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What is Intellectual Property?

4.1. The term "intellectual property rights" consists of:


[a] Copyright and Related Rights;

[b] Trademarks and Service Marks;

[c] Geographic Indications;

[d] Industrial Designs;

[e] Patents;

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

[g] Protection of Undisclosed Information (n) [TRIPS].

[G.R. No. 172835. December 13, 2007.]

AIR PHILIPPINES CORPORATION, petitioner, vs. PENNSWELL, INC.,


respondent.

DECISION

CHICO-NAZARIO, J : p

Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule 45 of the
Rules of Court, the nullification of the 16 February 2006 Decision and the 25 May 2006 Resolution
of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the Order dated 30 June 2004 of
the Regional Trial Court (RTC), Makati City, Branch 64, in Civil Case No. 00-561.
Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air
transportation services. On the other hand, respondent Pennswell, Inc. was organized to engage in
the business of manufacturing and selling industrial chemicals, solvents, and special lubricants.
On various dates, respondent delivered and sold to petitioner sundry goods in trade, covered by
Sales Invoices No. 8846, 9105, 8962, and 8963, which correspond to Purchase Orders No. 6433,
6684, 6634 and 6633, respectively. Under the contracts, petitioner's total outstanding obligation
amounted to P449,864.98 with interest at 14% per annum until the amount would be fully paid. For
failure of the petitioner to comply with its obligation under said contracts, respondent filed a
Complaint for a Sum of Money on 28 April 2000 with the RTC.
In its Answer, petitioner contended that its refusal to pay was not without valid and justifiable
reasons. In particular, petitioner alleged that it was defrauded in the amount of P592,000.00 by
respondent for its previous sale of four items, covered by Purchase Order No. 6626. Said items
respondent for its previous sale of four items, covered by Purchase Order No. 6626. Said items
were misrepresented by respondent as belonging to a new line, but were in truth and in fact,
identical with products petitioner had previously purchased from respondent. Petitioner asserted
that it was deceived by respondent which merely altered the names and labels of such goods.
Petitioner specifically identified the items in question, as follows:
Label/Description Item No. Amount P.O. Date
1. a. Anti-Friction Fluid MPL-800 153,941.40 5714 05/20/99
MPL-008 155,496.00 5888 06/20/99
b. Excellent Rust
Corrosion (fake)
2. a. Contact Grease COG #2 115,236.00 5540 04/26/99
b. Connector Grease (fake) CG 230,519.52 6327 08/05/99
3. a. Trixohtropic Grease EPC 81,876.96 4582 01/29/99
b. Di-Electric Strength EPC#2 81,876.96 5446 04/21/99
Protective Coating (fake)
4. a. Dry Lubricant ASC-EP 87,346.52 5712 05/20/99
b. Anti-Seize Compound ASC-EP 124,108.10 4763 & 02/16/99 &
(fake) 2000 5890 06/24/99
According to petitioner, respondent's products, namely Excellent Rust Corrosion, Connector
Grease, Electric Strength Protective Coating, and Anti-Seize Compound, are identical with its Anti-
Friction Fluid, Contact Grease, Thixohtropic Grease, and Dry Lubricant, respectively. Petitioner
asseverated that had respondent been forthright about the identical character of the products, it
would not have purchased the items complained of. Moreover, petitioner alleged that when the
purported fraud was discovered, a conference was held between petitioner and respondent on 13
January 2000, whereby the parties agreed that respondent would return to petitioner the amount it
previously paid. However, petitioner was surprised when it received a letter from the respondent,
demanding payment of the amount of P449,864.94, which later became the subject of respondent's
Complaint for Collection of a Sum of Money against petitioner.
During the pendency of the trial, petitioner filed a Motion to Compel respondent to give a detailed list
of the ingredients and chemical components of the following products, to wit: (a) Contact Grease
and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength Protective Coating; and (c)
Dry Lubricant and Anti-Seize Compound. It appears that petitioner had earlier requested the
Philippine Institute of Pure and Applied Chemistry (PIPAC) for the latter to conduct a comparison of
respondent's goods.
On 15 March 2004, the RTC rendered an Order granting the petitioner's motion. It disposed, thus:
The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air
Philippines Corporation[,] a detailed list of the ingredients or chemical components of
the following chemical products:
a.Contact Grease to be compared with Connector Grease;
b.Thixohtropic Grease to be compared with Di-Electric Strength Protective
Coating; and
c.Dry Lubricant to be compared with Anti-Seize Compound[.]
c.Dry Lubricant to be compared with Anti-Seize Compound[.]
[Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to
submit to [petitioner] Air Philippines Corporation the chemical components of all the
above-mentioned products for chemical comparison/analysis.
Respondent sought reconsideration of the foregoing Order, contending that it cannot be compelled
to disclose the chemical components sought because the matter is confidential. It argued that what
petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be forced
to divulge. Respondent maintained that its products are specialized lubricants, and if their
components were revealed, its business competitors may easily imitate and market the same types
of products, in violation of its proprietary rights and to its serious damage and prejudice.
The RTC gave credence to respondent's reasoning, and reversed itself. It issued an Order dated 30
June 2004, finding that the chemical components are respondent's trade secrets and are privileged
in character. A priori, it rationalized:
The Supreme Court held in the case of Chavez vs. Presidential Commission on Good
Government, 299 SCRA 744, p. 764, that "the drafters of the Constitution also
unequivocally affirmed that aside from national security matters and intelligence
information, trade or industrial secrets (pursuant to the Intellectual Property Code and
other related laws) as well as banking transactions (pursuant to the Secrecy of Bank
Deposit Act) are also exempted from compulsory disclosure."
Trade secrets may not be the subject of compulsory disclosure. By reason of [their]
confidential and privileged character, ingredients or chemical components of the
products ordered by this Court to be disclosed constitute trade secrets lest [herein
respondent] would eventually be exposed to unwarranted business competition with
others who may imitate and market the same kinds of products in violation of
[respondent's] proprietary rights. Being privileged, the detailed list of ingredients or
chemical components may not be the subject of mode of discovery under Rule 27,
Section 1 of the Rules of Court, which expressly makes privileged information an
exception from its coverage.
Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition for Certiorari
under Rule 65 of the Rules of Court with the Court of Appeals, which denied the Petition and
affirmed the Order dated 30 June 2004 of the RTC.
The Court of Appeals ruled that to compel respondent to reveal in detail the list of ingredients of its
lubricants is to disregard respondent's rights over its trade secrets. It was categorical in declaring
that the chemical formulation of respondent's products and their ingredients are embraced within
the meaning of "trade secrets." In disallowing the disclosure, the Court of Appeals expounded, thus:
The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held that
trade secrets and confidential, commercial and financial information are exempt from
public scrutiny. This is reiterated in Chavez v. Presidential Commission on Good
Government (299 SCRA 744 [1998]) where the Supreme Court enumerated the kinds
of information and transactions that are recognized as restrictions on or privileges
against compulsory disclosure. There, the Supreme Court explicitly stated that:
"The drafters of the Constitution also unequivocally affirmed that, aside from national
"The drafters of the Constitution also unequivocally affirmed that, aside from national
security matters and intelligence information, trade or industrial secrets (pursuant to the
Intellectual Property Code and other related laws) as well as banking transactions
(pursuant to the Secrecy of Bank Deposits Act) re also exempt from compulsory
disclosure."
It is thus clear from the foregoing that a party cannot be compelled to produce, release
or disclose documents, papers, or any object which are considered trade secrets.
In the instant case, petitioner [Air Philippines Corporation] would have [respondent]
Pennswell produce a detailed list of ingredients or composition of the latter's lubricant
products so that a chemical comparison and analysis thereof can be obtained. On this
note, We believe and so hold that the ingredients or composition of [respondent]
Pennswell's lubricants are trade secrets which it cannot be compelled to disclose.
[Respondent] Pennswell has a proprietary or economic right over the ingredients or
components of its lubricant products. The formulation thereof is not known to the
general public and is peculiar only to [respondent] Pennswell. The legitimate and
economic interests of business enterprises in protecting their manufacturing and
business secrets are well-recognized in our system.
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information against the
public. Otherwise, such information can be illegally and unfairly utilized by business
competitors who, through their access to [respondent] Pennswell's business secrets,
may use the same for their own private gain and to the irreparable prejudice of the
latter.
xxx xxx xxx
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises
of the ingredients and formulation of [respondent] Pennswell's lubricant products which
are unknown to the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of public respondent Judge in finding that the detailed list of ingredients or
composition of the subject lubricant products which petitioner [Air Philippines
Corporation] seeks to be disclosed are trade secrets of [respondent] Pennswell; hence,
privileged against compulsory disclosure.

Petitioner's Motion for Reconsideration was denied.


Unyielding, petitioner brought the instant Petition before us, on the sole issue of:
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH
PREVAILING LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF
THE TRIAL COURT THAT THE CHEMICAL COMPONENTS OR INGREDIENTS OF
RESPONDENT'S PRODUCTS ARE TRADE SECRETS OR INDUSTRIAL SECRETS
THAT ARE NOT SUBJECT TO COMPULSORY DISCLOSURE.
Petitioner seeks to convince this Court that it has a right to obtain the chemical composition and
ingredients of respondent's products to conduct a comparative analysis of its products. Petitioner
ingredients of respondent's products to conduct a comparative analysis of its products. Petitioner
assails the conclusion reached by the Court of Appeals that the matters are trade secrets which are
protected by law and beyond public scrutiny. Relying on Section 1, Rule 27 of the Rules of Court,
petitioner argues that the use of modes of discovery operates with desirable flexibility under the
discretionary control of the trial court. Furthermore, petitioner posits that its request is not done in
bad faith or in any manner as to annoy, embarrass, or oppress respondent.
A trade secret is defined as a plan or process, tool, mechanism or compound known only to its
owner and those of his employees to whom it is necessary to confide it. The definition also extends
to a secret formula or process not patented, but known only to certain individuals using it in
compounding some article of trade having a commercial value. A trade secret may consist of any
formula, pattern, device, or compilation of information that: (1) is used in one's business; and (2)
gives the employer an opportunity to obtain an advantage over competitors who do not possess the
information. Generally, a trade secret is a process or device intended for continuous use in the
operation of the business, for example, a machine or formula, but can be a price list or catalogue or
specialized customer list. It is indubitable that trade secrets constitute proprietary rights. The
inventor, discoverer, or possessor of a trade secret or similar innovation has rights therein which
may be treated as property, and ordinarily an injunction will be granted to prevent the disclosure of
the trade secret by one who obtained the information "in confidence" or through a "confidential
relationship." American jurisprudence has utilized the following factors to determine if an
information is a trade secret, to wit:
(1)the extent to which the information is known outside of the employer's business;
(2)the extent to which the information is known by employees and others involved in the
business;
(3)the extent of measures taken by the employer to guard the secrecy of the
information;
(4)the value of the information to the employer and to competitors;
(5)the amount of effort or money expended by the company in developing the
information; and
(6)the extent to which the information could be easily or readily obtained through an
independent source.
In Cocoland Development Corporation v. National Labor Relations Commission, the issue was the
legality of an employee's termination on the ground of unauthorized disclosure of trade secrets. The
Court laid down the rule that any determination by management as to the confidential nature of
technologies, processes, formulae or other so-called trade secrets must have a substantial factual
basis which can pass judicial scrutiny. The Court rejected the employer's naked contention that its
own determination as to what constitutes a trade secret should be binding and conclusive upon the
NLRC. As a caveat, the Court said that to rule otherwise would be to permit an employer to label
almost anything a trade secret, and thereby create a weapon with which he/it may arbitrarily dismiss
an employee on the pretext that the latter somehow disclosed a trade secret, even if in fact there be
none at all to speak of. Hence, in Cocoland, the parameters in the determination of trade secrets
none at all to speak of. Hence, in Cocoland, the parameters in the determination of trade secrets
were set to be such substantial factual basis that can withstand judicial scrutiny.
The chemical composition, formulation, and ingredients of respondent's special lubricants are trade
secrets within the contemplation of the law. Respondent was established to engage in the business
of general manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of
goods, wares, merchandise, products, including but not limited to industrial chemicals, solvents,
lubricants, acids, alkalies, salts, paints, oils, varnishes, colors, pigments and similar preparations,
among others. It is unmistakable to our minds that the manufacture and production of respondent's
products proceed from a formulation of a secret list of ingredients. In the creation of its lubricants,
respondent expended efforts, skills, research, and resources. What it had achieved by virtue of its
investments may not be wrested from respondent on the mere pretext that it is necessary for
petitioner's defense against a collection for a sum of money. By and large, the value of the
information to respondent is crystal clear. The ingredients constitute the very fabric of respondent's
production and business. No doubt, the information is also valuable to respondent's competitors. To
compel its disclosure is to cripple respondent's business, and to place it at an undue disadvantage.
If the chemical composition of respondent's lubricants are opened to public scrutiny, it will stand to
lose the backbone on which its business is founded. This would result in nothing less than the
probable demise of respondent's business. Respondent's proprietary interest over the ingredients
which it had developed and expended money and effort on is incontrovertible. Our conclusion is that
the detailed ingredients sought to be revealed have a commercial value to respondent. Not only do
we acknowledge the fact that the information grants it a competitive advantage; we also find that
there is clearly a glaring intent on the part of respondent to keep the information confidential and not
available to the prying public.
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to inspect
documents or things upon a showing of good cause before the court in which an action is pending.
Its entire provision reads:
SECTION 1. Motion for production or inspection order. Upon motion of any party
showing good cause therefore, the court in which an action is pending may (a) order
any party to produce and permit the inspection and copying or photographing, by or on
behalf of the moving party, of any designated documents, papers, books, accounts,
letters, photographs, objects or tangible things, not privileged, which constitute or
contain evidence material to any matter involved in the action and which are in his
possession, custody or control; or (b) order any party to permit entry upon designated
land or other property in his possession or control for the purpose of inspecting,
measuring, surveying, or photographing the property or any designated relevant object
or operation thereon. The order shall specify the time, place and manner of making the
inspection and taking copies and photographs, and may prescribe such terms and
conditions as are just.
A more than cursory glance at the above text would show that the production or inspection of
documents or things as a mode of discovery sanctioned by the Rules of Court may be availed of by
any party upon a showing of good cause therefor before the court in which an action is pending.

The court may order any party: a) to produce and permit the inspection and copying or
The court may order any party: a) to produce and permit the inspection and copying or
photographing of any designated documents, papers, books, accounts, letters, photographs, objects
or tangible things, which are not privileged; which constitute or contain evidence material to any
matter involved in the action; and which are in his possession, custody or control; or b) to permit
entry upon designated land or other property in his possession or control for the purpose of
inspecting, measuring, surveying, or photographing the property or any designated relevant object
or operation thereon.
Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters,
photographs, objects or tangible things that may be produced and inspected should not be
privileged. The documents must not be privileged against disclosure. On the ground of public policy,
the rules providing for production and inspection of books and papers do not authorize the
production or inspection of privileged matter; that is, books and papers which, because of their
confidential and privileged character, could not be received in evidence. Such a condition is in
addition to the requisite that the items be specifically described, and must constitute or contain
evidence material to any matter involved in the action and which are in the party's possession,
custody or control.
Section 24 of Rule 130 draws the types of disqualification by reason of privileged communication, to
wit: (a) communication between husband and wife; (b) communication between attorney and client;
(c) communication between physician and patient; (d) communication between priest and penitent;
and (e) public officers and public interest. There are, however, other privileged matters that are not
mentioned by Rule 130. Among them are the following: (a) editors may not be compelled to disclose
the source of published news; (b) voters may not be compelled to disclose for whom they voted; (c)
trade secrets; (d) information contained in tax census returns; and (d) bank deposits.
We, thus, rule against the petitioner. We affirm the ruling of the Court of Appeals which upheld the
finding of the RTC that there is substantial basis for respondent to seek protection of the law for its
proprietary rights over the detailed chemical composition of its products.
That trade secrets are of a privileged nature is beyond quibble. The protection that this jurisdiction
affords to trade secrets is evident in our laws. The Interim Rules of Procedure on Government
Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for rehabilitation filed by
corporations, partnerships, and associations pursuant to Presidential Decree No. 902-A, as
amended; and (2) cases for rehabilitation transferred from the Securities and Exchange
Commission to the RTCs pursuant to Republic Act No. 8799, otherwise known as The Securities
Regulation Code, expressly provides that the court may issue an order to protect trade secrets or
other confidential research, development, or commercial information belonging to the debtor.
Moreover, the Securities Regulation Code is explicit that the Securities and Exchange Commission
is not required or authorized to require the revelation of trade secrets or processes in any
application, report or document filed with the Commission. This confidentiality is made paramount
as a limitation to the right of any member of the general public, upon request, to have access to all
information filed with the Commission.

Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under the
Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under the
following articles:
Art. 291.Revealing secrets with abuse of office. The penalty of arresto mayor and a
fine not exceeding 500 pesos shall be imposed upon any manager, employee or
servant who, in such capacity, shall learn the secrets of his principal or master and shall
reveal such secrets.
Art. 292.Revelation of industrial secrets. The penalty of prision correccional in its
minimum and medium periods and a fine not exceeding 500 pesos shall be imposed
upon the person in charge, employee or workman of any manufacturing or industrial
establishment who, to the prejudice of the owner thereof, shall reveal the secrets of the
industry of the latter.
Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997,
has a restrictive provision on trade secrets, penalizing the revelation thereof by internal revenue
officers or employees, to wit:
SECTION 278.Procuring Unlawful Divulgence of Trade Secrets. Any person who
causes or procures an officer or employee of the Bureau of Internal Revenue to divulge
any confidential information regarding the business, income or inheritance of any
taxpayer, knowledge of which was acquired by him in the discharge of his official duties,
and which it is unlawful for him to reveal, and any person who publishes or prints in any
manner whatever, not provided by law, any income, profit, loss or expenditure
appearing in any income tax return, shall be punished by a fine of not more than two
thousand pesos (P2,000), or suffer imprisonment of not less than six (6) months nor
more than five (5) years, or both.
Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control Act of
1990, enacted to implement the policy of the state to regulate, restrict or prohibit the importation,
manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures
that present unreasonable risk and/or injury to health or the environment, also contains a provision
that limits the right of the public to have access to records, reports or information concerning
chemical substances and mixtures including safety data submitted and data on emission or
discharge into the environment, if the matter is confidential such that it would divulge trade secrets,
production or sales figures; or methods, production or processes unique to such manufacturer,
processor or distributor; or would otherwise tend to affect adversely the competitive position of such
manufacturer, processor or distributor.
Clearly, in accordance with our statutory laws, this Court has declared that intellectual and industrial
property rights cases are not simple property cases. Without limiting such industrial property rights
to trademarks and trade names, this Court has ruled that all agreements concerning intellectual
property are intimately connected with economic development. The protection of industrial property
encourages investments in new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. It speeds up transfer of technology and industrialization, and thereby
bring about social and economic progress. Verily, the protection of industrial secrets is inextricably
linked to the advancement of our economy and fosters healthy competition in trade.
Jurisprudence has consistently acknowledged the private character of trade secrets. There is a
Jurisprudence has consistently acknowledged the private character of trade secrets. There is a
privilege not to disclose one's trade secrets. Foremost, this Court has declared that trade secrets
and banking transactions are among the recognized restrictions to the right of the people to
information as embodied in the Constitution. We said that the drafters of the Constitution also
unequivocally affirmed that, aside from national security matters and intelligence information, trade
or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as
banking transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from
compulsory disclosure.
Significantly, our cases on labor are replete with examples of a protectionist stance towards the
trade secrets of employers. For instance, this Court upheld the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor
company, on the rationalization that the company has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information from
competitors. Notably, it was in a labor-related case that this Court made a stark ruling on the proper
determination of trade secrets.
In the case at bar, petitioner cannot rely on Section 77 of Republic Act 7394, or the Consumer Act of
the Philippines, in order to compel respondent to reveal the chemical components of its products.
While it is true that all consumer products domestically sold, whether manufactured locally or
imported, shall indicate their general make or active ingredients in their respective labels of
packaging, the law does not apply to respondent. Respondent's specialized lubricants namely,
Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating,
Dry Lubricant and Anti-Seize Compound are not consumer products. "Consumer products," as it
is defined in Article 4 (q), refers to goods, services and credits, debts or obligations which are
primarily for personal, family, household or agricultural purposes, which shall include, but not be
limited to, food, drugs, cosmetics, and devices. This is not the nature of respondent's products. Its
products are not intended for personal, family, household or agricultural purposes. Rather, they are
for industrial use, specifically for the use of aircraft propellers and engines.
Petitioner's argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs, requires
the disclosure of the active ingredients of a drug is also on faulty ground. Respondent's products
are outside the scope of the cited law. They do not come within the purview of a drug which, as
defined therein, refers to any chemical compound or biological substance, other than food, that is
intended for use in the treatment, prevention or diagnosis of disease in man or animals. Again, such
are not the characteristics of respondent's products.
What is clear from the factual findings of the RTC and the Court of Appeals is that the chemical
formulation of respondent's products is not known to the general public and is unique only to it. Both
courts uniformly ruled that these ingredients are not within the knowledge of the public. Since such
factual findings are generally not reviewable by this Court, it is not duty-bound to analyze and weigh
all over again the evidence already considered in the proceedings below. We need not delve into
the factual bases of such findings as questions of fact are beyond the pale of Rule 45 of the Rules
of Court. Factual findings of the trial court when affirmed by the Court of Appeals, are binding and
conclusive on the Supreme Court.
conclusive on the Supreme Court.
We do not find merit or applicability in petitioner's invocation of Section 12 of the Toxic Substances
and Hazardous and Nuclear Wastes Control Act of 1990, which grants the public access to records,
reports or information concerning chemical substances and mixtures, including safety data
submitted, and data on emission or discharge into the environment. To reiterate, Section 12 of said
Act deems as confidential matters, which may not be made public, those that would divulge trade
secrets, including production or sales figures or methods; production or processes unique to such
manufacturer, processor or distributor, or would otherwise tend to affect adversely the competitive
position of such manufacturer, processor or distributor. It is true that under the same Act, the
Department of Environment and Natural Resources may release information; however, the clear
import of the law is that said authority is limited by the right to confidentiality of the manufacturer,
processor or distributor, which information may be released only to a medical research or scientific
institution where the information is needed for the purpose of medical diagnosis or treatment of a
person exposed to the chemical substance or mixture. The right to confidentiality is recognized by
said Act as primordial. Petitioner has not made the slightest attempt to show that these
circumstances are availing in the case at bar.
Indeed, the privilege is not absolute; the trial court may compel disclosure where it is indispensable
for doing justice. We do not, however, find reason to except respondent's trade secrets from the
application of the rule on privilege. The revelation of respondent's trade secrets serves no better
purpose to the disposition of the main case pending with the RTC, which is on the collection of a
sum of money. As can be gleaned from the facts, petitioner received respondent's goods in trade in
the normal course of business. To be sure, there are defenses under the laws of contracts and sales
available to petitioner. On the other hand, the greater interest of justice ought to favor respondent as
the holder of trade secrets. If we were to weigh the conflicting interests between the parties, we rule
in favor of the greater interest of respondent. Trade secrets should receive greater protection from
discovery, because they derive economic value from being generally unknown and not readily
ascertainable by the public. To the mind of this Court, petitioner was not able to show a compelling
reason for us to lift the veil of confidentiality which shields respondent's trade secrets.
WHEREFORE, the Petition is DENIED. The Decision dated 16 February 2006, and the Resolution
dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329 are AFFIRMED. No costs.
SO ORDERED.

Sec. 2. Declaration of State Policy.

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

SECTION 73. Prior User. 73.1. Notwithstanding Section 72 hereof, any prior

user, who, in good faith was using the invention or has undertaken serious preparations to use
user, who, in good faith was using the invention or has undertaken serious preparations to use
the invention in his enterprise or business, before the filing date or priority date of the application
on which a patent is granted, shall have the right to continue the use thereof as envisaged in
such preparations within the territory where the patent produces its effect.

[G.R. No. 114508. November 19, 1999.]

PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR OF


PATENTS and the BARBIZON CORPORATION, respondents.

SYNOPSIS

On June 15, 1970, Lolita Escobar filed an application with the Bureau of Patents for the registration
of the trademark "Barbizon" docketed as Inter Partes No. 686. Private respondent Barbizon
Corporation, a corporation organized and doing business under the laws of New York, U.S.A. filed
an opposition thereto based on Sections 4 (d) and 8 of the Trademark law by claiming that the mark
BARBIZON of the applicant is confusingly similar to the trademark BARBIZON which opposer owns
and has not abandoned. On June 18, 1978, the Director of Patents rendered judgment dismissing
the opposition and giving due course to Escobar's application. The decision became final, and
Escobar was issued a certificate of registration. Later, Escobar assigned all her rights and interests
over the trademark to petitioner Pribhdas J. Mirpuri. In 1979, the Bureau of Patents cancelled
Escobar's certificate of registration for failure to file with the Bureau of Patents the Affidavit of Use of
the Trademark as required under Section 12 of the Philippine Trademark Law. Mirpuri reapplied for
the registration of the cancelled trademark of Barbizon docketed as Inter Partes No. 2049. Again,
private respondent filed an opposition by citing mainly the protection of trademark under Article
6BIS is of the Convention of Paris and stating that opposer's goods bearing the trademark
BARBIZON have been used in many countries including the Philippines for at least 40 years and
has enjoyed international reputation and good will for their quality and to allow such registration will
also violate Article 189 of the Revised Penal Code. Subsequently, the Director of Patents rendered
a decision declaring private respondent's opposition barred by res judicata and giving due course to
petitioner's reapplication for registration. On appeal, the Court of Appeals reversed the decision of
the Director of Patents.
In this petition, it is noted that the oppositions in the first and second cases are based on different
laws. The opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e.,
Section 4 (d) on confusing similarity of trademarks and Section 8 on the requisite damage to file an
opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris
Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister of
Trade and Industry. This opposition also invoked Article 189 of the Revised Penal Code which is a
statute totally different from the Trademark Law. Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of
facts, may be sued on separately, recovery on one being no bar to subsequent actions on others.
facts, may be sued on separately, recovery on one being no bar to subsequent actions on others.
The mere fact that the same relief is sought in the subsequent action will not render the judgment in
the prior action operative as res judicata, such as where the two actions are based on different
statutes. Res judicata, therefore, does not apply to the instant case and respondent Court of
Appeals did not err in so ruling.
Petition was DENIED.

DECISION

PUNO, J :p

The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which the
Philippines bound itself to honor and enforce in this country. As to whether or not the treaty affords
protection to a foreign corporation against a Philippine applicant for the registration of a similar
trademark is the principal issue in this case.cdphil

On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J. Mirpuri,
filed an application with the Bureau of Patents for the registration of the trademark "Barbizon" for
use in brassieres and ladies undergarments. Escobar alleged that she had been manufacturing and
selling these products under the firm name "L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business under the
laws of New York, U.S.A., opposed the application. It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly similar to the trademark
BARBIZON which opposer owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON which resembles the
trademark used and owned by opposer, constitutes an unlawful appropriation of a mark
previously used in the Philippines and not abandoned and therefore a statutory
violation of Section 4 (d) of Republic Act No. 166, as amended."
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the pleadings, the
parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and giving
due course to Escobar's application, thus:
"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due course.
IT IS SO ORDERED."
This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate
of registration for the trademark "Barbizon." The trademark was "for use in "brassieres and
of registration for the trademark "Barbizon." The trademark was "for use in "brassieres and
lady's underwear garments like panties.
Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J. Mirpuri
who, under his firm name then, the "Bonito Enterprises," was the sole and exclusive distributor of
Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the
trademark required under Section 12 of Republic Act (R.A.) No. 166, the Philippine Trademark Law.
Due to this failure, the Bureau of Patents cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed his
own application for registration of Escobar's trademark. Escobar later assigned her application to
herein petitioner and this application was opposed by private respondent. The case was docketed
as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word), sometime in
June 1933 and has then used it on various kinds of wearing apparel. On August 14,
1934, Opposer obtained from the United States Patent Office a more recent registration
of the said mark under Certificate of Registration No. 316, 161. On March 1, 1949,
Opposer obtained from the United States Patent Office a more recent registration for
the said trademark under Certificate of Registration No. 507, 214, a copy of which is
herewith attached as Annex 'A.' Said Certificate of Registration covers the following
goods wearing apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON
and Bee design and used the said mark in various kinds of wearing apparel. On March
15, 1977, Opposer secured from the United States Patent Office a registration of the
said mark under Certificate of Registration No. 1,061,277, a copy of which is herein
enclosed as Annex 'B.' The said Certificate of Registration covers the following goods:
robes, pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON
and a Representation of a Woman and thereafter used the said trademark on various
kinds of wearing apparel. Opposer obtained from the United States Patent Office
registration of the said mark on April 5, 1983 under Certificate of Registration No.
1,233,666 for the following goods: wearing apparel: robes, pajamas, nightgowns and
lingerie. A copy of the said certificate of registration is herewith enclosed as Annex 'C.'
(d) All the above registrations are subsisting and in force and Opposer has not
abandoned the use of the said trademarks. In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing the
goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-applicant's
misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie Corporation is
prevented from selling its goods in the local market, to the damage and prejudice of
Opposer and its wholly-owned subsidiary. LLpr

(e) The Opposer's goods bearing the trademark BARBIZON have been used in
(e) The Opposer's goods bearing the trademark BARBIZON have been used in
many countries, including the Philippines, for at least 40 years and has enjoyed
international reputation and good will for their quality. To protect its registrations in
countries where the goods covered by the registrations are being sold, Opposer has
procured the registration of the trademark BARBIZON in the following countries:
Australia, Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada, Chile,
Colombia, Denmark, Ecuador, France, West Germany, Greece, Guatemala, Hongkong,
Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New Zealand,
Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and
Iran, among others;
(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its
products, trademarks and name in various publications which are circulated in the
United States and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by
one Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by assignment the 'rights' to the
said mark previously registered by Lolita Escobar, hence respondent-applicant's title is
vitiated by the same fraud and criminal act. Besides, Certificate of Registration No.
21920 has been cancelled for failure of either Lolita Escobar or herein respondent-
applicant, to seasonably file the statutory affidavit of use. By applying for a re-
registration of the mark BARBIZON subject of this opposition, respondent-applicant
seeks to perpetuate the fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and
BARBIZON and Representation of a Woman trademarks qualify as well-known
trademarks entitled to protection under Article 6bis of the Convention of Paris for the
Protection of Industrial Property and further amplified by the Memorandum of the
Minister of Trade to the Honorable Director of Patents dated October 25, 1983 [sic], 4
Executive Order No. 913 dated October 7, 1963 and the Memorandum of the Minister
of Trade and Industry to the Honorable Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's
BARBIZON trademark and constitutes the dominant part of Opposer's two other marks
namely, BARBIZON and Bee design and BARBIZON and a Representation of a
Woman. The continued use by respondent-applicant of Opposer's trademark
BARBIZON on goods belonging to Class 25 constitutes a clear case of commercial and
criminal piracy and if allowed registration will violate not only the Trademark Law but
also Article 189 of the Revised Penal Code and the commitment of the Philippines to an
international treaty."
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon
International." Petitioner registered the name with the Department of Trade and Industry (DTI) for
which a certificate of registration was issued in 1987.

Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for
cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of
registration, and declared private respondent the owner and prior user of the business name
"Barbizon International." Thus:
"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner
and prior user of the business name "BARBIZON INTERNATIONAL" under Certificate
of Registration No. 87-09000 dated March 10, 1987 and issued in the name of
respondent, is [sic] hereby ordered revoked and cancelled. . . . .
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of Patents.
On June 18, 1992, the Director rendered a decision declaring private respondent's opposition
barred by res judicata and giving due course to petitioner's application for registration, to wit:
"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED. Accordingly,
Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is
GIVEN DUE COURSE.
SO ORDERED."
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No. 28415.
On April 30, 1993, the Court of Appeals reversed the Director of Patents finding that IPC No. 686
was not barred by judgment in IPC No. 2049 and ordered that the case be remanded to the Bureau
of Patents for further proceedings, viz: cdrep

"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director
of Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby
remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs." 8
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its decision. 9
Hence, this recourse.
Before us, petitioner raises the following issues:
"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN
INTER PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C
HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE
BEFORE THE DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED
THE PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE
RESPONDENT BARBIZON'S OPPOSITION TO PETITIONER'S
APPLICATION FOR REGISTRATION FOR THE TRADEMARK BARBIZON,
WHICH HAS SINCE RIPENED TO CERTIFICATE OF REGISTRATION NO.
53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE MERITS'
REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO
REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO
ADDUCE EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE
PARTIES TO A CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS
WITHOUT PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE
FALLS WITHIN THE MEANING OF 'JUDGMENT ON THE MERITS' AS ONE
OF THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME 'BARBIZON INTERNATIONAL'
AND WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER
OFFERED IN EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 2049 HAS THE RIGHT TO DECIDE SUCH
CANCELLATION NOT ON THE BASIS OF THE BUSINESS NAME LAW (AS
IMPLEMENTED BY THE BUREAU OF DOMESTIC TRADE) BUT ON THE
BASIS OF THE PARIS CONVENTION AND THE TRADEMARK LAW (R.A.
166) WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION
OF THE DIRECTOR OF PATENTS."
Before ruling on the issues of the case, there is need for a brief background on the function and
historical development of trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name,
symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those manufactured, sold or dealt in by
others." This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of the
Philippines, which defines a "trademark" as "any visible sign capable of distinguishing goods." In
Philippine jurisprudence, the function of a trademark is to point out distinctly the origin or ownership
of the goods to which it is affixed; to secure to him, who has been instrumental in bringing into the
market a superior article of merchandise, the fruit of his industry and skill; to assure the public that
they are procuring the genuine article; to prevent fraud and imposition; and to protect the
manufacturer against substitution and sale of an inferior and different article as his product.
Modern authorities on trademark law view trademarks as performing three distinct functions: (1)
they indicate origin or ownership of the articles to which they are attached; (2) they guarantee that
those articles come up to a certain standard of quality; and (3) they advertise the articles they
symbolize.
Symbols have been used to identify the ownership or origin of articles for several centuries. As early
as 5,000 B.C., markings on pottery have been found by archaeologists. Cave drawings in
southwestern Europe show bison with symbols on their flanks. Archaeological discoveries of
ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious stones,
glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These
marks were affixed by the creator or maker of the article, or by public authorities as indicators for
the payment of tax, for disclosing state monopoly, or devices for the settlement of accounts between
an entrepreneur and his workmen.
In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace.
Fifteenth century England saw the compulsory use of identifying marks in certain trades. There
Fifteenth century England saw the compulsory use of identifying marks in certain trades. There
were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks
on paper, etc. Every guild had its own mark and every master belonging to it had a special mark of
his own. The marks were not trademarks but police marks compulsorily imposed by the sovereign to
let the public know that the goods were not "foreign" goods smuggled into an area where the guild
had a monopoly, as well as to aid in tracing defective work or poor craftsmanship to the artisan. For
a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired from
many sources and the marks enabled them to identify and reclaim their goods upon recovery after
shipwreck or piracy.
With constant use, the mark acquired popularity and became voluntarily adopted. It was not
intended to create or continue monopoly but to give the customer an index or guarantee of quality.
It was in the late 18th century when the industrial revolution gave rise to mass production and
distribution of consumer goods that the mark became an important instrumentality of trade and
commerce. By this time, trademarks did not merely identify the goods; they also indicated the
goods to be of satisfactory quality, and thereby stimulated further purchases by the consuming
public. Eventually, they came to symbolize the goodwill and business reputation of the owner of the
product and became a property right protected by law. The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his goods as another's, from
getting another's business or injuring his reputation by unfair means, and, from defrauding the
public." Subsequently, England and the United States enacted national legislation on trademarks as
part of the law regulating unfair trade. It became the right of the trademark owner to exclude others
from the use of his mark, or of a confusingly similar mark where confusion resulted in diversion of
trade or financial injury. At the same time, the trademark served as a warning against the imitation
or faking of products to prevent the imposition of fraud upon the public.
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective
agent for the actual creation and protection of goodwill. It imprints upon the public mind an
anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In
other words, the mark actually sells the goods. The mark has become the "silent salesman," the
conduit through which direct contact between the trademark owner and the consumer is assured. It
has invaded popular culture in ways never anticipated that it has become a more convincing selling
point than even the quality of the article to which it refers. In the last half century, the unparalleled
growth of industry and the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to penetrate regions where the
owner does not actually manufacture or sell the product itself. Goodwill is no longer confined to the
territory of actual market penetration; it extends to zones where the marked article has been fixed in
the public mind through advertising. Whether in the print, broadcast or electronic communications
medium, particularly on the Internet, advertising has paved the way for growth and expansion of the
product by creating and earning a reputation that crosses over borders, virtually turning the whole
world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming that
"Barbizon" products have been sold in the Philippines since 1970. Petitioner developed this market
by working long hours and spending considerable sums of money on advertisements and promotion
by working long hours and spending considerable sums of money on advertisements and promotion
of the trademark and its products. Now, almost thirty years later, private respondent, a foreign
corporation, "swaggers into the country like a conquering hero," usurps the trademark and invades
petitioner's market. Justice and fairness dictate that private respondent be prevented from
appropriating what is not its own. Legally, at the same time, private respondent is barred from
questioning petitioner's ownership of the trademark because of res judicata.
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or
matter settled by judgment. In res judicata, the judgment in the first action is considered conclusive
as to every matter offered and received therein, as to any other admissible matter which might have
been offered for that purpose, and all other matters that could have been adjudged therein. Res
judicata is an absolute bar to a subsequent action for the same cause; and its requisites are: (a) the
former judgment or order must be final; (b) the judgment or order must be one on the merits; (c) it
must have been rendered by a court having jurisdiction over the subject matter and parties; (d)
there must be between the first and second actions, identity of parties, of subject matter and of
causes of action.
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with petitioner.
Both claim that all the four elements of res judicatahave been complied with: that the judgment in
IPC No. 686 was final and was rendered by the Director of Patents who had jurisdiction over the
subject matter and parties; that the judgment in IPC No. 686 was on the merits; and that the lack of
a hearing was immaterial because substantial issues were raised by the parties and passed upon
by the Director of Patents.
The decision in IPC No. 686 reads as follows:
"xxx xxx xxx.
Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records,
have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer
would probably be damaged by the registration of the trademark BARBIZON sought by
the respondent-applicant on the ground that it so resembles the trademark BARBIZON
allegedly used and owned by the former to be 'likely to cause confusion, mistake or to
deceive purchasers.'
On record, there can be no doubt that respondent-applicant's sought-to-be-registered
trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged
trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of presentation.
Respondent-applicant's trademark is in bold letters (set against a black background),
while that of the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the
identical mark BARBIZON by the respondent-applicant. However, the allegation of facts
in opposer's verified notice of opposition is devoid of such material information. In fact,
a reading of the text of said verified opposition reveals an apparent, if not deliberate,
omission of the date (or year) when opposer's alleged trademark BARBIZON was first
used in trade in the Philippines (see par. No. 1, p. 2, Verified Notice of Opposition,
Rec.). Thus, it cannot here and now be ascertained whether opposer's alleged use of
the trademark BARBIZON could be prior to the use of the identical mark by the herein
respondent-applicant, since the opposer attempted neither to substantiate its claim of
use in local commerce with any proof or evidence. Instead, the opposer submitted the
case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended application for
registration that she first used the trademark BARBIZON for brassiere (or 'brasseire')
and ladies underwear garments and panties as early as March 3, 1970. Be that as it
may, there being no testimony taken as to said date of first use, respondent-applicant
will be limited to the filing date, June 15, 1970, of her application as the date of first use
(Rule 173, Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010, for the registration of the trademark BARBIZON of
respondent Lolita R. Escobar, is given due course."
The decision in IPC No. 686 was a judgment on the merits and it was error for the Court of Appeals
to rule that it was not. A judgment is on the merits when it determines the rights and liabilities of the
parties based on the disclosed facts, irrespective of formal, technical or dilatory objections. 39 It is
not necessary that a trial should have been conducted. If the court's judgment is general, and not
based on any technical defect or objection, and the parties had a full legal opportunity to be heard
on their respective claims and contentions, it is on the merits although there was no actual hearing
or arguments on the facts of the case. 40 In the case at bar, the Director of Patents did not dismiss
private respondent's opposition on a sheer technicality. Although no hearing was conducted, both
parties filed their respective pleadings and were given opportunity to present evidence. They,
however, waived their right to do so and submitted the case for decision based on their pleadings.
The lack of evidence did not deter the Director of Patents from ruling on the case, particularly on the
issue of prior use, which goes into the very substance of the relief sought by the parties. Since
private respondent failed to prove prior use of its trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General allege that
IPC No. 686 and IPC No. 2049 also comply with the fourth requisite of res judicata, i.e., they involve
the same parties and the same subject matter, and have identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same subject matter.
Petitioner herein is the assignee of Escobar while private respondent is the same American
corporation in the first case. The subject matter of both cases is the trademark "Barbizon." Private
respondent counter-argues, however, that the two cases do not have identical causes of action.
New causes of action were allegedly introduced in IPC No. 2049, such as the prior use and
registration of the trademark in the United States and other countries worldwide, prior use in the
registration of the trademark in the United States and other countries worldwide, prior use in the
Philippines, and the fraudulent registration of the mark in violation of Article 189 of the Revised
Penal Code. Private respondent also cited protection of the trademark under the Convention of
Paris for the Protection of Industrial Property, specifically Article 6bis thereof, and the
implementation of Article 6bis by two Memoranda dated November 20, 1980 and October 25, 1983
of the Minister of Trade and Industry to the Director of Patents, as well as Executive Order (E.O.)
No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris
Convention, is a multilateral treaty that seeks to protect industrial property consisting of patents,
utility models, industrial designs, trademarks, service marks, trade names and indications of source
or appellations of origin, and at the same time aims to repress unfair competition. 41 The Convention
is essentially a compact among various countries which, as members of the Union, have pledged to
accord to citizens of the other member countries trademark and other rights comparable to those
accorded their own citizens by their domestic laws for an effective protection against unfair
competition. 42 In short, foreign nationals are to be given the same treatment in each of the member
countries as that country makes available to its own citizens. 43 Nationals of the various member
nations are thus assured of a certain minimum of international protection of their industrial property.
44

The Convention was first signed by eleven countries in Paris on March 20, 1883. 45 It underwent
several revisions at Brussels in 1900, at Washington in 1911, at The Hague in 1925, at London in
1934, at Lisbon in 1958, 46 and at Stockholm in 1967. Both the Philippines and the United States of
America, herein private respondent's country, are signatories to the Convention. The United States
acceded on May 30, 1887 while the Philippines, through its Senate, concurred on May 10, 1965. 47
The Philippines' adhesion became effective on September 27, 1965, 48 and from this date, the
country obligated itself to honor and enforce the provisions of the Convention. 49 Cdpr

In the case at bar, private respondent anchors its cause of action on the first paragraph of Article
6bis of the Paris Convention which reads as follows:
"Article 6bis
(1) The countries of the Union undertake, either administratively if their legislation
so permits, or at the request of an interested party, to refuse or to cancel the
registration and to prohibit the use, of a trademark which constitutes a reproduction, an
imitation, or a translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-known in that
country as being already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a

period within which the prohibition of use must be sought.


(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the
use of marks registered or used in bad faith." 50
This Article governs protection of well-known trademarks. Under the first paragraph, each
country of the Union bound itself to undertake to refuse or cancel the registration, and prohibit
the use of a trademark which is a reproduction, imitation or translation, or any essential part of
which trademark constitutes a reproduction, liable to create confusion, of a mark considered by
the competent authority of the country where protection is sought, to be well-known in the
country as being already the mark of a person entitled to the benefits of the Convention, and
used for identical or similar goods.
Article 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952. 51 It is a self-
executing provision and does not require legislative enactment to give it effect in the member
country. 52 It may be applied directly by the tribunals and officials of each member country by the
mere publication or proclamation of the Convention, after its ratification according to the public law
of each state and the order for its execution. 53
The essential requirement under Article 6bis is that the trademark to be protected must be "well-
known" in the country where protection is sought. The power to determine whether a trademark is
well-known lies in the "competent authority of the country of registration or use." This competent
authority would be either the registering authority if it has the power to decide this, or the courts of
the country in question if the issue comes before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the Ministry of
Trade issued a Memorandum to the Director of Patents. The Minister ordered the Director that:
"Pursuant to the Paris Convention for the Protection of Industrial Property to which the
Philippines is a signatory, you are hereby directed to reject all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants
other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name brands
as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and
Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certificates of registration, if any, to avoid
suits for damages and other legal action by the trademarks' foreign or local owners or
original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance." 55
Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another Memorandum
to the Director of Patents, viz:LLjur

"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the
rule-making and adjudicatory powers of the Minister of Trade and Industry and provides
rule-making and adjudicatory powers of the Minister of Trade and Industry and provides
inter alia, that 'such rule-making and adjudicatory powers should be revitalized in order
that the Minister of Trade and Industry can . . . apply more swift and effective solutions
and remedies to old and new problems . . . such as infringement of internationally-
known tradenames and trademarks . . .' and in view of the decision of the Intermediate
Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI
[AC-G.R. SP NO. 13359 (17) June 1983] 56 which affirms the validity of the
MEMORANDUM of then Minister Luis R. Villafuerte dated 20 November 1980
confirming our obligations under the PARIS CONVENTION FOR THE PROTECTION
OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a signatory,
you are hereby directed to implement measures necessary to effect compliance with
our obligations under said Convention in general, and, more specifically, to honor our
commitment under Section 6bis 57 thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or
is a mark already belonging to a person entitled to the benefits of the
CONVENTION, this should be established, pursuant to Philippine Patent Office
procedures in inter partes and ex parte cases, according to any of the following
criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark
being considered is already well-known in the Philippines such that
permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by
proof that goods bearing the trademark are sold on an international
scale, advertisements, the establishment of factories, sales offices,
distributorships, and the like, in different countries, including volume or
other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s)
of another country or countries, taking into consideration the date of
such registration;
(d) that the trademark has long been established and obtained goodwill
and international consumer recognition as belonging to one owner or
source;
(e) that the trademark actually belongs to a party claiming ownership and
has the right to registration under the provisions of the aforestated
PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include
tradenames, service marks, logos, signs, emblems, insignia or other similar
devices used for identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or

imitation of a trademark owned by a person, natural or corporate, who is a


citizen of a country signatory to the PARIS CONVENTION FOR THE
citizen of a country signatory to the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases
already or hereafter filed against the registration of trademarks entitled to
protection of Section 6bis of said PARIS CONVENTION as outlined above, by
remanding applications filed by one not entitled to such protection for final
disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other world-
famous trademarks filed by applicants other than their original owners or users
shall be rejected forthwith. Where such applicants have already obtained
registration contrary to the abovementioned PARIS CONVENTION and/or
Philippine Law, they shall be directed to surrender their Certificates of
Registration to the Philippine Patent Office for immediate cancellation
proceedings.
xxx xxx xxx." 58
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to reject all
pending applications for Philippine registration of signature and other world-famous trademarks by
applicants other than their original owners or users. The Minister enumerated several
internationally-known trademarks and ordered the Director of Patents to require Philippine
registrants of such marks to surrender their certificates of registration. cdrep

In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known
trademarks but laid down guidelines for the Director of Patents to observe in determining whether a
trademark is entitled to protection as a well-known mark in the Philippines under Article 6bis of the
Paris Convention. This was to be established through Philippine Patent Office procedures in inter
partes and ex parte cases pursuant to the criteria enumerated therein. The Philippine Patent Office
was ordered to refuse applications for, or cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a person who is a citizen of a
member of the Union. All pending applications for registration of world-famous trademarks by
persons other than their original owners were to be rejected forthwith. The Ongpin Memorandum
was issued pursuant to Executive Order No. 913 dated October 7, 1983 of then President Marcos
which strengthened the rule-making and adjudicatory powers of the Minister of Trade and Industry
for the effective protection of consumers and the application of swift solutions to problems in trade
and industry. 59

Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in the 1984
landmark case of La Chemise Lacoste, S.A. v. Fernandez. 60This court ruled therein that under the
provisions of Article 6bis of the Paris Convention, the Minister of Trade and Industry was the
"competent authority" to determine whether a trademark is well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of the
Paris Convention in 1965. In the case at bar, the first inter partes case, IPC No. 686, was filed in
1970, before the Villafuerte Memorandum but five (5) years after the effectivity of the Paris
1970, before the Villafuerte Memorandum but five (5) years after the effectivity of the Paris
Convention. Article 6bis was already in effect five years before the first case was instituted. Private
respondent, however, did not cite the protection of Article 6bis, neither did it mention the Paris
Convention at all. It was only in 1981 when IPC No. 2049 was instituted that the Paris Convention
and the Villafuerte Memorandum, and, during the pendency of the case, the 1983 Ongpin
Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the
Convention and the two Memoranda is barred by res judicata has already been answered in
Wolverine Worldwide, Inc. v. Court of Appeals. 62 In this case, petitioner Wolverine, a foreign
corporation, filed with the Philippine Patent Office a petition for cancellation of the registration
certificate of private respondent, a Filipino citizen, for the trademark "Hush Puppies" and "Dog
Device." Petitioner alleged that it was the registrant of the internationally-known trademark in the
United States and other countries, and cited protection under the Paris Convention and the Ongpin
Memorandum. The petition was dismissed by the Patent Office on the ground of res judicata. It was
found that in 1973 petitioner's predecessor-in-interest filed two petitions for cancellation of the same
trademark against respondent's predecessor-in-interest. The Patent Office dismissed the petitions,
ordered the cancellation of registration of petitioner's trademark, and gave due course to
respondent's application for registration. This decision was sustained by the Court of Appeals,
which decision was not elevated to us and became final and executory. 63
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the Trademark
Law, its subsequent petition was based on a new cause of action, i.e., the Ongpin Memorandum
and E.O. No. 913 issued in 1983, after finality of the previous decision. We held that the said
Memorandum and E.O. did not grant a new cause of action because it did "not amend the
Trademark Law," . . . "nor did it indicate a new policy with respect to the registration in the
Philippines of world-famous trademarks." 64 This conclusion was based on the finding that
Wolverine's two previous petitions and subsequent petition dealt with the same issue of ownership
of the trademark. 65 In other words, since the first and second cases involved the same issue of
ownership, then the first case was a bar to the second case. cdrep

In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC No.
686. Private respondent's opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to
private respondent's business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a
mark previously used in the Philippines which act is penalized under Section 4
(d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its
products such as robes, pajamas, lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent
Office in 1934 and 1949; and that variations of the same trademark, i.e.,
"BARBIZON" with Bee design and "BARBIZON" with the representation of a
woman were also registered with the U.S. Patent Office in 1961 and 1976; cdll

(c) that these marks have been in use in the Philippines and in many countries all
over the world for over forty years. "Barbizon" products have been advertised in
international publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was
based on fraud; and this fraudulent registration was cancelled in 1979,
stripping Escobar of whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark
under Article 6bis of the Paris Convention, Executive Order No. 913, and the
two Memoranda dated November 20, 1980 and October 25, 1983 of the
Minister of Trade and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the
same class of goods as the latter's amounts to a violation of the Trademark
Law and Article 189 of the Revised Penal Code. Cdpr

IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the
trademark in the United States and other countries, and the international recognition and reputation
of the trademark established by extensive use and advertisement of private respondent's products
for over forty years here and abroad. These are different from the issues of confusing similarity and
damage in IPC No. 686. The issue of prior use may have been raised in IPC No. 686 but this claim
was limited to prior use in the Philippines only. Prior use in IPC No. 2049 stems from private
respondent's claim as originator of the word and symbol "Barbizon," 66 as the first and registered
user of the mark attached to its products which have been sold and advertised worldwide for a
considerable number of years prior to petitioner's first application for registration of her trademark in
the Philippines. Indeed, these are substantial allegations that raised new issues and necessarily
gave private respondent a new cause of action. Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute separate or distinct
causes of action and were not put in issue in the former action. 67
Respondent corporation also introduced in the second case a fact that did not exist at the time the
first case was filed and terminated. The cancellation of petitioner's certificate of registration for
failure to file the affidavit of use arose only after IPC No. 686. It did not and could not have occurred
in the first case, and this gave respondent another cause to oppose the second application. Res
judicata extends only to facts and conditions as they existed at the time judgment was rendered and
to the legal rights and relations of the parties fixed by the facts so determined. 68 When new facts or
conditions intervene before the second suit, furnishing a new basis for the claims and defenses of
the parties, the issues are no longer the same, and the former judgment cannot be pleaded as a bar
to the subsequent action. 69

It is also noted that the oppositions in the first and second cases are based on different laws. The
opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4 (d)
opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e., Section 4 (d)
70 on confusing similarity of trademarks and Section 8 71 on the requisite damage to file an
opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris
Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister of
Trade and Industry. This opposition also invoked Article 189 of the Revised Penal Code which is a
statute totally different from the Trademark Law. 72 Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of
facts, may be sued on separately, recovery on one being no bar to subsequent actions on others. 73
The mere fact that the same relief is sought in the subsequent action will not render the judgment in
the prior action operative as res judicata, such as where the two actions are based on different
statutes. 74 Res judicata therefore does not apply to the instant case and respondent Court of
Appeals did not err in so ruling.LLphil

Intellectual and industrial property rights cases are not simple property cases. Trademarks deal with
the psychological function of symbols and the effect of these symbols on the public at large. 75
Trademarks play a significant role in communication, commerce and trade, and serve valuable and
interrelated business functions, both nationally and internationally. For this reason, all agreements
concerning industrial property, like those on trademarks and tradenames, are intimately connected
with economic development. 76 Industrial property encourages investments in new ideas and
inventions and stimulates creative efforts for the satisfaction of human needs. They speed up
transfer of technology and industrialization, and thereby bring about social and economic progress.
77 These advantages have been acknowledged by the Philippine government itself. The Intellectual
Property Code of the Philippinesdeclares that "an effective intellectual and industrial property
system is vital to the development of domestic and creative activity, facilitates transfer of technology,
it attracts foreign investments, and ensures market access for our products." 78 The Intellectual
Property Code took effect on January 1, 1998 and by its express provision, 79 repealed the
Trademark Law, 80 the Patent Law, 81 Articles 188 and 189 of the Revised Penal Code, the Decree
on Intellectual Property, 82 and the Decree on Compulsory Reprinting of Foreign Textbooks. 83 The
Code was enacted to strengthen the intellectual and industrial property system in the Philippines as
mandated by the country's accession to the Agreement Establishing the World Trade Organization
(WTO). 84

The WTO is a common institutional framework for the conduct of trade relations among its members
in matters related to the multilateral and plurilateral trade agreements annexed to the WTO
Agreement. 85 The WTO framework ensures a "single undertaking approach" to the administration
and operation of all agreements and arrangements attached to the WTO Agreement. Among those
annexed is the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPs. 86
Members to this Agreement "desire to reduce distortions and impediments to international trade,
taking into account the need to promote effective and adequate protection of intellectual property
rights, and to ensure that measures and procedures to enforce intellectual property rights do not
themselves become barriers to legitimate trade." To fulfill these objectives, the members have
agreed to adhere to minimum standards of protection set by several Conventions. 87 These
Conventions are: the Berne Convention for the Protection of Literary and Artistic Works (1971), the
Conventions are: the Berne Convention for the Protection of Literary and Artistic Works (1971), the
Rome Convention or the International Convention for the Protection of Performers, Producers of
Phonograms and Broadcasting Organisations, the Treaty on Intellectual Property in Respect of
Integrated Circuits, and the Paris Convention (1967), as revised in Stockholm on July 14, 1967. 88
A major proportion of international trade depends on the protection of intellectual property rights. 89
Since the late 1970's, the unauthorized counterfeiting of industrial property and trademarked
products has had a considerable adverse impact on domestic and international trade revenues. 90
The TRIPs Agreement seeks to grant adequate protection of intellectual property rights by creating
a favorable economic environment to encourage the inflow of foreign investments, and
strengthening the multi-lateral trading system to bring about economic, cultural and technological
independence. 91
The Philippines and the United States of America have acceded to the WTO Agreement. This
Agreement has revolutionized international business and economic relations among states, and has
propelled the world towards trade liberalization and economic globalization. 92 Protectionism and
isolationism belong to the past. Trade is no longer confined to a bilateral system. There is now "a
new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and
more open multilateral trading system." 93 Conformably, the State must reaffirm its commitment to
the global community and take part in evolving a new international economic order at the dawn of
the new millennium. cdrep

IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 28415 are affirmed.
SO ORDERED.

FIRST DIVISION

[G.R. No. 100098. December 29, 1995.]

EMERALD GARMENT MANUFACTURING CORPORATION, petitioner, vs.


HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC., respondents.

DECISION

KAPUNAN, J : p

In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals dated 29
November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar
November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar
to that ofprivate respondent and the resolution dated 17 May 1991 denying petitioner's motion for
reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized
under the laws of Delaware, U.S.A., filed with the Bureau ofPatents, Trademarks & Technology
Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental Register)
for the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets,
jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on 27 October 1980 in the
name of petitioner Emerald Garment Manufacturing Corporation, a domestic corporation organized
and existing under Philippine laws. The petition was docketed as Inter Partes Case No. 1558. 1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the Paris
Convention for the Protection of Industrial Property, averred that petitioner's trademark "so closely
resembled its own trademark, 'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with petitioner's goods, to cause
confusion, mistake and deception on the part of the purchasing public as to the origin of the goods."
2
In its answer dated 23 March 1982, petitioner contended that its trademark was entirely and
unmistakably different from that of private respondent and that its certificate of registration was
legally and validly granted. 3
On 20 February 1984, petitioner caused the publication of its application for registration of the
trademark "STYLISTIC MR. LEE" in the Principal Register." 4
On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for
registration also on grounds that petitioner's trademark was confusingly similar to its "LEE"
trademark. 5 The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May 1985,
issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds that a common
question of law was involved. 6
On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition
for cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of the trademark "LEE" in
the Philippines and that it had been using said mark in the Philippines. 7
Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's trademark
was confusingly similar to private respondent's mark because "it is the word 'Lee' which draws the
attention of the buyer and leads him to conclude that the goods originated from the same
manufacturer. It is undeniably the dominant feature of the mark." 8

On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it filed with
the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director of Patents on
the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director of Patents on
grounds that the same would cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988. 9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to stay
execution subject to the following terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized only to dispose
of its current stock using the mark "STYLISTIC MR. LEE";
2. That Respondent-Registrant is strictly prohibited from further production,
regardless of mode and source, of the mark in question (STYLISTIC MR. LEE) in
addition to its current stock;
3. That this relief Order shall automatically cease upon resolution of the Appeal by
the Court of Appeals and, if the Respondent's appeal loses, all goods bearing the mark
"STYLISTIC MR. LEE" shall be removed from the market, otherwise such goods shall
be seized in accordance with the law.

SO ORDERED. 10
On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision of the
Director of Patents dated 19 July 1988 in all respects. 11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxx.
Whether or not a trademark causes confusion and is likely to deceive the public is a
question of fact which is to be resolved by applying the "test ofdominancy", meaning, if
the competing trademark contains the main or essential or dominant features of
another by reason of which confusion and deception are likely to result, then
infringement takes place; that duplication or imitation is not necessary, a similarity in the
dominant features of the trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the appellant's
trademark and all of the appellee's "LEE" trademarks. It is the mark which draws the
attention of the buyer and leads him to conclude that the goods originated from the
same manufacturer. While it is true that there are other words such as "STYLISTIC",
printed in the appellant's label, such word is printed in such small letters over the word
"LEE" that it is not conspicuous enough to draw the attention of ordinary buyers
whereas the word "LEE" is printed across the label in big, bold letters and of the same
color, style, type and size of lettering as that of the trademark of the appellee. The
alleged difference is too insubstantial to be noticeable. Even granting arguendo that the
word "STYLISTIC" is conspicuous enough to draw attention, the goods may easily be
mistaken for just another variation or line of garments under the appellee's "LEE"
trademarks in view of the fact that the appellee has registered trademarks which use
other words in addition to the principal mark "LEE" such as "LEE RIDERS",
"LEESURES" and "LEE LEENS". The likelihood of confusion is further made more
probable by the fact that both parties are engaged in the same line of business. It is
probable by the fact that both parties are engaged in the same line of business. It is
well to reiterate that the determinative factor in ascertaining whether or not the marks
are confusingly similar to each other is not whether the challenged mark would actually
cause confusion or deception of the purchasers but whether the use of such mark
would likely cause confusion or mistake on the part of the buying public.
xxx xxx xxx.
The appellee has sufficiently established its right to prior use and registration of the
trademark "LEE" in the Philippines and is thus entitled to protection from any
infringement upon the same. It is thus axiomatic that one who has identified a peculiar
symbol or mark with his goods thereby acquires a property right in such symbol or
mark, and if another infringes the trademark, he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that expensive as alleged
to be by the appellant and are quite ordinary commodities purchased by the average
person and at times, by the ignorant and the unlettered. Ordinary purchasers will not as
a rule examine the small letterings printed on the label but will simply be guided by the
presence of the striking mark "LEE". Whatever difference there may be will pale in
insignificance in the face of an evident similarity in the dominant features and overall
appearance of the labels of the parties. 12
xxx xxx xxx.
On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned
decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and unrelated
arguments and defenses not previously raised in the proceedings below such as laches and a claim
that private respondent appropriated the style and appearance of petitioner's trademark when it
registered its "LEE" mark under Registration No. 44220. 13
On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:
xxx xxx xxx.
A defense not raised in the trial court cannot be raised on appeal for the first time. An
issue raised for the first time on appeal and not raised timely in the proceedings in the
lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the lower court
before they can be presented to this Court is to have the lower court rule upon them, so
that this Court on appeal may determine whether or not such ruling was erroneous. The
purpose is also in furtherance ofjustice to require the party to first present the question
he contends for in the lower court so that the other party may not be taken by surprise
and may present evidence to properly meet the issues raised.
Moreover, for a question to be raised on appeal, the same must also be within the
issues raised by the parties in their pleadings. Consequently, when a party deliberately
adopts a certain theory, and the case is tried and decided based upon such theory
adopts a certain theory, and the case is tried and decided based upon such theory
presented in the court below, he will not be permitted to change his theory on appeal.
To permit him to do so would be unfair to the adverse party. A question raised for the
first time on appeal, there having opportunity to raise them in the court of origin
constitutes a change of theory which is not permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer dated March 23,
1982 was that there was "no confusing similarity between the competing trademark
involved. On appeal, the appellant raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-
registrant's trademark "STYLISTIC MR. LEE" is confusingly similar
with the petitioner's trademarks "LEE or LEE RIDERS, LEE-LEENS
and LEE-SURES."
Appellant's main argument in this motion for reconsideration on the other hand is that
the appellee is estopped by laches from asserting its right to its trademark. Appellant
claims although belatedly that appellee went to court with "unclean hands" by changing
the appearance of its trademark to make it identical to the appellant's trademark.
Neither defenses were raised by the appellant in the proceedings before the Bureau of
Patents. Appellant cannot raise them now for the first time on appeal, let alone on a
mere motion for reconsideration of the decision of this Court dismissing the appellant's
appeal.
While there may be instances and situations justifying relaxation of this rule, the
circumstance of the instant case, equity would be better served by applying the settled
rule it appearing that appellant has not given any reason at all as to why the defenses
raised in its motion for reconsideration was not invoked earlier. 14
xxx xxx xxx.
Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT
CAUSED THE ISSUANCE OF A FOURTH "LEE" TRADEMARK IMITATING THAT OF THE
PETITIONER'S ON MAY 5, 1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF
PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF ESTOPPEL BY
LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE BUREAU OF PATENTS,
TRADEMARKS AND TECHNOLOGY TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE RESPONDENT'S
PRIOR REGISTRATION OF ITS TRADEMARK AND DISREGARDED THE FACT THAT PRIVATE
RESPONDENT HAD FAILED TO PROVE COMMERCIAL USE THEREOF BEFORE FILING OF
APPLICATION FOR REGISTRATION. 15
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S
TRADEMARK STYLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE
TRADEMARK STYLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE
RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS THE
PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE PRIVATE
RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE
RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA FACIEEVIDENCE
OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED WITH
PRIVATE RESPONDENT'S LEE TRADEMARK. 16
Petitioner contends that private respondent is estopped from instituting an action for infringement
before the BPTTT under the equitable principle oflaches pursuant to Sec. 9-A of R.A. No. 166,
otherwise known as the Law on Trade-marks, Trade-names and Unfair Competition:
SEC. 9-A. Equitable principles to govern proceedings. In opposition
proceedings and in all other inter partes proceedings in the patent office under this act,
equitable principles of laches, estoppel, and acquiescence, where applicable, may be
considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975, yet,
it was only on 18 September 1981 that private respondent filed a petition for cancellation of
petitioner's certificate of registration for the said trademark. Similarly, private respondent's notice of
opposition to petitioner's application for registration in the principal register was belatedly filed on 27
July 1984. 17
Private respondent counters by maintaining that petitioner was barred from raising new issues on
appeal, the only contention in the proceedings below being the presence or absence of confusing
similarity between the two trademarks in question. 18
We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No. 166)
provides that "marks and tradenames for the supplemental register shall not be published for or be
subject to opposition, but shall be published on registration in the Official Gazette." 19 The
reckoning point, therefore, should not be 1 May 1975, the date of alleged use by petitioner of its
assailed trademark but 27 October 1980, 20 the date the certificate ofregistration SR No. 5054 was
published in the Official Gazette and issued to petitioner.

It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" put on notice that petitioner has appropriated or is using
said mark, which, after all, is the function and purpose of registration in the supplemental register. 21
The record is bereft of evidence that private respondent was aware of petitioner's trademark before
the date of said publication and issuance. Hence, when private respondent instituted cancellation
the date of said publication and issuance. Hence, when private respondent instituted cancellation
proceedings on 18 September 1981, less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner's application for registration in the principal register since said application
was published only on 20 February 1984. 22 From the time of publication to the time of filing the
opposition on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit on
grounds of estoppel and laches, the delay must be lengthy. 23
More crucial is the issue of confusing similarity between the two trademarks. Petitioner vehemently
contends that its trademark "STYLISTIC MR. LEE" is entirely different from and not confusingly
similar to private respondent's "LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead and
confuse the public and thus constitutes an infringement of its own mark, since the dominant feature
therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
SEC. 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of
any registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a civil action by the registrant
for any or all of the remedies herein provided.
Practical application, however, of the aforesaid provision is easier said than done. In the history of
trademark cases in the Philippines, particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals, 24 we held:
. . . But likelihood of confusion is a relative concept; to be determined only according to
the particular, and sometimes peculiar, circumstances of each case. It is
unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.: "In trademark
cases, even more than in other litigation, precedent must be studied in the light of the
facts of the particular case."
xxx xxx xxx.
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable imitation" of another,
no all-embracing rule seems possible in view of the great number of factors which must
necessarily be considered in resolving this question of fact, such as the class of product
necessarily be considered in resolving this question of fact, such as the class of product
or business to which the article belongs; the product's quality, quantity, or size,
including its wrapper or container; the dominant color, style, size, form, meaning of
letters, words, designs and emblems used; the nature of the package, wrapper or
container; the character of the product's purchasers; location of the business; the
likelihood of deception or the mark or name's tendency to confuse; etc. 25
Proceeding to the task at hand, the essential element of infringement is colorable imitation. This
term has been defined as "such a close or ingenious imitation as to be calculated to deceive
ordinary purchasers, or such resemblance of the infringing mark to the original as to deceive an
ordinary purchaser giving such attention as a purchaser usually gives, and to cause him to
purchase the one supposing it to be the other." 26
Colorable imitation does not mean such similitude as amounts to identity. Nor does it
require that all the details be literally copied. Colorable imitation refers to such similarity
in form, content, words, sound, meaning, special arrangement, or general appearance
of the trademark or tradename with that of the other mark or tradename in their over-all
presentation or in their essential, substantive and distinctive parts as would likely
mislead or confuse persons in the ordinary course of purchasing the genuine article. 27
In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests
the Dominancy Test applied in Asia Brewery, Inc. v.Court of Appeals 28 and other cases 29 and the
Holistic Test developed in Del Monte Corporation v. Court of Appeals 30 and its proponent cases. 31
As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception and thus constitutes infringement.
xxx xxx xxx.
. . . 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 it is necessary that the infringing label
should suggest an effort to imitate. [C. Neilman Brewing Co. v. 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; . . . .) 32
xxx xxx xxx.
On the other side of the spectrum, the holistic test mandates that the entirety of the marks in
question must be considered in determining confusing similarity.
xxx xxx xxx.
In determining whether the trademarks are confusingly similar, a comparison of the
words is not the only determinant factor. The trademarks in their entirety as they appear
in their respective labels or hang tags must also be considered in relation to the goods
to which they are attached. The discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing in both labels in order
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. 33
xxx xxx xxx.
Applying the foregoing tenets to the present controversy and taking into account the factual
circumstances of this case, we considered the trademarks involved as a whole and rule that
petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE"
trademark.
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE" is
prominent, the trademark should be considered as a whole and not piecemeal. The dissimilarities
between the two marks become conspicuous, noticeable and substantial enough to matter
especially in the light ofthe following variables that must be factored in.
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not
your ordinary household items like catsup, soy sauce or soap which are of minimal cost. Maong
pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be more
cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception,
then, is less likely. In Del Monte Corporation v. Court of Appeals, 34we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the cost of the goods. To be sure, a person
who buys a box of candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products, low
priced articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not
ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He
is, therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary
purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the present case. There,
the "ordinary purchaser" was defined as one "accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent simulation is to be found in the likelihood
ofthe 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
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."

There is no cause for the Court of Appeal's apprehension that petitioner's products might be
mistaken as "another variation or line of garments under private respondent's 'LEE' trademark". 36
As one would readily observe, private respondent's variation follows a standard format
"LEERIDERS," "LEESURES" and "LEELEENS." It is, therefore, improbable that the public would
immediately and naturally conclude that petitioner's "STYLISTIC MR. LEE" is but another variation
under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity between trademarks is resolved by
considering the distinct characteristics of each case. In the present controversy, taking into account
these unique factors, we conclude that the similarities in the trademarks in question are not
sufficient as to likely cause deception and confusion tantamount to infringement
Another way of resolving the conflict is to consider the marks involved from the point of view of what
marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly paragraph 4(e):
CHAPTER II-A. The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
SEC. 4. Registration of trade-marks, trade-names and service-marks on the
principal register. There is hereby established a register of trade-marks, trade-
names and service-marks which shall be known as the principal register. The owner of
a trade-mark, trade-name or service-mark used to distinguish his goods, business or
services from the goods, business or services of others shall have the right to register
the same on the principal register, unless it:
xxx xxx xxx.
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely descriptive or
deceptively misdescriptive of them, or when applied to or used in connection with the
goods, business or services of the applicant is primarily geographically descriptive or
deceptively misdescriptive of them, or is primarily merely a surname; (Italics ours.)
xxx xxx xxx.
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership
over and singular use of said term.
. . . It has been held that a personal name or surname may not be monopolized as a
trademark or tradename as against others of the same name or surname. For in the
absence of contract, fraud, or estoppel, any man may use his name or surname in all
legitimate ways. Thus, "Wellington" is a surname, and its first user has no cause of
action against the junior user of "Wellington" as it is incapable of exclusive

appropriation. 37
In addition to the foregoing, we are constrained to agree with petitioner's contention that private
In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use ofits "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired ownership
over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No.
166) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
SEC. 2. What are registrable. Trade-marks, trade-names, and service marks
owned by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships, or associations domiciled in any
foreign country may be registered in accordance with the provisions of this act:
Provided, That said trade-marks, trade-names, or service marks are actually in use in
commerce and services not less than two months in the Philippines before the time the
applications for registration are filed: And Provided, further, That the country of which
the applicant for registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a certified true copy of
the foreign law translated into the English language, by the government of the foreign
country to the Government of the Republic of the Philippines. (As amended.) (Italics
ours.)
SEC. 2-A. Ownership of trade-marks, trade-names and service-marks; how
acquired. Anyone who lawfully produces or deals in merchandise ofany kind or who
engages in lawful business, or who renders any lawful service in commerce, by actual
use hereof in manufacture or trade, in business and in the service rendered; may
appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark not so
appropriated by another, to distinguish his merchandise, business or services from
others. The ownership or possession of trade-mark, trade-name, service-mark,
heretofore or hereafter appropriated, as in this section provided, shall be recognized
and protected in the same manner and to the same extent as are other property rights
to the law. (As amended.) (Italics ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38 relied upon
by private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) 39 were sufficiently
expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals: 40
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in most countries,
rules of international law are given a standing equal, not superior, to national legislative
rules of international law are given a standing equal, not superior, to national legislative
enactments.
xxx xxx xxx.
In other words, (a foreign corporation) may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section 21-A of
the Trademark Law but the question of whether they have an exclusive right over their
symbol as to justify issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do
business in the Philippines files a complaint for infringement, the entity need not be
actually using its trademark in commerce in the Philippines. Such a foreign corporation
may have the personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the local market.
xxx xxx xxx.
Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks "LEE," "LEE RIDERS," and "LEESURES" in both the
supplemental and principal registers, as early as 1969 to 1973. 41 However, registration alone will
not suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 42 we
declared:
xxx xxx xxx.
A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite in the acquisition of
the right of ownership over a trademark.
xxx xxx xxx.
It would seem quite clear that adoption alone of a trademark would not give exclusive
right thereto. Such right "grows out of their actual use." Adoption is not use. One may
make advertisements, issue circulars, give out price lists on certain goods; but these
alone would not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have come to understand the mark as
indicating the origin of the wares. Flowing from this is the trader's right to protection in
the trade he has built up and the goodwill he has accumulated from use ofthe
trademark. Registration of a trademark, of course, has value: it is an administrative act
declaratory of a pre-existing right. Registration does not, however, perfect a trademark
right. (Italics ours.)
xxx xxx xxx.
To augment its arguments that it was, not only the prior registrant, but also the prior user, private
respondent invokes Sec. 20 of the Trademark Law, thus:
SEC. 20. Certificate of registration prima facie evidence of validity. A
certificate of registration of a mark or tradename shall be a prima facie evidence of the
validity of the registration, the registrant's ownership of the mark or trade-name, and of
the registrant's exclusive right to use the same in connection with the goods, business
the registrant's exclusive right to use the same in connection with the goods, business
or services specified in the certificate, subject to any conditions and limitations stated
therein.
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of
validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima
facie evidence. It is not conclusive but can and may be rebutted by controverting evidence.
Moreover, the aforequoted provision applies only to registrations in the principal register. 43
Registrations in the supplemental register do not enjoy a similar privilege. A supplemental register
was created precisely for the registration of marks which are not registrable on the principal register
due to some defects. 44
The determination as to who is the prior user of the trademark is a question of fact and it is this
Court's working principle not to disturb the findings of the Director of Patents on this issue in the
absence of any showing of grave abuse of discretion. The findings of facts of the Director of Patents
are conclusive upon the Supreme Court provided they are supported by substantial evidence. 45

In the case at bench, however, we reverse the findings of the Director of Patents and the Court of
Appeals. After a meticulous study of the records, we observe that the Director of Patents and the
Court of Appeals relied mainly on the registration certificates as proof of use by private respondent
of the trademark "LEE" which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its "LEE" mark first reached the Philippines in the 1960's
through local sales by the Post Exchanges of the U.S. Military Bases in the Philippines 46 based as
it was solely on the self-serving statements of Mr. Edward Poste, General Manager of Lee (Phils.),
Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent. 47
Similarly, we give little weight to the numerous vouchers representing various advertising expenses
in the Philippines for "LEE" products. 48 It is well to note that these expenses were incurred only in
1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with private
respondent on 11 May 1981. 49
On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans
and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers. 50
Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v.
Universal Rubber Products, Inc., 52 respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior to
its registration. There is no dispute that respondent corporation was the first registrant,
yet it failed to fully substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among others, of

considerable sales since its first use. The invoices submitted by respondent which were
dated way back in 1957 show that the zippers sent to the Philippines were to be used
as "samples" and "of no commercial value." The evidence for respondent must be clear,
as "samples" and "of no commercial value." The evidence for respondent must be clear,
definite and free from inconsistencies. "Samples" are not for sale and therefore, the fact
of exporting them to the Philippines cannot be considered to be equivalent to the "use"
contemplated by law. Respondent did not expect income from such "samples." There
were no receipts to establish sale, and no proof were presented to show that they were
subsequently sold in the Philippines.
xxx xxx xxx.
The sales invoices provide the best proof that there were actual sales of petitioner's
product in the country and that there was actual use for a protracted period of
petitioner's trademark or part thereof through these sales.
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of
its own mark and for failure to establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily fail.
WHEREFORE, premises considered, the questioned decision and resolution are hereby
REVERSED and SET ASIDE.
SO ORDERED.
SECTION 5. Functions of the Intellectual Property Office (IPO). 5.1. To
administer and implement the State policies declared in this Act, there is hereby created the
Intellectual Property Office (IPO) which shall have the following functions:
a) Examine applications for grant of letters patent for inventions and register
utility models and industrial designs;
b) Examine applications for the registration of marks, geographic indication,
integrated circuits;
c) Register technology transfer arrangements and settle disputes involving
technology transfer payments covered by the provisions of Part II, Chapter
IX on Voluntary Licensing and develop and implement strategies to
promote and facilitate technology transfer;
d) Promote the use of patent information as a tool for technology
development;
e) Publish regularly in its own publication the patents, marks, utility models
and industrial designs, issued and approved, and the technology transfer
arrangements registered; cdasia

f) Administratively adjudicate contested proceedings affecting intellectual


property rights; and
g) Coordinate with other government agencies and the private sector efforts
to formulate and implement plans and policies to strengthen the protection
of intellectual property rights in the country.
5.2. The Office shall have custody of all records, books, drawings, specifications,
documents, and other papers and things relating to intellectual property rights applications filed
with the Office. (n)
SECTION 6. The Organizational Structure of the IPO. 6.1. The Office shall be
headed by a Director General who shall be assisted by two (2) Deputies Director General.
SECTION 8. The Bureau of Patents. The Bureau of Patents shall have the
following functions:
8.1. Search and examination of patent applications and the grant of patents;
8.2. Registration of utility models, industrial designs, and integrated circuits; and
8.3. Conduct studies and researches in the field of patents in order to assist the
Director General in formulating policies on the administration and examination of patents. (n)
[G.R. No. 113388. September 5, 1997.]

ANGELITA MANZANO, petitioner, vs. COURT OF APPEALS, and MELECIA


MADOLARIA, as Assignor to NEW UNITED FOUNDRY MANUFACTURING
CORPORATION, respondents.

DECISION

BELLOSILLO, J : p

The primary purpose of the patent system is not the reward of the individual but the advancement of
the arts and sciences. The function of a patent is to add to the sum of useful knowledge and one of
the purposes of the patent system is to encourage dissemination of information concerning
discoveries and inventions. This is a matter which is properly within the competence of the Patent
Office, the official action of which has the presumption of correctness and may not be interfered with
in the absence of new evidence carrying thorough conviction that the Office has erred. Since the
Patent Office is an expert body preeminently qualified to determine questions of patentability, its
findings must be accepted if they are consistent with the evidence, with doubts as to patentability
resolved in favor of the Patent Office. 1
Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action
for the cancellation of Letters Patent No. UM-4609 for a gas burner registered in the name of
respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry

and *Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the
utility model covered by the letters patent, in this case, an LPG gas burner, was not inventive, new
or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14,
or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14,
RA No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual
inventor nor did she derive her rights from the original, true and actual inventor of the utility model
covered by the letters patent; and, (d) the letters patent was secured by means of fraud or
misrepresentation. In support of her petition for cancellation petitioner further alleged that (a) the
utility model covered by the letters patent of respondent had been known or used by others in the
Philippines for more than one (1) year before she filed her application for letters patent on 9
December 1979; (b) the products which were produced in accordance with the utility model covered
by the letters patent had been in public use or on sale in the Philippines for more than one (1) year
before the application for patent therefor was filed. cdpr

Petitioner presented the following documents which she correspondingly marked as exhibits: (a)
affidavit of petitioner alleging the existence of prior art, marked Exh. "A;" (b) a brochure distributed
by Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by
Ransome Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by
Esso Gasul or Esso Standard Eastern, Inc., of the Philippines showing a picture of another similar
burner with top elevation view and another perspective view of the same burner, marked Exh. "E."
Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the
UNITED FOUNDRY where respondent Melecia Madolaria used to be affiliated with from 1965 to
1970; that Ong helped in the casting of an LPG burner which was the same utility model of a burner
for which Letters Patent No. UM-4609 was issued, and that after her husband's separation from the
shop she organized Besco Metal Manufacturing (BESCO METAL, for brevity) for the casting of LPG
burners one of which had the configuration, form and component parts similar to those being
manufactured by UNITED FOUNDRY. Petitioner presented in evidence an alleged model of an LPG
burner marked Exh. "K" and covered by the Letters Patent of respondent, and testified that it was
given to her in January 1982 by one of her customers who allegedly acquired it from UNITED
FOUNDRY. Petitioner also presented in evidence her own model of an LPG burner called
"Ransome" burner marked Exh. "L," which was allegedly manufactured in 1974 or 1975 and sold by
her in the course of her business operation in the name of BESCO METAL. Petitioner claimed that
this "Ransome" burner (Exh. "L") had the same configuration and mechanism as that of the model
which was patented in favor of private respondent Melecia Madolaria. Also presented by petitioner
was a burner cup of an imported "Ransome" burner marked Exh "M" which was allegedly existing
even before the patent application of private respondent.

Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel
Francisco. Ong testified that he worked as a helper in the UNITED FOUNDRY from 1965 to 1970
where he helped in the casting of LPG burners with the same form, configuration and mechanism
as that of the model covered by the Letters Patent issued to private respondent. Francisco testified
that he had been employed with the Manila Gas Corporation from 1930 to 1941 and from 1952 up

to 1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome"
burners way back in 1965 which were advertised through brochures to promote their sale.
Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who
testified, among others, that he was the General Supervisor of the UNITED FOUNDRY in the
foundry, machine and buffing section; that in his early years with the company, UNITED FOUNDRY
was engaged in the manufacture of different kinds of gas stoves as well as burners based on
sketches and specifications furnished by customers; that the company manufactured early models
of single-piece types of burners where the mouth and throat were not detachable; that in the latter
part of 1978 respondent Melecia Madolaria confided in him that complaints were being brought to
her attention concerning the early models being manufactured; that he was then instructed by
private respondent to cast several experimental models based on revised sketches and
specifications; that private respondent again made some innovations; that after a few months,
private respondent discovered the solution to all the defects of the earlier models and, based on her
latest sketches and specifications, he was able to cast several models incorporating the additions to
the innovations introduced in the models. Various tests were conducted on the latest model in the
presence and under the supervision of Melecia Madolaria and they obtained perfect results.
Rolando Madolaria testified that private respondent decided to file her application for utility model
patent in December 1979.
On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the
petition for cancellation and holding that the evidence of petitioner was not able to establish
convincingly that the patented utility model of private respondent was anticipated. Not one of the
various pictorial representations of business clearly and convincingly showed that the devices
presented by petitioner was identical or substantially identical with the utility model of the
respondent. The decision also stated that even assuming that the brochures depicted clearly each
and every element of the patented gas burner device so that the prior art and patented device
became identical although in truth they were not, they could not serve as anticipatory bars for the
reason that they were undated. The dates when they were distributed to the public were not
indicated and, therefore, were useless prior art references. The records and evidence also do not
support the petitioner's contention that Letters Patent No. UM-4609 was obtained by means of fraud
and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the
then applicant Melecia Madolaria withheld with intent to deceive material facts which, if disclosed,
would have resulted in the refusal by the Philippine Patent Office to issue the Letters Patent under
inquiry.
Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15
October 1993 affirmed the decision of the Director of Patents. Hence, this petition for review on
certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in
actuality did not exist between the model of private respondent covered by Letters Patent No. UM-
4609 and the previously known model of Esso Standard Eastern, Inc., and Manila Gas Corporation,
making such imaginary differences grounded entirely on speculation, surmises and conjectures; (b)
in rendering judgment based on misapprehension of facts; (c) in relying mainly on the testimony of
private respondent's sole witness Rolando Madolaria; and, (d) in not cancelling Letters Patent No.
UM-4609 in the name of private respondent.
Petitioner submits that the differences cited by the Court of Appeals between the utility model of
Petitioner submits that the differences cited by the Court of Appeals between the utility model of
private respondent and the models of Manila Gas Corporation and Esso Standard Eastern, Inc., are
more imaginary than real. She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the
brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the
cup-shaped burner mouth and threaded hole on the side are shown to be similar to the utility model
of private respondent. The exhibits also show a detachable burner mouth having a plurality of
upwardly existing undulations adopted to act as gas passage when the cover is attached to the top
of said cup-shaped mouth all of which are the same as those in the patented model. Petitioner also
denies as substantial difference the short cylindrical tube of the burner mouth appearing in the
brochures of the burners being sold by Manila Gas Corporation and the long cylindered tube of
private respondent's model of the gas burner.
Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in
form, operation and mechanism and parts between the utility model of private respondent and those
depicted in the brochures. The findings of the Patent Office and the Court of Appeals that the
brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot
overcome the fact of their circulation before private respondent filed her application for utility model
patent. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern,
Inc., disappeared before 1979 and reappeared only during the Martial Law years as Petrophil
Corporation. Petitioner also emphasizes that the brochures indicated the telephone number of
Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before
1975 because telephones in Metro Manila started to have six (6) numbers only after that year.
Petitioner further contends that the utility model of private respondent is absolutely similar to the
LPG burner being sold by petitioner in 1975 and 1976, and also to the "Ransome" burner depicted
in the old brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., fabricated by
Ransome Torch and Burner Company of Oakland, California, USA, especially when considered
through actual physical examination, assembly and disassembly of the models of petitioner and
private respondent. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong
Bun Tua and Fidel Francisco for their failure to produce documents on the alleged importation by
Manila Gas Corporation of "Ransome" burners in 1965 which had the same configuration, form and
mechanism as that of the private respondent's patented model.
Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria
should not have been given weight by the Patent Office and the Court of Appeals because it
contained mere after-thoughts and pretensions.
We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents,
expressly provides
Sec. 7. Inventions patentable. Any invention of a new and useful machine,
manufactured product or substance, process or an improvement of any of the
foregoing, shall be patentable.

Further, Sec. 55 of the same law provides


Sec. 55. Design patents and patents for utility models. (a) Any new, original and
Sec. 55. Design patents and patents for utility models. (a) Any new, original and
ornamental design for an article of manufacture and (b) any new model of implements
or tools or of any industrial product or of part of the same, which does not possess the
quality of invention, but which is of practical utility by reason of its form, configuration,
construction or composition, may be protected by the author thereof, the former by a
patent for a design and the latter by a patent for a utility model, in the same manner
and subject to the same provisions and requirements as relate to patents for inventions
insofar as they are applicable except as otherwise herein provided.
The element of novelty is an essential requisite of the patentability of an invention or discovery. If a
device or process has been known or used by others prior to its invention or discovery by the
applicant, an application for a patent therefor should be denied; and if the application has been
granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question,
will hold it void and ineffective. 2 It has been repeatedly held that an invention must possess the
essential elements of novelty, originality and precedence, and for the patentee to be entitled to the
protection the invention must be new to the world. 3
In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981,
the Philippine Patent Office found her invention novel and patentable. The issuance of such patent
creates a presumption which yields only to clear and cogent evidence that the patentee was the
original and first inventor. The burden of proving want of novelty is on him who avers it and the
burden is a heavy one which is met only by clear and satisfactory proof which overcomes every
reasonable doubt. 4 Hence, a utility model shall not be considered "new" if before the application for
a patent it has been publicly known or publicly used in this country or has been described in a
printed publication or publications circulated within the country, or if it is substantially similar to any
other utility model so known, used or described within the country. 5
As found by the Director of Patents, the standard of evidence sufficient to overcome the
presumption of legality of the issuance of UM-4609 to respondent Madolaria was not legally met by
petitioner in her action for the cancellation of the patent. Thus the Director of Patents explained his
reasons for the denial of the petition to cancel private respondent's patent

Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not
anticipated. Not one of the various pictorial representations of burners clearly and
convincingly show that the device presented therein is identical or substantially identical
in construction with the aforesaid utility model. It is relevant and material to state that in
determining whether novelty or newness is negatived by any prior art, only one item of
the prior art may be used at a time. For anticipation to occur, the prior art must show
that each element is found either expressly or described or under principles of
inherency in a single prior art reference or that the claimed invention was probably
known in a single prior art device or practice. (Kalman v.Kimberly Clark, 218 USPQ
781, 789)
Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all
fours each and every element of the patented gas burner device so that the prior art
and the said patented device become identical, although in truth they are not, they
cannot serve as anticipatory bars for the reason that they are undated. The dates when
cannot serve as anticipatory bars for the reason that they are undated. The dates when
they were distributed to the public were not indicated and, therefore, they are useless
prior art references.
xxx xxx xxx
Furthermore, and more significantly, the model marked Exh. "K" does not show whether
or not it was manufactured and/or cast before the application for the issuance of patent
for the LPG burner was filed by Melecia Madolaria.
With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner
allegedly manufactured sometime in 1974 or 1975 and sold by her in the course of her
business operation in the name of Besco Metal Manufacturing, which burner was
denominated as "Ransome" burner.
xxx xxx xxx
But a careful examination of Exh. "L" would show that it does not bear the word
"Ransome" which is the burner referred to as the product being sold by the Petitioner.
This is not the way to prove that Exh. "L" anticipates Letters Patent No. UM-4609
through Exhs. "C" and "D." Another factor working against the Petitioner's claims is that
an examination of Exh. "L" would disclose that there is no indication of the time or date
it was manufactured. This Office, thus has no way of determining whether Exh. "L" was
really manufactured before the filing of the aforesaid application which matured into
Letters Patent No. UM-4609, subject matter of the cancellation proceeding.
At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M"
which is the alleged burner cup of an imported "Ransome" burner. Again, this Office
finds the same as unreliable evidence to show anticipation. It observed that there is no
date indicated therein as to when it was manufactured and/or imported before the filing
of the application for issuance of patent of the subject utility model. What is more, some
component parts of Exh. "M" are missing, as only the cup was presented so that the
same could not be compared to the utility model (subject matter of this case) which
consists of several other detachable parts in combination to form the complete LPG
burner.
xxx xxx xxx
It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of
Manila Gas and of Esso Gasul marked Exhs. "E" and "F" and on the alleged fact that
Manila Gas Corporation was importing from the United States "Ransome" burners. But
the same could not be given credence since he himself admitted during cross-
examination that he has never been connected with Manila Gas Corporation. He could
not even present any importation papers relating to the alleged imported ransome
burners. Neither did his wife. 6
The above findings and conclusions of the Director of Patent were reiterated and affirmed by the
Court of Appeals. 7

The validity of the patent issued by the Philippine Patent Office in favor of private respondent and
the question over the inventiveness, novelty and usefulness of the improved model of the LPG
burner are matters which are better determined by the Patent Office. The technical staff of the
burner are matters which are better determined by the Patent Office. The technical staff of the
Philippine Patent Office composed of experts in their field has by the issuance of the patent in
question accepted private respondent's model of gas burner as a discovery. There is a presumption
that the Office has correctly determined the patentability of the model 8 and such action must not be
interfered with in the absence of competent evidence to the contrary.
The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the
Court of Appeals, are conclusive on this Court when supported by substantial evidence. Petitioner
has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent
Office and the Court of Appeals.
The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight
to the testimonies of the witnesses of petitioner showing anticipation is not a justification to grant the
petition. Pursuant to the requirement of clear and convincing evidence to overthrow the presumption
of validity of a patent, it has been held that oral testimony to show anticipation is open to suspicion
and if uncorroborated by cogent evidence, as what occurred in this case, it may be held insufficient.
9

Finally, petitioner would want this Court to review all over again the evidence she presented before
the Patent Office. She argues that contrary to the decision of the Patent Office and the Court of
Appeals, the evidence she presented clearly proves that the patented model of private respondent
is no longer new and, therefore, fraud attended the acquisition of patent by private respondent.
It has been held that the question on priority of invention is one of fact. Novelty and utility are
likewise questions of fact. The validity of patent is decided on the basis of factual inquiries. Whether
evidence presented comes within the scope of prior art is a factual issue to be resolved by the
Patent Office. 10 There is question of fact when the doubt or difference arises as to the truth or
falsehood of alleged facts or when the query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and relevance of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the situation. 11
cdphil

Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all
over again the evidence and credibility of witnesses presented before the lower tribunal or office.
The Supreme Court is not a trier of facts. Its jurisdiction is limited to reviewing and revising errors of
law imputed to the lower court, its findings of fact being conclusive and not reviewable by this Court.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the
Philippine Patent Office is AFFIRMED. Costs against petitioner.
SO ORDERED.
SECTION 9. The Bureau of Trademarks. The Bureau of Trademarks shall have
the following functions: cd

9.1. Search and examination of the applications for the registration of marks,
geographic indications and other marks of ownership and the issuance of the certificates of
registration; and
9.2. Conduct studies and researches in the field of trademarks in order to assist the
Director General in formulating policies on the administration and examination of trademarks.
SECTION 10. The Bureau of Legal Affairs. The Bureau of Legal Affairs shall
have the following functions:
10.1. Hear and decide opposition to the application for registration of marks;
cancellation of trademarks; subject to the provisions of Section 64, cancellation of patents, utility
models, and industrial designs; and petitions for compulsory licensing of patents;
10.2.(a) Exercise original jurisdiction in administrative complaints for violations of
laws involving intellectual property rights: Provided, That its jurisdiction is limited to complaints
where the total damages claimed are not less than Two hundred thousand pesos (P200,000):
Provided, further, That availment of the provisional remedies may be granted in accordance with
the Rules of Court. The Director of Legal Affairs shall have the power to hold and punish for
contempt all those who disregard orders or writs issued in the course of the proceedings. (n)
(b) After formal investigation, the Director for Legal Affairs may impose one (1) or
more of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the acts that
the respondent shall cease and desist from and shall require him to submit
a compliance report within a reasonable time which shall be fixed in the
order;
(ii) The acceptance of a voluntary assurance of compliance or discontinuance
as may be imposed. Such voluntary assurance may include one or more
of the following:
(1) An assurance to comply with the provisions of the intellectual
property law violated;
(2) An assurance to refrain from engaging in unlawful and unfair acts
and practices subject of the formal investigation;
(3) An assurance to recall, replace, repair, or refund the money value
of defective goods distributed in commerce; and
(4) An assurance to reimburse the complainant the expenses and
costs incurred in prosecuting the case in the Bureau of Legal
Affairs.
The Director of Legal Affairs may also require the respondent to submit
periodic compliance reports and file a bond to guarantee compliance of his
undertaking;

(iii) The condemnation or seizure of products which are subject of the


offense. The goods seized hereunder shall be disposed of in such manner
as may be deemed appropriate by the Director of Legal Affairs, such as by
as may be deemed appropriate by the Director of Legal Affairs, such as by
sale, donation to distressed local governments or to charitable or relief
institutions, exportation, recycling into other goods, or any combination
thereof, under such guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties which
have been used in the commission of the offense;
(v) The imposition of administrative fines in such amount as deemed
reasonable by the Director of Legal Affairs, which shall in no case be less
than Five thousand pesos (P5,000) nor more than One hundred fifty
thousand pesos (P150,000). In addition, an additional fine of not more
than One thousand pesos (P1,000) shall be imposed for each day of
continuing violation;
(vi) The cancellation of any permit, license, authority, or registration which
may have been granted by the Office, or the suspension of the validity
thereof for such period of time as the Director of Legal Affairs may deem
reasonable which shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration which is
being secured by the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions. (Secs. 6, 7, 8, and 9, Executive
Order No. 913 [1983]a)

"SEC. 9A. The Bureau of Copyright and Other Related Rights. the Bureau of Copyright and Other
Related Rights shall have the following functions:

"9A.1. Exercise original jurisdiction to resolve disputes relating to the terms of a license involving
the authors right to public performance or other communication of his work;

"9A.2. Accept, review and decide on applications for the accreditation of collective management
organizations or similar entities;

"9A.3. Conduct studies and researches in the field of copyright and related rights; and

"9A.4. Provide other copyright and related rights service and charge reasonable fees therefor.

SECTION 191. Registration and Deposit with National Library and the Supreme Court Library.
After the first public dissemination of performance by authority of the copyright owner of
a work falling under Subsections 172.1, 172.2 and 172.3 of this Act, there shall, for the
a work falling under Subsections 172.1, 172.2 and 172.3 of this Act, there shall, for the
purpose of completing the records of the National Library and the Supreme Court Library,
within three (3) weeks, be registered and deposited with it, by personal delivery or by
registered mail, two (2) complete copies or reproductions of the work in such form as the
directors of said libraries may prescribe. A certificate of deposit shall be issued for which
the prescribed fee shall be collected and the copyright owner shall be exempt from
making additional deposit of the works with the National Library and the Supreme Court
Library under other laws. If, within three (3) weeks after receipt by the copyright owner of
a written demand from the directors for such deposit, the required copies or
reproductions are not delivered and the fee is not paid, the copyright owner shall be
liable to pay a fine equivalent to the required fee per month of delay and to pay to the
National Library and the Supreme Court Library the amount of the retail price of the best
edition of the work. Only the above mentioned classes of work shall be accepted for
deposit by the National Library and the Supreme Court Library. (Sec. 26, P.D. No. 49a)

[G.R. No. 115758. March 19, 2002.]

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

DECISION

DE LEON, JR., J : p

Before us is a petition for review on certiorari of the Decision 1 dated May 24, 1993 of the
Court of Appeals setting aside and declaring as null and void the Orders 2 dated
February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of
Quezon City granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and

damages with a prayer for the issuance of a writ of preliminary injunction, docketed as
Civil Case No. Q-91-10926, against the respondents Summerville General
Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.
Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.

The petitioner's complaint alleges that petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun
Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright
Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun
Su & Device and Chin Chun Su for medicated cream after purchasing the same from
Quintin Cheng, the registered owner thereof in the Supplemental Register of the
Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
that respondent Summerville advertised and sold petitioner's cream products under the
brand name Chin Chun Su, in similar containers that petitioner uses, thereby misleading
the public, and resulting in the decline in the petitioner's business sales and income; and,
that the respondents should be enjoined from allegedly infringing on the copyrights and
patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the
exclusive and authorized importer, re-packer and distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing
company authorized Summerville to register its trade name Chin Chun Su Medicated
Cream with the Philippine Patent Office and other appropriate governmental agencies;
that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of
the patent registration certificate, to distribute and market Chin Chun Su products in the
Philippines had already been terminated by the said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the
same in an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business
under the style of KEC Cosmetic Laboratory, for preliminary injunction, is
hereby granted. Consequentially, plaintiff is required to file with the Court a
bond executed to defendants in the amount of five hundred thousand pesos
(P500,000.00) to the effect that plaintiff will pay to defendants all damages
which defendants may sustain by reason of the injunction if the Court
should finally decide that plaintiff is not entitled thereto.

SO ORDERED. 3

The respondents moved for reconsideration but their motion for reconsideration was
The respondents moved for reconsideration but their motion for reconsideration was
denied by the trial court in an Order dated March 19, 1992. 4
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of
preliminary injunction issued by the trial court. After the respondents filed their reply and
almost a month after petitioner submitted her comment, or on August 14, 1992, the latter
moved to dismiss the petition for violation of Supreme Court Circular No. 28-91, a
circular prohibiting forum shopping. According to the petitioner, the respondents did not
state the docket number of the civil case in the caption of their petition and, more
significantly, they did not include therein a certificate of non-forum shopping. The
respondents opposed the petition and submitted to the appellate court a certificate of
non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803
ruling in favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of
respondent court dated February 10, 1992 and March 19, 1992 granting the
writ of preliminary injunction and denying petitioners' motion for
reconsideration are hereby set aside and declared null and void.
Respondent court is directed to forthwith proceed with the trial of Civil Case
No. Q-91-10926 and resolve the issue raised by the parties on the merits.

SO ORDERED. 5

In granting the petition, the appellate court ruled that:


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

xxx xxx xxx

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


393:

"Registration in the Supplemental Register, therefore, serves as


notice that the registrant is using or has appropriated the

trademark. By the very fact that the trademark cannot as yet be on


guard and there are certain defects, some obstacles which the use
must still overcome before he can claim legal ownership of the
must still overcome before he can claim legal ownership of the
mark or ask the courts to vindicate his claims of an exclusive right
to the use of the same. It would be deceptive for a party with
nothing more than a registration in the Supplemental Register to
posture before courts of justice as if the registration is in the
Principal Register.

The reliance of the private respondent on the last sentence of the


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

The petitioner filed a motion for reconsideration. This she followed with several motions
to declare respondents in contempt of court for publishing advertisements notifying the
public of the promulgation of the assailed decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained only from Summerville General
Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction
and damages. On October 22, 1993, the trial court rendered a Decision 7 barring the
petitioner from using the trademark Chin Chun Su and upholding the right of the
respondents to use the same, but recognizing the copyright of the petitioner over the oval
shaped container of her beauty cream. The trial court did not award damages and costs
to any of the parties but to their respective counsels were awarded Seventy-Five

Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the
said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution 8 denying the
petitioner's motions for reconsideration and for contempt of court in CA-G.R. SP No.
27803.
Hence, this petition anchored on the following assignment of errors:
I

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


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

II

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


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

III

IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION,


THE HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY
APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF


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

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

We rule in favor of the respondents.


Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the
grounds for the issuance of a writ of preliminary injunction is a proof that the applicant is
entitled to the relief demanded, and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, either for a limited
period or perpetually. Thus, a preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief
demanded. 10 This is the reason why we have ruled that it must be shown that the
invasion of the right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable, and, that there is an urgent and paramount
necessity for the writ to prevent serious damage. 11
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order
on the ground that she is entitled to the use of the trademark on Chin Chun Su and its
container based on her copyright and patent over the same. We first find it appropriate to
rule on whether the copyright and patent over the name and container of a beauty cream
product would entitle the registrant to the use and ownership over the same to the
exclusion of others.

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

any field of human activity which is new, involves an inventive step and is industrially
applicable. 15
Petitioner has no right to support her claim for the exclusive use of the subject trade
name and its container. The name and container of a beauty cream product are proper
subjects of a trademark inasmuch as the same falls squarely within its definition. In order
to be entitled to exclusively use the same in the sale of the beauty cream product, the
user must sufficiently prove that she registered or used it before anybody else did. The
petitioner's copyright and patent registration of the name and container would not
guarantee her the right to the exclusive use of the same for the reason that they are not
appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction
order cannot be issued for the reason that the petitioner has not proven that she has a
order cannot be issued for the reason that the petitioner has not proven that she has a
clear right over the said name and container to the exclusion of others, not having proven
that she has registered a trademark thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction
and damages. The dispositive portion of said decision held that the petitioner does not
have trademark rights on the name and container of the beauty cream product. The said
decision on the merits of the trial court rendered the issuance of the writ of a preliminary
injunction moot and academic notwithstanding the fact that the same has been appealed
in the Court of Appeals. This is supported by our ruling in La Vista Association, Inc. v.
Court of Appeals, 16 to wit:
Considering that preliminary injunction is a provisional remedy which may
be granted at any time after the commencement of the action and before
judgment when it is established that the plaintiff is entitled to the relief
demanded and only when his complaint shows facts entitling such reliefs . .
. and it appearing that the trial court had already granted the issuance of a
final injunction in favor of petitioner in its decision rendered after trial on the
merits . . . the Court resolved to Dismiss the instant petition having been
rendered moot and academic. An injunction issued by the trial court after it
has already made a clear pronouncement as to the plaintiff's right thereto,
that is, after the same issue has been decided on the merits, the trial court
having appreciated the evidence presented, is proper, notwithstanding the
fact that the decision rendered is not yet final . . . . Being an ancillary
remedy, the proceedings for preliminary injunction cannot stand separately
or proceed independently of the decision rendered on the merit of the main
case for injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary determination of its
non-existence ceases to have any force and effect. (emphasis supplied)

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

The petitioner argues that the appellate court erred in not dismissing the petition for
certiorari for non-compliance with the rule on forum shopping. We disagree. First, the
petitioner improperly raised the technical objection of non-compliance with Supreme
petitioner improperly raised the technical objection of non-compliance with Supreme
Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in the
appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and
the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require the respondents to file their comment to,
and not a motion to dismiss, the petition . . . (emphasis supplied)." Secondly, the issue
was raised one month after petitioner had filed her answer/comment and after private
respondent had replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil
Procedure, a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim. She therefore could no longer
submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity require
this Court not to revive a dissolved writ of injunction in favor of a party without any legal
right thereto merely on a technical infirmity. The granting of an injunctive writ based on a
technical ground rather than compliance with the requisites for the issuance of the same
is contrary to the primary objective of legal procedure which is to serve as a means to
dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that petitioner contributed to this delay when
she filed successive contentious motions in the same proceeding, the last of which was
on October 27, 1993, necessitating counter-manifestations from private respondents with
the last one being filed on November 9, 1993. Nonetheless, it is well-settled that non-
observance of the period for deciding cases or their incidents does not render such
judgments ineffective or void. 17 With respect to the purported damages she suffered due
to the alleged delay in resolving her motion for reconsideration, we find that the said
issue has likewise been rendered moot and academic by our ruling that she has no right
over the trademark and, consequently, to the issuance of a writ of preliminary injunction.
Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions
for contempt of court. There is nothing contemptuous about the advertisements
complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely
announced in plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the
Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was
immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED.
With costs against the petitioner.HcaDTE

SO ORDERED.
[G.R. No. 148222. August 15, 2003.]

PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs.


SHOEMART, INCORPORATED, and NORTH EDSA MARKETING,
INCORPORATED,respondents.

DECISION

CORONA, J : p

In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the
Court of Appeals reversing the October 31, 1996 decision 2 of the Regional Trial Court of
Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents
Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of
trademark and copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals 3 contained a summary of this
dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in
the manufacture of advertising display units simply referred to as light
boxes. These units utilize specially printed posters sandwiched between
plastic sheets and illuminated with back lights. Pearl and Dean was able to
secure a Certificate of Copyright Registration dated January 20, 1981 over
these illuminated display units. The advertising light boxes were marketed
under the trademark "Poster Ads." The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and

Technology Transfer on June 20, 1983, but was approved only on


September 12, 1988, per Registration No. 41165. From 1981 to about 1988,
Pearl and Dean employed the services of Metro Industrial Services to
Pearl and Dean employed the services of Metro Industrial Services to
manufacture its advertising displays.

Sometime in 1985, Pearl, and Dean negotiated with defendant-appellant


Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was under construction at that
time, SMI offered as an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985, Pearl and Dean's General
Manager, Rodolfo Vergara, submitted for signature the contacts covering
SM Cubao and SM Makati to SMI's Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano
inquiring about the other contract and reminding him that their agreement
for installation of light boxes was not only for its SM Makati branch, but also
for SM Cubao. SMI did not bother to reply.

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

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

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

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

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

In denying the charges hurled against it, SMI maintained that it


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

NEMI, for its part, denied having manufactured, installed or used any
advertising display units, nor having engaged in the business of advertising.
It repleaded SMI's averments, admissions and denials and prayed for

similar reliefs and counterclaims as SMI."

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


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

(1) to pay plaintiff the following damages:

(a) actual damages P16,600,000.00,


representing profits
derived by defendants
as a result of infringement
of plaintiff's copyright
from 1991 to 1992
(b) moral damages P1,000.000.00
(c) exemplary damages P1,000,000.00
(d) attorney's fees P1,000,000.00
plus
(e) costs of suit;

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

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

(4) to permanently refrain from infringing the copyright on plaintiff's


light boxes and its trademark "Poster Ads."

Defendants' counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED. 4

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


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

42. When a drawing is technical and depicts a utilitarian


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

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

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

In fine, we cannot find SMI liable for infringing Pearl and Dean's copyright
over the technical drawings of the latter's advertising display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs.


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

SEC. 20. Certification of registration prima facie evidence of


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

The records show that on June 20, 1983, Pearl and Dean applied for the
registration of the trademark "Poster Ads" with the Bureau of Patents,
Trademarks, and Technology Transfer. Said trademark was recorded in the
Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads, envelopes
and calling cards and newsletters.

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

Really, if the certificate of registration were to be deemed as


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

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

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the


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

Defendants-appellants cannot thus be held liable for infringement of the


trademark "Poster Ads."

There being no finding of either copyright or trademark infringement on the


part of SMI and NEMI, the monetary award granted by the lower court to

Pearl and Dean has no leg to stand on.

xxx xxx xxx


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

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning
the following errors for the Court's consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY
RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING


THAT NO INFRINGEMENT OF PEARL & DEAN'S TRADEMARK
"POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND
NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING


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

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT


HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL &
DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,
ATTORNEY'S FEES AND COSTS OF SUIT. 6

ISSUES
In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law patents, copyrights,
trademarks and unfair competition arising from infringement of any of the first three. We
shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display
unit (light box) are granted copyright protection (copyright certificate of
registration) by the National Library, is the light box depicted in such

engineering drawings ipso facto also protected by such copyright?

(2) or should the light box be registered separately and protected by a


patent issued by the Bureau of Patents Trademarks and Technology
patent issued by the Bureau of Patents Trademarks and Technology
Transfer (now Intellectual Property Office) in addition to the copyright of
the engineering drawings?

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

ON THE ISSUE OF COPYRIGHT INFRINGEMENT


Petitioner P & D's complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its
own account. Obviously, petitioner's position was premised on its belief that its copyright
over the engineering drawings extended ipso facto to the light boxes depicted or
illustrated in said drawings. In ruling that there was no copyright infringement, the Court
of Appeals held that the copyright was limited to the drawings alone and not to the light
box itself. We agree with the appellate court.
First, petitioner's application for a copyright certificate as well as Copyright Certificate
No. PD-R2588 issued by the National Library on January 20, 1981 clearly stated that
it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property
Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the
works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following works:

xxx xxx xxx

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


box wraps;

xxx xxx xxx

Although petitioner's copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere
statutory grant, the rights are limited to what the statute confers. It may be obtained and
enjoyed only with respect to the subjects and by the persons, and on terms and
conditions specified in the statute. 7 Accordingly, it can cover only the works falling within
conditions specified in the statute. 7 Accordingly, it can cover only the works falling within
the statutory enumeration or description. 8
P & D secured its copyright under the classification class "O" work. This being so,
petitioner's copyright protection extended only to the technical drawings and not to the
light box itself because the latter was not at all in the category of "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as
we find that P & D indeed owned a valid copyright, the same could have referred only to
the technical drawings within the category of "pictorial illustrations." It could not have
possibly stretched out to include the underlying light box. The strict application 9 of the
law's enumeration in Section 2 prevents us from giving petitioner even a little leeway, that
is, even if its copyright certificate was entitled "Advertising Display Units." What the law
does not include, it excludes, and for the good reason: the light box was not a literary or
artistic piece which could be copyrighted under the copyright law. And no less clearly,
neither could the lack of statutory authority to make the light box copyrightable be
remedied by the simplistic act of entitling the copyright certificate issued by the National
Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D's technical drawings for sale to the public
without license from P & D, then no doubt they would have been guilty of copyright
infringement. But this was not the case. SMI's and NEMI's acts complained of by P & D
were to have units similar or identical to the light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioner's copyright over the technical
drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a
literary nor an artistic work but an "engineering or marketing invention." 10 Obviously,
there appeared to be some confusion regarding what ought or ought not to be the proper
subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of
Appeals, 11 we ruled that these three legal rights are completely distinct and separate
from one another, and the protection afforded by one cannot be used interchangeably to
cover items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights
that cannot be interchanged with one another. A trademark is any visible

sign capable of distinguishing the goods (trademark) or services (service


mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to
any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT


This brings us to the next point: if, despite its manufacture and commercial use of the
light boxes without license from petitioner, private respondents cannot be held legally
liable for infringement of P & D's copyright over its technical drawings of the said light
boxes, should they be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It
therefore acquired no patent rights which could have protected its invention, if in fact it
really was. And because it had no patent, petitioner could not legally prevent anyone
from manufacturing or commercially using the contraption. In Creser Precision Systems,
Inc. vs. Court of Appeals, 12 we held that "there can be no infringement of a patent until a
patent has been issued, since whatever right one has to the invention covered by the
patent arises alone from the grant of patent. . . . (A)n inventor has no common law right
to a monopoly of his invention. He has the right to make use of and vend his invention,
but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy
and use it with impunity. A patent, however, gives the inventor the right to exclude all
others. As a patentee, he has the exclusive right of making, selling or using the invention.
13 On the assumption that petitioner's advertising units were patentable inventions,

petitioner revealed them fully to the public by submitting the engineering drawings
thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate
goal of a patent system is to bring new designs and technologies into the public domain
through disclosure. 14 Ideas, once disclosed to the public without the protection of a valid
patent, are subject to appropriation without significant restraint. 15
On one side of the coin is the public which will benefit from new ideas; on the other are

the inventors who must be protected. As held in Bauer & Cie vs. O'Donnell, 16 "The act
secured to the inventor the exclusive right to make use, and vend the thing patented, and
consequently to prevent others from exercising like privileges without the consent of the
consequently to prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention and promoting
new and useful inventions by the protection and stimulation new and useful inventions by
the protection and stimulation given to inventive genius, and was intended to secure to
the public, after the lapse of the exclusive privileges granted the benefit of such
inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for
encouraging the creation and disclosure of new useful and non-obvious
advances in technology and design, in return for the exclusive right to
practice the invention for a number of years. The inventor may keep his
invention secret and reap its fruits indefinitely. In consideration of its
disclosure and the consequent benefit to the community, the patent is
granted. An exclusive enjoyment is guaranteed him for 17 years, but upon
the expiration of that period, the knowledge of the invention inures to the
people, who are thus enabled to practice it and profit by its use." 17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public
domain remain there for the free use of the public." 18
It is only after an exhaustive examination by the patent office that a patent is issued.
Such an in-depth investigation is required because "in rewarding a useful invention, the
rights and welfare of the community must be fairly dealt with and effectively guarded. To
that end, the prerequisites to obtaining a patent are strictly observed and when a patent
is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for
new appliances, the heavy hand of tribute be laid on each slight technological advance in
art." 19
There is no such scrutiny in the case of copyrights nor any notice published before its
grant to the effect that a person is claiming the creation of a work. The law confers the
copyright from the moment of creation 20 and the copyright certificate is issued upon

registration with the National Library of a sworn ex-parte claim of creation.


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

Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the
patent office (IPO) to scrutinize the light box's eligibility as a patentable invention. The
irony here is that, had petitioner secured a patent instead, its exclusivity would have
been for 17 years only. But through the simplified procedure of copyright-registration with
the National Library without undergoing the rigor of defending the patentability of its
invention before the IPO and the public the petitioner would be protected for 50 years.
This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden, 21 the United States Supreme Court held that
only the expression of an idea is protected by copyright, not the idea itself. In that case,
the plaintiff held the copyright of a book which expounded on a new accounting system
he had developed. The publication illustrated blank forms of ledgers utilized in such a
system. The defendant reproduced forms similar to those illustrated in the plaintiffs
copyrighted book. The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only
explanatory of well known systems, may be the subject of a copyright; but,
then, it is claimed only as a book. . . . But there is a clear distinction
between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly
any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping. A treatise on the composition
and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for
painting or dyeing; or on the mode of drawing lines to produce the effect of
perspective, would be the subject of copyright; but no one would contend
that the copyright of the treatise would give the exclusive right to the art or
manufacture described therein. The copyright of the book, if not pirated
from other works, would be valid without regard to the novelty or want of
novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the

author of the book an exclusive property in the art described therein, when
no examination of its novelty has ever been officially made, would be a
surprise and a fraud upon the public. That is the province of letters patent,
not of copyright. The claim to an invention of discovery of an art or
manufacture must be subjected to the examination of the Patent Office
before an exclusive right therein can be obtained; and a patent from the
government can only secure it.

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

The copyright of a book on perspective, no matter how many drawings and


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

xxx xxx xxx

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

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

ON THE ISSUE OF TRADEMARK INFRINGEMENT


This issue concerns the use by respondents of the mark "Poster Ads" which petitioner's
president said was a contraction of "poster advertising." P & D was able to secure a
trademark certificate for it, but one where the goods specified were "stationeries such as
letterheads, envelopes, calling cards and newsletters." 22 Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically
operated backlit advertising units and the sale of advertising spaces thereon, which,
however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs.
Intermediate Appellate Court, 23 where we, invoking Section 20 of the old Trademark
Law, ruled that "the certificate of registration issued by the Director of Patents can confer
(upon petitioner) the exclusive right to use its own symbol only to those goods specified
in the certificate, subject to any conditions and limitations specified in the certificate. . . . .
One who has adopted and used a trademark on his goods does not prevent the adoption
and use of the same trademark by others for products which are of a different
description." 24 Faberge, Inc. was correct and was in fact recently reiterated in Canon
Kabushiki Kaisha vs. Court of Appeals. 25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of
P & D to secure a trademark registration for specific use on the light boxes meant that
there could not have been any trademark infringement since registration was an
essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which
was possible even if P & D had no registration. 26 However, while the petitioner's
complaint in the RTC also cited unfair competition, the trial court did not find private
respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot
now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents
guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use
by a business (such that the name or phrase becomes associated with the business or
product in the mind of the purchasing public), be entitled to protection against unfair
competition. 27 In this case, there was no evidence that P & D's use of "Poster Ads" was
distinctive or well-known. As noted by the Court of Appeals, petitioner's expert witnesses
himself had testified that "'Poster Ads' was too generic a name. So it was difficult to
identify it with any company, honestly speaking." 28 This crucial admission by its own
expert witness that "Poster Ads" could not be associated with P & D showed that, in the
mind of the public, the goods and services carrying the trademark "Poster Ads" could not
be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster
Ads" was generic and incapable of being used as a trademark because it was used in
the field of poster advertising, the very business engaged in by petitioner. "Secondary
meaning" means that a word or phrase originally incapable of exclusive appropriation
with reference to an article in the market (because it is geographically or otherwise
descriptive) might nevertheless have been used for so long and so exclusively by one
producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his
property. 29 The admission by petitioner's own expert witness that he himself could not
associate "Poster Ads" with petitioner P & D because it was "too generic" definitely
precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the
rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it
reversed the Regional Trial Court of Makati City.ITSaHC

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

SECTION 21. Patentable Inventions. Any technical solution of a problem in any


SECTION 21. Patentable Inventions. Any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially
applicable shall be patentable. It may be, or may relate to, a product, or process, or an
improvement of any of the foregoing. (Sec. 7, R.A. No. 165a)

SECTION 71. Rights Conferred by Patent. 71.1. A patent shall confer


on its owner the following exclusive rights:
(a) Where the subject matter of a patent is a product, to restrain,
prohibit and prevent any unauthorized person or entity from
making, using, offering for sale, selling or importing that
product;
(b) Where the subject matter of a patent is a process, to restrain,
prevent or prohibit any unauthorized person or entity from using
the process, and from manufacturing, dealing in, using, selling
or offering for sale, or importing any product obtained directly or
indirectly from such process.
71.2.Patent owners shall also have the right to assign, or transfer by
succession the patent, and to conclude licensing contracts for the same. (Sec. 37,
R.A. No. 165a)

SECTION 54. Term of Patent. The term of a patent shall be twenty (20) years from the filing
date of the application. (Sec. 21, R.A. No. 165a)

[G.R. No. 167715. November 17, 2010.]

PHIL PHARMAWEALTH, INC., petitioner, vs. PFIZER, INC. and


PFIZER (PHIL.) INC., respondents.

DECISION

PERALTA, J : p

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 2by the Court of
aside the Resolutions dated January 18, 2005 1 and April 11, 2005 2by the Court of
Appeals (CA) in CA-G.R. SP No. 82734. TcADCI

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:
xxx xxx xxx

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. . . .
xxx xxx xxx

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. IcEACH

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.

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

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.
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? CAaEDH

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
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.HIACEa

On the basis of the foregoing, the Court agrees with petitioner that after July
16, 2004, respondents no longer possess the exclusive right to make, use and sell
the articles or products covered by Philippine Letters Patent No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the requirements for the
issuance of a writ of preliminary injunction, viz.:
(a) That the applicant is entitled to the relief demanded, and the whole
or part of such relief consists in restraining the commission or continuance
of the acts complained of, or in requiring the performance of an act or acts,
either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or


acts complained of during the litigation would probably work injustice to the
applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or


attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment ineffectual.

In this connection, pertinent portions of Section 5, Rule 58 of the same Rules


provide that if the matter is of extreme urgency and the applicant will suffer grave
injustice and irreparable injury, a temporary restraining order may be issued ex parte.
From the foregoing, it can be inferred that two requisites must exist to
warrant the issuance of an injunctive relief, namely: (1) the existence of a clear and
unmistakable right that must be protected; and (2) an urgent and paramount
necessity for the writ to prevent serious damage. 19 ESHcTD
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. EcAHDT
20 and 4, 21 Rule 65 of the Rules of Court, as amended. EcAHDT

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

Based on the foregoing, the Court finds that respondents' initial filing of their
complaint with the BLA-IPO, instead of the regular courts, is in keeping with the
doctrine of primary jurisdiction owing to the fact that the determination of the basic
issue of whether petitioner violated respondents' patent rights requires the exercise
by the IPO of sound administrative discretion which is based on the agency's special
competence, knowledge and experience.
However, the propriety of extending the life of the writ of preliminary
injunction issued by the BLA-IPO in the exercise of its quasi-judicial power is no

longer a matter that falls within the jurisdiction of the said administrative agency,
particularly that of its Director General. The resolution of this issue which was raised
before the CA does not demand the exercise by the IPO of sound administrative
discretion requiring special knowledge, experience and services in determining
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.
EACTSH

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. cdasia
the IPO and the RTC. cdasia

Respondents argue that they cannot be held guilty of forum shopping


because their complaints are based on different causes of action as shown by the
fact that the said complaints are founded on violations of different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or
omission by which a party violates a right of another. In the instant case,
respondents' cause of action in their complaint filed with the IPO is the alleged act of
petitioner in importing, distributing, selling or offering for sale Sulbactam Ampicillin
products, acts that are supposedly violative of respondents' right to the exclusive sale
of the said products which are covered by the latter's patent. However, a careful
reading of the complaint filed with the RTC of Makati City would show that
respondents have the same cause of action as in their complaint filed with the IPO.
They claim that they have the exclusive right to make, use and sell Sulbactam
Ampicillin products and that petitioner violated this right. Thus, it does not matter that
the patents upon which the complaints were based are different. The fact remains
that in both complaints the rights violated and the acts violative of such rights are
identical.
In fact, respondents seek substantially the same reliefs in their separate
complaints with the IPO and the RTC for the purpose of accomplishing the same
objective.
It is settled by this Court in several cases that the filing by a party of two
apparently different actions but with the same objective constitutes forum shopping.
28 The Court discussed this species of forum shopping as follows:

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

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


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

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

B.After hearing, issue a writ of preliminary injunction enjoining respondent,


its agents, representatives and assigns from importing, distributing, selling

or offering for sale Sulbactam Ampicillin products to the hospitals named in


paragraph 9 of the Complaint or to any other entity in the Philippines, or
from otherwise infringing Pfizer, Inc.'s Philippine Patent No. 21116; and aDIHCT
C.After trial, render judgment:

(i) declaring that respondent has infringed Pfizer, Inc.'s


Philippine Patent No. 21116 and that respondent has no
right whatsoever over complainant's patent;

(ii) ordering respondent to pay complainants the following


amounts:

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

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


expenses;

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

(d) costs of this suit.

(iii) ordering the condemnation, seizure or forfeiture of


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

(iv) making the injunction permanent. 32

In an almost identical manner, respondents prayed for the following in their


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

(1) temporarily restraining Pharmawealth, its agents,


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

(2) impounding all the sales invoices and other documents


evidencing sales by pharmawealth of sulbactam ampicillin
products; and IASEca

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


commerce.

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

(1) enjoining Pharmawealth, its agents, representatives and


assigns from importing, distributing, selling or offering for
sale infringing sulbactam ampicillin products to various
government hospitals or to any other entity in the
Philippines, or from otherwise infringing Patent No. 26810;

(2) impounding all the sales invoices and other documents


evidencing sales by Pharmawealth of sulbactam ampicillin
products; and

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


commerce.

(c) After trial, render judgment:

(1) finding Pharmawealth to have infringed Patent No. 26810


and declaring Pharmawealth to have no right whatsoever
over plaintiff's patent;

(2) ordering Pharmawealth to pay plaintiffs the following


amounts:

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

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


as litigation expenses;

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

(iv) costs of this suit.

(3) ordering the condemnation, seizure or forfeiture of


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

(4) making the injunction permanent. 33

It is clear from the foregoing that the ultimate objective which respondents
It is clear from the foregoing that the ultimate objective which respondents
seek to achieve in their separate complaints filed with the RTC and the IPO, is to ask
for damages for the alleged violation of their right to exclusively sell Sulbactam
Ampicillin products and to permanently prevent or prohibit petitioner from selling said
products to any entity. Owing to the substantial identity of parties, reliefs and issues
in the IPO and RTC cases, a decision in one case will necessarily amount to res
judicata in the other action.
It bears to reiterate that what is truly important to consider in determining
whether forum shopping exists or not is the vexation caused the courts and parties-
litigant by a party who asks different courts and/or administrative agencies to rule on
the same or related causes and/or to grant the same or substantially the same
reliefs, in the process creating the possibility of conflicting decisions being rendered
by the different fora upon the same issue. 34
Thus, the Court agrees with petitioner that respondents are indeed guilty of
forum shopping.
Jurisprudence holds that if the forum shopping is not considered willful and
deliberate, the subsequent case shall be dismissed without prejudice, on the ground
of either litis pendentia or res judicata. 35 However, if the forum shopping is willful and
deliberate, both (or all, if there are more than two) actions shall be dismissed with
prejudice. 36 In the present case, the Court finds that respondents did not deliberately
violate the rule on non-forum shopping. Respondents may not be totally blamed for
erroneously believing that they can file separate actions simply on the basis of
different patents. Moreover, in the suit filed with the RTC of Makati City, respondents
were candid enough to inform the trial court of the pendency of the complaint filed
with the BLA-IPO as well as the petition for certiorari filed with the CA. On these
bases, only Civil Case No. 04-754 should be dismissed on the ground of litis
pendentia.
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions
of the Court of Appeals, dated January 18, 2005 and April 11, 2005, in CA-G.R. No.
82734, are REVERSED and SET ASIDE. The petition for certiorari filed with the
Court of Appeals is DISMISSED for being moot and academic. IEcaHS

Civil Case No. 04-754, filed with the Regional Trial Court of Makati City,
Branch 138, is likewise DISMISSED on the ground of litis pendentia.
SO ORDERED.
SECTION 109. Special Provisions Relating to Utility Models. 109.1.
(a) An invention qualifies for registration as a utility model if it is new and industrially
applicable.
(b) Section 21, "Patentable Inventions", shall apply except the reference
to inventive step as a condition of protection. cdtai

109.2. Sections 43 to 49 shall not apply in the case of applications for


registration of a utility model.
109.3. A utility model registration shall expire, without any possibility of
renewal, at the end of the seventh year after the date of the filing of the application.
109.4. In proceedings under Sections 61 to 64, the utility model
registration shall be canceled on the following grounds:
(a) That the claimed invention does not qualify for registration as a
utility model and does not meet the requirements of
registrability, in particular having regard to Subsection 109.1
and Sections 22, 23, 24 and 27;
(b) That the description and the claims do not comply with the
prescribed requirements;
(c) That any drawing which is necessary for the understanding of
the invention has not been furnished;
(d) That the owner of the utility model registration is not the
inventor or his successor in title. (Secs. 55, 56, and 57, R.A.
No. 165a)
[G.R. No. 161295. June 29, 2005.]

JESSIE G. CHING, petitioner, vs. WILLIAM M. SALINAS, SR.,


WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y.
SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS,
NOEL M. YABUT (Board of Directors and Officers of WILAWARE

PRODUCT CORPORATION), respondents.

DECISION
CALLEJO, SR., J : p

This petition for review on certiorari assails the Decision 1 and Resolution 2 of the Court
of Appeals (CA) in CA-G.R. SP No. 70411 affirming the January 3, 2002 and February
14, 2002 Orders 3 of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed
and set aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner
Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the
maker and manufacturer of a Utility Model, described as "Leaf Spring Eye Bushing for
Automobile" made up of plastic. ICTaEH

On September 4, 2001, Ching and Joseph Yu were issued by the National Library
Certificates of Copyright Registration and Deposit of the said work described therein as
"Leaf Spring Eye Bushing for Automobile." 4
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for
police/investigative assistance for the apprehension and prosecution of illegal
manufacturers, producers and/or distributors of the works. 5
After due investigation, the NBI filed applications for search warrants in the RTC of
Manila against William Salinas, Sr. and the officers and members of the Board of
Directors of Wilaware Product Corporation. It was alleged that the respondents therein
reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of
Republic Act (R.A.) No. 8293. The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile
that are made up of plastic polypropylene;

b.) Undetermined quantity of Leaf spring eye bushing for automobile


that are made up of polyvinyl chloride plastic;

c.) Undetermined quantity of Vehicle bearing cushion that is made up


of polyvinyl chloride plastic;

d.) Undetermined quantity of Dies and jigs, patterns and flasks used in
the manufacture/fabrication of items a to d;
SACHcD

e.) Evidences of sale which include delivery receipts, invoices and


official receipts. 6
official receipts. 6

The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402
for the seizure of the aforecited articles. 7 In the inventory submitted by the NBI agent, it
appears that the following articles/items were seized based on the search warrants:
Leaf Spring eye bushing

a) Plastic Polypropylene

C190 27}

C240 rear 40}

C240 front 41} BAG 1

b) Polyvinyl Chloride Plastic

C190 13}

c) Vehicle bearing cushion

center bearing cushion 11}

Budder for C190 mold 8}

Diesel Mold

a) Mold for spring eye bushing rear 1 set

b) Mold for spring eye bushing front 1 set

c) Mold for spring eye bushing for C190 1 set

d) Mold for C240 rear 1 piece


of the set

e) Mold for spring eye bushing for L300 2 sets

f) Mold for leaf spring eye bushing C190


with metal 1 set

g) Mold for vehicle bearing cushion 1 set 8

The respondents filed a motion to quash the search warrants on the following grounds:
2. The copyright registrations were issued in violation of the Intellectual
Property Code on the ground that:
a) the subject matter of the registrations are not artistic or
literary;

b) the subject matter of the registrations are spare parts of


automobiles meaning there (sic) are original parts that
they are designed to replace. Hence, they are not original.
9

The respondents averred that the works covered by the certificates issued by the
National Library are not artistic in nature; they are considered automotive spare parts
and pertain to technology. They aver that the models are not original, and as such are
the proper subject of a patent, not copyright. 10
In opposing the motion, the petitioner averred that the court which issued the search
warrants was not the proper forum in which to articulate the issue of the validity of the
copyrights issued to him. Citing the ruling of the Court in Malaloan v. Court of Appeals, 11
the petitioner stated that a search warrant is merely a judicial process designed by the
Rules of Court in anticipation of a criminal case. Until his copyright was nullified in a
proper proceeding, he enjoys rights of a registered owner/holder thereof.

On January 3, 2002, the trial court issued an Order 12 granting the motion, and quashed
the search warrant on its finding that there was no probable cause for its issuance. The
court ruled that the work covered by the certificates issued to the petitioner pertained to
solutions to technical problems, not literary and artistic as provided in Article 172 of the
Intellectual Property Code.
His motion for reconsideration of the order having been denied by the trial court's Order
of February 14, 2002, the petitioner filed a petition for certiorari in the CA, contending
that the RTC had no jurisdiction to delve into and resolve the validity of the copyright
certificates issued to him by the National Library. He insisted that his works are covered
by Sections 172.1 and 172.2 of the Intellectual Property Code. The petitioner averred
that the copyright certificates are prima facie evidence of its validity, citing the ruling of
the United States Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales,
Inc. 13 The petitioner asserted that the respondents failed to adduce evidence to support
their motion to quash the search warrants. The petitioner noted that respondent William

Salinas, Jr. was not being honest, as he was able to secure a similar copyright
registration of a similar product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition on its finding
that the RTC did not commit any grave abuse of its discretion in issuing the assailed
that the RTC did not commit any grave abuse of its discretion in issuing the assailed
order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense
must have been committed to justify the issuance of a search warrant. In a
number of cases decided by the Supreme Court, the same is explicitly
provided, thus:

"The probable cause must be in connection with one specific


offense, and the judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing
and under oath, the complainant and any witness he may produce,
on facts personally known to them and attach to the record their
sworn statements together with any affidavit submitted. TEDAHI

"In the determination of probable cause, the court must necessarily


resolve whether or not an offense exists to justify the issuance or
quashal of the search warrant."

In the instant case, the petitioner is praying for the reinstatement of the
search warrants issued, but subsequently quashed, for the offense of
Violation of Class Designation of Copyrightable Works under Section 177.1
in relation to Section 177.3 of Republic Act 8293, when the objects subject
of the same, are patently not copyrightable.

It is worthy to state that the works protected under the Law on Copyright
are: literary or artistic works (Sec. 172) and derivative works (Sec. 173). The
Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither
classification. Accordingly, if, in the first place, the item subject of the
petition is not entitled to be protected by the law on copyright, how can
there be any violation? 14

The petitioner's motion for reconsideration of the said decision suffered the same fate.
The petitioner forthwith filed the present petition for review on certiorari, contending that
the revocation of his copyright certificates should be raised in a direct action and not in a
search warrant proceeding. HEISca

The petitioner posits that even assuming ex argumenti that the trial court may resolve the
validity of his copyright in a proceeding to quash a search warrant for allegedly infringing
items, the RTC committed a grave abuse of its discretion when it declared that his works
are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as
the Intellectual Property Code of the Philippines, which took effect on January 1, 1998,
provides in no uncertain terms that copyright protection automatically attaches to a work
by the sole fact of its creation, irrespective of its mode or form of expression, as well as
of its content, quality or purpose. 15 The law gives a non-inclusive definition of "work" as
referring to original intellectual creations in the literary and artistic domain protected from
the moment of their creation; and includes original ornamental designs or models for
articles of manufacture, whether or not registrable as an industrial design and other
works of applied art under Section 172.1(h) of R.A. No. 8293.
As such, the petitioner insists, notwithstanding the classification of the works as either
literary and/or artistic, the said law, likewise, encompasses works which may have a
bearing on the utility aspect to which the petitioner's utility designs were classified.
Moreover, according to the petitioner, what the Copyright Law protects is the author's
intellectual creation, regardless of whether it is one with utilitarian functions or
incorporated in a useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended use or use
in industry of an article eligible for patent bars or invalidates its registration under the Law
on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for
the copyright and invention of original and ornamental design for design patents. 16 In like
manner, the fact that his utility designs or models for articles of manufacture have been
expressed in the field of automotive parts, or based on something already in the public
domain does not automatically remove them from the protection of the Law on Copyright.
17

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the
same presumption to an affidavit executed by an author who claims copyright ownership
of his work.
The petitioner adds that a finding of probable cause to justify the issuance of a search
warrant means merely a reasonable suspicion of the commission of the offense. It is not
equivalent to absolute certainty or a finding of actual and positive cause. 18 He assists
that the determination of probable cause does not concern the issue of whether or not

the alleged work is copyrightable. He maintains that to justify a finding of probable cause
in the issuance of a search warrant, it is enough that there exists a reasonable suspicion
of the commission of the offense. EDIaSH

The petitioner contends that he has in his favor the benefit of the presumption that his
The petitioner contends that he has in his favor the benefit of the presumption that his
copyright is valid; hence, the burden of overturning this presumption is on the alleged
infringers, the respondents herein. But this burden cannot be carried in a hearing on a
proceeding to quash the search warrants, as the issue therein is whether there was
probable cause for the issuance of the search warrant. The petitioner concludes that the
issue of probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the petitioner is
essentially a technical solution to the problem of wear and tear in automobiles, the
substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil
resistant soft texture plastic material strong enough to endure pressure brought about by
the vibration of the counter bearing and thus brings bushings. Such work, the
respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293.
The respondents posit that a technical solution in any field of human activity which is
novel may be the subject of a patent, and not of a copyright. They insist that the
certificates issued by the National Library are only certifications that, at a point in time, a
certain work was deposited in the said office. Furthermore, the registration of copyrights
does not provide for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the
respondents aver that no copyright is said to exist if a party categorically questions its
existence and legality. Moreover, under Section 2, Rule 7 of the Implementing Rules of
R.A. No. 8293, the registration and deposit of work is not conclusive as to copyright
outlay or the time of copyright or the right of the copyright owner. The respondents
maintain that a copyright exists only when the work is covered by the protection of R.A.
No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioner's
utility models are copyrightable and, if so, whether he is the owner of a copyright over the
said models. It bears stressing that upon the filing of the application for search warrant,
the RTC was duty-bound to determine whether probable cause existed, in accordance
with Section 4, Rule 126 of the Rules of Criminal Procedure:
SEC. 4. Requisite for issuing search warrant. A search warrant shall
not issue but upon probable cause in connection with one specific offense

to be determined personally by the judge after examination under oath or


affirmation of the complainant and the witnesses he may produce, and,
particularly, describing the place to be searched and the things to be seized.

In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93, 19 the Court held
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93, 19 the Court held
that in the determination of probable cause, the court must necessarily resolve whether
or not an offense exists to justify the issuance of a search warrant or the quashal of one
already issued by the court. Indeed, probable cause is deemed to exist only where facts
and circumstances exist which could lead a reasonably cautious and prudent man to
believe that an offense has been committed or is being committed. Besides, in Section 3,
Rule 126 of the Rules of Criminal Procedure, a search warrant may be issued for the
search and seizure of personal property (a) subject of the offense; (b) stolen or
embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used
as the means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure to
determine probable cause. The court cannot abdicate its constitutional obligation by
refusing to determine whether an offense has been committed. 20 The absence of
probable cause will cause the outright nullification of the search warrant. 21
For the RTC to determine whether the crime for infringement under R.A. No. 8293 as
alleged in an application is committed, the petitioner-applicant was burdened to prove
that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted
material; and (b) the copyrighted material was being copied and distributed by the
respondents. Thus, the ownership of a valid copyright is essential. 22
Ownership of copyrighted material is shown by proof of originality and copyrightability. By
originality is meant that the material was not copied, and evidences at least minimal
creativity; that it was independently created by the author and that it possesses at least
same minimal degree of creativity. 23Copying is shown by proof of access to copyrighted
material and substantial similarity between the two works. 24 The applicant must thus
demonstrate the existence and the validity of his copyright because in the absence of
copyright protection, even original creation may be freely copied. 25
By requesting the NBI to investigate and, if feasible, file an application for a search
warrant for infringement under R.A. No. 8293 against the respondents, the petitioner
thereby authorized the RTC (in resolving the application), to delve into and determine the
validity of the copyright which he claimed he had over the utility models. The petitioner
cannot seek relief from the RTC based on his claim that he was the copyright owner over
the utility models and, at the same time, repudiate the court's jurisdiction to ascertain the
validity of his claim without running afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of registration covering
the work or, in its absence, other evidence. 26 A copyright certificate provides prima facie
the work or, in its absence, other evidence. 26 A copyright certificate provides prima facie
evidence of originality which is one element of copyright validity. It constitutes prima facie
evidence of both validity and ownership 27 and the validity of the facts stated in the
certificate. 28 The presumption of validity to a certificate of copyright registration merely
orders the burden of proof. The applicant should not ordinarily be forced, in the first
instance, to prove all the multiple facts that underline the validity of the copyright unless
the respondent, effectively challenging them, shifts the burden of doing so to the
applicant. 29 Indeed, Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:

(a) Copyright shall be presumed to subsist in the work or other subject


matter to which the action relates if the defendant does not put in issue the
question whether copyright subsists in the work or other subject matter; and
cSCTID

(b) Where the subsistence of the copyright is established, the plaintiff


shall be presumed to be the owner of the copyright if he claims to be the
owner of the copyright and the defendant does not put in issue the question
of his ownership.

A certificate of registration creates no rebuttable presumption of copyright validity where


other evidence in the record casts doubt on the question. In such a case, validity will not
be presumed. 30
To discharge his burden of probable cause for the issuance of a search warrant for
violation of R.A. No. 8293, the petitioner-applicant submitted to the RTC Certificate of
Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and
September 4, 2001, respectively, issued by the National Library covering work identified
as Leaf Spring Eye Bushing for Automobile and Vehicle Bearing Cushion both classified
under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic
works, hereinafter referred to as "works," are original intellectual creations in
the literary and artistic domain protected from the moment of their creation
and shall include in particular:

xxx xxx xxx

(h) Original ornamental designs or models for articles of manufacture,


whether or not registrable as an industrial design, and other works of
applied art.
applied art.

Related to the provision is Section 171.10, which provides that a "work of applied art" is
an artistic creation with utilitarian functions or incorporated in a useful article, whether
made by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright
certificate filed by the petitioner, the said Leaf Spring Eye Bushing for Automobile is
merely a utility model described as comprising a generally cylindrical body having a co-
axial bore that is centrally located and provided with a perpendicular flange on one of its
ends and a cylindrical metal jacket surrounding the peripheral walls of said body, with the
bushing made of plastic that is either polyvinyl chloride or polypropylene. 31 Likewise, the
Vehicle Bearing Cushion is illustrated as a bearing cushion comprising a generally semi-
circular body having a central hole to secure a conventional bearing and a plurality of
ridges provided therefore, with said cushion bearing being made of the same plastic
materials. 32 Plainly, these are not literary or artistic works. They are not intellectual
creations in the literary and artistic domain, or works of applied art. They are certainly not
ornamental designs or one having decorative quality or value.

It bears stressing that the focus of copyright is the usefulness of the artistic design, and
not its marketability. The central inquiry is whether the article is a work of art. 33 Works for
applied art include all original pictorials, graphics, and sculptural works that are intended
to be or have been embodied in useful article regardless of factors such as mass
production, commercial exploitation, and the potential availability of design patent
protection. 34
As gleaned from the description of the models and their objectives, these articles are
useful articles which are defined as one having an intrinsic utilitarian function that is not
merely to portray the appearance of the article or to convey information. Indeed, while
works of applied art, original intellectual, literary and artistic works are copyrightable,
useful articles and works of industrial design are not. 35 A useful article may be
copyrightable only if and only to the extent that such design incorporates pictorial,
graphic, or sculptural features that can be identified separately from, and are capable of
existing independently of the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293),
that the author's intellectual creation, regardless of whether it is a creation with utilitarian
functions or incorporated in a useful article produced on an industrial scale, is protected
by copyright law. However, the law refers to a "work of applied art which is an artistic
creation." It bears stressing that there is no copyright protection for works of applied art
creation." It bears stressing that there is no copyright protection for works of applied art
or industrial design which have aesthetic or artistic features that cannot be identified
separately from the utilitarian aspects of the article. 36 Functional components of useful
articles, no matter how artistically designed, have generally been denied copyright
protection unless they are separable from the useful article. 37
In this case, the petitioner's models are not works of applied art, nor artistic works. They
are utility models, useful articles, albeit with no artistic design or value. Thus, the
petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE

Known bushings inserted to leaf-spring eye to hold leaf-springs of


automobile are made of hard rubber. These rubber bushings after a time,
upon subjecting them to so much or intermittent pressure would eventually
wore (sic) out that would cause the wobbling of the leaf spring. IScaAE

The primary object of this utility model, therefore, is to provide a leaf-spring


eye bushing for automobile that is made up of plastic.

Another object of this utility model is to provide a leaf-spring eye bushing for
automobiles made of polyvinyl chloride, an oil resistant soft texture plastic
or polypropylene, a hard plastic, yet both causes cushion to the leaf spring,
yet strong enough to endure pressure brought about by the up and down
movement of said leaf spring.

Yet, an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a much longer life span than the rubber bushings.

Still an object of this utility model is to provide a leaf-spring eye bushing for
automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.

A further object of this utility model is to provide a leaf-spring eye bushing


for automobile that is supplied with a metal jacket to reinforce the plastic
eye bushing when in engaged with the steel material of the leaf spring.

These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.

Figure 1 is an exploded perspective of a leaf-spring eye bushing according


Figure 1 is an exploded perspective of a leaf-spring eye bushing according
to the present utility model;

Figure 2 is a sectional view taken along line 2-2 of Fig. 1;

Figure 3 is a longitudinal sectional view of another embodiment of this utility


model;

Figure 4 is a perspective view of a third embodiment; and

Figure 5 is a sectional view thereof.

Referring now to the several views of the drawings wherein like reference
numerals designated same parts throughout, there is shown a utility model
for a leaf-spring eye bushing for automobile generally designated as
reference numeral 10.

Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11


having a co-axial bore 12 centrally provided thereof.

As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with


a perpendicular flange 13 on one of its ends and a cylindrical metal jacket
14 surrounding the peripheral walls 15 of said body 11. When said leaf-
spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring
eye (not shown), which is also made of steel or cast steel. In effect, the
bushing 10 will not be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than those without the metal
jacket.

In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl


chloride, an oil resistant soft texture plastic or a hard polypropylene plastic,
both are capable to endure the pressure applied thereto, and, in effect,
would lengthen the life and replacement therefor.

Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of
said bushing 10 is insertably provided with a steel tube 17 to reinforce the
inner portion thereof. This steel tube 17 accommodates or engages with the
leaf-spring bolt (not shown) connecting the leaf spring and the automobile's

chassis.

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10
is elongated and cylindrical as to its construction. Said another embodiment
is also made of polypropylene or polyvinyl chloride plastic material. The
steel tube 17 and metal jacket 14 may also be applied to this embodiment
as an option thereof. 38

VEHICLE BEARING CUSHION

Known bearing cushions inserted to bearing housings for vehicle propeller


shafts are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually be
worn out that would cause the wobbling of the center bearing.

The primary object of this utility model therefore is to provide a vehicle-


bearing cushion that is made up of plastic.

Another object of this utility model is to provide a vehicle bearing cushion


made of polyvinyl chloride, an oil resistant soft texture plastic material which
causes cushion to the propeller's center bearing, yet strong enough to
endure pressure brought about by the vibration of the center bearing.

Yet, an object of this utility model is to provide a vehicle-bearing cushion


that has a much longer life span than rubber bushings. ESCacI

Still an object of this utility model is to provide a vehicle bearing cushion that
has a very simple construction and can be made using simple and ordinary
molding equipment.

These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.

Figure 1 is a perspective view of the present utility model for a vehicle-


bearing cushion; and

Figure 2 is a sectional view thereof.

Referring now to the several views of the drawing, wherein like reference
numeral designate same parts throughout, there is shown a utility model for
a vehicle-bearing cushion generally designated as reference numeral 10. TAaHIE

Said bearing cushion 10 comprises of a generally semi-circular body 11,


having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13
which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture
oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about
by the rotating movement of the propeller shaft of the vehicle. 39

A utility model is a technical solution to a problem in any field of human activity which is
new and industrially applicable. It may be, or may relate to, a product, or process, or an
improvement of any of the aforesaid. 40 Essentially, a utility model refers to an invention
in the mechanical field. This is the reason why its object is sometimes described as a
device or useful object. 41 A utility model varies from an invention, for which a patent for
invention is, likewise, available, on at least three aspects: first, the requisite of "inventive
step" 42 in a patent for invention is not required; second, the maximum term of protection
is only seven years 43 compared to a patent which is twenty years, 44 both reckoned from
the date of the application; and third, the provisions on utility model dispense with its
substantive examination 45 and prefer for a less complicated system. HDCAaS

Being plain automotive spare parts that must conform to the original structural design of
the components they seek to replace, the Leaf Spring Eye Bushing and Vehicle Bearing
Cushion are not ornamental. They lack the decorative quality or value that must
characterize authentic works of applied art. They are not even artistic creations with
incidental utilitarian functions or works incorporated in a useful article. In actuality, the
personal properties described in the search warrants are mechanical works, the principal
function of which is utility sans any aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as
included in the catch-all phrase "other literary, scholarly, scientific and artistic works" in
Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which
states that "where a statute describes things of a particular class or kind accompanied by
words of a generic character, the generic word will usually be limited to things of a similar
nature with those particularly enumerated, unless there be something in the context of
the state which would repel such inference," 46 the Leaf Spring Eye Bushing and Vehicle
Bearing Cushion are not copyrightable, being not of the same kind and nature as the
works enumerated in Section 172 of R.A. No. 8293. HCITDc

No copyright granted by law can be said to arise in favor of the petitioner despite the
issuance of the certificates of copyright registration and the deposit of the Leaf Spring
Eye Bushing and Vehicle Bearing Cushion. Indeed, in Joaquin, Jr. v. Drilon 47 and Pearl
& Dean (Phil.), Incorporated v. Shoemart, Incorporated, 48 the Court ruled that:
Copyright, in the strict sense of the term, is purely a statutory right. It is a
new or independent right granted by the statute, and not simply a pre-
existing right regulated by it. Being a statutory grant, the rights are only
such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions
specified in the statute. Accordingly, it can cover only the works falling within
the statutory enumeration or description.

That the works of the petitioner may be the proper subject of a patent does not entitle
him to the issuance of a search warrant for violation of copyright laws. In Kho v. Court of
Appeals 49 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated, 50 the Court
ruled that "these copyright and patent rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used interchangeably to cover
items or works that exclusively pertain to the others." The Court expounded further, thus:
Trademark, copyright and patents are different intellectual property rights
that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to
any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable. EHSITc

The petitioner cannot find solace in the ruling of the United States Supreme Court in
Mazer v. Stein 51 to buttress his petition. In that case, the artifacts involved in that case
were statuettes of dancing male and female figures made of semi-vitreous china. The
controversy therein centered on the fact that although copyrighted as "works of art," the
statuettes were intended for use and used as bases for table lamps, with electric wiring,
sockets and lampshades attached. The issue raised was whether the statuettes were

copyright protected in the United States, considering that the copyright applicant
intended primarily to use them as lamp bases to be made and sold in quantity, and
carried such intentions into effect. At that time, the Copyright Office interpreted the 1909
Copyright Act to cover works of artistic craftsmanship insofar as their form, but not the
utilitarian aspects, were concerned. After reviewing the history and intent of the US
utilitarian aspects, were concerned. After reviewing the history and intent of the US
Congress on its copyright legislation and the interpretation of the copyright office, the US
Supreme Court declared that the statuettes were held copyrightable works of art or
models or designs for works of art. The High Court ruled that:
"Works of art (Class G) (a) In General. This class includes works of
artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic jewelry, enamels,
glassware, and tapestries, as well as all works belonging to the fine arts,
such as paintings, drawings and sculpture. . . ."

So we have a contemporaneous and long-continued construction of the


statutes by the agency charged to administer them that would allow the
registration of such a statuette as is in question here. 52

The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not
beauty and utility but art for the copyright and the invention of original and ornamental
design for design patents." Significantly, the copyright office promulgated a rule to
implement Mazer to wit:
. . . [I]f "the sole intrinsic function of an article is its utility, the fact that the
work is unique and attractively shaped will not qualify it as a work of art."

In this case, the bushing and cushion are not works of art. They are, as the petitioner
himself admitted, utility models which may be the subject of a patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of
merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
70411 are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October
15, 2001 are ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.

[G.R. No. 115106. March 15, 1996.]

ROBERTO L. DEL ROSARIO, petitioner, vs. COURT OF APPEALS


AND JANITO CORPORATION, respondents.

DECISION
BELLOSILLO, J : p

Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1
which set aside the order of the Regional Trial Court of Makati granting a writ of
preliminary injunction in his favor.
The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement
against private respondent Janito Corporation. 2 Roberto L. delRosario alleged that he
was a patentee of an audio equipment and improved audio equipment commonly known
as the sing-along system or karaokeunder Letters Patent No. UM-5269 dated 2 June
1983 as well as Letters Patent No. UM-6237 dated 14 November 1986 issued by the
Director of Patents. The effectivity of both Letters Patents was for five (5) years and was
extended for another five (5) years starting 2 June 1988 and 14 November 1991,
respectively. He described his sing-along system as a handy multi-purpose compact
machine which incorporates an amplifier speaker, one or two tape mechanisms, optional
tuner or radio and microphone mixer with features to enhance one's voice, such as the
echo or reverb to stimulate an opera hall or a studio sound, with the whole system
enclosed in one cabinet casing.
In the early part of 1990 petitioner learned that private respondent was manufacturing a
sing-along system bearing the trademark miyata or miyata karaoke substantially similar if
not identical to the sing-along system covered by the patents issued in his favor. Thus he
sought from the trial court the issuance of a writ of preliminary injunction to enjoin private
respondent, its officers and everybody elsewhere acting on its behalf, from using, selling
and advertising the miyata or miyata karaoke brand, the injunction to be made
permanent after trial, and praying for damages, attorney's fees and costs of suit.
On 5 February 1993 the trial court temporarily restrained private respondent from
manufacturing, using and/or selling and advertising the miyata sing-along system or any
sing-along system substantially identical to the sing-along system patented by petitioner
until further orders.
On 24 February 1993 the trial court issued a writ of preliminary injunction upon a bond on

the basis of its finding that petitioner was a holder of a utility model patent for a sing-
along system and that without his approval and consent private respondent was
admittedly manufacturing and selling its own sing-along system under the brand name
miyata which was substantially similar to the patented utility model 3 of petitioner.
Private respondent assailed the order of 24 February 1993 directing the issuance of the
writ by way of a petition for certiorari with prayer for the issuance of a writ of preliminary
injunction and a temporary restraining order before respondent Court of Appeals.
On 15 November 1993 respondent appellate court granted the writ and set aside the
questioned order of the trial court. It expressed the view that there was no infringement
of the patents of petitioner by the fact alone that private respondent had manufactured
the miyata karaoke or audio system, and that the karaoke system was a universal
product manufactured, advertised and marketed in most countries of the world long
before the patents were issued to petitioner. The motion to reconsider the grant of the
writ was denied; 4 hence, the instant petition for review.
This petition alleges that: (a) it was improper for the Court of Appeals to consider
questions of fact in a certiorari proceeding; (b) the Court of Appeals erred in taking
judicial notice of private respondent's self-serving presentation of facts; (c) the Court of
Appeals erred in disregarding the findings of fact of the trial court; and, (d) there was no
basis for the Court of Appeals to grant a writ of preliminary injunction in favor of private
respondent. 5

Petitioner argues that in a certiorari proceeding, questions of fact are not generally
permitted the inquiry being limited essentially to whether the tribunal has acted without or
in excess of jurisdiction or with grave abuse of discretion; that respondent court should
not have disturbed but respected instead the factual findings of the trial court; that the
movant has a clear legal right to be protected and that there is a violation of such right by
private respondent. Thus, petitioner herein claims, he has satisfied the legal requisites to
justify the order of the trial court directing the issuance of the writ of injunction. On the
other hand, in the absence of a patent to justify the manufacture and sale by private
respondent of sing-along systems, it is not entitled to the injunctive relief granted by
respondent appellate court.
The crux of the controversy before us hinges on whether respondent Court of Appeals
erred in finding the trial court to have committed grave abuse ofdiscretion in enjoining
private respondent from manufacturing, selling and advertising the miyata karaoke brand
sing-along system for being substantially similar if not identical to the audio equipment
covered by letters patent issued to petitioner.
Injunction is a preservative remedy for the protection of substantive rights or interests. It
is not a cause of action in itself but merely a provisional remedy, an adjunct to a main
suit. The controlling reason for the existence of the judicial power to issue the writ is that
suit. The controlling reason for the existence of the judicial power to issue the writ is that
the court may thereby prevent a threatened or continuous irremediable injury to some of
the parties before their claims can be thoroughly investigated and advisedly adjudicated.
It is to be resorted to only when there is a pressing necessity to avoid injurious
consequences which cannot be remedied under any standard of compensation. The
application of the writ rests upon an alleged existence of an emergency or of a special
reason for such an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the complaint alleges
facts which appear to be sufficient to constitute a cause ofaction for injunction and that
on the entire showing from both sides, it appears, in view of all the circumstances, that
the injunction is reasonably necessary to protect the legal rights of plaintiff pending the
litigation. 6
A preliminary injunction may be granted at any time after the commencement of the
action and before judgment when it is established that the defendant is doing, threatens,
or is about to do, or is procuring or suffering to be done, some act probably in violation of
the plaintiff's rights. Thus, there are only two requisites to be satisfied if an injunction is to
issue, namely, the existence of the right to be protected, and that the facts against which
the injunction is to be directed are violative of said right. 7
For the writ to issue the interest of petitioner in the controversy or the right he seeks to
be protected must be a present right, a legal right which must be shown to be clear and
positive.
In this regard Sec. 55 of R.A. 165 as amended, known as The Patent Law, provides
Sec. 55. Design patents and patents for utility models. (a) Any new,
original, and ornamental design for an article of manufacture and (b) new
model of implements or tools or of any industrial product or of part of the
same, which does not possess the quality of invention but which is
ofpractical utility by reason of its form, configuration, construction or
composition, may be protected by the author thereof, the former by a patent
for a design and the latter by a patent for a utility model, in the same
manner and subject to the same provisions and requirements as relate to

patents for inventions insofar as they are applicable, except as otherwise


herein provide . . .

Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985
issued for a term of five (5) years from the grant of a Utility Model herein described
The construction of an audio equipment comprising a substantially cubical
casing having a window at its rear and upper corner fitted with a slightly
inclined control panel, said cubical (casing) having a vertical partition wall
therein defining a rear compartment and a front compartment, and said front
compartment serving as a speaker baffle; a transistorized amplifier circuit
having an echo section and writhed in at least the printed circuit boards
placed inside said rear compartment of said casing and attached to said
vertical partition wall, said transistorized amplifier circuit capable ofbeing
operated from outside, through various controls mounted on said control
panel of such casing; a loud speaker fitted inside said front compartment of
said casing and connected to the output of the main audio amplifier section
of said transistorized amplifier circuit and a tape player mounted on the top
wall of said casing and said tape player being connected in conventional
manner to said transistorized amplifier circuit. 8

Again, on 14 November 1986 petitioner was granted Letters Patent No. UM-6237 for a
term of five (5) years from the grant of a Utility Model described as
In an audio equipment consisting of a first cubical casing having an opening
at its rear and upper rear portion and a partition therein forming a rear
compartment and a front compartment serving as a loud speaker baffle, a
control panel formed by vertical and horizontal sections, a transistorized
amplifier circuit wired in at least two printed circuit boards attached at the
back of said control panel, a first loud speaker fitted inside said first
compartment of such first casing and connected to the output of said
transistorized amplifier circuit; the improvement wherein said control panel
being removably fitted to said first cubical casing and further comprises a
set of tape recorder and tape player mounted on the vertical section of said
control panel and said recorder and player are likewise connected to said
transistorized amplifier circuit; a second cubical casing having an opening at
its rear, said second cubical casing having (being ?) provided with a vertical
partition therein defining a rear compartment and a front compartment, said
rear compartment being provided with a door and enclosing therein a set of
tape racks and said front compartment serving as loud speaker baffle, said
second cubical casing being adapted to said first cubical casing so that said
first and second casings are secured together in compact and portable
form; and a second loud speaker fitted inside said front compartment of said
casing and connected to the output of said amplifier circuit. 9
casing and connected to the output of said amplifier circuit. 9

The terms of both Letters Patents were extended for another five (5) years each, the first
beginning 2 June 1988 and the second, 14 November 1991.
The Patent Law expressly acknowledges that any new model of implements or tools of
any industrial product even if not possessed of the quality ofinvention but which is of
practical utility is entitled to a patent for utility model. 10 Here, there is no dispute that the
letters patent issued to petitioner are for utility models of audio equipment.
In issuing, reissuing or withholding patents and extensions thereof, the Director of
Patents determines whether the patent is new and whether the machine or device is the
proper subject of patent. In passing on an application, the Director decides not only
questions of law but also questions of fact, i.e. whether there has been a prior public use
or sale of the article sought to be patented. 11 Where petitioner introduces the patent in
evidence, if it is in due form, it affords a prima facie presumption of its correctness and
validity. The decision of the Director of Patents in granting the patent is always presumed
to be correct, and the burden then shifts to respondent to overcome this presumption by
competent evidence. 12
Under Sec. 55 of The Patent Law a utility model shall not be considered "new" if before
the application for a patent it has been publicly known or publicly used in this country or
has been described in a printed publication or publications circulated within the country,
or if it is substantially similar to any other utility model so known, used or described within
the country. Respondent corporation failed to present before the trial court competent
evidence that the utility models covered by the Letters Patents issued to petitioner were
not new. This is evident from the testimony of Janito Cua, President of respondent Janito
Corporation, during the hearing on the issuance of the injunction, to wit
Q. Mr. Cua, you testified that there are (sic) so many other companies
which already have (sic) the sing-along system even before the
patent application of Mr. del Rosario and as a matter of fact you
mentioned Sanyo, Sony and Sharp, is that right?

A. Musicmate and Asahi.

Q. Now do you recall that your lawyer filed with this Honorable Court
an Urgent Motion to Lift Temporary Restraining Order of this
Honorable Court. I am sure you were the one who provided him
with the information about the many other companies selling the
sing-along system, is that right? These 18 which you enumerated
sing-along system, is that right? These 18 which you enumerated
here.

A. More than that because . . .

Q. Now you will agree with me that in your statement Sharp you put
the date as 1985 agreed?

A. No.

Q. You mean your lawyer was wrong when he put the word Sharp
1985?

A. Maybe I informed him already.

xxx xxx xxx

Q. You mean your lawyer was wrong in alleging to this Court that
Sharp manufactured and sold (in) 1985 as found in the Urgent
Motion?

A. Since it is urgent it is more or less.

Q. The same also with Sanyo 1985 which you put, more or less?

A. Sanyo is wrong.

Q. It is not 1985?

A. Sanyo is 1979 I think.

Q. So this is also wrong. Panasonic 1986 is also wrong?

A. Panasonic I think.

Q. So you don't think this is also correct.

A. The date?

Q. So you don't think also that this allegation here that they
manufacture in 1986 is correct?
A. Wrong. Earlier.

Q. National by Precision Electronic 1986 this is also wrong?

A. I think earlier.

Q. So that means all your allegations here from 2 to 5 are wrong? OK.
Q. So that means all your allegations here from 2 to 5 are wrong? OK.
By Philipps Philippines 1986, this is also correct or wrong?

A. More or less. We said more or less.

Q. Nakabutshi by Asahi Electronics that is also wrong?

A. No, that is 1979.

Q. Electone by DICO 1989 is this correct or wrong?

A. Correct. More or less.

Q. Skylers 1985 is that correct or wrong?

A. It is more or less because it is urgent. We don't have time to exact


the date.

Q. Musicmate of G.A. Yupangco 1981 this is more or less? You are not
also sure?

A. 95% sure.

Q. Now you are sure 1981.

A. This one because . . .

Q. Mr. Witness so you are now trying to tell this Honorable Court that
all your allegations here of the dates in this Urgent Motion except
for Musicmate which you are only 95% sure they are all wrong or
they are also more or less or not sure, is that right?

A. More or less.

Q. Now do you have any proof, any advertisement, anything in writing


that would show that all these instruments are in the market, do you
have it?

A. No, I don't have it because . . .

Q. No. I am satisfied with your answer. Now Mr. Witness, you don't

also have a proof that Akai instrument that you said was also in the
market before 1982? You don't have any written proof, any
advertisement?

A. I have the product.


Q. But you have not brought the product in (sic) this Honorable Court,
right?

A. No. 13

As may be gleaned herein, the rights of petitioner as a patentee have been sufficiently
established, contrary to the findings and conclusions of respondent Court of Appeals.
Consequently, under Sec. 37 of The Patent Law, petitioner as a patentee shall have the
exclusive right to make, use and sell the patented machine, article or product 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 authorization of
the patentee constitutes infringement of his patent.
Petitioner established before the trial court that respondent Janito Corporation was
manufacturing a similar sing-along system bearing the trademark miyata which infringed
his patented models. He also alleged that both his own patented audio equipment and
respondent's sing-along system were constructed in a casing with a control panel, the
casing having a vertical partition wall defining the rear compartment from the front
compartment, with the front compartment consisting of a loud speaker baffle, both
containing a transistorized amplifier circuit capable of being operated from outside
through various controls mounted on the control panel, and that both had loud speakers
fitted inside the front compartment of the casing and connected to the output of the main
audio amplifier section both having a tape recorder and a tape player mounted on the
control panel with the tape recorder and tape player being both connected to the
transistorized amplifier circuit. 14
Respondent Janito Corporation denied that there was any violation of petitioner's patent
rights, and cited the differences between its miyata equipmentand petitioner's audio
equipment. But, it must be emphasized, respondent only confined its comparison to the
first model, Utility Model No. 5269, and completely disregarded Utility Model No. 6237
which improved on the first. As described by respondent corporation, 15 these differences
are
First. Under Utility Model 5269, the unit is a substantially cubical casing with

a window at its rear and upper corner fitted with slightly inclined control
panel, while the miyata equipment is a substantially rectangular casing with
panel vertically positioned.

Second. Under Utility Model 5269, the cubical casing has a vertical partition
wall defining a rear compartment and a front compartment serving as a
wall defining a rear compartment and a front compartment serving as a
speaker baffle, while the miyata equipment has no rear compartment and
front compartment in its rectangular casing; it has only a front compartment
horizontally divided into 3 compartments like a 3-storey building, the 1st
compartment being a kit, the 2nd also the speaker, and the 3rd are kits.

Third. Under Utility Model No. 5269, a transistorized amplifier circuit with an
echo section wired in at least 2 printed circuit boards is placed inside the
rear compartment of the casing and attached to the vertical partition wall,
the printed circuit board having 1 amplifier and 1 echo, while in the
miyataequipment the amplifier is mainly IC (Integrated Circuit) powered
with 8 printed circuit boards almost all of which are IC controlled, with 1
amplifier with power supply, 1 main tuner, 1 equalizer (3-band), 1 IC
controlled volume control, 1 echo IC, 1 tape pream, 1 instrument and 1
wireless microphone.

Fourth. Under Utility Model 5269, 4 printed circuits are placed inside the
compartment of its casing attached to the vertical partition wall, while in the
miyata, the 7 printed circuit boards (PCB) are attached to the front panel
and 1 attached to the horizontal divider.

Fifth. Under Utility Model 5269, there are various controls mounted on the
control panel of the casing, while in miyata, the various controls are all
separated from the printed circuit boards and the various controls are all
attached thereto.

Sixth. Under Utility Model 5269, a loud speaker fitted inside the front
compartment of the casing is connected to the output of the main audio
amplifier section of the transistorized amplifier circuit, while in miyata, there
is no other way but to use 2 loud speakers connected to the amplifier.

Seventh. Under Utility Model 5269, a tape player is mounted on the top wall
of the casing, while in miyata, 2 tape players are used mounted side by side
at the front.

It is elementary that a patent may be infringed where the essential or substantial features
of the patented invention are taken or appropriated, or the device, machine or other
subject matter alleged to infringe is substantially identical with the patented invention. In
order to infringe a patent, a machine or device must perform the same function, or
accomplish the same result by identical or substantially identical means and the principle
or mode of operation must be substantially the same. 16
or mode of operation must be substantially the same. 16
It may be noted that respondent corporation failed to present before the trial court a
clear, competent and reliable comparison between its own model and that of petitioner,
and disregarded completely petitioner's Utility Model No. 6237 which improved on his
first patented model. Notwithstanding the differences cited by respondent corporation, it
did not refute and disprove the allegations of petitioner before the trial court that: (a) both
are used by a singer to sing and amplify his voice; (b) both are used to sing with a minus-
one or multiplex tapes, or that both are used to play minus-one or standard cassette
tapes for singing or for listening to; (c) both are used to sing with a minus-one tape and
multiplex tape and to record the singing and the accompaniment; (d) both are used to
sing with live accompaniment and to record the same; (e) both are used to enhance the
voice of the singer using echo effect, treble, bass and other controls; (g) both are
equipped with cassette tape decks which are installed with one being used for playback
and the other, for recording the singer and the accompaniment, and both may also be
used to record a speaker's voice or instrumental playing, like the guitar and other
instruments; (h) both are encased in a box-like cabinets; and (i) both can be used with
one or more microphones. 17
Clearly, therefore, both petitioner's and respondent's models involve substantially the
same modes of operation and produce substantially the same if not identical results
when used.
In view thereof, we find that petitioner had established before the trial court prima facie
proof of violation of his rights as patentee to justify the issuance ofa writ of preliminary
injunction in his favor during the pendency of the main suit for damages resulting from
the alleged infringement.
WHEREFORE, the Decision of the Court of Appeals dated 15 November 1993 is
REVERSED and SET ASIDE and the Order of the trial court dated 24 February 1993
granting petitioner the writ of injunction is REINSTATED.
The trial court is directed to continue with the proceedings on the main action pending
before it in order to resolve with dispatch the issues therein presented.
SO ORDERED.
SECTION 112. Definition of Industrial Design. An industrial design is any composition of lines
or colors or any three-dimensional form, whether or not associated with lines or colors:
Provided, That such composition or form gives a special appearance to and can serve as
pattern for an industrial product or handicraft. (Sec. 55, R.A. No. 165a)
SECTION 118. The Term of Industrial Design Registration. 118.1 The
registration of an industrial design shall be for a period of five (5) years from the filing
date of the application.
118.2. The registration of an industrial design may be renewed for not
more than two (2) consecutive periods of five (5) years each, by paying the renewal
fee.
118.3. The renewal fee shall be paid within twelve (12) months
preceding the expiration of the period of registration. However, a grace period of six
(6) months shall be granted for payment of the fees after such expiration, upon
payment of a surcharge
118.4. The Regulations shall fix the amount of renewal fee, the
surcharge and other requirements regarding the recording of renewals of registration.
SECTION 22. Non-Patentable Inventions. The following shall be
excluded from patent protection:
22.1. Discoveries, scientific theories and mathematical methods;
22.2. Schemes, rules and methods of performing mental acts, playing
games or doing business, and programs for computers;
22.3. Methods for treatment of the human or animal body by surgery or
therapy and diagnostic methods practiced on the human or animal body. This
provision shall not apply to products and composition for use in any of these
methods;
22.4. Plant varieties or animal breeds or essentially biological process
for the production of plants or animals. This provision shall not apply to micro-
organisms and non-biological and microbiological processes.
Provisions under this subsection shall not preclude Congress to consider the
enactment of a law providing sui generis protection of plant varieties and animal
breeds and a system of community intellectual rights protection:

22.5. Aesthetic creations; and


22.6. Anything which is contrary to public order or morality. (Sec. 8, R.A.
No. 165a)

SECTION 23. Novelty. An invention shall not be considered new if it forms part
of a prior art. (Sec. 9, R.A. No. 165a)||| (Intellectual Property Code of the
Philippines, Republic Act No. 8293, [June 6, 1997])

[G.R. No. 113388. September 5, 1997.]

ANGELITA MANZANO, petitioner, vs. COURT OF APPEALS, and MELECIA


MADOLARIA, as Assignor to NEW UNITED FOUNDRY
MANUFACTURING CORPORATION, respondents.

DECISION

BELLOSILLO, J p:

The primary purpose of the patent system is not the reward of the individual but the
advancement of the arts and sciences. The function of a patent is to add to
the sum of useful knowledge and one of the purposes of the patent system
is to encourage dissemination of information concerning discoveries and
inventions. This is a matter which is properly within the competence of the
Patent Office, the official action of which has the presumption of correctness
and may not be interfered with in the absence of new evidence carrying
thorough conviction that the Office has erred. Since the Patent Office is an
expert body preeminently qualified to determine questions of patentability,
its findings must be accepted if they are consistent with the evidence, with
doubts as to patentability resolved in favor of the Patent Office. 1

Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February
1982 an action for the cancellation of Letters Patent No. UM-4609 for a gas
burner registered in the name of respondent Melecia Madolaria who
subsequently assigned the letters patent to New United Foundry and
*Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner
alleged that (a) the utility model covered by the letters patent, in this case,

an LPG gas burner, was not inventive, new or useful; (b) the specification of
the letters patent did not comply with the requirements of Sec. 14, RA No.
165, as amended; (c) respondent Melecia Madolaria was not the original,
true and actual inventor nor did she derive her rights from the original, true
and actual inventor of the utility model covered by the letters patent; and, (d)
the letters patent was secured by means of fraud or misrepresentation. In
support of her petition for cancellation petitioner further alleged that (a) the
utility model covered by the letters patent of respondent had been known or
used by others in the Philippines for more than one (1) year before she filed
her application for letters patent on 9 December 1979; (b) the products
which were produced in accordance with the utility model covered by the
letters patent had been in public use or on sale in the Philippines for more
than one (1) year before the application for patent therefor was filed. cdpr

Petitioner presented the following documents which she correspondingly marked as


exhibits: (a) affidavit of petitioner alleging the existence of prior art, marked
Exh. "A;" (b) a brochure distributed by Manila Gas Corporation disclosing a
pictorial representation of Ransome Burner made by Ransome Torch and
Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by
Esso Gasul or Esso Standard Eastern, Inc., of the Philippines showing a
picture of another similar burner with top elevation view and another
perspective view of the same burner, marked Exh. "E."

Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a
helper in the UNITED FOUNDRY where respondent Melecia Madolaria
used to be affiliated with from 1965 to 1970; that Ong helped in the casting
of an LPG burner which was the same utility model of a burner for which
Letters Patent No. UM-4609 was issued, and that after her husband's
separation from the shop she organized Besco Metal Manufacturing
(BESCO METAL, for brevity) for the casting of LPG burners one of which
had the configuration, form and component parts similar to those being
manufactured by UNITED FOUNDRY. Petitioner presented in evidence an
alleged model of an LPG burner marked Exh. "K" and covered by the
Letters Patent of respondent, and testified that it was given to her in
January 1982 by one of her customers who allegedly acquired it from
UNITED FOUNDRY. Petitioner also presented in evidence her own model of
an LPG burner called "Ransome" burner marked Exh. "L," which was

allegedly manufactured in 1974 or 1975 and sold by her in the course of her
business operation in the name of BESCO METAL. Petitioner claimed that
this "Ransome" burner (Exh. "L") had the same configuration and
mechanism as that of the model which was patented in favor of private
respondent Melecia Madolaria. Also presented by petitioner was a burner
cup of an imported "Ransome" burner marked Exh "M" which was allegedly
existing even before the patent application of private respondent.

Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua
and Fidel Francisco. Ong testified that he worked as a helper in the UNITED
FOUNDRY from 1965 to 1970 where he helped in the casting of LPG
burners with the same form, configuration and mechanism as that of the
model covered by the Letters Patent issued to private respondent.
Francisco testified that he had been employed with the Manila Gas
Corporation from 1930 to 1941 and from 1952 up to 1969 where he retired
as supervisor and that Manila Gas Corporation imported "Ransome"
burners way back in 1965 which were advertised through brochures to
promote their sale.

Private respondent, on the other hand, presented only one witness, Rolando
Madolaria, who testified, among others, that he was the General Supervisor
of the UNITED FOUNDRY in the foundry, machine and buffing section; that
in his early years with the company, UNITED FOUNDRY was engaged in
the manufacture of different kinds of gas stoves as well as burners based
on sketches and specifications furnished by customers; that the company
manufactured early models of single-piece types of burners where the
mouth and throat were not detachable; that in the latter part of 1978
respondent Melecia Madolaria confided in him that complaints were being
brought to her attention concerning the early models being manufactured;
that he was then instructed by private respondent to cast several
experimental models based on revised sketches and specifications; that
private respondent again made some innovations; that after a few months,
private respondent discovered the solution to all the defects of the earlier
models and, based on her latest sketches and specifications, he was able to
cast several models incorporating the additions to the innovations

introduced in the models. Various tests were conducted on the latest model
in the presence and under the supervision of Melecia Madolaria and they
obtained perfect results. Rolando Madolaria testified that private respondent
decided to file her application for utility model patent in December 1979.

On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-
On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-
56 denying the petition for cancellation and holding that the evidence of
petitioner was not able to establish convincingly that the patented utility
model of private respondent was anticipated. Not one of the various pictorial
representations of business clearly and convincingly showed that the
devices presented by petitioner was identical or substantially identical with
the utility model of the respondent. The decision also stated that even
assuming that the brochures depicted clearly each and every element of the
patented gas burner device so that the prior art and patented device
became identical although in truth they were not, they could not serve as
anticipatory bars for the reason that they were undated. The dates when
they were distributed to the public were not indicated and, therefore, were
useless prior art references. The records and evidence also do not support
the petitioner's contention that Letters Patent No. UM-4609 was obtained by
means of fraud and/or misrepresentation. No evidence whatsoever was
presented by petitioner to show that the then applicant Melecia Madolaria
withheld with intent to deceive material facts which, if disclosed, would have
resulted in the refusal by the Philippine Patent Office to issue the Letters
Patent under inquiry.

Petitioner elevated the decision of the Director of Patents to the Court of Appeals
which on 15 October 1993 affirmed the decision of the Director of Patents.
Hence, this petition for review on certiorari alleging that the Court of
Appeals erred (a) in relying on imaginary differences which in actuality did
not exist between the model of private respondent covered by Letters
Patent No. UM-4609 and the previously known model of Esso Standard
Eastern, Inc., and Manila Gas Corporation, making such imaginary
differences grounded entirely on speculation, surmises and conjectures; (b)
in rendering judgment based on misapprehension of facts; (c) in relying
mainly on the testimony of private respondent's sole witness Rolando
Madolaria; and, (d) in not cancelling Letters Patent No. UM-4609 in the
name of private respondent.

Petitioner submits that the differences cited by the Court of Appeals between the
utility model of private respondent and the models of Manila Gas
Corporation and Esso Standard Eastern, Inc., are more imaginary than real.
She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the brochures
of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by
petitioner, the cup-shaped burner mouth and threaded hole on the side are
petitioner, the cup-shaped burner mouth and threaded hole on the side are
shown to be similar to the utility model of private respondent. The exhibits
also show a detachable burner mouth having a plurality of upwardly existing
undulations adopted to act as gas passage when the cover is attached to
the top of said cup-shaped mouth all of which are the same as those in the
patented model. Petitioner also denies as substantial difference the short
cylindrical tube of the burner mouth appearing in the brochures of the
burners being sold by Manila Gas Corporation and the long cylindered tube
of private respondent's model of the gas burner.

Petitioner argues that the actual demonstration made during the hearing disclosed
the similarities in form, operation and mechanism and parts between the
utility model of private respondent and those depicted in the brochures. The
findings of the Patent Office and the Court of Appeals that the brochures of
Manila Gas Corporation and Esso Standard Eastern, Inc., are undated
cannot overcome the fact of their circulation before private respondent filed
her application for utility model patent. Petitioner thus asks this Court to take
judicial notice of the fact that Esso Standard Eastern, Inc., disappeared
before 1979 and reappeared only during the Martial Law years as Petrophil
Corporation. Petitioner also emphasizes that the brochures indicated the
telephone number of Manila Gas Corporation as 5-79-81 which is a five (5)
numbered telephone number existing before 1975 because telephones in
Metro Manila started to have six (6) numbers only after that year.

Petitioner further contends that the utility model of private respondent is absolutely
similar to the LPG burner being sold by petitioner in 1975 and 1976, and
also to the "Ransome" burner depicted in the old brochures of Manila Gas
Corporation and Esso Standard Eastern, Inc., fabricated by Ransome Torch
and Burner Company of Oakland, California, USA, especially when
considered through actual physical examination, assembly and disassembly
of the models of petitioner and private respondent. Petitioner faults the
Court of Appeals for disregarding the testimonies of Ong Bun Tua and Fidel

Francisco for their failure to produce documents on the alleged importation


by Manila Gas Corporation of "Ransome" burners in 1965 which had the
same configuration, form and mechanism as that of the private respondent's
patented model.

Finally, it is argued that the testimony of private respondent's lone witness Rolando
Finally, it is argued that the testimony of private respondent's lone witness Rolando
Madolaria should not have been given weight by the Patent Office and the
Court of Appeals because it contained mere after-thoughts and pretensions.

We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the


law on patents, expressly provides

Sec. 7. Inventions patentable. Any invention of a new and useful machine,


manufactured product or substance, process or an improvement of any of
the foregoing, shall be patentable.

Further, Sec. 55 of the same law provides

Sec. 55. Design patents and patents for utility models. (a) Any new, original and
ornamental design for an article of manufacture and (b) any new model of
implements or tools or of any industrial product or of part of the same, which
does not possess the quality of invention, but which is of practical utility by
reason of its form, configuration, construction or composition, may be
protected by the author thereof, the former by a patent for a design and the
latter by a patent for a utility model, in the same manner and subject to the
same provisions and requirements as relate to patents for inventions insofar
as they are applicable except as otherwise herein provided.

The element of novelty is an essential requisite of the patentability of an invention or


discovery. If a device or process has been known or used by others prior to
its invention or discovery by the applicant, an application for a patent
therefor should be denied; and if the application has been granted, the
court, in a judicial proceeding in which the validity of the patent is drawn in
question, will hold it void and ineffective. 2 It has been repeatedly held that
an invention must possess the essential elements of novelty, originality and
precedence, and for the patentee to be entitled to the protection the
invention must be new to the world. 3

In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on
22 July 1981, the Philippine Patent Office found her invention novel and
patentable. The issuance of such patent creates a presumption which yields
only to clear and cogent evidence that the patentee was the original and
first inventor. The burden of proving want of novelty is on him who avers it
and the burden is a heavy one which is met only by clear and satisfactory
and the burden is a heavy one which is met only by clear and satisfactory
proof which overcomes every reasonable doubt. 4 Hence, a utility model
shall not be considered "new" if before the application for a patent it has
been publicly known or publicly used in this country or has been described
in a printed publication or publications circulated within the country, or if it is
substantially similar to any other utility model so known, used or described
within the country. 5

As found by the Director of Patents, the standard of evidence sufficient to overcome


the presumption of legality of the issuance of UM-4609 to respondent
Madolaria was not legally met by petitioner in her action for the cancellation
of the patent. Thus the Director of Patents explained his reasons for the
denial of the petition to cancel private respondent's patent

Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is
not anticipated. Not one of the various pictorial representations of burners
clearly and convincingly show that the device presented therein is identical
or substantially identical in construction with the aforesaid utility model. It is
relevant and material to state that in determining whether novelty or
newness is negatived by any prior art, only one item of the prior art may be
used at a time. For anticipation to occur, the prior art must show that each
element is found either expressly or described or under principles of
inherency in a single prior art reference or that the claimed invention was
probably known in a single prior art device or practice. (Kalman v.Kimberly
Clark, 218 USPQ 781, 789)

Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all
fours each and every element of the patented gas burner device so that the
prior art and the said patented device become identical, although in truth
they are not, they cannot serve as anticipatory bars for the reason that they
are undated. The dates when they were distributed to the public were not
indicated and, therefore, they are useless prior art references.

xxx xxx xxx

Furthermore, and more significantly, the model marked Exh. "K" does not show
whether or not it was manufactured and/or cast before the application for
whether or not it was manufactured and/or cast before the application for
the issuance of patent for the LPG burner was filed by Melecia Madolaria.

With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner
allegedly manufactured sometime in 1974 or 1975 and sold by her in the
course of her business operation in the name of Besco Metal
Manufacturing, which burner was denominated as "Ransome" burner.

xxx xxx xxx

But a careful examination of Exh. "L" would show that it does not bear the word
"Ransome" which is the burner referred to as the product being sold by the
Petitioner. This is not the way to prove that Exh. "L" anticipates Letters
Patent No. UM-4609 through Exhs. "C" and "D." Another factor working
against the Petitioner's claims is that an examination of Exh. "L" would
disclose that there is no indication of the time or date it was manufactured.
This Office, thus has no way of determining whether Exh. "L" was really
manufactured before the filing of the aforesaid application which matured
into Letters Patent No. UM-4609, subject matter of the cancellation
proceeding.

At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M"
which is the alleged burner cup of an imported "Ransome" burner. Again,
this Office finds the same as unreliable evidence to show anticipation. It
observed that there is no date indicated therein as to when it was
manufactured and/or imported before the filing of the application for
issuance of patent of the subject utility model. What is more, some
component parts of Exh. "M" are missing, as only the cup was presented so
that the same could not be compared to the utility model (subject matter of
this case) which consists of several other detachable parts in combination to
form the complete LPG burner.

xxx xxx xxx

It must likewise be pointed out that Ong Bun Tua testified on the brochures
allegedly of Manila Gas and of Esso Gasul marked Exhs. "E" and "F" and
on the alleged fact that Manila Gas Corporation was importing from the
United States "Ransome" burners. But the same could not be given
credence since he himself admitted during cross-examination that he has
never been connected with Manila Gas Corporation. He could not even
never been connected with Manila Gas Corporation. He could not even
present any importation papers relating to the alleged imported ransome
burners. Neither did his wife. 6

The above findings and conclusions of the Director of Patent were reiterated and
affirmed by the Court of Appeals. 7

The validity of the patent issued by the Philippine Patent Office in favor of private
respondent and the question over the inventiveness, novelty and usefulness
of the improved model of the LPG burner are matters which are better
determined by the Patent Office. The technical staff of the Philippine Patent
Office composed of experts in their field has by the issuance of the patent in
question accepted private respondent's model of gas burner as a discovery.
There is a presumption that the Office has correctly determined the
patentability of the model 8 and such action must not be interfered with in
the absence of competent evidence to the contrary.

The rule is settled that the findings of fact of the Director of Patents, especially
when affirmed by the Court of Appeals, are conclusive on this Court when
supported by substantial evidence. Petitioner has failed to show compelling
grounds for a reversal of the findings and conclusions of the Patent Office
and the Court of Appeals.

The alleged failure of the Director of Patents and the Court of Appeals to accord
evidentiary weight to the testimonies of the witnesses of petitioner showing
anticipation is not a justification to grant the petition. Pursuant to the
requirement of clear and convincing evidence to overthrow the presumption
of validity of a patent, it has been held that oral testimony to show
anticipation is open to suspicion and if uncorroborated by cogent evidence,
as what occurred in this case, it may be held insufficient. 9

Finally, petitioner would want this Court to review all over again the evidence she
presented before the Patent Office. She argues that contrary to the decision
of the Patent Office and the Court of Appeals, the evidence she presented
clearly proves that the patented model of private respondent is no longer
new and, therefore, fraud attended the acquisition of patent by private
respondent.

It has been held that the question on priority of invention is one of fact. Novelty and
It has been held that the question on priority of invention is one of fact. Novelty and
utility are likewise questions of fact. The validity of patent is decided on the
basis of factual inquiries. Whether evidence presented comes within the
scope of prior art is a factual issue to be resolved by the Patent Office. 10
There is question of fact when the doubt or difference arises as to the truth
or falsehood of alleged facts or when the query necessarily invites
calibration of the whole evidence considering mainly the credibility of
witnesses, existence and relevance of specific surrounding circumstances,
their relation to each other and to the whole and the probabilities of the
situation. 11 cdphil

Time and again we have held that it is not the function of the Supreme Court to
analyze or weigh all over again the evidence and credibility of witnesses
presented before the lower tribunal or office. The Supreme Court is not a
trier of facts. Its jurisdiction is limited to reviewing and revising errors of law
imputed to the lower court, its findings of fact being conclusive and not
reviewable by this Court.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals


affirming that of the Philippine Patent Office is AFFIRMED. Costs against
petitioner.

SO ORDERED.