SOCIETE DES PRODUITS G.R. No. 172276 Dy, Jr. owns 5M Enterprises.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks
NESTLE, S.A.,
- versus -
MARTIN T. DY, JR.,
August 8, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 1 September 2005 Decision and 4 April 2006 Resolution of the Court of Appeals
in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Jr.) not liable for trademark
infringement. The Court of Appeals reversed the 18 September 1998 Decision of the Regional
Trial Court (RTC), Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation organized under
the laws of Switzerland. It manufactures food products and beverages. As evidenced by
Certificate of Registration No. R-14621 issued on 7 April 1969 by the then Bureau of Patents,
Trademarks and Technology Transfer, Nestle owns the NAN trademark for its line of infant
powdered milk products, consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is
classified under Class 6 diatetic preparations for infant feeding.
Nestle distributes and sells its NAN milk products all over the Philippines. It has been investing
tremendous amounts of resources to train its sales force and to promote the NAN milk
products through advertisements and press releases.
the powdered milk into three sizes of plastic packs bearing the name NANNY. The packs weigh
80, 180 and 450 grams and are sold for P8.90, P17.50 and P39.90, respectively. NANNY
is is also classified under Class 6 full cream milk for adults in [sic] all ages. Dy, Jr. distributes and
sells the powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of
Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using NANNY and to
undertake that he would stop infringing the NAN trademark. Dy, Jr. did not act
on Nestles request. On 1 March 1990, Nestle filed before the RTC, Judicial Region 7, Branch
31, Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr. filed a motion to
dismiss alleging that the complaint did not state a cause of action. In its 4 June 1990 order, the
trial court dismissed the complaint. Nestle appealed the 4 June 1990 order to the Court of
Appeals. In its 16 February 1993 Resolution, the Court of Appeals set aside the 4 June 1990
order and remanded the case to the trial court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial court a
motion to transfer the case to the RTC, Judicial Region 7, Branch 9, Cebu City, which was
designated as a special court for intellectual property rights.
The RTCs Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for infringement. The trial
court held:
If determination of infringement shall only be limited on whether or not
the mark used would likely cause confusion or mistake in the minds of the
buying public or deceive customers, such in [sic] the most considered view
of this forum would be highly unlikely to happen in the instant case. This is
because upon comparison of the plaintiffs NAN and defendants NANNY,
the following features would reveal the absence of any deceptive
tendency in defendants NANNY: (1) all NAN products are contained tin cans
[sic], while NANNY are contained in plastic packs; (2) the predominant
colors used in the labels of NAN products are blue and white, while the
predominant colors in the plastic packings of NANNY are blue and green; (3)
the labels of NAN products have at the bottom portion an elliptical shaped
figure containing inside it a drawing of nestling birds, which is overlapped
by the trade-name Nestle, while the plastic packs of NANNY have a drawing
1
of milking cows lazing on a vast green field, back-dropped with snow
covered mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in small
and irregular style of letters with curved ends; and (5) all NAN products are
milk formulas intended for use of [sic] infants, while NANNY is an instant
full cream powdered milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant case
cannot be proven with the use of the test of dominancy because the
deceptive tendency of the unregistered trademark NANNY is not apparent
from the essential features of the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971,
Aug. 31, 1982, the Supreme Court took the occasion of discussing what is
implied in the definition of infringement when it stated: Implicit in this
definition is the concept that the goods must be so related that there is
likelihood either of confusion of goods or business. x x x But as to whether
trademark infringement exists depends for the most part upon whether or
not the goods are so related that the public may be, or is actually, deceived
and misled that they came from the same maker or manufacturer. For
non-competing goods may be those which, though they are not in actual
competition, are so related to each other that it might reasonably be
assumed that they originate from one manufacturer. Non-competing goods
may also be those which, being entirely unrelated, could not reasonably be
assumed to have a common source. In the former case of related goods,
confusion of business could arise out of the use of similar marks; in the
latter case of non-related goods, it could not.
Furthermore, in said case the Supreme Court as well discussed on when
goods may become so related for purposes of infringement when it stated:
Goods are related when they belong to the same class or have same
descriptive properties; when they possess the same physical attributes or
essential characteristics with reference to their form, composition, texture
or quality. They may also be related because they serve the same purpose
or are sold in grocery stores. x x x
Considering that defendants NANNY belongs to the same class as that of
plaintiffs NAN because both are food products, the defendants
unregistered trade mark NANNY should be held an infringement to
plaintiffs registered trademark NAN because defendants use of NANNY
would imply that it came from the manufacturer of NAN. Furthermore,
since the word nanny means a childs nurse, there might result the not so
remote probability that defendants NANNY may be confused with infant
formula NAN despite the aparent [sic] disparity between the features of
the two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial courts 18 September
1998 Decision and found Dy, Jr. not liable for infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no colorable
imitation of the registered mark NAN in Dys use of NANNY for his own milk
packs. Yet it did not stop there. It continued on applying the concept of
related goods.
The Supreme Court utlilized the concept of related goods in the said case
of Esso Standard Easter, Inc. versus Court of Appeals, et al. wherein two
contending parties used the same trademark ESSO for two different goods,
i.e. petroleum products and cigarettes. It rules that there is infringement of
trademark involving two goods bearing the same mark or label, even if the
said goods are non-competing, if and only if they are so related that the
public may be, or is actually, deceived that they originate from the one
maker or manufacturer. Since petroleum products and cigarettes, in kind
and nature, flow through different trade channels, and since the possibility
of confusion is unlikely in the general appearances of each mark as a whole,
the Court held in this case that they cannot be so related in the context of
infringement.
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In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellees NAN and
defendant-appellants NANNY belong to the same class being food products,
the unregistered NANNY should be held an infringement of Nestles NAN
because the use of NANNY would imply that it came from the
manufacturer of NAN. Said court went on to elaborate further: since the
word NANNY means a childs nurse, there might result the not so remote
probability that defendants NANNY may be confused with infant formula
NAN despite the aparent (sic) disparity between the features of the two
products as discussed above.
The trial courts application of the doctrine laid down by the Supreme Court
in the Esso Standard case aforementioned and the cases cited therein is
quite misplaced. The goods of the two contending parties in those cases
bear similar marks or labels: Esso for petroleum products and cigarettes,
Selecta for biscuits and milk, X-7 for soap and perfume, lipstick and nail
polish. In the instant case, two dissimilar marks are involved
plaintiff-appellees NAN and defendant-appellants NANNY. Obviously, the
concept of related goods cannot be utilized in the instant case in the same
way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that
in resolving infringement or trademark cases in the Philippines, particularly
in ascertaining whether one trademark is confusingly similar to or is a
colorable imitation of another, precedent must be studied in the light of
the facts of the particular case. Each case must be decided on its own
merits. In the more recent case of Societe Des Produits Nestle S.A. Versus
Court of Appeals, the High Court further stressed that due to the peculiarity
of the facts of each infringement case, a judicial forum should not readily
apply a certain test or standard just because of seeming similarities. The
entire panoply of elements constituting the relevant factual landscape
should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the
word NAN is contained in the word NANNY, there are more glaring
dissimilarities in the entirety of their trademarks as they appear in their
respective labels and also in relation to the goods to which they are
attached.The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels
in order that he may draw his conclusion whether one is confusingly similar
to the other. Even the trial court found these glaring dissimilarities as
above-quoted. We need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are
all infant preparations, while NANNY is a full cream milk for adults in [sic]
all ages. NAN milk products are sold in tin cans and hence, far expensive
than the full cream milk NANNY sold in three (3) plastic packs containing 80,
180 and 450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The
labels of NAN products are of the colors blue and white and have at the
bottom portion an elliptical shaped figure containing inside it a drawing of
nestling birds, which is overlapped by the trade-name Nestle. On the other
hand, the plastic packs NANNY have a drawing of milking cows lazing on a
vast green field, back-dropped with snow-capped mountains and using the
predominant colors of blue and green. The word NAN are [sic] all in large,
formal and conservative-like block letters, while the word NANNY are [sic]
all in small and irregular style of letters with curved ends. With these
material differences apparent in the packaging of both milk products,
NANNY full cream milk cannot possibly be an infringement of NAN infant
milk.
Moreover, NAN infant milk preparation is more expensive than NANNY
instant full cream milk. The cheaper price of NANNY would give, at the very
first instance, a considerable warning to the ordinary purchaser on whether
he is buying an infant milk or a full cream milk for adults. A cursory
examination of the packaging would confirm the striking differences
between the products in question.
In view of the foregoing, we find that the mark NANNY is not confusingly
similar to NAN. Dy therefore cannot be held liable for infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals
denied the motion for lack of merit. Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
3

The Courts Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy
or colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services, shall be
liable to a civil action by the registrant for any or all of the remedies herein
provided.
Section 155 of R.A. No. 8293 states:
Remedies; Infringement. Any person who shall, without the consent of the
owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable
imitation of a registered mark or the same container or a dominant feature
thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps
necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to
deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark
or a dominant feature thereof and apply such reproduction, counterfeit,
copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive, shall be liable in a civil action
for infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed regardless of
whether there is actual sale of goods or services using the infringing
material.
In Prosource International, Inc. v. Horphag Research Management SA, the Court laid down the
elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A,
9-A, and 20 thereof, the following constitute the elements of trademark
infringement:
(a) A trademark actually used in commerce in the
Philippines and registered in the principal register of
the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the
sale, offering for sale, or advertising of any goods,
business or services or in connection with which such
use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable imitation is
applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used
upon or in connection with such goods, business or
services as to likely cause confusion or mistake or to
deceive purchasers[;]
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(c) [T]he trademark is used for identical or
similar goods[;] and
(d) [S]uch act is done without the consent of the
trademark registrant or assignee.
On the other hand, the elements of infringement under R.A. No. 8293 are
as follows:
The trademark being infringed is registered in
the Intellectual Property Office; however, in
infringement of trade name, the same need not be
registered;
The trademark or trade name is reproduced,
counterfeited, copied, or colorably imitated by the
infringer;
The infringing mark or trade name is used in
connection with the sale, offering for sale, or
advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels, signs,
prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services;
The use or application of the infringing mark
or trade name is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or
services themselves or as to the source or origin of such
goods or services or the idenity of such business; and
It is without the consent of the trademark or
trade name owner or the assignee thereof.
Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. There are two types of confusion in trademark infringement: confusion of goods
and confusion of business. In Sterling Products International, Inc.
v. Farbenfabriken Bayer Aktiengesellschaft, the Court distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion of goods in
which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other. In
which case, defendants goods are then bought as the plaintiffs, and the
poorer quality of the former reflects adversely on the plaintiffs
reputation. The other is the confusion of business: Here though the goods
of the parties are different, the defendants product is such as might
reasonably be assumed to originate with the plaintiff, and the public would
then be deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not
exist.
There are two tests to determine likelihood of confusion: the dominancy test and holistic
test. The dominancy test focuses on the similarity of the main, prevalent or essential features
of the competing trademarks that might cause confusion. Infringement takes place when the
competing trademark contains the essential features of another. Imitation or an effort to
imitate is unnecessary. The question is whether the use of the marks is likely to cause
confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels and packaging, in
determining confusing similarity. The focus is not only on the predominant words but also on
the other features appearing on the labels.
In cases involving trademark infringement, no set of rules can be deduced. Each case must be
decided on its own merits. Jurisprudential precedents must be studied in the light of the facts
of each particular case. In McDonalds Corporation v. MacJoy FastfoodCorporation, the Court
held:
5
 In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each
case must be decided on its merits. In such cases, even more than in any We find no cogent reason to depart from such conclusion.
other litigation, precedent must be studied in the light of the facts of the
particular case. That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are specifically in point. This is not the first time the Court takes into account the aural effects of
the words and letters contained in the marks in determining the issue of
confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co.,
et al., cited in McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court
held:
In the light of the facts of the present case, the Court holds that the dominancy test is
applicable. In recent cases with similar factual milieus, the Court has consistently applied the
dominancy test. In Prosource International, Inc., the Court applied the dominancy test in
The following random list of confusingly similar sounds
holding that PCO-GENOLS is confusingly similar to PYCNOGENOL. The Court held:
in the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will
reinforce our view that SALONPAS and LIONPAS are
The trial and appellate courts applied the Dominancy Test in determining confusingly similar in sound: Gold Dust and Gold
whether there was a confusing similarity between the marks PYCNOGENOL Drop; Jantzen and Jass-Sea; Silver Flash and Supper
and PCO-GENOL. Applying the test, the trial court found, and the CA Flash; Cascarete and Celborite; Celluloid and Cellonite;
affirmed, that: Chartreuse and Charseurs; Cutex and Cuticlean; Hebe
and Meje; Kotex
and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his
book Trade-Mark Law and Practice, pp. 419-421, cities
Both the word[s] PYCNOGENOL and
[sic], as coming within the purview of
PCO-GENOLS have the same suffix GENOL which on
the idem sonans rule, Yusea and U-C-A, Steinway Pianos
evidence, appears to be merely descriptive and furnish
and Steinberg Pianos, and Seven-Up and
no indication of the origin of the article and hence,
Lemon-Up. In Co Tiong vs. Director of Patents, this
open for trademark registration by the plaintiff through
Court unequivocally said that Celdura and Condura are
combination with another word or phrase such as
confusingly similar in sound; this Court held
PYCNOGENOL, Exhibits A to A-3. Furthermore, although
in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
the letters Y between P and C, N between O and C and S
name Lusolin is an infringement of the
after L are missing in the [petitioners] mark
trademark Sapolin, as the sound of the two names is
PCO-GENOLS, nevertheless, when the two words are
almost the same.
pronounced, the sound effects are confusingly similar
not to mention that they are both described by their
manufacturers as a food supplement and thus,
identified as such by their public consumers. And In McDonalds Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy
although there were dissimilarities in the trademark test in holding that MACJOY is confusingly similar to MCDONALDS. The Court held:
due to the type of letters used as well as the size, color
and design employed on their individual
packages/bottles, still the close relationship of the
While we agree with the CAs detailed enumeration of differences between
competing products name is sounds as they were
the two (2) competing trademarks herein involved, we believe that the
pronounced, clearly indicates that purchasers could be
holistic test is not the one applicable in this case, the dominancy test being
misled into believing that they are the same and/or
the one more suitable. In recent cases with a similar factual milieu as here,
originates from a common source and manufacturer.
6
 the Court has consistently used and applied the dominancy test in
determining confusing similarity or likelihood of confusion between
competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court finds that herein
petitioners MCDONALDS and respondents MACJOY marks
are are confusingly similar with each other that an ordinary purchaser can
conclude an association or relation between the marks.
To begin with, both marks use the corporate M design logo and the prefixes
Mc and/or Mac as dominant features. x x x
For sure, it is the prefix Mc, and abbreviation of Mac, which visually and
aurally catches the attention of the consuming public. Verily, the word
MACJOY attracts attention the same way as did
McDonalds, MacFries, McSpaghetti, McDo, Big Mac and the rest of the
MCDONALDS marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale
of fastfood products. Indisputably, the respondents trademark application
for the MACJOY & DEVICE trademark covers goods under Classes 29 and 30
of the International Classification of Goods, namely, fried chicken, chicken
barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioners trademark
registration for the MCDONALDS marks in the Philippines covers goods
which are similar if not identical to those covered by the respondents
application.
In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in
holding that BIG MAK is confusingly similar to BIG MAC. The Court held:
This Court x x x has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. Courts will
consider more the aural and visual impressions created by the marks in the
public mind, giving little weight to factors like prices, quality, sales outlets
and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:
x x x It has been consistently held that the question of
infringement of a trademark is to be determined by the
test of dominancy. Similarity in size, form and color,
while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant
features of another, and confusion and deception is
likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent
Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue
in cases of infringement of trademarks is whether the
use of the marks involved would be likely to cause
confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation
vs. Honover Rubber Co., 107 F. 2d 588; x x x)
xxxx
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement as the
colorable imitation of a registered mark x x x or a dominant
feature thereof.
Applying the dominancy test, the Court finds that respondents use of the
Big Mak mark results in likelihood of confusion. First, Big Mak sounds
exactly the same as Big Mac. Second, the first word in Big Mak is exactly
the same as the first word in Big Mac. Third, the first two letters in Makare
the same as the first two letters in Mac. Fourth, the last letter Mak while a
7
 k sounds the same as c when the word Mak is pronounced. Fifth, in Filipino, buying public had come to learn to associate the word
the letter k replaces c in spelling, thus Caloocan is spelled Kalookan. MASTER with the opposers goods.

In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the dominancy test in x x x. It is the observation of this Office that much of
holding that FLAVOR MASTER is confusingly similar to MASTER ROAST and MASTER BLEND. The the dominance which the word MASTER has acquired
Court held: through Opposers advertising schemes is carried over
when the same is incorporated into
respondent-applicants trademark FLAVOR
MASTER. Thus, when one looks at the label bearing the
While this Court agrees with the Court of Appeals detailed enumeration of
trademark FLAVOR MASTER (exh. 4) ones attention is
differences between the respective trademarks of the two coffee products,
easily attracted to the word MASTER, rather than to the
this Court cannot agree that totality test is the one applicable in this
dissimilarities that exist. Therefore, the possibility of
case. Rather, this Court believes that the dominancy test is more suitable to
confusion as to the goods which bear the competing
this case in light of its peculiar factual milieu.
marks or as to the origins thereof is not farfetched.

Moreover, the totality or holistic test is contrary to the elementary

Applying the dominancy test in the present case, the Court finds that NANNY is confusingly
postulate of the law on trademarks and unfair competition that confusing
similar to NAN. NAN is the prevalent feature of Nestles line of infant powdered milk
similarity is to be determined on the basis of visual, aural, connotative
products. It is written in bold letters and used in all products. The line consists of
comparisons and overall impressions engendered by the marks in
PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY contains the prevalent feature
controversy as they are encountered in the realities of the
NAN. The first three letters of NANNY are exactly the same as the letters of NAN. When NAN
marketplace. The totality or holistic test only relies on visual comparison
and NANNY are pronounced, the aural effect is confusingly similar.
between two trademarks whereas the dominancy test relies not only on
the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.
In determining the issue of confusing similarity, the Court takes into account the aural effect of
the letters contained in the marks. In Marvex Commercial Company, Inc. v. Petra Hawpia &
Company, the Court held:
For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:

It is our considered view that the trademarks SALONPAS and LIONPAS are
confusingly similar in sound.

From the evidence at hand, it is sufficiently established

that the word MASTER is the dominant feature
of opposers mark. The word MASTER is printed across
the middle portion of the label in bold letters almost
twice the size of the printed word ROAST. Further, the
word MASTER has always been given emphasis in the
TV and radio commercials and other advertisements
made in promoting the product. x x x In due time,
because of these advertising schemes the mind of the
Both these words have the same suffix, PAS, which is used to denote a
plaster that adheres to the body with curative powers. PAS, being merely
descriptive, furnishes no indication of the origin of the article and therefore
is open for appropriation by anyone (Ethepa vs. Director of Patents,
L-20635, March 31, 1966) and may properly become the subject of a
trademark by combination with another word or phrase.

8
 xxxx
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that SALONPAS and LIONPAS are confusingly
similar in sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver
Flash and Supper Flash; Cascarete and Celborite; Celluloid and Cellonite;
Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and Meje; Kotex
and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-Mark Law
and Practice, pp. 419-421, cities [sic], as coming withinthe purview of
the idem sonans rule, Yusea and U-C-A, Steinway Pianos and Steinberg
Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents,
this Court unequivocally said that Celdura and Condura are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795
that the name Lusolin is an infringement of the trademark Sapolin, as the
sound of the two names is almost the same.
NANNY and NAN have the same classification, descriptive properties and physical
attributes. Both are classified under Class 6, both are milk products, and both are in powder
form. Also, NANNY and NAN are displayed in the same section of stores the milk section.
The Court agrees with the lower courts that there are differences between NAN and NANNY: (1)
NAN is intended for infants while NANNY is intended for children past their infancy and for
adults; and (2) NAN is more expensive than NANNY. However, as the registered owner of the
NAN mark, Nestle should be free to use its mark on similar products, in different segments of
the market, and at different price levels. In McDonalds Corporation v. L.C. Big Mak Burger, Inc.,
the Court held that the scope of protection afforded to registered trademark owners extends
to market areas that are the normal expansion of business:
xxx

Even respondents use of the Big Mak mark on non-hamburger food

products cannot excuse their infringement of petitioners
The scope of protection afforded to registered trademark owners is not limited to protection
registered mark, otherwise registered marks will lose their protection
from infringers with identical goods. The scope of protection extends to protection from
under the law.
infringers with related goods, and to market areas that are the normal expansion of business of
the registered trademark owners. Section 138 of R.A. No. 8293 states:

The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price
Certificates of Registration. A certificate of registration of a mark shall be
levels depending on variations of the products for specific segments of
prima facie evidence of validity of the registration, the registrants
the market. The Court has recognized that the registered trademark
ownership of the mark, and of the registrants exclusive right to use the
owner enjoys protection in product and market areas that are the normal
same in connection with the goods or services and those that are related
potential expansion of his business. Thus, the Court has declared:
thereto specified in the certificate. (Emphasis supplied)

Modern law recognizes that the protection to which the

In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, Non-competing goods may
owner of a trademark is entitled is not limited to
be those which, though they are not in actual competition, are so related to each other that it
guarding his goods or business from actual market
can reasonably be assumed that they originate from one manufacturer, in which case,
competition with identical or similar products of the
confusion of business can arise out of the use of similar marks. In that case, the Court
parties, but extends to all cases in which the use by a
enumerated factors in determining whether goods are related: (1) classification of the goods;
junior appropriator of a trade-mark or trade-name is
(2) nature of the goods; (3) descriptive properties, physical attributes or essential
likely to lead to a confusion of source, as where
characteristics of the goods, with reference to their form, composition, texture or quality; and
prospective purchasers would be misled into thinking
(4) style of distribution and marketing of the goods, including how the goods are displayed and
that the complaining party has extended his business
sold.
into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or
is in any way connected with the activities of the
infringer; or when it forestalls the normal potential
9
 expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur. is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
576, 577). (Emphasis supplied) 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
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4 trademark is used for identical or similar goods; and (d) Such act is done without the consent of
April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730 and REINSTATE the 18 the trademark registrant or assignee.
September 1998 Decision of the Regional Trial Court, Judicial Region 7, Branch 9, Cebu City, in On the other hand, the elements of infringement under R.A. No. 8293 are as follows: (a) The
Civil Case No. CEB-19345. trademark being infringed is registered in the Intellectual Property Office; however, in
infringement of trade name, the same need not be registered; (b) The trademark or trade
name is reproduced, counterfeited, copied, or colorably imitated by the infringer; (c) The
infringing mark or trade name is used in connection with the sale, offering for sale, or
SO ORDERED. advertising of any goods, business or services; or the infringing mark or trade name is applied
to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services; (d) The use or application of the
__________________________________________________________________________ infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers
or others as to the goods or services themselves or as to the source or origin of such goods or
SOCIETE DES PRODUITS G.R. No. 172276 services or the identity of such business; and (e) It is without the consent of the trademark or
trade name owner or the assignee thereof.
NESTLE, S.A., Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. Applying the dominancy test in the present case, the Court finds that NANNY is
- versus -
confusingly similar to NAN. NAN is the prevalent feature of Nestles line of infant
MARTIN T. DY, JR., powdered milk products. It is written in bold letters and used in all products. The line consists
of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY contains the prevalent feature
August 8, 2010 NAN. The first three letters of NANNY are exactly the same as the letters of NAN. When
NAN and NANNY are pronounced, the aural effect is confusingly similar.

Facts: Petitioner Nestle, a Swiss corporation, owns the NAN trademark for its line of infant
powdered milk products in the Philippines. Respondent Dy, Jr. on the other hand, owner of 5M
Enterprises, imports and repacks powdered milk for adults bearing the mark NANNY.
Petitioner Nestle filed before the trial court an infringement complaint against respondent. The
trial court held that respondents trademark is an infringement to petitioners mark because it
would imply that respondents NANNY product came from petitioner. CA reversed and held
that the two marks are not confusingly similar thus respondent cannot be held liable for
infringement.

Issue:Whether or not respondent is liable for trademark infringement.

Ruling: YES.
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof,
the following constitute the elements of trademark infringement: (a) A trademark actually
used in commerce in the Philippines and registered in the principal register of the
PhilippinePatent Office; (b) It is used by another person in connection with the sale, offering
for sale, or advertising of any goods, business or services or in connection with which such use
10
Dermaline, Inc. vs. Myra Pharmaceuticals, Inc.,
GR No. 190065, August 16, 2010
DECISION
NACHURA, J.:
This is a petition for review oncertiorari[1]
seeking to reverse and set aside the Decision dated
August 7, 2009[2] and the Resolution dated October 28, 2009[3] of the Court of Appeals (CA) in
CA-G.R. SP No. 108627.
The antecedent facts and proceedings
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual
Property Office (IPO) an application for registration of the trademark DERMALINE DERMALINE,
INC. (Application No. 4-2006011536). The application was published for Opposition in the IPO
E-Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified
Opposition[4] alleging that the trademark sought to be registered by Dermaline so resembles its
trademark DERMALIN and will likely cause confusion, mistake and deception to the purchasing
public. Myra said that the registration of Dermalines trademark will violate Section 123 [5] of
Republic Act (R.A.) No. 8293 (Intellectual Property Code of the Philippines). It further alleged
that Dermalines use and registration of its applied trademark will diminish the distinctiveness
and dilute the goodwill of Myras DERMALIN, registered with the IPO way back July 8, 1986,
renewed for ten (10) years on July 8, 2006. Myra has been extensively using DERMALIN
commercially since October 31, 1977, and said mark is still valid and subsisting.
Myra claimed that, despite Dermalines attempt to differentiate its applied mark, the dominant
feature is the term DERMALINE, which is practically identical with its own DERMALIN, more
particularly that the first eight (8) letters of the marks are identical, and that notwithstanding
the additional letter E by Dermaline, the pronunciation for both marks are identical. Further,
both marks have three (3) syllables each, with each syllable identical in sound and appearance,
even if the last syllable of DERMALINE consisted of four (4) letters while DERMALIN consisted
only of three (3).
Myra also pointed out that Dermaline applied for the same mark DERMALINE on June 3, 2003
and was already refused registration by the IPO. By filing this new application for registration,
Dermaline appears to have engaged in a fishing expedition for the approval of its
mark. Myra argued that its intellectual property right over its trademark is protected under
Section 147[6] of R.A. No. 8293.
Myra asserted that the mark DERMALINE DERMALINE, INC. is aurally similar to its own mark
such that the registration and use of Dermalines applied mark will enable it to obtain benefit
from Myras reputation, goodwill and advertising and will lead the public into believing that
Dermaline is, in any way, connected to Myra. Myra added that even if the subject application
was under Classification 44[7] for various skin treatments, it could still be connected to the
DERMALIN mark under Classification 5[8] for pharmaceutical products, since ultimately these
goods are very closely related.
In its Verified Answer,[9] Dermaline countered that a simple comparison of the trademark
DERMALINE DERMALINE, INC. vis--vis Myras DERMALIN trademark would show that they have
entirely different features and distinctive presentation, thus it cannot result in confusion,
mistake or deception on the part of the purchasing public. Dermaline contended that, in
determining if the subject trademarks are confusingly similar, a comparison of the words is not
the only determinant, but their entirety must be considered in relation to the goods to which
they are attached, including the other features appearing in both labels. It claimed that there
were glaring and striking dissimilarities between the two trademarks, such that its trademark
DERMALINE DERMALINE, INC. speaks for itself (Res ipsa loquitur). Dermaline further argued
that there could not be any relation between its trademark for health and beauty services
from Myras trademark classified under medicinal goods against skin disorders.
The parties failed to settle amicably. Consequently, the preliminary conference was terminated
and they were directed to file their respective position papers. [10]
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No.
2008-70[11] sustaining Myras opposition pursuant to Section 123.1(d) of R.A. No. 8293. It
disposed
WHEREFORE, the Verified Opposition is, as it is, hereby
SUSTAINED. Consequently, Application Serial No. 4-2006-011536 for the
mark DERMALINE, DERMALINE, INC. Stylized Wordmark for Dermaline, Inc.
under class 44 covering the aforementioned goods filed on 21 October
2006, is as it is hereby, REJECTED.
11

Let the file wrapper of DERMALINE, DERMALINE, INC. Stylized Wordmark
subject matter of this case be forwarded to the Bureau of Trademarks (BOT)
for appropriate action in accordance with this Decision.
SO ORDERED.[12]
Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution
No. 2009-12(D)[13] dated January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in
an Order[14] dated April 17, 2009, the appeal was dismissed for being filed out of time.
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17,
2009 and the rejection of Dermalines application for registration of trademark. The CA likewise
denied Dermalines motion for reconsideration; hence, this petition raising the issue of whether
the CA erred in upholding the IPOs rejection of Dermalines application for registration of
trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or merchant on his goods to
identify and distinguish them from those manufactured, sold, or dealt by others. [15]Inarguably,
it is an intellectual property deserving protection by law. In trademark controversies, each case
must be scrutinized according to its peculiar circumstances, such that jurisprudential
precedents should only be made to apply if they are specifically in point.[16]
As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of
R.A. No. 8293 to prevent third parties from using a trademark, or similar signs or containers for
goods or services, without its consent, identical or similar to its registered trademark, where
such use would result in a likelihood of confusion.
In determining likelihood of confusion, case law has developed two (2) tests, the Dominancy
Test and the Holistic or Totality Test.
The Dominancy Test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion or deception.[17] It is applied when the
trademark sought to be registered contains the main, essential and dominant features of the
earlier registered trademark, and confusion or deception is likely to result. Duplication or
imitation is not even required; neither is it necessary that the label of the applied mark for
registration should suggest an effort to imitate. The important issue is whether the use of the
marks involved would likely cause confusion or mistake in the mind of or deceive the ordinary
purchaser, or one who is accustomed to buy, and therefore to some extent familiar with, the
goods in question.[18] Given greater consideration are the aural and visual impressions created
by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets,
and market segments.[19] The test of dominancy is now explicitly incorporated into law in
Section 155.1 of R.A. No. 8293 which provides
155.1. Use in commerce any reproduction, counterfeit, copy,
or colorable imitation of a registered mark or the same container or
a dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services
on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; (emphasis supplied)
On the other hand, the Holistic Test entails a consideration of the entirety of the
marks as applied to the products, including labels and packaging, in determining confusing
similarity. The scrutinizing eye of the observer must focus not only on the predominant words
but also on the other features appearing in both labels so that a conclusion may be drawn as to
whether one is confusingly similar to the other.[20]
Relative to the question on confusion of marks and trade names, jurisprudence has
noted two (2) types of confusion, viz: (1) confusion of goods (product confusion), where the
ordinarily prudent purchaser would be induced to purchase one product in the belief that he
was purchasing the other; and (2) confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the mark of which registration is
applied for by one party, is such as might reasonably be assumed to originate with the
12
registrant of an earlier product, and the public would then be deceived either into that belief
or into the belief that there is some connection between the two parties, though inexistent. [21]
In rejecting the application of Dermaline for the registration of its mark DERMALINE
DERMALINE, INC., the IPO applied the Dominancy Test. It declared that both confusion of
goods and service and confusion of business or of origin were apparent in both trademarks. It
also noted that, per Bureau Decision No. 2007-179 dated December 4, 2007, it already
sustained the opposition of Myra involving the trademark DERMALINE of Dermaline under
Classification 5. The IPO also upheld Myras right under Section 138 of R.A. No. 8293, which
provides that a certification of registration of a mark is prima facie evidence of the validity of
the registration, the registrants ownership of the mark, and of the registrants exclusive right to
use the same in connection with the goods and those that are related thereto specified in the
certificate.
We agree with the findings of the IPO. As correctly applied by the IPO in this case,
while there are no set rules that can be deduced as what constitutes a dominant feature with
respect to trademarks applied for registration; usually, what are taken into account are signs,
color, design, peculiar shape or name, or some special, easily remembered earmarks of the
brand that readily attracts and catches the attention of the ordinary consumer.[22]
Dermalines insistence that its applied trademark DERMALINE DERMALINE, INC. had differences
too striking to be mistaken from Myras DERMALIN cannot, therefore, be sustained. While it is
true that the two marks are presented differently Dermalines mark is written with the first
DERMALINE in script going diagonally upwards from left to right, with an upper case D followed
by the rest of the letters in lower case, and the portion DERMALINE, INC. is written in upper
case letters, below and smaller than the long-hand portion; while Myras mark DERMALIN is
written in an upright font, with a capital D and followed by lower case letters the likelihood of
confusion is still apparent. This is because they are almost spelled in the same way, except for
Dermalines mark which ends with the letter E, and they are pronounced practically in the same
manner in three (3) syllables, with the ending letter E in Dermalines mark pronounced
silently. Thus, when an ordinary purchaser, for example, hears an advertisement of Dermalines
applied trademark over the radio, chances are he will associate it with Myras registered mark.
Further, Dermalines stance that its product belongs to a separate and different classification
from Myras products with the registered trademark does not eradicate the possibility of
mistake on the part of the purchasing public to associate the former with the latter, especially
considering that both classifications pertain to treatments for the skin.
Indeed, the registered trademark owner may use its mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The Court is cognizant that the registered
trademark owner enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, we have held
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior appropriator of
a trade-mark or trade-name is likely to lead to a confusion of source, as
where prospective purchasers would be misled into thinking that the
complaining party has extended his business into the field (see 148 ALR
56 et seq; 53 Am Jur. 576) or is in any way connected with the activities of
the infringer; or when it forestalls the normal potential expansion of his
business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577).[23] (Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra,
such that, considering the current proliferation of health and beauty products in the market,
the purchasers would likely be misled that Myra has already expanded its business through
Dermaline from merely carrying pharmaceutical topical applications for the skin to health and
beauty services.
Verily, when one applies for the registration of a trademark or label which is almost the same
or that very closely resembles one already used and registered by another, the application
should be rejected and dismissed outright, even without any opposition on the part of the
owner and user of a previously registered label or trademark. This is intended not only to avoid
confusion on the part of the public, but also to protect an already used and registered
trademark and an established goodwill.[24]
Besides, the issue on protection of intellectual property, such as trademarks, is factual in
nature. The findings of the IPO, upheld on appeal by the same office, and further sustained by
the CA, bear great weight and deserves respect from this Court. Moreover, the decision of the
IPO had already attained finality when Dermaline failed to timely file its appeal with the IPO
Office of the Director General.
13
WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution originate with the registrant of an earlier product, and the public would then be deceived
dated October 28, 2009 of the Court of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs either into that belief or into the belief that there is some connection between the two parties,
against petitioner. though inexistent.

Using this test, the IPO declared that both confusion of goods and service and confusion of
business or of origin were apparent in both trademarks. While it is true that the two marks are
SO ORDERED.
presented differently, they are almost spelled in the same way, except for Dermalines mark
which ends with the letter "E," and they are pronounced practically in the same manner in
three (3) syllables, with the ending letter "E" in Dermalines mark pronounced silently. Thus,
when an ordinary purchaser, for example, hears an advertisement of
Dermalines applied trademark over the radio, chances are he will associate it with Myras.
When one applies for the registration of a trademark or label which is almost the same or that
very closely resembles one already used and registered by another, the application should be
rejected and dismissed outright, even without any opposition on the part of the owner and
user of a previously registered label or trademark.

Further, Dermalines stance that its product belongs to a separate and different classification
from Myras products with the registeredtrademark does not eradicate the possibility of
mistake on the part of the purchasing public to associate the former with the latter, especially
Facts: Dermaline filed with the IPO an application to register the trademark Dermaline. Myra considering that both classifications pertain to treatments for the skin.
opposed this alleging that the trademark resembles its trademark Dermalin and will cause
confusion, mistake and deception to the purchasing public. Dermalin was registered way
back 1986 and was commercially used since 1977. Myra claims that despite attempts of
Dermaline to differentiate its mark, the dominant feature is the term Dermaline to which the
first 8 letters were identical to that of Dermalin. The pronunciation for both is also identical.
Further, both have 3 syllables each with identical sound and appearance.

Issue: W/N the IPO should allow the registration of the trademark Dermaline. NO

Held: As Myra correctly posits, it has the right under Section 147 of R.A. No. 8293 to prevent
third parties from using a trademark, or similar signs or containers for goods or services,
without its consent, identical or similar to its registered trademark, where such use would
result in a likelihood of confusion. In determining confusion, case lawhas developed two (2)
tests, the Dominancy Test and the Holistic or Totality Test.

The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion or deception. Duplication or imitation is not even
required; neither is it necessary that the label of the applied mark for registration should
suggest an effort to imitate. Relative to the question on confusion of marks and trade names,
jurisprudence noted two (2) types of confusion, viz: (1) confusion of goods (product confusion),
where the ordinarily prudent purchaser would be induced to purchase one product in the
belief that he was purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the product, the mark of
which registration is applied for by one party, is such as might reasonably be assumed to
14
Ty vs. NBI
G.R. No. 182147 | December 15, 2010 |
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, petitioners seek the reversal
of the Decision[1] dated September 28, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
98054, which reversed and set aside the Resolutions dated October 9, 2006[2] and December
14, 2006[3] of the Secretary of Justice, and reinstated the November 7, 2005 Joint
Resolution[4] of the Office of the Chief State Prosecutor. Petitioners assail also the CA
Resolution[5] dated March 14, 2008, denying their motion for reconsideration.
The Facts
Petitioners are stockholders of Omni Gas Corporation (Omni) as per Omnis General
Information Sheet[6] (GIS) dated March 6, 2004 submitted to the Securities and Exchange
Commission (SEC). Omni is in the business of trading and refilling of Liquefied Petroleum Gas
(LPG) cylinders and holds Pasig City Mayors Permit No. RET-04-001256 dated February 3, 2004.
The case all started when Joaquin Guevara Adarlo & Caoile Law Offices (JGAC Law
Offices) sent a letter dated March 22, 2004[7] to the NBI requesting, on behalf of their clients
Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc., and Totalgaz Dealers
Association, Inc., for the surveillance, investigation, and apprehension of persons or
establishments in Pasig City that are engaged in alleged illegal trading of petroleum products
and underfilling of branded LPG cylinders in violation of Batas Pambansa Blg. (BP) 33,[8] as
amended by Presidential Decree No. (PD) 1865.[9]
Earlier, the JGAC Law Offices was furnished by several petroleum producers/brand
owners their respective certifications on the dealers/plants authorized to refill their respective
branded LPG cylinders, to wit: (1) On October 3, 2003, Pilipinas Shell Petroleum Corporation
(Pilipinas Shell) issued a certification[10] of the list of entities duly authorized to
refill Shellane LPG cylinders; (2) on December 4, 2003, Petron Corporation (Petron) issued a
certification[11] of their dealers in Luzon, Visayas, and Mindanao authorized to refill Petron
Gasul LPG cylinders; and (3) on January 5, 2004, Total (Philippines) Corporation (Total) issued
two certifications[12] of the refilling stations and plants authorized to refill
their Totalgaz and Superkalan Gaz LPG cylinders.
Agents De Jemil and Kawada attested to conducting surveillance of Omni in the
months of March and April 2004 and doing a test-buy on April 15, 2004. They brought eight
branded LPG cylinders of Shellane, Petron Gasul, Totalgaz, and Superkalan Gaz to Omni for
refilling. The branded LPG cylinders were refilled, for which the National Bureau of
Investigation (NBI) agents paid PhP 1,582 as evidenced by Sales Invoice No. 90040[13] issued by
Omni on April 15, 2004. The refilled LPG cylinders were without LPG valve seals and one of the
cylinders was actually underfilled, as found by LPG Inspector Noel N. Navio of the Liquefied
Petroleum Gas Industry Association (LPGIA) who inspected the eight branded LPG cylinders on
April 23, 2004 which were properly marked by the NBI after the test-buy.
The NBIs test-buy yielded positive results for violations of BP 33, Section 2(a) in
relation to Secs. 3(c) and 4, i.e., refilling branded LPG cylinders without authority; and Sec. 2(c)
in relation to Sec. 4, i.e., underdelivery or underfilling of LPG cylinders. Thus, on April 28, 2004,
Agent De Jemil filed an Application for Search Warrant (With Request for Temporary Custody
of the Seized Items)[14] before the Regional Trial Court (RTC) in Pasig City, attaching, among
others, his affidavit[15] and the affidavit of Edgardo C. Kawada,[16]an NBI confidential agent.
On the same day of the filing of the application for search warrants on April 28, 2004,
the RTC, Branch 167 in Pasig City issued Search Warrants No. 2624[17] and 2625.[18] The NBI
served the warrants the next day or on April 29, 2004 resulting in the seizure of several items
from Omnis premises duly itemized in the NBIs Receipt/Inventory of Property/Item
Seized.[19] On May 25, 2004, Agent De Jemil filed his Consolidated Return of Search Warrants
with Ex-Parte Motion to Retain Custody of the Seized Items[20] before the RTC Pasig City.
Subsequently, Agent De Jemil filed before the Department of Justice (DOJ) his
Complaint-Affidavits against petitioners for: (1) Violation of Section 2(a), in relation to Sections
3(c) and 4, of B.P. Blg. 33, as amended by P.D. 1865;[21] and (2) Violation of Section 2(c), in
relation to Section 4, of B.P. Blg. 33, as amended by P.D. 1865,[22] docketed as I.S. Nos.
2004-616 and 2004-618, respectively.
During the preliminary investigation, petitioners submitted their Joint
Counter-Affidavit,[23] which was replied[24] to by Agent De Jemil with a corresponding
rejoinder[25] from petitioners.
The Ruling of the Office of the Chief State Prosecutor
in I.S. No. 2004-616 and I.S. No. 2004-618
On November 7, 2005, the 3rd Assistant City Prosecutor Leandro C. Catalo of Manila
issued a Joint Resolution,[26] later approved by the Chief State Prosecutor Jovencito R. Zuo
upon the recommendation of the Head of the Task Force on Anti-Intellectual Property Piracy
(TFAIPP), Assistant Chief State Prosecutor Leah C. Tanodra-Armamento, finding probable cause
15
to charge petitioners with violations of pertinent sections of BP 33, as amended, resolving as as the phenomenon may have been caused by human error, oversight or technical error. Being
follows: an isolated case, it ruled that there was no showing of a clear pattern of deliberate
underfilling. Second, on the alleged violation of refilling branded LPG cylinders sans written
authority, it found no sufficient basis to hold petitioners responsible for violation of Sec. 2 (c)
WHEREFORE, premises considered, it is hereby recommended of BP 33, as amended, since there was no proof that the branded LPG cylinders seized from
that two (2) Informations for violations of Section 2 [a] (illegal trading in Omni belong to another company or firm, holding that the simple fact that the LPG cylinders
petroleum and/or petroleum products) and Section 2 [c] (underfilling of with markings or stamps of other petroleum producers cannot by itself prove ownership by
LPG cylinders), both of Batas Pambansa Bilang 33, as amended, be filed said firms or companies as the consumers who take them to Omni fully owned them having
against respondents [herein petitioners] ARNEL TY, MARIE ANTONETTE TY, purchased or acquired them beforehand.
JASON ONG, WILLY DY and ALVIN TY.[27]
Agent De Jemil moved but was denied reconsideration[33] through another
Resolution[34] dated December 14, 2006 prompting him to repair to the CA via a petition for
Assistant City Prosecutor Catalo found the existence of probable cause based on the certiorari[35] under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 98054.
evidence submitted by Agent De Jemil establishing the fact that Omni is not an authorized
refiller of Shellane, Petron Gasul, Totalgaz and Superkalan Gaz LPG cylinders.Debunking
petitioners contention that the branded LPG cylinders are already owned by consumers who The Ruling of the CA
are free to do with them as they please, the law is clear that the stamped markings on the LPG
cylinders show who are the real owners thereof and they cannot be refilled sans authority
The Office of the Solicitor General (OSG), in its Comment[36] on Agent De Jemils
from Pilipinas Shell, Petron or Total, as the case may be. On the underfilling of one LPG cylinder,
appeal, sought the dismissal of the latters petition viewing that the determination by the Office
the findings of LPG Inspector Navio of the LPGIA were uncontroverted by petitioners.
of the Secretary of Justice of probable cause is entitled to respect owing to the exercise of his
prerogative to prosecute or not.
Petitioners motion for reconsideration,[28] was denied through a Resolution[29] by the
Office of the Chief State Prosecutor issued on May 3, 2006.
On August 31, 2007, Petron filed a Motion to Intervene and to Admit Attached
Petition-in-Intervention[37] and Petition-in-Intervention[38] before the CA in CA-G.R. SP No.
In time, petitioners appealed to the Office of the Secretary of Justice.[30]
98054. And much earlier, the Nationwide Association of Consumers, Inc. (NACI) also filed a
similar motion.
The Ruling of the DOJ Secretary
in I.S. No. 2004-616 and I.S. No. 2004-618
On September 28, 2007, the appellate court rendered the assailed
Decision[39] revoking the resolutions of the Office of the Secretary of Justice and reinstated the
On October 9, 2006, the Office of the Secretary of Justice issued a
November 7, 2005 Joint Resolution of the Office of the Chief State Prosecutor. The fallo reads:
Resolution[31] reversing and setting aside the November 7, 2005 Joint Resolution of the Office
of the Chief State Prosecutor, the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED. The assailed
resolutions dated October 9, 2006 and December 14, 2006 are
WHEREFORE, the assailed resolution is hereby REVERSED and SET
hereby REVERSED and SET ASIDE. The Joint Resolution dated November 7,
ASIDE. The Chief State Prosecutor is directed to cause the withdrawal of
2005 of the Office of the Chief State Prosecutor finding probable cause
the informations for violations of Sections 2(a) and 2(c) of B.P. Blg. 33, as
against private respondents Arnel Ty, Marie Antonette Ty, Jason Ong, Willy
amended by P.D. 1865, against respondents Arnel Ty, Mari Antonette Ty,
Dy, and Alvin Ty is hereby REINSTATED.
Jason Ong, Willy Dy and Alvin Ty and report the action taken within ten (10)
days from receipt hereof.
SO ORDERED.[40]
SO ORDERED.[32]
Citing Sec. 1 (1) and (3) of BP 33, as amended, which provide for the presumption of
underfilling, the CA held that the actual underfilling of an LPG cylinder falls under the
The Office of the Secretary of Justice viewed, first, that the underfilling of one of the
eight LPG cylinders was an isolated incident and cannot give rise to a conclusion of underfilling,
16
prohibition of the law which does not require for the underfilling to be substantial and
deliberate.
Moreover, the CA found strong probable violation of refilling of another companys or
firms cylinders without such companys or firms written authorization under Sec. 3 (c) of BP 33,
as amended. The CA relied on the affidavits of Agents De Jemil and Kawada, the certifications
from various LPG producers that Omni is not authorized to refill their branded LPG cylinders,
the results of the test-buy operation as attested to by the NBI agents and confirmed by the
examination of LPG Inspector Navio of the LPGIA, the letter-opinion[41]of the Department of
Energy (DOE) to Pilipinas Shell confirming that branded LPG cylinders are properties of the
companies whose stamp markings appear thereon, and Department Circular No.
2000-05-007[42] of the DOE on the required stamps or markings by the manufacturers of LPG
cylinders.
After granting the appeal of Agent De Jemil, however, the motions to intervene filed
by Petron and NACI were simply noted by the appellate court.
Petitioners motion for reconsideration was rebuffed by the CA through the equally
assailed March 14, 2008 Resolution.[43]
Thus, the instant petition.
The Issues
I. WHETHER OR NOT RESPONDENTS WERE ENTITLED TO THE SPECIAL CIVIL
ACTION OF CERTIORARI IN THE COURT OF APPEALS.
II. WHETHER OR NOT UNDER THE CIRCUMSTANCES THERE WAS PROBABLE
CAUSE TO BELIEVE THAT PETITIONERS VIOLATED SECTION 2(A) OF
BATAS PAMBANSA BLG. 33, AS AMENDED.
III. WHETHER OR NOT UNDER THE CIRCUMSTANCES THERE WAS PROBABLE
CAUSE TO BELIEVE THAT PETITIONERS VIOLATED SECTION 2(C) OF
BATAS PAMBANSA BLG. 33, AS AMENDED.
IV. WHETHER OR NOT PETITIONERS CAN BE HELD LIABLE UNDER BATAS
PAMBANSA BLG. 33, AS AMENDED, FOR BEING MERE DIRECTORS,
NOT ACTUALLY IN CHARGE OF THE MANAGEMENT OF THE
BUSINESS AFFAIRS OF THE CORPORATION.[44]
The foregoing issues can be summarized into two core issues: first, whether probable
cause exists against petitioners for violations of Sec. 2 (a) and (c) of BP 33, as amended;
and second, whether petitioners can be held liable therefor. We, however, will tackle at the
outset the sole procedural issue raised: the propriety of the petition for certiorari under Rule
65 availed of by public respondent Agent De Jemil to assail the resolutions of the Office of the
Secretary of Justice.
Petrons Comment-in-Intervention
On April 14, 2009, Petron entered its appearance by filing a Motion for Leave to
Intervene and to Admit Comment-in-Intervention[45] and its Comment-in-Intervention [To
petition for Review on Certiorari dated 13 May 2008].[46] It asserted vested interest in the
seizure of several Gasul LPG cylinders and the right to prosecute petitioners for unauthorized
refilling of its branded LPG cylinders by Omni. Petitioners duly filed their
Comment/Opposition[47] to Petrons motion to intervene. It is clear, however, that Petron has
substantial interest to protect in so far as its business relative to the sale and refilling of Petron
Gasul LPG cylinders is concerned, and therefore its intervention in the instant case is proper.
The Courts Ruling
We partially grant the petition.
Procedural Issue: Petition for Certiorari under Rule 65 Proper
Petitioners raise the sole procedural issue of the propriety of the legal remedy
availed of by public respondent Agent De Jemil. They strongly maintain that the Office of the
Secretary of Justice properly assumed jurisdiction and did not gravely abuse its discretion in its
determination of lack of probable causethe exercise thereof being its sole prerogativewhich,
they lament, the appellate court did not accord proper latitude. Besides, they assail the
non-exhaustion of administrative remedies when Agent De Jemil immediately resorted to court
action through a special civil action for certiorari under Rule 65 before the CA without first
appealing the resolutions of the Office of the Secretary of Justice to the Office of the President
(OP).
We cannot agree with petitioners.
For one, while it is the consistent principle in this jurisdiction that the determination
of probable cause is a function that belongs to the public prosecutor[48] and, ultimately, to the
Secretary of Justice, who may direct the filing of the corresponding information or move for
the dismissal of the case;[49] such determination is subject to judicial review where it is
established that grave abuse of discretion tainted the determination.
For another, there is no question that the Secretary of Justice is an alter ego of the
President who may opt to exercise or not to exercise his or her power of review over the
formers determination in criminal investigation cases. As aptly noted by Agent De Jemil, the
determination of probable cause by the Secretary of Justice is, under the doctrine of qualified
17
political agency, presumably that of the Chief Executive unless disapproved or reprobated by
the latter.
Chan v. Secretary of Justice[50] delineated the proper remedy from the determination
of the Secretary of Justice. Therein, the Court, after expounding on the policy of
non-interference in the determination of the existence of probable cause absent any showing
of arbitrariness on the part of the public prosecutor and the Secretary of Justice, however,
concluded, citing Alcaraz v. Gonzalez[51] and Preferred Home Specialties, Inc. v. Court of
Appeals,[52] that an aggrieved party from the resolution of the Secretary of Justice may directly
resort to judicial review on the ground of grave abuse of discretion, thus:
x x x [T]he findings of the Justice Secretary may be reviewed
through a petition for certiorari under Rule 65 based on the allegation that
he acted with grave abuse of discretion. This remedy is available to the
aggrieved party.[53] (Emphasis supplied.)
It is thus clear that Agent De Jemil, the aggrieved party in the assailed resolutions of
the Office of the Secretary of Justice, availed of and pursued the proper legal remedy of a
judicial review through a petition for certiorari under Rule 65 in assailing the latters finding of
lack of probable cause on the ground of grave abuse of discretion.
First Core Issue: Existence of Probable Cause
Petitioners contend that there is no probable cause that Omni violated Sec. 2 (a), in
relation to Secs. 3 (c) and 4 of BP 33, as amended, prohibiting the refilling of another companys
or firms LPG cylinders without its written authorization. First, the branded LPG cylinders seized
were not traded by Omni as its representative annotated in the NBI receipt of seized items that
the filled LPG cylinders came from customers trucks and the empty ones were taken from the
warehouse or swapping section of the refilling plant and not from the refilling section. Second,
the branded LPG cylinders are owned by end-user customers and not by the major petroleum
companies, i.e., Petron, Pilipinas Shell and Total. And even granting arguendo that Omni is
selling these LPG cylinders, still there cannot be a prima facie case of violation since there is no
proof that the refilled branded LPG cylinders are owned by another company or firm.
Third, granting that Petron, Total and Pilipinas Shell still own their respective branded
LPG cylinders already sold to consumers, still such fact will not bind third persons, like Omni,
who is not privy to the agreement between the buying consumers and said major petroleum
companies. Thus, a subsequent transfer by the customers of Petron, Total and Pilipinas Shell of
the duly marked or stamped LPG cylinders through swapping, for example, will effectively
transfer ownership of the LPG cylinders to the transferee, like Omni.
Fourth, LPG cylinder exchange or swapping is a common industry practice that the
DOE recognizes. They point to a series of meetings conducted by the DOE for institutionalizing
the validity of swapping of all and any kind of LPG cylinders among the industry players. The
meetings resulted in a draft Memorandum of Agreement (MOA) which unfortunately was not
signed due to the withdrawal of petroleum major players Petron, Total and Pilipinas
Shell. Nonetheless, the non-signing of the MOA does not diminish the fact of the recognized
industry practice of cylinder exchange or swapping. Relying on Republic Act No. (RA)
8479,[54] petitioners maintain that said law promotes and encourages the entry of new
participants in the petroleum industry such as Omni. And in furtherance of this mandate is the
valid practice of cylinder exchange or swapping in the LPG industry.
We are not persuaded by petitioners strained rationalizations.
Probable violation of Sec. 2 (a) of BP 33, amended
First. The test-buy conducted on April 15, 2004 by the NBI agents, as attested to by
their respective affidavits, tends to show that Omni illegally refilled the eight branded LPG
cylinders for PhP 1,582. This is a clear violation of Sec. 2 (a), in relation to Secs. 3 (c) and 4 of BP
33, as amended. It must be noted that the criminal complaints, as clearly shown in the
complaint-affidavits of Agent De Jemil, are not based solely on the seized items pursuant to the
search warrants but also on the test-buy earlier conducted by the NBI agents.
Second. The written certifications from Pilipinas Shell, Petron and Total show that
Omni has no written authority to refill LPG cylinders, embossed, marked or
stamped Shellane, Petron Gasul, Totalgaz and Superkalan Gaz. In fact, petitioners neither
dispute this nor claim that Omni has authority to refill these branded LPG cylinders.
Third. Belying petitioners contention, the seized items during the service of the
search warrants tend to show that Omni illegally refilled branded LPG cylinders without
authority.
On April 29, 2004, the NBI agents who served the search warrants on Omni seized
the following:
Quantity/Unit Description
7 LPG cylinders Totalgaz, 11.0 kg [filled]
1 LPG cylinder Petron Gasul, 11.0 kg [filled]
1 LPG cylinder Shellane, 11.0 kg [filled]
29 LPG cylinders Superkalan Gaz, 2.7 kg [empty]
17 LPG cylinders Petron Gasul, 11.0 kg [emptly]
8 LPG cylinders Marked as Omnigas with Shell emboss,
11.0 kg [empty]
5 LPG cylinders Marked as Omnigas with Totalgaz emboss,
11.0 kg [empty]
23 LPG cylinders Shellane, 11.0 kg [empty]
3 LPG cylinders Marked as Omnigas with Gasul emboss,
11.0 kg [empty]
18
 21 LPG cylinders Totalgaz, 11.0 kg [empty]
The foregoing list is embodied in the NBIs Receipt/Inventory of Property/Item
Seized[55] signed by NBI Agent Edwin J. Roble who served and implemented the search
warrants. And a copy thereof was duly received by Atty. Allan U. Ty, representative of Omni,
who signed the same under protest and made the annotation at the bottom part thereon: The
above items/cylinders were taken at customers trucks and the empty cylinders taken at the
warehouse (swapping section) of the company.[56]
Even considering that the filled LPG cylinders were indeed already loaded on
customers trucks when confiscated, yet the fact that these refilled LPG cylinders consisting of
nine branded LPG cylinders, specifically Totalgaz, Petron Gasul and Shellane, tends to show
that Omni indeed refilled these branded LPG cylinders without authorization from Total,
Petron and Pilipinas Shell. Such a fact is bolstered by the test-buy conducted by Agent De Jemil
and NBI confidential agent Kawada: Omnis unauthorized refilling of branded LPG cylinders,
contrary to Sec. 2 (a) in relation to Sec. 3 (c) of BP 33, as amended. Said provisos provide:
Sec. 2. Prohibited Acts.The following acts are prohibited and
penalized:
(a) Illegal trading in petroleum and/or petroleum products;
xxxx
Sec. 3. Definition of terms.For the purpose of this Act, the
following terms shall be construed to mean:
Illegal trading in petroleum and/or petroleum products
xxxx
(c) Refilling of liquefied petroleum gas cylinders without authority from
said Bureau, or refilling of another companys or firms cylinders without
such companys or firms written authorization; (Emphasis supplied.)
As petitioners strongly argue, even if the branded LPG cylinders were indeed owned
by customers, such fact does not authorize Omni to refill these branded LPG cylinders without
written authorization from the brand owners Pilipinas Shell, Petron and Total. In Yao, Sr. v.
People,[57] a case involving criminal infringement of property rights under Sec. 155 of RA
8293,[58] in affirming the courts a quos determination of the presence of probable cause, this
Court held that from Sec. 155.1[59] of RA 8293 can be gleaned that mere unauthorized use of a
container bearing a registered trademark in connection with the sale, distribution or
advertising of goods or services which is likely to cause confusion, mistake or deception among
the buyers/consumers can be considered as trademark infringement.[60] The Court affirmed the
presence of infringement involving the unauthorized sale of Gasul and Shellane LPG cylinders
and the unauthorized refilling of the same by Masagana Gas Corporation as duly attested to
and witnessed by NBI agents who conducted the surveillance and test-buys.
Similarly, in the instant case, the fact that Omni refilled various branded LPG
cylinders even if owned by its customers but without authority from brand owners Petron,
Pilipinas Shell and Total shows palpable violation of BP 33, as amended. As aptly noted by the
Court in Yao, Sr. v. People, only the duly authorized dealers and refillers of Shellane, Petron
Gasul and, by extension, Total may refill these branded LPG cylinders. Our laws sought to deter
the pernicious practices of unscrupulous businessmen.
Fourth. The issue of ownership of the seized branded LPG cylinders is irrelevant and
hence need no belaboring. BP 33, as amended, does not require ownership of the branded LPG
cylinders as a condition sine qua non for the commission of offenses involving petroleum and
petroleum products. Verily, the offense of refilling a branded LPG cylinder without the written
consent of the brand owner constitutes the offense regardless of the buyer or possessor of the
branded LPG cylinder.
After all, once a consumer buys a branded LPG cylinder from the brand owner or its
authorized dealer, said consumer is practically free to do what he pleases with the branded
LPG cylinder. He can simply store the cylinder once it is empty or he can even destroy it since
he has paid a deposit for it which answers for the loss or cost of the empty branded LPG
cylinder. Given such fact, what the law manifestly prohibits is the refilling of a branded LPG
cylinder by a refiller who has no written authority from the brand owner. Apropos, a refiller
cannot and ought not to refill branded LPG cylinders if it has no written authority from the
brand owner.
Besides, persuasive are the opinions and pronouncements by the DOE: brand owners
are deemed owners of their duly embossed, stamped and marked LPG cylinders even if these
are possessed by customers or consumers. The Court recognizes this right pursuant to our
laws, i.e., Intellectual Property Code of the Philippines. Thus the issuance by the DOE Circular
No. 2000-05-007,[61] the letter-opinion[62] dated December 9, 2004 of then DOE Secretary
Vincent S. Perez addressed to Pilipinas Shell, the June 6, 2007 letter[63] of then DOE Secretary
Raphael P.M. Lotilla to the LPGIA, and DOE Department Circular No. 2007-10-0007[64] on LPG
Cylinder Ownership and Obligations Related Thereto issued on October 13, 2007 by DOE
Secretary Angelo T. Reyes.
Fifth. The ownership of the seized branded LPG cylinders, allegedly owned by Omni
customers as petitioners adamantly profess, is of no consequence.
The law does not require that the property to be seized should be owned by the
person against whom the search warrants is directed. Ownership, therefore, is of no
consequence, and it is sufficient that the person against whom the warrant is directed has
19
control or possession of the property sought to be seized. [65] Petitioners cannot deny that the
seized LPG cylinders were in the possession of Omni, found as they were inside the Omni
compound.
In fine, we also note that among those seized by the NBI are 16 LPG cylinders bearing
the embossed brand names of Shellane, Gasul and Totalgaz but were marked as
Omnigas. Evidently, this pernicious practice of tampering or changing the appearance of a
branded LPG cylinder to look like another brand violates the brand owners property rights
as infringement under Sec. 155.1 of RA 8293. Moreover, tampering of LPG cylinders is a mode
of perpetrating the criminal offenses under BP 33, as amended, and clearly enunciated under
DOE Circular No. 2000-06-010 which provided penalties on a per cylinder basis for each
violation.
Foregoing considered, in the backdrop of the quantum of evidence required to
support a finding of probable cause, we agree with the appellate court and the Office of the
Chief State Prosecutor, which conducted the preliminary investigation, that there exists
probable cause for the violation of Sec. 2 (a) in relation to Sec. 3 (c) of BP 33, as
amended. Probable cause has been defined as the existence of such facts and circumstances as
would excite belief in a reasonable mind, acting on the facts within the knowledge of the
prosecutor, that the person charged was guilty of the crime for which he was
prosecuted.[66] After all, probable cause need not be based on clear and convincing evidence of
guilt, as the investigating officer acts upon reasonable beliefprobable cause implies probability
of guilt and requires more than bare suspicion but less than evidence which would justify a
conviction.[67]
Probable violation of Sec. 2 (c) of BP 33, as amended
Anent the alleged violation of Sec. 2 (c) in relation to Sec. 4 of BP 33, as amended,
petitioners strongly argue that there is no probable cause for said violation based upon an
underfilling of a lone cylinder of the eight branded LPG cylinders refilled during the
test-buy.Besides, they point out that there was no finding of underfilling in any of the filled LPG
cylinders seized during the service of the search warrants. Citing DOEs Bureau of Energy
Utilization Circular No. 85-3-348, they maintain that some deviation is allowed from the exact
filled weight. Considering the fact that an isolated underfilling happened in so many LPG
cylinders filled, petitioners are of the view that such is due to human or equipment error and
does not in any way constitute deliberate underfilling within the contemplation of the law.
Moreover, petitioners cast aspersion on the report and findings of LPG Inspector
Navio of the LPGIA by assailing his independence for being a representative of the major
petroleum companies and that the inspection he conducted was made without the presence of
any DOE representative or any independent body having technical expertise in determining
LPG cylinder underfilling beyond the authorized quantity.
Again, we are not persuaded.
Contrary to petitioners arguments, a single underfilling constitutes an offense under
BP 33, as amended by PD 1865, which clearly criminalizes these offenses. In Perez v. LPG
Refillers Association of the Philippines, Inc.,[68] the Court affirmed the validity of DOE Circular
No. 2000-06-010 which provided penalties on a per cylinder basis for each violation, thus:
B.P. Blg. 33, as amended, criminalizes illegal trading,
adulteration, underfilling, hoarding, and overpricing of petroleum
products. Under this general description of what constitutes criminal acts
involving petroleum products, the Circular merely lists the various modes
by which the said criminal acts may be perpetrated, namely: no price
display board, no weighing scale, no tare weight or incorrect tare weight
markings, no authorized LPG seal, no trade name, unbranded LPG cylinders,
no serial number, no distinguishing color, no embossed identifying
markings on cylinder, underfilling LPG cylinders, tampering LPG cylinders,
and unauthorized decanting of LPG cylinders. These specific acts and
omissions are obviously within the contemplation of the law, which seeks
to curb the pernicious practices of some petroleum
merchants.[69] (Emphasis supplied.)
Moreover, in denying the motion for reconsideration of the LPG Refillers Association
of the Philippines, Inc., the Court upheld the basis of said DOE Circular No. 2000-06-010 on
the imposition of penalties on a per cylinder basis, thus:
Respondents position is untenable. The Circular is not
confiscatory in providing penalties on a per cylinder basis. Those penalties
do not exceed the ceiling prescribed in Section 4 of B.P. Blg. 33, as
amended, which penalizes any person who commits any act [t]herein
prohibited. Thus, violation on a per cylinder basis falls within the
phrase any act as mandated in Section 4. To provide the same penalty for
one who violates a prohibited act in B.P. Blg. 33, as amended, regardless of
the number of cylinders involved would result in an indiscriminate,
oppressive and impractical operation of B.P. Blg. 33, as amended. The
equal protection clause demands that all persons subject to such legislation
shall be treated alike, under like circumstances and conditions, both in the
privileges conferred and in the liabilities imposed.[70]
The Court made it clear that a violation, like underfilling, on a per cylinder basis falls
within the phrase of any act as mandated under Sec. 4 of BP 33, as amended. Ineluctably, the
underfilling of one LPG cylinder constitutes a clear violation of BP 33, as amended.The finding
of underfilling by LPG Inspector Navio of the LPGIA, as aptly noted by Manila Assistant City
Prosecutor Catalo who conducted the preliminary investigation, was indeed not controverted
by petitioners.
20
 On the issue of manifest bias and partiality, suffice it to say that aside from the
allegation by petitioners, they have not shown that LPG Inspector Navio is neither an expert
nor qualified to determine underfilling. Besides, it must be noted that the inspection by LPG
Inspector Navio was conducted in the presence of NBI agents on April 23, 2004 who attested to
that fact through their affidavits. Moreover, no rules require and petitioners have not cited any
that the inspection be conducted in the presence of DOE representatives.
Second Core Issue: Petitioners Liability for Violations
Sec. 4 of BP 33, as amended, provides for the penalties and persons who are
criminally liable, thus:
Sec. 4. Penalties. Any person who commits any act herein prohibited
shall, upon conviction, be punished with a fine of not less than twenty
thousand pesos (P20,000) but not more than fifty thousand
pesos (P50,000), or imprisonment of at least two (2) years but not more
than five (5) years, or both, in the discretion of the court. In cases of second
and subsequent conviction under this Act, the penalty shall be both fine
and imprisonment as provided herein. Furthermore, the petroleum and/or
petroleum products, subject matter of the illegal trading, adulteration,
shortselling, hoarding, overpricing or misuse, shall be forfeited in favor of
the Government: Provided, That if the petroleum and/or petroleum
products have already been delivered and paid for, the offended party shall
be indemnified twice the amount paid, and if the seller who has not yet
delivered has been fully paid, the price received shall be returned to the
buyer with an additional amount equivalent to such price; and in addition,
if the offender is an oil company, marketer, distributor, refiller, dealer,
sub-dealer and other retail outlets, or hauler, the cancellation of his
license.
Trials of cases arising from this Act shall be terminated within thirty (30)
days after arraignment.
When the offender is a corporation, partnership, or other juridical person,
the president, the general manager, managing partner, or such
other officer charged with the management of the business affairs
thereof, or employee responsible for the violation shall be criminally liable;
in case the offender is an alien, he shall be subject to deportation after
serving the sentence.
If the offender is a government official or employee, he shall be perpetually
disqualified from office. (Emphasis supplied.)
Relying on the third paragraph of the above statutory proviso, petitioners argue that
they cannot be held liable for any perceived violations of BP 33, as amended, since they are
mere directors of Omni who are not in charge of the management of its business
affairs.Reasoning that criminal liability is personal, liability attaches to a person from his
personal act or omission but not from the criminal act or negligence of another. Since Sec. 4 of
BP 33, as amended, clearly provides and enumerates who are criminally liable, which do not
include members of the board of directors of a corporation, petitioners, as mere members of
the board of directors who are not in charge of Omnis business affairs, maintain that they
cannot be held liable for any perceived violations of BP 33, as amended. To bolster their
position, they attest to being full-time employees of various firms as shown by the Certificates
of Employment[71] they submitted tending to show that they are neither involved in the
day-to-day business of Omni nor managing it. Consequently, they posit that even if BP 33, as
amended, had been violated by Omni they cannot be held criminally liable thereof not being in
any way connected with the commission of the alleged violations, and, consequently, the
criminal complaints filed against them based solely on their being members of the board of
directors as per the GIS submitted by Omni to SEC are grossly discriminatory.
On this point, we agree with petitioners except as to petitioner Arnel U. Ty who is
indisputably the President of Omni.
It may be noted that Sec. 4 above enumerates the persons who may be held liable
for violations of the law, viz: (1) the president, (2) general manager, (3) managing partner, (4)
such other officer charged with the management of the business affairs of the corporation or
juridical entity, or (5) the employee responsible for such violation. A common thread of the
first four enumerated officers is the fact that they manage the business affairs of the
corporation or juridical entity. In short, they are operating officers of a business concern, while
the last in the list is self-explanatory.
It is undisputed that petitioners are members of the board of directors of Omni at
the time pertinent. There can be no quibble that the enumeration of persons who may be held
liable for corporate violators of BP 33, as amended, excludes the members of the board of
directors. This stands to reason for the board of directors of a corporation is generally a policy
making body. Even if the corporate powers of a corporation are reposed in the board of
directors under the first paragraph of Sec. 23[72] of the Corporation Code, it is of common
knowledge and practice that the board of directors is not directly engaged or charged with the
running of the recurring business affairs of the corporation. Depending on the powers granted
to them by the Articles of Incorporation, the members of the board generally do not concern
themselves with the day-to-day affairs of the corporation, except those corporate officers who
are charged with running the business of the corporation and are concomitantly members of
the board, like the President. Section 25[73] of the Corporation Code requires the president of a
corporation to be also a member of the board of directors.
21
 Thus, the application of the legal maxim expressio unius est exclusio alterius, which
means the mention of one thing implies the exclusion of another thing not mentioned. If a
statute enumerates the thing upon which it is to operate, everything else must necessarily and
by implication be excluded from its operation and effect.[74] The fourth officer in the
enumerated list is the catch-all such other officer charged with the management of the
business affairs of the corporation or juridical entity which is a factual issue which must be
alleged and supported by evidence.
A scrutiny of the GIS reveals that among the petitioners who are members of the
board of directors are the following who are likewise elected as corporate officers of Omni: (1)
Petitioner Arnel U. Ty (Arnel) as President; (2) petitioner Mari Antonette Ty as Treasurer; and
(3) petitioner Jason Ong as Corporate Secretary. Sec. 4 of BP 33, as amended, clearly indicated
firstly the president of a corporation or juridical entity to be criminally liable for violations of BP
33, as amended.
Evidently, petitioner Arnel, as President, who manages the business affairs of Omni,
can be held liable for probable violations by Omni of BP 33, as amended. The fact that
petitioner Arnel is ostensibly the operations manager of Multi-Gas Corporation, a family owned
business, does not deter him from managing Omni as well. It is well-settled that where the
language of the law is clear and unequivocal, it must be taken to mean exactly what it
says.[75] As to the other petitioners, unless otherwise shown that they are situated under the
catch-all such other officer charged with the management of the business affairs, they may not
be held liable under BP 33, as amended, for probable violations. Consequently, with the
exception of petitioner Arnel, the charges against other petitioners must perforce be dismissed
or dropped.
WHEREFORE, premises considered, we PARTIALLY GRANT the instant
petition. Accordingly, the assailed September 28, 2007 Decision and March 14, 2008 Resolution
of the Court of Appeals in CA-G.R. SP No. 98054
are AFFIRMED withMODIFICATION that petitioners Mari Antonette Ty, Jason Ong, Willy Dy and
Alvin Ty are excluded from the two Informations charging probable violations of Batas
Pambansa Bilang 33, as amended. The Joint Resolution dated November 7, 2005 of the Office
of the Chief State Prosecutor is modified accordingly.
No pronouncement as to costs.
SO ORDERED.
Facts:
Petitioners are stockholders of Omni Gas Corporation ("Omni"). They are being suspected of
engaging in illegal trading of petroleum products and underfilling of branded LPG cylinders in
violation of B.P. 33, as amended by P.D. 1865. NBI Agents Marvin De Jemil and Edgardo
Kawada conducted surveillance operations on Omni. On 15 April 2004, the NBI Agents carried
out a test-buy. Using eight branded LPG cylinders from Shell, Petron and Total, they went to
Omni for refilling. Omni refilled the cylinders. The NBI agents paid more than P1500. LPG
Inspector Noel Navio found that the LPG cylinders were without LPG valve seals and one of the
cylinders was actually underfilled.
On 28 April 2004, Agent De Jemil obtained a search warrant from Pasig RTC branch 167. The
NBI seized several items from Omni's premises. Subsequently, Agent De Jemil filed his
Complaint-Affidavit before the DOJ. The Assistant City Prosecutor of Pasig found probable
cause for violation of BP 33. This was later approved by Chief State Prosecutor Jovencito Zuno.
Petitioners appealed the decision to the Secretary of Justice, who later reversed the decision of
the Office of the Chief State Prosecutor. NBI Agent De Jemil moved for reconsideration. Denied.
He thus filed a petition for certiorari under Rule 65 with the Court of Appeals.
The Court of Appeals affirmed the decision of Secretary of Justice. It later reversed itself and
reinstated the Resolution of the Chief State Prosecutor.
Issues:
(1) Whether the petition for certiorari with the Court of Appeals was proper even if Agent De
Jemil did not appeal to the Office of the President?
(2) Whether probable cause exists against petitioners for violations of Sec. 2 (a) and (c) of BP
33, as amended?
(3) Whether petitioners can be held liable therefor?
Held:(1) YES. The determination of probable cause by the public prosecutor, and, later on, by
the Secretary of Justice, is subject to judicial review where it is established that grave abuse of
discretion tainted the determination. The aggrieved party need not resort to the Office of the
President before availing of judicial remedies because the Secretary of Justice is an alter ego of
the President who may opt to exercise or not to exercise his or her power of review over the
formers determination in criminal investigation cases. Also, under the doctrine of qualified
22
political agency, the determination of probable cause by the Secretary of Justice is presumably
that of the Chief Executive unless disapproved or reprobated by the latter.

(2) YES. The test-buy conducted on 15 April 2004 tends to show that Omni illegally refilled the
eight branded cylinders. Such act is a clear violation of Sec. 2 (a), in relation to Secs. 3 (c) and 4
of BP 33, as amended.

Omni has no authority to refill LPG cylinders as shown by the certifications provided by Shell,
Petron and Total. The seized items also show that Omni has no authority to refill the cylinders.
It shows that Omni really refilled branded cylinders without authorization. Omnis
unauthorized refilling of branded LPG cylinders, contrary to Sec. 2 (a) in relation to Sec. 3 (c) of
BP 33, as amended.

Granting arguendo that the customers already owned the LPG cylinders, such fact does give
Omni authority to refill the cylinders without authorization from the brand owners. Only the
duly authorized dealers and refillers of the brand owners may refill the branded LPG cylinders.
The offense of refilling a branded LPG cylinder without the written consent of the brand owner
constitutes the offense regardless of the buyer or possessor of the branded LPG cylinder.

Petitioner's contention that they are not liable because the underfilling that took place during
the test-buy is an isolated event is UNTENABLE. A single underfilling under BP 33 is already a
criminal act.

(3) Only Arnel Ty, as President of Omni, is liable. The other petitioners, who are members of
Omni's Board of Directors, are not liable. Sec. 4 of BP 33 enumerates the persons who may be
held liable, viz: (1) the president, (2) general manager, (3) managing partner, (4) such other
officer charged with the management of the business affairs of the corporation or juridical
entity, or (5) the employee responsible for such violation. The Board of Directors is primarily a
policy-making body of the Corporation who doesn't concern itself with day-to-day operations.

23
Pharmawealth vs. Pfizer
December 19, 2010
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to annul and set aside the
Resolutions dated January 18, 2005[1] and April 11, 2005[2] by the Court of Appeals (CA) in
CA-G.R. SP No. 82734.
The instant case arose from a Complaint[3] for patent infringement filed against petitioner Phil
Pharmawealth, Inc. by respondent companies, Pfizer, Inc. and Pfizer (Phil.), Inc., with the
Bureau of Legal Affairs of the Intellectual Property Office (BLA-IPO). The Complaint alleged as
follows:
xxxx
6. Pfizer is the registered owner of Philippine Letters Patent No. 21116 (the
Patent) which was issued by this Honorable Office on July 16, 1987. The
patent is valid until July 16, 2004. The claims of this Patent are directed to a
method of increasing the effectiveness of a beta-lactam antibiotic in a
mammalian subject, which comprises co-administering to said subject a
beta-lactam antibiotic effectiveness increasing amount of a compound of
the formula IA. The scope of the claims of the Patent extends to a
combination of penicillin such as ampicillin sodium and beta-lactam
antibiotic like sulbactam sodium.
7. Patent No. 21116 thus covers ampicillin sodium/sulbactam sodium
(hereafter Sulbactam Ampicillin). Ampicillin sodium is a specific example of
the broad beta-lactam antibiotic disclosed and claimed in the Patent. It is
the compound which efficacy is being enhanced by co-administering the
same with sulbactam sodium. Sulbactam sodium, on the other hand, is a
specific compound of the formula IA disclosed and claimed in the Patent.
8. Pfizer is marketing Sulbactam Ampicillin under the brand name Unasyn.
Pfizer's Unasyn products, which come in oral and IV formulas, are covered
by Certificates of Product Registration (CPR) issued by the Bureau of Food
and Drugs (BFAD) under the name of complainants. The sole and exclusive
distributor of Unasyn products in the Philippines is Zuellig Pharma
Corporation, pursuant to a Distribution Services Agreement it executed
with Pfizer Phils. on January 23, 2001.
9. Sometime in January and February 2003, complainants came to know
that respondent [herein petitioner] submitted bids for the supply of
Sulbactam Ampicillin to several hospitals without the consent of
complainants and in violation of the complainants' intellectual property
rights. x x x
xxxx
10. Complainants thus wrote the above hospitals and demanded that the
latter immediately cease and desist from accepting bids for the supply [of]
Sulbactam Ampicillin or awarding the same to entities other than
complainants. Complainants, in the same letters sent through undersigned
counsel, also demanded that respondent immediately withdraw its bids to
supply Sulbactam Ampicillin.
11. In gross and evident bad faith, respondent and the hospitals named in
paragraph 9 hereof, willfully ignored complainants' just, plain and valid
demands, refused to comply therewith and continued to infringe the
Patent, all to the damage and prejudice of complainants. As registered
owner of the Patent, Pfizer is entitled to protection under Section 76 of the
IP Code.
x x x x[4]
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 Order[5] 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
Order[7] dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the same was also denied by the BLA-IPO
in a Resolution[8] dated 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,
24
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 Order[10] directing the issuance of a
temporary restraining order conditioned upon respondents' filing of a bond.
In a subsequent Order[11] 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 Dismiss [12] 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 Resolution[13] 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 Dismiss[15] the case for being moot and
academic, contending that respondents' patent had already lapsed. In the same manner,
petitioner also moved for the reconsideration of the temporary restraining order issued by the
CA on the same basis that the patent right sought to be protected has been extinguished due
to the lapse of the patent license and on the ground that the CA has no jurisdiction to review
the order of the BLA-IPO as said jurisdiction is vested by law in the Office of the Director
General of the IPO.
On April 11, 2005, the CA rendered its presently assailed Resolution denying the Motion to
Dismiss, dated November 16, 2004, and the motion for reconsideration, as well as Motion to
Dismiss, both dated February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an action of patent
infringement when the patent allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director of
Legal Affairs of the Intellectual Property Office?
c) Is there forum shopping when a party files two actions with two
seemingly different causes of action and yet pray for the same relief?[16]
In the first issue raised, petitioner argues that respondents' exclusive right to monopolize the
subject matter of the patent exists only within the term of the patent. Petitioner claims that
since respondents' patent expired on July 16, 2004, the latter no longer possess any right of
monopoly and, as such, there is no more basis for the issuance of a restraining order or
injunction against petitioner insofar as the disputed patent is concerned.
The Court agrees.
Section 37 of Republic Act No. (RA) 165,[17] which was the governing law at the time of the
issuance of respondents' patent, provides:
Section 37. Rights of patentees. A patentee shall have the exclusive right
to make, use and sell the patented machine, article or product, and to use
the patented process for the purpose of industry or commerce, throughout
the territory of the Philippines for the term of the patent; and such making,
using, or selling by any person without the authorization of the patentee
constitutes infringement of the patent.[18]
It is clear from the above-quoted provision of law that the exclusive right of a patentee to
make, use and sell a patented product, article or process exists only during the term of the
patent. In the instant case, Philippine Letters Patent No. 21116, which was the basis of
respondents in filing their complaint with the BLA-IPO, was issued on July 16, 1987. This fact
was admitted by respondents themselves in their complaint. They also admitted that the
validity of the said patent is until July 16, 2004, which is in conformity with Section 21 of RA
165, providing that the term of a patent shall be seventeen (17) years from the date of
issuance thereof. Section 4, Rule 129 of the Rules of Court provides that an admission, verbal
or written, made by a party in the course of the proceedings in the same case, does not require
proof and that the admission may be contradicted only by showing that it was made through
palpable mistake or that no such admission was made. In the present case, there is no dispute
as to respondents' admission that the term of their patent expired on July 16, 2004. Neither is
there evidence to show that their admission was made through palpable mistake. Hence,
contrary to the pronouncement of the CA, there is no longer any need to present evidence on
the issue of expiration of respondents' patent.
On the basis of the foregoing, the Court agrees with petitioner that after July 16, 2004,
respondents no longer possess the exclusive right to make, use and sell the articles or products
covered by Philippine Letters Patent No. 21116.
25
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]
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 1[20] 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
26
 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.[25] Hence, the CA, and not the IPO Director General, has jurisdiction to determine
whether the BLA-IPO committed grave abuse of discretion in denying respondents' motion to
extend the effectivity of the writ of preliminary injunction which the said office earlier issued.
Lastly, petitioner avers that respondents are guilty of forum shopping for having filed separate
actions before the IPO and the RTC praying for the same relief.
The Court agrees.
Forum shopping is defined as the act of a party against whom an adverse judgment has been
rendered in one forum, of seeking another (and possibly favorable) opinion in another forum
(other than by appeal or the special civil action of certiorari), or the institution of two (2) or
more actions or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition.[26]
The elements of forum shopping are: (a) identity of parties, or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed
for, the reliefs being founded on the same facts; (c) identity of the two preceding particulars,
such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.[27]
There is no question as to the identity of parties in the complaints filed with the IPO and the
RTC.
Respondents argue that they cannot be held guilty of forum shopping because their complaints
are based on different causes of action as shown by the fact that the said complaints are
founded on violations of different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which
a party violates a right of another. In the instant case, respondents' cause of action in their
complaint filed with the IPO is the alleged act of petitioner in importing, distributing, selling or
offering for sale Sulbactam Ampicillin products, acts that are supposedly violative of
respondents' right to the exclusive sale of the said products which are covered by the latter's
patent. However, a careful reading of the complaint filed with the RTC of Makati City would
show that respondents have the same cause of action as in their complaint filed with the IPO.
They claim that they have the exclusive right to make, use and sell Sulbactam Ampicillin
products and that petitioner violated this right. Thus, it does not matter that the patents upon
which the complaints were based are different. The fact remains that in both complaints the
rights violated and the acts violative of such rights are identical.
In fact, respondents seek substantially the same reliefs in their separate complaints with the
IPO and the RTC for the purpose of accomplishing the same objective.
It is settled by this Court in several cases that the filing by a party of two apparently different
actions but with the same objective constitutes forum shopping. [28] The Court discussed this
species of forum shopping as follows:
Very simply stated, the original complaint in the court a
quo which gave rise to the instant petition was filed by the buyer
(herein private respondent and his predecessors-in-interest)
against the seller (herein petitioners) to enforce the alleged
perfected sale of real estate. On the other hand, the complaint in
the Second Case seeks to declare such purported sale involving the
same real property as unenforceable as against the Bank, which is
the petitioner herein. In other words, in the Second Case, the
majority stockholders, in representation of the Bank, are seeking to
accomplish what the Bank itself failed to do in the original case in
the trial court. In brief, the objective or the relief being sought,
though worded differently, is the same, namely, to enable the
27
 petitioner Bank to escape from the obligation to sell the property that respondent has no right whatsoever
to respondent.[29] over complainant's patent;

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

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]
(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:

In the instant case, the prayer of respondents in their complaint filed with the IPO is as follows: (1) temporarily restraining Pharmawealth, its agents,
representatives and assigns from importing, distributing, selling
A. Immediately upon the filing of this action, issue an ex parte order (a) or offering for sale infringing sulbactam ampicillin products to
temporarily restraining respondent, its agents, representatives and assigns various government and private hospitals or to any other entity
from importing, distributing, selling or offering for sale Sulbactam Ampicillin in the Philippines, or from otherwise infringing Pfizer Inc.'s
products to the hospitals named in paragraph 9 of this Complaint or to any Philippine Patent No. 26810.
other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s
Philippine Patent No. 21116; and (b) impounding all the sales invoices and (2) impounding all the sales invoices and
other documents evidencing sales by respondent of Sulbactam Ampicillin other documents evidencing sales
products. by pharmawealth of sulbactam
ampicillin products; and
B. After hearing, issue a writ of preliminary injunction enjoining respondent,
its agents, representatives and assigns from importing, distributing, selling (3) disposing of the infringing goods outside
or offering for sale Sulbactam Ampicillin products to the hospitals named in the channels of commerce.
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 (b) After hearing, issue a writ of preliminary injunction:

C. After trial, render judgment: (1) enjoining Pharmawealth, its agents,

representatives and assigns from
(i) declaring that respondent has infringed importing, distributing, selling or
Pfizer Inc.'s Philippine Patent No. 21116 and offering for sale infringing
sulbactam ampicillin products to
28
 various government hospitals or to violation of their right to exclusively sell Sulbactam Ampicillin products and to permanently
any other entity in the Philippines, prevent or prohibit petitioner from selling said products to any entity. Owing to the substantial
or from otherwise infringing Patent identity of parties, reliefs and issues in the IPO and RTC cases, a decision in one case will
No. 26810; necessarily amount to res judicata in the other action.

(2) impounding all the sales invoices and It bears to reiterate that what is truly important to consider in determining whether forum
other documents evidencing sales shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks
by Pharmawealth of sulbactam different courts and/or administrative agencies to rule on the same or related causes and/or to
ampicillin products; and 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.[34]
(3) disposing of the infringing goods outside the channels of
commerce. Thus, the Court agrees with petitioner that respondents are indeed guilty of forum shopping.

(c) After trial, render judgment: 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
(1) finding Pharmawealth to have pendentia or res judicata.[35] However, if the forum shopping is willful and deliberate, both (or
infringed Patent No. 26810 and all, if there are more than two) actions shall be dismissed with prejudice. [36] In the present case,
declaring Pharmawealth to have no right the Court finds that respondents did not deliberately violate the rule on non-forum shopping.
whatsoever over plaintiff's patent; 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
(2) ordering Pharmawealth to pay plaintiffs Makati City, respondents were candid enough to inform the trial court of the pendency of the
the following amounts: complaint filed with the BLA-IPO as well as the petition for certiorari filed with the CA. On
(i) at least P3,000,000.00 as actual these bases, only Civil Case No. 04-754 should be dismissed on the ground of litis pendentia.
damages;
(ii) P500,000.00 as attorney's fees and P1,000,000.00 as litigation WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of the Court of
expenses; Appeals, dated January 18, 2005 and April 11, 2005, in CA-G.R. No. 82734,
(iii) P3,000,000.00 as exemplary are REVERSED and SET ASIDE. The petition for certiorari filed with the Court of Appeals
damages; and is DISMISSED for being moot and academic.
(iv) costs of this suit.
(3) ordering the condemnation, seizure or Civil Case No. 04-754, filed with the Regional Trial Court of Makati City, Branch 138, is
forfeiture of Pharmawealth's likewise DISMISSED on the ground of litis pendentia.
infringing goods or products,
wherever they may be found, SO ORDERED.
including the materials and
implements used in the Facts: Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is
commission of infringement, to be marketed under the brand name Unasyn. Sometime in January and February 2003, Pfizer
disposed of in such manner as discovered that Pharmawealth submitted bids for the supply of Sulbactam Ampicillin to several
may be deemed appropriate by hospitals without the Pfizers consent. Pfizer then demanded that the hospitals cease and
this Honorable Court; 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
(4) making the injunction permanent.[33] demands.

Pfizer then filed a complaint for patent infringement with a prayer for permanent injunction
It is clear from the foregoing that the ultimate objective which respondents seek to achieve in and forfeiture of the infringing products. A preliminary injunction effective for 90 days was
their separate complaints filed with the RTC and the IPO, is to ask for damages for the alleged granted by the IPOs Bureau of Legal Affairs (IPO-BLA). Upon expiration, a motion for extension
29
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?
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?
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.
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. This instance meets these
elements.
The parties are clearly identical. In both the complaints in the BLA-IPO and RTC, the rights
allegedly violated and the acts allegedly violative of such rights are identical, regardless of
whether the patents on which the complaints were based are different. In both cases, the
ultimate objective of Pfizer was to ask for damages and to permanently prevent Pharmawealth
from selling the contested products. Relevantly, the Supreme Court has decided that the filing
of two actions with the same objective, as in this instance, constitutes forum shopping.
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.

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.

c) Yes. Forum shopping is defined as the act of a party against whom an adverse judgment has
30

BERRIS AGRICULTURAL CO., INC. vs. NORVY ABYADANG.
G.R. No. 183404. October 13, 2010
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
This petition for review[1] on certiorari under Rule 45 of the Rules of Court seeks the reversal of
the Decision dated April 14, 2008[2] and the Resolution dated June 18, 2008[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 99928.
The antecedents
On January 16, 2004, respondent Norvy A. Abyadang (Abyadang), proprietor of NS Northern
Organic Fertilizer, with address at No. 43 Lower QM, Baguio City, filed with the Intellectual
Property Office (IPO) a trademark application for the mark NS D-10 PLUS for use in connection
with Fungicide (Class 5) with active ingredient 80% Mancozeb. The application, under
Application Serial No. 4-2004-00450, was given due course and was published in the IPO
e-Gazette for opposition on July 28, 2005.
On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with business address in
Barangay Masiit, Calauan, Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA) a
Verified Notice of Opposition[4] against the mark under application allegedly because NS D-10
PLUS is similar and/or confusingly similar to its registered trademark D-10 80 WP, also used for
Fungicide (Class 5) with active ingredient 80% Mancozeb. The opposition was docketed as IPC
No. 14-2005-00099.
After an exchange of pleadings, on April 28, 2006, Director Estrellita Beltran-Abelardo (Director
Abelardo) of the IPO-BLA issued Decision No. 2006-24[5] (BLA decision), the dispositive portion
of which reads
WHEREFORE, viewed in the light of all the foregoing, this Bureau
finds and so holds that Respondent-Applicants mark NS D-10 PLUS is
confusingly similar to the Opposers mark and as such, the opposition is
hereby SUSTAINED. Consequently, trademark application bearing Serial No.
4-2004-00450 for the mark NS D-10 PLUS filed on January 16, 2004 by
Norvy A. Ab[yada]ng covering the goods fungicide under Class 5 of the
International Classification of goods is, as it is hereby, REJECTED.
Let the filewrapper of the trademark NS D-10 PLUS subject
matter under consideration be forwarded to the Administrative, Financial
and Human Resources Development Services Bureau (AFHRDSB) for
appropriate action in accordance with this Order with a copy to be
furnished the Bureau of Trademark (BOT) for information and to update its
records.
SO ORDERED.[6]
Abyadang filed a motion for reconsideration, and Berris, in turn, filed its opposition to the
motion.
On August 2, 2006, Director Abelardo issued Resolution No. 2006-09(D)[7] (BLA resolution),
denying the motion for reconsideration and disposing as follows
IN VIEW OF THE FOREGOING, the Motion for Reconsideration
filed by the Respondent-Applicant is hereby DENIED FOR LACK OF
MERIT. Consequently, Decision No. 2006-24 dated April 28, 2006 STANDS.
31
 Let the filewrapper of the trademark NS D-10 PLUS subject
matter under consideration be forwarded to the Bureau of Trademarks for
appropriate action in accordance with this Resolution.
SO ORDERED.[8]
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the Office of the Director General,
Intellectual Property Philippines (IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties respective memoranda, Director General Adrian S. Cristobal, Jr. of
the IPPDG rendered a decision dated July 20, 2007,[9] ruling as follows
Wherefore, premises considered[,] the appeal is hereby
DENIED. Accordingly, the appealed Decision of the Director is hereby
AFFIRMED.
Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of Bureau of Legal
Affairs for appropriate action. Further, let also the Directors of the Bureau
of Trademarks, the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the Documentation,
Information and Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records purposes.
SO ORDERED.[10]
Undeterred, Abyadang filed a petition for review[11] before the CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG decision. It held
In sum, the petition should be granted due to the following
reasons: 1) petitioners mark NS D-10 PLUS is not confusingly similar with
respondents trademark D-10 80 WP; 2) respondent failed to establish its
ownership of the mark D-10 80 WP and 3) respondents trademark
registration for D-10 80 WP may be cancelled in the present case to avoid
multiplicity of suits.
WHEREFORE, the petition is GRANTED. The decision dated July
20, 2007 of the IPO Director General in Appeal No. 14-06-13 (IPC No.
14-2005-00099) is REVERSED and SET ASIDE, and a new one is entered
giving due course to petitioners application for registration of the mark NS
D-10 PLUS, and canceling respondents trademark registration for D-10 80
WP.
SO ORDERED.[12]
Berris filed a Motion for Reconsideration, but in its June 18, 2008 Resolution, the CA denied the
motion for lack of merit. Hence, this petition anchored on the following arguments
I. The Honorable Court of Appeals finding that there exists no
confusing similarity between Petitioners and respondents marks
is based on misapprehension of facts, surmise and conjecture and
not in accord with the Intellectual Property Code and applicable
Decisions of this Honorable Court [Supreme Court].
II. The Honorable Court of Appeals Decision reversing and setting
aside the technical findings of the Intellectual Property Office
even without a finding or, at the very least, an allegation of grave
abuse of discretion on the part of said agency is not in accord
with law and earlier pronouncements of this Honorable Court
[Supreme Court].
III. The Honorable Court of Appeals Decision ordering the
cancellation of herein Petitioners duly registered and validly
existing trademark in the absence of a properly filed Petition for
Cancellation before the Intellectual Property Office is not in
accord with the Intellectual Property Code and applicable
Decisions of this Honorable Court [Supreme Court].[13]
32

The basic law on trademark, infringement, and unfair competition is Republic Act
(R.A.) No. 8293[14] (Intellectual Property Code of the Philippines), specifically Sections 121 to
170 thereof. It took effect on January 1, 1998. Prior to its effectivity, the applicable law was R.A.
No. 166,[15] as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its entirety R.A. No. 166, but
merely provided in Section 239.1[16] that Acts and parts of Acts inconsistent with it were
repealed. In other words, only in the instances where a substantial and irreconcilable conflict is
found between the provisions of R.A. No. 8293 and of R.A. No. 166 would the provisions of the
latter be deemed repealed.
R.A. No. 8293 defines a mark as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods.[17] It also defines a collective mark as any visible sign designated as such in
the application for registration and capable of distinguishing the origin or any other common
characteristic, including the quality of goods or services of different enterprises which use the
sign under the control of the registered owner of the collective mark.[18]
On the other hand, R.A. No. 166 defines a trademark as any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those
manufactured, sold, or dealt by another.[19] A trademark, being a special property, is afforded
protection by law. But for one to enjoy this legal protection, legal protection ownership of the
trademark should rightly be established.
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. Section
122[20] of R.A. No. 8293 provides that the rights in a mark shall be acquired by means of its valid
registration with the IPO. A certificate of registration of a mark, once issued, constitutes prima
facie evidence of the validity of the registration, of the registrants ownership of the mark, and
of the registrants exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate.[21] R.A. No. 8293, however, requires
the applicant for registration or the registrant to file a declaration of actual use (DAU) of the
mark, with evidence to that effect, within three (3) years from the filing of the application for
registration; otherwise, the application shall be refused or the mark shall be removed from the
register.[22] In other words, the prima facie presumption brought about by the registration of a
mark may be challenged and overcome, in an appropriate action, by proof of the nullity of the
registration or of non-use of the mark, except when excused. [23] Moreover, the presumption
may likewise be defeated by evidence of prior use by another person, i.e., it will controvert a
claim of legal appropriation or of ownership based on registration by a subsequent user. This is
because a trademark is a creation of use and belongs to one who first used it in trade or
commerce.[24]
The determination of priority of use of a mark is a question of fact. Adoption of the
mark alone does not suffice. One may make advertisements, issue circulars, distribute price
lists on certain goods, but these alone will not inure to the claim of ownership of the mark until
the goods bearing the mark are sold to the public in the market. Accordingly, receipts, sales
invoices, and testimonies of witnesses as customers, or orders of buyers, best prove the actual
use of a mark in trade and commerce during a certain period of time.[25]
In the instant case, both parties have submitted proof to support their claim of
ownership of their respective trademarks.
Culled from the records, Berris, as oppositor to Abyadangs application for
registration of his trademark, presented the following evidence: (1) its trademark application
dated November 29, 2002[26] with Application No. 4-2002-0010272; (2) its IPO certificate of
registration dated October 25, 2004,[27] with Registration No. 4-2002-010272 and July 8, 2004
as the date of registration; (3) a photocopy of its packaging[28] bearing the mark D-10 80
WP; (4) photocopies of its sales invoices and official receipts;[29] and (5) its notarized DAU
dated April 23, 2003,[30] stating that the mark was first used on June 20, 2002, and indicating
that, as proof of actual use, copies of official receipts or sales invoices of goods using the mark
were attached as Annex B.
On the other hand, Abyadangs proofs consisted of the following: (1) a photocopy of
the packaging[31] for his marketed fungicide bearing mark NS D-10 PLUS; (2) Abyadangs
Affidavit dated February 14, 2006,[32] stating among others that the mark NS D-10 PLUS was his
own creation derived from: N for Norvy, his name; S for Soledad, his wifes name; D the first
letter for December, his birth month; 10 for October, the 10th month of the year, the month of
his business name registration; and PLUS to connote superior quality; that when he applied for
registration, there was nobody applying for a mark similar to NS D-10 PLUS; that he did not
know of the existence of Berris or any of its products; that D-10 could not have been
associated with Berris because the latter never engaged in any commercial activity to sell D-10
80 WP fungicide in the local market; and that he could not have copied Berris mark because he
registered his packaging with the Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3)
Certification dated December 19, 2005[33]issued by the FPA, stating that NS D-10 PLUS is owned
and distributed by NS Northern Organic Fertilizer, registered with the FPA since May 26, 2003,
and had been in the market since July 30, 2003; (4) Certification dated October 11,
33
2005[34] issued by the FPA, stating that, per monitoring among dealers in Region I and in the
Cordillera Administrative Region registered with its office, the Regional Officer neither
encountered the fungicide with mark D-10 80 WP nor did the FPA provincial officers from the
same area receive any report as to the presence or sale of Berris product; (5) Certification
dated March 14, 2006[35] issued by the FPA, certifying that all pesticides must be registered
with the said office pursuant to Section 9[36] of Presidential Decree (P.D.) No. 1144[37] and
Section 1, Article II of FPA Rules and Regulations No. 1, Series of 1977; (6) Certification dated
March 16, 2006[38] issued by the FPA, certifying that the pesticide D-10 80 WP was registered
by Berris on November 12, 2004; and (7) receipts from Sunrise Farm Supply[39] in La Trinidad,
Benguet of the sale of Abyadangs goods referred to as D-10 and D-10+.
Based on their proffered pieces of evidence, both Berris and Abyadang claim to be
the prior user of their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark D-10 80 WP since June 20, 2002,
even before it filed for its registration with the IPO on November 29, 2002, as shown by its DAU
which was under oath and notarized, bearing the stamp of the Bureau of Trademarks of the
IPO on April 25, 2003,[40] and which stated that it had an attachment as Annex B sales invoices
and official receipts of goods bearing the mark. Indeed, the DAU, being a notarized document,
especially when received in due course by the IPO, is evidence of the facts it stated and has the
presumption of regularity, entitled to full faith and credit upon its face. Thus, the burden of
proof to overcome the presumption of authenticity and due execution lies on the party
contesting it, and the rebutting evidence should be clear, strong, and convincing as to preclude
all controversy as to the falsity of the certificate.[41] What is more, the DAU is buttressed by the
Certification dated April 21, 2006[42] issued by the Bureau of Trademarks that Berris mark is still
valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that Berris DAU is
fraudulent based only on his assumption that Berris could not have legally used the mark in the
sale of its goods way back in June 2002 because it registered the product with the FPA only on
November 12, 2004. As correctly held by the IPPDG in its decision on Abyadangs appeal, the
question of whether or not Berris violated P.D. No. 1144, because it sold its product without
prior registration with the FPA, is a distinct and separate matter from the jurisdiction and
concern of the IPO. Thus, even a determination of violation by Berris of P.D. No. 1144 would
not controvert the fact that it did submit evidence that it had used the mark D-10 80 WP
earlier than its FPA registration in 2004.
Furthermore, even the FPA Certification dated October 11, 2005, stating that the
office had neither encountered nor received reports about the sale of the fungicide D-10 80
WP within Region I and the Cordillera Administrative Region, could not negate the fact that
Berris was selling its product using that mark in 2002, especially considering that it first traded
its goods in Calauan, Laguna, where its business office is located, as stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the owner of the mark D-10 80
WP. As such, Berris has in its favor the rights conferred by Section 147 of R.A. No. 8293, which
provides
Sec. 147. Rights Conferred.
147.1. The owner of a registered mark shall have the exclusive
right to prevent all third parties not having the owners consent from using
in the course of trade identical or similar signs or containers for goods or
services which are identical or similar to those in respect of which the
trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or
services, a likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-known mark
defined in Subsection 123.1(e) which is registered in the Philippines, shall
extend to goods and services which are not similar to those in respect of
which the mark is registered: Provided, That use of that mark in relation to
those goods or services would indicate a connection between those goods
or services and the owner of the registered mark: Provided, further, That
the interests of the owner of the registered mark are likely to be damaged
by such use.
34
 Now, we confront the question, Is Abyadangs mark NS D-10 PLUS confusingly similar
to that of Berris D-10 80 WP such that the latter can rightfully prevent the IPO registration of
the former?
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is
identical with a registered mark belonging to a different proprietor with an earlier filing or
priority date, with respect to: (1) the same goods or services; (2) closely related goods or
services; or (3) near resemblance of such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, jurisprudence has developed
teststhe Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public. Duplication or
imitation is not necessary; neither is it required that the mark sought to be registered suggests
an effort to imitate. Given more consideration are the aural and visual impressions created by
the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets,
and market segments.[43]
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of
the marks as applied to the products, including the labels and packaging, in determining
confusing similarity. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both labels so that the
observer may draw conclusion on whether one is confusingly similar to the other. [44]
Comparing Berris mark D-10 80 WP with Abyadangs mark NS D-10 PLUS, as
appearing on their respective packages, one cannot but notice that both have a common
component which is D-10. On Berris package, the D-10 is written with a bigger font than the 80
WP. Admittedly, the D-10 is the dominant feature of the mark. The D-10, being at the
beginning of the mark, is what is most remembered of it. Although, it appears in Berris
certificate of registration in the same font size as the 80 WP, its dominancy in the D-10 80 WP
mark stands since the difference in the form does not alter its distinctive character.[45]
Applying the Dominancy Test, it cannot be gainsaid that Abyadangs NS D-10 PLUS is
similar to Berris D-10 80 WP, that confusion or mistake is more likely to occur. Undeniably,
both marks pertain to the same type of goods fungicide with 80% Mancozeb as an active
ingredient and used for the same group of fruits, crops, vegetables, and ornamental plants,
using the same dosage and manner of application. They also belong to the same classification
of goods under R.A. No. 8293. Both depictions of D-10, as found in both marks, are similar in
size, such that this portion is what catches the eye of the purchaser. Undeniably, the likelihood
of confusion is present.
This likelihood of confusion and mistake is made more manifest when the Holistic
Test is applied, taking into consideration the packaging, for both use the same type of material
(foil type) and have identical color schemes (red, green, and white); and the marks are both
predominantly red in color, with the same phrase BROAD SPECTRUM FUNGICIDE written
underneath.
Considering these striking similarities, predominantly the D-10, the buyers of both
products, mainly farmers, may be misled into thinking that NS D-10 PLUS could be an upgraded
formulation of the D-10 80 WP.
Moreover, notwithstanding the finding of the IPPDG that the D-10 is a fanciful
component of the trademark, created for the sole purpose of functioning as a trademark, and
does not give the name, quality, or description of the product for which it is used, nor does it
describe the place of origin, such that the degree of exclusiveness given to the mark is closely
restricted,[46] and considering its challenge by Abyadang with respect to the meaning he has
given to it, what remains is the fact that Berris is the owner of the mark D-10 80 WP, inclusive
of its dominant feature D-10, as established by its prior use, and prior registration with the
IPO. Therefore, Berris properly opposed and the IPO correctly rejected Abyadangs application
for registration of the mark NS D-10 PLUS.
Verily, the protection of trademarks as intellectual property is intended not only to
preserve the goodwill and reputation of the business established on the goods bearing the
mark through actual use over a period of time, but also to safeguard the public as consumers
against confusion on these goods.[47] On this matter of particular concern, administrative
agencies, such as the IPO, by reason of their special knowledge and expertise over matters
falling under their jurisdiction, are in a better position to pass judgment thereon. Thus, their
findings of fact in that regard are generally accorded great respect, if not finality by the courts,
as long as they are supported by substantial evidence, even if such evidence might not be
overwhelming or even preponderant. It is not the task of the appellate court to weigh once
more the evidence submitted before the administrative body and to substitute its own
judgment for that of the administrative agency in respect to sufficiency of evidence. [48]
35
 Inasmuch as the ownership of the mark D-10 80 WP fittingly belongs to Berris, and
because the same should not have been cancelled by the CA, we consider it proper not to
belabor anymore the issue of whether cancellation of a registered mark may be done absent a
petition for cancellation.

WHEREFORE, the petition is GRANTED. The assailed Decision dated April 14, 2008
and Resolution dated June 18, 2008 of the Court of Appeals in CA-G.R. SP No. 99928
are REVERSED and SET ASIDE. Accordingly, the Decision No. 2006-24 dated April 28, 2006 and
the Resolution No. 2006-09(D) dated August 2, 2006 in IPC No. 14-2005-00099, and the
Decision dated July 20, 2007 in Appeal No. 14-06-13 are REINSTATED. Costs against
respondent.

SO ORDERED.

BERRIS AGRICULTURAL CO., INC. vs. NORVY ABYADANG.

G.R. No. 183404. October 13, 2010

FACTS: Abyadang filed a trademark application with the IPO for the mark "NS D-10 PLUS" for
use in connection with Fungicide. Berris Agricultural Co., Inc. filed an opposition against the
trademark citing that it is confusingly similar with their trademark, "D-10 80 WP" which is also
used for Fungicide also with the same active ingredient.

The IPO ruled in favor of Berries but on appeal with the CA, the CA ruled in favor of Abyadang.

ISSUE: Whether there is confusing similarity between the trademarks.

RULING:

Yes. The SC found that both products have the component D-10 as their ingredient and that it
is the dominant feature in both their marks. Applying the Dominancy Test, Abyadang's product
is similar to Berris' and that confusion may likely to occur especially that both in the same type
of goods. Also using the Holistic Test, it was more obvious that there is likelihood of confusion
in their packaging and color schemes of the marks. The SC states that buyers would think that
Abyadang's product is an upgrade of Berris'.

36
GLOBAL BUSINESS HOLDINGS, INC. (formerly Global Business Bank, Inc.),
Vs
SURECOMP SOFTWARE, B.V
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] dated May 5, 2006 and the Resolution[2] dated July 10, 2006 of the
Court of Appeals (CA) in CA-G.R. SP No. 75524.
The facts of the case are as follows:
On March 29, 1999, respondent Surecomp Software, B.V. (Surecomp), a foreign corporation
duly organized and existing under the laws of the Netherlands, entered into a software license
agreement with Asian Bank Corporation (ABC), a domestic corporation, for the use of its IMEX
Software System (System) in the banks computer system for a period of twenty (20) years.[3]
In July 2000, ABC merged with petitioner Global Business Holdings, Inc. (Global), [4] with Global
as the surviving corporation. When Global took over the operations of ABC, it found the
System unworkable for its operations, and informed Surecomp of its decision to discontinue
with the agreement and to stop further payments thereon. Consequently, for failure of Global
to pay its obligations under the agreement despite demands, Surecomp filed a complaint for
breach of contract with damages before the Regional Trial Court (RTC) of Makati. The case was
docketed as Civil Case No. 01-1278.[5]
In its complaint, Surecomp alleged that it is a foreign corporation not doing business in
the Philippines and is suing on an isolated transaction. Pursuant to the agreement, it installed
the System in ABCs computers for a consideration of US$298,000.00 as license fee. ABC also
undertook to pay Surecomp professional services, which included on-site support and
development of interfaces, and annual maintenance fees for five (5) subsequent anniversaries,
and committed to purchase one (1) or two (2) Remote Access solutions at discounted prices. In
a separate transaction, ABC requested Surecomp to purchase on its behalf a software called
MF Cobol Runtime with a promise to reimburse its cost. Notwithstanding the delivery of the
product and the services provided, Global failed to pay and comply with its obligations under
the agreement. Thus, Surecomp demanded payment of actual damages amounting to
US$319,955.00 and an additional amount of US$227,610.00 for Globals unilateral
pretermination of the agreement, exemplary damages, attorneys fees and costs of suit.[6]
Instead of filing an answer, Global filed a motion to dismiss based on two grounds: (1) that
Surecomp had no capacity to sue because it was doing business in the Philippines without a
license; and (2) that the claim on which the action was founded was unenforceable under the
Intellectual Property Code of the Philippines.[7]
On the first ground, Global argued that the contract entered into was not an isolated
transaction since the contract was for a period of 20 years. Furthermore, Global stressed that it
could not be held accountable for any breach as the agreement was entered into between
Surecomp and ABC. It had not, in any manner, taken part in the negotiation and execution of
the agreement but merely took over the operations of ABC as a result of the merger. On the
second ground, Global averred that the agreement, being a technology transfer arrangement,
failed to comply with Sections 87 and 88 of the Intellectual Property Code of the Philippines.[8]
In the interim, Global filed a motion for leave to serve written interrogatories to Surecomp in
preparation for the hearing on the motion to dismiss, attaching thereto its written
interrogatories.
After an exchange of pleadings on the motions filed by Global, on June 18, 2002, the RTC
issued an Order,[9] the pertinent portions of which read:
After a thorough and careful deliberation of the respective arguments
advanced by the parties in support of their positions in these two (2)
incidents, and since it cannot be denied that there is indeed a contract
entered into between the plaintiff [Surecomp] and the defendant [Global],
the latter as a successor in interest of the merging corporation Asian Bank,
defendant [Global] is estopped from denying plaintiffs
[Surecomps] capacity to sue it for alleged breach of that contract with
damages. Its argument that it was not the one who actually contracted
37
with the plaintiff [Surecomp] as it was the merging Asian Bank which did, is
of no moment as it does not relieve defendant Global Bank of its
contractual obligation under the Agreement on account of its undertaking
under it:
Surecomp moved for partial reconsideration, praying for an outright denial of the motion to
dismiss, while Global filed a motion for reconsideration. [11]

x x x shall be responsible for all the liabilities and

obligations of ASIANBANK in the same manner as if the
On November 27, 2002, the RTC issued an Order,[12] the fallo of which reads:
Merged Bank had itself incurred such liabilities or
obligations, and any pending claim, action or
proceeding brought by or against ASIANBANK may be
prosecuted by or against the Merged Bank. The right of WHEREFORE, the Order of this Court dated 18 June 2002 is modified.
creditors or liens upon the property of ASIANBANK shall Defendants [Globals] Motion to Dismiss dated 17 October 2001 is denied
not be impaired by the merger; provided that the on the two grounds therein alleged. Defendant [Global] is given five (5)
Merged Bank shall have the right to exercise all days from receipt of this Order within which to file its Answer.
defenses, rights, privileges, set-offs and counter-claims
of every kind and nature which ASIANBANK may have,
or with the Merged Bank may invoke under existing The resolution of defendants [Globals] Motion to Serve Written
laws. Interrogatories is held in abeyance pending the filing of the Answer.

It appearing however that the second ground relied upon by the defendant SO ORDERED.[13]
[Global], i.e., that the cause of action of the plaintiff is anchored on an
unenforceable contract under the provision of the Intellectual Property
Code, will require a hearing before the motion to dismiss can be resolved
and considering the established jurisprudence in this jurisdiction, that
availment of mode of discovery by any of the parties to a litigation, shall be
In partially modifying the first assailed Order, the RTC ratiocinated, viz.:
liberally construed to the end that the truth of the controversy on hand,
shall be ascertained at a less expense with the concomitant facility and
expeditiousness, the motion to serve written interrogatories upon the
plaintiff [Surecomp] filed by the defendant [Global] is GRANTED insofar as This court sees no reason to further belabor the issue on plaintiffs capacity
the alleged unenforceability of the subject contract is to sue since there is a prima facie showing that defendant entered into a
concerned. Accordingly, the latter is directed to serve the written contract with defendant and having done so, willingly, it cannot now be
interrogatories upon the plaintiff [Surecomp], which is required to act on it made to raise the issue of capacity to sue [Merrill Lynch Futures, Inc. v. CA,
in accordance with the pertinent rule on the matter. 211 SCRA 824]. That defendant was not aware of plaintiffs lack of capacity
to sue or that defendant did not benefit from the transaction are
arguments that are hardly supported by the evidence already presented for
the resolution of the Motion to Dismiss.
Necessarily, the resolution of the motion to dismiss is held in abeyance
until after a hearing on it is property conducted, relative to the second
ground aforementioned.
As to the issue of unenforceability of the subject contract under the
Intellectual Property Code, this court finds justification in modifying the
earlier Order allowing the further presentation of evidence. It appearing
SO ORDERED.[10]
38
 that the subject contract between the parties is an executed, rather than
an executory, contract the statute of frauds therefore finds no application
here.
xxxx
As to defendants Motion to Serve Written Interrogatories, this court finds
that resort to such a discovery mechanism while laudable is premature as
defendant has yet to file its Answer. As the case now stands, the issues are
not yet joined and the disputed facts are not clear.[14]
Undaunted, Global filed a petition for certiorari with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction under Rule 65 of the Rules of Court
before the CA, contending that the RTC abused its discretion and acted in excess of its
jurisdiction.[15]
On May 5, 2006, the CA rendered a Decision,[16] the dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is DENIED. The
assailed Orders dated June 18, 2002 and November 27, 2002 of
the Regional Trial Court of Makati City, Branch 146, in Civil Case No.
01-1278 are hereby AFFIRMED.
SO ORDERED.[17]
A motion for reconsideration was filed by Global. On July 10, 2006, the CA issued a
Resolution[18] denying the motion for reconsideration for lack of merit.
Hence, this petition.
Global presents the following issues for resolution: (1) whether a special civil action
for certiorari is the proper remedy for a denial of a motion to dismiss; and (2) whether Global is
estopped from questioning Surecomps capacity to sue.[19]
The petition is bereft of merit.
I
An order denying a motion to dismiss is an interlocutory order which neither terminates nor
finally disposes of a case as it leaves something to be done by the court before the case is
finally decided on the merits. As such, the general rule is that the denial of a motion to dismiss
cannot be questioned in a special civil action for certiorari which is a remedy designed to
correct errors of jurisdiction and not errors of judgment.[20]
To justify the grant of the extraordinary remedy of certiorari, the denial of the motion to
dismiss must have been tainted with grave abuse of discretion. By "grave abuse of discretion"
is meant such capricious and whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law.[21]
In the instant case, Global did not properly substantiate its claim of arbitrariness on the part of
the trial court judge that issued the assailed orders denying the motion to dismiss. In a petition
for certiorari, absent such showing of arbitrariness, capriciousness, or ill motive in the
disposition of the trial judge in the case, we are constrained to uphold the courts ruling,
especially because its decision was upheld by the CA.
II
The determination of a corporations capacity is a factual question that requires the elicitation
of a preponderant set of facts.[22] As a rule, unlicensed foreign non-resident corporations doing
39
business in the Philippines cannot file suits in the Philippines.[23] This is mandated under Global also has the right to exercise all defenses, rights, privileges, and counter-claims of every
Section 133 of the Corporation Code, which reads: kind and nature which ABC may have or invoke under the law. These findings of fact were
never contested by Global in any of its pleadings filed before this Court.

Sec. 133. Doing business without a license. - No foreign corporation

transacting business in the Philippines without a license, or its successors WHEREFORE, in view of the foregoing, the Decision dated May 5, 2006 and the
or assigns, shall be permitted to maintain or intervene in any action, suit or Resolution dated July 10, 2006 of the Court of Appeals in CA-G.R. SP No. 75524 are
proceeding in any court or administrative agency of the Philippines, but hereby AFFIRMED. Costs against petitioner.
such corporation may be sued or proceeded against before Philippine
courts or administrative tribunals on any valid cause of action recognized
under Philippine laws.
SO ORDERED.

A corporation has a legal status only within the state or territory in which it was organized. For
this reason, a corporation organized in another country has no personality to file suits in
the Philippines. In order to subject a foreign corporation doing business in the country to the
jurisdiction of our courts, it must acquire a license from the Securities and Exchange
Commission and appoint an agent for service of process. Without such license, it cannot
institute a suit in the Philippines.[24]

The exception to this rule is the doctrine of estoppel. Global is estopped from challenging
Surecomps capacity to sue.

A foreign corporation doing business in the Philippines without license may sue in Philippine
courts a Filipino citizen or a Philippine entity that had contracted with and benefited from
it.[25] A party is estopped from challenging the personality of a corporation after having
acknowledged the same by entering into a contract with it.[26] The principle is applied to
prevent a person contracting with a foreign corporation from later taking advantage of its
noncompliance with the statutes, chiefly in cases where such person has received the benefits
of the contract. [27]

Due to Globals merger with ABC and because it is the surviving corporation, it is as if it was the
one which entered into contract with Surecomp. In the merger of two existing corporations,
one of the corporations survives and continues the business, while the other is dissolved, and
all its rights, properties, and liabilities are acquired by the surviving corporation.[28] This is
particularly true in this case. Based on the findings of fact of the RTC, as affirmed by the CA,
under the terms of the merger or consolidation, Global assumed all the liabilities and
obligations of ABC as if it had incurred such liabilities or obligations itself. In the same way,
40
E.Y. INDUSTRIAL SALES, INC. G.R. No. 184850 the cancellation of COR No. 4-1997-121492, also for the trademark VESPA, issued in favor of
respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO
and ENGRACIO YAP, Director General, in effect, affirmed the Decision dated May 29, 2006[4] issued by the Director
of the Bureau of Legal Affairs (BLA) of the IPO.
Petitioners, Present:

CORONA, C.J., Chairperson,

The Facts
VELASCO, JR.,

- versus - LEONARDO - DE CASTRO,

EYIS is a domestic corporation engaged in the production, distribution and sale of air
DEL CASTILLO, and
compressors and other industrial tools and equipment. [5] Petitioner Engracio Yap is the
PEREZ, JJ. Chairman of the Board of Directors of EYIS.[6]

SHEN DAR ELECTRICITY AND Promulgated:

MACHINERY CO., LTD., Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the
manufacture of air compressors.[7]
Respondent. October 20, 2010

x-----------------------------------------------------------------------------------------x
Both companies claimed to have the right to register the trademark VESPA for air
compressors.

DECISION

From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales
contracts. In the Sales Contract dated April 20, 2002,[8] for example, Shen Dar would supply
VELASCO, JR., J.: EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of air compressors identified
in the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In
the corresponding Bill of Ladings, the items were described merely as air compressors. [9] There
is no documentary evidence to show that such air compressors were marked VESPA.

The Case

On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with
the IPO for the mark VESPA, Chinese Characters and Device for use on air compressors and
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February welding machines.[10]
21, 2008 Decision[1] and the October 6, 2008 Resolution[2] rendered by the Court of Appeals
(CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y.
Industrial Sales, Inc. and Engracio Yap.
On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for
the mark VESPA, for use on air compressors.[11] On January 18, 2004, the IPO issued COR No.
4-1999-005393 in favor of EYIS.[12] Thereafter, on February 8, 2007, Shen Dar was also issued
The assailed decision reversed the Decision dated May 25, 2007[3] issued by the Director COR No. 4-1997-121492.[13]
General of the Intellectual Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The
IPO Director General upheld Certificate of Registration (COR) No. 4-1999-005393issued by the
IPO for the trademark VESPA in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered
41
 In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS
COR with the BLA.[14] In the Petition, Shen Dar primarily argued that the issuance of the COR in
favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293, 1. Whether the BLA Director erred in ruling that Shen Dar failed to present
otherwise known as the Intellectual Property Code (IP Code), having first filed an application for evidence;
the mark. Shen Dar further alleged that EYIS was a mere distributor of air compressors bearing
the mark VESPA which it imported from Shen Dar. Shen Dar also argued that it had prior and
exclusive right to the use and registration of the mark VESPA in the Philippines under the 2. Whether the registration of EYIS application was proper considering that
provisions of the Paris Convention.[15] Shen Dar was the first to file an application for the mark; and

In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the 3. Whether the BLA Director correctly ruled that EYIS is the true owner of the
mark VESPA being the sole assembler and fabricator of air compressors since the early mark.[18]
1990s. They further alleged that the air compressors that Shen Dar allegedly supplied them
bore the mark SD for Shen Dar and not VESPA. Moreover, EYIS argued that Shen Dar, not being Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the
the owner of the mark, could not seek protection from the provisions of the Paris Convention COR issued in favor of EYIS while cancelling the COR of Shen Dar, the dispositive portion of
or the IP Code.[16] which reads:

Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of WHEREFORE, premises considered, the appeal is DENIED.
EYIS and against Shen Dar, the dispositive portion of which reads: Certificate of Registration No. 4-1999-005393 for the mark VESPA for air
compressor issued in favor of Appellee is hereby upheld. Consequently,
Certificate of Registration No. 4-1997-121492 for the mark VESPA, Chinese
Characters & Device for goods air compressor and spot welding machine
WHEREFORE, premises considered, the Petition for Cancellation
issued in favor of Appellant is hereby ordered cancelled.
is, as it is hereby, DENIED. Consequently, Certificate of Registration No.
4-1999-[005393] for the mark VESPA granted in the name of E.Y. Industrial
Sales, Inc. on 9 January 2007 is hereby upheld.
Let a copy of this Decision as well as the records of this case be
furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of
Let the filewrapper of VESPA subject matter of this case be
Trademarks, the Administrative, Financial and Human Resources
forwarded to the Administrative, Financial and Human Resource
Development Services Bureau, and the Documentation, Information and
Development Services Bureau for issuance and appropriate action in
Technology Transfer Bureau be furnished a copy of this Decision for
accordance with this DECISION and a copy thereof furnished to the Bureau
information, guidance, and records purposes.[19]
of Trademarks for information and update of its records.

SO ORDERED.[17]
Shen Dar appealed the above decision of the IPO Director General to the CA where
Shen Dar raised the following issues:

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO.
1. Whether Shen Dar is guilty of forum shopping;
In the appeal, Shen Dar raised the following issues:

42
 2. Whether the first-to-file rule applies to the instant case; EYIS filed a motion for reconsideration of the assailed decision which the CA denied
in the assailed resolution.
3. Whether Shen Dar presented evidence of actual use;

4. Whether EYIS is the true owner of the mark VESPA;

Hence, the instant appeal.
5. Whether the IPO Director General erred in cancelling Shen Dars COR No.
4-1997-121492 without a petition for cancellation; and

6. Whether Shen Dar sustained damages.[20] Issues

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen EYIS and Yap raise the following issues in their petition:
Dar. The dispositive portion states:

A. Whether the Director General of the IPO correctly upheld the

WHEREFORE, premises considered, the petition is GRANTED. rights of Petitioners over the trademark VESPA.
Consequently, the assailed decision of the Director General of the
Intellectual Property Office dated May 25, 2007 is hereby REVERSED and
SET ASIDE. In lieu thereof, a new one is entered: a) ordering the
B. Whether the Director General of the IPO can, under the
cancellation of Certificate of Registration No. 4-1999-005393 issued on
circumstances, order the cancellation of Respondents certificate
January 19, 2004 for the trademark VESPA in favor of E.Y. Industrial Sales,
of registration for VESPA, which has been fraudulently obtained
Inc.; b) ordering the restoration of the validity of Certificate of Registration
and erroneously issued.
No. 4-1997-121492 for the trademark VESPA in favor of Shen Dar Electricity
and Machinery Co., Ltd. No pronouncement as to costs.

C. Whether the Honorable Court of Appeals was justified in

reversing the findings of fact of the IPO, which affirm the rights of
SO ORDERED.[21]
Petitioner EYIS over the trademark VESPA and when such findings
are supported by the evidence on record.

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not D. Whether this Honorable Court may review questions of fact
formally offer its evidence before the BLA, such evidence was properly attached to the Petition considering that the findings of the Court of Appeals and the IPO
for Cancellation. As such, Shen Dars evidence may be properly considered. The CA also are in conflict and the conclusions of the appellee court are
enunciated that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, contradicted by the evidence on record.[23]
which prohibits the registration of a trademark in favor of a party when there is an earlier filed
application for the same mark. The CA further ruled that Shen Dar should be considered to
have prior use of the mark based on the statements made by the parties in their respective
Declarations of Actual Use. The CA added that EYIS is a mere importer of the air compressors
with the mark VESPA as may be gleaned from its receipts which indicated that EYIS is an The Ruling of the Court
importer, wholesaler and retailer, and therefore, cannot be considered an owner of the
mark.[22]
The appeal is meritorious.
43
 First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general
rule, this Court is not a trier of facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission,[24] the Court ruled
that:
We are very much aware that the rule to the effect that this
Court is not a trier of facts admits of exceptions. As we have stated
in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts
power of review, the Court is not a trier of facts and does not
normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case
considering that the findings of facts of the CA are conclusive and
binding on the Court. However, the Court had recognized several
exceptions to this rule, to wit: (1) when the findings are grounded
entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8)
when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioners main and reply briefs are
not disputed by the respondent; (10) when the findings of fact
are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court
of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would
justify a different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA made differing
conclusions on the issue of ownership based on the evidence presented by the parties. Hence,
this issue may be the subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce
evidence in support of its allegations as required under Office Order No. 79, Series of 2005,
Amendments to the Regulations on Inter Partes Proceedings, having failed to formally offer its
evidence during the proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence
in support of its allegations in the Petition for Cancellation. Petitioner did
not file nor submit its marked evidence as required in this Bureaus Order
No. 2006-157 dated 25 January 2006 in compliance with Office Order No.
79, Series of 2005, Amendments to the Regulations on Inter
Partes Proceedings.[25] x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03,
Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences
in accordance with Sections 7 and 8 of the rules on summary proceedings
shall be construed as a waiver on the part of the parties. In such a case, the
original petition, opposition, answer and the supporting documents therein
shall constitute the entire evidence for the parties subject to applicable
rules.
44
 The CA concluded that Shen Dar needed not formally offer its evidence but merely
needed to attach its evidence to its position paper with the proper markings,[26] which it did in
this case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall
establish the procedure for the application for the registration of a trademark, as well as the
opposition to it:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal
Affairs shall have the following functions:
xxxx
10.3. The Director General may by Regulations establish the
procedure to govern the implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the
regulations on Inter Partes Proceedings, Sec. 12.1 of which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked
affidavits of the witnesses, and the documents submitted, shall constitute
the entire evidence for the petitioner or opposer. The verified answer,
rejoinder if any, and the duly marked affidavits and documents submitted
shall constitute the evidence for the respondent. Affidavits, documents and
other evidence not submitted and duly marked in accordance with the
preceding sections shall not be admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9
which, in turn, provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of
witnesses and originals of the documents and other requirements, shall be
filed with the Bureau, provided, that in case of public documents, certified
copies shall be allowed in lieu of the originals. The Bureau shall check if the
petition or opposition is in due form as provided in the Regulations
particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6,
Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and 4. For petition for
cancellation of layout design (topography) of integrated circuits, Rule 3,
Section 3 applies as to the form and requirements. The affidavits,
documents and other evidence shall be marked consecutively as Exhibits
beginning with the letter A.
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or
opposition, the Bureau shall issue an order for the respondent to file an
answer together with the affidavits of witnesses and originals of
documents, and at the same time shall notify all parties required to be
notified in the IP Code and these Regulations, provided, that in case of
public documents, certified true copies may be submitted in lieu of the
originals. The affidavits and documents shall be marked consecutively as
Exhibits beginning with the number 1.
Section 9. Petition or Opposition and Answer must be
verified Subject to Rules 7 and 8 of these regulations, the petition or
opposition and the answer must be verified. Otherwise, the same shall not
be considered as having been filed.
In other words, as long as the petition is verified and the pieces of evidence
consisting of the affidavits of the witnesses and the original of other documentary evidence are
attached to the petition and properly marked in accordance with Secs. 7.1 and 8.1
45
abovementioned, these shall be considered as the evidence of the petitioner. There is no
requirement under the abovementioned rules that the evidence of the parties must be
formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the
Regulations on Inter Partes Proceedings, the BLA is not bound by technical rules of procedure.
The evidence attached to the petition may, therefore, be properly considered in the resolution
of the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant
case was for the cancellation of the COR issued in favor of EYIS, the interests of justice dictate,
and in view of its findings, that the COR of Shen Dar must be cancelled. The Director General
explained:
Accordingly, while the instant case involves a petition to cancel
the registration of the Appellees trademark VESPA, the interest of justice
requires that Certificate of Registration No. 4-1997-121492 be cancelled.
While the normal course of proceedings should have been the filing of a
petition for cancellation of Certificate of Registration No. 4-1997-121492,
that would involve critical facts and issues that have already been resolved
in this case. To allow the Applicant to still maintain in the Trademark
Registry Certificate of Registration No. 4-1997-121492 would nullify the
exclusive rights of Appellee as the true and registered owner of the mark
VESPA and defeat the purpose of the trademark registration system.[27]
Shen Dar challenges the propriety of such cancellation on the ground that there was
no petition for cancellation as required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of
hearing of Inter Partes cases.The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The Rules of
Court may be applied suppletorily. The Bureau shall not be bound by strict
technical rules of procedure and evidence but may adopt, in the absence
of any applicable rule herein, such mode of proceedings which is
consistent with the requirements of fair play and conducive to the just,
speedy and inexpensive disposition of cases, and which will give the
Bureau the greatest possibility to focus on the contentious issues before
it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and
administrative bodies are not bound by technical rules of procedure. Such principle, however,
is tempered by fundamental evidentiary rules, including due process. Thus, we ruled in Aya-ay,
Sr. v. Arpaphil Shipping Corp.:[28]
That administrative quasi-judicial bodies like the NLRC are not
bound by technical rules of procedure in the adjudication of cases does not
mean that the basic rules on proving allegations should be entirely
dispensed with. A party alleging a critical fact must still support his
allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.
x x x The liberality of procedure in administrative actions is
subject to limitations imposed by basic requirements of due process. As
this Court said in Ang Tibay v. CIR, the provision for flexibility in
administrative procedure does not go so far as to justify orders without a
basis in evidence having rational probative value. More specifically, as held
in Uichico v. NLRC:
46
 It is true that administrative and quasi-judicial bodies like
the NLRC are not bound by the technical rules of procedure in the
adjudication of cases. However, this procedural rule should not
be construed as a license to disregard certain fundamental
evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:[29]
While it is true that administrative or quasi-judicial bodies like the
NLRC are not bound by the technical rules of procedure in the adjudication
of cases, this procedural rule should not be construed as a license to
disregard certain fundamental evidentiary rules. The evidence presented
must at least have a modicum of admissibility for it to have probative value.
Not only must there be some evidence to support a finding or conclusion,
but the evidence must be substantial. Substantial evidence is more than a
mere scintilla. It means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. Thus, even though technical
rules of evidence are not strictly complied with before the LA and the NLRC,
their decision must be based on evidence that must, at the very least, be
substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar
does not preclude the cancellation of Shen Dars COR. It must be emphasized that, during the
hearing for the cancellation of EYIS COR before the BLA, Shen Dar tried to establish that it, not
EYIS, was the true owner of the mark VESPA and, thus, entitled to have it registered. Shen Dar
had more than sufficient opportunity to present its evidence and argue its case, and it did. It
was given its day in court and its right to due process was respected. The IPO Director Generals
disregard of the procedure for the cancellation of a registered mark was a valid exercise of his
discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of the BLA that
Shen Dar and not EYIS is the prior user and, therefore, true owner of the mark. In arguing its
position, petitioners cite numerous rulings of this Court where it was enunciated that the
factual findings of administrative bodies are given great weight if not conclusive upon the
courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual
findings of administrative bodies deserve utmost respect when supported by
evidence. However, such general rule is subject to exceptions.
In Fuentes v. Court of Appeals,[30] the Court established the rule of conclusiveness of
factual findings of the CA as follows:
Jurisprudence teaches us that (a)s a rule, the jurisdiction of this
Court in cases brought to it from the Court of Appeals x x x is limited to the
review and revision of errors of law allegedly committed by the appellate
court, as its findings of fact are deemed conclusive. As such this Court is not
duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below. This rule, however, is not without
exceptions. The findings of fact of the Court of Appeals, which are as a
general rule deemed conclusive, may admit of review by this Court:
(1) when the factual findings of the Court of Appeals and the trial
court are contradictory;
(2) when the findings are grounded entirely on speculation,
surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its
findings of fact is manifestly mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion in the appreciation of
facts;
47
 (5) when the appellate court, in making its findings, goes beyond
the issues of the case, and such findings are contrary to the admissions of
both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a
misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant
facts which, if properly considered, will justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of
the specific evidence on which they are based; and
(10) when the findings of fact of the Court of Appeals are
premised on the absence of evidence but such findings are contradicted by
the evidence on record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,[31] this Court applied the above principle to
factual findings of quasi-judicial bodies, to wit:
Proceeding by analogy, the exceptions to the rule on
conclusiveness of factual findings of the Court of Appeals, enumerated
in Fuentes vs. Court of Appeals, can also be applied to those of
quasi-judicial bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the
BLA and the IPO Director General which it opined, when correctly appreciated, would alter the
result of the case. An examination of the IPO Decisions, however, would show that no such
evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application
for registration of the VESPA trademark on July 28, 1999, they stated under
oath, as found in their DECLARATION OF ACTUAL USE, that their first use of
the mark was on December 22, 1998. On the other hand, [Shen Dar] in its
application dated June 09, 1997 stated, likewise under oath in their
DECLARATION OF ACTUAL USE, that its first use of the mark was in June
1996. This cannot be made any clearer. [Shen Dar] was not only the first to
file an application for registration but likewise first to use said registrable
mark.[32]
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on
the statements of the parties in their respective Declarations of Actual Use. Such conclusion is
premature at best. While a Declaration of Actual Use is a notarized document, hence, a public
document, it is not conclusive as to the fact of first use of a mark. The declaration must be
accompanied by proof of actual use as of the date claimed. In a declaration of actual use, the
applicant must, therefore, present evidence of such actual use.
The BLA ruled on the same issue, as follows:
More importantly, the private respondents prior adoption and
continuous use of the mark VESPA on air compressors is bolstered by
numerous documentary evidence consisting of sales invoices issued in the
name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375). Sales Invoice
No. 12075 dated March 27, 1995 antedates petitioners date of first use on
January 1, 1997 indicated in its trademark application filed on June 9, 1997
as well as the date of first use in June of 1996 as indicated in the
Declaration of Actual Use submitted on December 3, 2001 (Exhibit 385).
The use by respondent registrant in the concept of owner is shown by
commercial documents, sales invoices unambiguously describing the goods
as VESPA air compressors. Private respondents have sold the air
compressors bearing the VESPA to various locations in the Philippines, as
48
 far as Mindanao and the Visayas since the early 1990s. We carefully
inspected the evidence consisting of three hundred seventy-one (371)
invoices and shipment documents which show that VESPA air compressors
were sold not only in Manila, but to locations such as Iloilo City, Cebu City,
Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City, to
name a few. There is no doubt that it is through private respondents efforts
that the mark VESPA used on air compressors has gained business goodwill
and reputation in the Philippines for which it has validly acquired
trademark rights. Respondent E.Y. Industrials right has been preserved until
the passage of RA 8293 which entitles it to register the same.[33]
Comparatively, the BLAs findings were founded upon the evidence presented by the
parties. An example of such evidence is Invoice No. 12075 dated March 29, 1995[34] where EYIS
sold four units of VESPA air compressors to Veteran Paint Trade Center. Shen Dar failed to
rebut such evidence. The truth, as supported by the evidence on record, is that EYIS was first to
use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed
by EYIS and the proof submitted was appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the
use of the mark VESPA on the concept of an owner as early as 1991.
Although Respondent E.Y. indicated in its trademark application that its
first use was in December 22, 1998, it was able to prove by clear and
positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791,
23 November 1966, the High Court clarified: Where an applicant for
registration of a trademark states under oath the date of his earliest use,
and later on he wishes to carry back his first date of use to an earlier date,
he then takes on the greater burden of presenting clear and convincing
evidence of adoption and use as of that earlier date. (B.R. Baker Co. vs.
Lebrow Bros., 150 F. 2d 580.)[35]
The CA further found that EYIS is not a manufacturer of air compressors but merely
imports and sells them as a wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted
receipts shows that it is not manufacturer but an importer, wholesaler
and retailer. This fact is corroborated by the testimony of a former
employee of appellees. Admittedly too, appellees are importing air
compressors from [Shen Dar] from 1997 to 2004. These matters, lend
credence to [Shen Dars] claim that the letters SD followed by a number
inscribed in the air compressor is only to describe its type, manufacturer
business name and capacity. The VESPA mark is in the sticker which is
attached to the air compressors. The ruling of the Supreme Court, in the
case of UNNO Commercial Enterprises, Inc. vs. General Milling Corporation
et al., is quite enlightening, thus We quote:
The term owner does not include the importer of the
goods bearing the trademark, trade name, service mark, or other
mark of ownership, unless such importer is actually the owner
thereof in the country from which the goods are imported. Thus,
this Court, has on several occasions ruled that where the
applicants alleged ownership is not shown in any notarial
document and the applicant appears to be merely an importer or
distributor of the merchandise covered by said trademark, its
application cannot be granted.[36]
This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales
invoice as an importer, wholesaler and retailer does not preclude its being a manufacturer. Sec.
237 of the National Internal Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial
Invoices.All persons subject to an internal revenue tax shall, for each sale
and transfer of merchandise or for services rendered valued at Twenty-five
pesos (P25.00) or more, issue duly registered receipts or sale or
commercial invoices, prepared at least in duplicate, showing the date of
transaction, quantity, unit cost and description of merchandise or nature
of service: Provided, however, That where the receipt is issued to cover
payment made as rentals, commissions, compensation or fees, receipts or
49
 invoices shall be issued which shall show the name, business style, if any,
and address of the purchaser, customer or client.
The original of each receipt or invoice shall be issued to the
purchaser, customer or client at the time the transaction is effected, who,
if engaged in business or in the exercise of profession, shall keep and
preserve the same in his place of business for a period of three (3) years
from the close of the taxable year in which such invoice or receipt was
issued, while the duplicate shall be kept and preserved by the issuer, also in
his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person
subject to an internal revenue tax from compliance with the provisions of
this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the
Bureau of Internal Revenue defined a Sales Invoice and identified its required information as
follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods
sold or services rendered and the prices charged therefor used in the
ordinary course of business evidencing sale and transfer or agreement to
sell or transfer of goods and services. It contains the same information
found in the Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of
services rendered or goods sold. It contains the following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial
number of booklets and date of issuance of receipts.
There is no requirement that a sales invoice should accurately state the nature of all
the businesses of the seller. There is no legal ground to state that EYIS declaration in its sales
invoices that it is an importer, wholesaler and retailer is restrictive and would preclude its
being a manufacturer.
From the above findings, there was no justifiable reason for the CA to disregard the
factual findings of the IPO. The rulings of the IPO Director General and the BLA Director were
supported by clear and convincing evidence. The facts cited by the CA and Shen Dar do not
justify a different conclusion from that of the IPO. Hence, the findings of the BLA Director and
the IPO Director General must be deemed as conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark VESPA
In any event, given the length of time already invested by the parties in the instant
case, this Court must write finis to the instant controversy by determining, once and for all, the
true owner of the mark VESPA based on the evidence presented.
RA 8293 espouses the first-to-file rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if
it:
xxxx
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be
likely to deceive or cause confusion. (Emphasis
supplied.)
50

Under this provision, the registration of a mark is prevented with the filing of an
earlier application for registration. This must not, however, be interpreted to mean that
ownership should be based upon an earlier filing date. While RA 8293 removed the previous
requirement of proof of actual use prior to the filing of an application for registration of a mark,
proof of prior and continuous use is necessary to establish ownership of a mark. Such
ownership constitutes sufficient evidence to oppose the registration of a mark.
Sec. 134 of the IP Code provides that any person who believes that he would be
damaged by the registration of a mark x x x may file an opposition to the application. The term
any person encompasses the true owner of the markthe prior and continuous user.
Notably, the Court has ruled that the prior and continuous use of a mark may even
overcome the presumptive ownership of the registrant and be held as the owner of the
mark. As aptly stated by the Court in Shangri-la International Hotel Management, Ltd. v.
Developers Group of Companies, Inc.:[37]
Registration, without more, does not confer upon the registrant
an absolute right to the registered mark. The certificate of registration is
merely a prima facie proof that the registrant is the owner of the registered
mark or trade name. Evidence of prior and continuous use of the mark or
trade name by another can overcome the presumptive ownership of the
registrant and may very well entitle the former to be declared owner in
an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not
necessarily by registration but by adoption and use in trade or commerce.
As between actual use of a mark without registration, and registration of
the mark without actual use thereof, the former prevails over the latter.
For a rule widely accepted and firmly entrenched, because it has come
down through the years, is that actual use in commerce or business is a
pre-requisite to the acquisition of the right of ownership.
xxxx
By itself, registration is not a mode of acquiring ownership. When
the applicant is not the owner of the trademark being applied for, he has
no right to apply for registration of the same. Registration merely creates
a prima facie presumption of the validity of the registration, of the
registrants ownership of the trademark and of the exclusive right to the use
thereof. Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to
evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence submitted by the
parties, is that EYIS is the prior user of the mark. The exhaustive discussion on the matter made
by the BLA sufficiently addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation
engaged in buying, importing, selling, industrial machineries and tools, manufacturing, among
others since its incorporation in 1988. (Exhibit 1). Indeed private respondents have submitted
photographs (Exhibit 376, 377, 378, 379) showing an assembly line of its manufacturing or
assembly process.
More importantly, the private respondents prior adoption and
continuous use of the mark VESPA on air compressors is bolstered by
numerous documentary evidence consisting of sales invoices issued in the
name of respondent EY Industrial and Bills of Lading. (Exhibits 4 to 375).
Sales Invoice No. 12075 dated March 27, 1995 antedates petitioners date
of first use in January 1, 1997 indicated in its trademark application filed in
June 9, 1997 as well as the date of first use in June of 1996 as indicated in
the Declaration of Actual Use submitted on December 3, 2001 (Exhibit
385). The use by respondent-registrant in the concept of owner is shown by
commercial documents, sales invoices unambiguously describing the goods
as VESPA air compressors. Private respondents have sold the air
compressors bearing the VESPA to various locations in the Philippines, as
far as Mindanao and the Visayas since the early 1990s. We carefully
inspected the evidence consisting of three hundred seventy one (371)
invoices and shipment documents which show that VESPA air compressors
were sold not only in Manila, but to locations such as Iloilo City, Cebu City,
Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City to name
a few. There is no doubt that it is through private respondents efforts that
51
 the mark VESPA used on air compressors has gained business goodwill and
reputation in the Philippines for which it has validly acquired trademark
rights. Respondent EY Industrials right has been preserved until the
passage of RA 8293 which entitles it to register the same. x x x[38]
On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its
decision. More importantly, Shen Dar failed to present sufficient evidence to prove its own
prior use of the mark VESPA. We cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the
trademark VESPA used on air compressors. The thrust of [Shen Dars]
argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor
of the VESPA air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over
each and every document attached as Annexes A, A 1-48 which consist of
Bill of Lading and Packing Weight List. Not one of these documents referred
to a VESPA air compressor. Instead, it simply describes the goods plainly as
air compressors which is type SD and not VESPA. More importantly, the
earliest date reflected on the Bill of Lading was on May 5, 1997. (Annex
A-1). [Shen Dar] also attached as Annex B a purported Sales Contract with
respondent EY Industrial Sales dated April 20, 2002. Surprisingly, nowhere
in the document does it state that respondent EY Industrial agreed to sell
VESPA air compressors. The document only mentions air compressors
which if genuine merely bolsters respondent Engracio Yaps contention that
[Shen Dar] approached them if it could sell the Shen Dar or SD air
compressor. (Exhibit 386) In its position paper, [Shen Dar] merely mentions
of Bill of Lading constituting respondent as consignee in 1993 but never
submitted the same for consideration of this Bureau. The document is also
not signed by [Shen Dar]. The agreement was not even drafted in the
letterhead of either [Shen Dar] nor [sic] respondent registrant. Our only
conclusion is that [Shen Dar] was not able to prove to be the owner of the
VESPA mark by appropriation. Neither was it able to prove actual
commercial use in the Philippines of the mark VESPA prior to its filing of a
trademark application in 9 June 1997.[39]
As such, EYIS must be considered as the prior and continuous user of the mark VESPA
and its true owner. Hence, EYIS is entitled to the registration of the mark in its name.
WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and
October 6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The
Decision dated May 25, 2007 issued by the IPO Director General in Inter Partes Case No.
14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of the IPO are
hereby REINSTATED.
No costs.
SO ORDERED.
Facts: EYIS is a domestic corporation engaged in the production, distribution and sale of air
compressors and other industrial tools and equipment. On the other hand, Shen Dar is a
Taiwan-based foreign manufacturer of air compressors. From 1997 to 2004, EYIS imported air
compressors from Shen Dar. Both of them sought to register the mark VESPA for use on air
compressors, but it was Shen Dar who first filed the application on June 1997. EYIS application
was first granted on 2004, so Shen Dar sought for its cancellation on the ground of Sec 123 of
the Intellectual Property Code which provides that the registration of a similar mark is
prevented with the filing of an earlier application for registration. On the other hand, EYIS
contended that Shen Dar is not entitled to register the mark VESPA on its products because
EYIS has been using it as the sole assembler and distributor of air compressors since the 1990s.
EYIS was able to prove such fact.
Issue: W/N EYIS is the true owner of the mark VESPA
Ruling:Yes. EYIS is the true owner because it is the prior and continuous user of the mark
VESPA.
Section 123.1 of the IPC should not be interpreted to mean that ownership is based upon an
earlier filing date. While RA 8293 removed the previous requirement of proof of actual use
prior to the filing of an application for registration of a mark, proof of prior and continuous use
is necessary to establish ownership of a mark. Ownership of a mark or trade name may be
acquired not necessarily by registration but by adoption and use in trade or commerce.
As between actual use of a mark without registration, and registration of the mark without
actual use thereof, the former prevails over the latter. Hence, EYIS is entitled to the
registration of the mark in its name.
52
G.R. No. 169440 November 23, 2011
GEMMA ONG A.K.A. Maria Teresa Gemma Catacutan, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of
Court, to set aside and reverse the June 16, 2005 Decision[1] of the Court of Appeals in CA-G.R.
CR No. 28308, which affirmed the September 23, 2003 Decision[2] of the Regional Trial Court
(RTC) of Manila, Branch 24 in Criminal Case No. 00-184454.
On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan
(Gemma) was charged before the RTC for Infringement under Section 155 in relation to Section
170 of Republic Act No. 8293 or the Intellectual Property Code. The accusatory portion of the
Information reads:
That sometime in September 25, 1998 and prior thereto at Sta.
Cruz, Manila and within the jurisdiction of this Honorable Court, the
above-named accused did then and there, knowingly, maliciously,
unlawfully and feloniously engage in the distribution, sale, [and] offering
for sale of counterfeit Marlboro cigarettes which had caused confusion,
deceiving the public that such cigarettes [were] Marlboro cigarettes and
those of the Telengtan Brothers and Sons, Inc., doing business under the
style of La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer
of Marlboro Cigarette in the Philippines and that of Philip Morris Products,
Inc. (PMP7) the registered owner and proprietor of the MARLBORO
trademark together with the devices, including the famous-Root Device, to
their damage and prejudice, without the accused seeking their permit or
authority to manufacture and distribute the same.[3]
On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a
warrant of arrest against Gemma, but lifted[4] and set aside[5] the same
after Gemma voluntarily surrendered on August 4, 2000, and filed a cash bond for 12,000.00.
Gemma pleaded not guilty to the charge upon arraignment on October 17,
2000.[6] After the pre-trial conference on February 13, 2001,[7] trial on the merits ensued.
The prosecution called to the witness stand the following: Roger Sherman Slagle, the
Director of Operations of Philip Morris Malaysia, and Philip Morris Philippines, Inc.s (PMPI)
product/brand security expert, to testify that according to his examination, the products they
seized at the subject premises were counterfeit cigarettes; [8] as well as Jesse Lara, who, as then
Senior Investigator III at the Intellectual Property Rights (IPR) Unit of the Economic Intelligence
and Investigation Bureau (EIIB), Department of Finance, led the investigating team, to testify
on the events that led to the arrest of Gemma.[9] The prosecution also presented the billing
accountant of Quasha Ancheta Pea & Nolasco Law Office (Quasha Law Office), Juliet Flores, to
show that PMPI, being one of Quasha Law Offices clients, paid the amount of $4,069.12 for
legal services rendered.[10] The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a
senior law partner at Quasha Law Office, who testified that as the duly appointed
Attorney-in-Fact of PMPI, he was in charge of the EIIB search operation in the subject
premises. Atty. Ancheta said that while he was not personally present during the
implementation of the search warrant, he sent Atty. Leonardo Salvador, who constantly
reported the developments to him.[11]
The facts, as succinctly summarized by the Court of Appeals, are as follows:
On September 10, 1998, Jesse S. Lara, then Senior Investigator III
at the Intellectual Property Rights (IPR) Unit of the Economic Intelligence
and Investigation Bureau (EIIB), Department of Finance, received reliable
information that counterfeit Marlboro cigarettes were being distributed
and sold by two (2) Chinese nationals, Johnny Sia and Jessie Concepcion, in
the areas of Tondo, Binondo, Sta. Cruz and Quiapo, Manila. A mission team
formed by EIIB, including Lara, conducted surveillance operation to verify
the report. EIIB agents Leonardo Villanueva and Jigo Madrigal did
a test-buy on the different sari-sari stores of Manila located in Quiapo,
Tondo, Sta. Cruz and Blumentritt areas and took samples of Marlboro
cigarettes sold therein. During the surveillance, the container van
delivering the Marlboro packed in black plastic bags was seen parked at
1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the subject
53
premises)]. Upon inquiry from the Barangay Chairman, they also learned
that the place is owned by a certain Mr. Jackson Ong.
The EIIB team coordinated with officers of Philip Morris, Inc., owner of the
trademark Marlboro Label in the Philippines duly registered with the
Philippine Patents Office and subsequently with the Intellectual Property
Office (IPO) since 1956. Initial examination made by Philip Morris, Inc. on
those random sample purchases revealed that the cigarettes were indeed
fake products unauthorized by the company. With official indorsement by
the EIIB, Senior Investigator Lara filed an application for search warrant
before the Regional Trial Court of Dasmarias, Cavite, Branch 90.
On September 24, 1998, Executive Judge Dolores L. Espaol issued
a search warrant after finding probable cause to believe that Mr. Jackson
Ong has in his possession/control in the premises located at 1675-1677
Bulacan St. cor. M. Hizon St., Sta. Cruz, Manila, the following properties:
Substantial number of fake locally made and imported
fake cigarettes bearing the Marlboro brand, together
with the corresponding labels, cartons, boxes and other
packaging as well as receipts, invoices and other
documents relative to the purchase, sale, and
distribution of the aforesaid fake Marlboro cigarettes.
On September 25, 1998, the EIIB team led by Senior Investigator Lara
implemented the search warrant, together with SPO2 Rommel P. Sese of
the Western Police District (WPD) as representative of the Philippine
National Police (PNP), Barangay Chairman Ernesto Traje, Sr., Barangay
Kagawad Vivian V. Rallonza and Atty. Leonardo P. Salvador who was sent
by [Quasha Pea & Nolasco Law Office,] the law firm engaged by Philip
Morris, Inc. They proceeded to the subject premises but Jackson Ong, the
alleged owner, was not there. It was accused, who is supposedly either the
spouse or common-law wife of Jackson Ong, who entertained them. At first,
accused refused to allow them entry into the premises but eventually the
team was able to search the premises and found Marlboro cigarettes
stocked in several boxes containing fifty (50) reams inside each box which
were packed in black plastic sacks like in balikbayan boxes. The Inventory
and Certification In the Conduct of Search were duly accomplished and
signed by the members of the EIIB and the other representatives present
during the actual search (SPO2 Sese, Jess Lara, Traje, Sr., Henry Mariano,
Isidro Burgos and Atty. Salvador). Accused signed her name in the said
documents as Gemma Ong, as the Owner/Representative, while a certain
employee, Girlie Cantillo, also signed as witness.
On September 28, 1998, a Return of Search Warrant was submitted by the
EIIB to the issuing court stating that the articles seized pursuant to the
warrant were stored in the premises of the EIIB and requesting that EIIB be
granted temporary custody of the goods. Acting on the Urgent Motion To
Transfer Custody of Confiscated Articles filed by Philip Morris Products, Inc.
(PMPI) of Virginia, U.S.A., Executive Judge Dolores L. Espaol ordered the
custody of the seized goods transferred from EIIB to PMPI c/o Quasha
Ancheta Pea and Nolasco Law Office, the Attorney-in-Fact of PMPI. Judge
Espaol subsequently also issued an order dated October 15, 1998
authorizing PMPI to secure and take out samples of the unauthorized
products from the confiscated cartons/boxes of Marlboro cigarettes which
are stored at Four Winds Phils. Inc. warehouse located at No. 2241 Pasong
Tamo Extension, Makati City under the direct and personal control and
supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such
order from the court for the purpose of laboratory analysis and scientific
testing of the samples from the confiscated cigarettes.
On the basis of the results of the examination conducted by PMPI on the
samples obtained from the confiscated boxes of cigarettes bearing the
Marlboro brand, which confirmed the same to be unauthorized products
and not genuine Marlboro cigarettes, the EIIB filed a case for Violation of
Sections 155 and 168 in relation to Section 170 of Republic Act No. 8293
against Jackson Ong who is not an authorized distributor of Marlboro
products in the Philippines.[12]
After the prosecution rested its case, the defense filed a Demurrer to
Evidence,[13] which the RTC denied on March 26, 2003.[14] The defense moved for a
reconsideration of this order but the same was denied on April 22, 2003.[15]
Gemma, as the lone witness for the defense, then took the witness stand. She said
that she is married to Co Yok Piao, a Chinese national, but she still uses her maiden name
Catacutan.[16] She denied that she is the Gemma Ong accused in this case. She testified that she
54
was arrested on August 4, 2000, without the arresting officers asking for her name. She said With costs against accused Gemma Catacutan.[20]
that when she pleaded to be released, she was instructed to post a cash bond, which she did in
the amount of 12,000.00. Gemma averred that when she posted her bond and signed her
certificate of arraignment, she did so under her real name Maria Teresa Gemma Catacutan, as
opposed to the signatures in the Inventory and Certification in the Conduct of Search (search
documents), which she denied signing. She claimed that she was not able to bring up her In resolving the case, the RTC narrowed down the issue to whether Gemma
defense of mistaken identity early on as she did not know when the proper time to raise it Catacutan was the same accused identified as Gemma Ong. The RTC answered this in the
was. She avowed that she was not interrogated by the police prior to her arrest, despite the affirmative as it found Gemmas defense of mistaken identity as untenable, especially since she
two-year gap between it and the search of the subject premises.She alleged that she did not claimed to be a professional. The RTC explained:
know Jackson Ong and that the prosecution witnesses, whom she first saw during her trial,
couldnt even point to her as the person present during the raid when they testified in
court. Gemma further asseverated that while she could not remember where she was on
September 25, 1998, she was sure that she was not at the subject premises on that Ranged against the positive and forthright declaration of the
date. Gemma presented her Identification Card issued by the Professional Regulation prosecution witnesses, the mere uncorroborated and self-serving denials of
Commission (PRC) to show that she is a dentist by profession, although she claimed that she is the accused cannot stand. (People vs. Hortaleza, 258 SCRA 201)
a businessperson in practice. She said that she used to buy and sell gear fabrics, t-shirts, truck
materials, and real estate[17] under the business name Fascinate Trading based in Bulacan
Street, Sta. Cruz, Manila, but that it had ceased operations in February 1998.[18] Gemma denied We note in disbelief that it was only in the hearing of November 26, 2001,
ever having engaged in the manufacture and sale of any kind of cigarettes and claimed that she that accused[s] former lawyer manifested that accused is known as Gemma
could not even distinguish between a fake and a genuine Marlboro cigarette.[19] Catacutan never as Gemma Ong (tsn, November 26, 2001, p. 3) and as
admitted by her, she never revealed her true identity when arrested, when
she posted her bail bond and even during her arraignment.
On September 30, 2003, the RTC convicted Gemma of the crime as charged. The
dispositive portion of its Decision reads:
She could have protested at the time of her arrest that they were arresting
the wrong person but this she did not do. She proceeded to post a bond for
her provisional liberty, hired a lawyer to defend her but failed to divulge
the very information that could have led to an early dismissal of the case, if
Accordingly, this Court finds accused Gemma Catacutan guilty beyond true.
reasonable doubt of violation of Section 155 in relation to Section 170 of
Republic Act No. 8293 and hereby sentences her to suffer the penalty of
imprisonment of two (2) years and to pay a fine of Fifty Thousand Her pretensions of ignorance as to the proper stage of when to explain (tsn,
(50,000.00) Pesos. May 26, 2003), p. 13 can hardly be given credit. A dentist by profession, it is
utterly incredible that she remained meek all through-out her arrest and
the posting of her bail bond.[21]
Accused is further directed to indemnify private complainant the sum of
US$4,069.12 or its peso equivalent, as actual damages.

The records of the case as against Jackson Ong is hereby ordered archived The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale
pending his arrest. and manufacture of Marlboro cigarettes, the address of her business Fascinate Trading is
registered as 1677 Bulacan Street, Sta. Cruz, Manila, the same property raided by the EIIB that
contained the counterfeit cigarettes.[22]

55

Aggrieved, Gemma appealed the RTCs decision to the Court of Appeals based on the following
grounds:
I UNCONFOUNDED THEORY OF GUILT.[23]
THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR.
MARIA TERESA GEMMA CATACUTAN GUILTY OF THE CRIME OF VIOLATION
OF THE INTELLECTUAL PROPERTY RIGHTS LAW DESPITE UTTER LACK OF
EVIDENCE.
II
THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA
CATACUTAN ON THE BASIS OF SURMISE (sic), CONJECTURES AND
GUESSWORK COMMITTED GRAVE VIOLENCE AGAINST THE
CONSTITUTIONAL PRESUMPTION OF INNOCENCE.
III
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN
CONVICTING THE ACCUSED-APPELLANT WHO HAD NOT BEEN POSITIVELY
IDENTIFIED AND PINPOINTED AS MANUFACTURER NOR (sic) DISTRIBUTOR
OF FAKE MARLBORO PRODUCT.
IV
THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN
NOT GIVING THE SLIGHTEST CREDENCE TO THE UNCONTRADICTED,
UNREFUTED AND CANDID TESTIMONY OF THE ACCUSED-APPELLANT, BUT
INSTEAD, CONVICTED HER ON [T]HE BASIS OF EXTRAPOLATED EVIDENCE
NOT BORNE BY THE RECORDS.
V
THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN
CONVICTING ACCUSED-APPELLANT DESPITE THE UTTER AND PATHETIC
LACK OF EVIDENCE TO SUSTAIN THE PROSECUTIONS LAME, SHALLOW AND
The Court of Appeals found Gemmas appeal to be unmeritorious. It said that Gemma
was positively identified by the prosecution witnesses as the woman who entertained them
during the search of the subject premises on September 25, 1998, and the woman who signed
the Certification in the Conduct of Search and Inventory. The Court of Appeals agreed with the
RTCs rejection of Gemmas defense of mistaken identity, as she should have raised it at the
earliest opportunity, which was at the time of her arrest, the posting of her bail bond, or during
her arraignment. The Court of Appeals held that the amendment of the prosecution witnesses
affidavits was explained during the hearing, and although the original affidavits were the ones
marked during the pre-trial, the amended ones provided the basis for the filing of the
Information against Gemma and her co-accused Jackson Ong. The Court of Appeals also noted
that the March 20, 2000 Resolution of the State Prosecutor specifically mentioned that the
search warrant was served on Gemma Ong. The Court of Appeals then proclaimed that in the
hierarchy of evidence, the testimony of the witness in court commands greater weight than his
written affidavit.[24]
The Court of Appeals affirmed the conviction of Gemma for trademark infringement
under Section 155 of Republic Act No. 8293, as the counterfeit goods seized by the EIIB were
not only found in her possession and control, but also in the building registered under her
business, Fascinate Trading. The Court of Appeals said that the prosecution had satisfactorily
proven Gemmas commission of the offense since the unauthorized use of the trademark
Marlboro, owned by PMPI, was clearly intended to deceive the public as to the origin of the
cigarettes being distributed and sold, or intended to be distributed and sold. The Court of
Appeals further sustained the penalty and damages imposed by the RTC for being in accord
with the law and facts.[25]
Gemma is now before this Court with the following assignment of errors:
A.
56
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES
OF PROSECUTION WITNESSES IDENTIFYING PETITIONER AS PRESENT AT
THE TIME AND PLACE WHEN THE SEARCH AND SEIZURE TOOK PLACE.
B.
THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES
OF PROSECUTION WITNESSES THAT THEY SAW PETITIONER SIGN HER
NAME AS GEMMA ONG AS OWNER/CLAIMANT/REPRESENTATIVE (OF THE
ARTICLES SEIZED) ON THE SEARCH WARRANT (EXH. A), CERTIFICATION IN
THE CONDUCT OF SEARCH (EXH. B) AND INVENTORY OF THE S[E]IZED
ARTICLES AT THE TIME OF THE SEARCH (EXH. D).
C.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONERS
SIGNATURE IN EXHIBITS A, B AND C ARE NOT HERS BUT WERE FORGED,
BEING COMPLETELY AND PATENTLY DISSIMILAR TO HER TRUE AND REAL
SIGNATURE AS SHOWN IN HER OFFICIAL I.D AS PROFESSIONAL DENTIST.
D.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF
THE PROSECUTION WITNESSES WHICH DID NOT MENTION PETITIONERS
PRESENCE AT THE TIME AND PLACE OF THE SEARCH CANNOT TAKE
PRECEDENCE OVER THEIR CONTRARY TESTIMONIES IN COURT THAT SHE
WAS PRESENT AND IN FACT THE OCCUPANT AND OWNER OF THE
PREMISES FROM WHICH SHE INITIALLY BLOCKED THEIR ENTRY INTO.
E.
THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS
THE VERY SAME PERSON WHO WAS CAUGHT IN POSSESSION AND
CONTROL OF THE PREMISES WHERE THE COUNTERFEIT ARTICLES WERE
SEIZED BECAUSE SHE ALLEGEDLY NEVER PROTESTED BEING WRONGFULLY
ACCUSED AT THE TIME OF HER ARREST ON 4 AUGUST 2000, WHEN SHE
POSTED HER CASH BOND AND WHEN SHE EVEN SIGNED HER NAME AS MA.
TERESA GEMMA CATACUTAN IN THE WAIVER, UNDERTAKING AND
CERTIFICATE OR ARRAIGNMENT, ALL IN THE NAME OF THE ACCUSED AS
GEMMA ONG, a.k.a. MA. THERESA CATACUTAN.
F.
THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR
FAILURE OF THE PROSECUTION TO PROVE THE GUILT OF THE
ACCUSED-APPELLANT BEYOND REASONABLE DOUBT.[26]
Gemma argues that if it were true that she was in the subject premises when it was
raided on September 25, 1998, then her name and presence would have been mentioned in
the respective affidavits of Slagle and Atty. Ancheta; and the EIIB agents who conducted the
search would have confronted, investigated, or arrested her. Gemma insists that the fact that
her name was only mentioned for the first time in the amended affidavits yields to the
conclusion that she was not in the subject premises when it was searched and that the
testimonies of the prosecution witnesses were perjured.[27]
Gemma further claims that the courts below were wrong in finding that she never
protested that she was mistakenly identified. She claims that she was arrested without the
benefit of a preliminary investigation and all she wanted to do at that point was to get out [of]
the clutches of overzealous and eager beaver policemen who were exuberant in arresting an
innocent party like[28] her. Gemma also explains that her non-protest during her arraignment
was upon the advice of her former lawyer, who said that he would correct it in the proper time
during the trial.
Respondent People of the Philippines, in its comment,[29] avers that there are only
two issues to be resolved in this case, to wit:
57
 1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES
QUESTIONS OF FACT WHICH ARE NOT PROPER FOR REVIEW UNDER
RULE 45 OF THE REVISED RULES OF COURT.
2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONERS
CONVICTION FOR VIOLATION OF SECTION 155 IN RELATION TO
SECTION 170 OF R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE
PHILIPPINES).[30]
Respondent claims that a perusal of the issues in Gemmas petition readily discloses
that only questions of fact have been raised, which are not reviewable in an appeal
by certiorari.[31] Respondent asseverates that Gemmas conviction was warranted as the
prosecution had sufficiently established her presence during the search of the subject premises
where she signed the search documents as Gemma Ong. Moreover, the respondent avers,
Gemma failed to timely protest her arrest and raise her claim that she is not Gemma Ong. [32]
Issues
A study of the pleadings filed before this Court shows that the only issues to be
resolved are the following:
1. Whether or not accused-appellants petition for review on certiorari under Rule
45 of the Rules of Court is fatally defective as it raises questions of fact; and
2. Whether or not Gemmas guilt was proven beyond reasonable doubt in light of
her alleged mistaken identity.
This Courts Ruling
Procedural Issue
As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual
questions are beyond the province of this Court, because only questions of law may be raised
in a petition for review.[33] However, in exceptional cases, this Court has taken cognizance of
questions of fact in order to resolve legal issues, such as when there was palpable error or a
grave misapprehension of facts by the lower court.[34] In Armed Forces of the Philippines
Mutual Benefit Association, Inc. v. Court of Appeals,[35] we said that although submission of
issues of fact in an appeal by certiorari taken to this Court is ordinarily proscribed, this Court
nonetheless retains the option in the exercise of its sound discretion, taking into account the
attendant circumstances, either to decide the case or refer it to the proper court for
determination.[36] Since the determination of the identity of Gemma is the very issue affecting
her guilt or innocence, this Court chooses to take cognizance of this case in the interest of
proper administration of justice.
Gemma is guilty of violating
Section 155 in relation to Section 170 of
Republic Act No. 8293
Gemma was charged and convicted of violating Section 155 in relation to Section 170
of Republic Act No. 8293, or the Intellectual Property Code of the Philippines.
Section 155. Remedies; Infringement. - Any person who shall,
without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services
on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in
commerceupon or in connection with the sale, offering for sale,
distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the registrant
for the remedies hereinafter set forth: Provided, That the infringement
takes place at the moment any of the acts stated in Subsection 155.1 or
58
 this subsection are committed regardless of whether there is actual sale
of goods or services using the infringing material. (Sec. 22, R.A. No 166a)
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 (50,000) to Two hundred thousand pesos (200,000),
shall be imposed on any person who is found guilty of committing any of
the acts mentioned in Section 155, Section 168 and Subsection 169.1. (Arts.
188 and 189, Revised Penal Code.) (Emphases supplied.)
A mark 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.[37]
In McDonalds Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger,
Inc.,[38] this Court held:
To establish trademark infringement, the following elements
must be shown: (1) the validity of plaintiffs mark; (2) the plaintiffs
ownership of the mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in likelihood of confusion. Of these,
it is the element of likelihood of confusion that is the gravamen of
trademark infringement.
A mark is valid if it is distinctive and not barred from registration. Once registered,
not only the marks validity, but also the registrants ownership of the mark is prima
facie presumed.[39]
The prosecution was able to establish that the trademark Marlboro was not only
valid for being neither generic nor descriptive, it was also exclusively owned by PMPI, as
evidenced by the certificates of registration issued by the Intellectual Property Office of the
Department of Trade and Industry.[40]
Anent the element of confusion, both the RTC and the Court of Appeals have
correctly held that the counterfeit cigarettes seized from Gemmas possession were intended to
confuse and deceive the public as to the origin of the cigarettes intended to be sold, as they
not only bore PMPIs mark, but they were also packaged almost exactly as PMPIs products.[41]
Regarding the
Claim of
Mistaken
Identity
Despite all these findings, Gemma has posited only a single defense, from the RTC all
the way up to this Court: that she is not the Gemma Ong named and accused in this case. She
bases this claim on the alleged discrepancies in the prosecution witnesses original
affidavits vis--vis the amended ones, which discrepancies, according to her, strongly suggest
her innocence.
This Court has time and again held that between an affidavit executed outside the
court, and a testimony given in open court, the latter almost always prevails.
Discrepancies between a sworn statement and testimony in court
do not outrightly justify the acquittal of an accused. Such discrepancies do
not necessarily discredit the witness since ex parte affidavits are often
incomplete. They do not purport to contain a complete compendium of the
details of the event narrated by the affiant. Thus, our rulings generally
consider sworn statements taken out of court to be inferior to in court
testimony. x x x.[42]
A reading of the original affidavits[43] executed by Slagle and Atty. Ancheta, readily
reveals that they concentrated on the facts and events leading up to the search and seizure of
the contraband materials from the subject premises. They not only failed to mention Gemma
Ongs presence there, but they also failed to mention the other witnesses names and presence
there as well. Although this might appear to be a mistake on the part of a known and
established law firm like the Quasha Law Office, the firm immediately sought to rectify this by
having the affidavits of Slagle, Atty. Ancheta, and Lara amended.
59
 If it were true that Gemma was not at the subject premises at all on September 25,
1998, then she should have grabbed every chance to correct this notion and expose this
mistake before she was arrested. She could have brought up her defense of mistaken identity
or absence at the raid in the preliminary investigation conducted prior to the issuance of her
warrant of arrest; but instead, she chose to ignore her subpoena and disregard the preliminary
investigation. Even then, Gemma had the opportunity to raise the fact that she was not
Gemma Ong; not only during her arrest, but also during the posting of the cash bond for her
bail, and more importantly, during her arraignment, when she was asked if she understood
the charges against her. Gemma also knew that the Information was filed against her on the
basis of the amended affidavits, thus, she could have filed a motion to quash the information
before she entered her plea, or asked that a reinvestigation be conducted. However, all
these Gemma failed to do. We agree with the RTC that it is highly unlikely that a person of her
stature and educational attainment would be so meek and timid that she failed to protest
against her being wrongly identified, accused, arrested, and potentially imprisoned. If what she
says were true, she would not have agreed to post bail or to be arraigned without at the very
least, bringing up the fact that she was not the Gemma Ong the police officers were looking
for. In addition, her own lawyer, Atty. Maglinao, brought up the fact that she was not Gemma
Ong, only for the purpose of correcting the Information, and not to contest it, to wit:
WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR
CONTINUATION OF DIRECT EXAMINATION BY:
ATTY. ERESE:
With the kind permission of the hon. court.
COURT: Proceed.
ATTY. MAGLINAO:
I would just want to be on record that my client, Gemma Catacutan has
never been known as Gemma Ong
because her real name is Gemma
Catacutan.
COURT: Do you have any objection to the amendment of the information?
ATTY. MAGLINAO:
No, your Honor. May we request to correct the information from Gemma
Ong to Gemma Catacutan.[44]
Gemma further accuses the prosecution witnesses of falsely testifying and of
perjuring themselves just so they can satisfy a big client like PMPI by showing that somebody
had been arrested for counterfeiting its cigarettes. The crimes Gemma is imputing on these
witnesses are serious crimes, and in the absence of concrete and convincing evidence, this
Court could not believe her mere allegations that imply that these people would destroy
someones life just so they can please a client, more so over mere cigarettes. In Principio v. Hon.
Barrientos,[45] we said:
Bad faith is never presumed while good faith is always presumed and the
chapter on Human Relations of the Civil Code directs every person, inter
alia, to observe good faith, which springs from the fountain of good
conscience. Therefore, he who claims bad faith must prove it. For one to be
in bad faith, the same must be evident. x x x.[46]
The prosecution witnesses, contrary to Gemmas claim, had positively identified her
as the person who initially refused the search team entrance, then later acquiesced to the
search operations. Slagle explained that even though he mentioned Gemma only in his
amended affidavit, he was sure that she was at the subject premises on the day that they
searched it:
Testimony of Roger Sherman Slagle
ATTY. MAGLINAO:
Q In this amended affidavit you mentioned the name, Gemma Catacutan as
one of the accused?
60
 A Yes sir.

A : Yes, sir.

Q Can you tell the court how you were able to include the name of
Gemma Catacutan in your amended affidavit,
when in fact it did not appear in the first
affidavit?
Q : So, as regard to the person whom you identify as the one
who refused you to gain entry, would you be
able to identify this person?

A When we arrived she was there and she was very nervous and upset.
A : Yes, sir, that lady in pink is Mrs. Gemma Ong.

(As witness is pointing to the accused Gemma Ong).

xxxx

Q : Mr. Witness, why do you say that the person whom you
A It is very clear to me when I arrived there that she was somehow pointed to us is the one who wrote the name
involved.[47] (Emphases ours.) Mrs. Gemma Ong?

WITNESS

Lara on the other hand, even pointed to her and thus positively identified her to be Because when we served the search warrant
the one who had signed the search documents,[48] as the owner of the subject premises, to wit: she signed it in our presence and that is her
own signature.

Testimony of Jesse Lara

xxxx

ATTY. FREZ
ATTY. FREZ
Q : Mr. Witness, do you know this person who wrote the name
Gemma Ong? Q : So, Mr. Witness, in this Inventory, we made some markings
during the pre-trial conference and I see here
above the signature (Owner/Representative),
there exist a handwritten name which reads
A : Yes, sir, Gemma Ong is the owner of the premises when we
GEMMA ONG and above it, there exist a
served the search warrant and also, she was
signature, are you familiar with this person
the one who refused us to gain entry during
which appears to be Gemma Ong?
the service of the search warrant.

A : Yes, sir, Gemma Ong signed that in my presence.

Q : Were you able to gain entry at the premises?

61
 Q : Your Honor, during the pre-trial conference, it was previously ATTY. FERNANDEZ
marked as Exhibit D-1. Mr. Witness, I also see
here a Verification but there also exist an Objection, your honor, the witness would be incompetent . . .
entry below the name and I quote
Owner/Claimant/Representative, there
appears a handwritten name Gemma Ong COURT
and a signature above it, are you familiar with
this person which appears to be Gemma Ong? May answer.

(The stenographer read back the question).

A : Yes, sir, Gemma Ong signed that in my presence.

WITNESS

xxxx I am not familiar with the relationship of Mrs. Gemma Ong with Jackson
Ong because during the service of the search
warrant, Mrs. Gemma Ong was there
together with two employees and when I
Q : Mr. Witness, in this document which is the certification in the
asked where was Jackson Ong, she was the
Conduct of Search and I have here above the
one who entertained us.
entry (Owner/Representative), a handwritten
name which reads Gemma Ong and there
exist a signature above the handwritten name,
can you identify the signature? ATTY. FREZ

So, the search warrant was served against Gemma Ong?

A : Yes, sir, this was signed by Gemma Ong in my

presence.[49] (Emphases ours.)
WITNESS

Yes, Sir.[50]

Lara further attested to the fact that the search warrant was served on Gemma, who
later on entertained the search team:
Positive identification of a culprit is of great weight in determining whether an
accused is guilty or not.[51] Gemma, in claiming the defense of mistaken identity, is in reality
ATTY. FREZ denying her involvement in the crime. This Court has held that the defense of denial is insipid
and weak as it is easy to fabricate and difficult to prove; thus, it cannot take precedence over
Mr. Witness, the person to whom you served the search warrant is the positive testimony of the offended party.[52] The defense of denial is unavailing when
identified as Mrs. Gemma Ong, do you know placed astride the undisputed fact that there was positive identification of the accused.[53]
her relationship with the accused Jackson
Ong?

62
 While Gemma claims she does not know Jackson Ong, the subject premises where
the counterfeit cigarettes were seized was registered under her admitted business Fascinate
Trading.[54] Aside from the bare allegation that she had stopped operations in the subject
premises as early as February 1998, she has neither proven nor shown any evidence that she
had relinquished control of the building after that date. Gemmas allegation that she did not
sign the search documents, and that the signatures therein did not match the signature on her
PRC identification card, must also be struck down as she has not shown proof that her PRC
signature is the only way she has ever signed her name. She could have, at the very least,
gotten a handwriting expert to testify on her behalf that there is no way that the signatures in
the search documents and the signature on her PRC identification card could have been
written by one and the same person; instead, she relied on the flimsy contention that the two
signatures were, on their face, different.
Gemmas defense consists of her claim of mistaken identity, her denial of her
involvement in the crime, and her accusation against the prosecution witnesses of allegedly
giving false testimonies and committing perjury. These are all weak, unproven, and unfounded
claims, and will not stand against the strong evidence against her.
WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court
of Appeals in CA-G.R. CR No. 28308 is AFFIRMED.
SO ORDERED.
FACTS:
On September 2003, the Regional Trial Court of Manila convicted Gemma Ong
for Infringement under Sec. 155 in relation to Sec. 170 of Republic Act. No. 8293 or the
Intellectual Property Code. This decision was assailed based on facts established that
Gemma Ong was engaged in the distribution, sale and offering for sale of counterfeit
Marlboro cigarettes which caused confusion and deception to public and without permit
or authority from the Telengtan Brothers and Sons Inc., the exclusive manufacturer of
Malboro cigarette in the Philippines and from the Philip Morris Products, Inc. (PMPI)
which is the registered owner and proprietor of the MARLBORO trademark.
The decision of the RTC Manila was affirmed by the Court of Appeals and hence this
appeal by certiorari by Gemma Ong praying that the decision of RTC and CA to be set
aside and reverse.
ISSUE:
Whether or not Gemma Ong, setting aside the issue of alleged mistaken identity, is guilty
beyond reasonable doubt of Infringement under the Intellectual Property Code.
RULING:
The Supreme Court AFFIRMED the decision of Court of Appeals.
In McDonalds Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger,
Inc., Supreme Court held:
To establish trademark infringement, the following elements must be shown:
(1) the validity of plaintiffs mark;
(2) the plaintiffs ownership of the mark; and
(3) the use of the mark or its colorable imitation by the alleged infringer results in
"likelihood of confusion." Of these, it is the element of likelihood of confusion that is the
gravamen of trademark infringement.
A mark is valid if it is distinctive and not barred from registration. Once registered, not
only the marks validity, but also the registrants ownership of the mark is prima facie
presumed.
Anent the element of confusion, both the RTC and the Court of Appeals have correctly
held that the counterfeit cigarettes seized from Gemmas possession were intended to
confuse and deceive the public as to the origin of the cigarettes intended to be sold, as
they not only bore PMPIs mark, but they were also packaged almost exactly as PMPIs
products.
The prosecution was able to establish that the trademark "Marlboro" was not only valid
for being neither generic nor descriptive, it was also exclusively owned by PMPI, as
evidenced by the certificates of registration issued by the Intellectual Property Office of
the Department of Trade and Industry.
63
 Irrespective of the Holistic and Dominancy tests, the Court finds no confusing similarity
between the subject marks. While both marks use the shape of a shark, the Court noted
GREAT WHITE SHARK ENTERPRISES, INC. v. DANILO M. CARALDE, JR. . G.R. No. 192294 . distinct visual and aural differences between them.
November 21, 2012

As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are
FACTS: evident and significant, negating the possibility of confusion in the minds of the ordinary
purchaser, especially considering the distinct aural difference between the marks.

On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark
application seeking to register the mark "SHARK & LOGO" for his manufactured goods under
Class 25, such as slippers, shoes and sandals. Petitioner, a foreign corporation domiciled in
Florida, USA, opposed the application claiming to be the owner of the mark consisting of a Finally, there being no confusing similarity between the subject marks, the matter of whether
representation of a shark in color. It alleged that the mark pending registration is confusingly Great White Sharks mark has gained recognition and acquired becomes unnecessary.
similar with theirs which is likely to confuse the public.

Caralde averred that the subject marks are distinctively different from one another and easily
distinguishable.

The BLA Director ruled in favor of petitioners citing that the shark logo was both a dominant
feature and are similar and that both trademarks belong to the same class. The Director
General of the IPO affirmed this decision. The CA, however, reversed the decision citing that
there were no confusing similarity.

ISSUE: Whether there is confusing similarity between the trademarks.

RULING:

No. A trademark device is susceptible to registration if it is crafted fancifully or arbitrarily and is

capable of identifying and distinguishing the goods of one manufacturer or seller from those of
another. Apart from its commercial utility, the benchmark of trademark registrability is
distinctiveness. Thus, a generic figure, as that of a shark in this case, if employed and designed
in a distinctive manner, can be a registrable trademark device, subject to the provisions of the
IP Code.

64
G.R. No. 188225 : November 28, 2012
SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.
G.R. No. 198728
SHIRLEY F. TORRES, Petitioner, v. IMELDA PEREZ and RODRIGO PEREZ, Respondents.
DECISION
SERENO, C.J.:
These are Petitions for Review on Certiorari under Rule 45 of the Rules of Court. The petition
docketed as G.R. No. 188225 assails the Decision1rll of the Court of Appeals (CA) in CA-G.R.
SP No. 103846 dated 11 March 2009. The CA Decision nullified the Orders dated 12 February
20082rll and 11 April 20083rll of the Regional Trial Court (RTC) of Makati, Branch 149.
The RTC Orders had denied the Motion to Dismiss and/or Withdraw Information filed against
respondents for unfair competition (violation of Section 168 in relation to Section
170)4rll under Republic Act No. (R.A.) 8293 (Intellectual Property Code of the Philippines).
On the other hand, the petition docketed as G.R. No. 198728 assails the Decision 5rll in
CA-G.R. SP No. 111903 dated 29 September 2011, which affirmed the RTC Orders dated 29 July
20096rll and 19 October 2009,7rll this time quashing the Information against
respondents.
Respondents Imelda and Rodrigo are spouses who own RGP Footwear Manufacturing (RGP),
which supplies ladies shoes to Shoe Mart (SM).8rll They met petitioner when she sold them
business-class plane tickets to the United States in 2002.9rll She was also interested in
doing business with SM, and they suggested that she form a partnership with their daughter
Sunshine, nicknamed Sasay.10rll
Petitioner and Sunshine formed Sasays Closet Co. (SCC), a partnership registered with the
Securities and Exchange Commission on 17 October 2002. SCC was engaged in the supply,
trading, retailing of garments such as underwear, childrens wear, womens and mens wear, and
other incidental activities related thereto.11rll
For its products, SCC used the trademark "Naturals with Design," which it filed with the
Intellectual Property Office on 24 August 2005 and registered on 26 February
2007.12rll These products were primarily supplied to SM,13rll which assigned to them the
vendor code "190501" for purposes of identification.14rll
SCC used the facilities and equipment owned by RGP, as well as the latters business address
(No. 72 Victoria Subdivision, Barangay Dela Paz, Bin, Laguna), which was also the residential
address of respondents.15rll
In August 2003, Sunshine pulled out of the partnership, because she was hired to work in an
international school.16rllRespondent Imelda took over Sunshines responsibilities in the
partnership.17rll
On 14 December 2005, petitioner sent an email to respondent Imelda asking to be reimbursed
for expenses incurred in the formers travel to China.18rllRespondent Imelda replied the
following day, stating that the partnership could not reimburse petitioner, because the trip was
personal and not business-related.19rll In the same email, respondent Imelda vented her
frustration over the fact that she, together with respondent Rodrigo, had been doing all the
work for SCC and incurring expenses that they did not charge to the
partnership.20rllRespondent Imelda then informed petitioner of the formers decision to
dissolve the partnership.21rll Despite the objections of petitioner to the dissolution of SCC,
various amounts were paid to her by respondents from January to April 2006 representing her
share in the partnership assets.22rll
Meanwhile, on 27 March 2006, petitioner established Tezares Enterprise, a sole proprietorship
engaged in supplying and trading of clothing and accessories except footwear.23rll Also in
March 2006, she discovered that underwear products bearing the brand "Naturals" were being
sold in SM with vendor code "180195."24rll This code was registered to RGP,25rll a fact
confirmed by test buys conducted by her lawyers on 13 and 14 May 2006.26rll
On 5 June 2006, a search warrant for unfair competition under Section 168 in relation to
Section 170 of R.A. 8293 was issued by the RTC of Manila, Branch 24, against respondents at
their address.27rllThe search warrant called for the seizure of womens undergarments
bearing the brand "Naturals," as well as equipment and papers having the vendor code
"180195" or the inscription "RGP." The search warrant was implemented on the same day.
However, it was quashed by the same court on 20 October 2006 upon motion of respondents.
The trial court ruled that respondents did not pass off "Naturals" as the brand of another
manufacturer. On the contrary, they used the brand in the honest belief that they owned SCC,
the owner of the brand.
On 9 June 2006, petitioner filed a criminal complaint for unfair competition against
respondents and Sunshine before the City Prosecution Office of Makati City. 28rll Assistant
City Prosecutor Imelda P. Saulog found probable cause to indict respondents for unfair
competition.29rll She ruled that they had clearly passed off the "Naturals" brand as RGPs
even if the brand was owned by SCC. According to the prosecutor, SCC was indeed dissolved
when respondent Imelda manifested her intention to cease from the partnership in an email
sent to petitioner on 15 December 2005.30rll The prosecutor said, however, that it
remained operational, since the process of winding up its business had not been completed.
65
Thus, SCC remained the owner of the "Naturals" brand, and petitioner being a legitimate
partner thereof had a right to file the complaint against respondents. The prosecutor found no
probable cause against Sunshine, as it was established that she had withdrawn from SCC as of
August 2003.
The indictment was raffled to RTC Makati City, Branch 149. On 23 October 2006, it issued an
Order finding probable cause for the issuance of a warrant of arrest against
respondents.31rll
Respondents filed a petition for review of the prosecutors resolution before the Department of
Justice (DOJ), which on 13 December 2006 issued its own Resolution32rll reversing the
finding of existence of probable cause against them. Contrary to the prosecutors finding, the
DOJ found that SCC had effectively wound up the latters partnership affairs on 24 April 2006
when petitioner was reimbursed for her trip to China. That was the last of the payments made
to her to cover her share in the partnership affairs, which started after respondent Imelda
manifested her intention to cease from the partnership business on 15 December 2005. Thus,
when the criminal complaint for unfair competition was filed on 9 June 2006, there was "no
longer any competition, unfair or otherwise, involving the partnership." 33rll
Furthermore, the DOJ ruled that even if SCC had not yet terminated its business and therefore
still existed, respondents had the right to use the "Naturals" brand, as they were already the
exclusive owners of SCC following the completion of payments of petitioners share in the
partnership affairs. Also, the establishment by petitioner of Tezares Enterprise which directly
competed with SCC in terms of products and its subsequent accreditation as supplier of
intimate apparel for SM in April 2006 were regarded by the DOJ as apparent indications that
she no longer had any share in SCC. Thus, the petition for review was granted, and the city
prosecutor of Makati was ordered to withdraw the Information against respondents for unfair
competition.
The DOJ denied the motion for reconsideration filed by petitioner on 28 March
2007.34rll Hence, she filed a petition for certiorari before the CA, where it was docketed as
CA-G.R. SP No. 98861. In her petition, she questioned the DOJ Resolution, but later withdrew
the same on 6 December 2007 for an unknown reason.35rll
Following the directive of the DOJ, the prosecutor filed before the RTC of Makati City, Branch
149, a Motion to Dismiss and/or Withdraw Information on 3 April 2007.36rll The trial court
denied the motion in an Order37rll dated 12 February 2008. It maintained the correctness of
its finding of existence of probable cause in the case and ruled that the findings of the DOJ
would be better appreciated and evaluated in the course of the trial.
Respondents moved for reconsideration,38rll but their motion was denied39rll by the
RTC. Aggrieved, they filed a Petition for Certiorari (with Prayer for the Issuance of a Temporary
Restraining Order and thereafter a Preliminary Injunction)40rll before the CA. They argued
that probable cause for the issuance of a warrant of arrest is different from probable cause for
holding a person for trial. The first is the function of the judge, while the second is the
prosecutors.41rll Thus, respondents claimed that it was wrong for Presiding Judge Cesar O.
Untalan to deny the prosecutors motion to dismiss for lack of probable cause on the basis of
the judges own finding that there was probable cause to issue a warrant of arrest against
respondents. Furthermore, the Judge Untalan based his finding solely on the evidence
submitted by petitioner without evaluating the evidence of respondents.
In the first assailed Decision in CA-G.R. SP No. 10384642rll dated 11 March 2009, the CA
granted the petition. It found that the trial judge committed grave abuse of discretion
amounting to lack or excess of jurisdiction when he denied the prosecutors motion to dismiss
for lack of probable cause. The CA sustained the position of respondents that the finding of
probable cause for the filing of an information is an executive function lodged with the
prosecutor. It also found that the trial judge did not make an independent assessment of the
evidence on record in determining the existence of probable cause for the offense of unfair
competition, as opposed to the exhaustive study made by the DOJ before arriving at its finding
of lack of probable cause.
The CA also ruled that in determining probable cause, the essential elements of the crime
charged must be considered, for their absence would mean that there is no criminal offense. In
determining probable cause for unfair competition, the question is "whether or not the
offenders by the use of deceit or any other means contrary to good faith passes off the goods
manufactured by him or in which he deals, or his business, or services for those of the one
having established such goodwill, or who shall commit any acts calculated to produce said
result."43rll The CA affirmed the findings of the DOJ and the RTC of Manila, Branch 24 that
respondents used the "Naturals" brand because they believed that they were the owners of
SCC, which owned the brand. Furthermore, the partnership had been terminated as of April
2006; hence, the filing of the criminal complaint on 9 June 2006 could no longer prosper. Even
if SCC had not yet terminated its business, respondents, having bought petitioner out of SCC,
were already its exclusive owners and, as such, had the right to use the "Naturals" brand.
According to the CA, the filing of the criminal complaint for unfair competition was nothing but
an offshoot of the misunderstanding and quarrel that arose when respondents initially refused
to reimburse the expenses incurred by petitioner in her trip to China and further escalated
when respondent Imelda decided to dissolve SCC.
Petitioner moved for reconsideration44rll of the CA Decision, but the motion was denied on
1 June 2009.45rll She then brought the matter before this Court via a Petition for Review on
Certiorari filed under Rule 45 of the Rules of Court and docketed as G.R. No.
188225.46rll Without giving due course to the petition, the Court
required47rll respondents to comment thereon. Upon their compliance,48rllpetitioner
was required49rll to file a reply,50rll which was later received on 11 December 2009. On
19 May 2011, she filed her Memorandum.51rll
66
Meanwhile, following the promulgation of the Decision in CA-G.R. SP No. 103846, respondents
filed an Urgent Motion to Dismiss the criminal complaint for unfair competition before the RTC
on 1 April 2009.52rll The motion was duly opposed by petitioner, arguing that the CA
Decision had not yet attained finality in view of her pending petition before this Court; thus,
the motion was premature.53rllThe RTC denied the motion to dismiss for lack of
merit.54rll However, upon motion for reconsideration55rll filed by respondents, it issued competition, and that the findings of the DOJ would be better appreciated in the course of a
the Order dated 29 July 200956rll ordering the quashal of the Information against them. The
trial court issued another Order on 19 October 200957rlldenying petitioners Motion for
Reconsideration.58rll
Petitioner filed a Petition for Certiorari59rll before the CA on the ground that the trial judge
committed grave abuse of discretion amounting to lack or excess of jurisdiction when he
quashed the Information against respondents based on a CA Decision that was not yet final
and executory, being the subject of a petition still pending before this Court.
On 29 September 2011, the CA issued the second assailed Decision in CA-G.R. SP No. 111903
affirming the RTC Orders dated 29 July 2009 and 19 October 2009. The appellate court ruled
that while its Decision in CA-G.R. SP No. 103846 was still under review before this Court,
neithercourt had issued a restraining order or injunction that would prevent the RTC from
implementing the said Decision ordering the dismissal of the information against respondents.
Furthermore, the CA ruled that since petitioner had withdrawn her petition in CA-G.R. SP No.
98861 questioning the DOJ Resolution, the issue of whether there was probable cause had
"already been resolved with finality in the negative."60rll Thus, the trial court cannot be
faulted for following the CA directive to dismiss the Information against respondents.
Opting not to file a motion for reconsideration,61rll petitioner again comes before us on a
Petition for Review on Certiorari questioning the Decision in CA-G.R. SP No. 111903.62rll In
her petition docketed as G.R. No. 198728, she argues that Presiding Judge Cesar O. Untalan
committed grave abuse of discretion amounting to lack or excess of jurisdiction when he
dismissed the criminal case against respondents for unfair competition based on CA findings
that were not yet final. The trial judge was fully aware that those findings were still subject to a
pending petition before this Court.
On 23 November 2011, the Court consolidated G.R. Nos. 198728 and 188225.63rll
ISSUE
Despite the extensive legal battle that petitioner and respondents have waged heretofore,
these petitions will be settled simply through a ruling on whether there exists probable cause
to indict respondents for unfair competition (violation of Section 168 in relation to Section 170)
under R.A. 8293.
OUR RULING
No probable cause to indict respondents
At the outset, it is worth noting that Judge Untalan acted well within the exercise of his judicial
discretion when he denied the Motion to Dismiss and/or Withdraw Information filed by the
prosecution. His finding that there was probable cause to indict respondents for unfair
trial, was based on his own evaluation of the evidence brought before him. It was an
evaluation that was required of him as a judge.
Thus, in Yambot v. Armovit,64rll this Court reiterated the mandate of judges to make a
personal evaluation of records submitted in support of criminal complaints filed before their
respective salas:chanroblesvirtuallawlibrary
Crespo v. Mogul instructs in a very clear manner that once a complaint or information is filed in
court, any disposition of the case as to its dismissal, or the conviction or acquittal of the
accused, rests on the sound discretion of the said court, as it is the best and sole judge of what
to do with the case before it. While the resolution of the prosecutorial arm is persuasive, it is
not binding on the court. It may therefore grant or deny at its option a motion to dismiss or to
withdraw the information based on its own assessment of the records of the preliminary
investigation submitted to it, in the faithful exercise of judicial discretion and prerogative, and
not out of subservience to the prosecutor.65rll x x x. (Emphasis supplied)
Judge Untalan stood firm on this finding in his denial of the motion for reconsideration and
even initially after the CA had made a ruling on the matter. He only performed a task he was
called upon to do, and his judgment on the matter although erroneous cannot be regarded as
capricious and whimsical. Thus, he did not commit grave abuse of discretion amounting to lack
or excess of jurisdiction.
However, while we recognize that Judge Untalan did not commit grave abuse of discretion, we
take note of his apparent loss of steam when he issued the Order dated 29 July 2009 granting
respondents motion for reconsideration of his earlier ruling denying the Urgent Motion to
Dismiss. The good judge yielded, even though he was well aware that the CA Decision had not
yet attained finality pending review by this Court.
We now rule on the issue of probable cause.
Probable cause, for purposes of filing a criminal information, is described as "such facts as are
sufficient to engender a well-founded belief that a crime has been committed and the
respondent is probably guilty thereof, and should be held for trial."66rll
Thus, the determination of the existence of probable cause necessitates the prior
determination of whether a crime or an offense was committed in the first place. Here, we find
67
that there was no probable cause to indict respondents, because the crime of unfair
competition was not committed.

In positing that respondents were guilty of unfair competition, petitioner makes a lot of the
fact that they used the vendor code of RGP in marketing the "Naturals" products. She argues
that they passed off the "Naturals" products, which they marketed under RGP, as those of SCC;
thus, they allegedly prejudiced the rights of SCC as owner of the trademark. She also claims
that she has the personality to prosecute respondents for unfair competition on behalf of SCC.

When Judge Untalan denied the Motion to Dismiss and/or Withdraw Information filed by the
prosecution and thereby sustained the position of petitioner, his error lay in the fact that his
focus on the crime of unfair competition was unwarranted. In this case, much more important
than the issue of protection of intellectual property is the change of ownership of SCC. The
arguments of petitioner have no basis, because respondents are the exclusive owners of SCC,
of which she is no longer a partner.

Based on the findings of fact of the CA and the DOJ, respondents have completed the
payments of the share of petitioner in the partnership affairs. Having bought her out of SCC,
respondents were already its exclusive owners who, as such, had the right to use the
"Naturals" brand.

The use of the vendor code of RGP was resorted to only for the practical purpose of ensuring
that SMs payments for the "Naturals" products would go to respondents, who were the actual
suppliers.

Furthermore, even if we were to assume that the issue of protection of intellectual property is
paramount in this case, the criminal complaint for unfair competition against respondents
cannot prosper, for the elements of the crime were not present. We have enunciated in CCBPI
v. Gomez67rllthat the key elements of unfair competition are "deception, passing off and
fraud upon the public."68rllNo deception can be imagined to have been foisted on the
public through different vendor codes, which are used by SM only for the identification of
suppliers products.blrlllbrr

WHEREFORE, the Decisions dated 11 March 2009 in CA-G.R. SP No. 103846 and 29 September
2011 in CA-G.R. SP No. 111903, finding lack of probable cause for respondents alleged violation
of Section 168 in relation to Section 170 of Republic Act No. 8293 (unfair competition), are
AFFIRMED. The Information against respondents for unfair competition is

DISMISSED.rllbrr

SO ORDERED.

68
G.R. No. 194307 November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE
GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court of Appeals (CA) Decision2 dated
June 25, 2010 and Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278 which
reversed and set aside the Intellectual Property Office (IPO) Director Generals Decision 4 dated
December 22, 2009 that allowed the registration of various trademarks in favor of petitioner
Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for
various trademark registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark
Application Serial No. (TASN) 4-1994-091508 for goods falling under Class 25 of the
International Classification of Goods and Services (Nice Classification) with filing date of March
11, 1994; (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING OF ROUND
COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN
4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing date of
March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF
ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
TASN 4-1994-095043 for goods falling under Class 10 of the Nice Classification with filing date
of September 5, 1994 (subject applications).5
However, registration proceedings of the subject applications were suspended in view of an
existing registration of the mark "BIRKENSTOCK AND DEVICE" under Registration No. 56334
dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town International and
Industrial Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo
Marketing Corporation.6 In this regard, on May 27, 1997 petitioner filed a petition for
cancellation of Registration No. 56334 on the ground that it is the lawful and rightful owner of
the Birkenstock marks (Cancellation Case).7 During its pendency, however, respondent and/or
its predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th
Year DAU) for Registration No. 56334 on or before October 21, 2004,8 thereby resulting in the
cancellation of such mark.9 Accordingly, the cancellation case was dismissed for being moot
and academic.10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the
subject applications in the IPO e-Gazette on February 2, 2007.11 In response, respondent filed
three (3) separate verified notices of oppositions to the subject applications docketed as Inter
Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116,12 claiming, inter alia,
that: (a) it, together with its predecessor-in-interest, has been using Birkenstock marks in the
Philippines for more than 16 years through the mark "BIRKENSTOCK AND DEVICE"; (b) the
marks covered by the subject applications are identical to the one covered by Registration No.
56334 and thus, petitioner has no right to the registration of such marks; (c) on November 15,
1991, respondents predecessor-in-interest likewise obtained a Certificate of Copyright
Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d) while respondent and its
predecessor-in-interest failed to file the 10th Yea r DAU, it continued the use of "BIRKENSTOCK
AND DEVICE" in lawful commerce; and (e) to record its continued ownership and exclusive
right to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a " re-application "
of its old registration, Registration No. 56334.13 On November 13, 2007, the Bureau of Legal
Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the aforesaid inter partes
cases (Consolidated Opposition Cases).14
The Ruling of the BLA
In its Decision15 dated May 28, 2008, the BLA of the IPO sustained respondents opposition,
thus, ordering the rejection of the subject applications. It ruled that the competing marks of
the parties are confusingly similar since they contained the word "BIRKENSTOCK" and are used
on the same and related goods. It found respondent and its predecessor-in-interest as the
prior user and adopter of "BIRKENSTOCK" in the Philippines, while on the other hand,
petitioner failed to present evidence of actual use in the trade and business in this country. It
opined that while Registration No. 56334 was cancelled, it does not follow that prior right over
the mark was lost, as proof of continuous and uninterrupted use in trade and business in the
Philippines was presented. The BLA likewise opined that petitioners marks are not well -known
in the Philippines and internationally and that the various certificates of registration submitted
by petitioners were all photocopies and, therefore, not admissible as evidence.16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision17 dated December 22, 2009, the IPO Director General reversed and set aside the
ruling of the BLA, thus allowing the registration of the subject applications. He held that with
the cancellation of Registration No. 56334 for respondents failure to file the 10th Year DAU,
there is no more reason to reject the subject applications on the ground of prior registration by
another proprietor.18 More importantly, he found that the evidence presented proved that
petitioner is the true and lawful owner and prior user of "BIRKENSTOCK" marks and thus,
entitled to the registration of the marks covered by the subject applications. 19 The IPO Director
General further held that respondents copyright for the word "BIRKENSTOCK" is of no
69
moment since copyright and trademark are different forms of intellectual property that cannot
be interchanged.20
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a petition
for review with the CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO
Director General and reinstated that of the BLA. It disallowed the registration of the subject
applications on the ground that the marks covered by such applications "are confusingly similar,
if not outright identical" with respondents mark.22 It equally held that respondents failure to
file the 10th Year DAU for Registration No. 56334 "did not deprive petitioner of its ownership
of the BIRKENSTOCK mark since it has submitted substantial evidence showing its continued
use, promotion and advertisement thereof up to the present."23 It opined that when
respondents predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK,"
there is neither an existing registration nor a pending application for the same and thus, it
cannot be said that it acted in bad faith in adopting and starting the use of such mark. 24 Finally,
the CA agreed with respondent that petitioners documentary evidence, being mere
photocopies, were submitted in violation of Section 8.1 of Office Order No. 79, Series of 2005
(Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration 25 dated July 20, 2010, which was,
however, denied in a Resolution26 dated October 27, 2010. Hence, this petition.27
Issues Before the Court
The primordial issue raised for the Courts resolution is whether or not the subject marks
should be allowed registration in the name of petitioner.
The Courts Ruling
The petition is meritorious.
A. Admissibility of Petitioners Documentary Evidence.
In itsComment28 dated April 29, 2011, respondent asserts that the documentary evidence
submitted by petitioner in the Consolidated Opposition Cases, which are mere photocopies,
are violative of Section 8.1 of the Rules on Inter Partes Proceedings, which requires certified
true copies of documents and evidence presented by parties in lieu of originals. 29 As such, they
should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the
attainment of justice, rather than its frustration. A strict and rigid application of the rules must
always be eschewed when it would subvert the primary objective of the rules, that is, to
enhance fair trials and expedite justice. Technicalities should never be used to defeat the
substantive rights of the other party. Every party-litigant must be afforded the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities."30"Indeed, the primordial policy is a faithful observance of [procedural rules],
and their relaxation or suspension should only be for persuasive reasons and only in
meritorious cases, to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed."31 This is especially true with
quasi-judicial and administrative bodies, such as the IPO, which are not bound by technical
rules of procedure.32 On this score, Section 5 of the Rules on Inter Partes Proceedings provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. The
rules of procedure herein contained primarily apply in the conduct of hearing of Inter Partes
cases. The Rules of Court may be applied suppletorily. The Bureau shall not be bound by strict
technical rules of procedure and evidence but may adopt, in the absence of any applicable rule
herein, such mode of proceedings which is consistent with the requirements of fair play and
conducive to the just, speedy and inexpensive disposition of cases, and which will give the
Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis and
underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence in
the Consolidated Opposition Cases, it should be noted that the IPO had already obtained the
originals of such documentary evidence in the related Cancellation Case earlier filed before it.
Under this circumstance and the merits of the instant case as will be subsequently discussed,
the Court holds that the IPO Director Generals relaxation of procedure was a valid exercise of
his discretion in the interest of substantial justice.33
Having settled the foregoing procedural matter, the Court now proceeds to resolve the
substantive issues.
B. Registration and ownership of "BIRKENSTOCK."
Republic Act No. (RA) 166,34 the governing law for Registration No. 56334, requires the filing of
a DAU on specified periods,35 to wit:
Section 12. Duration. Each certificate of registration shall remain in force for twenty years:
Provided, That registrations under the provisions of this Act shall be cancelled by the Director,
unless within one year following the fifth, tenth and fifteenth anniversaries of the date of issue
of the certificate of registration, the registrant shall file in the Patent Office an affidavit
70
showing that the mark or trade-name is still in use or showing that its non-use is due to special
circumstance which excuse such non-use and is not due to any intention to abandon the same,
and pay the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his
acceptance or refusal thereof and, if a refusal, the reasons therefor. (Emphasis and
underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the requisite
period results in the automatic cancellation of registration of a trademark. In turn, such failure
is tantamount to the abandonment or withdrawal of any right or interest the registrant has
over his trademark.36
In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No.
56334 within the requisite period, or on or before October 21, 2004. As a consequence, it was
deemed to have abandoned or withdrawn any right or interest over the mark "BIRKENSTOCK."
Neither can it invoke Section 23637 of the IP Code which pertains to intellectual property rights
obtained under previous intellectual property laws, e.g., RA 166, precisely because it already
lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership of the mark
"BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing the subject applications, in order
to register a trademark, one must be the owner thereof and must have actually used the mark
in commerce in the Philippines for two (2) months prior to the application for registration.
Section 2-A39 of the same law sets out to define how one goes about acquiring ownership
thereof. Under the same section, it is clear that actual use in commerce is also the test of
ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Significantly, to be an owner, Section 2-A does not require that the
actual use of a trademark must be within the Philippines. Thus, under RA 166, one may be an
owner of a mark due to its actual use but may not yet have the right to register such ownership
here due to the owners failure to use the same in the Philippines for two (2) months prior to
registration.40
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring
ownership.1wphi1 If the applicant is not the owner of the trademark, he has no right to apply
for its registration. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrants ownership of the trademark, and of the exclusive right to the
use thereof. Such presumption, just like the presumptive regularity in the performance of
official functions, is rebuttable and must give way to evidence to the contrary.41
Clearly, it is not the application or registration of a trademark that vests ownership thereof, but
it is the ownership of a trademark that confers the right to register the same. A trademark is an
industrial property over which its owner is entitled to property rights which cannot be
appropriated by unscrupulous entities that, in one way or another, happen to register such
trademark ahead of its true and lawful owner. The presumption of ownership accorded to a
registrant must then necessarily yield to superior evidence of actual and real ownership of a
trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this
point:
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. x x x A
certificate of registration of a mark, once issued, constitutes prima facie evidence of the
validity of the registration, of the registrants ownership of the mark, and of the registrants
exclusive right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate. x x x In other words, the prima facie presumption
brought about by the registration of a mark may be challenged and overcome in an
appropriate action, x x x by evidence of prior use by another person, i.e. , it will controvert a
claim of legal appropriation or of ownership based on registration by a subsequent user. This is
because a trademark is a creation of use and belongs to one who first used it in trade or
commerce.43 (Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark
"BIRKENSTOCK." It submitted evidence relating to the origin and history of "BIRKENSTOCK" and
its use in commerce long before respondent was able to register the same here in the
Philippines. It has sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774
by its inventor, Johann Birkenstock, a shoemaker, on his line of quality footwear and thereafter,
numerous generations of his kin continuously engaged in the manufacture and sale of shoes
and sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the
petitioner. Petitioner also submitted various certificates of registration of the mark
"BIRKENSTOCK" in various countries and that it has used such mark in different countries
worldwide, including the Philippines.44
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent
only presented copies of sales invoices and advertisements, which are not conclusive evidence
of its claim of ownership of the mark "BIRKENSTOCK" as these merely show the transactions
made by respondent involving the same.45
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful
owner of the mark "BIRKENSTOCK" and entitled to its registration, and that respondent was in
bad faith in having it registered in its name. In this regard, the Court quotes with approval the
words of the IPO Director General, viz.:
71
The facts and evidence fail to show that [respondent] was in good faith in using and in
registering the mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly
distinct and arbitrary mark. It is very remote that two persons did coin the same or identical
marks. To come up with a highly distinct and uncommon mark previously appropriated by
another, for use in the same line of business, and without any plausible explanation, is
incredible. The field from which a person may select a trademark is practically unlimited. As in
all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms
and combinations of letters and designs available, [respondent] had to come up with a mark
identical or so closely similar to the [petitioners] if there was no intent to take advantage of
the goodwill generated by the [petitioners] mark. Being on the same line of business, it is
highly probable that the [respondent] knew of the existence of BIRKENSTOCK and its use by the
[petitioner], before [respondent] appropriated the same mark and had it registered in its
name.46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated
October 27, 2010 of the Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET
ASIDE. Accordingly, the Decision dated December 22, 2009 of the IPO Director General is
hereby REINSTATED.
SO ORDERED.
FACTS: Petitioner, a corporation duly organized and existing under the laws of Germany
applied for various trademark registrations before the Intellectual Property Office (IPO).
However, the applications were suspended in view of the existing registration of the mark
BIRKENSTOCK AND DEVICE under Registration No. 56334 dated October 21, 1993 in the
name of Shoe Town International and Industrial Corporation, the predecessor-in-interest of
respondent Philippine Shoe Expo Marketing Corporation.
On May 27, 1997, petitioner filed a petition (Cancellation Case) for cancellation of
Registration No. 564334 on the ground that it is the lawful and rightful owner of the
Birkenstock marks. During its pendency, however, respondent and/or it predecessor-in-interest
failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration
No. 56334 on or before October 21, 2004, thereby resulting the cancellation of such mark.
Accordingly, the cancellation case was dismissed for being moot and academic thereby paving
the way for the publication of the subject applications.
In response, respondent filed with the Bureau of Legal Affairs (BLA) of the IPO three
separate verified notices of opposition to the subject applications docketed as Inter Partes
Cases claiming, among others, it, together with its predecessor-in-interest, has been using the
Birkenstock marks in the Philippines for more than 16 years through the mark BIRKENSTOCK
AND DEVICE. In its Decision, the BLA of the IPO sustained respondents opposition, thus
ordering the rejection of the subject applications. Aggrieved, petitioner appealed to the IPO
Director General whereby in its decision, the latter reversed and set aside the ruling of the BLA
thus allowing the registration of the subject applications.
Finding the IPO Director Generals reversal of the BLA unacceptable, respondent filed a
petition for review with the Court of Appeals. In its decision dated June 25, 2010, the CA
reversed and set aside the ruling of the IPO Director General and reinstated that of the BLA.
The petitioner filed a Motion for Reconsideration but was denied by the CA. Hence , this
petition to the Supreme Court.
ISSUE: 1.Whether or not the petitioners documentary evidence, although photocopies, are
admissible in court?
2.Whether or not the subject marks should be allowed registration in the name of the
petitioner?
HELD:
1.The court ruled yes. It is a well-settled principle that the rules of procedure are mere tools
aimed at facilitating the attainment of justice, rather than its frustration. A strict and rigid
application of the rules must always be eschewed when it would subvert the primary objective
of the rules, that is, to enhance fair trials and expedite justice. In the light of this, Section 5 of
the Rules on Inter Partes Proceedings provides that, The Bureau shall not be bound by strict
technical rules of procedure and evidence but may adopt, in the absence of any applicable rule
herein, such mode of proceedings which is consistent with the requirements of fair play and
conducive to the just, speedy and inexpensive disposition of cases, and which will the Bureau
the greatest possibility to focus on the contentious issues before it.
In the case at bar, it should be noted that the IPO had already obtained the originals of such
documentary evidence in the related Cancellation Case earlier before it. Under the
circumstance and the merits of the instant case as will be subsequently discussed, the Court
holds that the IPO Director Generals relaxation of procedure was a valid exercise of his
discretion in the interest of substantial justice.
2.The court ruled in favour of the petitioner. Under Section 12 of Republic Act 166, it provides
that, Each certificate of registration shall remain in force for twenty years: Provided, that the
registration under the provisions of this Act shall be cancelled by the Director, unless within
one year following the fifth, tenth and fifteenth anniversaries of the date of issue of the
certificate of registration, the registrant shall file in the Patent Office an affidavit showing that
the mark or trade-name is still in use or showing that its non-use is due to special circumstance
which excuse such non-use and is not due to any intention to abandon the same, and pay the
required fee.
72
In the case at bar, respondent admitted that it failed to file the 10th Year DAU for Registration
No. 56334 within the requisite period, or on or before October 21, 2004. As a consequence, it
was deemed to have abandoned or withdrawn any right or interest over the mark
BIRKENSTOCK. It must be emphasized that registration of a trademark, by itself, is not a
mode of acquiring ownership. If the applicant is not the owner of the trademark, he has no
right to apply for its registration. Registration merely creates a prima facie presumption of the
validity of the registration. Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence to the contrary.
Besides, petitioner has duly established its true and lawful ownership of the mark
BIRKENSTOCK. It submitted evidence relating to the origin and history of BIRKENSTOCK and
it use in commerce long before respondent was able to register the same here in the
Philippines. Petitioner also submitted various certificates of registration of the mark
BIRKENSTOCK in various countries and that it has used such mark in different countries
worldwide, including the Philippines.

73
G.R. No. 194872 June 9, 2014
SAHAR INTERNATIONAL TRADING, INC., Petitioner,
vs.
WARNER LAMBERT LLC and PFIZER, (Philippines), CO., INC. Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated April 22, 2010 and the
Resolution3 dated December 21, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 106455
which annulled and set aside the Orders4 dated August 5, 2008 and September 25, 2008 of the
Regional Trial Court of Makati City, Branch 149 (RTC), thereby directing the said court to issue a
writ of preliminary injunction enjoining petitioner Sahar International Trading, Inc. (Sahar), its
agents, representatives, and assigns, during the pendency of Civil Case No. 08-424, from
making, using or offering for sale, or distributing Atorvastatin or Atorvastatin Calcium products
to various hospitals, drugstores, or to any other individual or entity in the Philippines, or from
otherwise infringing the patents of respondent Warner Lambert Co., LLC (Warner Lambert)'
over the foregoing drugs.
The Facts
Warner Lambert, a foreign corporation, is the registered owner of three (3) Philippine patents,
namely: (a) Letters Patent (LP) No. 26330 for the pharmaceutical substance Atorvastatin valid
until April 29, 2009; (b) LP No. 29149 for the pharmaceutical substance Atorvastatin Calcium
valid until September 26, 2012;5 and (c) LP No. 1-1996-53719 for the pharmaceutical substance
Atorvastatin Calcium in crystalline form valid until October 23, 2019 (subject patents).6 In
general, Atorvastatin blocks the production of cholesterol in the body and is used to reduce the
amounts of LDL (bad cholesterol), total cholesterol, triglycerides (another type of fat), and
apolipoprotein B (a protein needed to make cholesterol) in a persons blood. 7 Atorvastatin is
also used to increase the level of HDL (good cholesterol) in ones blood. These actions are
important in reducing the risk of hardening of the arteries, which can lead to heart attacks,
strokes, and peripheral vascular diseases.8 Warner Lambert and its worldwide affiliates sell
products covered by the subject patents under the brand name Lipitor.9
On the other hand, respondent Pfizer, Inc. (Pfizer) is the exclusive licensee of Warner Lambert
to import, market, distribute, and sell products covered by the subject patents in the
Philippines. To this end, Pfizer applied for and was issued various Certificates of Product
Registration (CPR) from the Bureau of Food and Drugs (now, Food and Drug Administration
[FDA]) in order to validly sell and promote such products in the Philippine market.10
Sometime in 2005, Pfizer discovered that Sahar also applied for and was issued a CPR by the
FDA for Atorvastatin Calcium under the brand name Atopitar. 11 It also found out that Sahar has
been selling and distributing Atopitar in the provinces of Bicol, Zamboanga, Cebu, Ilocos Norte,
as well as in Tarlac; and thatSahars marketing ads showed that Atopitar is neither
manufactured by Warner Lambert nor any Pfizer company, but by Geofman12 Pharmaceuticals
of Pakistan. Upon further investigation and laboratory testing, Pfizer learned that the
Atorvastatin Calcium that is used in Atopitar is also in its crystalline form.13
Pfizer immediately sent numerous letters to Sahar informing the latter of Warner Lamberts
patents over Atorvastatin Calcium and demanding it to cease and desist from selling and
distributing said pharmaceutical substance under the brand name Atopitar. However, Sahar did
not heed such demands and replied that the patent over Atorvastatin Calcium had already
expired in Pakistan and, therefore, it believed the same can already be freely distributed and
marketed in the Philippines by any entity.14 Thus, Warner Lambert and Pfizer (respondents)
filed a Complaint15 for Patent Infringement, Damages, and Injunction, with applications for the
issuance of Temporary Restraining Orders and/or Writs of Preliminary Injunction against Sahar
before the RTC, docketed as Civil Case No. 08-424.16 In support of its prayer for injunctive relief,
respondents alleged that Sahars acts of importing, selling, and offering for sale Atorvastatin
and Atorvastatin Calcium products under the brand name Atopitar constitute acts of patent
infringement as defined in Section 7617 of Republic Act No. (RA) 8293,18otherwise known as the
"Intellectual Property Code of the Philippines,"19 and that unless Sahar is enjoined from doing
said acts, they will suffer irreparable damage and render any judgment ineffectual.20
In opposition to the prayer for injunctive relief, Sahar assailed the validity of Warner Lamberts
patents, maintaining that: (a) the ingredients and the process in the making of the Atorvastatin
Calcium found in Atopitar is substantially different from that found in Lipitor; (b) the FDAs
issuance of a CPR in its favor should be deemed prima facie evidence that it is authorized to
sell and distribute Atopitar in the Philippines; and (c) there is no urgent need to enjoin the sale
and distribution of Atopitar in the Philippine market, considering that Warner and Pfizer
themselves took more than two (2) years to file their complaint.21
The RTC Ruling
In an Order22 dated August 5, 2008, the RTC denied respondents application for the issuance
of a writ of preliminary injunction against the alleged patent infringement of Sahar. The RTC
deemed it proper not to grant such prayer, considering that the instant case is principally for
injunction and damages, and, as such, the issuance of an injunctive writ "would in effect result
in [the] premature disposition of the main case and would defeat the purpose of preliminary
injunctive relief."23
Respondents filed a Motion for Reconsideration24 dated August 20, 2008, which was, however,
denied by the RTC in an Order25 dated September 25, 2008. Aggrieved, respondents filed a
petition for certiorari26 before the CA.
74
The CA Ruling The Court's Ruling

In a Decision27 dated April 22, 2010, the CA annulled and set aside the assailed orders of the
RTC and issued a writ of preliminary injunction enjoining Sahar, its agents, representatives, and
assigns, during the pendency of Civil Case No. 08-424, from making, using or offering for sale,
or distributing Atopitar in the Philippine market.28
The CA held that from the evidence presented, respondents have established their right to
preliminary injunctive relief against Sahars acts of selling and distributing Atorvastatin Calcium
under the brand name Atopitar, considering that: (a) Warner Lambert is the registered owner
of the subject patents which are still existing and effective; (b) Sahar does not deny that it has
been selling and distributing products using Atorvastatin and Atorvastatin Calcium in crystalline
form; and (c) respondents witnesses testified that the presence of Atopitaris causing confusion
among medical practitioners as to the availability of Lipitor and validity of the subject patents
registered under the name of Warner Lambert.29
Further, contrary to the RTCs findings, the CA held that the issuance of a writ of preliminary
injunction in respondents favor would not result in the prejudgment of the instant case
because other issues, such as whether or not Sahar is indeed guilty of patent infringement and
thus, liable for damages, still need to be resolved through full-blown trial.30
Dissatisfied, Sahar moved for reconsideration,31 which was, however, denied by the CA in a
Resolution32 dated December 21, 2010.1wphi1 Hence, this petition.
The Issue Before the Court
The sole issue for the Courts resolution is whether or not the CA was correct in issuing a writ
of preliminary injunction enjoining Sahar, its agents, representatives, and assigns, during the
pendency of Civil Case No. 08-424 from making, using or offering for sale, or distributing
Atopitar in the Philippine market.
The petition is dismissed on the ground of mootness.
A case or issue is considered moot and academic when it ceases to present a justiciable
controversy by virtue of supervening events, so that an adjudication of the case or a
declaration on the issue would be of no practical value or use. In such instance, there is no
actual substantial relief which a petitioner would be entitled to, and which would be negated
by the dismissal of the petition. Courts generally decline jurisdiction over such case or dismiss
it on the ground of mootness. This is because the judgment will not serve any useful purpose
or have any practical legal effect because, in the nature of things, it cannot be enforced.37
Applying the foregoing, the Court finds that the CA's supervening promulgation of its Decision
dated November 5, 2013 in CA-G.R. CV No. 97495 - which reversed the RTC's Judgment dated
March 11, 2011 in Civil Case No. 08-424 and thereby made the writ of preliminary injunction
permanent - rendered the present case moot and academic. This is because the primordial
issue raised in the instant petition is precisely the propriety of the aforesaid issuance. Since the
writ of preliminary injunction is but an incident of the patent infringement case which had
already been resolved by the CA, ruling on its propriety would be merely an academic exercise
carrying no practical effect. Accordingly, the Court is constrained to dismiss the instant petition.
In this relation, it is relevant to point out that it would be premature for the Court to tackle the
merits of the CA's recent decision for the reason that it is not the matter herein appealed.
WHEREFORE, the petition is DISMISSED for being moot and academic.
SO ORDERED.

At this point, it must be noted that on March 11, 2011 and during the pendency of the instant
petition, the RTC issued a Judgment33 dismissing Civil Case No. 08-424 on the ground of lack of
cause of action. Thereafter, respondents filed an appeal before the CA, docketed as CA-G.R. CV
No. 97495.34 In a Decision35 dated November 5, 2013, the CA reversed and set aside the RTC
ruling and found Sahar liable for patent infringement, and thus, ordered that: (a) Sahar pay
respondents P300,000.00 as temperate or moderate damages, P50,000.00 as exemplary
damages, and P50,000.00 as attorneys fees and litigation expenses; (b) the writ of preliminary
injunction that it issued in its April 22, 2010 Decision in CA-G.R. SP No. 106455 be made
permanent; and (c) Sahars Atopitar, wherever they may be found in the Philippines, including
materials and implements used in the commission of patent infringement, be condemned,
seized, and forfeited.36

75
G.R. No. 195549 September 3, 2014
WILLAWARE PRODUCTS CORPORATION, Petitioner,
vs.
JESICHRIS MANUFACTURING CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision1 dated November 24, 2010 and Resolution2 dated February 10,
2011 of the Court of Appeals (CA) in CA-G.R. CV No. 86744.
The facts, as found by the Regional Trial Court (RTC), are as follows:
[Respondent] Jesichris Manufacturing Company ([respondent] for short) filed this present
complaint for damages for unfair competition with prayer for permanent injunction to enjoin
[petitioner] Willaware Products Corporation ([petitioner] for short) from manufacturing and
distributing plastic-made automotive parts similar to those of [respondent].
[Respondent] alleged that it is a duly registeredpartnership engaged in the manufacture and
distribution of plastic and metal products, with principal office at No. 100 Mithi Street,
Sampalukan, Caloocan City. Since its registration in 1992, [respondent] has been
manufacturing in its Caloocan plant and distributing throughout the Philippines plastic-made
automotive parts. [Petitioner], on the other hand, which is engaged in the manufacture and
distribution of kitchenware items made of plastic and metal has its office near that of
[respondent]. [Respondent] further alleged that in view of the physical proximity of
[petitioners] office to [respondents] office, and in view of the fact that some of the
[respondents] employeeshad transferred to [petitioner], [petitioner] had developed familiarity
with [respondents] products, especially its plastic-made automotive parts.
That sometime in November 2000, [respondent] discovered that [petitioner] had been
manufacturing and distributing the same automotive parts with exactly similar design, same
material and colors but was selling these products at a lower price as [respondents]
plastic-made automotive parts and to the same customers.
[Respondent] alleged that it had originated the use of plastic in place of rubber in the
manufacture ofautomotive underchassis parts such as spring eye bushing, stabilizer bushing,
shock absorberbushing, center bearing cushions, among others. [Petitioners] manufacture of
the same automotive parts with plastic materialwas taken from [respondents] idea of using
plastic for automotive parts. Also, [petitioner] deliberately copied [respondents] products all
of which acts constitute unfair competition, is and are contrary to law, morals, good customs
and public policy and have caused [respondent] damages in terms oflost and unrealizedprofits
in the amount of TWO MILLION PESOS as of the date of [respondents] complaint.
Furthermore, [petitioners] tortuous conduct compelled [respondent] to institute this action
and thereby to incur expenses in the way of attorneys fees and other litigation expenses in the
amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00).
In its Answer, [petitioner] denies all the allegations of the [respondent] except for the following
facts: that it is engaged in the manufacture and distribution of kitchenware items made of
plastic and metal and that theres physical proximity of [petitioners] office to [respondent]s
office, and that someof [respondents] employees had transferred to [petitioner] and that over
the years [petitioner] had developed familiarity with [respondents] products, especially its
plastic made automotive parts.
As its Affirmative Defenses, [petitioner] claims that there can be no unfair competition as the
plastic-made automotive parts are mere reproductions of original parts and their construction
and composition merely conforms to the specificationsof the original parts of motor vehicles
they intend to replace. Thus, [respondent] cannot claim that it "originated" the use of plastic
for these automotive parts. Even assuming for the sake of argument that [respondent] indeed
originated the use of these plastic automotive parts, it still has no exclusive right to use,
manufacture and sell these as it has no patent over these products. Furthermore, [respondent]
is not the only exclusive manufacturer of these plastic-made automotive parts as there are
other establishments which were already openly selling them to the public.3
After trial on the merits, the RTC ruled in favor of respondent. It ruled that petitioner clearly
invaded the rights or interest of respondent by deliberately copying and performing acts
amounting to unfair competition. The RTC further opined that under the circumstances, in
order for respondents property rights to be preserved, petitioners acts of manufacturing
similar plastic-made automotive parts such as those of respondents and the selling of the
sameproducts to respondents customers, which it cultivated over the years, will have to be
enjoined. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the court finds the defendant liable to plaintiff Two Million
(P2,000,000.00) Pesos, as actual damages, One Hundred Thousand (P100,000.00) Pesos as
attorneys fees and One Hundred Thousand (P100,000.00) Pesos for exemplary damages. The
court hereby permanently [enjoins] defendant from manufacturing the plastic-made
automotive parts as those manufactured by plaintiffs.
SO ORDERED.4
Thus, petitioner appealed to the CA.
76
On appeal, petitioner asserts that ifthere is no intellectual property protecting a good
belonging to another,the copying thereof for production and selling does not add up to unfair
competition as competition is promoted by law to benefit consumers. Petitioner further
contends that it did not lure away respondents employees to get trade secrets. It points out
that the plastic spare parts sold by respondent are traded in the market and the copying of
these can be done by simplybuying a sample for a mold to be made.
Conversely, respondent averred that copyright and patent registrations are immaterial for an
unfair competition case to prosper under Article 28 of the Civil Code. It stresses that the
characteristics of unfair competition are present in the instant case as the parties are trade
rivals and petitioners acts are contrary to good conscience for deliberately copying its
products and employing its former employees.
In a Decision dated November 24,2010, the CA affirmed with modification the ruling of the RTC.
Relevant portions of said decision read:
Despite the evidence showing thatWillaware took dishonest steps in advancing its business
interest against Jesichris, however, the Court finds no basis for the award by the RTC of actual
damages. One is entitled to actual damages as one has duly proven. The testimony of Quejada,
who was engaged by Jesichris in 2001 to audit its business, only revealed that there was a
discrepancy between the sales of Jesichris from 2001 to 2002. No amount was mentioned. As
for Exhibit "Q," which is a copy of the comparative income statement of Jesichris for 1999-2002,
it shows the decline of the sales in 2002 in comparison with those made in 2001 but it does not
disclose if this pertains to the subject automotive parts or to the other products of Jesichris like
plates.
In any event, it was clearly shown that there was unfair competition on the part of Willaware
that prejudiced Jesichris. It is only proper that nominal damages be awarded in the amount of
Two Hundred Thousand Pesos (P200,000.00) in order to recognize and vindicate Jesichris
rights. The RTCs award of attorneys fees and exemplary damages is also maintained.
xxxx
WHEREFORE, premises considered, the Decision dated April 15, 2003 of the Regional Trial
Court of Caloocan City, Branch 131, in Civil Case No. C-19771 is hereby MODIFIED. The award
of Two Million Pesos (P2,000,000.00) actual damages is deleted and in its place, Two Hundred
Thousand Pesos nominal damages is awarded.
SO ORDERED.5
Dissatisfied, petitioner moved for reconsideration. However, the same was denied for lack of
merit by the CA in a Resolution dated February 10, 2011.
Hence, the present Petition for Review wherein petitioner raises the following issues for our
resolution:
(1) Whether or not there is unfair competition under human relations when the parties are not
competitors and there is actually no damage on the part of Jesichris?
(2) Consequently, if there is no unfair competition, should there be moral damages and
attorneys fees?
(3) Whether or not the addition of nominal damages is proper although no rights have been
established?
(4) If ever the right of Jesichris refersto its copyright on automotive parts, should it be
considered in the light of the said copyrights were considered to be void by no less than this
Honorable Court in SC GR No. 161295?
(5) If the right involved is "goodwill" then the issue is: whether or not Jesichris has established
"goodwill?"6
In essence, the issue for our resolution is: whether or not petitioner committed acts amounting
to unfair competition under Article 28 of the Civil Code.
Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil Code
on humanrelations, and not unfair competition under Republic Act No. 8293, 7 as the present
suit is a damage suit and the products are not covered by patent registration. A fortiori, the
existence of patent registration is immaterial in the present case.
The concept of "unfair competition"under Article 28 is very much broader than that covered by
intellectual property laws. Under the present article, which follows the extended concept of
"unfair competition" in American jurisdictions, the term coverseven cases of discovery of trade
secrets of a competitor, bribery of his employees, misrepresentation of all kinds, interference
with the fulfillment of a competitors contracts, or any malicious interference with the latters
business.8
With that settled, we now come to the issue of whether or not petitioner committed acts
amounting tounfair competition under Article 28 of the Civil Code.
We find the petition bereft of merit.
Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial or
industrial enterprises or in labor through the use of force, intimidation, deceit, machination or
77
any other unjust, oppressive or high-handed method shall give rise to a right of action by the
person who thereby suffers damage."
From the foregoing, it is clear thatwhat is being sought to be prevented is not competitionper
sebut the use of unjust, oppressive or high- handed methods which may deprive others of a
fair chance to engage in business or to earn a living. Plainly,what the law prohibits is unfair
competition and not competition where the means usedare fair and legitimate.
In order to qualify the competition as "unfair," it must have two characteristics: (1) it must
involve an injury to a competitor or trade rival, and (2) it must involve acts which are
characterized as "contrary to good conscience," or "shocking to judicial sensibilities," or
otherwise unlawful; in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The public injury or
interest is a minor factor; the essence of the matter appears to be a private wrong perpetrated
by unconscionable means.9
Here, both characteristics are present.
First, both parties are competitors or trade rivals, both being engaged in the manufacture of
plastic-made automotive parts. Second, the acts of the petitioner were clearly "contrary to
good conscience" as petitioner admitted having employed respondents formeremployees,
deliberately copied respondents products and even went to the extent of selling these
products to respondents customers.10
To bolster this point, the CA correctly pointed out that petitioners hiring of the former
employees of respondent and petitioners act of copying the subject plastic parts of
respondent were tantamount to unfair competition, viz.:
The testimonies of the witnesses indicate that [petitioner] was in bad faith in competing with
the business of [respondent].1wphi1 [Petitioners] acts can be characterized as executed with
mischievous subtle calculation. To illustrate, in addition to the findings of the RTC, the Court
observes that [petitioner] is engaged in the production of plastic kitchenware previous to its
manufacturing of plasticautomotive spare parts, it engaged the services of the then mold
setter and maintenance operator of [respondent], De Guzman, while he was employed by the
latter. De Guzman was hired by [petitioner] in order to adjust its machinery since quality plastic
automotive spare parts were not being made. It baffles the Court why [petitioner] cannot rely
onits own mold setter and maintenance operator to remedy its problem. [Petitioners]
engagement of De Guzman indicates that it is banking on his experience gained from working
for [respondent].
Another point we observe is that Yabut, who used to be a warehouse and delivery man of
[respondent], was fired because he was blamed of spying in favor of [petitioner]. Despite this
accusation, he did not get angry. Later on, he applied for and was hired by [petitioner] for the
same position he occupied with [respondent]. These sequence of events relating to his
employment by [petitioner] is suspect too like the situation with De Guzman.11
Thus, it is evident that petitioner isengaged in unfair competition as shown by his act of
suddenly shifting his business from manufacturing kitchenware to plastic-made automotive
parts; his luring the employees of the respondent to transfer to his employ and trying to
discover the trade secrets of the respondent.12
Moreover, when a person starts an opposing place of business, not for the sake of profit to
himself, but regardless of loss and for the sole purpose of driving his competitor out of
business so that later on he can take advantage of the effects of his malevolent purpose, he is
guilty of wanton wrong.13 As aptly observed by the courta quo, the testimony of petitioners
witnesses indicate that it acted in bad faith in competing with the business of respondent, to
wit: [Petitioner], thru its General Manager, William Salinas, Jr., admitted that it was never
engaged in the business of plastic-made automotive parts until recently, year 2000:
Atty. Bautista: The business name of Willaware Product Corporation is kitchenware, it is (sic)
not? Manufacturer of kitchenware and distributor ofkitchenware, is it not? Mr. Salinas: Yes, sir.
Atty. Bautista: And you said you have known the [respondent] Jesichris Manufacturing Co., you
have known it to be manufacturing plastic automotive products, is it not? Mr. Salinas: Yes, sir.
Atty. Bautista: In fact, you have been (sic) physically become familiar with these products,
plastic automotive products of Jesichris? Mr. Salinas: Yes, sir.
How [petitioner] was able to manufacture the same products, in terms of color, size, shape and
composition as those sold by Jesichris was due largely to the sudden transfer ofJesichris
employees to Willaware.
Atty. Bautista: Since when have you been familiar with Jesichris Manufacturing Company?
Mr. Salinas: Since they transferred there (sic) our place.
Atty. Bautista: And that was in what year? Mr. Salinas: Maybe four (4) years. I dont know the
exact date.
Atty. Bautista: And some of the employees of Jesichris Manufacturing Co. have transferred to
your company, is it not?
Mr. Salinas: Yes, sir.
Atty. Bautista: How many, more or less?
Mr. Salinas: More or less, three (3).
Atty. Bautista: And when, in what year or month did they transfer to you?
Mr. Salinas: First, November 1.
Atty. Bautista: Year 2000?
Mr. Salinas: Yes sir. And then the other maybe February, this year. And the other one, just one
month ago.
78
That [petitioner] was clearly outto take [respondent] out of business was buttressed by the
testimony of [petitioners] witness, Joel Torres:
Q: Are you familiar with the [petitioner], Willaware Product Corporation?
A: Yes, sir.
Q: Will you kindly inform this court where is the office of this Willaware Product Corporation
(sic)?
A: At Mithi Street, Caloocan City, sir.
Q: And Mr. Witness, sometime second Saturday of January 2001, will you kindly inform this
court what unusual even (sic) transpired between you and Mr. Salinas on said date?
A: There was, sir.
Q: What is that?
A: Sir, I was walking at that time together with my wife going to the market and then I passed
by the place where they were having a drinking spree, sir.
Q: You mentioned they, who were they who were drinking at that time?
A: I know one Jun Molina, sir.
Q: And who else was there?
A: William Salinas, sir.
Q: And will you kindly inform us what happened when you spotted upon them drinking?
A: Jun Molina called me, sir.
Q: And what happened after that?
A: At that time, he offered mea glass of wine and before I was able to drink the wine, Mr.
Salinas uttered something, sir.
Q: And what were those words uttered by Mr. Salinas to you?
A: "O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?"
Q: And what did you do after that, after hearing those words?
A: And he added these words, sir. "sabihin mo sa amo mo, dalawang taon na lang
pababagsakin ko na siya."
Q: Alright, hearing those words, will you kindly tell this court whom did you gather to be
referred to as your "amo"?
A: Mr. Jessie Ching, sir.14
In sum, petitioner is guilty of unfair competition under Article 28 of the Civil Code.
However, since the award of Two Million Pesos (P2,000,000.00) in actual damages had been
deleted and in its place Two Hundred Thousand Pesos (P200,000.00) in nominal damages is
awarded, the attorney's fees should concomitantly be modified and lowered to Fifty Thousand
Pesos (P50,000.00).
WHEREFORE, the instant petition is DENIED. The Decision dated November 24, 2010 and
Resolution dated February 10, 2011 of the Court of Appeals in CA-G.R. CV No. 86744 are
hereby AFFIRMED with MODIFICATION that the award of attorney's fees be lowered to Fifty
Thousand Pesos (P50,000.00).
SO ORDERED.
Facts:
The respondent filed a complaint for damages for unfair competition to enjoin the
respondents from manufacturing from manufacturing and distributing plastic-made
automotive parts which are similar to that of the respondent. The petitioner is engaged in the
manufacture and distribution of kitchenware items while respondent is engaged in the
manufacture and distribution of plastic and metal products. In 2000, the respondent
discovered that the petitioner was manufacturing and distributing automotive parts with
exactly the same design, same material and colors as that of respondents but at a lower price.
The respondent also alleged that some of the respondents employees transferred to
petitioners business which thereby led to the familiarity of its products. The petitioners
countered that respondent had no exclusive right to use, manufacture and sell these products
as he has no patent over these. RTC ruled in favor of the respondent. CA affirmed RTCs
decision with modification on actual damages.
Issue: WoN petitioner committed acts amounting to unfair competition under Article 28 of the
Civil Code
Held: Yes. Article 28 of the Civil Code applies in the case and not RA 8293 because the product
is not patented. Article 28 seeks to prevent the use of unjust, oppressive or high-handed
methods which may deprive others of a fair chance to engage in business or to earn a living.
Two characteristics must be present in order to qualify for unfair competition. One is that it
must involve an injury to a competitor or trade rival and the other is that it must involve an act
which is characterized as contrary to good conscience or shocking to judicial sensibilities or
otherwise unlawful. Both of these are present in this case. Both parties are trade rivals
engaged in the sale of plastic-made automotive parts. The acts of petitioner of employing the
respondents for employees, deliberately copying respondents products and selling these
products are contrary to good conscience. It is evident that petitioner is engaged in unfair
competition when he suddenly shifter his business from manufacturing kitchenware to
79
plastic-made automotive parts, in enticing the employees of the respondent to transfer to his
business and trying to discover the trade secrets of the respondent.

80
G.R. No. 205800 September 10, 2014 On 17 March 2010, counsel for petitioners filed a letter-complaint with the Chief of the
Philippine National Police Criminal Investigation and Detection Group. The case was assigned
MICROSOFT CORPORATION and ADOBE SYSTEMS INCORPORATED, Petitioners, to Police Senior Inspector Ernesto V. Padilla (Padilla).6
vs.
SAMIR FARAJALLAH, VIRGILIO D.C. HERCE, RACHEL P. FOLLOSCO, JESUSITO G. MORALLOS, On 26 March 2010, Padilla, Serrano, and Moradoz went to the office of respondents. Using a
and MA. GERALDINE S. GARCIA (directors and officers of NEW FIELDS (ASIA PACIFIC), legitimate business pretext, they were able to use two computers owned by New Fields and
INC.), Respondents. obtained the following information regarding the installed Microsoft and Adobe software:

DECISION First computer

CARPIO, Acting C.J.: Installed Software Product I.D./Serial Number

The Case
Microsoft Windows XP Pro V2002 SP2 55274-640-1582543-23775

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court which
Microsoft Office Word 2007 Enterprise
seeks to reverse and set aside the Decision1 of the Court of Appeals (CA) dated 28 June 2012 in 89388-707-0358973-65509
CA-G.R. SP No. 116771 and the Resolution2 of the CA dated 30 January 2013. The Decision and
Resolution sustained the orders of the Regional Trial Court of Manila, Branch 21 (RTC) quashing Edition 2007
Search Warrant Nos. 10-15912 and 10-15913.
Adobe Acrobat 8 Pro (1) 1118-1061-0904-4874-2027

The Facts

Microsoft Corporation and Adobe Systems Incorporated (petitioners) are corporations Second computer
organized and existing under the laws of the United States. Microsoft Corporation is the owner
of all rights including copyright relating to all versions and editions of Microsoft software 3 and
the corresponding users manuals, and the registeredowner of the "Microsoft" "MS DOS" Installed Software Product I.D./Serial Number
trademarks in the Philippines. Adobe Systems Incorporatedis the owner of all rights including
copyright relating to all versions and editions of Adobe Software.4 Microsoft Windows XP Pro V2002 SP2 55274-640-1582543-23442

Samir Farajallah, Virgilio D.C. Herce, Rachel P. Follosco, Jesusito G. Morallos and Ma. Geraldine Microsoft Office Word 2007 Enterprise
S. Garcia (respondents) are the directors and officers of New Fields (Asia Pacific), Inc., a 89388-707-0358973-65709
domestic corporation with principal office at Unit 1603, East Tower, PhilippineStock Exchange Edition 2007
Center, Exchange Road, Ortigas Center, Pasig City.
Adobe Acrobat 8 Pro (1) 1118-1061-0904-4874-2027
Petitioners claim that in September 2009, they were informed that New Fields was unlawfully
reproducing and using unlicensed versions of their software. Orion Support, Inc.(OSI) was
engaged by petitioners to assist in the verification of this information. Two OSI Market
Researchers, Norma L. Serrano (Serrano) and Michael A. Moradoz (Moradoz) were assigned to Padilla was trained to distinguish original from counterfeit software,7 and he saw the screens
confirm the informant's tip. Serrano and Moradoz were trained to detect unauthorized copies of the computers used by the OSI staff, including the product I.D. Nos. of the installed
of Adobe and Microsoft software.5 software.
81
In their Joint Affidavit, Serrano and Moradoz stated that:
There are at least two (2) computers using common product identification and/or serial
numbers of MICROSOFT and ADOBE software. This is one indication that the software being
used is unlicensed or was illegally reproduced or copied. Based on the training we attended, all
ADOBE and MICROSOFTsoftware should only be installed in one computer, unless they avail of
an Open Licese Agreement from the software developer, which is not the case in NEW FIELDS.
In this case, the first three sets of numbers of the Product I.D. Nos. of the MICROSOFT
Windows XP Pro operating System software program installed in the two (2) computerunits we
used, i.e., "55274-640-1582543-xxxxx", were the same. We also observed that the first three
sets of numbers of the Product I.D Nos. of the MICROSOFT Office 2007 (Word) software in the
two (2) computers we used, i.e., "89388-707-0358973-xxxxx", were also the same. Ostensibly,
this means that NEW FIELDS only used one (1) installer of the MICROSOFT Windows XP
operating system software and one (1) installer of the MICROSOFT Office software program on
two (2) computers. Based on our training, if the first three sets of numbers of the Product I.D.
Nos. of the MICROSOFT software installed are the same, it signifies that it came from one
installer. It does not matter [if] the last 5 digits of the Product I.D. Nos. are different because
this is computer-generated and therefore varies with every installation. Apart from the
MICROSOFT software, the serial numbers of the ADOBE software installed in the computer
units we used were also the same, signifying that NEW FIELDS only used one (1) installer of the
ADOBE software program on two (2) computers.8 (Emphasis supplied)
They also observed that New Fields had 90 computers in their office with Microsoft software,
none of which had the Certificate of Authenticity issued by Microsoft.
After being informed of the resultsof the investigation, petitioners then issued certifications
that they have not authorized New Fields to "copy, print, reproduce and/or publish
unauthorized copies of Microsoft and Adobe software products."9
An application for search warrants was filed by Padilla on 20 May 2010, before Judge Amor
Reyes in her capacity as Executive Judge of the RTC. Search Warrant Nos. 10-15912 and
10-15913 were issued on the same date.10
The warrants were served on respondents on 24 May 2010. New Fields employees witnessed
the search conducted by the authorities. Several items were seized, including 17 CD installers
and 83 computers containing unauthorized copies of Microsoft and/or Adobe software.
On 6 June 2010, New Fields filed a motion seeking to quash one of the two warrants served
(Search Warrant No. 10-15912).11 The motion was received by petitioners on 10 June 2010 and
was set for hearing on 11 June 2010. During the hearing on the motion, petitioners were
allowed by the RTC to file their Comment/Opposition on or before 21 June 2010. 12
In their Comment/Opposition dated 21 June 2010,13 petitioners alleged that:
The Motion [to Quash] failed to comply with the mandatory 3-day notice rule under the Rules
of Court. Hence it is nothing but a worthless piece of paper.
xxxx
In this case, the Motion of Respondents was scheduled for hearing on 11 June 2010. However,
Respondents only furnished [petitioners] a copy of the Motion on 10 June 2010, or just1 day
before the scheduled hearing, which was in clear violation of the 3-day notice rule.14
On 29 June 2010, the RTC issued an Order quashing both warrants and directing that "allthe
items seized from the respondents be returned x x x."15 According to the RTC,
petitionersshould have identified which specific computer had the pirated software. 16 The RTC
added that no criminal charge has been filed yet, despite the fact that the seized items have
been in petitioners possession for several weeks since the warrants were issued. Lastly, the
RTC dismissed the petitioners contention that the threeday notice rule was not complied
withbecause petitioners were already notified of the motion personally.17
On 8 July 2010, petitioners receiveda copy of the Order, and Deputy Sheriff Edgardo Reyes of
the RTC alsoeffected the return of the seized items, in compliance with the RTCs
Order.18 Petitioners filed an Urgent Manifestation and Motion for the Issuance of a Status Quo
Order on 8 July 2010 wherein they alleged that: (1) they intend to file a Motion for
Reconsideration of the Order; and (2) the Order was not immediately executory.19Respondents
received a copy of the motion the day it was filed.
On 9 July 2010, respondents moved to expunge petitioners motion for reconsideration, saying
that petitioners failed to comply with the threeday notice rule.20 The hearing on the motion
was set on 13 July 2010. A copy of the motion was received by petitioners on 20 July 2010.21
On 15 July 2010, petitioners filed a motion for reconsideration of the Order. 22 Respondents
filed their Comment/Opposition23 to the motion, which was received by petitioners on 12
August 2010.24
The RTC denied petitioners motion for reconsideration in its Order dated 27 August
2010.25 Petitioners filed a petition for certiorari26 under Rule 65 on 8 November 2010 before
the Court of Appeals. Petitioners alleged that the RTC committed grave abuse of discretion in
82
granting the Motion to Quash despite: (1) respondents failure to comply with the three-day
notice requirement; and (2) the existence of probable cause, and personal knowledge of the
warrant applicant.
The Ruling of the CA
The CA denied the petition for certiorari. The appellate court held that:
In the instant case, when the court a quoordered petitioners to submit their comment on the
motion toquash, it was, in effect, giving petitioners their day in court. Thus, while the
[three]-day notice rule was not strictly observed, its purpose was still satisfied when
respondent judge did not immediately rule on the motion giving petitioners x x x the
opportunity to study and oppose the arguments stated in the motion.27
Hence, this petition.
The Issue
The instant petition raisedonly one issue, to wit:
The Honorable Court of Appeals erred in ruling that Judge Amor Reyes of Branch 21, Regional
Trial Court of Manila did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing its Orders dated 29 June2010 and 27 August 2010, quashing Search
Warrant Nos. 10-[1]5912 and 10-[1]5913 and directing the immediate release of the items
seized pursuant to the said warrants, despite the pendency of appellate proceedings.28
The Ruling of the Court
We rule that strict compliance with the three-day notice rule may be relaxed in this case.
However, we sustain petitioners contention that there was probable cause for issuance of a
warrant, and the RTC and CA should have upheld the validity of both warrants.
Compliance with the three-day notice rule
In Anama v. Court of Appeals,29 we ruled that the three-day notice rule is not absolute. The
purpose of the ruleis to safeguard the adverse partys right to due process. Thus, if the adverse
party was given a reasonable opportunity to study the motion and oppose it, then strict
compliance with the three-day notice rule may be dispensed with.
As correctly pointed out by the CA:
In the instant case, when the court a quoordered petitioners to submit their comment on the
motion toquash, it was, in effect, giving petitioners their day in court. Thus, while the
[three]-day notice rule was not strictly observed, its purpose was still satisfied when
respondent judge did not immediately rule on the motion giving petitioners x x x the
opportunity to study and oppose the arguments stated in the motion.30
Existence of probable cause
Under Section 1 of Rule 45 of the Rules of Court, petitions for review by certiorari "shall raise
only questions of law." A question of fact exists when there is a doubt as to the truth of certain
facts, and it can only be resolved through a reexamination of the body of evidence.31
In Microsoft Corporation v. Maxicorp, Inc.,32 we ruled that the existence of probable cause is a
question of fact.33In the same case, we also stated that:
Probable cause is dependent largely on the opinion and findings of the judge who conducted
the examination and who had the opportunity to question the applicant and his witnesses. For
this reason, the findings of the judge deserve great weight. The reviewing court should
overturn such findings only upon proof that the judge disregarded the facts before him or
ignored the clear dictates of reason.34
This Court is not a trier of facts. As a general rule, we defer to the lower courts appreciation
and evaluation of evidence.35 This general rule, however, is not absolute. We will review the
factual findings of the CA in any of the following instances:
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the conclusion is a finding grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd, or impossible;
(4) when there is a grave abuse of discretion in the appreciation of facts;
(5) when the Appellate Court, in making its findings, went beyond the issues of the case and
such findings are contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;
83
(7) when the Court of Appeals failed to notice certain relevant facts which, if properly
considered, would justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which
they are based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence
but such findings are contradicted by the evidence on record. 36
6. I suspect that the ADOBE and MICROSOFT computer software programs that are being used
in the premises of NEW FIELDS are unauthorized, illegal or unlicensed copies because of the
following reasons:
6.1. At least two (2) computer units are using a common Product Identification Number of
MICROSOFT and ADOBE software.1wphi1 This is one indication that the software being used
is unlicensed or was illegally reproduced or copied. All ADOBE and MICROSOFT computer
software programs should only be used in one computer unit, unless they avail of an Open
License Agreement from the computer software developer, which [was not obtained by] NEW
FIELDS. x x x.41

In this case, we find reason to overturn the rulings of the RTC and CA, since there was grave
abuse of discretion in the appreciation of facts. The CA sustained the quashal of the warrant
because the witnesses had "no personal knowledge of the facts upon which the issuance of the
warrants may be justified,"37 and the applicants and the witnesses merely relied on the screen
shots acquired from the confidential informant.38
We disagree with the conclusions of the CA. The assailed CA Decision itself stated:
Initial hearsay information or tips from confidential informants could very well serve as basis
for the issuance of a search warrant, if followed up personally by the recipient and
validated.39 Looking at the records, it is clear that Padilla and his companions were able to
personally verify the tipof their informant. In his Affidavit submitted to Judge Amor Reyes prior
to the issuance of the warrant, Padilla stated that:
The evidence on record clearly shows that the applicant and witnesses were able to verify the
information obtained from their confidential source. The evidence likewise shows that there
was probable cause for the issuance of a search warrant. Thus, the requirement of personal
knowledge of the applicant and witnesses was clearly satisfied in this case.
WHEREFORE, the petition is GRANTED. The Decision dated 28 June 2012 and the Resolution
dated 30 January 2013 of the Court of Appeals, uph0lding the 29 June 2010 and 27 August
2010 Orders of the Regional Trial Court, are hereby REVERSED and SET ASIDE. Search Warrant
Nos. 10-15912 and 10-15913 are declared valid.
SO ORDERED.

At the time that I was inside the office premises of the NEW FIELDS, I saw the Product Keys or
Product Identification Numbers of the ADOBE and MICROSOFT computer software programs
installed in some of the computer units. Ms. Serrano and Mr. Moradoz were able to pull up
these data since they were allowed to use some of the computers of the target companies in
line with the pretext that we used to gain entry into NEW FIELDS. I actively read and attentively
observed the information reflected from the monitor display unit of the computers that Ms.
Serrano and Mr. Moradoz were able to use. x x x.40

As mentioned earlier, Padilla has been trained to distinguish illegally reproduced Adobe and
Microsoft software. Thus, in his Affidavit, he stated that:

xxxx

84
G.R. No. 209843, March 25, 2015
TAIWAN KOLIN CORPORATION, LTD., Petitioner, v. KOLIN ELECTRONICS CO.,
INC., Respondent.
DECISION
VELASCO JR., J.:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the Rules of Court interposed by
petitioner Taiwan Kolin Corporation, Ltd. (Taiwan Kolin), assailing the April 30, 2013
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 122565 and its subsequent November
6, 2013 Resolution.2 The assailed issuances effectively denied petitioners trademark
application for the use of KOLIN on its television and DVD players.chanroblesvirtuallawlibrary
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office (IPO), then
Bureau of Patents, Trademarks, and Technology Transfer, a trademark application, docketed as
Application No. 4-1996-106310, for the use of KOLIN on a combination of goods, including
colored televisions, refrigerators, window-type and split-type air conditioners, electric fans and
water dispensers. Said goods allegedly fall under Classes 9, 11, and 21 of the Nice Classification
(NCL).
Application No. 4-1996-106310 would eventually be considered abandoned for Taiwan Kolins
failure to respond to IPOs Paper No. 5 requiring it to elect one class of good for its coverage.
However, the same application was subsequently revived through Application Serial No.
4-2002-011002,3 with petitioner electing Class 9 as the subject of its application, particularly:
television sets, cassette recorder, VCD Amplifiers, camcorders and other audio/video electronic
equipment, flat iron, vacuum cleaners, cordless handsets, videophones, facsimile machines,
teleprinters, cellular phones and automatic goods vending machine. The application would in
time be duly published.4cralawred
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics) opposed petitioners
revived application, docketed as Inter Partes Case No. 14-2006-00096. As argued, the mark
Taiwan Kolin seeks to register is identical, if not confusingly similar, with its KOLIN mark
registered on November 23, 2003, covering the following products under Class 9 of the NCL:
automatic voltage regulator, converter, recharger, stereo booster, AC-DC regulated power
supply, step-down transformer, and PA amplified AC-DC.5cralawred
To digress a bit, Kolin Electronics KOLIN registration was, as it turns out, the subject of a
prior legal dispute between the parties in Inter Partes Case No. 14-1998-00050 before the IPO.
In the said case, Kolin Electronics own application was opposed by Taiwan Kolin, being, as
Taiwan Kolin claimed, the prior registrant and user of the KOLIN trademark, having
registered the same in Taipei, Taiwan on December 1, 1988. The Bureau of Legal Affairs of the
IPO (BLA-IPO), however, did not accord priority right to Taiwan Kolins Taipei registration
absent evidence to prove that it has already used the said mark in the Philippines as early as
1988. On appeal, the IPO Director General affirmed the BLA-IPOs Decision. Taiwan Kolin
elevated the case to the CA, but without injunctive relief, Kolin Electronics was able to register
the KOLIN trademark on November 23, 2003 for its products.6 Subsequently, the CA, on July
31, 2006, affirmed7 the Decision of the Director General.
In answer to respondents opposition in Inter Partes Case No. 14-2006-00096, petitioner
argued that it should be accorded the benefits of a foreign-registered mark under Secs. 3 and
131.1 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines (IP Code);8 that it has already registered the KOLIN mark in the Peoples Republic
of China, Malaysia and Vietnam, all of which are parties to the Paris Convention for the
Protection of Industrial Property (Paris Convention) and the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS);and that benefits accorded to a well-known
mark should be accorded to petitioner.9cralawred
Ruling of the BLA-IPO
By Decision10 dated August 16, 2007, the BLA-IPO denied petitioners application disposing as
follows:chanRoblesvirtualLawlibrary
In view of all the foregoing, the instant Opposition is as, it is
hereby SUSTAINED. Accordingly, application bearing Serial No.
4-1996-106310 for the mark KOLIN filed in the name of TAIWAN KOLIN.,
LTD. on February 29, 1996 for goods falling under Class 09 of the
International Classification of Goods such as cassette recorder, VCD,
woofer, amplifiers, camcorders and other audio/video electronic
equipment, flat iron, vacuum cleaners, cordless handsets, videophones,
facsimile machines, teleprinters, cellular phones, automatic goods vending
machines and other electronic equipment is hereby REJECTED.
Let the file wrapper of KOLIN, subject of this case be forwarded to the
Bureau of Trademarks (BOT) for appropriate action in accordance with this
Decision.
85
 SO ORDERED.cralawlawlibrary
Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark cannot be registered if it is
identical with a registered mark belonging to a different proprietor in respect of the same or
closely-related goods. Accordingly, respondent, as the registered owner of the mark KOLIN
for goods falling under Class 9 of the NCL, should then be protected against anyone who
impinges on its right, including petitioner who seeks to register an identical mark to be used on
goods also belonging to Class 9 of the NCL.12 The BLA-IPO also noted that there was proof of
actual confusion in the form of consumers writing numerous e-mails to respondent asking for
information, service, and complaints about petitioners products.13cralawred
Petitioner moved for reconsideration but the same was denied on January 26, 2009 for lack of
merit.14 Thus, petitioner appealed the above Decision to the Office of the Director General of
the IPO.chanroblesvirtuallawlibrary
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a Decision15 reversing that of the
BLA-IPO in the following wise:chanRoblesvirtualLawlibrary
Wherefore, premises considered, the appeal is hereby GRANTED. The
Appellants Trademark Application No. 4-1996-106310 is hereby GIVEN
DUE COURSE subject to the use limitation or restriction for the goods
television and DVD player. Let a copy of this Decision as well as the
trademark application and records be furnished and returned to the
Director of the Bureau of Legal Affairs for appropriate action. Further, let
the Director of the Bureau of Trademarks and the library of the
Documentation, Information and Technology Transfer Bureau be furnished
a copy of this Decision for information, guidance, and records purposes.
SO ORDERED.cralawlawlibrary
In so ruling, the IPO Director General ratiocinated that product classification alone cannot
serve as the decisive factor in the resolution of whether or not the goods are related and that
emphasis should be on the similarity of the products involved and not on the arbitrary
classification or general description of their properties or characteristics. As held, 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.16cralawred
Aggrieved, respondent elevated the case to the CA.chanroblesvirtuallawlibrary
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the strength of the following
premises: (a) the mark sought to be registered by Taiwan Kolin is confusingly similar to the one
already registered in favor of Kolin Electronics; (b) there are no other designs, special shape or
easily identifiable earmarks that would differentiate the products of both competing
companies;17 and (c) the intertwined use of television sets with amplifier, booster and voltage
regulator bolstered the fact that televisions can be considered as within the normal expansion
of Kolin Electronics,18 and is thereby deemed covered by its trademark as explicitly protected
under Sec. 13819 of the IP Code.20Resultantly, the CA granted respondents appeal
thusly:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is GRANTED. The November 23, 2011 Decision of
the Director General of the Intellectual Property Office in Inter Partes Case
No. 14-2006-0096 is REVERSED and SET ASIDE. The September 17, 2007
Decision of the Bureau of Legal Affairs of the same office is REINSTATED.
SO ORDERED.cralawlawlibrary
Petitioner moved for reconsideration only to be denied by the CA through its equally assailed
November 6, 2013 Resolution. Hence, the instant recourse.chanroblesvirtuallawlibrary
The Issue
The primordial issue to be resolved boils down to whether or not petitioner is entitled to its
trademark registration of KOLIN over its specific goods of television sets and DVD players.
Petitioner postulates, in the main, that its goods are not closely related to those of Kolin
Electronics. On the other hand, respondent hinges its case on the CAs findings that its and
petitioners products are closely-related. Thus, granting petitioners application for trademark
registration, according to respondent, would cause confusion as to the public.
The Courts Ruling
The petition is impressed with merit.
Identical marks may be registered for
86
products from the same classification
To bolster its opposition against petitioners application to register trademark KOLIN,
respondent maintains that the element of mark identity argues against approval of such
application,quoting the BLA IPOs ruling in this regard:21cralawred
Indubitably, Respondent-Applicants [herein petitioner] mark is identical to
the registered mark of herein Opposer [herein respondent] and the
identical mark is used on goods belonging to Class 9 to which Opposers
goods are also classified. On this point alone, Respondent-Applicants
application should already be denied.cralawlawlibrary
The argument is specious.
The parties admit that their respective sets of goods belong to Class 9 of the NCL, which
includes the following:22cralawred
Class 9
Scientific, nautical, surveying, photographic, cinematographic, optical,
weighing, measuring, signalling, checking (supervision), life-saving and
teaching apparatus and instruments; apparatus and instruments for
conducting, switching, transforming, accumulating, regulating or
controlling electricity; apparatus for recording, transmission or
reproduction of sound or images; magnetic data carriers, recording discs;
compact discs, DVDs and other digital recording media; mechanisms for
coin-operated apparatus; cash registers, calculating machines, data
processing equipment, computers; computer software; fire-extinguishing
apparatus.cralawlawlibrary
But mere uniformity in categorization, by itself, does not automatically preclude the
registration of what appears to be an identical mark, if that be the case. In fact, this Court, in a
long line of cases,has held that such circumstance does not necessarily result in any trademark
infringement. The survey of jurisprudence cited in Mighty Corporation v. E. & J Gallo
Winery23 is enlightening on this point:chanRoblesvirtualLawlibrary
in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered the approval of
Acoje Minings application for registration of the trademark LOTUS for its soy
(a) 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;
in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 25 we upheld
the Patent Directors registration of the same trademark CAMIA for Ng Sams
(b) 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;
in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
Liong,26we dismissed Hickoks petition to cancel private respondents HICKOK
(c)
trademark registration for its Marikina shoes as against petitioners earlier
registration of the same trademark for handkerchiefs, briefs, belts and wallets.
cralawlawlibrary
Verily, whether or not the products covered by the trademark sought to be registered by
Taiwan Kolin, on the one hand, and those covered by the prior issued certificate of registration
in favor of Kolin Electronics, on the other, fall under the same categories in the NCL is not the
sole and decisive factor in determining a possible violation of Kolin Electronics intellectual
property right should petitioners application be granted. It is hornbook doctrine, as held in the
above-cited cases, that emphasis should be on the similarity of the products involved and not
on the arbitrary classification or general description of their properties or characteristics. The
mere fact that one person has adopted and used a trademark on his goods would not, without
more, prevent the adoption and use of the same trademark by others on unrelated articles of a
different kind.27cralawred
The CA erred in denying petitioners
registration application
Respondent next parlays the idea of relation between products as a factor militating against
petitioners application. Citing Esso Standard Eastern, Inc. v. Court of Appeals,28 respondent
argues that the goods covered by petitioners application and those covered by its registration
are actually related belonging as they do to the same class or have the same physical
characteristics with reference to their form, composition, texture, or quality, or if they serve
the same purpose. Respondent likewise draws parallelisms between the present controversy
and the following cases:29cralawred
87
 In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits were held related to
(a)
milk because they were both food products;
(b) In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick and nail polish
are held to be similarly related because they are common household items;
In Ang vs. Teodoro,32 the trademark Ang Tibay for shoes and slippers was
(c) disallowed to be used for shirts and pants because they belong to the same
general class of goods; and
In Khe vs. Lever Bros. Co.,33 soap and pomade, although non-competitive,
(d) were held to be similar or belong to the same class, since both are toilet
articles.
cralawlawlibrary
Respondent avers that Kolin Electronics and Taiwan Kolins products are closely-related not
only because both fall under Class 9 of the NCL, but mainly because they both relate to
electronic products, instruments, apparatus, or appliances.34 Pushing the point, respondent
would argue that Taiwan Kolin and Kolin Electronics goods are inherently similar in that they
are all plugged into electric sockets and perform a useful function.35 Furthermore, respondent
echoes the appellate courts ratiocination in denying petitioners application, viz:36cralawred
Significantly, Kolin Electronics goods (automatic voltage regulator;
converter; recharger; stereo booster; AC-DC regulated power supply;
step-down transformer; and PA amplified AC-DC) and Taiwan Kolins
television sets and DVD players are both classified under class 9 of the NICE
agreement. At first glance, it is also evident that all these goods are
generally desc ribed as electrical devices.x x x [T]he goods of both Kolin
Electronics and Taiwan Kolin will inevitably be introduced to the public as
KOLIN products and will be offered for sale in the same channels of trade.
Contrary to Taiwan Kolins claim, power supply as well as audio and stereo
equipment like booster and amplifier are not only sold in hardware and
electrical shops. These products are commonly found in appliance stores
alongside television sets and DVD players. With the present trend in
todays entertainment of having a home theater system, it is not unlikely to
see a stereo booster, amplifier and automatic voltage regulator displayed
together with the television sets and DVD players. With the intertwined use
of these products bearing the identical KOLIN mark, the ordinary
intelligent consumer would likely assume that they are produced by the
same manufacturer.
In sum, the intertwined use, the same classification of the products as
class 9 under the NICE Agreement, and the fact that they generally flow
through the same channel of trade clearly establish that Taiwan Kolins
television sets and DVD players are closely related to Kolin Electronics
goods. As correctly pointed out by the BLA-IPO, allowing Taiwan Kolins
registration would only confuse consumers as to the origin of the products
they intend to purchase. Accordingly, protection should be afforded to
Kolin Electronics, as the registered owner of the KOLIN
trademark.37 (emphasis added)cralawlawlibrary
The CAs approach and reasoning to arrive at the assailed holding that the approval of
petitioners application is likely to cause confusion or deceive fail to persuade.
The products covered by petitioners
application and respondents
registration are unrelated
A certificate of trademark registration confers upon the trademark owner the exclusive right to
sue those who have adopted a similar mark not only in connection with the goods or services
specified in the certificate, but also with those that are related thereto.38cralawred
In resolving one of the pivotal issues in this casewhether or not the products of the parties
involved are relatedthe doctrine in Mighty Corporation is authoritative. There, the Court
held that the goods should be tested against several factors before arriving at a sound
conclusion on the question of relatedness. Among these are:chanRoblesvirtualLawlibrary
(a) the business (and its location) to which the goods belong;
(b) the class of product to which the goods belong;
(c) the products quality, quantity, or size, including the nature of the
package, wrapper or container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is,
day-to-day household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods flow, how they are
distributed, marketed, displayed and sold.39cralawlawlibrary
88

As mentioned, the classification of the products under the NCL is merely part and parcel of the
factors to be considered in ascertaining whether the goods are related. It is not sufficient to
state that the goods involved herein are electronic products under Class 9 in order to establish
relatedness between the goods, for this only accounts for one of many considerations
enumerated in Mighty Corporation. In this case, credence is accorded to petitioners assertions
that:40cralawred
1. Taiwan Kolins goods are classified as home appliances as opposed to Kolin
Electronics goods which are power supply and audio equipment
accessories;ChanRoblesVirtualawlibrary
2. Taiwan Kolins television sets and DVD players perform distinct function and purpose
from Kolin Electronics power supply and audio equipment; and
3. Taiwan Kolin sells and distributes its various home appliance products on wholesale
and to accredited dealers, whereas Kolin Electronics goods are sold and flow
through electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the CA to conclude that all
electronic products are related and that the coverage of one electronic product necessarily
precludes the registration of a similar mark over another. In this digital age wherein electronic
products have not only diversified by leaps and bounds, and are geared towards
interoperability, it is difficult to assert readily, as respondent simplistically did, that all devices
that require plugging into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in Class 941 can be
sub-categorized into five (5) classifications, namely: (1) apparatus and instruments for scientific
or research purposes, (2) information technology and audiovisual equipment, (3) apparatus
and devices for controlling the distribution and use of electricity, (4) optical apparatus and
instruments, and (5) safety equipment.42 From this sub-classification, it becomes apparent that
petitioners products, i.e., televisions and DVD players, belong to audiovisiual equipment, while
that of respondent, consisting of automatic voltage regulator, converter, recharger, stereo
booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the distribution and use of electricity.
The ordinarily intelligent buyer
is not likely to be confused
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to
another, no rigid set rules can plausible be formulated. Each case must be decided on its
merits, with due regard to the goods or services involved, the usual purchasers character and
attitude, among others. In such cases, even more than in any other litigation, precedent must
be studied in the light of the facts of a particular case. That is the reason why in trademark
cases, jurisprudential precedents should be applied only to a case if they are specifically in
point.43cralawred
For a clearer perspective and as matter of record, the following image on the left44 is the
trademark applied for by petitioner, while the image juxtaposed to its right45 is the trademark
registered by respondent:
(please see image in G.R. No. 209843 page 10)
While both competing marks refer to the word KOLIN written in upper case letters and in
bold font, the Court at once notes the distinct visual and aural differences between them: Kolin
Electronics mark is italicized and colored black while that of Taiwan Kolin is white in pantone
red color background. The differing features between the two, though they may appear
minimal, are sufficient to distinguish one brand from the other.
It cannot be stressed enough that the products involved in the case at bar are, generally
speaking, various kinds of electronic products. These are not ordinary consumable household
items, like catsup, soy sauce or soap which are of minimal cost.46 The products of the
contending parties are relatively luxury items not easily considered affordable. Accordingly, the
casual buyer is predisposed to be more cautious and discriminating in and would prefer to mull
over his purchase. Confusion and deception, then, is less likely. 47 As further elucidated in Del
Monte Corporation v. Court of Appeals:48cralawred
x x x Among these, what essentially determines the attitudes of the
purchaser, specifically his inclination to be cautious, is the cost of the goods.
To be sure, a person who buys a box of candies will not exercise as much
care as one who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an article for which he
pays a few centavos as he does in purchasing a more valuable
thing. Expensive and valuable items are normally bought only after
deliberate, comparative and analytical investigation. But mass products,
low priced articles in wide use, and matters of everyday purchase
requiring frequent replacement are bought by the casual consumer
without great care x x x.(emphasis added)cralawlawlibrary
Respondent has made much reliance on Arce & Sons, Chua Che, Ang, and Khe, oblivious that
89
they involved common household itemsi.e., biscuits and milk, cosmetics, clothes, and toilet
articles, respectivelywhereas the extant case involves luxury items not regularly and
inexpensively purchased by the consuming public. In accord with common empirical
experience, the useful lives of televisions and DVD players last for about five (5) years,
minimum, making replacement purchases very infrequent. The same goes true with converters
and regulators that are seldom replaced despite the acquisition of new equipment to be
plugged onto it. In addition, the amount the buyer would be parting with cannot be deemed
minimal considering that the price of televisions or DVD players can exceed todays monthly
minimum wage.In light of these circumstances, it is then expected that the ordinary intelligent
buyer would be more discerning when it comes to deciding which electronic product they are
going to purchase, and it is this standard which this Court applies here in in determining the
likelihood of confusion should petitioners application be granted.
To be sure, the extant case is reminiscent of Emerald Garment Manufacturing Corporation v.
Court of Appeals,49 wherein the opposing trademarks are that of Emerald Garment
Manufacturing Corporations Stylistic Mr. Lee and H.D. Lees LEE. In the said case, the
appellate court affirmed the decision of the Director of Patents denying Emerald Garments
application for registration due to confusing similarity with H.D. Lees trademark. This Court,
however, was of a different beat and ruled that there is no confusing similarity between the
marks, given that the products covered by the trademark, i.e., jeans, were,at that time,
considered pricey, typically purchased by intelligent buyers familiar with the products and are
more circumspect, and, therefore, would not easily be deceived. As
held:chanRoblesvirtualLawlibrary
Finally, in line with the foregoing discussions, more credit should be given
to the ordinary purchaser. Cast in this particular controversy, the
ordinary purchaser is not the completely unwary consumer but is the
ordinarily intelligent buyer considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok50is better suited to
the present case. There, the ordinary purchaser was defined as one
accustomed to buy, and therefore to some extent familiar with, the
goods in question. The test of fraudulent simulation is to be found in the
likelihood of the deception of some persons in some measure acquainted
with an established design and desirous of purchasing the commodity with
which that design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be
indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar with the article
that he seeks to purchase.51 (emphasis added)cralawlawlibrary
Consistent with the above ruling, this Court finds that the differences between the two marks,
subtle as they may be, are sufficient to prevent any confusion that may ensue should
petitioners trademark application be granted.As held in Esso Standard Eastern,
Inc.:52cralawred
Respondent court correctly ruled that considering the general appearances
of each mark as a whole, the possibility of any confusion is unlikely. A
comparison of the labels of the samples of the goods submitted by the
parties shows a great many differences on the trademarks used. As pointed
out by respondent court in its appealed decision, (A) witness for the
plaintiff, Mr. Buhay, admitted that the color of the ESSO used by the
plaintiff for the oval design where the blue word ESSO is contained is the
distinct and unique kind of blue. In his answer to the trial courts question,
Mr. Buhay informed the court that the plaintiff never used its trademark on
any product where the combination of colors is similar to the label of the
Esso cigarettes, and Another witness for the plaintiff, Mr. Tengco,
testified that generally, the plaintiffs trademark comes all in either red,
white, blue or any combination of the three colors. It is to be pointed out
that not even a shade of these colors appears on the trademark of the
appellants cigarette. The only color that the appellant uses in its
trademark is green.
Even the lower court, which ruled initially for petitioner, found that a
noticeable difference between the brand ESSO being used by the
defendants and the trademark ESSO of the plaintiff is that the former has a
rectangular background, while in that of the plaintiff the word ESSO is
enclosed in an oval background.cralawlawlibrary
All told, We are convinced that petitioners trademark registration not only covers unrelated
good, but is also incapable of deceiving the ordinary intelligent buyer. The ordinary purchaser
must be thought of as having, and credited with, at least a modicum of intelligence to be able
to see the differences between the two trademarks in question.53cralawred
Questions of fact may still be entertained
On a final note, the policy according factual findings of courts a quo great respect, if not finality,
is not binding where they have overlooked, misapprehended, or misapplied any fact or
circumstance of weight and substance.54 So it must be here; the nature of the products
involved materially affects the outcome of the instant case. A reversal of the appellate courts
Decision is then in order.
90
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Decision and the
Resolution of the Court of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013 and
November 6, 2013, respectively, are hereby REVERSED and SET ASIDE. Accordingly, the
Decision of the Intellectual Property Office Director General in Inter Partes Case No.
14-2006-00096, dated November 23, 2011, is hereby REINSTATED.
SO ORDERED.cralawlawlibrar
First, products classified under Class 9 can be further classified into five categories. Accordingly,
the goods covered by the competing marks between Taiwan Kolin and Kolin Electronics fall
under different categories. Taiwan Kolins goods are categorized as audio visual equipments,
while Kolin Electronics goods fall under devices for controlling the distribution and use of
electricity. Thus, it is erroneous to assume that all electronic products are closely related and
that the coverage of one electronic product necessarily precludes the registration of a similar
mark over another.

Facts:
Taiwan Kolin Corp sought to register the trademark KOLIN in Class 9 on the following
combination of goods: television sets, cassette recorder, VCD Amplifiers, camcorders and other
audio/video electronic equipment, flat iron, vacuum cleaners, cordless handsets, videophones,
facsimile machines, teleprinters, cellular phones and automatic goods vending machine.
Second, the ordinarily intelligent buyer is not likely to be confused. The distinct visual and aural
differences between the two trademarks KOLIN, although appear to be minimal, are
sufficient to distinguish between one brand or another. The casual buyer is predisposed to be
more cautious, discriminating, and would prefer to mull over his purchase because the
products involved are various kind of electronic products which are relatively luxury items and
not considered affordable. They are not ordinarily consumable items such as soy sauce, ketsup
or soap which are of minimal cost. Hence, confusion is less likely.

Kolin Electronics opposed the application on the ground that the trademark KOLIN is
identical, if not confusingly similar, with its registered trademark KOLIN which covers the
following products under Class 9 of the Nice Classification (NCL): automatic voltage regulator,
converter, recharger, stereo booster, AC-DC regulated power supply, step-down transformer,
and PA amplified AC-DC. Kolin Electronics argued that the products are not only closely-related
because they fall under the same classification, but also because they are inherently similar for
being electronic products and are plugged into electric sockets and perform a useful function.

Issue: W/N the products are closely-related

Held:

No, the products are not related and the use of the trademark KOLIN on them would not likely
cause confusion. To confer exclusive use of a trademark, emphasis should be on the
similarity or relatedness of the goods and/or services involved and not on the arbitrary
classification or general description of their properties or characteristics.
91
G.R. No. 197802, November 11, 2015
ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D. DBA ZUNECA
PHARMACEUTICAL, Petitioners, v. NATRAPHARM, INC., Respondent.
RESOLUTION
VILLARAMA, JR., J.:
This is a petition for review1 under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the April 18, 2011 Decision2 and July 21, 2011 Resolution3 of the Court of Appeals (CA)
in the petition for certiorari docketed as CA-G.R. SP No. 103333 granting a permanent
injunction in favor of respondent Natrapharm, Inc. and against petitioner Zuneca
Pharmaceutical.
The facts follow:
Respondent is an all-Filipino pharmaceutical company which manufactures and sells a medicine
bearing the generic name "CITICOLINE," which is indicated for heart and stroke patients. The
said medicine is marketed by respondent under its registered trademark "ZYNAPSE," which
respondent obtained from the Intellectual Property Office (IPO) on September 24, 2007 under
Certificate of Trademark Registration No. 4-2007-005596. With its registration, the trademark
"ZYNAPSE" enjoys protection for a term of 10 years from September 24, 2007.4
In addition, respondent obtained from the Bureau of Food and Drugs (BFAD) all necessary
permits and licenses to register, list and sell its "ZYNAPSE" medicine in its various forms and
dosages.5
Allegedly unknown to respondent, since 2003 or even as early as 2001, petitioners have been
selling a medicine imported from Lahore, Pakistan bearing the generic name
"CARBAMAZEPINE," an anti-convulsant indicated for epilepsy, under the brand name
"ZYNAPS," which trademark is however not registered with the IPO. "ZYNAPS" is pronounced
exactly like "ZYNAPSE."6
Respondent further alleged that petitioners are selling their product "ZYNAPS"
CARBAMAZEPINE in numerous drugstores in the country where its own product "ZYNAPSE"
CITICOLINE is also being sold.7
Moreover, respondent claimed that the drug CARBAMAZEPINE has one documented serious
and disfiguring side-effect called "Stevens-Johnson Syndrome," and that the sale of the
medicines "ZYNAPSE" and "ZYNAPS" in the same drugstores will give rise to medicine
switching.8
On October 30, 2007, respondent sent petitioners a cease-and-desist demand letter, pointing
out that:
1. "ZYNAPSE" is the registered trademark of [respondent], and that
as such owner, it has exclusive trademark right under the law to
the use thereof and prevent others from using identical or
confusingly similar marks, and that [petitioners] must stop the
use of "ZYNAPS" for being nearly identical to "ZYNAPSE"; and
2. Because there is confusing similarity between "ZYNAPSE" and
"ZYNAPS," there is a danger of medicine switching, with the
patient on "ZYNAPSE" medication placed in a more injurious
situation given the Steven-Johnson Syndrome side effect of the
"ZYNAPS" CARBAMAZEPINE.9
Petitioners refused to heed the above demand, claiming that they had prior use of the name
"ZYNAPS" since year 2003, having been issued by the BFAD a Certificate of Product Registration
(CPR) on April 15, 2003, which allowed them to sell CARBAMAZEPINE under the brand name
"ZYNAPS."10
On November 29, 2007, respondent filed a complaint against petitioners for trademark
infringement for violation of Republic Act (R.A.) No. 8293, or the Intellectual Property Code of
the Philippines (IPC), with prayer for a temporary restraining order (TRO) and/or writ of
preliminary injunction. To justify the TRO/writ of preliminary injunction, respondent cited
Section 12211 of R.A. No. 8293, under which the registration of "ZYNAPSE" gives it the exclusive
right to use the said name as well as to exclude others from using the same. 12 In addition,
respondent argued that under Sections 13813 and 147.114 of the IPC, certificates of registration
are prima facie evidence of the registrant's ownership of the mark and of the registrant's
exclusive right to use the same.15 Respondent also invoked the case of Conrad and Company,
Inc. v. Court of Appeals16 where it was ruled that an invasion of a registered mark entitles the
holder of a certificate of registration thereof to injunctive relief.17
In their answer, petitioners argued that they enjoyed prior use in good faith of the brand name
"ZYNAPS," having submitted their application for CPR with the BFAD on October 2, 2001, with
the name "ZYNAPS" expressly indicated thereon. The CPR was issued to them on April 15,
2003.18Moreover, petitioners averred that under Section 15919 of the IPC their right to use the
said mark is protected.20
92
In its December 21, 2007 Order,21 the Regional Trial Court (RTC) denied respondent's
application for a TRO, ruling that even if respondent was able to first register its mark
"ZYNAPSE" with the IPO in 2007, it is nevertheless defeated by the prior actual use by
petitioners of "ZYNAPS" in 2003.
In its March 12, 2008 Order,22 the RTC denied the application for a writ of preliminary
injunction, reiterating the reasons stated in the order denying the application for a TRO:
In this Court's objective evaluation, neither party is, at this point, entitled
to any injunctive solace. Plaintiff, while admittedly the holder of a
registered trademark under the IPC, may not invoke ascendancy or
superiority of its CTR [certificate of trademark registration] over the CPR
[certificate of product registration of the BFAD] of the defendants, as the
latter certificate is, in the Court's opinion, evidence of its "prior use".
Parenthetically, the plaintiff would have been entitled to an injunction as
against any or all third persons in respect of its registered mark under
normal conditions, that is, in the event wherein Section 159.1 would not be
invoked by such third person. Such is the case however in this litigation.
Section 159 of the IPC explicitly curtails the registrant's rights by providing
for limitations on those rights as against a "prior user" under Section 159.1
xxx.23
Via a petition for certiorari with an application for a TRO and/or a writ of preliminary injunction,
respondent questioned before the CA the RTC's denial of the application for a writ of
preliminary injunction.
On June 17, 2008, the CA issued a Resolution24 denying respondent's application for TRO
and/or preliminary injunction for lack of merit. The CA found no compelling reason to grant the
application for TRO and/or preliminary injunction because there was no showing that
respondent had a clear and existing right that will be violated by petitioners. Respondent
moved for reconsideration but was denied by the CA in its July 31, 2008 Resolution.25cralawred
However, contrary to its earlier resolutions denying the application for a TRO/preliminary
injunction, the CA, in its April 18, 2011 Decision, upheld the allegations of respondent that it is
entitled to injunctive relief on the basis of its IPO registration and permanently enjoined
petitioners from the commercial use of "ZYNAPS." The fallo of the CA Decision reads:
WHEREFORE, premises considered, the Petition for Certiorari is GRANTED.
The assailed Omnibus Order dated 12 March 2008 of the Regional Trial
Court, Branch 93 of Quezon City in Civil Case No. Q-07-61561
is REVERSED and SET ASIDE, and a new one is
entered permanently ENJOINING defendants-respondents, their
employees, agents, representatives, dealers, retailers, and/or assigns, and
any and all persons acting in their behalf, from manufacturing, importing,
distributing, selling and/or advertising for sale, or otherwise using in
commerce, the anti-convulsant drug CARBAMAZEPINE under the brand
name and mark "ZYNAPS," or using any other name which is similar or
confusingly similar to petitioner's registered trademark "ZYNAPSE,"
including filing of application for permits, license, or certificate of product
registration with the Food and Drug Administration and other government
agencies.
SO ORDERED.26 (Underscoring and additional emphasis supplied)
Petitioners' motion for reconsideration was denied by the CA in its Resolution dated July 21,
2011.
Hence, this petition for review.
On December 2, 2011, the RTC rendered a Decision 27 on the merits of the case. It found
petitioners liable to respondent for damages. Moreover, it enjoined the petitioners from using
"ZYNAPS" and ordered all materials related to it be disposed outside the channel of commerce
or destroyed without compensation.28
Respondent moved to dismiss the present petition in view of the December 2, 2011 RTC
Decision which functions as a full adjudication on the merits of the main issue of trademark
infringement. Respondent contended that the present petition is moot and academic, it only
involving an ancillary writ.29
Petitioners, on the other hand, opposed the motion to dismiss arguing that the December 2,
2011 RTC Decision had not yet attained finality, thus, the present petition had not yet been
rendered moot.
The two issues which need to be addressed are:
1) Whether the decision on the merits rendered the issues in this case moot and academic?
and
2) Whether the CA may order a permanent injunction in deciding a petition
for certiorari against the denial of an application for a preliminary injunction issued by the RTC?
We hold that the issues raised in the instant petition have been rendered moot and academic
93
given the RTC's December 2, 2011 Decision on the merits of the case.
Rule 58 of the Rules of Court provides for both preliminary and permanent injunction. Section
1, Rule 58 provides for the definition of preliminary injunction:
SECTION 1. Preliminary injunction defined; classes. A preliminary
injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court, agency
or a person to refrain from a particular act or acts. It may also require the
performance of a particular act or acts, in which case it shall be known as a
preliminary mandatory injunction. (Emphasis supplied)
On the other hand, Section 9 of the same Rule defines a permanent injunction in this wise:
SEC. 9. When final injunction granted. If after the trial of the action it
appears that the applicant is entitled to have the act or acts complained of
permanently enjoined, the court shall grant a final injunction perpetually
restraining the party or person enjoined from the commission or
continuance of the act or acts or confirming the preliminary mandatory
injunction. (Emphasis supplied)
A writ of preliminary injunction is generally based solely on initial and incomplete
evidence.30 The evidence submitted during the hearing on an application for a writ of
preliminary injunction is not conclusive or complete for only a sampling is needed to give the
trial court an idea of the justification for the preliminary injunction pending the decision of the
case on the merits.31 As such, the findings of fact and opinion of a court when issuing the writ
of preliminary injunction are interlocutory in nature and made even before the trial on the
merits is commenced or terminated.32
By contrast a permanent injunction, based on Section 9, Rule 58 of the Rules of Court, forms
part of the judgment on the merits and it can only be properly ordered only on final judgment.
A permanent injunction may thus be granted after a trial or hearing on the merits of the case
and a decree granting or refusing an injunction should not be entered until after a hearing on
the merits where a verified answer containing denials is filed or where no answer is required,
or a rule to show cause is equivalent to an answer.33
As such a preliminary injunction, like any preliminary writ and any interlocutory order, cannot
survive the main case of which it is an incident; because an ancillary writ of preliminary
injunction loses its force and effect after the decision in the main petition.34
In Casilan v. Ybaez,35 this Court stated:
As things stand now, this Court can no longer interfere with the preliminary
injunctions issued by the Leyte court in its cases Nos. 2985 and 2990,
because such preliminary writs have already been vacated, being
superseded and replaced by the permanent injunction ordered in the
decision on the merits rendered on 21 March 1962. And as to the
permanent injunction, no action can be taken thereon without reviewing
the judgment on the merits, such injunction being but a consequence of
the pronouncement that the credits of Tiongson and Montilla are entitled
to priority over that of Casilan. Since the court below had the power and
right to determine such question of preference, its judgment is not
without, nor in excess of, jurisdiction; and even assuming that its findings
are not correct, they would, at most, constitute errors of law, and not
abuses of discretion, correctible bycertiorari . The obvious remedy for
petitioner Casilan was a timely appeal from the judgment on the
merits to the Court of Appeals, the amount involved being less than
P200,000. But the judgment has become final and unappealable and can
not be set aside through certiorari proceedings. (Emphasis supplied)
Here, this Court is being asked to determine whether the CA erred by issuing a permanent
injunction in a case which questioned the propriety of the denial of an ancillary writ. But with
the RTC's December 2, 2011 Decision on the case for "Injunction, Trademark Infringement,
Damages and Destruction," the issues raised in the instant petition have been rendered moot
and academic. We note that the case brought to the CA on a petition for certiorari merely
involved the RTC's denial of respondent's application for a writ of preliminary injunction, a
mere ancillary writ. Since a decision on the merits has already been rendered and which
includes in its disposition a permanent injunction, the proper remedy is an appeal36 from the
decision in the main case.
WHEREFORE, in light of all the foregoing, the petition is hereby DENIED for being moot and
academic.
SO ORDERED.
94
EN BANC
G.R. No. 222702, April 05, 2016
RAPPLER, INC., Petitioner, v. ANDRES D. BAUTISTA, Respondent.
RESOLUTION
CARPIO, J.:
Petitioner Rappler, Inc. (petitioner) filed a petition for certiorari and prohibition against Andres
D. Bautista (respondent), in his capacity as Chairman of the Commission on Elections
(COMELEC). The petition seeks to nullify Part VI (C), paragraph 19 and Part VI (D), paragraph 20
of the Memorandum of Agreement (MOA) on the 2016 presidential and vice-presidential
debates, for being executed without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction and for violating the fundamental rights
of petitioner protected under the Constitution. The MOA, signed on 13 January 2016, was
executed by the COMELEC through its Chairman, respondent Bautista, and the Kapisanan ng
mga Brodkaster ng Pilipinas (KBP), and the various media networks, namely: ABS-CBN
Corporation, GMA Network, Inc., Nine Media Corporation, TV5 Network, Inc., Philstar Daily,
Inc., Philippine Daily Inquirer, Inc., Manila Bulletin Publishing Corporation, Philippine Business
Daily Mirror Publishing, Inc., and petitioner. Under the MOA, the KBP was designated as
Debate Coordinator while ABS-CBN, GMA, Nine Media, and TV5, together with their respective
print media partners were designated as Lead Networks.
Petitioner alleged that on 21 September 2015, respondent called for a meeting with various
media outlets to discuss the "PiliPinas 2016 Debates," for presidential and vice-presidential
candidates, which the COMELEC was organizing.1 Respondent showed a presentation
explaining the framework of the debates, in which there will be three presidential debates and
one vice presidential debate. Respondent proposed that petitioner and Google, Inc. be in
charge of online and social media engagement. Respondent announced during the meeting
that KBP will coordinate with all media entities regarding the organization and conduct of the
debates.
On 22 September 2015, petitioner sent a proposed draft for broadcast pool guidelines to
COMELEC and the KBP. A broadcast pool has a common audio and video feed of the debates,
and the cost will be apportioned among those needing access to the same. KBP informed
petitioner that the proposal will be discussed in the next meeting.
On 19 October 2015, another meeting was held at the COMELEC office to discuss a draft MOA
on the debates. In the draft, petitioner and Google's participation were dropped in favor of the
online outlets owned by the Lead Networks. After the meeting, the representatives of the Lead
Networks drew lots to determine who will host each leg of the debates. GMA and its partner
Philippine Daily Inquirer sponsored the first presidential debate in Mindanao on 21 February
2016; TV5, Philippine Star, and Businessworld sponsored the second phase of presidential
debate in the Visayas on 20 March 2016; ABS-CBN and Manila Bulletin will sponsor the
presidential debate to be held in Luzon on 24 April 2016; and the lone vice-presidential debate
will be sponsored by CNN, Business Mirror, and petitioner on 10 April 2016. Petitioner alleged
that the draft MOA permitted online streaming, provided proper attribution is given the Lead
Network.
On 12 January 2016, petitioner was informed that the MOA signing was scheduled the
following day. Upon petitioner's request, the draft MOA was emailed to petitioner on the
evening of 12 January 2016. Petitioner communicated with respondent its concerns regarding
certain provisions of the MOA particularly regarding online streaming and the imposition of a
maximum limit of two minutes of debate excerpts for news reporting. Respondent assured
petitioner that its concerns will be addressed afterwards, but it has to sign the MOA because
time was of the essence. On 13 January 2016, petitioner, along with other media networks and
entities, executed the MOA with the KBP and the COMELEC for the conduct of the three
presidential debates and one vice-presidential debate. Petitioner alleged that it made several
communications with respondent and the COMELEC Commissioners regarding its concerns on
some of the MOA provisions, but petitioner received no response. Hence, this petition.
In this petition for certiorari and prohibition, petitioner prays for the Court to render judgment:
a. Declaring null and void, for being unconstitutional, pertinent parts of the
Memorandum of Agreement that violate the rights of the Petitioner,
specifically Part VI (C), paragraph 19 and Part VI (D), paragraph 20 [of the
MOA];
b. Prohibiting the Respondent from implementing specifically Part VI (C),
paragraph 19 and Part VI (D), paragraph 20 of the MOA;
c. Pending resolution of this case, issuing a Preliminary Injunction enjoining
the Respondent from implementing Part VI (C), paragraph 19 and Part VI
(D), paragraph 20 of the MOA; and
d. Pending resolution of this case, issuing a Preliminary Mandatory
Injunction requiring the Respondent to ensure an unimpaired and equal
access to all mass media, online or traditional, to all the Debates.2
Part VI (C), paragraph 19 and Part VI (D), paragraph 20 of the MOA read:
95
 VI
ROLES AND RESPONSIBILITIES OF THE LEAD NETWORKS
xxxx
C. ONLINE STREAMING
xxxx
19. Subject to copyright conditions or separate
negotiations with the Lead Networks, allow the debates
they have produced to be shown or streamed on other
websites;
D. NEWS REPORTING AND FAIR USE
20. Allow a maximum of two minutes of excerpt from
the debates they have produced to be used for news
reporting or fair use by other media or entities as
allowed by the copyright law: Provided, that the use of
excerpts longer than two minutes shall be subject to
the consent of the Lead Network concerned;3
Respondent argues that the petition should be dismissed for its procedural defects. In several
cases, this Court has acted liberally and set aside procedural lapses in cases involving
transcendental issues of public interest,4 especially when time constraint is a factor to be
considered, as in this case. As held in GMA Network, Inc. v. Commission on Elections:5
Respondent claims that certiorari and prohibition are not the proper
remedies that petitioners have taken to question the assailed Resolution of
the COMELEC. Technically, respondent may have a point. However,
considering the very important and pivotal issues raised, and the limited
time, such technicality should not deter the Court from having to make the
final and definitive pronouncement that everyone else depends for
enlightenment and guidance. "[T]his Court has in the past seen fit to step in
and resolve petitions despite their being the subject of an improper
remedy, in view of the public importance of the issues raised therein.6
The urgency to resolve this case is apparent considering that the televised debates have
already started and only two of the scheduled four national debates remain to be staged.7 And
considering the importance of the debates in informing the electorate of the positions of the
presidential and vice-presidential candidates on vital issues affecting the nation, this case falls
under the exception laid down in GMA Network, Inc. v. Commission on Elections.
Petitioner is a signatory to the MOA. In fact, the sole vice-presidential debate, to be held in
Manila on 10 April 2016, will be sponsored by CNN Philippines (owned and operated by Nine
Media Corporation) and its partners Business Mirror and petitioner. Petitioner, however, is
alleging that it is being discriminated particularly as regards the MOA provisions on live audio
broadcast via online streaming. Petitioner argues that the MOA grants radio stations the right
to simultaneously broadcast live the audio of the debates, even if the radio stations are not
obliged to perform any obligation under the MOA. Yet, this right to broadcast by live streaming
online the audio of the debates is denied petitioner and other online media entities, which also
have the capacity to live stream the audio of the debates. Petitioner insists that it signed the
MOA believing in good faith the issues it has raised will be resolved by the COMELEC.
The provisions on Live Broadcast and Online Streaming under the MOA read:
VI
ROLES AND RESPONSIBILITIES OF THE LEAD NETWORKS
xxxx
B1. LIVE BROADCAST
10. Broadcast the debates produced by the Lead
Networks in their respective television stations and
other news media platforms;
11. Provide a live feed of the debate to other radio
stations, other than those of the Lead Network's, for
simultaneous broadcast;
12. Provide a live feed of the debates produced by
them to radio stations not belonging to any of the Lead
Networks for simultaneous broadcast;
xxxx
C. ONLINE STREAMING
96
 17. Live broadcast the debates produced by the Lead
Networks on their respective web sites and social
media sites for free viewing by the public;
18. Maintain a copy of the debate produced by the
Lead Network on its on-line site(s) for free viewing by
the public during the period of elections or longer;
19. Subject to copyright conditions or separate
negotiations with the Lead Networks, allow the
debates they have produced to be shown or streamed
on other websites;8 (Boldfacing and underscoring
supplied)
Petitioner's demand to exercise the right to live stream the debates is a contractual right of
petitioner under the MOA. Under Part VI (C), paragraph 19 of the MOA, the Lead Networks are
expressly mandated to "allow the debates they have produced to be shown or streamed on
other websites," but "subject to copyright conditions or separate negotiations with the Lead
Networks." The use of the word "or" means that compliance with the "copyright conditions" is
sufficient for petitioner to exercise its right to live stream the debates in its website.
The "copyright conditions" refer to the limitations on copyright as provided under Section
184.1(c) of the Intellectual Property Code (IPC), thus:
SEC. 184. Limitations on Copyright. - 184.1 Notwithstanding the provisions
of Chapter V, the following acts shall not constitute infringement of
copyright:
xxxx
(c) The reproduction or communication to the public by mass media of
articles on current political, social, economic, scientific or religious topic,
lectures, addresses and other works of the same nature, which are
delivered in public if such use is for information purposes and has not
been expressly reserved; Provided, That the source is clearly indicated;
(Sec. 11, P.D. No. 49) (Boldfacing and underscoring supplied)
Under this provision, the debates fall under "addresses and other works of the same nature."
Thus, the copyright conditions for the debates are: (1) the reproduction or communication to
the public by mass media of the debates is for information purposes; (2) the debates have
not been expressly reserved by the Lead Networks (copyright holders); and (3) the source is
clearly indicated.
Condition 1 is complied because the live streaming by petitioner is obviously for information
purposes. Condition 2 is also complied because Part VI (C), paragraph 19 of the MOA
expressly "allow[s] the debates x x x to be shown or streamed on other websites," including
petitioner's website. This means that the "reproduction or communication (of the debates) to
the public by mass media x x x has not been expressly reserved" or withheld. Condition 3 is
complied by clearly indicating and acknowledging that the source of the debates is one or
more of the Lead Networks.
Part VI (C), paragraph 19 of the MOA, which expressly allows the debates produced by the Lead
Networks to be shown or streamed on other websites, clearly means that the Lead Networks
have not "expressly reserved" or withheld the use of the debate audio for online streaming.
In short, the MOA expressly allows the live streaming of the debates subject only to
compliance with the "copyright conditions." Once petitioner complies with the copyright
conditions, petitioner can exercise the right to live stream the audio of the debates as
expressly allowed by the MOA.
Under the MOA, the Lead Networks are mandated to promote the debates for maximum
audience.9The MOA recognizes the public function of the debates and the need for the
widest possible dissemination of the debates. The MOA has not reserved or withheld the
reproduction of the debates to the public but has in fact expressly allowed the reproduction
of the debates "subject to copyright conditions." Thus, petitioner may live stream the debate
in its entirety by complying with the "copyright conditions," including the condition that "the
source is clearly indicated" and that there will be no alteration, which means that the
streaming will include the proprietary graphics used by the Lead Networks. If petitioner opts
for a clean feed without the proprietary graphics used by the Lead Networks, in order for
petitioner to layer its own proprietary graphics and text on the same, then petitioner will have
to negotiate separately with the Lead Networks. Similarly, if petitioner wants to alter the
debate audio by deleting the advertisements, petitioner will also have to negotiate with the
Lead Networks.
Once the conditions imposed under Section 184.1(c) of the IPC are complied with, the
information - in this case the live audio of the debates -now forms part of the public domain.
There is now freedom of the press to report or publicly disseminate the live audio of the
debates. In fact, the MOA recognizes the right of other mass media entities, not parties to the
MOA, to reproduce the debates subject only to the same copyright conditions. The freedom of
the press to report and disseminate the live audio of the debates, subject to compliance with
Section 184.1(c) of the IPC, can no longer be infringed or subject to prior restraint. Such
freedom of the press to report and disseminate the live audio of the debates is now protected
and guaranteed under Section 4, Article III of the Constitution, which provides that "[N]o law
97
shall be passed abridging the freedom x x x of the press."

The presidential and vice-presidential debates are held primarily for the benefit of the
electorate to assist the electorate in making informed choices on election day. Through the
conduct of the national debates among presidential and vice-presidential candidates, the
electorate will have the "opportunity to be informed of the candidates' qualifications and track
record, platforms and programs, and their answers to significant issues of national
concern."10 The political nature of the national debates and the public's interest in the wide
availability of the information for the voters' education certainly justify allowing the debates to
be shown or streamed in other websites for wider dissemination, in accordance with the MOA.

Therefore, the debates should be allowed to be live streamed on other websites, including
petitioner's, as expressly mandated in Part VI (C), paragraph 19 of the MOA. The respondent,
as representative of the COMELEC which provides over-all supervision under the MOA,
including the power to "resolve issues that may arise among the parties involved in the
organization of the debates,"11 should be directed by this Court to implement Part VI (C),
paragraph 19 of the MOA, which allows the debates to be shown or live streamed unaltered on
petitioner's and other websites subject to the copyright condition that the source is clearly
indicated.chanrobleslaw

WHEREFORE, we PARTIALLY GRANT the petition. Respondent Andres D. Bautista, as Chairman

of the COMELEC, is directed to implement Part VI (C), paragraph 19 of the MOA, which allows
the debates to be shown or live streamed unaltered on petitioner's and other websites subject
to the copyright condition that the source is clearly indicated. Due to the time constraint, this
Resolution is immediately executory.

SO ORDERED.cralawla

98
Rapler vs Bautista

FACTS

Rappler, Inc. signed a Memorandum of Agreement (MOA) to sponsor the Presidential and
Vice-Presidential debates. Alleging that it is being discriminated particularly as regards the
MOA provisions on live audio broadcast via online streaming, Rappler argues that the MOA
grants radio stations the right to simultaneously broadcast live the audio of the debates, even
if the radio stations are not obliged to perform any obligation under the MOA. However, the
right to broadcast by online live streaming the audio of the debates is denied to the petitioner
and other online media entities which also have the capacity to live stream the audio of the
debates.

Rappler filed a petition for certiorari and prohibition against COMELEC Chairman Andres
Bautista to nullify MOA provisions on the ground of violating the fundamental rights protected
under the Constitution.

ISSUE: Whether petitioner has the right to live stream the debates

RULING: Yes, Rappler has the right to live stream the debates because the exercise to do so is
its contractual right under the MOA. Under the MOA, as long as it complies with the copyright
conditions for the debates, it can live stream the debates.

The MOA recognizes the right of other mass media entities, not parties to the MOA, to
reproduce the debates subject to the same copyright conditions. The freedom of the press to
report and disseminate the live audio can no longer be infringed or subject to prior restraint.
Such freedom of the press to report and disseminate the live audio of the debates is now
protected and guaranteed under Section 4, Article III of the Constitution, which provides that,
No law shall be passed abridging the freedomof the press.

The petition was partially granted. The COMELEC Chairman was directed to allow the debates
to be shown or live streamed unaltered on the petitioners website subject to the copyright
condition that the source is clearly indicated.

99