merits although there was no actual hearing or arguments on the facts of the
case. 40 In the case at bar, the Director of Patents did not dismiss private respondent's opposition on a sheer technicality. Although
no hearing was conducted, both parties filed their respective pleadings and were given opportunity to present evidence. They,
however, waived their right to do so and submitted the case for decision based on their pleadings. The lack of evidence did not deter
the Director of Patents from ruling on the case, particularly on the issue of prior use, which goes into the very substance of the relief
sought by the parties. Since private respondent failed to prove prior use of its trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General allege that IPC No. 686 and IPC No. 2049
also comply with the fourth requisite of res judicata, i.e., they involve the same parties and the same subject matter, and have
identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same subject matter. Petitioner herein is the
assignee of Escobar while private respondent is the same American corporation in the first case. The subject matter of both cases is
the trademark "Barbizon." Private respondent counter-argues, however, that the two cases do not have identical causes of action.
New causes of action were allegedly introduced in IPC No. 2049, such as the prior use and registration of the trademark in the
United States and other countries worldwide, prior use in the Philippines, and the fraudulent registration of the mark in violation of
Article 189 of the Revised Penal Code. Private respondent also cited protection of the trademark under the Convention of Paris for
the Protection of Industrial Property, specifically Article 6bis thereof, and the implementation of Article 6bis by two Memoranda dated
November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to the Director of Patents, as well as Executive
Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, is a multilateral treaty
that seeks to 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. 41 The
Convention is essentially a compact among various countries which, as members of the Union, have pledged to accord to citizens of
the other member countries trademark and other rights comparable to those accorded their own citizens by their domestic laws for
an effective protection against unfair competition. 42 In short, foreign nationals are to be given the same treatment in each of the
member countries as that country makes available to its own citizens. 43 Nationals of the various member nations are thus assured
of a certain minimum of international protection of their industrial property. 44
The Convention was first signed by eleven countries in Paris on March 20, 1883. 45 It underwent several revisions at Brussels in
1900, at Washington in 1911, at The Hague in 1925, at London in 1934, at Lisbon in 1958, 46 and at Stockholm in 1967. Both the
Philippines and the United States of America, herein private respondent's country, are signatories to the Convention. The United
States acceded on May 30, 1887 while the Philippines, through its Senate, concurred on May 10, 1965. 47 The Philippines' adhesion
became effective on September 27, 1965, 48 and from this date, the country obligated itself to honor and enforce the provisions of
the Convention. 49
In the case at bar, private respondent anchors its cause of action on the first paragraph of Article 6bis of the Paris Convention which
reads as follows:
Article 6bis
(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, an imitation, or a 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 this 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 registered or
used in bad faith. 50
This Article governs protection of well-known trademarks. Under the first paragraph, each country of the Union bound
itself to undertake to refuse or cancel the registration, and prohibit the use of a trademark which is a reproduction,
imitation or translation, or any essential part of which trademark constitutes a reproduction, liable to create confusion, of a
mark considered by the competent authority of the country where protection is sought, to be well-known in the country as
being already the mark of a person entitled to the benefits of the Convention, and used for identical or similar goods.
Art. 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952. 51 It is a self-executing provision and does not
require legislative enactment to give it effect in the member country. 52 It may be applied directly by the tribunals and officials of each
member country by the mere publication or proclamation of the Convention, after its ratification according to the public law of each
state and the order for its execution. 53
The essential requirement under Article 6bis is that the trademark to be protected must be "well-known" in the country where
protection is sought. The power to determine whether a trademark is well-known lies in the "competent authority of the country of
registration or use." This competent authority would be either the registering authority if it has the power to decide this, or the courts
of the country in question if the issue comes before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the Ministry of Trade issued a Memorandum to the
Director of Patents. The Minister ordered the Director that:
Pursuant to the Paris Convention for the Protection of Industrial Property to which the Philippines is a signatory,
you are hereby directed to reject all pending applications for Philippine registration of signature and other world-
famous trademarks by applicants other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache,
Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph
Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.

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It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be asked
to surrender their certificates of registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance. 55
Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another Memorandum to the Director of Patents, viz:
Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-making and adjudicatory
powers of the Minister of Trade and Industry and provides inter alia, that "such rule-making and adjudicatory
powers should be revitalized in order that the Minister of Trade and Industry can . . . apply more swift and
effective solutions and remedies to old and new problems . . . such as infringement of internationally-known
tradenames and trademarks . . ." and in view of the decision of the Intermediate Appellate Court in the case of
LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. SP NO. 13359 (17) June 1983] 56 which
affirms the validity of the MEMORANDUM of then Minister Luis R. Villafuerte dated 20 November 1980
confirming our obligations under the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY to which the Republic of the Philippines is a signatory, you are hereby directed to implement
measures necessary to effect compliance with our obligations under said Convention in general, and, more
specifically, to honor our commitment under Section 6bis 57 thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or is a mark
already belonging to a person entitled to the benefits of the CONVENTION, this should be
established, pursuant to Philippine Patent Office procedures in inter partesand ex
parte cases, according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the
trademark being considered is already well-known in the Philippines
such that permission for its use by other than its original owner will
constitute a reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported
by proof that goods bearing the trademark are sold on an international
scale, advertisements, the establishment of factories, sales offices,
distributorships, and the like, in different countries, including volume or
other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property
office(s) of another country or countries, taking into consideration the
date of such registration;
(d) that the trademark has long been established and obtained goodwill
and international consumer recognition as belonging to one owner or
source;
(e) that the trademark actually belongs to a party claiming ownership
and has the right to registration under the provisions of the aforestated
PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service
marks, logos, signs, emblems, insignia or other similar devices used for identification and
recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the registration of,
trademarks which constitute a reproduction, translation or imitation of a trademark owned
by a person, natural or corporate, who is a citizen of a country signatory to the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases already or
hereafter filed against the registration of trademarks entitled to protection of Section 6bis of
said PARIS CONVENTION as outlined above, by remanding applications filed by one not
entitled to such protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other world-famous
trademarks filed by applicants other than their original owners or users shall be rejected
forthwith. Where such applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they shall be directed to
surrender their Certificates of Registration to the Philippine Patent Office for immediate
cancellation proceedings.
xxx xxx xxx. 58
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to reject all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants other than their original owners or users. The
Minister enumerated several internationally-known trademarks and ordered the Director of Patents to require Philippine registrants
of such marks to surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known trademarks but laid down guidelines
for the Director of Patents to observe in determining whether a trademark is entitled to protection as a well-known mark in the
Philippines under Article 6bis of the Paris Convention. This was to be established through Philippine Patent Office procedures
in inter partes and ex parte cases pursuant to the criteria enumerated therein. The Philippine Patent Office was ordered to refuse
applications for, or cancel the registration of, trademarks which constitute a reproduction, translation or imitation of a trademark
owned by a person who is a citizen of a member of the Union. All pending applications for registration of world-famous trademarks
by persons other than their original owners were to be rejected forthwith. The Ongpin Memorandum was issued pursuant to
Executive Order No. 913 dated October 7, 1983 of then President Marcos which strengthened the rule-making and adjudicatory

6
powers of the Minister of Trade and Industry for the effective protection of consumers and the application of swift solutions to
problems in trade and industry. 59
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in the 1984 landmark case ofLa Chemise
Lacoste, S.A. v. Fernandez. 60 This court ruled therein that under the provisions of Article 6bis of the Paris Convention, the Minister
of Trade and Industry was the "competent authority" to determine whether a trademark is well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of the Paris Convention in 1965. In the
case at bar, the first inter partes case, IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but five (5) years after the
effectivity of the Paris Convention. Article 6bis was already in effect five years before the first case was instituted. Private
respondent, however, did not cite the protection of Article 6bis, neither did it mention the Paris Convention at all. It was only in 1981
when IPC No. 2049 was instituted that the Paris Convention and the Villafuerte Memorandum, and, during the pendency of the
case, the 1983 Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the Convention and the two Memoranda is
barred by res judicata has already been answered in Wolverine Worldwide, Inc. v. Court of
Appeals. 62 In this case, petitioner Wolverine, a foreign corporation, filed with the Philippine Patent Office a petition for cancellation of
the registration certificate of private respondent, a Filipino citizen, for the trademark "Hush Puppies" and "Dog Device." Petitioner
alleged that it was the registrant of the internationally-known trademark in the United States and other countries, and cited protection
under the Paris Convention and the Ongpin Memorandum. The petition was dismissed by the Patent Office on the ground of res
judicata. It was found that in 1973 petitioner's predecessor-in-interest filed two petitions for cancellation of the same trademark
against respondent's predecessor-in-interest. The Patent Office dismissed the petitions, ordered the cancellation of registration of
petitioner's trademark, and gave due course to respondent's application for registration. This decision was sustained by the Court of
Appeals, which decision was not elevated to us and became final and
executory. 63
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the Trademark Law, its subsequent petition was
based on a new cause of action, i.e., the Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous
decision. We held that the said Memorandum and E.O. did not grant a new cause of action because it did "not amend the
Trademark Law," . . . "nor did it indicate a new policy with respect to the registration in the Philippines of world-famous
trademarks." 64 This conclusion was based on the finding that Wolverine's two previous petitions and subsequent petition dealt with
the same issue of ownership of the trademark. 65 In other words, since the first and second cases involved the same issue of
ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC No. 686. Private respondent's
opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private respondent's business
reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark previously used in the
Philippines which act is penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products such as robes, pajamas,
lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent Office in 1934 and 1949; and
that variations of the same trademark, i.e., "BARBIZON" with Bee design and "BARBIZON" with the
representation of a woman were also registered with the U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many countries all over the world for over forty
years. "Barbizon" products have been advertised in international publications and the marks registered in 36
countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on fraud; and this fraudulent
registration was cancelled in 1979, stripping Escobar of whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark under Article 6bis of the Paris
Convention, Executive Order No. 913, and the two Memoranda dated November 20, 1980 and October 25,
1983 of the Minister of Trade and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same class of goods as the latter's
amounts to a violation of the Trademark Law and Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the trademark in the United
States and other countries, and the international recognition and reputation of the trademark established by extensive use
and advertisement of private respondent's products for over forty years here and abroad. These are different from the
issues of confusing similarity and damage in IPC No. 686. The issue of prior use may have been raised in IPC No. 686
but this claim was limited to prior use in the Philippines only. Prior use in IPC No. 2049 stems from private respondent's
claim as originator of the word and symbol "Barbizon," 66 as the first and registered user of the mark attached to its
products which have been sold and advertised worldwide for a considerable number of years prior to petitioner's first
application for registration of her trademark in the Philippines. Indeed, these are substantial allegations that raised new
issues and necessarily gave private respondent a new cause of action. Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute separate or distinct causes of action and
were not put in issue in the former action. 67
Respondent corporation also introduced in the second case a fact that did not exist at the time the first case was filed and
terminated. The cancellation of petitioner's certificate of registration for failure to file the affidavit of use arose only after IPC No. 686.
It did not and could not have occurred in the first case, and this gave respondent another cause to oppose the second
application. Res judicata extends only to facts and conditions as they existed at the time judgment was rendered and to the legal
rights and relations of the parties fixed by the facts so determined. 68 When new facts or conditions intervene before the second suit,
furnishing a new basis for the claims and defenses of the parties, the issues are no longer the same, and the former judgment
cannot be pleaded as a bar to the subsequent action. 69
7
It is also noted that the oppositions in the first and second cases are based on different laws. The opposition in IPC No. 686 was
based on specific provisions of the Trademark Law, i.e., Section 4 (d) 70 on confusing similarity of trademarks and Section 8 71 on the
requisite damage to file an opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris Convention,
particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister of Trade and Industry. This opposition also
invoked Article 189 of the Revised Penal Code which is a statute totally different from the Trademark Law. 72 Causes of action which
are distinct and independent from each other, although arising out of the same contract, transaction, or state of facts, may be sued
on separately, recovery on one being no bar to subsequent actions on others. 73 The mere fact that the same relief is sought in the
subsequent action will not render the judgment in the prior action operative as res judicata, such as where the two actions are based
on different statutes. 74 Res judicata therefore does not apply to the instant case and respondent Court of Appeals did not err in so
ruling.
Intellectual and industrial property rights cases are not simple property cases. Trademarks deal with the psychological function of
symbols and the effect of these symbols on the public at large. 75 Trademarks play a significant role in communication, commerce
and trade, and serve valuable and interrelated business functions, both nationally and internationally. For this reason, all
agreements concerning industrial property, like those on trademarks and tradenames, are intimately connected with economic
development. 76 Industrial property encourages investments in new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of technology and industrialization, and thereby bring about social and
economic progress. 77 These advantages have been acknowledged by the Philippine government itself. The Intellectual Property
Code of the Philippines declares that "an effective intellectual and industrial property system is vital to the development of domestic
and creative activity, facilitates transfer of technology, it attracts foreign investments, and ensures market access for our
products." 78 The Intellectual Property Code took effect on January 1, 1998 and by its express provision, 79 repealed the Trademark
Law, 80 the Patent Law, 81 Articles 188 and 189 of the Revised Penal Code, the Decree on Intellectual Property, 82 and the Decree on
Compulsory Reprinting of Foreign Textbooks. 83 The Code was enacted to strengthen the intellectual and industrial property system
in the Philippines as mandated by the country's accession to the Agreement Establishing the World Trade Organization (WTO). 84
The WTO is a common institutional framework for the conduct of trade relations among its members in matters related to the
multilateral and plurilateral trade agreements annexed to the WTO Agreement. 85 The WTO framework ensures a "single
undertaking approach" to the administration and operation of all agreements and arrangements attached to the WTO Agreement.
Among those annexed is the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPs. 86 Members to this
Agreement "desire to reduce distortions and impediments to international trade, taking into account the need to promote effective
and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property
rights do not themselves become barriers to legitimate trade." To fulfill these objectives, the members have agreed to adhere to
minimum standards of protection set by several Conventions.87 These Conventions are: the Berne Convention for the Protection of
Literary and Artistic Works (1971), the Rome Convention or the International Convention for the Protection of Performers, Producers
of Phonograms and Broadcasting Organisations, the Treaty on Intellectual Property in Respect of Integrated Circuits, and the Paris
Convention (1967), as revised in Stockholm on July 14, 1967. 88
A major proportion of international trade depends on the protection of intellectual property rights. 89 Since the late 1970's, the
unauthorized counterfeiting of industrial property and trademarked products has had a considerable adverse impact on domestic
and international trade revenues. 90 The TRIPs Agreement seeks to grant adequate protection of intellectual property rights by
creating a favorable economic environment to encourage the inflow of foreign investments, and strengthening the multi-lateral
trading system to bring about economic, cultural and technological independence. 91
The Philippines and the United States of America have acceded to the WTO Agreement. This Agreement has revolutionized
international business and economic relations among states, and has propelled the world towards trade liberalization and economic
globalization. 92 Protectionism and isolationism belong to the past. Trade is no longer confined to a bilateral system. There is now "a
new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading
system." 93 Conformably, the State must reaffirm its commitment to the global community and take part in evolving a new
international economic order at the dawn of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are
affirmed.
SO ORDERED.
Facts:
Lolita Escobar applied for the registration of the trademark Barbizon for her products such as brassieres and ladies
undergarments. Respondent Barbizon Corporation, an American corporation, opposed alleging that petitioners
mark is confusingly similar to its own trademark Barbizon. Escobars application was given due course and her
trademark was registered. Later, Escobar assigned all her rights to petitioner Mirpuri who failed to file an Affidavit of
Use resulting in the cancellation of the trademark. Petitioner then applied for registration of the trademark to which
respondent Barbizon again opposed, now invoking the protection under Article 6bis of the Paris Convention. The
Director of Patents declaring respondents opposition was already barred, petitioners application was given due
course. CA reversed the judgment.
Issue:
Whether or not respondent may invoke the protection under Article 6bis of the Paris Convention.
Ruling: YES.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, is a
multilateral treaty that seeks to 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. The Convention is essentially a compact among various countries which, as
members of the Union, have pledged to accord to citizens of the other member countries trademark and other
rights comparable to those accorded their own citizens by their domestic laws for an effective protection against
unfair competition. Art. 6bis is a self-executing provision and does not require legislative enactment to give it effect
in the member country. It may be applied directly by the tribunals and officials of each member country by the

8
mere publication or proclamation of the Convention, after its ratification according to the public law of each state
and the order for its execution.
The Philippines and the United States of America have acceded to the WTO Agreement. Conformably, the State
must reaffirm its commitment to the global community and take part in evolving a new international economic
order at the dawn of the new millennium.

PRIBHDAS J. MIRPURI vs. CA, DIRECTOR OF PATENTS and the BARBIZON CORPORATION

FACTS

Lolita Escobar, the predecessor-in-interest of petitioner Mirpuri, filed an application for the registration of the
trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar alleged that she had been
manufacturing and selling these products under the firm name "L & BM Commercial" since 1970.

Private respondent Barbizon Corporation, a US corporation opposed the application.

Director of Patents rendered judgment dismissing the opposition and giving due course to Escobar's application.

Escobar later assigned all her rights and interest over the trademark to petitioner Mirpuri who, under his firm name
then, the "Bonito Enterprises," was the sole and exclusive distributor of Escobar's "Barbizon" products.

In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the trademark required
under Section 12 of R.A. 166. Due to this failure, the Bureau of Patents cancelled Escobar's certificate of
registration.

Escobar reapplied for registration of the cancelled trademark. Mirpuri filed his own application for registration of
Escobar's trademark. Escobar later assigned her application to herein petitioner and this application was opposed
by private respondent.

Petitioner raised the defense of res judicata.

Escobar assigned to petitioner the use of the business name "Barbizon International." Petitioner registered the
name with the Department of Trade and Industry (DTI) for which a certificate of registration was issued in 1987.

Private respondent filed before the Office of Legal Affairs of the DTI a petition for cancellation of petitioner's
business name. DTI, Office of Legal Affairs, cancelled petitioner's certificate of registration, and declared private
respondent the owner and prior user of the business name "Barbizon International."

Director rendered a decision declaring private respondent's opposition barred by res judicata and giving due course
to petitioner's application for registration.

CA reversed the Directors decision that case was barred and ordered that the case be remanded to the Bureau of
Patents for further proceedings.

ISSUES

Whether or not respondent is barred by filing this case by res judicata

Whether or not petitioner is liable for trademark infringement

DECISION

The Paris Convention, is a multilateral treaty that seeks to 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. It is essentially a compact among various
9
countries which, as members of the Union, have pledged to accord to citizens of the other member countries
trademark and other rights comparable to those accorded their own citizens by their domestic laws for an effective
protection against unfair competition. Both the Philippines and the United States of America, are signatories to the
Convention.

Private respondent anchors its cause of action on the first paragraph of Article 6bis of the Paris Convention, said
Article governing protection of well-known trademarks.

Art. 6bis is a self-executing provision and does not require legislative enactment to give it effect in the member
country. It may be applied directly by the tribunals and officials of each member country by the mere publication or
proclamation of the Convention, after its ratification according to the public law of each state and the order for its
execution.

The essential requirement under Article 6bis is that the trademark to be protected must be "well-known" in the
country where protection is sought. The power to determine whether a trademark is well-known lies in the
"competent authority of the country of registration or use." This competent authority would be either the
registering authority if it has the power to decide this, or the courts of the country in question if the issue comes
before a court.

Pursuant to Article 6bis, then Minister Villafuerte of the Ministry of Trade issued a Memorandum instructing Director
of Patents to reject all pending applications for Philippine registration of signature and other world-famous
trademarks by applicants other than their original owners or users, enumerating several internationally-known
trademarks and ordered the Director of Patents to require Philippine registrants of such marks to surrender their
certificates of registration.

After, Minister Ongpin issued Memorandum which did not enumerate well-known trademarks but laid down
guidelines for the Director of Patents to observe in determining whether a trademark is entitled to protection as a
well-known mark in the Philippines under Article 6bis of the Paris Convention. All pending applications for
registration of world-famous trademarks by persons other than their original owners were to be rejected forthwith.

The Supreme Court in the 1984 landmark case of La Chemise Lacoste, S.A. v. Fernandez ruled therein that under
the provisions of Article 6bis of the Paris Convention, the Minister of Trade and Industry was the "competent
authority" to determine whether a trademark is well-known in this country.

The Villafuerte Memorandum was issued in 1980. In the case at bar, the first inter partes case, was filed in 1970,
before the Villafuerte Memorandum but 5 years after the effectivity of the Paris Convention. Private respondent,
however, did not cite the protection of Article 6bis, neither did it mention the Paris Convention at all. It was only in
1981 when second case was instituted that the Paris Convention and the Villafuerte Memorandum, and, during the
pendency of the case, the 1983 Ongpin Memorandum were invoked by private respondent.

We held in Wolverine Worldwide, Inc. v. CA that the Memorandum and E.O. did not grant a new cause of action
because it did "not amend the Trademark Law," . . . "nor did it indicate a new policy with respect to the registration
in the Philippines of world-famous trademarks." In other words, since the first and second cases involved the same
issue of ownership, then the first case was a bar to the second case.

Here the second case raised the issue of ownership of the trademark, the first registration and use of the
trademark in the United States and other countries, and the international recognition and reputation of the
trademark established by extensive use and advertisement of private respondent's products for over forty years
here and abroad. These are different from the issues of confusing similarity and damage in first. The issue of prior
use may have been raised in first case but this claim was limited to prior use in the Philippines only. Prior use in
second stems from private respondent's claim as originator of the word and symbol "Barbizon," as the first and
registered user of the mark attached to its products which have been sold and advertised worldwide for a
considerable number of years prior to petitioner's first application for registration of her trademark in the
Philippines. Indeed, these are substantial allegations that raised new issues and necessarily gave private
respondent a new cause of action. Res judicata does not apply to rights, claims or demands, although growing out
of the same subject matter, which constitute separate or distinct causes of action and were not put in issue in the
former action.

Respondent corporation also introduced in the second case a fact that did not exist at the time the first case was
filed and terminated: the cancellation of petitioner's certificate of registration for failure to file the affidavit of use.
It did not and could not have occurred in the first case, and this gave respondent another cause to oppose the

10
second application. Res judicata extends only to facts and conditions as they existed at the time judgment was
rendered and to the legal rights and relations of the parties fixed by the facts so determined. When new facts or
conditions intervene before the second suit, furnishing a new basis for the claims and defenses of the parties, the
issues are no longer the same, and the former judgment cannot be pleaded as a bar to the subsequent action.

It is also noted that the oppositions in the first and second cases are based on different laws. The opposition in first
was based on specific provisions of the Trademark Law, i.e., Section 4 (d) on confusing similarity of trademarks and
Section 8 on the requisite damage to file an opposition to a petition for registration. The opposition in second
invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister
of Trade and Industry. This opposition also invoked Article 189 of the Revised Penal Code which is a statute totally
different from the Trademark Law. Causes of action which are distinct and independent from each other, although
arising out of the same contract, transaction, or state of facts, may be sued on separately, recovery on one being
no bar to subsequent actions on others. The mere fact that the same relief is sought in the subsequent action will
not render the judgment in the prior action operative as res judicata, such as where the two actions are based on
different statutes.

N VIEW WHEREOF, the petition is denied and the Decision and Resolution of the CA are affirmed.

G.R. No. 154342 July 14, 2004

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner,


vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.

DECISION

CORONA, J.:

In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La Campana Fabrica de Tabaco, Inc. (La
Campana) seek to annul, reverse and set aside: (a) the November 15, 2001 decision1 of the Court of Appeals (CA) in CA-G.R. CV
No. 65175 affirming the November 26, 1998 decision,2 as modified by the June 24, 1999 order,3 of the Regional Trial Court of Makati
City, Branch 57 (Makati RTC) in Civil Case No. 93-850, which held petitioners liable for, and permanently enjoined them from,
committing trademark infringement and unfair competition, and which ordered them to pay damages to respondents E. & J. Gallo
Winery (Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11, 2002 CA resolution denying their motion for
reconsideration4 and (c) the aforesaid Makati RTC decision itself.

I.

The Factual Background

Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and existing under the laws of
the State of California, United States of America (U.S.), where all its wineries are located. Gallo Winery produces different kinds of
wines and brandy products and sells them in many countries under different registered trademarks, including the GALLO and
ERNEST & JULIO GALLO wine trademarks.

Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and distributor in the Philippines
since 1991, selling these products in its own name and for its own account.5

Gallo Winerys GALLO wine trademark was registered in the principal register of the Philippine Patent Office (now Intellectual
Property Office) on November 16, 1971 under Certificate of Registration No. 17021 which was renewed on November 16, 1991 for
another 20 years.6 Gallo Winery also applied for registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990
under Application Serial No. 901011-00073599-PN but the records do not disclose if it was ever approved by the Director of
Patents.7

11
On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco Industries of the Philippines
(Tobacco Industries), are engaged in the cultivation, manufacture, distribution and sale of tobacco products for which they have
been using the GALLO cigarette trademark since 1973. 8

The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette mark on September 14, 1973
and GALLO filter cigarette mark on March 26, 1976, both for the manufacture and sale of its cigarette products. In 1976, Tobacco
Industries filed its manufacturers sworn statement as basis for BIRs collection of specific tax on GALLO cigarettes. 9

On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the GALLO cigarette
trademark in the principal register of the then Philippine Patent Office.10

In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July 16, 1985, applied for
trademark registration in the Philippine Patent Office.11 On July 17, 1985, the National Library issued Certificate of Copyright
Registration No. 5834 for La Campanas lifetime copyright claim over GALLO cigarette labels.12

Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO trademark.13 BIR
approved Mighty Corporations use of GALLO 100s cigarette brand, under licensing agreement with Tobacco Industries, on May 18,
1988, and GALLO SPECIAL MENTHOL 100s cigarette brand on April 3, 1989.14

Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco Industries, then by La
Campana and finally by Mighty Corporation.15

On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971, respondents claim that they first
introduced and sold the GALLO and ERNEST & JULIO GALLO wines in the Philippines circa1974 within the then U.S. military
facilities only. By 1979, they had expanded their Philippine market through authorized distributors and independent outlets. 16

Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992 when an Andresons
employee saw such cigarettes on display with GALLO wines in a Davao supermarket wine cellar section. 17 Forthwith, respondents
sent a demand letter to petitioners asking them to stop using the GALLO trademark, to no avail.

II.

The Legal Dispute

On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename infringement and unfair
competition, with a prayer for damages and preliminary injunction.

Respondents charged petitioners with violating Article 6bis of the Paris Convention for the Protection of Industrial Property (Paris
Convention)18 and RA 166 (Trademark Law),19 specifically, Sections 22 and 23 (for trademark infringement),20 29 and 3021 (for unfair
competition and false designation of origin) and 37 (for tradename infringement).22 They claimed that petitioners adopted the GALLO
trademark to ride on Gallo Winerys GALLO and ERNEST & JULIO GALLO trademarks established reputation and popularity, thus
causing confusion, deception and mistake on the part of the purchasing public who had always associated GALLO and ERNEST &
JULIO GALLO trademarks with Gallo Winerys wines. Respondents prayed for the issuance of a writ of preliminary injunction and ex
parte restraining order, plus P2 million as actual and compensatory damages, at least P500,000 as exemplary and moral damages,
and at least P500,000 as attorneys fees and litigation expenses.23

In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO cigarettes and Gallo Winerys wines
were totally unrelated products; Gallo Winerys GALLO trademark registration certificate covered wines only, not cigarettes; GALLO
cigarettes and GALLO wines were sold through different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters
and P3 for GALLO menthols, were low-cost items compared to Gallo Winerys high-priced luxury wines which cost between P98
to P242.50; the target market of Gallo Winerys wines was the middle or high-income bracket with at least P10,000 monthly income
while GALLO cigarette buyers were farmers, fishermen, laborers and other low-income workers; the dominant feature of the GALLO
cigarette mark was the rooster device with the manufacturers name clearly indicated as MIGHTY CORPORATION while, in the
case of Gallo Winerys wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just their surname GALLO;
by their inaction and conduct, respondents were guilty of laches and estoppel; and petitioners acted with honesty, justice and good
faith in the exercise of their right to manufacture and sell GALLO cigarettes.

In an order dated April 21, 1993,24 the Makati RTC denied, for lack of merit, respondents prayer for the issuance of a writ of
preliminary injunction,25 holding that respondents GALLO trademark registration certificate covered wines only, that respondents
wines and petitioners cigarettes were not related goods and respondents failed to prove material damage or great irreparable injury
as required by Section 5, Rule 58 of the Rules of Court.26

12
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents motion for reconsideration. The court reiterated that
respondents wines and petitioners cigarettes were not related goods since the likelihood of deception and confusion on the part of
the consuming public was very remote. The trial court emphasized that it could not rely on foreign rulings cited by respondents
"because the[se] cases were decided by foreign courts on the basis of unknown facts peculiar to each case or upon factual
surroundings which may exist only within their jurisdiction. Moreover, there [was] no showing that [these cases had] been tested or
found applicable in our jurisdiction."27

On February 20, 1995, the CA likewise dismissed respondents petition for review on certiorari, docketed as CA-G.R. No. 32626,
thereby affirming the Makati RTCs denial of the application for issuance of a writ of preliminary injunction against petitioners. 28

After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable for, and permanently enjoined them
from, committing trademark infringement and unfair competition with respect to the GALLO trademark:

WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the defendant (sic), to wit:

a. permanently restraining and enjoining defendants, their distributors, trade outlets, and all persons acting for
them or under their instructions, from (i) using E & Js registered trademark GALLO or any other reproduction,
counterfeit, copy or colorable imitation of said trademark, either singly or in conjunction with other words,
designs or emblems and other acts of similar nature, and (ii) committing other acts of unfair competition against
plaintiffs by manufacturing and selling their cigarettes in the domestic or export markets under the GALLO
trademark.

b. ordering defendants to pay plaintiffs

(i) actual and compensatory damages for the injury and prejudice and impairment of plaintiffs
business and goodwill as a result of the acts and conduct pleaded as basis for this suit, in an amount
equal to 10% of FOURTEEN MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS
(PHP14,235,000.00) from the filing of the complaint until fully paid;

(ii) exemplary damages in the amount of PHP100,000.00;

(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;

(iv) the cost of suit.

SO ORDERED."29

On June 24, 1999, the Makati RTC granted respondents motion for partial reconsideration and increased the award of actual and
compensatory damages to 10% of P199,290,000 or P19,929,000.30

On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for reconsideration.

III.

The Issues

Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws and jurisprudence when it held that:
[a] RA 8293 (Intellectual Property Code of the Philippines [IP Code]) was applicable in this case; [b] GALLO cigarettes and GALLO
wines were identical, similar or related goods for the reason alone that they were purportedly forms of vice; [c] both goods passed
through the same channels of trade and [d] petitioners were liable for trademark infringement, unfair competition and damages. 31

Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve pure questions of law, and hence,
must be dismissed outright.

IV.

Discussion

13
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS

As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of law"32 (that is, the doubt pertains to
the application and interpretation of law to a certain set of facts) and not "questions of fact" (where the doubt concerns the truth or
falsehood of alleged facts),33 otherwise, the petition will be denied. We are not a trier of facts and the Court of Appeals factual
findings are generally conclusive upon us.34

This case involves questions of fact which are directly related and intertwined with questions of law. The resolution of the factual
issues concerning the goods similarity, identity, relation, channels of trade, and acts of trademark infringement and unfair
competition is greatly dependent on the interpretation of applicable laws. The controversy here is not simply the identity or similarity
of both parties trademarks but whether or not infringement or unfair competition was committed, a conclusion based on statutory
interpretation. Furthermore, one or more of the following exceptional circumstances oblige us to review the evidence on record: 35

(1) the conclusion is grounded entirely on speculation, surmises, and conjectures;

(2) the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd and impossible;

(3) there is grave abuse of discretion;

(4) the judgment is based on a misapprehension of facts;

(5) the appellate court, in making its findings, went beyond the issues of the case, and the same are contrary to the
admissions of both the appellant and the appellee;

(6) the findings are without citation of specific evidence on which they are based;

(7) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents;
and

(8) the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted [by the
evidence] on record.36

In this light, after thoroughly examining the evidence on record, weighing, analyzing and balancing all factors to determine whether
trademark infringement and/or unfair competition has been committed, we conclude that both the Court of Appeals and the trial court
veered away from the law and well-settled jurisprudence.

Thus, we give due course to the petition.

THE TRADEMARK LAW AND THE PARIS


CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE

We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair competition committed during
the effectivity of the Paris Convention and the Trademark Law.

Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the aforesaid governing laws but
also under the IP Code which took effect only on January 1, 1998,37 or about five years after the filing of the complaint:

Defendants unauthorized use of the GALLO trademark constitutes trademark infringement pursuant to Section 22 of
Republic Act No. 166, Section 155 of the IP Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS
Agreement as it causes confusion, deception and mistake on the part of the purchasing public.38 (Emphasis and
underscoring supplied)

The CA apparently did not notice the error and affirmed the Makati RTC decision:

In the light of its finding that appellants use of the GALLO trademark on its cigarettes is likely to create confusion with the
GALLO trademark on wines previously registered and used in the Philippines by appellee E & J Gallo Winery, the trial

14
court thus did not err in holding that appellants acts not onlyviolated the provisions of the our trademark laws (R.A.
No. 166 and R.A. Nos. (sic) 8293) but also Article 6bis of the Paris Convention.39 (Emphasis and underscoring supplied)

We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.

It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has first been promulgated. A
law that is not yet effective cannot be considered as conclusively known by the populace. To make a law binding even before it
takes effect may lead to the arbitrary exercise of the legislative power.40 Nova constitutio futuris formam imponere debet non
praeteritis. A new state of the law ought to affect the future, not the past. Any doubt must generally be resolved against the
retroactive operation of laws, whether these are original enactments, amendments or repeals.41 There are only a few instances
when laws may be given retroactive effect,42 none of which is present in this case.

The IP Code, repealing the Trademark Law,43 was approved on June 6, 1997. Section 241 thereof expressly decreed that it was to
take effect only on January 1, 1998, without any provision for retroactive application. Thus, the Makati RTC and the CA should have
limited the consideration of the present case within the parameters of the Trademark Law and the Paris Convention, the laws in
force at the time of the filing of the complaint.

DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION

Although the laws on trademark infringement and unfair competition have a common conception at their root, that is, a person shall
not be permitted to misrepresent his goods or his business as the goods or business of another, the law on unfair competition is
broader and more inclusive than the law on trademark infringement. The latter is more limited but it recognizes a more exclusive
right derived from the trademark adoption and registration by the person whose goods or business is first associated with it. The law
on trademarks is thus a specialized subject distinct from the law on unfair competition, although the two subjects are entwined with
each other and are dealt with together in the Trademark Law (now, both are covered by the IP Code). Hence, even if one fails to
establish his exclusive property right to a trademark, he may still obtain relief on the ground of his competitors unfairness or fraud.
Conduct constitutes unfair competition if the effect is to pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end.44

In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark infringement from unfair competition:

(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of
one's goods as those of another.

(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is
essential.

(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary.

Pertinent Provisions on Trademark


Infringement under the Paris
Convention and the Trademark Law

Article 6bis of the Paris Convention,46 an international agreement binding on the Philippines and the United States (Gallo Winerys
country of domicile and origin) prohibits "the [registration] or use of a trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to
be well-known in that country as being already the mark of a person entitled to the benefits of the [Paris] Convention and used for
identical or similar goods. [This rule also applies] when the essential part of the mark constitutes a reproduction of any such well-
known mark or an imitation liable to create confusion therewith." There is no time limit for seeking the prohibition of the use of marks
used in bad faith.47

Thus, under Article 6bis of the Paris Convention, the following are the elements of trademark infringement:

(a) registration or use by another person of a trademark which is a reproduction, imitation or translationliable to create
confusion,

(b) of a mark considered by the competent authority of the country of registration or use 48 to be well-knownin that country
and is already the mark of a person entitled to the benefits of the Paris Convention, and

15
(c) such trademark is used for identical or similar goods.

On the other hand, Section 22 of the Trademark Law holds a person liable for infringement when, among others, he "uses without
the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in
connection with the sale, offering for sale, or advertising of any goods, business or services or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business or services." 49 Trademark registration and actual use are
material to the complaining partys cause of action.

Corollary to this, Section 20 of the Trademark Law50 considers the trademark registration certificate as prima facie evidence of the
validity of the registration, the registrants ownership and exclusive right to use the trademark in connection with the goods, business
or services as classified by the Director of Patents51 and as specified in the certificate, subject to the conditions and limitations
stated therein. Sections 2 and 2-A52 of the Trademark Law emphasize the importance of the trademarks actual use in commerce in
the Philippines prior to its registration. In the adjudication of trademark rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered and applied. 53

Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the elements of trademark
infringement:

(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine
Patent Office

(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers,

(c) the trademark is used for identical or similar goods, and

(d) such act is done without the consent of the trademark registrant or assignee.

In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic authorities), while the
Trademark Law protects all trademarks, whether well-known or not, provided that they have been registered and are in actual
commercial use in the Philippines. Following universal acquiescence and comity, in case of domestic legal disputes on any
conflicting provisions between the Paris Convention (which is an international agreement) and the Trademark law (which is a
municipal law) the latter will prevail.54

Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is limited only to goods identical
or similar to those in respect of which such trademark is registered and only when there is likelihood of confusion. Under both laws,
the time element in commencing infringement cases is material in ascertaining the registrants express or implied consent to
anothers use of its trademark or a colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat the
registrants otherwise valid cause of action.

Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of liability.

THE ACTUAL COMMERCIAL USE IN THE


PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.

By respondents own judicial admission, the GALLO wine trademark was registered in the Philippines in November 1971 but the
wine itself was first marketed and sold in the country only in 1974 and only within the former U.S. military facilities, and outside
thereof, only in 1979. To prove commercial use of the GALLO wine trademark in the Philippines, respondents presented sales
invoice no. 29991 dated July 9, 1981 addressed to Conrad Company Inc., Makati, Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global, Inc., Quezon City, Philippines. Both invoices were for the sale and shipment of
GALLO wines to the Philippines during that period.55 Nothing at all, however, was presented to evidence the alleged sales of GALLO
wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.

16
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and manufacturers sworn statement, it
appears that petitioners and its predecessor-in-interest, Tobacco Industries, have indeed been using and selling GALLO cigarettes
in the Philippines since 1973 or before July 9, 1981.56

In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we reiterated our rulings in Pagasa Industrial Corporation
vs. Court of Appeals,58 Converse Rubber Corporation vs. Universal Rubber Products, Inc., 59 Sterling Products International, Inc. vs.
Farbenfabriken Bayer Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate Court, 61 and Philip Morris vs. Court of
Appeals,62 giving utmost importance to theactual commercial use of a trademark in the Philippines prior to its registration,
notwithstanding the provisions of the Paris Convention:

xxx xxx xxx

In addition to the foregoing, we are constrained to agree with petitioner's contention that private respondent failed to
prove prior actual commercial use of its "LEE" trademark in the Philippines before filing its application for
registration with the BPTTT and hence, has not acquired ownership over said mark.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a
trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x

xxx xxx xxx

The provisions of the 1965 Paris Convention for the Protection of Industrial Property relied upon by private respondent
and Sec. 21-A of the Trademark Law (R.A. No. 166) were sufficiently expounded upon and qualified in the recent case
of Philip Morris, Inc. v. Court of Appeals (224 SCRA 576 [1993]):

xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement
of actual use in the Philippines must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the
fact that international law has been made part of the law of the land does not by any means imply the primacy
of international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal, not superior, to national legislative
enactments.

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack
of business activity in the Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2
and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using
the trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit
for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.

xxx xxx xxx

Undisputably, private respondent is the senior registrant, having obtained several registration certificates for its
various trademarks "LEE," "LEE RIDERS," and "LEESURES" in both the supplemental and principal registers, as early as
1969 to 1973. However, registration alone will not suffice. In Sterling Products International, Inc. v. Farbenfabriken
Bayer Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated in Kabushi Isetan vs. Intermediate Appellate Court (203
SCRA 583 [1991]) we declared:

xxx xxx xxx

A rule widely accepted and firmly entrenched because it has come down through the years is thatactual use in
commerce or business is a prerequisite in the acquisition of the right of ownership over a trademark.

xxx xxx xxx

17
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership and
exclusive use, is qualified. A registration certificate serves merely as prima facieevidence. It is not conclusive but
can and may be rebutted by controverting evidence.

xxx xxx xxx

In the case at bench, however, we reverse the findings of the Director of Patents and the Court of Appeals.After a
meticulous study of the records, we observe that the Director of Patents and the Court of Appeals relied mainly
on the registration certificates as proof of use by private respondent of the trademark "LEE" which, as we have
previously discussed are not sufficient. We cannot give credence to private respondent's claim that its "LEE"
mark first reached the Philippines in the 1960's through local sales by the Post Exchanges of the U.S. Military
Bases in the Philippines (Rollo, p. 177) based as it was solely on the self-serving statements of Mr. Edward Poste,
General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private
respondent. (Original Records, p. 52) Similarly, we give little weight to the numerous vouchers representing
various advertising expenses in the Philippines for "LEE" products. It is well to note that these expenses were
incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with private
respondent on 11 May 1981. (Exhibit E)

On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans and other
garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by appropriate sales invoices to
various stores and retailers. (Exhibit 1-e to 1-o)

Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526 [1982]) and Converse Rubber Corp. v.
Universal Rubber Products, Inc., (147 SCRA 154 [1987]), respectively, are instructive:

The Trademark Law is very clear. It requires actual commercial use of the mark prior to its registration. There is
no dispute that respondent corporation was the first registrant, yet it failed to fully substantiate its
claim that it used in trade or business in the Philippines the subject mark; it did not present proof to
invest it with exclusive, continuous adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices submitted by respondent which were dated way
back in 1957 show that the zippers sent to the Philippines were to be used as "samples" and "of no
commercial value." The evidence for respondent must be clear, definite and free from inconsistencies.
"Samples" are not for sale and therefore, the fact of exporting them to the Philippines cannot be considered to
be equivalent to the "use" contemplated by law. Respondent did not expect income from such "samples." There
were no receipts to establish sale, and no proof were presented to show that they were subsequently sold in the
Philippines.

xxx xxx xxx

For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own
mark and for failure to establish confusing similarity between said trademarks, private respondent's action for
infringement must necessarily fail. (Emphasis supplied.)

In view of the foregoing jurisprudence and respondents judicial admission that the actual commercial use of the GALLO wine
trademark was subsequent to its registration in 1971 and to Tobacco Industries commercial use of the GALLO cigarette trademark
in 1973, we rule that, on this account, respondents never enjoyed the exclusive right to use the GALLO wine trademark to the
prejudice of Tobacco Industries and its successors-in-interest, herein petitioners, either under the Trademark Law or the Paris
Convention.

Respondents GALLO trademark


registration is limited to wines only

We also note that the GALLO trademark registration certificates in the Philippines and in other countries expressly state that they
cover wines only, without any evidence or indication that registrant Gallo Winery expanded or intended to expand its business to
cigarettes.63

Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use the GALLO trademark should
be limited to wines, the only product indicated in its registration certificates. This strict statutory limitation on the exclusive right to
use trademarks was amply clarified in our ruling in Faberge, Inc. vs. Intermediate Appellate Court:64

Having thus reviewed the laws applicable to the case before Us, it is not difficult to discern from the foregoing statutory
enactments that private respondent may be permitted to register the trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement protestations of unfair dealings in marketing its own set of items which are limited
to: after-shave lotion, shaving cream, deodorant, talcum powder and toilet soap. Inasmuch as petitioner has not
18
ventured in the production of briefs, an item which is not listed in its certificate of registration, petitioner cannot
and should not be allowed to feign that private respondent had invaded petitioner's exclusive domain. To be sure,
it is significant that petitioner failed to annex in its Brief the so-called "eloquent proof that petitioner indeed intended to
expand its mark BRUT to other goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere application
by petitioner in this aspect does not suffice and may not vest an exclusive right in its favor that can ordinarily be protected
by the Trademark Law. In short, paraphrasing Section 20 of the Trademark Law as applied to the documentary
evidence adduced by petitioner, the certificate of registration issued by the Director of Patents can confer upon
petitioner the exclusive right to use its own symbol only to those goods specified in the certificate, subject to any
conditions and limitations stated therein. This basic point is perhaps the unwritten rationale of Justice Escolin
inPhilippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]), when he stressed the principle enunciated by the
United States Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L ed 317, 46 Sct. 160) that
one who has adopted and used a trademark on his goods does not prevent the adoption and use of the same
trademark by others for products which are of a different description. Verily, this Court had the occasion to observe
in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no serious objection was posed by
the petitioner therein since the applicant utilized the emblem "Tango" for no other product than hair pomade in which
petitioner does not deal.

This brings Us back to the incidental issue raised by petitioner which private respondent sought to belie as regards
petitioner's alleged expansion of its business. It may be recalled that petitioner claimed that it has a pending application
for registration of the emblem "BRUT 33" for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to impress upon Us
the Solomonic wisdom imparted by Justice JBL Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to the effect that
dissimilarity of goods will not preclude relief if the junior user's goods are not remote from any other product
which the first user would be likely to make or sell (vide, at page 1025). Commenting on the former provision of the
Trademark Law now embodied substantially under Section 4(d) of Republic Act No. 166, as amended, the erudite jurist
opined that the law in point "does not require that the articles of manufacture of the previous user and late user of the
mark should possess the same descriptive properties or should fall into the same categories as to bar the latter from
registering his mark in the principal register." (supra at page 1026).

Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to the goods
used by the first user as specified in the certificate of registration following the clear message conveyed by
Section 20.

How do We now reconcile the apparent conflict between Section 4(d) which was relied upon by Justice JBL
Reyes in the Sta. Ana case and Section 20? It would seem that Section 4(d) does not require that the goods
manufactured by the second user be related to the goods produced by the senior user while Section 20 limits the
exclusive right of the senior user only to those goods specified in the certificate of registration. But the rule has
been laid down that the clause which comes later shall be given paramount significance over an anterior proviso upon the
presumption that it expresses the latest and dominant purpose. (Graham Paper Co. vs. National Newspapers Asso. (Mo.
App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061;
cited by Martin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its symbol for the briefs it manufactures because
as aptly remarked by Justice Sanchez in Sterling Products International Inc. vs. Farbenfabriken Bayer (27 SCRA
1214 [1969]):

"Really, if the certificate of registration were to be deemed as including goods not specified therein,
then a situation may arise whereby an applicant may be tempted to register a trademark on any and all
goods which his mind may conceive even if he had never intended to use the trademark for the said
goods. We believe that such omnibus registration is not contemplated by our Trademark Law." (1226).

NO LIKELIHOOD OF CONFUSION, MISTAKE


OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS

A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or origin
of the goods or identity of the business as a consequence of using a certain mark. Likelihood of confusion is admittedly a relative
term, to be determined rigidly according to the particular (and sometimes peculiar) circumstances of each case. Thus, in trademark
cases, more than in other kinds of litigation, precedents must be studied in the light of each particular case. 65

There are two types of confusion in trademark infringement. The first is "confusion of goods" when an otherwise prudent purchaser
is induced to purchase one product in the belief that he is purchasing another, in which case defendants goods are then bought as
the plaintiffs and its poor quality reflects badly on the plaintiffs reputation. The other is "confusion of business" wherein the goods of
the parties are different but the defendants product can reasonably (though mistakenly) be assumed to originate from the plaintiff,
thus deceiving the public into believing that there is some connection between the plaintiff and defendant which, in fact, does not
exist.66

19
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the trademarks; [b] the similarity of
the goods to which the trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants express or implied
consent and other fair and equitable considerations.

Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products. But, as held in the
following cases, the use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement:

(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we ordered the approval of Acoje Minings application for registration
of the trademark LOTUS for its soy sauce even though Philippine Refining Company had prior registration and use of
such identical mark for its edible oil which, like soy sauce, also belonged to Class 47;

(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 68 we upheld the Patent Directors registration of the
same trademark CAMIA for Ng Sams ham under Class 47, despite Philippine Refining Companys prior trademark
registration and actual use of such mark on its lard, butter, cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;

(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong,69 we dismissed Hickoks petition to
cancel private respondents HICKOK trademark registration for its Marikina shoes as against petitioners earlier
registration of the same trademark for handkerchiefs, briefs, belts and wallets;

(d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute resolution, we dismissed the petition for review
for lack of merit and affirmed the Patent Offices registration of the trademark SHELL used in the cigarettes manufactured
by respondent Fortune Tobacco Corporation, notwithstanding Shell Companys opposition as the prior registrant of the
same trademark for its gasoline and other petroleum products;

(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed ESSOs complaint for trademark infringement
against United Cigarette Corporation and allowed the latter to use the trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum products, and

(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,72 we affirmed the rulings of the Patent
Office and the CA that NSR Rubber Corporation could use the trademark CANON for its sandals (Class 25) despite
Canon Kabushiki Kaishas prior registration and use of the same trademark for its paints, chemical products, toner and
dyestuff (Class 2).

Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation"73 which has been defined
as "such similarity in form, content, words, sound, meaning, special arrangement or general appearance of the trademark or
tradename in their overall presentation or in their essential and substantive and distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the genuine article."74

Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance: 75

(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals76 and other cases,77 and

(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Appeals78 and its preceding cases.79

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or
deception, and thus infringement. If the competing trademark contains the main, essential or dominant features of another, and
confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that
the infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause
confusion or mistake in the mind of the public or deceive purchasers.80

On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in resolving confusing similarity.
Comparison of words is not the only determining factor. The trademarks in their entirety as they appear in their respective labels or
hang tags must also be considered in relation to the goods to which they are attached. The discerning eye of the observer must
focus not only on the predominant words but also on the other features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other.81

In comparing the resemblance or colorable imitation of marks, various factors have been considered, such as the dominant color,
style, size, form, meaning of letters, words, designs and emblems used, the likelihood of deception of the mark or name's tendency
to confuse82 and the commercial impression likely to be conveyed by the trademarks if used in conjunction with the respective goods
of the parties.83

20
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette trademark is the device of a
large rooster facing left, outlined in black against a gold background. The roosters color is either green or red green for GALLO
menthols and red for GALLO filters. Directly below the large rooster device is the word GALLO. The rooster device is given
prominence in the GALLO cigarette packs in terms of size and location on the labels.84

The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all to the product but was
chosen merely as a trademark due to the fondness for fighting cocks of the son of petitioners president. Furthermore, petitioners
adopted GALLO, the Spanish word for rooster, as a cigarette trademark to appeal to one of their target markets,
the sabungeros (cockfight aficionados).85

Also, as admitted by respondents themselves,86 on the side of the GALLO cigarette packs are the words "MADE BY MIGHTY
CORPORATION," thus clearly informing the public as to the identity of the manufacturer of the cigarettes.

On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels are embellished with sketches
of buildings and trees, vineyards or a bunch of grapes while in a few, one or two small roosters facing right or facing each other
(atop the EJG crest, surrounded by leaves or ribbons), with additional designs in green, red and yellow colors, appear as minor
features thereof.87 Directly below or above these sketches is the entire printed name of the founder-owners, "ERNEST & JULIO
GALLO" or just their surname "GALLO,"88 which appears in different fonts, sizes, styles and labels, unlike
petitioners uniform casque-font bold-lettered GALLO mark.

Moreover, on the labels of Gallo Winerys wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO GALLO,
MODESTO, CALIFORNIA."89

The many different features like color schemes, art works and other markings of both products drown out the similarity between them the use
of the word GALLO a family surname for the Gallo Winerys wines and a Spanish word for rooster for petitioners cigarettes.

WINES AND CIGARETTES ARE NOT


IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS

Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise between non-
competing interests as well.90

Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6bis of the Paris Convention which proscribe
trademark infringement not only of goods specified in the certificate of registration but also of identical or similar goods, we have
also uniformly recognized and applied the modern concept of "related goods." 91 Simply stated, when goods are so related that the
public may be, or is actually, deceived and misled that they come from the same maker or manufacturer, trademark infringement
occurs.92

Non-competing goods may be those which, though they are not in actual competition, are so related to each other that it can
reasonably be assumed that they originate from one manufacturer, in which case, confusion of business can arise out of the use of
similar marks.93 They may also be those which, being entirely unrelated, cannot be assumed to have a common source; hence,
there is no confusion of business, even though similar marks are used.94 Thus, there is no trademark infringement if the public does
not expect the plaintiff to make or sell the same class of goods as those made or sold by the defendant. 95

In resolving whether goods are related,96 several factors come into play:

(a) the business (and its location) to which the goods belong

(b) the class of product to which the goods belong

97
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container

(d) the nature and cost of the articles98

(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or
quality

(f) the purpose of the goods99

(g) whether the article is bought for immediate consumption, 100 that is, day-to-day household items101
21
(h) the fields of manufacture102

(i) the conditions under which the article is usually purchased103 and

(j) the channels of trade through which the goods flow,104 how they are distributed, marketed, displayed and sold.105

The wisdom of this approach is its recognition that each trademark infringement case presents its own unique set of facts. No single
factor is preeminent, nor can the presence or absence of one determine, without analysis of the others, the outcome of an
infringement suit. Rather, the court is required to sift the evidence relevant to each of the criteria. This requires that the entire
panoply of elements constituting the relevant factual landscape be comprehensively examined.106 It is a weighing and balancing
process. With reference to this ultimate question, and from a balancing of the determinations reached on all of the factors, a
conclusion is reached whether the parties have a right to the relief sought. 107

A very important circumstance though is whether there exists a likelihood that an appreciable number of ordinarily prudent
purchasers will be misled, or simply confused, as to the source of the goods in question.108 The "purchaser" is not the "completely
unwary consumer" but is the "ordinarily intelligent buyer" considering the type of product involved. 109 He is "accustomed to buy, and
therefore to some extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the
deception of some persons in some measure acquainted with an established design and desirous of purchasing the commodity with
which that design has been associated. The test is not found in the deception, or the possibility of deception, of the person who
knows nothing about the design which has been counterfeited, and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase."110

Hence, in the adjudication of trademark infringement, we give due regard to the goods usual purchasers character, attitude, habits,
age, training and education. 111

Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark is not likely to cause confusion
or mistake, or to deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both as to the identity of the goods, their
source and origin, or identity of the business of petitioners and respondents.

Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the same class of goods.
Respondents GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark Cases
while petitioners GALLO cigarettes fall under Class 34.

We are mindful that product classification alone cannot serve as the decisive factor in the resolution of whether or not wines and
cigarettes are related goods. Emphasis should be on the similarity of the products involved and not on the arbitrary classification or
general description of their properties or characteristics. But the mere fact that one person has adopted and used a particular
trademark for his goods does not prevent the adoption and use of the same trademark by others on articles of a different
description. 112

Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are related forms of vice,
harmful when taken in excess, and used for pleasure and relaxation" and (2) "they are grouped or classified in the same section of
supermarkets and groceries."

We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines and cigarettes are related
products within the contemplation of the Trademark Law and the Paris Convention.

First, anything - not only wines and cigarettes can be used for pleasure and relaxation and can be harmful when taken in excess. Indeed, it
would be a grave abuse of discretion to treat wines and cigarettes as similar or related products likely to cause confusion just because they are
pleasure-giving, relaxing or potentially harmful. Such reasoning makes no sense.

Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products and the goods here involved,
wines and cigarettes, have nothing whatsoever in common with respect to their essential characteristics, quality, quantity, size,
including the nature of their packages, wrappers or containers.113

Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold in one store under the
same roof does not automatically mean that buyers are likely to be confused as to the goods respective sources, connections or
sponsorships. The fact that different products are available in the same store is an insufficient standard, in and of itself, to warrant a
finding of likelihood of confusion.114

In this regard, we adopted the Director of Patents finding in Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents:115

22
In his decision, the Director of Patents enumerated the factors that set respondents products apart from the goods of
petitioner. He opined and we quote:

"I have taken into account such factors as probable purchaser attitude and habits, marketing activities, retail
outlets, and commercial impression likely to be conveyed by the trademarks if used in conjunction with the
respective goods of the parties, I believe that ham on one hand, and lard, butter, oil, and soap on the other
are products that would not move in the same manner through the same channels of trade. They pertain
to unrelated fields of manufacture, might be distributed and marketed under dissimilar conditions, and
are displayed separately even though they frequently may be sold through the same retail food
establishments. Opposers products are ordinary day-to-day household items whereas ham is not necessarily
so. Thus, the goods of the parties are not of a character which purchasers would likely attribute to a common
origin.

The observations and conclusion of the Director of Patents are correct. The particular goods of the parties are so
unrelated that consumers, would not, in any probability mistake one as the source of origin of the product of the other.
(Emphasis supplied).

The same is true in the present case. Wines and cigarettes are non-competing and are totally unrelated products not likely to cause
confusion vis--vis the goods or the business of the petitioners and respondents.

Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked. There is a whale of a
difference between their descriptive properties, physical attributes or essential characteristics like form, composition, texture and
quality.

GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by middle-to-high-income
earners while GALLO cigarettes appeal only to simple folks like farmers, fishermen, laborers and other low-income
workers.116 Indeed, the big price difference of these two products is an important factor in proving that they are in fact unrelated and
that they travel in different channels of trade. There is a distinct price segmentation based on vastly different social classes of
purchasers.117

GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes are Philippine-made and
petitioners neither claim nor pass off their goods as imported or emanating from Gallo Winery. GALLO cigarettes are distributed,
marketed and sold through ambulant and sidewalk vendors, small localsari-sari stores and grocery stores in Philippine rural areas,
mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu.118 On the other hand, GALLO wines are imported, distributed and sold in
the Philippines through Gallo Winerys exclusive contracts with a domestic entity, which is currently Andresons. By respondents own
testimonial evidence, GALLO wines are sold in hotels, expensive bars and restaurants, and high-end grocery stores and
supermarkets, not through sari-sari stores or ambulant vendors.119

Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip Morris, Inc.120to support its finding
that GALLO wines and GALLO cigarettes are related goods. The courts a quo should have taken into consideration the subsequent
case of IDV North America, Inc. and R & A Bailey Co. Limited vs. S & M Brands, Inc.: 121

IDV correctly acknowledges, however, that there is no per se rule that the use of the same mark on alcohol and tobacco
products always will result in a likelihood of confusion. Nonetheless, IDV relies heavily on the decision in John Walker &
Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), affd,222 F. 2d 460 (5th Cir. 1955), wherein the
court enjoined the use of the mark "JOHNNIE WALKER" on cigars because the fame of the plaintiffs mark for scotch
whiskey and because the plaintiff advertised its scotch whiskey on, or in connection with tobacco products. The court,
in John Walker & Sons, placed great significance on the finding that the infringers use was a deliberate attempt
to capitalize on the senior marks fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip Morris, Inc., 297
F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendants use of the mark "BLACK LABEL"
for cigarettes because it was likely to cause confusion with the plaintiffs well-known mark "BLACK LABEL" for
beer.

xxx xxx xxx

Those decisions, however, must be considered in perspective of the principle that tobacco products and alcohol
products should be considered related only in cases involving special circumstances. Schenley Distillers, Inc. v.
General Cigar Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special circumstances has been
found to exist where there is a finding of unfair competition or where a famous or well-known mark is
involved and there is a demonstrated intent to capitalize on that mark. For example, in John Walker & Sons, the
court was persuaded to find a relationship between products, and hence a likelihood of confusion, because of the
plaintiffs long use and extensive advertising of its mark and placed great emphasis on the fact that the defendant used
the trademark Johnnie Walker with full knowledge of its fame and reputation and with the intention of taking advantage
thereof. John Walker & Sons, 124 F. Supp. At 256; see Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120
U.S.P.Q. 306, 307 (1959) (holding that the decision in John Walker & Sons was merely the law on the particular case
23
based upon its own peculiar facts); see also Alfred Dunhill, 350 F. Supp. At 1363 (defendants adoption of Dunhill mark
was not innocent). However, inSchenley, the court noted that the relation between tobacco and whiskey products is
significant where a widely known arbitrary mark has long been used for diversified products emanating from a single
source and a newcomer seeks to use the same mark on unrelated goods. Schenley, 427 F.2d. at 785. Significantly,
in Schenley, the court looked at the industry practice and the facts of the case in order to determine the nature and extent
of the relationship between the mark on the tobacco product and the mark on the alcohol product.

The record here establishes conclusively that IDV has never advertised BAILEYS liqueurs in conjunction with tobacco or
tobacco accessory products and that IDV has no intent to do so. And, unlike the defendant in Dunhill, S & M Brands does
not market bar accessories, or liqueur related products, with its cigarettes. The advertising and promotional materials
presented a trial in this action demonstrate a complete lack of affiliation between the tobacco and liqueur products bearing
the marks here at issue.

xxx xxx xxx

Of equal significance, it is undisputed that S & M Brands had no intent, by adopting the family nameBaileys as the mark
for its cigarettes, to capitalize upon the fame of the BAILEYS mark for liqueurs. See Schenley, 427 F. 2d at
785. Moreover, as will be discussed below, and as found in Mckesson & Robbins, the survey evidence refutes the
contention that cigarettes and alcoholic beverages are so intimately associated in the public mind that they
cannot under any circumstances be sold under the same mark without causing confusion. See Mckesson &
Robbins, 120 U.S.P.Q. at 308.

Taken as a whole, the evidence here demonstrates the absence of the special circumstances in which courts have found
a relationship between tobacco and alcohol products sufficient to tip the similarity of goods analysis in favor of the
protected mark and against the allegedly infringing mark. It is true that BAILEYS liqueur, the worlds best selling
liqueur and the second best selling in the United States, is a well-known product. That fact alone, however, is
insufficient to invoke the special circumstances connection here where so much other evidence and so many
other factors disprove a likelihood of confusion. The similarity of products analysis, therefore, augers against
finding that there is a likelihood of confusion. (Emphasis supplied).

In short, tobacco and alcohol products may be considered related only in cases involving special circumstanceswhich exist only if a
famous mark is involved and there is a demonstrated intent to capitalize on it. Both of these are absent in the present case.

THE GALLO WINE TRADEMARK IS NOT A


WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS

First, the records bear out that most of the trademark registrations took place in the late 1980s and the 1990s, that is, after Tobacco
Industries use of the GALLO cigarette trademark in 1973 and petitioners use of the same mark in 1984.

GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite element under both the
Trademark Law and the Paris Convention.

Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines. Respondents do not dispute the
documentary evidence that aside from Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks and
Technology Transfer also issued on September 4, 1992 Certificate of Registration No. 53356 under the Principal Register
approving Productos Alimenticios Gallo, S.As April 19, 1990 application for GALLO trademark registration and use for its "noodles,
prepared food or canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species and ice."122

Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,123 "GALLO" cannot be considered a "well-known" mark within the contemplation and protection of the Paris Convention
in this case since wines and cigarettes are not identical or similar goods:

We agree with public respondents that the controlling doctrine with respect to the applicability of Article 8 of the Paris
Convention is that established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As
pointed out by the BPTTT:

"Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no
automatic protection afforded an entity whose tradename is alleged to have been infringed through the
use of that name as a trademark by a local entity.

24
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 (sic) 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 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, Petitioner's contention that its mark is well-known at the time the Respondent filed its
application for the same mark should fail." (Emphasis supplied.)

Consent of the Registrant and


Other air, Just and Equitable
Considerations

Each trademark infringement case presents a unique problem which must be answered by weighing the conflicting interests of the
litigants.124

Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade, that is, retail trade. If
respondents assertion is true, then both goods co-existed peacefully for a considerable period of time. It took respondents almost
20 years to know about the existence of GALLO cigarettes and sue petitioners for trademark infringement. Given, on one hand, the
long period of time that petitioners were engaged in the manufacture, marketing, distribution and sale of GALLO cigarettes and, on
the other, respondents delay in enforcing their rights (not to mention implied consent, acquiescence or negligence) we hold that
equity, justice and fairness require us to rule in favor of petitioners. The scales of conscience and reason tip far more readily in favor
of petitioners than respondents.

Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they intended to capitalize on
respondents goodwill in adopting the GALLO mark for their cigarettes which are totally unrelated to respondents GALLO wines.
Thus, we rule out trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE


FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary to good faith by which he
passes off the goods manufactured by him or in which he deals, or his business, or services for those of the one having established
such goodwill, or who commits any acts calculated to produce said result, is guilty of unfair competition. It includes the following
acts:

25
(a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that
such person is offering the services of another who has identified such services in the mind of the public;

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods, business or services of another.

The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off one mans
goods or business as that of another constitutes unfair competition. Actual or probable deception and confusion on the part of
customers by reason of defendants practices must always appear.125 On this score, we find that petitioners never attempted to pass
off their cigarettes as those of respondents. There is no evidence of bad faith or fraud imputable to petitioners in using their GALLO
cigarette mark.

All told, after applying all the tests provided by the governing laws as well as those recognized by jurisprudence, we conclude that
petitioners are not liable for trademark infringement, unfair competition or damages.

WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The questioned decision and resolution of
the Court of Appeals in CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, 1999 order of the Regional
Trial Court of Makati, Branch 57 in Civil Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint against
petitioners DISMISSED.

Costs against respondents.

SO ORDERED.

G.R. No. 154342 July 14, 2004

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner,


vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.

FACTS

Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and existing
under the laws of the State of California, United States of America (U.S.), where all its wineries are located. Gallo
Winery produces different kinds of wines and brandy products and sells them in many countries under different
registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine trademarks.

Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and distributor in the
Philippines since 1991, selling these products in its own name and for its own account.

Gallo Winerys GALLO wine trademark was registered in the principal register of the Philippine Patent Office (now
Intellectual Property Office) on November 16, 1971 under Certificate of Registration No. 17021 which was renewed on
November 16, 1991 for another 20 years. Gallo Winery also applied for registration of its ERNEST & JULIO GALLO
wine trademark on October 11, 1990 under Application Serial No. 901011-00073599-PN but the records do not
disclose if it was ever approved by the Director of Patents.

On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco Industries of
the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture, distribution and sale of tobacco
products for which they have been using the GALLO cigarette trademark since 1973.

The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette mark on September
14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for the manufacture and sale of its cigarette
26
products. In 1976, Tobacco Industries filed its manufacturers sworn statement as basis for BIRs collection of specific
tax on GALLO cigarettes.

On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the GALLO
cigarette trademark in the principal register of the then Philippine Patent Office.

In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July 16, 1985,
applied for trademark registration in the Philippine Patent Office. On July 17, 1985, the National Library issued
Certificate of Copyright Registration No. 5834 for La Campanas lifetime copyright claim over GALLO cigarette labels.

Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO
trademark. BIR approved Mighty Corporations use of GALLO 100s cigarette brand, under licensing agreement with
Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100s cigarette brand on April 3, 1989.

Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco Industries,
then by La Campana and finally by Mighty Corporation.

On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971, respondents claim
that they first introduced and sold the GALLO and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within
the then U.S. military facilities only. By 1979, they had expanded their Philippine market through authorized
distributors and independent outlets.

Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992 when an
Andresons employee saw such cigarettes on display with GALLO wines in a Davao supermarket wine cellar section.
Forthwith, respondents sent a demand letter to petitioners asking them to stop using the GALLO trademark, to no
avail.

On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename infringement and
unfair competition, with a prayer for damages and preliminary injunction.

Respondents charged petitioners with violating Article 6 of the Paris Convention for the Protection of Industrial
Property (Paris Convention) and RA 166 (Trademark Law), specifically, Sections 22 and 23 (for trademark infringement),
29 and 30 (for unfair competition and false designation of origin) and 37 (for tradename infringement). They claimed
that petitioners adopted the GALLO trademark to ride on Gallo Winerys GALLO and ERNEST & JULIO GALLO
trademarks established reputation and popularity, thus causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winerys
wines. Respondents prayed for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2
million as actual and compensatory damages, at least P500,000 as exemplary and moral damages, and at least
P500,000 as attorneys fees and litigation expenses.

In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO cigarettes and Gallo
Winerys wines were totally unrelated products; Gallo Winerys GALLO trademark registration certificate covered wines
only, not cigarettes; GALLO cigarettes and GALLO wines were sold through different channels of trade; GALLO
cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-cost items compared to Gallo Winerys
high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo Winerys wines was the middle
or high-income bracket with at least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen,
laborers and other low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device with
the manufacturers name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo Winerys wines, it was
the full names of the founders-owners ERNEST & JULIO GALLO or just their surname GALLO; by their inaction and
conduct, respondents were guilty of laches and estoppel; and petitioners acted with honesty, justice and good faith in
the exercise of their right to manufacture and sell GALLO cigarettes.

RTC denied, for lack of merit, respondents prayer for the issuance of a writ of preliminary injunction, holding that
respondents GALLO trademark registration certificate covered wines only, that respondents wines and petitioners
cigarettes were not related goods and respondents failed to prove material damage or great irreparable injury as
required by Section 5, Rule 58 of the Rules of Court.

RTC denied, for lack of merit, respondents motion for reconsideration.

After trial on the merits, however, the Makati RTC, held petitioners liable for, and permanently enjoined them from,
committing trademark infringement and unfair competition with respect to the GALLO trademark.
27
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for reconsideration.

ISSUE

Whether or not petitioners were liable for trademark infringement, unfair competition and damages. (No)

RULING

THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE APPLICABLE LAWS, NOT THE INTELLECTUAL
PROPERTY CODE

We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair competition
committed during the effectivity of the Paris Convention and the Trademark Law.

Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the aforesaid
governing laws but also under the IP Code which took effect only on January 1, 1998,

The CA apparently did not notice the error and affirmed the Makati RTC decision.

We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.

It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has first been
promulgated. A law that is not yet effective cannot be considered as conclusively known by the populace. To make a law
binding even before it takes effect may lead to the arbitrary exercise of the legislative power.

DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION

In Del Monte Corporation vs. Court of Appeals, we distinguished trademark infringement from unfair competition:

(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of
one's goods as those of another.

(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is
essential.

(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in
unfair competition registration is not necessary.

Pertinent Provisions on Trademark Infringement under the Paris Convention and the Trademark Law

Under Article 6 of the Paris Convention, the following are the elements of trademark infringement:

(a) registration or use by another person of a trademark which is a reproduction, imitation or translation liable to create
confusion,

(b) of a mark considered by the competent authority of the country of registration or use to be well-known in that
country and is already the mark of a person entitled to the benefits of the Paris Convention, and

(c) such trademark is used for identical or similar goods.

Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the elements of
trademark infringement:

(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine
Patent Office

(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others
as to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
28
upon or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive
purchasers,

(c) the trademark is used for identical or similar goods, and

(d) such act is done without the consent of the trademark registrant or assignee.

In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic authorities),
while the Trademark Law protects all trademarks, whether well-known or not, provided that they have been registered
and are in actual commercial use in the Philippines. Following universal acquiescence and comity, in case of domestic
legal disputes on any conflicting provisions between the Paris Convention (which is an international agreement) and
the Trademark law (which is a municipal law) the latter will prevail.

Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is limited only to
goods identical or similar to those in respect of which such trademark is registered and only when there is likelihood of
confusion. Under both laws, the time element in commencing infringement cases is material in ascertaining the
registrants express or implied consent to anothers use of its trademark or a colorable imitation thereof. This is why
acquiescence, estoppel or laches may defeat the registrants otherwise valid cause of action.

Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of liability.

THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO CIGARETTE


TRADEMARK PRECEDED THAT OF GALLO WINE TRADEMARK.

By respondents own judicial admission, the GALLO wine trademark was registered in the Philippines in November
1971 but the wine itself was first marketed and sold in the country only in 1974 and only within the former U.S.
military facilities, and outside thereof, only in 1979. To prove commercial use of the GALLO wine trademark in the
Philippines, respondents presented sales invoice no. 29991 dated July 9, 1981.

On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and manufacturers
sworn statement, it appears that petitioners and its predecessor-in-interest, Tobacco Industries, have indeed been
using and selling GALLO cigarettes in the Philippines since 1973 or before July 9, 1981.

In Emerald Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our ruling of giving utmost
importance to the actual commercial use of a trademark in the Philippines prior to its registration, notwithstanding
the provisions of the Paris Convention.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a
trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack of
business activity in the Philippines on account of Section 21-A of the Trademark Law but the question of
whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will
depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It
is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the
Philippines files a complaint for infringement, the entity need not be actually using the trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not
necessarily be entitled to protection due to absence of actual use of the emblem in the local market.

xxx xxx xxx

The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership
and exclusive use, is qualified. A registration certificate serves merely as prima facie evidence. It is not
conclusive but can and may be rebutted by controverting evidence.

For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own
mark and for failure to establish confusing similarity between said trademarks, private respondent's action for
infringement must necessarily fail.
29
In view of the foregoing jurisprudence and respondents judicial admission that the actual commercial use of the
GALLO wine trademark was subsequent to its registration in 1971 and to Tobacco Industries commercial use of the
GALLO cigarette trademark in 1973, we rule that, on this account, respondents never enjoyed the exclusive right to use
the GALLO wine trademark to the prejudice of Tobacco Industries and its successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris Convention.

Respondents GALLO trademark registration is limited to wines only

We also note that the GALLO trademark registration certificates in the Philippines and in other countries expressly
state that they cover wines only, without any evidence or indication that registrant Gallo Winery expanded or intended
to expand its business to cigarettes.

Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use the GALLO
trademark should be limited to wines, the only product indicated in its registration certificates.

Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to the goods
used by the first user as specified in the certificate of registration following the clear message conveyed by
Section 20.

NO LIKELIHOOD OF CONFUSION, MISTAKE OR DECEIT AS TO THE IDENTITY OR SOURCE OF PETITIONERS


AND RESPONDENTS GOODS OR BUSINESS

A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity,
source or origin of the goods or identity of the business as a consequence of using a certain mark. Likelihood of
confusion is admittedly a relative term, to be determined rigidly according to the particular (and sometimes peculiar)
circumstances of each case.

There are two types of confusion in trademark infringement. The first is "confusion of goods" when an otherwise
prudent purchaser is induced to purchase one product in the belief that he is purchasing another, in which case
defendants goods are then bought as the plaintiffs and its poor quality reflects badly on the plaintiffs reputation. The
other is "confusion of business" wherein the goods of the parties are different but the defendants product can
reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the public into believing that
there is some connection between the plaintiff and defendant which, in fact, does not exist.

In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the trademarks; [b]
the similarity of the goods to which the trademarks are attached; [c] the likely effect on the purchaser and [d] the
registrants express or implied consent and other fair and equitable considerations.

Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products. But, as
held in the following cases, the use of an identical mark does not, by itself, lead to a legal conclusion that there is
trademark infringement.

Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation" which has
been defined as "such similarity in form, content, words, sound, meaning, special arrangement or general
appearance of the trademark or tradename in their overall presentation or in their essential and substantive
and distinctive parts as would likely mislead or confuse persons in the ordinary course of purchasing the
genuine article."

Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance:

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might
cause confusion or deception, and thus infringement. If the competing trademark contains the main, essential or
dominant features of another, and confusion or deception is likely to result, infringement takes place. The question is
whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or deceive
purchasers.

On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in resolving
confusing similarity. Comparison of words is not the only determining factor. The trademarks in their entirety as they

30
appear in their respective labels or hang tags must also be considered in relation to the goods to which they are
attached.

Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette trademark is the
device of a large rooster facing left, outlined in black against a gold background. The roosters color is either green or
red green for GALLO menthols and red for GALLO filters. Directly below the large rooster device is the word GALLO.
The rooster device is given prominence in the GALLO cigarette packs in terms of size and location on the labels. 84

The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all to the
product but was chosen merely as a trademark due to the fondness for fighting cocks of the son of petitioners
president. Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a cigarette trademark to appeal to
one of their target markets, the sabungeros (cockfight aficionados).85

Also, as admitted by respondents themselves, 86 on the side of the GALLO cigarette packs are the words "MADE BY
MIGHTY CORPORATION," thus clearly informing the public as to the identity of the manufacturer of the cigarettes.

On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels are embellished
with sketches of buildings and trees, vineyards or a bunch of grapes while in a few, one or two small roosters facing
right or facing each other (atop the EJG crest, surrounded by leaves or ribbons), with additional designs in green, red
and yellow colors, appear as minor features thereof. 87 Directly below or above these sketches is the entire printed name
of the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO," 88 which appears in different fonts,
sizes, styles and labels, unlike petitioners uniform casque-font bold-lettered GALLO mark.

Moreover, on the labels of Gallo Winerys wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO
GALLO, MODESTO, CALIFORNIA."89

The many different features like color schemes, art works and other markings of both products drown out the similarity
between them the use of the word GALLO a family surname for the Gallo Winerys wines and a Spanish word for
rooster for petitioners cigarettes.

WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING OR RELATED GOODS

Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise
between non-competing interests as well. 90

Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6 bis of the Paris Convention
which proscribe trademark infringement not only of goods specified in the certificate of registration but also of identical
or similar goods, we have also uniformly recognized and applied the modern concept of "related goods." 91 Simply stated,
when goods are so related that the public may be, or is actually, deceived and misled that they come from the same
maker or manufacturer, trademark infringement occurs. 92

In resolving whether goods are related,96 several factors come into play:

(a) the business (and its location) to which the goods belong

(b) the class of product to which the goods belong

(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container 97

(d) the nature and cost of the articles98

(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition,
texture or quality

(f) the purpose of the goods99

(g) whether the article is bought for immediate consumption, 100 that is, day-to-day household items101

(h) the fields of manufacture 102

(i) the conditions under which the article is usually purchased 103 and

31
(j) the channels of trade through which the goods flow, 104 how they are distributed, marketed, displayed and sold. 105

Hence, in the adjudication of trademark infringement, we give due regard to the goods usual purchasers character,
attitude, habits, age, training and education. 111

Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark is not likely to
cause confusion or mistake, or to deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both as to the
identity of the goods, their source and origin, or identity of the business of petitioners and respondents.

Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the same class of
goods. Respondents GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in
Trademark Cases while petitioners GALLO cigarettes fall under Class 34.

Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are related
forms of vice, harmful when taken in excess, and used for pleasure and relaxation" and (2) "they are grouped or
classified in the same section of supermarkets and groceries."

We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines and cigarettes
are related products within the contemplation of the Trademark Law and the Paris Convention.

First, anything - not only wines and cigarettes can be used for pleasure and relaxation and can be harmful when
taken in excess.

Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products and the goods
here involved, wines and cigarettes, have nothing whatsoever in common with respect to their essential characteristics,
quality, quantity, size, including the nature of their packages, wrappers or containers.

Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold in one store
under the same roof does not automatically mean that buyers are likely to be confused as to the goods respective
sources, connections or sponsorships. The fact that different products are available in the same store is an insufficient
standard, in and of itself, to warrant a finding of likelihood of confusion.

Wines and cigarettes are non-competing and are totally unrelated products not likely to cause confusion vis--vis the
goods or the business of the petitioners and respondents.

Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked. There is a
whale of a difference between their descriptive properties, physical attributes or essential characteristics like form,
composition, texture and quality.

GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by middle-to-high-
income earners while GALLO cigarettes appeal only to simple folks like farmers, fishermen, laborers and other low-
income workers.116 Indeed, the big price difference of these two products is an important factor in proving that they are
in fact unrelated and that they travel in different channels of trade. There is a distinct price segmentation based on
vastly different social classes of purchasers.117

GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes are Philippine-
made and petitioners neither claim nor pass off their goods as imported or emanating from Gallo Winery. GALLO
cigarettes are distributed, marketed and sold through ambulant and sidewalk vendors, small local sari-sari stores and
grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu. 118 On the other
hand, GALLO wines are imported, distributed and sold in the Philippines through Gallo Winerys exclusive contracts
with a domestic entity, which is currently Andresons. By respondents own testimonial evidence, GALLO wines are sold
in hotels, expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-sari stores
or ambulant vendors.119

In short, tobacco and alcohol products may be considered related only in cases involving special circumstances which
exist only if a famous mark is involved and there is a demonstrated intent to capitalize on it. Both of these are absent in
the present case.

THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE CONTEXT OF THE PARIS CONVENTION
IN THIS CASE SINCE WINES AND CIGARETTES ARE NOT IDENTICAL OR SIMILAR GOODS

32
First, the records bear out that most of the trademark registrations took place in the late 1980s and the 1990s, that is,
after Tobacco Industries use of the GALLO cigarette trademark in 1973 and petitioners use of the same mark in 1984.

GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite element under
both the Trademark Law and the Paris Convention.

Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines. Respondents do not
dispute the documentary evidence that aside from Gallo Winerys GALLO trademark registration, the Bureau of
Patents, Trademarks and Technology Transfer also issued on September 4, 1992 Certificate of Registration No. 53356
under the Principal Register approving Productos Alimenticios Gallo, S.As April 19, 1990 application for GALLO
trademark registration and use for its "noodles, prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking
powder, salt, mustard, vinegar, species and ice." 122

Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,123 "GALLO" cannot be considered a "well-known" mark within the contemplation and protection of the Paris
Convention in this case since wines and cigarettes are not identical or similar goods:

Consent of the Registrant and Other air, Just and Equitable Considerations

Each trademark infringement case presents a unique problem which must be answered by weighing the conflicting
interests of the litigants.124

Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade, that is, retail
trade. If respondents assertion is true, then both goods co-existed peacefully for a considerable period of time. It took
respondents almost 20 years to know about the existence of GALLO cigarettes and sue petitioners for trademark
infringement. Given, on one hand, the long period of time that petitioners were engaged in the manufacture, marketing,
distribution and sale of GALLO cigarettes and, on the other, respondents delay in enforcing their rights (not to mention
implied consent, acquiescence or negligence) we hold that equity, justice and fairness require us to rule in favor of
petitioners. The scales of conscience and reason tip far more readily in favor of petitioners than respondents.

Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they intended to
capitalize on respondents goodwill in adopting the GALLO mark for their cigarettes which are totally unrelated to
respondents GALLO wines. Thus, we rule out trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary to good faith
by which he passes off the goods manufactured by him or in which he deals, or his business, or services for those of
the one having established such goodwill, or who commits any acts calculated to produce said result, is guilty of unfair
competition. It includes the following acts:

(a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which would be likely to influence purchasers to believe
that the goods offered are those of a manufacturer or dealer other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like
purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that
such person is offering the services of another who has identified such services in the mind of the public;

(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods, business or services of another.

The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off
one mans goods or business as that of another constitutes unfair competition. Actual or probable deception and
confusion on the part of customers by reason of defendants practices must always appear. 125 On this score, we find
that petitioners never attempted to pass off their cigarettes as those of respondents. There is no evidence of bad faith or
fraud imputable to petitioners in using their GALLO cigarette mark.
33
All told, after applying all the tests provided by the governing laws as well as those recognized by jurisprudence, we
conclude that petitioners are not liable for trademark infringement, unfair competition or damages.

WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The questioned decision and
resolution of the Court of Appeals in CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June 24,
1999 order of the Regional Trial Court of Makati, Branch 57 in Civil Case No. 93-850 are hereby REVERSED and SET
ASIDE and the complaint against petitioners DISMISSED.

Section 3. International Conventions and Reciprocity. - Any person who is a national or who is domiciled or has
a real and effective industrial establishment in a country which is a party to any convention, treaty or agreement
relating to intellectual property rights or the repression of unfair competition, to which the Philippines is also a
party, or extends reciprocal rights to nationals of the Philippines by law, shall be entitled to benefits to the extent
necessary to give effect to any provision of such convention, treaty or reciprocal law, in addition to the rights to
which any owner of an intellectual property right is otherwise entitled by this Act. (n)

Section 4. Definitions. - 4.1. The term "intellectual property rights" consists of:

a) Copyright and Related Rights;

b) Trademarks and Service Marks;

c) Geographic Indications;

d) Industrial Designs;

e) Patents;

f) Layout-Designs (Topographies) of Integrated Circuits; and

g) Protection of Undisclosed Information (n, TRIPS).

4.2. The term "technology transfer arrangements" refers to contracts or agreements involving the transfer of
systematic knowledge for the manufacture of a product, the application of a process, or rendering of a service
including management contracts; and the transfer, assignment or licensing of all forms of intellectual property
rights, including licensing of computer software except computer software developed for mass market.

4.3. The term "Office" refers to the Intellectual Property Office created by this Act.

4.4. The term "IPO Gazette" refers to the gazette published by the Office under this Act. (n)

G.R. No. 115758 March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and ANG TIAM
CHAY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court of Appeals setting aside and
declaring as null and void the Orders2 dated February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of
Quezon City granting the issuance of a writ of preliminary injunction.

The facts of the case are as follows:

34
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a prayer for the issuance of a writ
of preliminary injunction, docketed as Civil Case No. Q-91-10926, against the respondents Summerville General Merchandising and
Company (Summerville, for brevity) and Ang Tiam Chay.

The petitioner's complaint alleges that petitioner, doing business under the name and style of KEC Cosmetics Laboratory, is the
registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights onChin Chun Su & Device and Chin Chun Su for medicated
cream after purchasing the same from Quintin Cheng, the registered owner thereof in the Supplemental Register of the Philippine
Patent Office on February 7, 1980 under Registration Certificate No. 4529; that respondent Summerville advertised and sold
petitioner's cream products under the brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading the
public, and resulting in the decline in the petitioner's business sales and income; and, that the respondents should be enjoined from
allegedly infringing on the copyrights and patents of the petitioner.

The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and authorized importer, re-packer
and distributor of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office and
other appropriate governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of the patent registration certificate, to
distribute and market Chin Chun Su products in the Philippines had already been terminated by the said Taiwanese Manufacturing
Company.

After due hearing on the application for preliminary injunction, the trial court granted the same in an Order dated February 10, 1992,
the dispositive portion of which reads:

ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC Cosmetic Laboratory, for
preliminary injunction, is hereby granted. Consequentially, plaintiff is required to file with the Court a bond executed to
defendants in the amount of five hundred thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants
all damages which defendants may sustain by reason of the injunction if the Court should finally decide that plaintiff is not
entitled thereto.

SO ORDERED.3

The respondents moved for reconsideration but their motion for reconsideration was denied by the trial court in an Order dated
March 19, 1992.4

On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 27803,
praying for the nullification of the said writ of preliminary injunction issued by the trial court. After the respondents filed their reply and
almost a month after petitioner submitted her comment, or on August 14 1992, the latter moved to dismiss the petition for violation of
Supreme Court Circular No. 28-91, a circular prohibiting forum shopping. According to the petitioner, the respondents did not state
the docket number of the civil case in the caption of their petition and, more significantly, they did not include therein a certificate of
non-forum shopping. The respondents opposed the petition and submitted to the appellate court a certificate of non-forum shopping
for their petition.

On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in favor of the respondents, the
dispositive portion of which reads:

WHEREFORE, the petition is hereby given due course and the orders of respondent court dated February 10, 1992 and
March 19, 1992 granting the writ of preliminary injunction and denying petitioners' motion for reconsideration are hereby
set aside and declared null and void. Respondent court is directed to forthwith proceed with the trial of Civil Case No. Q-
91-10926 and resolve the issue raised by the parties on the merits.

SO ORDERED.5

In granting the petition, the appellate court ruled that:

The registration of the trademark or brandname "Chin Chun Su" by KEC with the supplemental register of the Bureau of
Patents, Trademarks and Technology Transfer cannot be equated with registration in the principal register, which is duly
protected by the Trademark Law.1wphi1.nt

xxx xxx xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:

35
"Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or has
appropriated the trademark. By the very fact that the trademark cannot as yet be on guard and there are certain
defects, some obstacles which the use must still overcome before he can claim legal ownership of the mark or
ask the courts to vindicate his claims of an exclusive right to the use of the same. It would be deceptive for a
party with nothing more than a registration in the Supplemental Register to posture before courts of justice as if
the registration is in the Principal Register.

The reliance of the private respondent on the last sentence of the Patent office action on application Serial No.
30954 that 'registrants is presumed to be the owner of the mark until after the registration is declared cancelled'
is, therefore, misplaced and grounded on shaky foundation. The supposed presumption not only runs counter to
the precept embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in
Trademark Cases but considering all the facts ventilated before us in the four interrelated petitions involving the
petitioner and the respondent, it is devoid of factual basis. As even in cases where presumption and precept
may factually be reconciled, we have held that the presumption is rebuttable, not conclusive, (People v. Lim
Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v.
chua Seco & Co., 14 Phil 534)."6

The petitioner filed a motion for reconsideration. This she followed with several motions to declare respondents in contempt of court
for publishing advertisements notifying the public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General Merchandising and Co.

In the meantime, the trial court went on to hear petitioner's complaint for final injunction and damages. On October 22, 1993, the trial
court rendered a Decision7 barring the petitioner from using the trademark Chin Chun Su and upholding the right of the respondents
to use the same, but recognizing the copyright of the petitioner over the oval shaped container of her beauty cream. The trial court
did not award damages and costs to any of the parties but to their respective counsels were awarded Seventy-Five Thousand
Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the said decision to the Court of Appeals.

On June 3, 1994, the Court of Appeals promulgated a Resolution8 denying the petitioner's motions for reconsideration and for
contempt of court in CA-G.R. SP No. 27803.

Hence, this petition anchored on the following assignment of errors:

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO


LACK OF JURISDICTION IN FAILING TO RULE ON PETITIONER'S MOTION TO DISMISS.

II

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO


LACK OF JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONER'S MOTION FOR
RECONSIDERATION.

III

IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE HONORABLE COURT
OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED PETITIONER'S
RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO


LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT.9

The petitioner faults the appellate court for not dismissing the petition on the ground of violation of Supreme Court Circular No. 28-
91. Also, the petitioner contends that the appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of
Appeals when it failed to rule on her motion for reconsideration within ninety (90) days from the time it is submitted for resolution.
The appellate court ruled only after the lapse of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution
thereof, the appellate court denied the petitioner's right to seek the timely appellate relief. Finally, petitioner describes as arbitrary
the denial of her motions for contempt of court against the respondents.

36
We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the issuance of a writ of preliminary
injunction is a proof that the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, either for a limited period or perpetually. Thus, a preliminary
injunction order may be granted only when the application for the issuance of the same shows facts entitling the applicant to the
relief demanded.10 This is the reason why we have ruled that it must be shown that the invasion of the right sought to be protected is
material and substantial, that the right of complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage.11

In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the ground that she is entitled to the use
of the trademark on Chin Chun Su and its container based on her copyright and patent over the same. We first find it appropriate to
rule on whether the copyright and patent over the name and container of a beauty cream product would entitle the registrant to the
use and ownership over the same to the exclusion of others.

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark
is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods.12 In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise.13 Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their creation. 14 Patentable inventions, on the
other hand, refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.15

Petitioner has no right to support her claim for the exclusive use of the subject trade name and its container. The name and
container of a beauty cream product are proper subjects of a trademark inasmuch as the same falls squarely within its definition. In
order to be entitled to exclusively use the same in the sale of the beauty cream product, the user must sufficiently prove that she
registered or used it before anybody else did. The petitioner's copyright and patent registration of the name and container would not
guarantee her the right to the exclusive use of the same for the reason that they are not appropriate subjects of the said intellectual
rights. Consequently, a preliminary injunction order cannot be issued for the reason that the petitioner has not proven that she has a
clear right over the said name and container to the exclusion of others, not having proven that she has registered a trademark
thereto or used the same before anyone did.

We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The dispositive portion of
said decision held that the petitioner does not have trademark rights on the name and container of the beauty cream product. The
said decision on the merits of the trial court rendered the issuance of the writ of a preliminary injunction moot and academic
notwithstanding the fact that the same has been appealed in the Court of Appeals. This is supported by our ruling in La Vista
Association, Inc. v. Court of Appeals16, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted at any time after the
commencement of the action and before judgment when it is established that the plaintiff is entitled to the relief demanded
and only when his complaint shows facts entitling such reliefs xxx and it appearing that the trial court had already granted
the issuance of a final injunction in favor of petitioner in its decision rendered after trial on the merits xxx the Court
resolved to Dismiss the instant petition having been rendered moot and academic. An injunction issued by the trial court
after it has already made a clear pronouncement as to the plaintiff's right thereto, that is, after the same issue has been
decided on the merits, the trial court having appreciated the evidence presented, is proper, notwithstanding the fact that
the decision rendered is not yet final xxx. Being an ancillary remedy, the proceedings for preliminary injunction cannot
stand separately or proceed independently of the decision rendered on the merit of the main case for injunction. The merit
of the main case having been already determined in favor of the applicant, the preliminary determination of its non-
existence ceases to have any force and effect. (italics supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminary injunctive order
moot and academic despite the fact that the decision granting a final injunction is pending appeal. Conversely, a decision denying
the applicant-plaintiff's right to a final injunction, although appealed, renders moot and academic any objection to the prior
dissolution of a writ of preliminary injunction.

The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for non-compliance with the rule on
forum shopping. We disagree. First, the petitioner improperly raised the technical objection of non-compliance with Supreme Court
Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in the appellate court. This is prohibited by Section 6,
Rule 66 of the Revised Rules of Civil Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and the
Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before giving due course thereto, the court may require
the respondents to file their comment to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue was
raised one month after petitioner had filed her answer/comment and after private respondent had replied thereto. Under Section 1,
Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for but before filing the answer to
the complaint or pleading asserting a claim. She therefore could no longer submit a motion to dismiss nor raise defenses and
objections not included in the answer/comment she had earlier tendered. Thirdly, substantial justice and equity require this Court not
to revive a dissolved writ of injunction in favor of a party without any legal right thereto merely on a technical infirmity. The granting
37
of an injunctive writ based on a technical ground rather than compliance with the requisites for the issuance of the same is contrary
to the primary objective of legal procedure which is to serve as a means to dispense justice to the deserving party.

The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion for reconsideration. But we find
that petitioner contributed to this delay when she filed successive contentious motions in the same proceeding, the last of which was
on October 27, 1993, necessitating counter-manifestations from private respondents with the last one being filed on November 9,
1993. Nonetheless, it is well-settled that non-observance of the period for deciding cases or their incidents does not render such
judgments ineffective or void.17 With respect to the purported damages she suffered due to the alleged delay in resolving her motion
for reconsideration, we find that the said issue has likewise been rendered moot and academic by our ruling that she has no right
over the trademark and, consequently, to the issuance of a writ of preliminary injunction.1wphi1.nt

Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for contempt of court. There is nothing
contemptuous about the advertisements complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed Decision of the appellate court. Moreover,
pursuant to Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was
immediately executory.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated May 24, 1993 and June 3, 1994,
respectively, are hereby AFFIRMED. With costs against the petitioner.

SO ORDERED.

G.R. No. 115758 March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY, petitioner, vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and ANG TIAM
CHAY, respondents.

FACTS:

The petitioner alleged that she is the registered owner of the copyrights Chin Chun Su and Oval Facial Cream
Container/Case as evidenced by certificates of copyright registrations and patent rights on Chun Chun Su &
Device and Chin Chun Su (medicated cream) after she purchased it from Quintin Cheng (previous registered owner
in the Philippine Patent Office [PPO]).

Meanwhile, there was a decline in the petitioners business income due to the advertisement and sale made by
Summerville on petitioners products under the same brand name and in similar containers. According to
Summerville, they are the exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan and that said company authorized them to register its trade name Chin
Chun Su Mediated Cream with the PPO.

The application for preliminary injunction filed by petitioner was granted. Hence, respondents moved for
reconsideration, which was denied. The respondents then moved for nullification of said preliminary injunction with
the CA. The latter granted its petition.

ISSUE: WON the copyright and patent over the name and container of the beauty cream product entitle the
registrant to its EXCLUSIVE use and ownership .

HELD: NO. The petitioner has no right for the EXCLUSIVE use of the trade name and its container. In order to be
entitled to its exclusive use, the user must sufficiently prove that she registered or used it before anybody else did.
This, petitioner failed to do.

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one
38
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.

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 }

39
- 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 inMalaloan 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.

40
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

41
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.

42
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.

43
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.

44
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, inJoaquin, 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.

45
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.

Jessie Chingvs William Salinas (2005)

Facts:

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.

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."

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.

After due investigation, the NBI filed applications for search warrants against William Salinas, Sr. andWilaware Product Corporation. It was
alleged that the respondents therein reproduced and distributed the said models. The RTC granted the application and issued the search warrants
for the seizure of the aforecited articles.

William Salinas opposed the warrant alleging violations of the Intellectual Property Code particularly as to the propriety of the issuance of the
Copyright certificate. Petitioneropposed averring 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. The trial court favored Salinas and quashed the warrant. On appeal, the CA affirmed the
decision of the trial court.

Issue:

Whether or not the Utility Model Leaf Spring Eye Bushing for Automobile may be the proper object of a copyright law

Ruling:

Petition is DENIED.
46
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.

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.

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.

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.Copying is shown by proof of access to copyrighted materialand substantial similarity between the two works . 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.

To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence. 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 ownership and the validity of the facts stated in the certificate.The presumption of validity to a certificate of copyright
registration merely orders the burden of proof.

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. 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. 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.

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.

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. Essentially, 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. 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" in a patent for invention is
not required; second, the maximum term of protection is only seven years compared to a patent which is twenty years, both reckoned from the
date of the application; and third, the provisions on utility model dispense with its substantive examination 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 sans any 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, 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.

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. 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.

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.

Section 5. Functions of the Intellectual Property Office (IPO). - 5.1. To administer and implement the State
policies declared in this Act, there is hereby created the Intellectual Property Office (IPO) which shall have the
following functions:
47
a) Examine applications for grant of letters patent for inventions and register utility models and
industrial designs;

b) Examine applications for the registration of marks, geographic indication, integrated circuits;

c) Register technology transfer arrangements and settle disputes involving technology transfer
payments covered by the provisions of Part II, Chapter IX on Voluntary Licensing and develop and
implement strategies to promote and facilitate technology transfer;

d) Promote the use of patent information as a tool for technology development;

e) Publish regularly in its own publication the patents, marks, utility models and industrial designs,
issued and approved, and the technology transfer arrangements registered;

f) Administratively adjudicate contested proceedings affecting intellectual property rights; and

g) Coordinate with other government agencies and the private sector efforts to formulate and
implement plans and policies to strengthen the protection of intellectual property rights in the country.

5.2. The Office shall have custody of all records, books, drawings, specifications, documents, and other papers
and things relating to intellectual property rights applications filed with the Office. (n)

Section 6. The Organizational Structure of the IPO. - 6.1. The Office shall be headed by a Director General
who shall be assisted by two (2) Deputies Director General.

6.2. The Office shall be divided into six (6) Bureaus, each of which shall be headed by a Director and assisted
by an Assistant Director. These Bureaus are:

a) The Bureau of Patents;

b) The Bureau of Trademarks;

c) The Bureau of Legal Affairs;

d) The Documentation, Information and Technology Transfer Bureau;

e) The Management Information System and EDP Bureau; and

f) The Administrative, Financial and Personnel Services Bureau.

6.3. The Director General, Deputies Director General, Directors and Assistant Directors shall be appointed by
the President, and the other officers and employees of the Office by the Secretary of Trade and Industry,
conformably with and under the Civil Service Law. (n)

Section 7. The Director General and Deputies Director General. - 7.1. Functions. - The Director General shall
exercise the following powers and functions:

a) Manage and direct all functions and activities of the Office, including the promulgation of rules and
regulations to implement the objectives, policies, plans, programs and projects of the Office: Provided,
That in the exercise of the authority to propose policies and standards in relation to the following: (1)
the effective, efficient, and economical operations of the Office requiring statutory enactment; (2)
coordination with other agencies of government in relation to the enforcement of intellectual property
rights; (3) the recognition of attorneys, agents, or other persons representing applicants or other
parties before the Office; and (4) the establishment of fees for the filing and processing of an
48
application for a patent, utility model or industrial design or mark or a collective mark, geographic
indication and other marks of ownership, and for all other services performed and materials furnished
by the Office, the Director General shall be subject to the supervision of the Secretary of Trade and
Industry;

b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs,
the Director of Patents, the Director of Trademarks, and the Director of the Documentation, Information
and Technology Transfer Bureau. The decisions of the Director General in the exercise of his appellate
jurisdiction in respect of the decisions of the Director of Patents, and the Director of Trademarks shall
be appealable to the Court of Appeals in accordance with the Rules of Court; and those in respect of
the decisions of the Director of Documentation, Information and Technology Transfer Bureau shall be
appealable to the Secretary of Trade and Industry; and

c) Exercise original jurisdiction to resolve disputes relating to the terms of a license involving the
author's right to public performance or other communication of his work. The decisions of the Director
General in these cases shall be appealable to the Secretary of Trade and Industry.

7.2. Qualifications. - The Director General and the Deputies Director General must be natural born citizens of
the Philippines, at least thirty-five (35) years of age on the day of their appointment, holders of a college
degree, and of proven competence, integrity, probity and independence: Provided, That the Director General
and at least one (1) Deputy Director General shall be members of the Philippine Bar who have engaged in the
practice of law for at least ten (10) years: Provided further, That in the selection of the Director General and the
Deputies Director General, consideration shall be given to such qualifications as would result, as far as
practicable, in the balanced representation in the Directorate General of the various fields of intellectual
property.

7.3. Term of Office. - The Director General and the Deputies Director General shall be appointed by the
President for a term of five (5) years and shall be eligible for reappointment only once: Provided, That the first
Director General shall have a first term of seven (7) years. Appointment to any vacancy shall be only for the
unexpired term of the predecessor.

7.4. The Office of the Director General. - The Office of the Director General shall consist of the Director General
and the Deputies Director General, their immediate staff and such Offices and Services that the Director
General will set up to support directly the Office of the Director General. (n)

Section 8. The Bureau of Patents. - The Bureau of Patents shall have the following functions:

8.1. Search and examination of patent applications and the grant of patents;

8.2. Registration of utility models, industrial designs, and integrated circuits; and

8.3. Conduct studies and researches in the field of patents in order to assist the Director General in formulating
policies on the administration and examination of patents. (n)

Section 9. The Bureau of Trademarks. - The Bureau of Trademarks shall have the following functions:

9.1. Search and examination of the applications for the registration of marks, geographic indications and other
marks of ownership and the issuance of the certificates of registration; and

9.2. Conduct studies and researches in the field of trademarks in order to assist the Director General in
formulating policies on the administration and examination of trademarks. (n)

Section 10. The Bureau of Legal Affairs. - The Bureau of Legal Affairs shall have the following functions:

49
10.1. Hear and decide opposition to the application for registration of marks; cancellation of trademarks; subject
to the provisions of Section 64, cancellation of patents, utility models, and industrial designs; and petitions for
compulsory licensing of patents;

10.2. (a) Exercise original jurisdiction in administrative complaints for violations of laws involving intellectual
property rights: Provided, That its jurisdiction is limited to complaints where the total damages claimed are not
less than Two hundred thousand pesos (P200,000): Provided further, That availment of the provisional
remedies may be granted in accordance with the Rules of Court. The Director of Legal Affairs shall have the
power to hold and punish for contempt all those who disregard orders or writs issued in the course of the
proceedings. (n)

(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more of the following
administrative penalties:

(i) The issuance of a cease and desist order which shall specify the acts that the respondent
shall cease and desist from and shall require him to submit a compliance report within a
reasonable time which shall be fixed in the order;

(ii) The acceptance of a voluntary assurance of compliance or discontinuance as may be


imposed. Such voluntary assurance may include one or more of the following:

(1) An assurance to comply with the provisions of the intellectual property law
violated;

(2) An assurance to refrain from engaging in unlawful and unfair acts and practices
subject of the formal investigation;

(3) An assurance to recall, replace, repair, or refund the money value of defective
goods distributed in commerce; and

(4) An assurance to reimburse the complainant the expenses and costs incurred in
prosecuting the case in the Bureau of Legal Affairs.

The Director of Legal Affairs may also require the respondent to submit periodic compliance
reports and file a bond to guarantee compliance of his undertaking;

(iii) The condemnation or seizure of products which are subject of the offense. The goods
seized hereunder shall be disposed of in such manner as may be deemed appropriate by the
Director of Legal Affairs, such as by sale, donation to distressed local governments or to
charitable or relief institutions, exportation, recycling into other goods, or any combination
thereof, under such guidelines as he may provide;

(iv) The forfeiture of paraphernalia and all real and personal properties which have been used
in the commission of the offense;

(v) The imposition of administrative fines in such amount as deemed reasonable by the
Director of Legal Affairs, which shall in no case be less than Five thousand pesos (P5,000) nor
more than One hundred fifty thousand pesos (P150,000). In addition, an additional fine of not
more than One thousand pesos (P1,000) shall be imposed for each day of continuing
violation;

(vi) The cancellation of any permit, license, authority, or registration which may have been
granted by the Office, or the suspension of the validity thereof for such period of time as the
Director of Legal Affairs may deem reasonable which shall not exceed one (1) year;

50
(vii) The withholding of any permit, license, authority, or registration which is being secured by
the respondent from the Office;

(viii) The assessment of damages;

(ix) Censure; and

(x) Other analogous penalties or sanctions. (Secs. 6, 7, 8, and 9, Executive Order No. 913
[1983]a)

10.3. The Director General may by Regulations establish the procedure to govern the implementation of this
Section. (n)

Section 11. The Documentation, Information and Technology Transfer Bureau. - The Documentation,
Information and Technology Transfer Bureau shall have the following functions:

11.1. Support the search and examination activities of the Office through the following activities:

(a) Maintain and upkeep classification systems whether they be national or international such as the
International Patent Classification (IPC) system;

(b) Provide advisory services for the determination of search patterns;

(c) Maintain search files and search rooms and reference libraries; and

(d) Adapt and package industrial property information.

11.2. Establish networks or intermediaries or regional representatives;

11.3. Educate the public and build awareness on intellectual property through the conduct of seminars and
lectures, and other similar activities;

11.4. Establish working relations with research and development institutions as well as with local and
international intellectual property professional groups and the like;

11.5. Perform state-of-the-art searches;

11.6. Promote the use of patent information as an effective tool to facilitate the development of technology in
the country;

11.7. Provide technical, advisory, and other services relating to the licensing and promotion of technology, and
carry out an efficient and effective program for technology transfer; and

11.8. Register technology transfer arrangements, and settle disputes involving technology transfer payments.
(n)

Section 12. The Management Information Services and EDP Bureau. - The Management Information Services
and EDP Bureau shall:

12.1. Conduct automation planning, research and development, testing of systems, contracts with firms,
contracting, purchase and maintenance of equipment, design and maintenance of systems, user consultation,
and the like; and

51
12.2. Provide management information support and service to the Office. (n)

Section 13. The Administrative, Financial and Human Resource Development Service Bureau. - 13.1. The
Administrative Service shall: (a) Provide services relative to procurement and allocation of supplies and
equipment, transportation, messengerial work, cashiering, payment of salaries and other Office's obligations,
office maintenance, proper safety and security, and other utility services; and comply with government
regulatory requirements in the areas of performance appraisal, compensation and benefits, employment
records and reports;

(b) Receive all applications filed with the Office and collect fees therefor, and

(c) Publish patent applications and grants, trademark applications, and registration of marks, industrial
designs, utility models, geographic indication, and lay-out-designs of integrated circuits registrations.

13.2. The Patent and Trademark Administration Services shall perform the following functions among others:

(a) Maintain registers of assignments, mergings, licenses, and bibliographic on patents and
trademarks;

(b) Collect maintenance fees, issue certified copies of documents in its custody and perform similar
other activities; and

(c) Hold in custody all the applications filed with the office, and all patent grants, certificate of
registrations issued by the office, and the like.

13.3. The Financial Service shall formulate and manage a financial program to ensure availability and proper
utilization of funds; provide for an effective monitoring system of the financial operations of the Office; and

13.4. The Human Resource Development Service shall design and implement human resource development
plans and programs for the personnel of the Office; provide for present and future manpower needs of the
organization; maintain high morale and favorable employee attitudes towards the organization through the
continuing design and implementation of employee development programs. (n)

Section 14. Use of Intellectual Property Rights Fees by the IPO. - 14.1. For a more effective and expeditious
implementation of this Act, the Director General shall be authorized to retain, without need of a separate
approval from any government agency, and subject only to the existing accounting and auditing rules and
regulations, all the fees, fines, royalties and other charges, collected by the Office under this Act and the other
laws that the Office will be mandated to administer, for use in its operations, like upgrading of its facilities,
equipment outlay, human resource development, and the acquisition of the appropriate office space, among
others, to improve the delivery of its services to the public. This amount, which shall be in addition to the
Office's annual budget, shall be deposited and maintained in a separate account or fund, which may be used or
disbursed directly by the Director General.

14.2. After five (5) years from the coming into force of this Act, the Director General shall, subject to the
approval of the Secretary of Trade and Industry, determine if the fees and charges mentioned in Subsection
14.1 hereof that the Office shall collect are sufficient to meet its budgetary requirements. If so, it shall retain all
the fees and charges it shall collect under the same conditions indicated in said Subsection 14.1 but shall
forthwith, cease to receive any funds from the annual budget of the National Government; if not, the provisions
of said Subsection 14.1 shall continue to apply until such time when the Director General, subject to the
approval of the Secretary of Trade and Industry, certifies that the above-stated fees and charges the Office
shall collect are enough to fund its operations. (n)

Section 15. Special Technical and Scientific Assistance. - The Director General is empowered to obtain the
assistance of technical, scientific or other qualified officers and employees of other departments, bureaus,
offices, agencies and instrumentalities of the Government, including corporations owned, controlled or operated

52
by the Government, when deemed necessary in the consideration of any matter submitted to the Office relative
to the enforcement of the provisions of this Act. (Sec. 3, R.A. No. 165a)

Section 16. Seal of Office. - The Office shall have a seal, the form and design of which shall be approved by
the Director General. (Sec. 4, R.A. No. 165a)

Section 17. Publication of Laws and Regulations. - The Director General shall cause to be printed and make
available for distribution, pamphlet copies of this Act, other pertinent laws, executive orders and information
circulars relating to matters within the jurisdiction of the Office. (Sec. 5, R.A. No. 165a)

Section 18. The IPO Gazette. - All matters required to be published under this Act shall be published in the
Office's own publication to be known as the IPO Gazette. (n)

Section 19. Disqualification of Officers and Employees of the Office. - All officers and employees of the Office
shall not apply or act as an attorney or patent agent of an application for a grant of patent, for the registration of
a utility model, industrial design or mark nor acquire, except by hereditary succession, any patent or utility
model, design registration, or mark or any right, title or interest therein during their employment and for one (1)
year thereafter. (Sec. 77, R.A. No. 165a)

G.R. No. 167715 November 17, 2010

PHIL PHARMAWEALTH, INC., Petitioner,


vs.
PFIZER, INC. and PFIZER (PHIL.) INC., Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to annul and set aside the Resolutions dated January 18, 20051 and
April 11, 20052 by the Court of Appeals (CA) in CA-G.R. SP No. 82734.

The instant case arose from a Complaint3 for patent infringement filed against petitioner Phil Pharmawealth, Inc. by respondent
companies, Pfizer, Inc. and Pfizer (Phil.), Inc., with the Bureau of Legal Affairs of the Intellectual Property Office (BLA-IPO). The
Complaint alleged as follows:

xxxx

6. Pfizer is the registered owner of Philippine Letters Patent No. 21116 (the "Patent") which was issued by this Honorable
Office on July 16, 1987. The patent is valid until July 16, 2004. The claims of this Patent are directed to "a method of
increasing the effectiveness of a beta-lactam antibiotic in a mammalian subject, which comprises co-administering to said
subject a beta-lactam antibiotic effectiveness increasing amount of a compound of the formula IA." The scope of the
claims of the Patent extends to a combination of penicillin such as ampicillin sodium and beta-lactam antibiotic like
sulbactam sodium.

7. Patent No. 21116 thus covers ampicillin sodium/sulbactam sodium (hereafter "Sulbactam Ampicillin"). Ampicillin sodium
is a specific example of the broad beta-lactam antibiotic disclosed and claimed in the Patent. It is the compound which
efficacy is being enhanced by co-administering the same with sulbactam sodium. Sulbactam sodium, on the other hand, is
a specific compound of the formula IA disclosed and claimed in the Patent.

8. Pfizer is marketing Sulbactam Ampicillin under the brand name "Unasyn." Pfizer's "Unasyn" products, which come in
oral and IV formulas, are covered by Certificates of Product Registration ("CPR") issued by the Bureau of Food and Drugs
("BFAD") under the name of complainants. The sole and exclusive distributor of "Unasyn" products in the Philippines is
Zuellig Pharma Corporation, pursuant to a Distribution Services Agreement it executed with Pfizer Phils. on January 23,
2001.

9. Sometime in January and February 2003, complainants came to know that respondent [herein petitioner] submitted
bids for the supply of Sulbactam Ampicillin to several hospitals without the consent of complainants and in violation of the
complainants' intellectual property rights. x x x

53
xxxx

10. Complainants thus wrote the above hospitals and demanded that the latter immediately cease and desist from
accepting bids for the supply [of] Sulbactam Ampicillin or awarding the same to entities other than complainants.
Complainants, in the same letters sent through undersigned counsel, also demanded that respondent immediately
withdraw its bids to supply Sulbactam Ampicillin.

11. In gross and evident bad faith, respondent and the hospitals named in paragraph 9 hereof, willfully ignored
complainants' just, plain and valid demands, refused to comply therewith and continued to infringe the Patent, all to the
damage and prejudice of complainants. As registered owner of the Patent, Pfizer is entitled to protection under Section 76
of the IP Code.

x x x x4

Respondents prayed for permanent injunction, damages and the forfeiture and impounding of the alleged infringing products. They
also asked for the issuance of a temporary restraining order and a preliminary injunction that would prevent herein petitioner, its
agents, representatives and assigns, from importing, distributing, selling or offering the subject product for sale to any entity in the
Philippines.

In an Order5 dated July 15, 2003 the BLA-IPO issued a preliminary injunction which was effective for ninety days from petitioner's
receipt of the said Order.

Prior to the expiration of the ninety-day period, respondents filed a Motion for Extension of Writ of Preliminary Injunction 6 which,
however, was denied by the BLA-IPO in an Order7 dated October 15, 2003.

Respondents filed a Motion for Reconsideration but the same was also denied by the BLA-IPO in a Resolution 8dated January 23,
2004.

Respondents then filed a special civil action for certiorari with the CA assailing the October 15, 2003 and January 23, 2004
Resolutions of the BLA-IPO. Respondents also prayed for the issuance of a preliminary mandatory injunction for the reinstatement
and extension of the writ of preliminary injunction issued by the BLA-IPO.

While the case was pending before the CA, respondents filed a Complaint 9 with the Regional Trial Court (RTC) of Makati City for
infringement and unfair competition with damages against herein petitioner. In said case, respondents prayed for the issuance of a
temporary restraining order and preliminary injunction to prevent herein petitioner from importing, distributing, selling or offering for
sale sulbactam ampicillin products to any entity in the Philippines. Respondents asked the trial court that, after trial, judgment be
rendered awarding damages in their favor and making the injunction permanent.

On August 24, 2004, the RTC of Makati City issued an Order10 directing the issuance of a temporary restraining order conditioned
upon respondents' filing of a bond.

In a subsequent Order11 dated April 6, 2005, the same RTC directed the issuance of a writ of preliminary injunction "prohibiting and
restraining [petitioner], its agents, representatives and assigns from importing, distributing or selling Sulbactam Ampicillin products to
any entity in the Philippines."

Meanwhile, on November 16, 2004, petitioner filed a Motion to Dismiss12 the petition filed with the CA on the ground of forum
shopping, contending that the case filed with the RTC has the same objective as the petition filed with the CA, which is to obtain an
injunction prohibiting petitioner from importing, distributing and selling Sulbactam Ampicillin products.

On January 18, 2005, the CA issued its questioned Resolution13 approving the bond posted by respondents pursuant to the
Resolution issued by the appellate court on March 23, 2004 which directed the issuance of a temporary restraining order
conditioned upon the filing of a bond. On even date, the CA issued a temporary restraining order 14 which prohibited petitioner "from
importing, distributing, selling or offering for sale Sulbactam Ampicillin products to any hospital or to any other entity in the
Philippines, or from infringing Pfizer Inc.'s Philippine Patent No. 21116 and impounding all the sales invoices and other documents
evidencing sales by [petitioner] of Sulbactam Ampicillin products."

On February 7, 2005, petitioner again filed a Motion to Dismiss15 the case for being moot and academic, contending that
respondents' patent had already lapsed. In the same manner, petitioner also moved for the reconsideration of the temporary
restraining order issued by the CA on the same basis that the patent right sought to be protected has been extinguished due to the
lapse of the patent license and on the ground that the CA has no jurisdiction to review the order of the BLA-IPO as said jurisdiction
is vested by law in the Office of the Director General of the IPO.

54
On April 11, 2005, the CA rendered its presently assailed Resolution denying the Motion to Dismiss, dated November 16, 2004, and
the motion for reconsideration, as well as Motion to Dismiss, both dated February 7, 2005.

Hence, the present petition raising the following issues:

a) Can an injunctive relief be issued based on an action of patent infringement when the patent allegedly infringed has
already lapsed?

b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the Intellectual Property Office?

c) Is there forum shopping when a party files two actions with two seemingly different causes of action and yet pray for the
same relief?16

In the first issue raised, petitioner argues that respondents' exclusive right to monopolize the subject matter of the patent exists only
within the term of the patent. Petitioner claims that since respondents' patent expired on July 16, 2004, the latter no longer possess
any right of monopoly and, as such, there is no more basis for the issuance of a restraining order or injunction against petitioner
insofar as the disputed patent is concerned.

The Court agrees.

Section 37 of Republic Act No. (RA) 165,17 which was the governing law at the time of the issuance of respondents' patent, provides:

Section 37. Rights of patentees. A patentee shall have the exclusive right to make, use and sell the patented machine, article or
product, and to use the patented process for the purpose of industry or commerce, throughout the territory of the Philippines for the
term of the patent; and such making, using, or selling by any person without the authorization of the patentee constitutes
infringement of the patent.18

It is clear from the above-quoted provision of law that the exclusive right of a patentee to make, use and sell a patented product,
article or process exists only during the term of the patent. In the instant case, Philippine Letters Patent No. 21116, which was the
basis of respondents in filing their complaint with the BLA-IPO, was issued on July 16, 1987. This fact was admitted by respondents
themselves in their complaint. They also admitted that the validity of the said patent is until July 16, 2004, which is in conformity with
Section 21 of RA 165, providing that the term of a patent shall be seventeen (17) years from the date of issuance thereof. Section 4,
Rule 129 of the Rules of Court provides that an admission, verbal or written, made by a party in the course of the proceedings in the
same case, does not require proof and that the admission may be contradicted only by showing that it was made through palpable
mistake or that no such admission was made. In the present case, there is no dispute as to respondents' admission that the term of
their patent expired on July 16, 2004. Neither is there evidence to show that their admission was made through palpable mistake.
Hence, contrary to the pronouncement of the CA, there is no longer any need to present evidence on the issue of expiration of
respondents' patent.

On the basis of the foregoing, the Court agrees with petitioner that after July 16, 2004, respondents no longer possess the exclusive
right to make, use and sell the articles or products covered by Philippine Letters Patent No. 21116.

Section 3, Rule 58, of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction, viz:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the acts complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would
probably work injustice to the applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be
done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.

In this connection, pertinent portions of Section 5, Rule 58 of the same Rules provide that if the matter is of extreme urgency and the
applicant will suffer grave injustice and irreparable injury, a temporary restraining order may be issued ex parte.

From the foregoing, it can be inferred that two requisites must exist to warrant the issuance of an injunctive relief, namely: (1) the
existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to
prevent serious damage.19

55
In the instant case, it is clear that when the CA issued its January 18, 2005 Resolution approving the bond filed by respondents, the
latter no longer had a right that must be protected, considering that Philippine Letters Patent No. 21116 which was issued to them
already expired on July 16, 2004. Hence, the issuance by the CA of a temporary restraining order in favor of the respondents is not
proper.

In fact, the CA should have granted petitioner's motion to dismiss the petition for certiorari filed before it as the only issue raised
therein is the propriety of extending the writ of preliminary injunction issued by the BLA-IPO. Since the patent which was the basis
for issuing the injunction, was no longer valid, any issue as to the propriety of extending the life of the injunction was already
rendered moot and academic.

As to the second issue raised, the Court, is not persuaded by petitioner's argument that, pursuant to the doctrine of primary
jurisdiction, the Director General of the IPO and not the CA has jurisdiction to review the questioned Orders of the Director of the
BLA-IPO.

It is true that under Section 7(b) of RA 8293, otherwise known as the Intellectual Property Code of the Philippines, which is the
presently prevailing law, the Director General of the IPO exercises exclusive appellate jurisdiction over all decisions rendered by the
Director of the BLA-IPO. However, what is being questioned before the CA is not a decision, but an interlocutory order of the BLA-
IPO denying respondents' motion to extend the life of the preliminary injunction issued in their favor.

RA 8293 is silent with respect to any remedy available to litigants who intend to question an interlocutory order issued by the BLA-
IPO. Moreover, Section 1(c), Rule 14 of the Rules and Regulations on Administrative Complaints for Violation of Laws Involving
Intellectual Property Rights simply provides that interlocutory orders shall not be appealable. The said Rules and Regulations do not
prescribe a procedure within the administrative machinery to be followed in assailing orders issued by the BLA-IPO pending final
resolution of a case filed with them. Hence, in the absence of such a remedy, the provisions of the Rules of Court shall apply in a
suppletory manner, as provided under Section 3, Rule 1 of the same Rules and Regulations. Hence, in the present case,
respondents correctly resorted to the filing of a special civil action for certiorari with the CA to question the assailed Orders of the
BLA-IPO, as they cannot appeal therefrom and they have no other plain, speedy and adequate remedy in the ordinary course of
law. This is consistent with Sections 120 and 4,21 Rule 65 of the Rules of Court, as amended.

In the first place, respondents' act of filing their complaint originally with the BLA-IPO is already in consonance with the doctrine of
primary jurisdiction.

This Court has held that:

[i]n cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence
in observance of the doctrine of primary jurisdiction. The Court has ratiocinated that it cannot or will not determine a controversy
involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the
administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is
essential to comply with the premises of the regulatory statute administered. The objective of the doctrine of primary jurisdiction is to
guide a court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has
determined some question or some aspect of some question arising in the proceeding before the court. It applies where the claim is
originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial
process is suspended pending referral of such issues to the administrative body for its view.22

Based on the foregoing, the Court finds that respondents' initial filing of their complaint with the BLA-IPO, instead of the regular
courts, is in keeping with the doctrine of primary jurisdiction owing to the fact that the determination of the basic issue of whether
petitioner violated respondents' patent rights requires the exercise by the IPO of sound administrative discretion which is based on
the agency's special competence, knowledge and experience.

However, the propriety of extending the life of the writ of preliminary injunction issued by the BLA-IPO in the exercise of its quasi-
judicial power is no longer a matter that falls within the jurisdiction of the said administrative agency, particularly that of its Director
General. The resolution of this issue which was raised before the CA does not demand the exercise by the IPO of sound
administrative discretion requiring special knowledge, experience and services in determining technical and intricate matters of fact.
It is settled that one of the exceptions to the doctrine of primary jurisdiction is where the question involved is purely legal and will
ultimately have to be decided by the courts of justice.23 This is the case with respect to the issue raised in the petition filed with the
CA.

Moreover, as discussed earlier, RA 8293 and its implementing rules and regulations do not provide for a procedural remedy to
question interlocutory orders issued by the BLA-IPO. In this regard, it bears to reiterate that the judicial power of the courts, as
provided for under the Constitution, includes the authority of the courts to determine in an appropriate action the validity of the acts
of the political departments.24 Judicial power also includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.25Hence, the CA, and not
56
the IPO Director General, has jurisdiction to determine whether the BLA-IPO committed grave abuse of discretion in denying
respondents' motion to extend the effectivity of the writ of preliminary injunction which the said office earlier issued.

Lastly, petitioner avers that respondents are guilty of forum shopping for having filed separate actions before the IPO and the RTC
praying for the same relief.

The Court agrees.

Forum shopping is defined as the act of a party against whom an adverse judgment has been rendered in one forum, of seeking
another (and possibly favorable) opinion in another forum (other than by appeal or the special civil action of certiorari), or the
institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court
would make a favorable disposition.26

The elements of forum shopping are: (a) identity of parties, or at least such parties that represent the same interests in both actions;
(b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; (c) identity of the two preceding
particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata
in the action under consideration.27

There is no question as to the identity of parties in the complaints filed with the IPO and the RTC.

Respondents argue that they cannot be held guilty of forum shopping because their complaints are based on different causes of
action as shown by the fact that the said complaints are founded on violations of different patents.

The Court is not persuaded.

Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates a right of another.
In the instant case, respondents' cause of action in their complaint filed with the IPO is the alleged act of petitioner in importing,
distributing, selling or offering for sale Sulbactam Ampicillin products, acts that are supposedly violative of respondents' right to the
exclusive sale of the said products which are covered by the latter's patent. However, a careful reading of the complaint filed with
the RTC of Makati City would show that respondents have the same cause of action as in their complaint filed with the IPO. They
claim that they have the exclusive right to make, use and sell Sulbactam Ampicillin products and that petitioner violated this right.
Thus, it does not matter that the patents upon which the complaints were based are different. The fact remains that in both
complaints the rights violated and the acts violative of such rights are identical.

In fact, respondents seek substantially the same reliefs in their separate complaints with the IPO and the RTC for the purpose of
accomplishing the same objective.

It is settled by this Court in several cases that the filing by a party of two apparently different actions but with the same objective
constitutes forum shopping.28 The Court discussed this species of forum shopping as follows:

Very simply stated, the original complaint in the court a quo which gave rise to the instant petition was filed by the buyer (herein
private respondent and his predecessors-in-interest) against the seller (herein petitioners) to enforce the alleged perfected sale of
real estate. On the other hand, the complaint in the Second Case seeks to declare such purported sale involving the same real
property "as unenforceable as against the Bank," which is the petitioner herein. In other words, in the Second Case, the majority
stockholders, in representation of the Bank, are seeking to accomplish what the Bank itself failed to do in the original case in the trial
court. In brief, the objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner Bank
to escape from the obligation to sell the property to respondent.29

In Danville Maritime, Inc. v. Commission on Audit,30 the Court ruled as follows:

In the attempt to make the two actions appear to be different, petitioner impleaded different respondents therein PNOC in the case
before the lower court and the COA in the case before this Court and sought what seems to be different reliefs. Petitioner asks this
Court to set aside the questioned letter-directive of the COA dated October 10, 1988 and to direct said body to approve the
Memorandum of Agreement entered into by and between the PNOC and petitioner, while in the complaint before the lower court
petitioner seeks to enjoin the PNOC from conducting a rebidding and from selling to other parties the vessel "T/T Andres Bonifacio,"
and for an extension of time for it to comply with the paragraph 1 of the memorandum of agreement and damages. One can see that
although the relief prayed for in the two (2) actions are ostensibly different, the ultimate objective in both actions is the same, that is,
the approval of the sale of vessel in favor of petitioner, and to overturn the letter directive of the COA of October 10, 1988
disapproving the sale.31

In the instant case, the prayer of respondents in their complaint filed with the IPO is as follows:

57
A. Immediately upon the filing of this action, issue an ex parte order (a) temporarily restraining respondent, its agents,
representatives and assigns from importing, distributing, selling or offering for sale Sulbactam Ampicillin products to the
hospitals named in paragraph 9 of this Complaint or to any other entity in the Philippines, or from otherwise infringing
Pfizer Inc.'s Philippine Patent No. 21116; and (b) impounding all the sales invoices and other documents evidencing sales
by respondent of Sulbactam Ampicillin products.

B. After hearing, issue a writ of preliminary injunction enjoining respondent, its agents, representatives and assigns from
importing, distributing, selling or offering for sale Sulbactam Ampicillin products to the hospitals named in paragraph 9 of
the Complaint or to any other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine Patent No.
21116; and

C. After trial, render judgment:

(i) declaring that respondent has infringed Pfizer Inc.'s Philippine Patent No. 21116 and that respondent has no
right whatsoever over complainant's patent;

(ii) ordering respondent to pay complainants the following amounts:

(a) at least P1,000,000.00 as actual damages;

(b) P700,000.00 as attorney's fees and litigation expenses;

(d) P1,000,000.00 as exemplary damages; and

(d) costs of this suit.

(iii) ordering the condemnation, seizure or forfeiture of respondent's infringing goods or products, wherever they
may be found, including the materials and implements used in the commission of infringement, to be disposed
of in such manner as may be deemed appropriate by this Honorable Office; and

(iv) making the injunction permanent.32

In an almost identical manner, respondents prayed for the following in their complaint filed with the RTC:

(a) Immediately upon the filing of this action, issue an ex parte order:

(1) temporarily restraining Pharmawealth, its agents, representatives and assigns from importing, distributing,
selling or offering for sale infringing sulbactam ampicillin products to various government and private hospitals
or to any other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine Patent No. 26810.

(2) impounding all the sales invoices and other documents evidencing sales by pharmawealth of sulbactam
ampicillin products; and

(3) disposing of the infringing goods outside the channels of commerce.

(b) After hearing, issue a writ of preliminary injunction:

(1) enjoining Pharmawealth, its agents, representatives and assigns from importing, distributing, selling or
offering for sale infringing sulbactam ampicillin products to various government hospitals or to any other entity in
the Philippines, or from otherwise infringing Patent No. 26810;

(2) impounding all the sales invoices and other documents evidencing sales by Pharmawealth of sulbactam
ampicillin products; and

(3) disposing of the infringing goods outside the channels of commerce.

(c) After trial, render judgment:

58
(1) finding Pharmawealth to have infringed Patent No. 26810 and declaring Pharmawealth to have no right
whatsoever over plaintiff's patent;

(2) ordering Pharmawealth to pay plaintiffs the following amounts:

(i) at least P3,000,000.00 as actual damages;

(ii) P500,000.00 as attorney's fees and P1,000,000.00 as litigation expenses;

(iii) P3,000,000.00 as exemplary damages; and

(iv) costs of this suit.

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

(4) making the injunction permanent.33

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

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

Thus, the Court agrees with petitioner that respondents are indeed guilty of forum shopping.

Jurisprudence holds that if the forum shopping is not considered willful and deliberate, the subsequent case shall be dismissed
without prejudice, on the ground of either litis pendentia or res judicata.35 However, if the forum shopping is willful and deliberate,
both (or all, if there are more than two) actions shall be dismissed with prejudice.36 In the present case, the Court finds that
respondents did not deliberately violate the rule on non-forum shopping. Respondents may not be totally blamed for erroneously
believing that they can file separate actions simply on the basis of different patents. Moreover, in the suit filed with the RTC of
Makati City, respondents were candid enough to inform the trial court of the pendency of the complaint filed with the BLA-IPO as
well as the petition for certiorari filed with the CA. On these bases, only Civil Case No. 04-754 should be dismissed on the ground
of litis pendentia.

WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of the Court of Appeals, dated January 18, 2005 and
April 11, 2005, in CA-G.R. No. 82734, are REVERSED and SET ASIDE. The petition for certiorari filed with the Court of Appeals
is DISMISSED for being moot and academic.

Civil Case No. 04-754, filed with the Regional Trial Court of Makati City, Branch 138, is likewise DISMISSED on the ground of litis
pendentia.

SO ORDERED.

Phil. Pharmawealth, Inc. v. Pfizer, Inc. & Pfizer (Phil.), Inc. G.R. No. 167715, 17 November 2010

Facts:

Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is marketed under the brand name
Unasyn. Sometime in January and February 2003, Pfizer discovered that Pharmawealth submitted bids for the
supply of Sulbactam Ampicillin to several hospitals without the Pfizers consent. Pfizer then demanded that the
hospitals cease and desist from accepting such bids. Pfizer also demanded that Pharmawealth immediately withdraw
its bids to supply Sulbactam Ampicillin. Pharmawealth and the hospitals ignored the demands.

59
Pfizer then filed a complaint for patent infringement with a prayer for permanent injunction and forfeiture of the
infringing products. A preliminary injunction effective for 90 days was granted by the IPOs Bureau of Legal Affairs
(IPO-BLA). Upon expiration, a motion for extension filed by Pfizer was denied. Pfizer filed a Special Civil Action for
Certiorari in the Court of Appeals (CA) assailing the denial.

While the case was pending in the CA, Pfizer filed with the Regional Trial Court of Makati (RTC) a complaint for
infringement and unfair competition, with a prayer for injunction. The RTC issued a temporary restraining order, and
then a preliminary injunction.

Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum shopping. Nevertheless, the CA
issued a temporary restraining order. Pharmawealth again filed a motion to dismiss, alleging that the patent, the main
basis of the case, had already lapsed, thus making the case moot, and that the CA had no jurisdiction to review the
order of the IPO-BLA because this was granted to the Director General. The CA denied all the motions.
Pharmawealth filed a petition for review on Certiorari with the Supreme Court.

Issues:

a) Can an injunctive relief be issued based on an action of patent infringement when the patent allegedly infringed
has already lapsed?

b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the Intellectual Property
Office?

Held:

a) No. The provision of R.A. 165, from which the Pfizers patent was based, clearly states that "[the] patentee shall
have the exclusive right to make, use and sell the patented machine, article or product, and to use the patented
process for the purpose of industry or commerce, throughout the territory of the Philippines for the term of the patent;
and such making, using, or selling by any person without the authorization of the patentee constitutes infringement of
the patent."

Clearly, the patentees exclusive rights exist only during the term of the patent. Since the patent was registered on 16
July 1987, it expired, in accordance with the provisions of R.A. 165, after 17 years, or 16 July 2004. Thus, after 16
July 2004, Pfizer no longer possessed the exclusive right to make, use, and sell the products covered by their patent.
The CA was wrong in issuing a temporary restraining order after the cut-off date.

b) According to IP Code, the Director General of the IPO exercises exclusive jurisdiction over decisions of the IPO-
BLA. The question in the CA concerns an interlocutory order, and not a decision. Since the IP Code and the Rules
and Regulations are bereft of any remedy regarding interlocutory orders of the IPO-BLA, the only remedy available to
Pfizer is to apply the Rules and Regulations suppletorily. Under the Rules, a petition for certiorari to the CA is the
proper remedy. This is consistent with the Rules of Court. Thus, the CA had jurisdiction.

G.R. No. 179127 December 24, 2008

IN-N-OUT BURGER, INC., petitioner,


vs.
SEHWANI, INCORPORATED AND/OR BENITAS FRITES, INC., respondents.

DECISION

CHICO-NAZARIO, J.:

60
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the Decision1dated 18 July 2006
rendered by the Court of Appeals in CA-G.R. SP No. 92785, which reversed the Decision 2dated 23 December 2005 of the Director
General of the Intellectual Property Office (IPO) in Appeal No. 10-05-01. The Court of Appeals, in its assailed Decision, decreed that
the IPO Director of Legal Affairs and the IPO Director General do not have jurisdiction over cases involving unfair competition.

Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California, United States (US) of America,
which is a signatory to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in business
in the Philippines. 3

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the Philippines. 4

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-
OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31
May 2000, that respondent Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside
of the letter "O" formed like a star)."5 By virtue of a licensing agreement, Benita Frites, Inc. was able to use the registered mark of
respondent Sehwani, Incorporated.

Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against
respondents for unfair competition and cancellation of trademark registration. Petitioner averred in its complaint that it is the owner
of the trade name IN-N-OUT and the following trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-
OUT Burger Logo." These trademarks are registered with the Trademark Office of the US and in various parts of the world, are
internationally well-known, and have become distinctive of its business and goods through its long and exclusive commercial
use.6 Petitioner pointed out that its internationally well-known trademarks and the mark of the respondents are all registered for the
restaurant business and are clearly identical and confusingly similar. Petitioner claimed that respondents are making it appear that
their goods and services are those of the petitioner, thus, misleading ordinary and unsuspecting consumers that they are purchasing
petitioners products.7

Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing respondent Sehwani, Incorporated
to cease and desist from claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its trademark registration. In a letter-
reply dated 23 October 2000, respondents refused to accede to petitioner demand, but expressed willingness to surrender the
registration of respondent Sehwani, Incorporated of the "IN N OUT" trademark for a fair and reasonable consideration. 8

Petitioner was able to register the mark "Double Double" on 4 July 2002, based on their application filed on 2 June 1997. 9 It alleged
that respondents also used this mark, as well as the menu color scheme. Petitioners also averred that respondent Benitas receipts
bore the phrase, "representing IN-N-OUT Burger."10 It should be noted that that although respondent Sehwahi, Incorporated
registered a mark which appeared as "IN N OUT (the inside of the letter "O" formed like a star)," respondents used the mark "IN-N-
OUT."11

To counter petitioners complaint, respondents filed before the BLA-IPO an Answer with Counterclaim. Respondents asserted
therein that they had been using the mark "IN N OUT" in the Philippines since 15 October 1982. On 15 November 1991, respondent
Sehwani, Incorporated filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for the
registration of the mark "IN N OUT (the inside of the letter "O" formed like a star)." Upon approval of its application, a certificate of
registration of the said mark was issued in the name of respondent Sehwani, Incorporated on 17 December 1993. On 30 August
2000, respondents Sehwani, Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the former entitled
the latter to use its registered mark, "IN N OUT." Respondents asserted that respondent Sehwani, Incorporated, being the registered
owner of the mark "IN N OUT," should be accorded the presumption of a valid registration of its mark with the exclusive right to use
the same. Respondents argued that none of the grounds provided under the Intellectual Property Code for the cancellation of a
certificate of registration are present in this case. Additionally, respondents maintained that petitioner had no legal capacity to sue as
it had never operated in the Philippines.12

Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision dated 22 December 2003, 13 in favor
of petitioner. According to said Decision, petitioner had the legal capacity to sue in the Philippines, since its country of origin or
domicile was a member of and a signatory to the Convention of Paris on Protection of Industrial Property. And although petitioner
had never done business in the Philippines, it was widely known in this country through the use herein of products bearing its
corporate and trade name. Petitioners marks are internationally well-known, given the world-wide registration of the mark "IN-N-
OUT," and its numerous advertisements in various publications and in the Internet. Moreover, the IPO had already declared in a
previous inter partes case that "In-N-Out Burger and Arrow Design" was an internationally well-known mark. Given these
circumstances, the IPO Director for Legal Affairs pronounced in her Decision that petitioner had the right to use its tradename and
mark "IN-N-OUT" in the Philippines to the exclusion of others, including the respondents. However, respondents used the mark "IN
N OUT" in good faith and were not guilty of unfair competition, since respondent Sehwani, Incorporated did not evince any intent to
ride upon petitioners goodwill by copying the mark "IN-N-OUT Burger" exactly. The inside of the letter "O" in the mark used by
respondents formed a star. In addition, the simple act of respondent Sehwani, Incorporated of inquiring into the existence of a
pending application for registration of the "IN-N-OUT" mark was not deemed fraudulent. The dispositive part of the Decision of the
IPO Director for Legal Affairs reads:

61
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17 December 1993 for the mark "IN-N-OUT"
(the inside of the letter "O" formed like a star) issued in favor of Sehwani, Incorporated is hereby CANCELLED.
Consequently, respondents Sehwani, Inc. and Benitas Frites are hereby ordered to permanently cease and desist from
using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO" on its goods and in its business. With regards the mark
"Double-Double," considering that as earlier discussed, the mark has been approved by this Office for publication and that
as shown by evidence, Complainant is the owner of the said mark, Respondents are so hereby ordered to permanently
cease and desist from using the mark Double-Double. NO COSTS. 14

Both parties filed their respective Motions for Reconsideration of the aforementioned Decision. Respondents Motion for
Reconsideration15 and petitioners Motion for Partial Reconsideration16 were denied by the IPO Director for Legal Affairs in
Resolution No. 2004-1817 dated 28 October 2004 and Resolution No. 2005-05 dated 25 April 2005,18 respectively.

Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No. 179127, the case at bar.

G.R. No. 171053

On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004 denying their Motion for
Reconsideration. Thus, on 18 November 2004, respondents filed an Appeal Memorandum with IPO Director General Emma
Francisco (Director General Francisco). However, in an Order dated 7 December 2004, the appeal was dismissed by the IPO
Director General for being filed beyond the 15-day reglementary period to appeal.

Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules of Court, filed on 20 December
2004 and docketed as CA-G.R. SP No. 88004, challenging the dismissal of their appeal by the IPO Director General, which
effectively affirmed the Decision dated 22 December 2003 of the IPO Director for Legal Affairs ordering the cancellation of the
registration of the disputed trademark in the name of respondent Sehwani, Incorporated and enjoining respondents from using the
same. In particular, respondents based their Petition on the following grounds:

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING APPEAL NO. 14-2004-00004 ON A
MERE TECHNICALITY

THE BUREAU OF LEGAL AFFAIRS (SIC) DECISION AND RESOLUTION (1) CANCELLING RESPONDENTS
CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE
CONTRARY TO LAW AND/OR IS NOT SUPPORTED BY EVIDENCE.

Respondents thus prayed:

WHEREFORE, petitioners respectfully pray that this Honorable Court give due course to this petition, and thereafter order
the Office of the Director General of the Intellectual Property Office to reinstate and give due course to [respondent]s
Appeal No. 14-2004-00004.

Other reliefs, just and equitable under the premises, are likewise prayed for.

On 21 October 2005, the Court of Appeals rendered a Decision denying respondents Petition in CA-G.R SP No. 88004 and
affirming the Order dated 7 December 2004 of the IPO Director General. The appellate court confirmed that respondents appeal
before the IPO Director General was filed out of time and that it was only proper to cancel the registration of the disputed trademark
in the name of respondent Sehwani, Incorporated and to permanently enjoin respondents from using the same. Effectively, the 22
December 2003 Decision of IPO Director of Legal Affairs was likewise affirmed. On 10 November 2005, respondents moved for the
reconsideration of the said Decision. On 16 January 2006, the Court of Appeals denied their motion for reconsideration.

Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the matter to the Supreme Court in a
Petition for Review under Rule 45 of the Rules of Court, filed on 30 January 2006, bearing the title Sehwani, Incorporated v. In-N-
Out Burger and docketed as G.R. No. 171053.19

This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007,20 finding that herein respondents failed to file their
Appeal Memorandum before the IPO Director General within the period prescribed by law and, consequently, they lost their right to
appeal. The Court further affirmed the Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding that herein
petitioner had the legal capacity to sue for the protection of its trademarks, even though it was not doing business in the Philippines,
and ordering the cancellation of the registration obtained by herein respondent Sehwani, Incorporated of the internationally well-
known marks of petitioner, and directing respondents to stop using the said marks. Respondents filed a Motion for Reconsideration
of the Decision of this Court in G.R. No. 171053, but it was denied with finality in a Resolution dated 21 January 2008.

62
G.R. No. 179127

Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of the IPO Director for Legal
Affairs, petitioner was able to file a timely appeal before the IPO Director General on 27 May 2005.

During the pendency of petitioners appeal before the IPO Director General, the Court of Appeals already rendered on 21 October
2005 its Decision dismissing respondents Petition in CA-G.R. SP No. 88004.

In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioners appeal meritorious and
modified the Decision dated 22 December 2003 of the IPO Director of Legal Affairs. The IPO Director General declared that
respondents were guilty of unfair competition. Despite respondents claims that they had been using the mark since 1982, they only
started constructing their restaurant sometime in 2000, after petitioner had already demanded that they desist from claiming
ownership of the mark "IN-N-OUT." Moreover, the sole distinction of the mark registered in the name of respondent Sehwani,
Incorporated, from those of the petitioner was the star inside the letter "O," a minor difference which still deceived purchasers.
Respondents were not even actually using the star in their mark because it was allegedly difficult to print. The IPO Director General
expressed his disbelief over the respondents reasoning for the non-use of the star symbol. The IPO Director General also
considered respondents use of petitioners registered mark "Double-Double" as a sign of bad faith and an intent to mislead the
public. Thus, the IPO Director General ruled that petitioner was entitled to an award for the actual damages it suffered by reason of
respondents acts of unfair competition, exemplary damages, and attorneys fees.21 The fallo of the Decision reads:

WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair competition. Accordingly, Decision
No. 2003-02 dated 22 December 2003 is hereby MODIFIED as follows:

[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:

1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED SEVENTY FOUR AND
28/100(P212,574.28);

2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00);

3. Attorneys fees and expenses of litigation in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00).

All products of [herein respondents] including the labels, signs, prints, packages, wrappers, receptacles and materials
used by them in committing unfair competition should be without compensation of any sort be seized and disposed of
outside the channels of commerce.

Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for appropriate action, and the records be
returned to her for proper disposition. Further, let a copy of this Decision be furnished the Documentation, Information and
Technology Transfer Bureau for their information and records purposes.22

Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of Appeals another Petition for Review
under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 92785. Respondents based their second Petition before the
appellate court on the following grounds:

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING PETITIONERS LIABLE FOR UNFAIR
COMPETITION AND IN ORDERING THEM TO PAY DAMAGES AND ATTORNEYS FEES TO RESPONDENTS

THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU OF LEGAL AFFAIRS
DECISION (1) CANCELLING PETITIONERS CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2)
ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT MARK ON ITS
GOODS AND BUSINESS

Respondents assailed before the appellate court the foregoing 23 December 2005 Decision of the IPO Director General, alleging
that their use of the disputed mark was not tainted with fraudulent intent; hence, they should not be held liable for damages. They
argued that petitioner had never entered into any transaction involving its goods and services in the Philippines and, therefore, could
not claim that its goods and services had already been identified in the mind of the public. Respondents added that the disputed
mark was not well-known. Finally, they maintained that petitioners complaint was already barred by laches. 23

At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:

WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:

63
(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO and [petitioner], their agents,
successors and assigns, from executing, enforcing and implementing the IPO Director Generals Decision dated 23
December 2005, which modified the Decision No. 2003-02 dated 22 December 2003 of the BLA, until further orders from
this Honorable Court.

(b) after notice and hearing, enjoin the IPO and [petitioner], their agents, successors and assigns, from executing,
enforcing and implementing the Decision dated 23 December 2005 of the Director General of the IPO in IPV No. 10-2001-
00004 and to maintain the status quo ante pending the resolution of the merits of this petition; and

(c) after giving due course to this petition:

(i) reverse and set aside the Decision dated 23 December 2005 of the Director General of the IPO in IPV No.
10-2001-00004 finding the [respondents] guilty of unfair competition and awarding damages and attorneys fees
to the respondent

(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December 2003 and Resolution No. 2005-
05 of the BLA dated 25 April 2005, insofar as it finds [respondents] not guilty of unfair competition and hence not
liable to the [petitioner] for damages and attorneys fees;

(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and Resolution No. 2005-05 of the BLA
dated 25 April 2005, insofar as it upheld [petitioner]s legal capacity to sue; that [petitioner]s trademarks are
well-known; and that respondent has the exclusive right to use the same; and

(iv) make the injunction permanent.

[Respondents] also pray for other reliefs, as may deemed just or equitable. 24

On 18 July 2006, the Court of Appeals promulgated a Decision25 in CA-G.R. SP No. 92785 reversing the Decision dated 23
December 2005 of the IPO Director General.

The Court of Appeals, in its Decision, initially addressed petitioners assertion that respondents had committed forum shopping by
the institution of CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It ruled that respondents were not guilty of forum shopping,
distinguishing between the respondents two Petitions. The subject of Respondents Petition in CA-G.R SP No. 88004 was the 7
December 2004 Decision of the IPO Director General dismissing respondents appeal of the 22 December 2003 Decision of the IPO
Director of Legal Affairs. Respondents questioned therein the cancellation of the trademark registration of respondent Sehwani,
Incorporated and the order permanently enjoining respondents from using the disputed trademark. Respondents Petition in CA-
G.R. SP No. 92785 sought the review of the 23 December 2005 Decision of the IPO Director General partially modifying the 22
December 2003 Decision of the IPO Director of Legal Affairs. Respondents raised different issues in their second petition before the
appellate court, mainly concerning the finding of the IPO Director General that respondents were guilty of unfair competition and the
awarding of actual and exemplary damages, as well as attorneys fees, to petitioner.

The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not raised by the parties. The
appellate court declared that Section 163 of the Intellectual Property Code specifically confers upon the regular courts, and not the
BLA-IPO, sole jurisdiction to hear and decide cases involving provisions of the Intellectual Property Code, particularly trademarks.
Consequently, the IPO Director General had no jurisdiction to rule in its Decision dated 23 December 2005 on supposed violations
of these provisions of the Intellectual Property Code.

In the end, the Court of Appeals decreed:

WHEREFORE, the Petition is GRANTED. The Decision dated 23 December 2005 rendered by the Director General of the
Intellectual Property Office of the Philippines in Appeal No. 10-05-01 is REVERSED and SET ASIDE. Insofar as they
pertain to acts governed by Article 168 of R.A. 8293 and other sections enumerated in Section 163 of the same Code,
respondents claims in its Complaint docketed as IPV No. 10-2001-00004 are hereby DISMISSED.26

The Court of Appeals, in a Resolution dated 31 July 2007,27 denied petitioners Motion for Reconsideration of its aforementioned
Decision.

Hence, the present Petition, where petitioner raises the following issues:

64
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISIONDATED 18 JULY
2006 AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER
ADMINISTRATIVE COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;

II

WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISIONDATED 18 JULY
2006 AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A)
SUBMITTING A PATENTLY FALSE CERTIFICATION OF NON-FORUM SHOPPING; AND (B) FORUM SHOPPING
PROPER.28

As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this Court already promulgated its
Decision29 in G.R. No. 171053 on 15 October 2007, which affirmed the IPO Director Generals dismissal of respondents appeal for
being filed beyond the reglementary period, and left the 22 December 2003 Decision of the IPO Director for Legal Affairs, canceling
the trademark registration of respondent Sehwani, Incorporated and enjoining respondents from using the disputed marks.

Before discussing the merits of this case, this Court must first rule on the procedural flaws that each party has attributed to the other.

Formal Defects of the Petition

Respondents contend that the Verification/Certification executed by Atty. Edmund Jason Barranda of Villaraza and Angangco, which
petitioner attached to the present Petition, is defective and should result in the dismissal of the said Petition.

Respondents point out that the Secretarys Certificate executed by Arnold M. Wensinger on 20 August 2007, stating that petitioner
had authorized the lawyers of Villaraza and Angangco to represent it in the present Petition and to sign the Verification and
Certification against Forum Shopping, among other acts, was not properly notarized. The jurat of the aforementioned Secretarys
Certificate reads:

Subscribed and sworn to me this 20th day of August 2007 in Irving California.

Rachel A. Blake (Sgd.)


Notary Public30

Respondents aver that the said Secretarys Certificate cannot properly authorize Atty. Barranda to sign the Verification/Certification
on behalf of petitioner because the notary public Rachel A. Blake failed to state that: (1) petitioners Corporate Secretary, Mr.
Wensinger, was known to her; (2) he was the same person who acknowledged the instrument; and (3) he acknowledged the same
to be his free act and deed, as required under Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines.31

Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on Atty. Barandas
Verification/Certification attached to the instant Petition, noting the absence of (1) the serial number of the commission of the notary
public; (2) the office address of the notary public; (3) the roll of attorneys number and the IBP membership number; and (4) a
statement that the Verification/Certification was notarized within the notary publics territorial jurisdiction, as required under the 2004
Rules on Notarial Practice. 32

Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the present case. The requirements
enumerated therein refer to documents which require an acknowledgement, and not a mere jurat.

A jurat is that part of an affidavit in which the notary certifies that before him/her, the document was subscribed and sworn to by the
executor. Ordinarily, the language of the jurat should avow that the document was subscribed and sworn to before the notary public.
In contrast, an acknowledgment is the act of one who has executed a deed in going before some competent officer or court and
declaring it to be his act or deed. It involves an extra step undertaken whereby the signor actually declares to the notary that the
executor of a document has attested to the notary that the same is his/her own free act and deed.33 A Secretarys Certificate, as that
executed by petitioner in favor of the lawyers of the Angangco and Villaraza law office, only requires a jurat.34

Even assuming that the Secretarys Certificate was flawed, Atty. Barranda may still sign the Verification attached to the Petition at
bar. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of

65
his personal knowledge or based on authentic records. 35 The party itself need not sign the verification. A partys representative,
lawyer or any other person who personally knows the truth of the facts alleged in the pleading may sign the verification. 36 Atty.
Barranda, as petitioners counsel, was in the position to verify the truth and correctness of the allegations of the present Petition.
Hence, the Verification signed by Atty. Barranda substantially complies with the formal requirements for such.

Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty. Barandas Verification. It must be
borne in mind that the purpose of requiring a verification is to secure an assurance that the allegations of the petition has been
made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of
pleadings, and non-compliance therewith does not necessarily render it fatally defective. Indeed, verification is only a formal, not a
jurisdictional requirement. In the interest of substantial justice, strict observance of procedural rules may be dispensed with for
compelling reasons.37 The vital issues raised in the instant Petition on the jurisdiction of the IPO Director for Legal Affairs and the
IPO Director General over trademark cases justify the liberal application of the rules, so that the Court may give the said Petition
due course and resolve the same on the merits.

This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy, were less than careful with their
jurats or notarial certificates. Parties and their counsel should take care not to abuse the Courts zeal to resolve cases on their
merits. Notaries public in the Philippines are reminded to exert utmost care and effort in complying with the 2004 Rules on Notarial
Practice. Parties and their counsel are further charged with the responsibility of ensuring that documents notarized abroad be in
their proper form before presenting said documents before Philippine courts.

Forum Shopping

Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R. SP No. 92785, following their
earlier filing of the Petition in CA-G.R SP No. 88004. Petitioner also asserts that respondents were guilty of submitting to the Court
of Appeals a patently false Certification of Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein the
pendency of CA-G.R SP No. 88004.

Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or
the other court would make a favorable disposition. It is an act of malpractice and is prohibited and condemned as trifling with courts
and abusing their processes. In determining whether or not there is forum shopping, what is important is the vexation caused the
courts and parties-litigants by a party who asks different courts and/or administrative bodies to rule on the same or related causes
and/or grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being
rendered by the different bodies upon the same issues.38

Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2) rights or causes of action and
reliefs prayed for, and (3) the identity of the two preceding particulars is such that any judgment rendered in the other action, will,
regardless of which party is successful, amount to res judicata in the action under consideration.39

After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785, it would at first seem that
respondents are guilty of forum shopping.

There is no question that both Petitions involved identical parties, and raised at least one similar ground for which they sought the
same relief. Among the grounds stated by the respondents for their Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of
Legal Affairs (sic) Decision and Resolution (1) canceling [herein respondent Sehwani, Incorporated]s certificate of registration for
the mark IN-N-OUT and (2) ordering [herein respondents] to permanently cease and desist from using the subject mark on its
goods and business are contrary to law and/or is (sic) not supported by evidence." 40 The same ground was again invoked by
respondents in their Petition in CA-G.R. SP No. 92785, rephrased as follows: "The IPO Director General committed grave error in
affirming the Bureau of Legal Affairs (sic) Decision (1) canceling [herein respondent Sehwani, Incorporated]s certificate of
registration for the mark "IN-N-OUT," and (2) ordering [herein respondents] to permanently cease and desist from using the subject
mark on its goods and business."41 Both Petitions, in effect, seek the reversal of the 22 December 2003 Decision of the IPO Director
of Legal Affairs. Undoubtedly, a judgment in either one of these Petitions affirming or reversing the said Decision of the IPO Director
of Legal Affairs based on the merits thereof would bar the Court of Appeals from making a contrary ruling in the other Petition, under
the principle of res judicata.

Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which respondents did not raise in CA-G.R.
SP No. 88004, but can be found in CA-G.R. SP No. 92785, i.e., whether respondents are liable for unfair competition. Hence,
respondents seek additional reliefs in CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO Director General that
they are guilty of unfair competition, and the nullification of the award of damages in favor of petitioner resulting from said finding.
Undoubtedly, respondents could not have raised the issue of unfair competition in CA-G.R. SP No. 88004 because at the time they
filed their Petition therein on 28 December 2004, the IPO Director General had not yet rendered its Decision dated 23 December
2005 wherein it ruled that respondents were guilty thereof and awarded damages to petitioner.

In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it is only predictable, although not
necessarily legally tenable, for respondents to reassert their right to register, own, and use the disputed mark. Respondents again
raise the issue of who has the better right to the disputed mark, because their defense from the award of damages for unfair
66
competition depends on the resolution of said issue in their favor. While this reasoning may be legally unsound, this Court cannot
readily presume bad faith on the part of respondents in filing their Petition in CA-G.R. SP No. 92785; or hold that respondents
breached the rule on forum shopping by the mere filing of the second petition before the Court of Appeals.

True, respondents should have referred to CA-G.R. SP No. 88004 in the Certification of Non-Forum Shopping, which they attached
to their Petition in CA-G.R. SP No. 92785. Nonetheless, the factual background of this case and the importance of resolving the
jurisdictional and substantive issues raised herein, justify the relaxation of another procedural rule. Although the submission of a
certificate against forum shopping is deemed obligatory, it is not jurisdictional.42 Hence, in this case in which such a certification was
in fact submitted, only it was defective, the Court may still refuse to dismiss and, instead, give due course to the Petition in light of
attendant exceptional circumstances.

The parties and their counsel, however, are once again warned against taking procedural rules lightly. It will do them well to
remember that the Courts have taken a stricter stance against the disregard of procedural rules, especially in connection with the
submission of the certificate against forum shopping, and it will not hesitate to dismiss a Petition for non-compliance therewith in the
absence of justifiable circumstances.

The Jurisdiction of the IPO

The Court now proceeds to resolve an important issue which arose from the Court of Appeals Decision dated 18 July 2006 in CA-
G.R. SP No. 92785. In the afore-stated Decision, the Court of Appeals adjudged that the IPO Director for Legal Affairs and the IPO
Director General had no jurisdiction over the administrative proceedings below to rule on issue of unfair competition, because
Section 163 of the Intellectual Property Code confers jurisdiction over particular provisions in the law on trademarks on regular
courts exclusively. According to the said provision:

Section 163. Jurisdiction of Court.All actions under Sections 150, 155, 164, and 166 to 169 shall be brought before the
proper courts with appropriate jurisdiction under existing laws.

The provisions referred to in Section 163 are: Section 150 on License Contracts; Section 155 on Remedies on Infringement; Section
164 on Notice of Filing Suit Given to the Director; Section 166 on Goods Bearing Infringing Marks or Trade Names; Section 167 on
Collective Marks; Section 168 on Unfair Competition, Rights, Regulation and Remedies; and Section 169 on False Designations of
Origin, False Description or Representation.

The Court disagrees with the Court of Appeals.

Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of Legal Affairs, thus:

Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following functions:

10.1 Hear and decide opposition to the application for registration of marks; cancellation of trademarks; subject to the
provisions of Section 64, cancellation of patents and utility models, and industrial designs; and petitions for compulsory
licensing of patents;

10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws involving intellectual
property rights; Provided, That its jurisdiction is limited to complaints where the total damages claimed are not
less than Two hundred thousand pesos (P200,000): Provided, futher, That availment of the provisional remedies
may be granted in accordance with the Rules of Court. The Director of Legal Affairs shall have the power to hold and
punish for contempt all those who disregard orders or writs issued in the course of the proceedings.

(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more of the following administrative
penalties:

(i) The issuance of a cease and desist order which shall specify the acts that the respondent shall cease and
desist from and shall require him to submit a compliance report within a reasonable time which shall be fixed in
the order;

(ii) The acceptance of a voluntary assurance of compliance or discontinuance as may be imposed. Such
voluntary assurance may include one or more of the following:

(1) An assurance to comply with the provisions of the intellectual property law violated;

67
(2) An assurance to refrain from engaging in unlawful and unfair acts and practices subject of the
formal investigation

(3) An assurance to recall, replace, repair, or refund the money value of defective goods distributed in
commerce; and

(4) An assurance to reimburse the complainant the expenses and costs incurred in prosecuting the
case in the Bureau of Legal Affairs.

The Director of Legal Affairs may also require the respondent to submit periodic compliance reports
and file a bond to guarantee compliance of his undertaking.

(iii) The condemnation or seizure of products which are subject of the offense. The goods seized hereunder
shall be disposed of in such manner as may be deemed appropriate by the Director of Legal Affairs, such as by
sale, donation to distressed local governments or to charitable or relief institutions, exportation, recycling into
other goods, or any combination thereof, under such guidelines as he may provide;

(iv) The forfeiture of paraphernalia and all real and personal properties which have been used in the
commission of the offense;

(v) The imposition of administrative fines in such amount as deemed reasonable by the Director of Legal Affairs,
which shall in no case be less than Five thousand pesos (P5,000) nor more than One hundred fifty thousand
pesos (P150,000). In addition, an additional fine of not more than One thousand pesos (P1,000) shall be
imposed for each day of continuing violation;

(vi) The cancellation of any permit, license, authority, or registration which may have been granted by
the Office, or the suspension of the validity thereof for such period of time as the Director of Legal Affairs may
deem reasonable which shall not exceed one (1) year;

(vii) The withholding of any permit, license, authority, or registration which is being secured by the respondent
from the Office;

(viii) The assessment of damages;

(ix) Censure; and

(x) Other analogous penalties or sanctions.

10.3 The Director General may by Regulations establish the procedure to govern the implementation of this
Section.43 (Emphasis provided.)

Unquestionably, petitioners complaint, which seeks the cancellation of the disputed mark in the name of respondent Sehwani,
Incorporated, and damages for violation of petitioners intellectual property rights, falls within the jurisdiction of the IPO Director of
Legal Affairs.

The Intellectual Property Code also expressly recognizes the appellate jurisdiction of the IPO Director General over the decisions of
the IPO Director of Legal Affairs, to wit:

Section 7. The Director General and Deputies Director General. 7.1 Fuctions.The Director General shall exercise the
following powers and functions:

xxxx

b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the Director of
Patents, the Director of Trademarks, and the Director of Documentation, Information and Technology Transfer Bureau.
The decisions of the Director General in the exercise of his appellate jurisdiction in respect of the decisions of the Director
of Patents, and the Director of Trademarks shall be appealable to the Court of Appeals in accordance with the Rules of
Court; and those in respect of the decisions of the Director of Documentation, Information and Technology Transfer
Bureau shall be appealable to the Secretary of Trade and Industry;

68
The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code, conferring upon the BLA-IPO
jurisdiction over administrative complaints for violations of intellectual property rights, is a general provision, over which the specific
provision of Section 163 of the same Code, found under Part III thereof particularly governing trademarks, service marks, and
tradenames, must prevail. Proceeding therefrom, the Court of Appeals incorrectly concluded that all actions involving trademarks,
including charges of unfair competition, are under the exclusive jurisdiction of civil courts.

Such interpretation is not supported by the provisions of the Intellectual Property Code. While Section 163 thereof vests in civil
courts jurisdiction over cases of unfair competition, nothing in the said section states that the regular courts have sole jurisdiction
over unfair competition cases, to the exclusion of administrative bodies. On the contrary, Sections 160 and 170, which are also
found under Part III of the Intellectual Property Code, recognize the concurrent jurisdiction of civil courts and the IPO over unfair
competition cases. These two provisions read:

Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark Enforcement Action.Any foreign national
or juridical person who meets the requirements of Section 3 of this Act and does not engage in business in the Philippines
may bring a civil or administrative action hereunder for opposition, cancellation, infringement, unfair competition, or false
designation of origin and false description, whether or not it is licensed to do business in the Philippines under existing
laws.

xxxx

Section 170. Penalties.Independent of the civil and administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred
thousand pesos (P200,000), shall be imposed on any person who is found guilty of committing any of the acts mentioned
in Section 155, Section168, and Subsection169.1.

Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the petitioners administrative case
against respondents and the IPO Director General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.

Unfair Competition

The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003 Decision of the IPO Director of Legal
Affairs which: (1) directed the cancellation of the certificate of registration of respondent Sehwani, Incorporated for the mark "IN-N-
OUT" and (2) ordered respondents to permanently cease and desist from using the disputed mark on its goods and business. Such
an issue has already been settled by this Court in its final and executory Decision dated 15 October 2007 in G.R. No.
171053, Sehwani, Incorporated v. In-N-Out Burger,44 ultimately affirming the foregoing judgment of the IPO Director of Legal Affairs.
That petitioner has the superior right to own and use the "IN-N-OUT" trademarks vis--vis respondents is a finding which this Court
may no longer disturb under the doctrine of conclusiveness of judgment. In conclusiveness of judgment, any right, fact, or matter in
issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their
privies whether or not the claims, demands, purposes, or subject matters of the two actions are the same.45

Thus, the only remaining issue for this Court to resolve is whether the IPO Director General correctly found respondents guilty of
unfair competition for which he awarded damages to petitioner.

The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods and (2)
intent to deceive the public and defraud a competitor. The confusing similarity may or may not result from similarity in the marks, but
may result from other external factors in the packaging or presentation of the goods. The intent to deceive and defraud may be
inferred from the similarity of the appearance of the goods as offered for sale to the public. Actual fraudulent intent need not be
shown.46

In his Decision dated 23 December 2005, the IPO Director General ably explains the basis for his finding of the existence of unfair
competition in this case, viz:

The evidence on record shows that the [herein respondents] were not using their registered trademark but that of the
[petitioner]. [Respondent] SEHWANI, INC. was issued a Certificate of Registration for IN N OUT (with the Inside of the
Letter "O" Formed like a Star) for restaurant business in 1993. The restaurant opened only in 2000 but under the name
IN-N-OUT BURGER. Apparently, the [respondents] started constructing the restaurant only after the [petitioner]
demanded that the latter desist from claiming ownership of the mark IN-N-OUT and voluntarily cancel their trademark
registration. Moreover, [respondents] are also using [petitioners] registered mark Double-Double for use on hamburger
products. In fact, the burger wrappers and the French fries receptacles the [respondents] are using do not bear the mark
registered by the [respondent], but the [petitioners] IN-N-OUT Burgers name and trademark IN-N-OUT with Arrow
design.

69
There is no evidence that the [respondents] were authorized by the [petitioner] to use the latters marks in the business.
[Respondents] explanation that they are not using their own registered trademark due to the difficulty in printing the "star"
does not justify the unauthorized use of the [petitioners] trademark instead.

Further, [respondents] are giving their products the general appearance that would likely influence purchasers to believe
that these products are those of the [petitioner]. The intention to deceive may be inferred from the similarity of the goods
as packed and offered for sale, and, thus, action will lie to restrain such unfair competition. x x x.

xxxx

[Respondents] use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive purchasers. Exhibit
"GG," which shows the business establishment of [respondents] illustrates the imitation of [petitioners] corporate name
IN-N-OUT and signage IN-N-OUT BURGER. Even the Director noticed it and held:

"We also note that In-N-Out Burger is likewise, [petitioners] corporate name. It has used the "IN-N-OUT" Burger
name in its restaurant business in Baldwin Park, California in the United States of America since 1948. Thus it
has the exclusive right to use the tradenems "In-N-Out" Burger in the Philippines and the respondents are
unlawfully using and appropriating the same."

The Office cannot give credence to the [respondents] claim of good faith and that they have openly and continuously
used the subject mark since 1982 and is (sic) in the process of expanding its business. They contend that assuming that
there is value in the foreign registrations presented as evidence by the [petitioner], the purported exclusive right to the use
of the subject mark based on such foreign registrations is not essential to a right of action for unfair competition.
[Respondents] also claim that actual or probable deception and confusion on the part of customers by reason of
respondents practices must always appear, and in the present case, the BLA has found none. This Office finds the
arguments untenable.

In contrast, the [respondents] have the burden of evidence to prove that they do not have fraudulent intent in using the
mark IN-N-OUT. To prove their good faith, [respondents] could have easily offered evidence of use of their registered
trademark, which they claimed to be using as early as 1982, but did not.

[Respondents] also failed to explain why they are using the marks of [petitioner] particularly DOUBLE DOUBLE, and the
mark IN-N-OUT Burger and Arrow Design. Even in their listing of menus, [respondents] used [Appellants] marks of
DOUBLE DOUBLE and IN-N-OUT Burger and Arrow Design. In addition, in the wrappers and receptacles being used by
the [respondents] which also contained the marks of the [petitioner], there is no notice in such wrappers and receptacles
that the hamburger and French fries are products of the [respondents]. Furthermore, the receipts issued by the
[respondents] even indicate "representing IN-N-OUT." These acts cannot be considered acts in good faith. 47

Administrative proceedings are governed by the "substantial evidence rule." A finding of guilt in an administrative case would have to
be sustained for as long as it is supported by substantial evidence that the respondent has committed acts stated in the complaint or
formal charge. As defined, substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support
a conclusion.48 As recounted by the IPO Director General in his decision, there is more than enough substantial evidence to support
his finding that respondents are guilty of unfair competition.

With such finding, the award of damages in favor of petitioner is but proper. This is in accordance with Section 168.4 of the
Intellectual Property Code, which provides that the remedies under Sections 156, 157 and 161 for infringement shall apply mutatis
mutandis to unfair competition. The remedies provided under Section 156 include the right to damages, to be computed in the
following manner:

Section 156. Actions, and Damages and Injunction for Infringement.156.1 The owner of a registered mark may recover
damages from any person who infringes his rights, and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have made, had the defendant not infringed his rights, or the profit
which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the
amount of gross sales of the defendant or the value of the services in connection with which the mark or trade name was
used in the infringement of the rights of the complaining party.

In the present case, the Court deems it just and fair that the IPO Director General computed the damages due to petitioner by
applying the reasonable percentage of 30% to the respondents gross sales, and then doubling the amount thereof on account of
respondents actual intent to mislead the public or defraud the petitioner,49 thus, arriving at the amount of actual damages
of P212,574.28.

Taking into account the deliberate intent of respondents to engage in unfair competition, it is only proper that petitioner be awarded
exemplary damages. Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction
70
for the public good, such as the enhancement of the protection accorded to intellectual property and the prevention of similar acts of
unfair competition. However, exemplary damages are not meant to enrich one party or to impoverish another, but to serve as a
deterrent against or as a negative incentive to curb socially deleterious action.50 While there is no hard and fast rule in determining
the fair amount of exemplary damages, the award of exemplary damages should be commensurate with the actual loss or injury
suffered.51 Thus, exemplary damages of P500,000.00 should be reduced to P250,000.00 which more closely approximates the
actual damages awarded.

In accordance with Article 2208(1) of the Civil Code, attorneys fees may likewise be awarded to petitioner since exemplary
damages are awarded to it. Petitioner was compelled to protect its rights over the disputed mark. The amount of P500,000.00 is
more than reasonable, given the fact that the case has dragged on for more than seven years, despite the respondents failure to
present countervailing evidence. Considering moreover the reputation of petitioners counsel, the actual attorneys fees paid by
petitioner would far exceed the amount that was awarded to it.52

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No.
92785, promulgated on 18 July 2006, is REVERSED. The Decision of the IPO Director General, dated 23 December 2005, is
hereby REINSTATED IN PART, with the modification that the amount of exemplary damages awarded be reduced to P250,000.00.

SO ORDERED.

In-N-Out Burger, Inc vs Sehwani, Inc

G.R. No. 179127 : December 24, 2008

Facts: Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of US, which is a signatory
to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never
engaged in business in the Philippines. Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations
organized in the Philippines.

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of
the IPO for "IN-N-OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action
Papers issued by the IPO on 31 May 2000, that respondent Sehwani, Incorporated had already obtained Trademark
Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)." Petitioner eventually filed on 4
June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against respondents for
unfair competition and cancellation of trademark registration. Respondents asserted therein that they had been
using the mark "IN N OUT" in the Philippines since 15 October 1982. Respondent then filed with the BPTTT an
application for the registration of the mark. BPTTT approved its application and issued the corresponding certificate
of registration in favor of the respondent.

On Dec 22, 2003, IPO Director of Legal Affairs rendered a decision in favor of petitioner stating petitioner had the
right to use its tradename and mark in the Philippines to the exclusion of others. However, the decision also
includes that respondent is not guilty of unfair competition. Upon appeal by petitioner, the new IPO Director
General declared that respondents were guilty of unfair competition on December 23, 2005. On 18 July 2006, the
Court of Appeals promulgated a Decision reversing the Decision dated 23 December 2005 of the IPO Director
General. The appellate court declared that Section 163 of the Intellectual Property Code specifically confers upon
the regular courts, and not the BLA-IPO, sole jurisdiction to hear and decide cases involving provisions of the
Intellectual Property Code, particularly trademarks. Hence, the present petition.

Issue: (1) Whether the IPO (administrative bodies) have jurisdiction to cases involving unfair competition

(2) Whether respondent Sehwani is liable of unfair competition

Held: (1) Yes. Sec. 160 and 170, which are found under Part III of the IP Code, recognize the concurrent jurisdiction
of civil courts and the IPO over unfair competition cases. Therefore, the IPO Director of Legal Affairs have
jurisdiction to decide the petitioner's administrative case against respondents and the IPO Director General have
exclusive jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.

(2) Yes. The evidence on record shows that the respondents were not using their registered trademark but that of
the petitioner. Further, respondents are giving their products the general appearance that would likely influence
71
purchasers to believe that these products are those of the petitioner. The intention to deceive may be inferred from
the similarity of the goods as packed and offered for sale, and, thus, action will lie to restrain such unfair
competition. Also, respondents use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive
purchasers.

N.B.

The essential elements of an action for unfair competition are 1) confusing similarity in the general appearance of
the goods and (2) intent to deceive the public and defraud a competitor.

G.R. No. 161693 June 28, 2005

MANOLO P. SAMSON, petitioner,


vs.
HON. VICTORIANO B. CABANOS, In his capacity as Acting Presiding Judge, Regional Trial Court of Antipolo City, Branch
71,
PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.

DECISION

PUNO, J.:

Petitioner Manolo P. Samson seeks the reversal of the orders dated January 22, 2003 and November 17, 2003 issued by Presiding
Judge Felix S. Caballes and Acting Presiding Judge Victoriano B. Cabanos, respectively, of the Regional Trial Court (RTC) of
Antipolo City, Branch 71, in relation to Criminal Case No. 02-23183. The assailed orders denied petitioners motion to quash the
information for unfair competition filed against him before said court. 1 Petitioner also prayed that a temporary restraining order
and/or preliminary injunction be issued to enjoin respondent judge from further proceeding with Criminal Case No. 02-23183 until
the resolution of the instant petition. The Court issued a temporary restraining order on February 18, 2004. 2

The background facts: Petitioner was charged with the crime of unfair competition before the RTC of Antipolo City in an Information
that states:

The undersigned Senior State Prosecutor of the Department of Justice hereby accuses MANOLO P. SAMSON for violation of Sec.
168.3 (a) in relation to Secs. 123.1 (e), 131.3 and 170 of RA 8293 otherwise known as the Intellectual Property Code of the
Philippines, committed as follows:

That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Cainta, Rizal, Philippines, and
within the jurisdiction of this Honorable Court, above-named accused, owner/proprietor of ITTI Shoes Corporation located at F.P.
Felix Avenue, Cainta, Rizal, did then and there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR
products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or colorable
imitations of the authentic Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion,
mistake or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user
and owner of the following internationally famous marks: "CATERPILLAR", "CAT", "CATERPILLAR", "CAT", "CATERPILLAR &
DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR & DESIGN".

CONTRARY TO LAW.3

Petitioner moved to quash the information on the ground that the court has no jurisdiction over the offense charged in the
Information. He argued that Section 170 of Republic Act (R.A.) No. 82934 provides that the penalty for violation of Section 168
thereof is imprisonment from two (2) to five (5) years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred
thousand pesos (P200,000.00), and R.A. No. 76915 amending Batas Pambansa (B.P.) Blg. 1296 vested the Metropolitan Trial Courts
(MTC) exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the
amount of the fine.7Presiding Judge Felix S. Caballes denied the motion for lack of merit in his order dated January 22,
2003.8Petitioner filed a motion for reconsideration which was likewise denied by Acting Presiding Judge Victoriano B. Cabanos. 9

Petitioner filed the instant petition for certiorari before this Court on pure question of law:

Whether or not the respondent Regional Trial Court has jurisdiction over the offenses charged in the subject information where the
penalty therein range from two (2) years to five (5) years, pursuant to Section 170 of R.A. 8293, in the light of the enactment of
Republic Act No. 7691, amending B.P. Blg. 129, which vests exclusive original jurisdiction on the Metropolitan Trial Courts over all

72
offenses punishable with "imprisonment not exceeding six (6) years irrespective of the amount of fine", in relation to Section 163 of
R.A. No. 8293.10

Petitioner reiterates his argument before the trial court in support of his motion to quash. He contends that Section 170 of R.A. No.
8293 provides that the penalty to be imposed upon any person guilty of violation of Section 168 of the law is "imprisonment from two
(2) to five (5) years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00)."
Under Section 2 of R.A. No. 7691, amending Section 32 of B.P. 129, the MTC shall exercise exclusive original jurisdiction over all
offenses punishable with imprisonment not exceeding six (6) years irrespective of the fine. As petitioner is charged with an offense
penalized by imprisonment not exceeding six (6) years, the jurisdiction to try the case lies with the MTC and not the RTC. In
addition, petitioner submits that the old Trademark Law, R.A. No. 166, conferring jurisdiction on the Courts of First Instance (now
RTC) over complaints for unfair competition, has been repealed by Section 239 of R.A. No. 8293. He cites the Courts decision
in Mirpuri vs. Court of Appeals.11

The petition must be dismissed.

It appears that petitioner had already raised the same issue and argument before this Court in the case ofSamson vs.
Daway,12 decided on July 21, 2004. That case involved exactly the same facts and issue as in this case, except that the information
for unfair competition against petitioner was filed before the RTC of Quezon City. We held in that case:

The issues posed for resolution are - (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property
rights? xxx

Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks,
unfair competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine
ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:

SEC. 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 (P50,000.00) to Two hundred thousand pesos
(P200,000.00) shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155
[Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and False Description or
Representation].

Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167,
168 and 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws, thus -

SEC. 163. Jurisdiction of Court. - All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts
with appropriate jurisdiction under existing laws. (Emphasis supplied)

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that
jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or
representation, is lodged with the Court of First Instance (now Regional Trial Court) -

SEC. 27. Jurisdiction of Court of First Instance. - All actions under this Chapter [V - Infringement] and Chapters VI [Unfair
Competition] and VII [False Designatiion of Origin and False Description or Representation], hereof shall be brought before the
Court of First Instance.1avvphi1.net

We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293. The repealing clause of R.A.
No. 8293, reads -

SEC. 239. Repeals. - 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act No. 165, as
amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49,
including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis added)

Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases
"parts of Acts" and "inconsistent herewith;" and it would have simply stated "Republic Act No. 165, as amended; Republic Act No.
166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree
No. 285, as amended are hereby repealed." It would have removed all doubts that said specific laws had been rendered without
force and effect. The use of the phrases "parts of Acts" and "inconsistent herewith" only means that the repeal pertains only to
provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293. Section 27 of R.A. No. 166, however, is
consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction over violations of
intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163 thereof.

73
Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must
prevail. Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal
Trial Courts.

In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations of intellectual property
rights to the Regional Trial Court. They should therefore prevail over R.A. No. 7691, which is a general law. Hence, jurisdiction over
the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is
imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.

In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No.
8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual
Property Courts. On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual
Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial
Courts.

The case of Mirpuri v. Court of Appeals, invoked by petitioner finds no application in the present case. Nowhere inMirpuri did we
state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did we make a categorical ruling therein that
jurisdiction over cases for violation of intellectual property rights is lodged with the Municipal Trial Courts. The passing remark
in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the present Intellectual
Property Code and cannot thus be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights.

The foregoing ruling is the law of the case and thus lays to rest the issue posed by petitioner. We see no reason in this case to
deviate therefrom. It is a basic legal principle that whatever is once irrevocably established as the controlling legal rule or decision
between the same parties in the case continues to be the law of the case, whether correct on general principles or not, so long as
the facts on which such decision was predicated continue to be the facts of the case before the court. 13

IN VIEW WHEREOF, the petition is DISMISSED. The temporary restraining order issued by this Court on February 18, 2004 is
hereby LIFTED.

SO ORDERED.

G.R. No. 148222 August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,


vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.

DECISION

CORONA, J.:

In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails
the May 22, 2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2of the Regional Trial Court of Makati,
Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc.
(NEMI) liable for infringement of trademark and copyright, and unfair competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:

"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity

74
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only for
its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.

Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of
SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemarts chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMIs different branches. Pearl and Dean noted that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMIs establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its
advertisements for "Poster Ads" from the lighted display units in SMIs stores. Claiming that both SMI and NEMI failed to meet all its
demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Deans copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMIs good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Deans Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMIs averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."

The RTC of Makati City decided in favor of P & D:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section
28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - P16,600,000.00,


representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992

(b) moral damages - P1,000.000.00

(c) exemplary damages - P1,000,000.00

(d) attorneys fees - P1,000,000.00

75
plus

(e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro
Industrial Services and EYD Rainbow Advertising Corporation;

(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction; and

(4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its trademark "Poster Ads".

Defendants counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED.4

On appeal, however, the Court of Appeals reversed the trial court:

Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising
copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work, we have to agree with SMI when it
posited that what was copyrighted were the technical drawings only, and not the light boxes themselves, thus:

42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellants will not extend
to the actual object. It has so been held under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In
that case, Selden had obtained a copyright protection for a book entitled "Seldens Condensed Ledger or Bookkeeping Simplified"
which purported to explain a new system of bookkeeping. Included as part of the book were blank forms and illustrations consisting
of ruled lines and headings, specially designed for use in connection with the system explained in the work. These forms showed
the entire operation of a day or a week or a month on a single page, or on two pages following each other. The defendant Baker
then produced forms which were similar to the forms illustrated in Seldens copyrighted books. The Court held that exclusivity to the
actual forms is not extended by a copyright. The reason was that "to grant a monopoly in the underlying art when no examination of
its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not of
copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass the rigorous examination
of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to a copyright
registration which merely employs a recordal system without the benefit of an in-depth examination of novelty.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In
this case, Muller had obtained a copyright over an unpublished drawing entitled "Bridge Approach the drawing showed a novel
bridge approach to unsnarl traffic congestion". The defendant constructed a bridge approach which was alleged to be an
infringement of the new design illustrated in plaintiffs drawings. In this case it was held that protection of the drawing does not
extend to the unauthorized duplication of the object drawn because copyright extends only to the description or expression of the
object and not to the object itself. It does not prevent one from using the drawings to construct the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held
that there is no copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a
structure. This is because the copyright does not extend to the structures themselves.

In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical drawings of the latters advertising
display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective mantle of the
Trademark Law extends only to the goods used by the first user as specified in the certificate of registration, following the clear
mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:

SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a mark or trade-name shall
be prima facie evidence of the validity of the registration, the registrants ownership of the mark or trade-name, and of the
registrants exclusive right to use the same in connection with the goods, business or services specified in the certificate, subject to
any conditions and limitations stated therein." (underscoring supplied)

The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads" with the Bureau
of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register on September 12, 1988

76
under Registration No. 41165 covering the following products: stationeries such as letterheads, envelopes and calling cards and
newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of
the words "Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as
"an implicit permission to a manufacturer to venture into the production of goods and allow that producer to appropriate the brand
name of the senior registrant on goods other than those stated in the certificate of registration." The Supreme Court further
emphasized the restrictive meaning of Section 20 when it stated, through Justice Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise
whereby an applicant may be tempted to register a trademark on any and all goods which his mind may conceive even if he had
never intended to use the trademark for the said goods. We believe that such omnibus registration is not contemplated by our
Trademark Law.

While we do not discount the striking similarity between Pearl and Deans registered trademark and defendants-appellants "Poster
Ads" design, as well as the parallel use by which said words were used in the parties respective advertising copies, we cannot find
defendants-appellants liable for infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its
stationeries, in contrast to defendants-appellants who used the same words in their advertising display units. Why Pearl and Dean
limited the use of its trademark to stationeries is simply beyond us. But, having already done so, it must stand by the consequence
of the registration which it had caused.

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction of the generic
term poster advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary meaning in this
jurisdiction, we find that Pearl and Deans exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of
registration, namely, stationeries.

Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".

There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary award granted by
the lower court to Pearl and Dean has no leg to stand on.

xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered DISMISSING
the complaint and counterclaims in the above-entitled case for lack of merit. 5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the Courts
consideration:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEANS
TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE
THE LATTERS FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF
BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO
PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES AND COSTS OF SUIT.6

ISSUES

In resolving this very interesting case, we are challenged once again to put into proper perspective four main concerns of intellectual
property law patents, copyrights, trademarks and unfair competition arising from infringement of any of the first three. We shall
focus then on the following issues:

77
(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection
(copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso
facto also protected by such copyright?

(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks
and Technology Transfer (now Intellectual Property Office) in addition to the copyright of the engineering drawings?

(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of
a term descriptive of his goods, services or business?

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when SMI had the units manufactured by
Metro and EYD Rainbow Advertising for its own account. Obviously, petitioners position was premised on its belief that its copyright
over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was
no copyright infringement, the Court of Appeals held that the copyright was limited to the drawings alone and not to the light box
itself. We agree with the appellate court.

First, petitioners application for a copyright certificate as well as Copyright Certificate No. PD-R2588 issued by the National
Library on January 20, 1981 clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property
Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works:

xxx xxx xxx

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

xxx xxx xxx

Although petitioners copyright certificate was entitled "Advertising Display Units" (which depicted the box-type electrical devices), its
claim of copyright infringement cannot be sustained.

Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the
statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions
specified in the statute.7 Accordingly, it can cover only the works falling within the statutory enumeration or description. 8

P & D secured its copyright under the classification class "O" work. This being so, petitioners copyright protection extended only to
the technical drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations,
advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the
same could have referred only to the technical drawings within the category of "pictorial illustrations." It could not have possibly
stretched out to include the underlying light box. The strict application9 of the laws enumeration in Section 2 prevents us from giving
petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising Display Units." What the law does not
include, it excludes, and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the
copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by
the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising Display Units."

In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without license from P & D, then no doubt they
would have been guilty of copyright infringement. But this was not the case. SMIs and NEMIs acts complained of by P & D were to
have units similar or identical to the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow
Advertising, for leasing out to different advertisers. Was this an infringement of petitioners copyright over the technical drawings?
We do not think so.

During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an
"engineering or marketing invention."10 Obviously, there appeared to be some confusion regarding what ought or ought not to be the
proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three
legal rights are completely distinct and separate from one another, and the protection afforded by one cannot be used
interchangeably to cover items or works that exclusively pertain to the others:

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A
trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall
include a stamped or marked container of goods. In relation thereto, a trade name means the name or designation identifying or

78
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the moment of their creation. Patentable inventions, on the
other hand, refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is
industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner,
private respondents cannot be held legally liable for infringement of P & Ds copyright over itstechnical drawings of the said light
boxes, should they be liable instead for infringement of patent? We do not think so either.

For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could
have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from
manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "there
can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the
patent arises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the
right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy
and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive
right of making, selling or using the invention.13 On the assumption that petitioners advertising units were patentable inventions,
petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library.

To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial
requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public
domain through disclosure.14 Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation
without significant restraint.15

On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As
held in Bauer & Cie vs. ODonnel,16 "The act secured to the inventor the exclusive right to make use, and vend the thing patented,
and consequently to prevent others from exercising like privileges without the consent of the patentee. It was passed for the purpose
of encouraging useful invention and promoting new and useful inventions by the protection and stimulation given to inventive genius,
and was intended to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions and
improvements."

The law attempts to strike an ideal balance between the two interests:

"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful and non-
obvious advances in technology and design, in return for the exclusive right to practice the invention for a number of years. The
inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to
the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period,
the knowledge of the invention inures to the people, who are thus enabled to practice it and profit by its use." 17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes disclosures of
inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the
public."18

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required
because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded.
To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise
are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated lest in the constant demand for
new appliances, the heavy hand of tribute be laid on each slight technological advance in art." 19

There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the
creation of a work. The law confers the copyright from the moment of creation20 and the copyright certificate is issued upon
registration with the National Library of a sworn ex-parte claim of creation.

Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture,
sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings.

Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize the light boxs
eligibility as a patentable invention. The irony here is that, had petitioner secured a patent instead, its exclusivity would have been
for 17 years only. But through the simplified procedure of copyright-registration with the National Library without undergoing the
rigor of defending the patentability of its invention before the IPO and the public the petitioner would be protected for 50 years.
This situation could not have been the intention of the law.
79
In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the expression of an idea is protected by
copyright, not the idea itself. In that case, the plaintiff held the copyright of a book which expounded on a new accounting system he
had developed. The publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar
to those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled that:

"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be the subject
of a copyright; but, then, it is claimed only as a book. x x x. But there is a clear distinction between the books, as such, and the art,
which it is, intended to illustrate. The mere statement of the proposition is so evident that it requires hardly any argument to support
it. The same distinction may be predicated of every other art as well as that of bookkeeping. A treatise on the composition and use
of medicines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright;
but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein.
The copyright of the book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its
subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to
the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been
officially made, would be asurprise and a fraud upon the public. That is the province of letters patent, not of copyright. The
claim to an invention of discovery of an art or manufacture must be subjected to the examination of the Patent Office
before an exclusive right therein can be obtained; and a patent from the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just enumerated.
Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and
publishes a book on the subject (as regular physicians generally do), he gains no exclusive right to the manufacture and
sale of the medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for
the mixture as a new art, manufacture or composition of matter. He may copyright his book, if he pleases; but that only
secures to him the exclusive right of printing and publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the
modes of drawing described, though they may never have been known or used before. By publishing the book without getting a
patent for the art, the latter is given to the public.

xxx

Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in
the art, any person may practice and use the art itself which he has described and illustrated therein. The use of the art is a totally
different thing from a publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive
right to make, sell and use account books prepared upon the plan set forth in such book. Whether the art might or might not have
been patented, is a question, which is not before us. It was not patented, and is open and free to the use of the public. And, of
course, in using the art, the ruled lines and headings of accounts must necessarily be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by the peculiar
nature of the art described in the books, which have been made the subject of copyright. In describing the art, the illustrations and
diagrams employed happened to correspond more closely than usual with the actual work performed by the operator who uses the
art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays no foundation for an exclusive
claim to the art itself. The object of the one is explanation; the object of the other is use. The former may be secured by
copyright. The latter can only be secured, if it can be secured at all, by letters patent." (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the mark "Poster Ads" which petitioners president said was a contraction of "poster
advertising." P & D was able to secure a trademark certificate for it, but one where the goods specified were "stationeries such as
letterheads, envelopes, calling cards and newsletters."22 Petitioner admitted it did not commercially engage in or market these
goods. On the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,23where we, invoking
Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the Director of Patents can confer (upon
petitioner) the exclusive right to use its own symbol only to those goods specified in the certificate, subject to any conditions and
limitations specified in the certificate x x x. One who has adopted and used a trademark on his goods does not prevent the adoption
and use of the same trademark by others for products which are of a different description."24 Faberge, Inc. was correct and was in
fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for
specific use on the light boxes meant that there could not have been any trademark infringement since registration was an essential
element thereof.1wphi1

80
ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had no
registration.26 However, while the petitioners complaint in the RTC also cited unfair competition, the trial court did not find private
respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its claim of unfair competition.

But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.

By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the
use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use
by a business (such that the name or phrase becomes associated with the business or product in the mind of the purchasing public),
be entitled to protection against unfair competition.27 In this case, there was no evidence that P & Ds use of "Poster Ads" was
distinctive or well-known. As noted by the Court of Appeals, petitioners expert witnesses himself had testified that " Poster Ads was
too generic a name. So it was difficult to identify it with any company, honestly speaking." 28 This crucial admission by its own expert
witness that "Poster Ads" could not be associated with P & D showed that, in the mind of the public, the goods and services carrying
the trademark "Poster Ads" could not be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being
used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner. "Secondary
meaning" means that a word or phrase originally incapable of exclusive appropriation with reference to an article in the market
(because it is geographically or otherwise descriptive) might nevertheless have been used for so long and so exclusively by one
producer with reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has come to
mean that the article was his property.29 The admission by petitioners own expert witness that he himself could not associate
"Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of this exception.

Having discussed the most important and critical issues, we see no need to belabor the rest.

All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial Court of Makati
City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto.

SO ORDERED.

Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated


G.R. No. 148222, August 15, 2003

Facts: Pearl & Dean (P&D) is engaged in the manufacture of advertising display units referred to as light boxes.
These units utilize specially printed posters sandwiched between plastic sheets and illuminated with backlights. It was
able to secure registration over these illuminated display units. The advertising light boxes were marketed under the
trademark Poster Ads.
In 1985, P&D negotiated with defendant Shoemart, Inc. (SMI) for the lease and installation of the light boxes
in SM North Edsa. However, since SM North Edsa was under construction, SMI offered as alternative SM Makati and
Cubao. During the signing of the Contract, SMI only returned the Contract with SM Makati. Manager of petitioner
reminded SMI that their agreement includes SM Cubao. However, SMI did not bother to reply. Instead, respondent
informed petitioner that they are rescinding the contract for SM Makati due to non-performance.
Two years later, SMI engaged the services of EYD Rainbow Advertising to make the light boxes. These were
delivered in a staggered basis and installed at SM Megamall and SM City. In 1989, petitioner received reports that
exact copy of its light boxes was installed by SMI. It further discovered that North Edsa Marketing Inc. (NEMI), sister
company of SMI, was set up primarily to sell advertising space in lighted display units located in SMIs different
branches. Petitioner sent letters to respondents asking them to cease using the light boxes and the discontinued use
of the trademark Poster Ads.
Claiming that SMI and NEMI failed to meet its demand, petitioner filed a case for infringement of trademark
and copy right, unfair competition and damages. SMI maintained that it independently developed its poster panels
using commonly known techniques and available technology without notice of or reference to P&Ds copyright. In
addition, it said that registration of Poster Ads obtained by petitioner was only for stationeries such as letterheads,
envelopes and the like. Poster Ads is a generic term which cannot be appropriated as trademark, and, as such,
registration of such mark is invalid. It also stressed that P&D is not entitled to the reliefs sought because the
advertising display units contained no copyright notice as provided for by law.
RTC found SMI and NEMI jointly and severally liable for infringement of copyright and trademark. CA
reversed saying that it agreed with SMI that what was copyrighted was the technical drawings only and not the light
boxes. Light boxes cannot be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box
81
wraps, to be properly classified as copyrightable class O work. In addition, CA stressed that the protective mantle of
the Trademark Law extends only to the goods used by the first user as specified in its certificate of registration. The
registration of the trademark Poster Ads covers only stationeries such as letterheads, envelopes and calling cards
and newsletter.

ISSUES: (1) If the engineering or technical drawings of an advertising display unit are granted copyright protection is
the light box depicted in such drawings ipso facto also protected by such copyright? (2) Should the light box be
registered separately? (3) Can the owner of the registered trademark legally prevent others from using such mark if it
is mere abbreviation of a term descriptive of his goods, services or business?

Held:
1. No. Copyright is purely statutory. As such, the rights are limited to what the statute confers. It may be
obtained and enjoyed only with respect to the subjects and by the persons, and on the terms and conditions
specified in the statute. Accordingly, it can cover only the works falling within the statutory enumeration or
description. Petitioner secured copyright under classification class O work. Thus, copyright protection
extended only to the technical drawings and not to the light box itself because the latter was not at all in the
category of prints, pictorial illustrations, advertising copies, labels, tags and box wraps.
What the law does not include, it excludes, and for the good reason: the light box was not a literary
or artistic piece which could be copyrighted under the copyright law. And no less clearly, neither could the
lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling
the copyright certificate issued by the National Library as Advertising Display Units.
It must be noted that 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.

2. Yes. Petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could
have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally
prevent anyone from manufacturing or commercially using the contraption. To be able to effectively and
legally preclude others from copying and profiting from the invention, a patent is a primordial requirement.
No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into
the public through disclosure. Ideas, once, disclosed to the public without protection of a valid patent, are
subject to appropriation without significant restraint.
The Patent Law has a three-fold purpose: first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to
practice the invention once the patent expires; third, the stringent requirements for patent protection seek to
ensure that ideas in the public domain remain there for the free use of the public. It is only after an
exhaustive examination by the patent office that patent is issued. Therefore, not having gone through the
arduous examination for patents, petitioner cannot exclude other s from the manufacture, sale or
commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings.

3. Court agrees with CA that the certificate of registration issued by the Director of Patents can confer the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to any
conditions and limitations specified in the certificate. One who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by others for products which are of a
different description.
Assuming arguendo that Poster Ads could validly qualify as a trademark, the failure of petitioner
to secure a trademark registration for specific use on the light boxes meant that there could not have been
any trademark infringement since registration was an essential element thereof.
There is no evidence that petitioners use of poster Ads was distinctive or well-known. As noted by
CA, petitioners expert witness himself had testified that Poster Ads was not too generic a name. SO it was
difficult to identify it with any company. This fact also prevented the application of the doctrine of secondary
meaning. Poster Ads was generic and incapable of being used as a trademark because it was used in the
field of poster advertising the very business engaged in by petitioner. Secondary meaning means that a
word or phrase originally incapable of exclusive appropriation with reference to an article in the market might
nevertheless have been used for so long and so exclusively by one producer with reference to his article
that , in the trade and to that branch of the purchasing public, the word or phrase has come to mean that the
article was his property.
PETITION WAS DENIED.

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Section 21. Patentable Inventions. - Any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable shall be Patentable. It may be, or may relate to, a
product, or process, or an improvement of any of the foregoing. (Sec. 7, R.A. No. 165a)

G.R. No. 113388 September 5, 1997

ANGELITA MANZANO, petitioner,


vs.
COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY MANUFACTURING
CORPORATION, respondents.

BELLOSILLO, J.:

The primary purpose of the patent system is not the reward of the individual but the advancement of the arts and sciences. The
function of a patent is to add to the sum of useful knowledge and one of the purposes of the patent system is to encourage
dissemination of information concerning discoveries and inventions. This is a matter which is properly within the competence of the
Patent Office the official action of which has the presumption of correctness and may not be interfered with in the absence of new
evidence carrying thorough conviction that the Office has erred. Since the Patent Office is an expert body preeminently qualified to
determine questions of patentability, its findings must be accepted if they are consistent with the evidence, with doubts as to
patentability resolved in favor of the Patent Office. 1

Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for the cancellation of Letters
Patent No. UM-4609 for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the
letters patent to New United Foundry and Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the
utility model covered by the letters patent, in this case, an LPG gas burner, was not inventive, new or useful; (b) the specification of
the letters patent did not comply with the requirements of Sec. 14, RA No. 165, as amended; (c) respondent Melecia Madolaria was
not the original, true and actual inventor nor did she derive her rights from the original, true and actual inventor of the utility model
covered by the letters patent; and, (d) the letters patent was secured by means of fraud or misrepresentation. In support of her
petition for cancellation petitioner further alleged that (a) the utility model covered by the letters patent of respondent had been
known or used by others in the Philippines for more than one (1) year before she filed her application for letters patent on 9
December 1979; (b) the products which were produced in accordance with the utility model covered by the letters patent had been
in public use or on sale in the Philippines for more than one (1) year before the application for patent therefor was filed.

Petitioner presented the following documents which she correspondingly marked as exhibits: (a) affidavit of petitioner alleging the
existence of prior art, marked Exh. "A;" (b) a brochure distributed by Manila Gas Corporation disclosing a pictorial representation of
Ransome Burner made by Ransome Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by Esso
Gasul or Esso Standard Eastern, Inc., of the Philippines showing a picture of another similar burner with top elevation view and
another perspective view of the same burner, marked Exh. "E."

Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the UNITED FOUNDRY where
respondent Melecia Madolaria used to be affiliated with from 1965 to 1970; that Ong helped in the casting of an LPG burner which
was the same utility model of a burner for which Letters Patent No. UM-4609 was issued, and that after her husband's separation
from the shop she organized Besco Metal Manufacturing (BESCO METAL, for brevity) for the casting of LPG burners one of which
had the configuration, form and component parts similar to those being manufactured by UNITED FOUNDRY. Petitioner presented
in evidence an alleged model of an LPG burner marked Exh. "K" and covered by the Letters Patent of respondent, and testified that
it was given to her in January 1982 by one of her customers who allegedly acquired it from UNITED FOUNDRY. Petitioner also
presented in evidence her own model of an LPG burner called "Ransome" burner marked Exh. "L," which was allegedly
manufactured in 1974 or 1975 and sold by her in the course of her business operation in the name of BESCO METAL. Petitioner
claimed that this "Ransome" burner (Exh. "L") had the same configuration and mechanism as that of the model which was patented
in favor of private respondent Melecia Madolaria. Also presented by petitioner was a burner cup of an imported "Ransome" burner
marked Exh "M" which was allegedly existing even before the patent application of private respondent.

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Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel Francisco. Ong testified that he worked
as a helper in the UNITED FOUNDRY from 1965 to 1970 where he helped in the casting of LPG burners with the same form,
configuration and mechanism as that of the model covered by the Letters Patent issued to private respondent. Francisco testified
that he had been employed with the Manila Gas Corporation from 1930 to 1941 and from 1952 up to 1969 where he retired as
supervisor and that Manila Gas Corporation imported "Ransome" burners way back in 1965 which were advertised through
brochures to promote their sale.

Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who testified, among others, that he was
the General Supervisor of the UNITED FOUNDRY in the foundry, machine and buffing section; that in his early years with the
company, UNITED FOUNDRY was engaged in the manufacture of different kinds of gas stoves as well as burners based on
sketches and specifications furnished by customers; that the company manufactured early models of single-piece types of burners
where the mouth and throat were not detachable; that in the latter part of 1978 respondent Melecia Madolaria confided in him that
complaints were being brought to her attention concerning the early models being manufactured; that he was then instructed by
private respondent to cast several experimental models based on revised sketches and specifications; that private respondent again
made some innovations; that after a few months, private respondent discovered the solution to all the defects of the earlier models
and, based on her latest sketches and specifications, he was able to cast several models incorporating the additions to the
innovations introduced in the models. Various tests were conducted on the latest model in the presence and under the supervision
of Melecia Madolaria and they obtained perfect results. Rolando Madolaria testified that private respondent decided to file her
application for utility model patent in December 1979.

On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the petition for cancellation and
holding that the evidence of petitioner was not able to establish convincingly that the patented utility model of private respondent
was anticipated. Not one of the various pictorial representations of business clearly and convincingly showed that the devices
presented by petitioner was identical or substantially identical with the utility model of the respondent. The decision also stated that
even assuming that the brochures depicted clearly each and every element of the patented gas burner device so that the prior art
and patented device became identical although in truth they were not, they could not serve as anticipatory bars for the reason that
they were undated. The dates when they were distributed to the public were not indicated and, therefore, were useless prior art
references. The records and evidence also do not support the petitioner's contention that Letters Patent No. UM-4609 was obtained
by means of fraud and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the then applicant
Melecia Madolaria withheld with intent to deceive material facts which, if disclosed, would have resulted in the refusal by the
Philippine Patent Office to issue the Letters Patent under inquiry.

Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15 October 1993 affirmed the decision of
the Director of Patents. Hence, this petition for review on certiorari alleging that the Court of Appeals erred (a) in relying on
imaginary differences which in actuality did not exist between the model of private respondent covered by Letters Patent No. UM-
4609 and the previously known model of Esso Standard Eastern, Inc., and Manila Gas Corporation, making such imaginary
differences grounded entirely on speculation, surmises and conjectures; (b) in rendering judgment based on misapprehension of
facts; (c) in relying mainly on the testimony of private respondent's sole witness Rolando Madolaria; and, (d) in not cancelling Letters
Patent No. UM-4609 in the name of private respondent.

Petitioner submits that the differences cited by the Court of Appeals between the utility model of private respondent and the models
of Manila Gas Corporation and Esso Standard Eastern, Inc., are more imaginary than real. She alleges that based on Exhs. "E," "E-
1," "F" and "F-1" or the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the cup-
shaped burner mouth and threaded hole on the side are shown to be similar to the utility model of private respondent. The exhibits
also show a detachable burner mouth having a plurality of upwardly existing undulations adopted to act as gas passage when the
cover is attached to the top of said cup-shaped mouth all of which are the same as those in the patented model. Petitioner also
denies as substantial difference the short cylindrical tube of the burner mouth appearing in the brochures of the burners being sold
by Manila Gas Corporation and the long cylindered tube of private respondent's model of the gas burner.

Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in form, operation and mechanism
and parts between the utility model of private respondent and those depicted in the brochures. The findings of the Patent Office and
the Court of Appeals that the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot overcome
the fact of their circulation before private respondent filed her application for utility model patent. Petitioner thus asks this Court to
take judicial notice of the fact that Esso Standard Eastern, Inc., disappeared before 1979 and reappeared only during the Martial
Law years as Petrophil Corporation. Petitioner also emphasizes that the brochures indicated the telephone number of Manila Gas
Corporation as 5-79-81 which is a five (5) numbered telephone number existing before 1975 because telephones in Metro Manila
started to have six (6) numbers only after that year.

Petitioner further contends that the utility model of private respondent is absolutely similar to the LPG burner being sold by petitioner
in 1975 and 1976, and also to the "Ransome" burner depicted in the old brochures of Manila Gas Corporation and Esso Standard
Eastern, Inc., fabricated by Ransome Torch and Burner Company of Oakland, California, USA, especially when considered through
actual physical examination, assembly and disassembly of the models of petitioner and private respondent. Petitioner faults the
Court of Appeals for disregarding the testimonies of Ong Bun Tua and Fidel Francisco for their failure to produce documents on the
alleged importation by Manila Gas Corporation of "Ransome" burners in 1965 which had the same configuration, form and
mechanism as that of the private respondent's patented model.

84
Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria should not have been given weight by
the Patent Office and the Court of Appeals because it contained mere after-thoughts and pretensions.

We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents, expressly provides

Sec. 7. Inventians patentable. Any invention of a new and useful machine, manufactured product or substance, process or
an improvement of any of the foregoing, shall be patentable.

Further, Sec. 55 of the same law provides

Sec. 55. Design patents and patents for utility models. (a) Any new, original and ornamental design for an article of
manufacture and (b) any new model of implements or tools or of any industrial product or of part of the same, which does
not possess the quality of invention, but which is of practical utility by reason of its form, configuration, construction or
composition, may be protected by the author thereof, the former by a patent for a design and the latter by a patent for a
utility model, in the same manner and subject to the same provisions and requirements as relate to patents for inventions
insofar as they are applicable except as otherwise herein provided.

The element of novelty is an essential requisite of the patentability of an invention or discovery. If a device or process has been
known or used by others prior to its invention or discovery by the applicant, an application for a patent therefor should be denied;
and if the application has been granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will
hold it void and ineffective. 2 It has been repeatedly held that an invention must possess the essential elements of novelty, originality
and precedence, and for the patentee to be entitled to the protection the invention must be new to the world. 3

In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981, the Philippine Patent Office found
her invention novel and patentable. The issuance of such patent creates a presumption which yields only to clear and cogent
evidence that the patentee was the original and first inventor. The burden of proving want of novelty is on him who avers it and the
burden is a heavy one which is met only by clear and satisfactory proof which overcomes every reasonable doubt. 4 Hence, a utility
model shall not be considered "new" if before the application for a patent it has been publicly known or publicly used in this country
or has been described in a printed publication or publications circulated within the country, or if it is substantially similar to any other
utility model so known, used or described within the country. 5

As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption of legality of the issuance of
UM-4609 to respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. Thus the Director
of Patents explained his reasons for the denial of the petition to cancel private respondent's patent

Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not anticipated. Not one of the various
pictorial representations of burners clearly and convincingly show that the device presented therein is identical or
substantially identical in construction with the aforesaid utility model. It is relevant and material to state that in determining
whether novelty or newness is negatived by any prior art, only one item of the prior art may be used at a time. For
anticipation to occur, the prior art must show that each element is found either expressly or described or under principles
of inherency in a single prior art reference or that the claimed invention was probably known in a single prior art device or
practice. (Kalman v. Kimberly Clark, 218 USPQ 781, 789)

Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours each and every element of the
patented gas burner device so that the prior art and the said patented device become identical, although in truth they are
not, they cannot serve as anticipatory bars for the reason that they are undated. The dates when they were distributed to
the public were not indicated and, therefore, they are useless prior art references.

xxx xxx xxx

Furthermore, and more significantly, the model marked Exh. "K" does not show whether or not it was manufactured and/or
cast before the application for the issuance of patent for the LPG burner was filed by Melecia Madolaria.

With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner allegedly manufactured sometime in
1974 or 1975 and sold by her in the course of her business operation in the name of Besco Metal Manufacturing, which
burner was denominated as "Ransome" burner

xxx xxx xxx

But a careful examination of Exh. "L" would show that it does not bear the word "Ransome" which is the burner referred to
as the product being sold by the Petitioner. This is not the way to prove that Exh. "L" anticipates Letters Patent No. UM-
4609 through Exhs. "C" and "D." Another factor working against the Petitioner's claims is that an examination of Exh. "L"

85
would disclose that there is no indication of the time or date it was manufactured. This Office, thus has no way of
determining whether Exh. "L" was really manufactured before the filing of the aforesaid application which matured into
Letters Patent No. UM-4609, subject matter of the cancellation proceeding.

At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M" which is the alleged burner cup of an
imported "Ransome" burner. Again, this Office finds the same as unreliable evidence to show anticipation. It observed that
there is no date indicated therein as to when it was manufactured and/or imported before the filing of the application for
issuance of patent of the subject utility model. What is more, some component parts of Exh. "M" are missing, as only the
cup was presented so that the same could not be compared to the utility model (subject matter of this case) which
consists of several other detachable parts in combination to form the complete LPG burner.

xxx xxx xxx

It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of Manila Gas and of Esso Gasul
marked Exhs. "E" and "F" and on the alleged fact that Manila Gas Corporation was importing from the United States
"Ransome" burners. But the same could not be given credence since he himself admitted during cross-examination that
he has never been connected with Manila Gas Corporation. He could not even present any importation papers relating to
the alleged imported ransome burners. Neither did his wife. 6

The above findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals. 7

The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the
inventiveness, novelty and usefulness of the improved model of the LPG burner are matters which are better determined by the
Patent Office. The technical staff of the Philippine Patent Office composed of experts in their field has by the issuance of the patent
in question accepted private respondent's model of gas burner as a discovery. There is a presumption that the Office has correctly
determined the patentability of the model 8 and such action must not be interfered with in the absence of competent evidence to the
contrary.

The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are
conclusive on this Court when supported by substantial evidence. Petitioner has failed to show compelling grounds for a reversal of
the findings and conclusions of the Patent Office and the Court of Appeals.

The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight to the testimonies of the
witnesses of petitioner showing anticipation is not a justification to grant the petition. Pursuant to the requirement of clear and
convincing evidence to overthrow the presumption of validity of a patent, it has been held that oral testimony to show anticipation is
open to suspicion and if uncorroborated by cogent evidence, as what occurred in this case, it may be held insufficient. 9

Finally, petitioner would want this Court to review all over again the evidence she presented before the Patent Office. She argues
that contrary to the decision of the Patent Office and the Court of Appeals, the evidence she presented clearly proves that the
patented model of private respondent is no longer new and, therefore, fraud attended the acquisition of patent by private
respondent.

It has been held that the question on priority of invention is one of fact. Novelty and utility are likewise questions of fact. The validity
of patent is decided on the basis of factual inquiries. Whether evidence presented comes within the scope of prior art is a factual
issue to be resolved by the Patent Office. 10 There is question of fact when the doubt or difference arises as to the truth or falsehood
of alleged facts or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of
witnesses, existence and relevance of specific surrounding circumstances, their relation to each other and to the whole and the
probabilities of the situation. 11

Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all over again the evidence and
credibility of witnesses presented before the lower tribunal or office. The Supreme Court is not a trier of facts. Its jurisdiction is
limited to reviewing and revising errors of law imputed to the lower court, its findings of fact being conclusive and not reviewable by
this Court.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the Philippine Patent Office is
AFFIRMED. Costs against petitioner.

SO ORDERED.

FIRST DIVISION

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[G.R. No. 113388. September 5, 1997]

ANGELITA MANZANO, petitioner, vs. COURT OF APPEALS, and MELECIA MADOLARIA, as


Assignor to NEW UNITED FOUNDRY MANUFACTURING CORPORATION, respondents.

FACTS:

The petitioner filed an action for the cancellation of Letters of Patent covering a gas burner
registered in the name of responded Melecia Madolaria who subsequently assigned the letter of patent
to United Foundry. Petitioner alleged that the private respondent was not the original, true and actual
inventor nor did she derive her rights from the original, true and actual inventor of the utility model
covered by the letter of patent; further alleged that the utility model covered by the subject letter of
patent had been known or used by others in the Philippines for than one (1) year before she filed her
application for letter of patent on Dec 1979. For failure to present substantive proof of her allegations,
the lower court and Court of Appeals denied the action for cancellation. Hence, the present petition.

ISSUE:

Whether or not the respondent court wrongfully denied the cancellation of letter of patent
registered under the private respondent.

HELD:

No. The issuance of such patent creates a presumption which yields only to clear and cogent
evidence that the patentee was the original and first inventor. The burden of proving want of novelty
is on him who avers it and the burden is a heavy one which is met only by clear and satisfactory proof
which overcomes every reasonable doubt. Clearly enough, the petitioner failed to present clear and
satisfactory proof to overcome every reasonable doubt to afford the cancellation of the patent to the
private respondent.

Section 22. Non-Patentable Inventions. - The following shall be excluded from patent protection:

22.1. Discoveries, scientific theories and mathematical methods;

22.2. Schemes, rules and methods of performing mental acts, playing games or doing business, and programs
for computers;

22.3. Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods
practiced on the human or animal body. This provision shall not apply to products and composition for use in
any of these methods;

22.4. Plant varieties or animal breeds or essentially biological process for the production of plants or animals.
This provision shall not apply to micro-organisms and non-biological and microbiological processes.

Provisions under this subsection shall not preclude Congress to consider the enactment of a law providing sui
generis protection of plant varieties and animal breeds and a system of community intellectual rights protection:

22.5. Aesthetic creations; and

22.6. Anything which is contrary to public order or morality. (Sec. 8, R.A. No. 165a)

87
Section 28. Right to a Patent. - The right to a patent belongs to the inventor, his heirs, or assigns. When two
(2) or more persons have jointly made an invention, the right to a patent shall belong to them jointly. (Sec. 10,
R.A. No. 165a)

Section 29. First to File Rule. - If two (2) or more persons have made the invention separately and
independently of each other, the right to the patent shall belong to the person who filed an application for such
invention, or where two or more applications are filed for the same invention, to the applicant who has the
earliest filing date or, the earliest priority date. (3rd sentence, Sec. 10, R.A. No. 165a.)

Section 40. Filing Date Requirements. - 40.1. The filing date of a patent application shall be the date of receipt
by the Office of at least the following elements:

(a) An express or implicit indication that a Philippine patent is sought;

(b) Information identifying the applicant; and

(c) Description of the invention and one (1) or more claims in Filipino or English.

40.2. If any of these elements is not submitted within the period set by the Regulations, the application shall be
considered withdrawn. (n)

Section 41. According a Filing Date. - The Office shall examine whether the patent application satisfies the
requirements for the grant of date of filing as provided in Section 40 hereof. If the date of filing cannot be
accorded, the applicant shall be given an opportunity to correct the deficiencies in accordance with the
implementing Regulations. If the application does not contain all the elements indicated in Section 40, the filing
date should be that date when all the elements are received. If the deficiencies are not remedied within the
prescribed time limit, the application shall be considered withdrawn. (n)

Section 30. Inventions Created Pursuant to a Commission. - 30.1. The person who commissions the work shall
own the patent, unless otherwise provided in the contract.

30.2. In case the employee made the invention in the course of his employment contract, the patent shall
belong to:

(a) The employee, if the inventive activity is not a part of his regular duties even if the employee uses
the time, facilities and materials of the employer.

(b) The employer, if the invention is the result of the performance of his regularly-assigned duties,
unless there is an agreement, express or implied, to the contrary. (n)

Section 31. Right of Priority. . - An application for patent filed by any person who has previously applied for the
same invention in another country which by treaty, convention, or law affords similar privileges to Filipino
citizens, shall be considered as filed as of the date of filing the foreign application: Provided, That: (a) the local
application expressly claims priority; (b) it is filed within twelve (12) months from the date the earliest foreign
application was filed; and (c) a certified copy of the foreign application together with an English translation is
filed within six (6) months from the date of filing in the Philippines. (Sec. 15, R.A. No. 165a)

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