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FIRST DIVISION

MANLY SPORTWEAR G.R. No. 165306


MANUFACTURING, INC.,
Petitioner, Present:
Davide, Jr., C.J. (Chairman),
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
DADODETTE ENTERPRISES
AND/OR HERMES SPORTS Promulgated:
CENTER,
Respondents. September 20, 2005

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari[1] under Rule 45 of the Revised Rules of Civil Procedure assails the July 13, 2004 decision[2] of the
Court of Appeals[3] in CA-G.R. SP No. 79887 and its September 15, 2004 resolution[4] denying reconsideration thereof.

The facts are as follows:

On March 14, 2003, Special Investigator Eliezer P. Salcedo of the National Bureau of Investigation (NBI) applied for a search
warrant before the Regional Trial Court (RTC) of Quezon City, based on the information that Dadodette Enterprises and/or Hermes
Sports Center were in possession of goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY).[5]

After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No. 8293[6] has been committed,
Judge Estrella T. Estrada of RTC-Quezon City, Branch 83, issued on March 17, 2003 Search Warrant No. 4044(03).[7]

Respondents thereafter moved to quash and annul the search warrant contending that the same is invalid since the requisites
for its issuance have not been complied with. They insisted that the sporting goods manufactured by and/or registered in the name of
MANLY are ordinary and common hence, not among the classes of work protected under Section 172 of RA 8293.

On June 10, 2003, the trial court granted the motion to quash and declared Search Warrant No. 4044(03) null and void based
on its finding that the copyrighted products of MANLY do not appear to be original creations and were being manufactured and distributed
by different companies locally and abroad under various brands, and therefore unqualified for protection under Section 172 of RA 8293.
Moreover, MANLYs certificates of registrations were issued only in 2002, whereas there were certificates of registrations for the same
sports articles which were issued earlier than MANLYs, thus further negating the claim that its copyrighted products were original
creations.[8]

On August 11, 2003, the trial court denied[9] MANLYs motion for reconsideration. Hence it filed a petition for certiorari[10] before
the Court of Appeals which was denied for lack of merit. The appellate court found that the trial court correctly granted the motion to
quash and that its ruling in the ancillary proceeding did not preempt the findings of the intellectual property court as it did not resolve with
finality the status or character of the seized items.

After denial of its motion for reconsideration on September 15, 2004, MANLY filed the instant petition for review on certiorari
raising the sole issue of whether or not the Court of Appeals erred in finding that the trial court did not gravely abuse its discretion in
declaring in the hearing for the quashal of the search warrant that the copyrighted products of MANLY are not original creations subject
to the protection of RA 8293.

We deny the petition.


The power to issue search warrants is exclusively vested with the trial judges in the exercise of their judicial function.[11] As such,
the power to quash the same also rests solely with them. After the judge has issued a warrant, he is not precluded to subsequently quash
the same, if he finds upon reevaluation of the evidence that no probable cause exists.

Our ruling in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93[12] is instructive, thus:

Inherent in the courts power to issue search warrants is the power to quash warrants already issued. In this
connection, this Court has ruled that the motion to quash should be filed in the court that issued the warrant unless a
criminal case has already been instituted in another court, in which case, the motion should be filed with the latter. The
ruling has since been incorporated in Rule 126 of the Revised Rules of Criminal Procedure[.]

In the instant case, we find that the trial court did not abuse its discretion when it entertained the motion to quash considering
that no criminal action has yet been instituted when it was filed. The trial court also properly quashed the search warrant it earlier issued
after finding upon reevaluation of the evidence that no probable cause exists to justify its issuance in the first place. As ruled by the trial
court, the copyrighted products do not appear to be original creations of MANLY and are not among the classes of work enumerated
under Section 172 of RA 8293. The trial court, thus, may not be faulted for overturning its initial assessment that there was probable
cause in view of its inherent power to issue search warrants and to quash the same. No objection may be validly posed to an order
quashing a warrant already issued as the court must be provided with the opportunity to correct itself of an error unwittingly committed,
or, with like effect, to allow the aggrieved party the chance to convince the court that its ruling is erroneous.

Moreover, the trial court was acting within bounds when it ruled, in an ancillary proceeding, that the copyrighted products of
petitioner are not original creations. This is because in the determination of the existence of probable cause for the issuance or quashal
of a warrant, it is inevitable that the court may touch on issues properly threshed out in a regular proceeding. In so doing, it does not
usurp the power of, much less preclude, the court from making a final judicial determination of the issues in a full-blown trial.
Consequently, MANLYs assertion that the trial courts order quashing the warrant preempted the finding of the intellectual property court
has no legal basis.

As pertinently held in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93:[13]

When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense
has been committed, it does not interfere with or encroach upon the proceedings in the preliminary investigation. The
court does not oblige the investigating officer not to file an information for the courts ruling that no crime exists is only
for purposes of issuing or quashing the warrant. This does not, as petitioners would like to believe, constitute a
usurpation of the executive function. Indeed, to shirk from this duty would amount to an abdication of a constitutional
obligation.
...

... The finding by the court that no crime exists does not preclude the authorized officer conducting the preliminary
investigation from making his own determination that a crime has been committed and that probable cause exists for
purposes of filing the information.
As correctly observed by the Court of Appeals, the trial courts finding that the seized products are not copyrightable was merely
preliminary as it did not finally and permanently adjudicate on the status and character of the seized items. MANLY could still file a
separate copyright infringement suit against the respondents because the order for the issuance or quashal of a warrant is not res
judicata.

Thus, in Vlasons Enterprises Corporation v. Court of Appeals[14] we held that:

The proceeding for the seizure of property in virtue of a search warrant does not end with the actual taking of
the property by the proper officers and its delivery, usually constructive, to the court. The order for the issuance of the
warrant is not a final one and cannot constitute res judicata. Such an order does not ascertain and adjudicate the
permanent status or character of the seized property. By its very nature, it is provisional, interlocutory. It is merely the
first step in the process to determine the character and title of the property. That determination is done in the criminal
action involving the crime or crimes in connection with which the search warrant was issued. Hence, such a criminal
action should be prosecuted, or commenced if not yet instituted, and prosecuted. The outcome of the criminal action
will dictate the disposition of the seized property
We have also ruled in Ching v. Salinas, Sr., et al.[15] that:

The RTC had jurisdiction to delve into and resolve the issue whether the petitioners utility models are
copyrightable and, if so, whether he is the owner of a copyright over the said models. It bears stressing that upon the
filing of the application for search warrant, the RTC was duty-bound to determine whether probable cause existed, in
accordance with Section 4, Rule 126 of the Rules of Criminal Procedure[.]

Further, the copyright certificates issued in favor of MANLY constitute merely prima facie evidence of validity and ownership.
However, no presumption of validity is created where other evidence exist that may cast doubt on the copyright validity. Hence, where
there is sufficient proof that the copyrighted products are not original creations but are readily available in the market under various
brands, as in this case, validity and originality will not be presumed and the trial court may properly quash the issued warrant for lack of
probable cause.

Besides, no copyright accrues in favor of MANLY despite issuance of the certificates of registration and deposit [16] pursuant
to Section 2, Rule 7 of the Copyrights Safeguards and Regulations[17] which states:

Sec. 2 Effects of Registration and Deposit of Work. The registration and deposit of the work is purely for
recording the date of registration and deposit of the work and shall not be conclusive as to copyright ownership or the
term of the copyrights or the rights of the copyright owner, including neighboring rights.

At most, the certificates of registration and deposit issued by the National Library and the Supreme Court Library serve merely
as a notice of recording and registration of the work but do not confer any right or title upon the registered copyright owner or automatically
put his work under the protective mantle of the copyright law. It is not a conclusive proof of copyright ownership. As it is, non-registration
and deposit of the work within the prescribed period only makes the copyright owner liable to pay a fine.[18]

WHEREFORE, the petition is DENIED. The July 13, 2004 decision of the Court of Appeals in CA-G.R. SP No. 79887 and
resolution dated September 15, 2004, are AFFIRMED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

SECOND DIVISION
[G.R. No. 161295. June 29, 2005]
JESSIE G. CHING, petitioner, vs. WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y.
SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of
WILAWARE PRODUCT CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:
This petition for review on certiorari assails the 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.
On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit
of the said work described therein as Leaf Spring Eye Bushing for Automobile.[4]
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the
apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.[5]
After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the
officers and members of the Board of Directors of Wilaware Product Corporation. It was alleged that the respondents therein reproduced
and distributed the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293. The applications sought the
seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official receipts.[6]
The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles.[7] In
the inventory submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 set
b) Mold for spring eye bushing front 1 set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the
set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190
with metal 1 set
g) Mold for vehicle bearing cushion 1 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 courts Order of February 14, 2002, the petitioner filed a
petition for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and resolve the validity of the copyright certificates
issued to him by the National Library. He insisted that his works are covered by Sections 172.1 and 172.2 of the Intellectual Property
Code. The petitioner averred that the copyright certificates are prima facie evidence of its validity, citing the ruling of the United States
Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc.[13] The petitioner asserted that the respondents failed to
adduce evidence to support their motion to quash the search warrants. The petitioner noted that respondent William Salinas, Jr. was not
being honest, as he was able to secure a similar copyright registration of a similar product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit any grave
abuse of its discretion in issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a
search warrant. In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:
The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing and under oath, the complainant and any witness he may produce,
on facts personally known to them and attach to the record their sworn statements together with any affidavit submitted.
In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or
quashal of the search warrant.
In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the
offense of Violation of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act 8293,
when the objects subject of the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative works
(Sec. 173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first place,
the item subject of the petition is not entitled to be protected by the law on copyright, how can there be any violation? [14]
The petitioners motion for reconsideration of the said decision suffered the same fate. The petitioner forthwith filed the present
petition for review on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not in a
search warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding
to quash a search warrant for allegedly infringing items, the RTC committed a grave abuse of its discretion when it declared that his
works are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, which took effect on January 1, 1998, provides in no uncertain terms that copyright protection automatically attaches to a
work by the sole fact of its creation, irrespective of its mode or form of expression, as well as of its content, quality or purpose.[15] The law
gives a non-inclusive definition of work as referring to original intellectual creations in the literary and artistic domain protected from the
moment of their creation; and includes original ornamental designs or models for articles of manufacture, whether or not registrable as
an industrial design and other works of applied art under Section 172.1(h) of R.A. No. 8293.
As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise,
encompasses works which may have a bearing on the utility aspect to which the petitioners utility designs were classified. Moreover,
according to the petitioner, what the Copyright Law protects is the authors intellectual creation, regardless of whether it is one with
utilitarian functions or incorporated in a useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent
bars or invalidates its registration under the Law on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for
the copyright and invention of original and ornamental design for design patents.[16] In like manner, the fact that his utility designs or
models for articles of manufacture have been expressed in the field of automotive parts, or based on something already in the public
domain does not automatically remove them from the protection of the Law on Copyright.[17]
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed
by an author who claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable suspicion
of the commission of the offense. It is not equivalent to absolute certainty or a finding of actual and positive cause.[18] He assists that the
determination of probable cause does not concern the issue of whether or not the alleged work is copyrightable. He maintains that to
justify a finding of probable cause in the issuance of a search warrant, it is enough that there exists a reasonable suspicion of the
commission of the offense.
The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of
overturning this presumption is on the alleged infringers, the respondents herein. But this burden cannot be carried in a hearing on a
proceeding to quash the search warrants, as the issue therein is whether there was probable cause for the issuance of the search
warrant. The petitioner concludes that the issue of probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution to the problem
of wear and tear in automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft
texture plastic material strong enough to endure pressure brought about by the vibration of the counter bearing and thus brings bushings.
Such work, the respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The respondents posit that a
technical solution in any field of human activity which is novel may be the subject of a patent, and not of a copyright. They insist that the
certificates issued by the National Library are only certifications that, at a point in time, a certain work was deposited in the said office.
Furthermore, the registration of copyrights does not provide for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the
respondents aver that no copyright is said to exist if a party categorically questions its existence and legality. Moreover, under Section 2,
Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit of work is not conclusive as to copyright outlay or the
time of copyright or the right of the copyright owner. The respondents maintain that a copyright exists only when the work is covered by
the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioners utility models are copyrightable and, if so,
whether he is the owner of a copyright over the said models. It bears stressing that upon the filing of the application for search warrant,
the RTC was duty-bound to determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal
Procedure:
SEC. 4. Requisite for issuing search warrant. A search warrant shall not issue but upon probable cause in connection with one specific
offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he
may produce, and, particularly, describing the place to be searched and the things to be seized.
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,[19] the Court held that in the determination of probable cause,
the court must necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one
already issued by the court. Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a
reasonably cautious and prudent man to believe that an offense has been committed or is being committed. Besides, in Section 3, Rule
126 of the Rules of Criminal Procedure, a search warrant may be issued for the search and seizure of personal property (a) subject of
the offense; (b) stolen or embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used as the means of
committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court cannot
abdicate its constitutional obligation by refusing to determine whether an offense has been committed.[20] The absence of probable cause
will cause the outright nullification of the search warrant.[21]
For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the
petitioner-applicant was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material;
and (b) the copyrighted material was being copied and distributed by the respondents. Thus, the ownership of a valid copyright is
essential.[22]
Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was
not copied, and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same
minimal degree of creativity.[23] Copying is shown by proof of access to copyrighted material and substantial similarity between the two
works.[24] The applicant must thus demonstrate the existence and the validity of his copyright because in the absence of copyright
protection, even original creation may be freely copied.[25]
By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under R.A. No. 8293
against the respondents, the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the validity
of the copyright which he claimed he had over the utility models. The petitioner cannot seek relief from the RTC based on his claim that
he was the copyright owner over the utility models and, at the same time, repudiate the courts jurisdiction to ascertain the validity of his
claim without running afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other
evidence.[26] A copyright certificate provides prima facieevidence 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
(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright if he claims to
be the owner of the copyright and the defendant does not put in issue the question of his ownership.
A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt
on the question. In such a case, validity will not be presumed.[30]
To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the petitioner-
applicant submitted to the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and
September 4, 2001, respectively, issued by the National Library covering work identified as Leaf Spring Eye Bushing for Automobile and
Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works, hereinafter referred to as works, are original intellectual
creations in the literary and artistic domain protected from the moment of their creation and shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other
works of applied art.
Related to the provision is Section 171.10, which provides that a work of applied art is an artistic creation with utilitarian functions
or incorporated in a useful article, whether made by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf
Spring Eye Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial bore
that is centrally located and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the
peripheral walls of said body, with the bushing made of plastic that is either polyvinyl chloride or polypropylene. [31] Likewise, the Vehicle
Bearing Cushion is illustrated as a bearing cushion comprising a generally semi-circular body having a central hole to secure a
conventional bearing and a plurality of ridges provided therefore, with said cushion bearing being made of the same plastic
materials.[32] Plainly, these are not literary or artistic works. They are not intellectual creations in the literary and artistic domain, or works
of applied art. They are certainly not ornamental designs or one having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The central inquiry is
whether the article is a work of art.[33] Works for applied art include all original pictorials, graphics, and sculptural works that are intended
to be or have been embodied in useful article regardless of factors such as mass production, commercial exploitation, and the potential
availability of design patent protection.[34]
As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having
an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information. Indeed, while works of
applied art, original intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are not.[35] A
useful article may be copyrightable only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features
that can be identified separately from, and are capable of existing independently of the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the authors intellectual creation,
regardless of whether it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is protected
by copyright law. However, the law refers to a work of applied art which is an artistic creation. It bears stressing that there is no copyright
protection for works of applied art or industrial design which have aesthetic or artistic features that cannot be identified separately from
the utilitarian aspects of the article.[36] Functional components of useful articles, no matter how artistically designed, have generally been
denied copyright protection unless they are separable from the useful article.[37]
In this case, the petitioners models are not works of applied art, nor artistic works. They are utility models, useful articles, albeit with
no artistic design or value. Thus, the petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber bushings after a
time, upon subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of the
leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant
soft texture plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure
brought about by the up and down movement of said leaf spring.
Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the
rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can be
made using simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to reinforce
the plastic eye bushing when in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is shown
a utility model for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a
cylindrical metal jacket 14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the metal
jacket 14 acts with the leaf-spring eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not be directly
in contact with steel, but rather the metal jacket, making the life of the bushing 10 longer than those without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard
polypropylene plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and replacement
therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17 to
reinforce the inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the
leaf spring and the automobiles chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction. Said
another embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14 may
also be applied to this embodiment as an option thereof.[38]
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These rubber bushings after
a time, upon subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling of the
center bearing.
The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture plastic
material which causes cushion to the propellers center bearing, yet strong enough to endure pressure brought about by the vibration of
the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using
simple and ordinary molding equipment.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown a
utility model for a vehicle-bearing cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not
shown). As shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is strong,
durable and capable of enduring severe pressure from the center bearing brought about by the rotating movement of the propeller shaft
of the vehicle.[39]
A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable. It may be,
or may relate to, a product, or process, or an improvement of any of the aforesaid.[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.
Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the
Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that must
characterize authentic works of applied art. They are not even artistic creations with incidental utilitarian functions or works incorporated
in a useful article. In actuality, the personal properties described in the search warrants are mechanical works, the principal function of
which is utility sansany aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase other literary,
scholarly, scientific and artistic works in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which states that
where a statute describes things of a particular class or kind accompanied by words of a generic character, the generic word will usually
be limited to things of a similar nature with those particularly enumerated, unless there be something in the context of the state which
would repel such inference,[46] the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the same
kind and nature as the works enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright
registration and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed, in Joaquin, Jr. v. 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.
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 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.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
G.R. No. L-36402 March 16, 1987
FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC., plaintiff-appellant,
vs.
BENJAMIN TAN, defendant-appellee.
Lichauco, Picazo & Agcaoili Law Office for plaintiff-appellant.
Ramon A. Nieves for defendant-appellee.

PARAS, J.:
An appeal was made to the Court of Appeals docketed as CA-G.R. No. 46373-R * entitled Filipino Society of Composers, Authors,
Publishers, Inc., Plaintiff-Appellant v. Benjamin Tan, Defendant-Appellee, from the decision of the Court of First Instance of Manila,
Branch VII in Civil Case No. 71222 ** "Filipino Society of Composers, Authors and Publishers, Inc., Plaintiff v. Benjamin Tan,
Defendant," which had dismissed plaintiffs' complaint without special pronouncement as to costs.
The Court of Appeals, finding that the case involves pure questions of law, certified the same to the Supreme Court for final
determination (Resolution, CA-G.R. No. 46373-R, Rollo, p. 36; Resolution of the Supreme Court of February 16, 1973 in L-36402,
Rollo, p. 38).
The undisputed facts of this case are as follows:
Plaintiff-appellant is a non-profit association of authors, composers and publishers duly organized under the Corporation Law of the
Philippines and registered with the Securities and Exchange Commission. Said association is the owner of certain musical
compositions among which are the songs entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin," "Sapagkat Kami Ay Tao Lamang" and "The
Nearness Of You."
On the other hand, defendant-appellee is the operator of a restaurant known as "Alex Soda Foundation and Restaurant" where a
combo with professional singers, hired to play and sing musical compositions to entertain and amuse customers therein, were playing
and singing the above-mentioned compositions without any license or permission from the appellant to play or sing the same.
Accordingly, appellant demanded from the appellee payment of the necessary license fee for the playing and singing of aforesaid
compositions but the demand was ignored.
Hence, on November 7, 1967, appellant filed a complaint with the lower court for infringement of copyright against defendant-appellee
for allowing the playing in defendant-appellee's restaurant of said songs copyrighted in the name of the former.
Defendant-appellee, in his answer, countered that the complaint states no cause of action. While not denying the playing of said
copyrighted compositions in his establishment, appellee maintains that the mere singing and playing of songs and popular tunes even if
they are copyrighted do not constitute an infringement (Record on Appeal, p. 11; Resolution, CA-G.R. NO. 46373-R, Rollo, pp. 32-36)
under the provisions of Section 3 of the Copyright Law (Act 3134 of the Philippine Legislature).
The lower court, finding for the defendant, dismissed the complaint (Record on Appeal, p. 25).
Plaintiff appealed to the Court of Appeals which as already stated certified the case to the Supreme Court for adjudication on the legal
question involved. (Resolution, Court of Appeals, Rollo, p. 36; Resolution of the Supreme Court of February 18, 1973, Rollo, p. 38).
In its brief in the Court of Appeals, appellant raised the following Assignment of Errors:
I
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE APPELLANT WERE IN THE NATURE
OF PUBLIC PROPERTY WHEN THEY WERE COPYRIGHTED OR REGISTERED.
II
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL COMPOSITIONS OF THE APPELLANT WERE PLAYED AND
SUNG IN THE SODA FOUNTAIN AND RESTAURANT OF THE APPELLEE BY INDEPENDENT CONTRACTORS AND ONLY UPON
THE REQUEST OF CUSTOMERS.
III
THE LOWER COURT ERRED IN HOLDING THAT THE PLAYING AND SINGING OF COPYRIGHTED MUSICAL COMPOSITIONS IN
THE SODA FOUNTAIN AND RESTAURANT OF THE APPELLEE ARE NOT PUBLIC PERFORMANCES FOR PROFIT OF THE SAID
COMPOSITIONS WITHIN THE MEANING AND CONTEMPLATION OF THE COPYRIGHT LAW.
IV
THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPELLEE IS LIABLE TO THE APPELLANT FOR FOUR (4)
SEPARATE INFRINGEMENTS. (Brief for Appellant, pp. A and B).
The petition is devoid of merit.
The principal issues in this case are whether or not the playing and signing of musical compositions which have been copyrighted
under the provisions of the Copyright Law (Act 3134) inside the establishment of the defendant-appellee constitute a public
performance for profit within the meaning and contemplation of the Copyright Law of the Philippines; and assuming that there were
indeed public performances for profit, whether or not appellee can be held liable therefor.
Appellant anchors its claim on Section 3(c) of the Copyright Law which provides:
SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the exclusive right:
xxx xxx xxx
(c) To exhibit, perform, represent, produce, or reproduce the copyrighted work in any manner or by any method
whatever for profit or otherwise; if not reproduced in copies for sale, to sell any manuscripts or any record whatsoever
thereof;
xxx xxx xxx
It maintains that playing or singing a musical composition is universally accepted as performing the musical composition and that
playing and singing of copyrighted music in the soda fountain and restaurant of the appellee for the entertainment of the customers
although the latter do not pay for the music but only for the food and drink constitute performance for profit under the Copyright Law
(Brief for the Appellant, pp. 19-25).
We concede that indeed there were "public performances for profit. "
The word "perform" as used in the Act has been applied to "One who plays a musical composition on a piano, thereby producing in the
air sound waves which are heard as music ... and if the instrument he plays on is a piano plus a broadcasting apparatus, so that waves
are thrown out, not only upon the air, but upon the other, then also he is performing the musical composition." (Buck, et al. v. Duncan,
et al.; Same Jewell La Salle Realty Co., 32F. 2d. Series 367).
In relation thereto, it has been held that "The playing of music in dine and dance establishment which was paid for by the public in
purchases of food and drink constituted "performance for profit" within a Copyright Law." (Buck, et al. v. Russon No. 4489 25 F. Supp.
317). Thus, it has been explained that while it is possible in such establishments for the patrons to purchase their food and drinks and
at the same time dance to the music of the orchestra, the music is furnished and used by the orchestra for the purpose of inducing the
public to patronize the establishment and pay for the entertainment in the purchase of food and drinks. The defendant conducts his
place of business for profit, and it is public; and the music is performed for profit (Ibid, p. 319). In a similar case, the Court ruled that
"The Performance in a restaurant or hotel dining room, by persons employed by the proprietor, of a copyrighted musical composition,
for the entertainment of patrons, without charge for admission to hear it, infringes the exclusive right of the owner of the copyright."
(Herbert v. Shanley Co.; John Church Co. v. Hillard Hotel Co., et al., 242 U.S. 590-591). In delivering the opinion of the Court in said
two cases, Justice Holmes elaborated thus:
If the rights under the copyright are infringed only by a performance where money is taken at the door, they are very
imperfectly protected. Performances not different in kind from those of the defendants could be given that might
compete with and even destroy the success of the monopoly that the law intends the plaintiffs to have. It is enough to
say that there is no need to construe the statute so narrowly. The defendants' performances are not eleemosynary.
They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular
item which those present are expected to order is not important. It is true that the music is not the sole object, but
neither is the food, which probably could be got cheaper elsewhere. The object is a repast in surroundings that to
people having limited power of conversation or disliking the rival noise, give a luxurious pleasure not to be had from
eating a silent meal. If music did not pay, it would be given up. If it pays, it pays out of the public's pocket. Whether it
pays or not, the purpose of employing it is profit, and that is enough. (Ibid., p. 594).
In the case at bar, it is admitted that the patrons of the restaurant in question pay only for the food and drinks and apparently not for
listening to the music. As found by the trial court, the music provided is for the purpose of entertaining and amusing the customers in
order to make the establishment more attractive and desirable (Record on Appeal, p. 21). It will be noted that for the playing and
singing the musical compositions involved, the combo was paid as independent contractors by the appellant (Record on Appeal, p. 24).
It is therefore obvious that the expenses entailed thereby are added to the overhead of the restaurant which are either eventually
charged in the price of the food and drinks or to the overall total of additional income produced by the bigger volume of business which
the entertainment was programmed to attract. Consequently, it is beyond question that the playing and singing of the combo in
defendant-appellee's restaurant constituted performance for profit contemplated by the Copyright Law. (Act 3134 amended by P.D. No.
49, as amended).
Nevertheless, appellee cannot be said to have infringed upon the Copyright Law. Appellee's allegation that the composers of the
contested musical compositions waived their right in favor of the general public when they allowed their intellectual creations to become
property of the public domain before applying for the corresponding copyrights for the same (Brief for Defendant-Appellee, pp. 14-15) is
correct.
The Supreme Court has ruled that "Paragraph 33 of Patent Office Administrative Order No. 3 (as amended, dated September 18,
1947) entitled 'Rules of Practice in the Philippines Patent Office relating to the Registration of Copyright Claims' promulgated pursuant
to Republic Act 165, provides among other things that an intellectual creation should be copyrighted thirty (30) days after its
publication, if made in Manila, or within the (60) days if made elsewhere, failure of which renders such creation public property."
(Santos v. McCullough Printing Company, 12 SCRA 324-325 [1964]. Indeed, if the general public has made use of the object sought to
be copyrighted for thirty (30) days prior to the copyright application the law deems the object to have been donated to the public
domain and the same can no longer be copyrighted.
A careful study of the records reveals that the song "Dahil Sa Iyo" which was registered on April 20, 1956 (Brief for Appellant, p. 10)
became popular in radios, juke boxes, etc. long before registration (TSN, May 28, 1968, pp. 3-5; 25) while the song "The Nearness Of
You" registered on January 14, 1955 (Brief for Appellant, p. 10) had become popular twenty five (25) years prior to 1968, (the year of
the hearing) or from 1943 (TSN, May 28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin" and "Sapagkat Kami Ay Tao Lamang"
both registered on July 10, 1966, appear to have been known and sang by the witnesses as early as 1965 or three years before the
hearing in 1968. The testimonies of the witnesses at the hearing of this case on this subject were unrebutted by the appellant. (Ibid, pp.
28; 29 and 30).
Under the circumstances, it is clear that the musical compositions in question had long become public property, and are therefore
beyond the protection of the Copyright Law.
PREMISES CONSIDERED, the appealed decision of the Court of First Instance of Manila in Civil Case No. 71222 is hereby
AFFIRMED.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.
Alampay, J., took no part.

Footnotes
* Penned by Justice Ruperto G. Martin concurred in by Justices Andres Reyes and Mateo Canonoy.
** Penned by Judge Gregorio T. Lantin.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19439 October 31, 1964
MAURO MALANG SANTOS, plaintiff-appellant,
vs.
MCCULLOUGH PRINTING COMPANY, defendant-appellee.
Tañada Teehankee & Carreon for plaintiff-appellant.
Esposo & Usison for defendant-appellee.
PAREDES, J.:
This is an action for damages based on the provisions of Articles 721 and 722 of the Civil Code of the Philippines, allegedly on the
unauthorized use, adoption and appropriation by the defendant company of plaintiff's intellectual creation or artistic design for a
Christmas Card. The design depicts "a Philippine rural Christmas time scene consisting of a woman and a child in a nipa hut adorned
with a star-shaped lantern and a man astride a carabao, beside a tree, underneath which appears the plaintiff's pen name, Malang."
The complaint alleges that plaintiff Mauro Malang Santos designed for former Ambassador Felino Neri, for his personal Christmas Card
greetings for the year 1959, the artistic motif in question. The following year the defendant McCullough Printing Company, without the
knowledge and authority of plaintiff, displayed the very design in its album of Christmas cards and offered it for sale, for a price. For
such unauthorized act of defendant, plaintiff suffered moral damages to the tune of P16,000.00, because it has placed plaintiff's
professional integrity and ethics under serious question and caused him grave embarrassment before Ambassador Neri. He further
prayed for the additional sum of P3,000.00 by way of attorney's fee.
Defendant in answer to the complaint, after some denials and admissions, moved for a dismissal of the action claiming that —
(1) The design claimed does not contain a clear notice that it belonged to him and that he prohibited its use by others;
(2) The design in question has been published but does not contain a notice of copyright, as in fact it had never been
copyrighted by the plaintiff, for which reason this action is barred by the Copyright Law;
(3) The complaint does not state a cause of action.
The documentary evidence submitted were the Christmas cards, as originally designed by plaintiff, the design as printed for
Ambassador Neri, and the subsequent reprints ordered by other parties. The case was submitted an a "Stipulation of Fact" the
pertinent portions of which are hereunder reproduced:
1. That the plaintiff was the artist who created the design shown in Exhibit A, ...
2. That the design carries the pen name of plaintiff, MALANG, on its face ... and indicated in Exhibit A, ...
3. That said design was created by plaintiff in the latter part of 1959 for the personal use of former Ambassador Felino Neri; ...
4. That former Ambassador Neri had 800 such cards ... printed by the defendant company in 1959, ... which he distributed to
his friends in December, 1959;
5. That defendant company utilized plaintiff's design in the year 1960 in its album of Christmas card samples displayed to its
customers ... .
6. That the Sampaguita Pictures, Inc., placed an order with defendant company for 700 of said cards ... while Raul Urra & Co.
ordered 200 ..., which cards were sent out by them to their respective correspondent, clients and friends during the Christmas
season of 1960;
7. That defendant company's use of plaintiff's design was without knowledge, authority or consent of plaintiff;
8. That said design has not been copyrighted;
9. That plaintiff is an artist of established name, good-will and reputation. ... .
Upon the basis of the facts stipulated, the lower court rendered judgment on December 1, 1961, the pertinent portions of which are
recited below:
As a general proposition, there can be no dispute that the artist acquires ownership of the product of his art. At the time of its
creation, he has the absolute dominion over it. To help the author protect his rights the copyright law was enacted.
In intellectual creations, a distinction must be made between two classes of property rights; the fact of authorship and the right
to publish and/or distribute copies of the creation. With regard to the first, i.e. the fact of authorship, the artist cannot be
divested of the same. In other words, he may sell the right to print hundred of his work yet the purchaser of said right can
never be the author of the creation.
It is the second right, i.e., the right to publish, republish, multiply and/or distribute copies of the intellectual creation which the
state, through the enactment of the copyright law, seeks to protect. The author or his assigns or heirs may have the work
copyrighted and once this is legally accomplished any infringement of the copyright will render the infringer liable to the owner
of the copyright.
xxx xxx xxx
The plaintiff in this case did not choose to protect his intellectual creation by a copyright. The fact that the design was used in
the Christmas card of Ambassador Neri who distributed eight hundred copies thereof among his friends during the Christmas
season of 1959, shows that the, same was published.
Unless satisfactorily explained a delay in applying for a copyright, of more than thirty days from the date of its publication,
converts the property to one of public domain.
Since the name of the author appears in each of the alleged infringing copies of the intellectual creation, the defendant may
not be said to have pirated the work nor guilty of plagiarism Consequently, the complaint does not state a cause of action
against the defendant.
xxx xxx ;xxx
WHEREFORE, the Court dismisses the complaint without pronouncement as to costs.
In his appeal to this Court, plaintiff-appellant pointed five (5) errors allegedly committed by the trial court, all of which bring to the fore,
the following propositions: (1) whether plaintiff is entitled to protection, notwithstanding the, fact that he has not copyrighted his design;
(2) whether the publication is limited, so as to prohibit its use by others, or it is general publication, and (3) whether the provisions of the
Civil Code or the Copyright Law should apply in the case. We will undertake a collective discussion of these propositions.
Under the established facts, We find that plaintiff is not entitled to a protection, the provision of the Civil Code, notwithstanding.
Paragraph 33 of Patent Office Administrative Order No. 3 (as amended dated September 18, 1947) entitled "Rules of Practice in the
Philippines Patent Office relating to the Registration of Copyright Claims" promulgated pursuant to Republic Act 165, provides, among
others, that an intellectual creation should be copyrighted thirty (30) days after its publication, if made in Manila, or within sixty (60)
day's if made elsewhere, failure of which renders such creation public property. In the case at bar, even as of this moment, there is no
copyright for the design in question. We are not also prepared to accept the contention of appellant that the publication of the design
was a limited one, or that there was an understanding that only Ambassador Neri should, have absolute right to use the same. In the
first place, if such were the condition then Ambassador Neri would be the aggrieved party, and not the appellant. In the second place, if
there was such a limited publication or prohibition, the same was not shown on the face of the design. When the purpose is a limited
publication, but the effect is general publication, irrevocable rights thereupon become vested in the public, in consequence of which
enforcement of the restriction becomes impossible (Nutt vs. National Institute, 31 F [2d] 236). It has been held that the effect of offering
for sale a dress, for example manufactured in accordance with an original design which is not protected by either a copyright or a
patent, is to divest the owner of his common law rights therein by virtue of the publication of a 'copy' and thereafter anyone is free to
copy the design or the dress (Fashion Originators Guild of America v. Federal Trade Commission, 114 F [2d] 80). When Ambassador
Neri distributed 800 copies of the design in controversy, the plaintiff lost control of his design and the necessary implication was that
there had been a general publication, there having been no showing of a clear indication that a limited publication was intended. The
author of a literary composition has a light to the first publication thereof. He has a right to determine whether it shall be published at all,
and if published, when, where, by whom, and in what form. This exclusive right is confined to the first publication. When once
published, it is dedicated to the public, and the author loses the exclusive right to control subsequent publication by others, unless the
work is placed under the protection of the copyright law. (See II Tolentino's Comments on the Civil Code, p. 433, citing Wright v. Eisle
83 N.Y. Supp. 887.)
CONFORMABLY WITH ALL THE FOREGOING, We find that the errors assigned have not been committed by the lower court. The
decision appealed from, therefore, should be, as it is hereby affirmed. Costs taxed against plaintiff-appellant.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Dizon, Makalintal, Bengzon, J. P., and Zaldivar JJ., concur.
Regala, J., took no part.
SECOND DIVISION
[G.R. No. 108946. January 28, 1999]
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners, vs. FRANKLIN DRILON GABRIEL ZOSA, WILLIAM
ESPOSO, FELIPE MEDINA, JR., and CASEY FRANCISCO, respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari. Petitioners seek to annul the resolution of the Department of Justice, dated August 12, 1992, in
Criminal Case No. Q-92-27854, entitled Gabriel Zosa, et al. v. City Prosecutor of Quezon City and Francisco Joaquin, Jr., and its
resolution, dated December 3, 1992, denying petitioner Joaquins motion for reconsideration.
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of Copyright No. M922, dated January 28, 1971, of Rhoda
and Me, a dating game show aired from 1970 to 1977.
On June 28, 1973, petitioner BJPI submitted to the National Library an addendum to its certificate of copyright specifying the shows
format and style of presentation.
On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr., president of BJPI, saw on RPN Channel 9 an episode
of Its a Date, which was produced by IXL Productions, Inc. (IXL). On July 18, 1991, he wrote a letter to private respondent Gabriel M.
Zosa, president and general manager of IXL, informing Zosa that BJPI had a copyright to Rhoda and Me and demanding that IXL
discontinue airing Its a Date.
In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner Joaquin and requested a meeting to discuss a
possible settlement. IXL, however, continued airing Its a Date, prompting petitioner Joaquin to send a second letter on July 25, 1991 in
which he reiterated his demand and warned that, if IXL did not comply, he would endorse the matter to his attorneys for proper legal
action.
Meanwhile, private respondent Zosa sought to register IXLs copyright to the first episode of Its a Date for which it was issued by
the National Library a certificate of copyright on August 14, 1991.
Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed against private respondent Zosa together with
certain officers of RPN Channel 9, namely, William Esposo, Felipe Medina, and Casey Francisco, in the Regional Trial Court of Quezon
City where it was docketed as Criminal Case No. 92-27854 and assigned to Branch 104 thereof. However, private respondent Zosa
sought a review of the resolution of the Assistant City Prosecutor before the Department of Justice.
On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon reversed the Assistant City Prosecutors findings and
directed him to move for the dismissal of the case against private respondents. [1]
Petitioner Joaquin filed a motion for reconsideration, but his motion was denied by respondent Secretary of Justice on December
3, 1992. Hence, this petition. Petitioners contend that:
1. The public respondent gravely abused his discretion amounting to lack of jurisdiction when he invoked non-presentation of
the master tape as being fatal to the existence of probable cause to prove infringement, despite the fact that private
respondents never raised the same as a controverted issue.
2. The public respondent gravely abused his discretion amounting to lack of jurisdiction when he arrogated unto himself the
determination of what is copyrightable - an issue which is exclusively within the jurisdiction of the regional trial court to
assess in a proper proceeding.
Both public and private respondents maintain that petitioners failed to establish the existence of probable cause due to their failure
to present the copyrighted master videotape of Rhoda and Me. They contend that petitioner BJPIs copyright covers only a specific
episode of Rhoda and Me and that the formats or concepts of dating game shows are not covered by copyright protection under P. D.
No. 49.
Non-Assignment of Error

Petitioners claim that their failure to submit the copyrighted master videotape of the television show Rhoda and Me was not raised
in issue by private respondents during the preliminary investigation and, therefore, it was error for the Secretary of Justice to reverse the
investigating prosecutors finding of probable cause on this ground.
A preliminary investigation falls under the authority of the state prosecutor who is given by law the power to direct and control
criminal actions.[2] He is, however, subject to the control of the Secretary of Justice. Thus, Rule 112, 4 of the Revised Rules of Criminal
Procedure, provides:
SEC. 4. Duty of investigating fiscal. - If the investigating fiscal finds cause to hold the respondent for trial, he shall prepare
the resolution and corresponding information. He shall certify under oath that he, or as shown by the record, an authorized
officer, has personally examined the complainant and his witnesses, that there is reasonable ground to believe that a crime
has been committed and that the accused is probably guilty thereof, that the accused was informed of the complaint and of
the evidence submitted against him and that he was given an opportunity to submit controverting evidence.Otherwise, he shall
recommend dismissal of the complaint.
In either case, he shall forward the records of the case to the provincial or city fiscal or chief state prosecutor within five
(5) days from his resolution. The latter shall take appropriate action thereon within ten (10) days from receipt thereof,
immediately informing the parties of said action.
No complaint or information may be filed or dismissed by an investigating fiscal without the prior written authority or
approval of the provincial or city fiscal or chief state prosecutor.
Where the investigating assistant fiscal recommends the dismissal of the case but his findings are reversed by the
provincial or city fiscal or chief state prosecutor on the ground that a probable cause exists, the latter may, by himself, file the
corresponding information against the respondent or direct any other assistant fiscal or state prosecutor to do so, without
conducting another preliminary investigation.
If upon petition by a proper party, the Secretary of Justice reverses the resolution of the provincial or city fiscal or chief
state prosecutor, he shall direct the fiscal concerned to file the corresponding information without conducting another
preliminary investigation or to dismiss or move for dismissal of the complaint or information.
In reviewing resolutions of prosecutors, the Secretary of Justice is not precluded from considering errors, although unassigned, for
the purpose of determining whether there is probable cause for filing cases in court. He must make his own finding of probable cause
and is not confined to the issues raised by the parties during preliminary investigation. Moreover, his findings are not subject to review
unless shown to have been made with grave abuse.
Opinion of the Secretary of Justice

Petitioners contend, however, that the determination of the question whether the format or mechanics of a show is entitled to
copyright protection is for the court, and not the Secretary of Justice, to make. They assail the following portion of the resolution of the
respondent Secretary of Justice:
[T]he essence of copyright infringement is the copying, in whole or in part, of copyrightable materials as defined and enumerated
in Section 2 of PD. No. 49. Apart from the manner in which it is actually expressed, however, the idea of a dating game show is,
in the opinion of this Office, a non-copyrightable material. Ideas, concepts, formats, or schemes in their abstract form clearly do
not fall within the class of works or materials susceptible of copyright registration as provided in PD. No. 49.[3] (Emphasis added.)
It is indeed true that the question whether the format or mechanics of petitioners television show is entitled to copyright protection
is a legal question for the court to make. This does not, however, preclude respondent Secretary of Justice from making a preliminary
determination of this question in resolving whether there is probable cause for filing the case in court. In doing so in this case, he did not
commit any grave error.
Presentation of Master Tape

Petitioners claim that respondent Secretary of Justice gravely abused his discretion in ruling that the master videotape should have
been presented in order to determine whether there was probable cause for copyright infringement. They contend
that 20th Century Fox Film Corporation v. Court of Appeals,[4] on which respondent Secretary of Justice relied in reversing the resolution
of the investigating prosecutor, is inapplicable to the case at bar because in the present case, the parties presented sufficient evidence
which clearly establish linkages between the copyrighted show Rhoda and Me and the infringing TV show Its a Date.[5]
The case of 20th Century Fox Film Corporation involved raids conducted on various videotape outlets allegedly selling or renting
out pirated videotapes. The trial court found that the affidavits of NBI agents, given in support of the application for the search warrant,
were insufficient without the master tape. Accordingly, the trial court lifted the search warrants it had previously issued against the
defendants. On petition for review, this Court sustained the action of the trial court and ruled:[6]
The presentation of the master tapes of the copyrighted films from which the pirated films were allegedly copied, was necessary for the
validity of search warrants against those who have in their possession the pirated films. The petitioners argument to the effect that the
presentation of the master tapes at the time of application may not be necessary as these would be merely evidentiary in nature and
not determinative of whether or not a probable cause exists to justify the issuance of the search warrants is not meritorious. The court
cannot presume that duplicate or copied tapes were necessarily reproduced from master tapes that it owns.
The application for search warrants was directed against video tape outlets which allegedly were engaged in the unauthorized sale and
renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.
The essence of a copyright infringement is the similarity or at least substantial similarity of the purported pirated works to the
copyrighted work. Hence, the applicant must present to the court the copyrighted films to compare them with the purchased evidence
of the video tapes allegedly pirated to determine whether the latter is an unauthorized reproduction of the former. This linkage of the
copyrighted films to the pirated films must be established to satisfy the requirements of probable cause. Mere allegations as to the
existence of the copyrighted films cannot serve as basis for the issuance of a search warrant.
This ruling was qualified in the later case of Columbia Pictures, Inc. v. Court of Appeals[7] in which it was held:
In fine, the supposed pronunciamento in said case regarding the necessity for the presentation of the master tapes of the copyrighted
films for the validity of search warrants should at most be understood to merely serve as a guidepost in determining the existence of
probable cause in copyright infringement cases where there is doubt as to the true nexus between the master tape and the pirated
copies. An objective and careful reading of the decision in said case could lead to no other conclusion than that said directive was
hardly intended to be a sweeping and inflexible requirement in all or similar copyright infringement cases. . . .[8]
In the case at bar, during the preliminary investigation, petitioners and private respondents presented written descriptions of the
formats of their respective televisions shows, on the basis of which the investigating prosecutor ruled:
As may [be] gleaned from the evidence on record, the substance of the television productions complainants RHODA AND ME and
Zosas ITS A DATE is that two matches are made between a male and a female, both single, and the two couples are treated to a night
or two of dining and/or dancing at the expense of the show. The major concepts of both shows is the same. Any difference appear
mere variations of the major concepts.
That there is an infringement on the copyright of the show RHODA AND ME both in content and in the execution of the video
presentation are established because respondents ITS A DATE is practically an exact copy of complainants RHODA AND ME because
of substantial similarities as follows, to wit:
RHODA AND ME ITS A DATE
Set I Set I
a. Unmarried participant a. same
of one gender (searcher) appears on one side of a divider, while three (3) unmarried participants of the other gender are on the
other side of the divider. This arrangement is done to ensure that the searcher does not see the searchees.
b. Searcher asks a question b. same
to be answered by each of the searchees. The purpose is to
determine who among the searchees is the most
compatible with the searcher.
c. Searcher speculates on the c. same
match to the searchee.
d. Selection is made by the d. Selection is
use of compute (sic) methods, based on the
or by the way questions are answer of the
answered, or similar methods. Searchees.
Set 2 Set 2
Same as above with the genders same
of the searcher and searchees interchanged.[9]
Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is thus entitled to copyright protection. It
is their position that the presentation of a point-by-point comparison of the formats of the two shows clearly demonstrates the nexus
between the shows and hence establishes the existence of probable cause for copyright infringement. Such being the case, they did not
have to produce the master tape.
To begin with, the format of a show is not copyrightable. Section 2 of P.D. No. 49,[10] otherwise known as the DECREE ON
INTELLECTUAL PROPERTY, enumerates the classes of work entitled to copyright protection, to wit:
Section 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following classes of
works:
(A) Books, including composite and cyclopedic works, manuscripts, directories, and gazetteers;
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb shows, the acting form of which is
fixed in writing or otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of art; models or designs for works of
art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture, whether or not patentable, and other works of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a scientific or technical character;
(L) Photographic works and works produced by a process analogous to photography; lantern slides;
(M) Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual
recordings;
(N) Computer programs;
(O) Prints, pictorial illustrations advertising copies, labels, tags, and box wraps;
(P) Dramatizations, translations, adaptations, abridgements, arrangements and other alterations of literary, musical or artistic works or
of works of the Philippine government as herein defined, which shall be protected as provided in Section 8 of this Decree.
(Q) Collections of literary, scholarly, or artistic works or of works referred to in Section 9 of this Decree which by reason of the selection
and arrangement of their contents constitute intellectual creations, the same to be protected as such in accordance with Section 8 of
this Decree.
(R) Other literary, scholarly, scientific and artistic works.
This provision is substantially the same as 172 of the INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES (R.A. No.
8293).[11] The format or mechanics of a television show is not included in the list of protected works in 2 of P.D. No. 49. For this reason,
the protection afforded by the law cannot be extended to cover them.
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 the statute. 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.[12]
Since . . . copyright in published works is purely a statutory creation, a copyright may be obtained only for a work falling within the
statutory enumeration or description.[13]
Regardless of the historical viewpoint, it is authoritatively settled in the United States that there is no copyright
except that which is both created and secured by act of Congress . . . .[14]
P.D. No. 49, 2, in enumerating what are subject to copyright, refers to finished works and not to concepts. The copyright does not
extend to an idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is
described, explained, illustrated, or embodied in such work.[15] Thus, the new INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES
provides:
Sec. 175. Unprotected Subject Matter. - Notwithstanding the provisions of Sections 172 and 173, no protection shall extend, under this
law, to any idea, procedure, system, method or operation, concept, principle, discovery or mere data as such, even if they are
expressed, explained, illustrated or embodied in a work; news of the day and other miscellaneous facts having the character of mere
items of press information; or any official text of a legislative, administrative or legal nature, as well as any official translation thereof.
What then is the subject matter of petitioners copyright? This Court is of the opinion that petitioner BJPIs copyright covers audio-
visual recordings of each episode of Rhoda and Me, as falling within the class of works mentioned in P.D. 49, 2(M), to wit:
Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual
recordings;
The copyright does not extend to the general concept or format of its dating game show. Accordingly, by the very nature of the subject
of petitioner BJPIs copyright, the investigating prosecutor should have the opportunity to compare the videotapes of the two shows.
Mere description by words of the general format of the two dating game shows is insufficient; the presentation of the master
videotape in evidence was indispensable to the determination of the existence of probable cause. As aptly observed by respondent
Secretary of Justice:
A television show includes more than mere words can describe because it involves a whole spectrum of visuals and effects, video
and audio, such that no similarity or dissimilarity may be found by merely describing the general copyright/format of both dating
game shows.[16]
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Puno, Quisumbing, and Buena, JJ., concur.
Bellosillo, J., (Chairman), no part due to relation to one of the parties.
FIRST DIVISION
[G.R. No. 114508. November 19, 1999]
PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR OF PATENTS and the BARBIZON
CORPORATION, respondents.
DECISION
PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which the Philippines bound itself to honor
and enforce in this country. As to whether or not the treaty affords protection to a foreign corporation against a Philippine applicant for
the registration of a similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J. Mirpuri, filed an application with the
Bureau of Patents for the registration of the trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar alleged that
she had been manufacturing and selling these products under the firm name "L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business under the laws of New York, U.S.A., opposed
the application. It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly similar to the trademark BARBIZON which opposer owns and has not
abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its business reputation and goodwill will suffer great and
irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON which resembles the trademark used and owned by opposer,
constitutes an unlawful appropriation of a mark previously used in the Philippines and not abandoned and therefore a statutory violation
of Section 4 (d) of Republic Act No. 166, as amended."[1]
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the pleadings, the parties submitted the case for
decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and giving due course to Escobar's
application, thus:
"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly, Application Serial No. 19010 for the registration of
the trademark BARBIZON, of respondent Lolita R. Escobar, is given due course.
IT IS SO ORDERED."[2]
This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate of registration for the trademark
"Barbizon." The trademark was "for use in "brassieres and lady's underwear garments like panties."[3]
Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J. Mirpuri who, under his firm name then,
the "Bonito Enterprises," was the sole and exclusive distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the trademark required under Section 12
of Republic Act (R.A.) No. 166, the Philippine Trademark Law. Due to this failure, the Bureau of Patents cancelled Escobar's certificate
of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed his own application for registration of
Escobar's trademark. Escobar later assigned her application to herein petitioner and this application was opposed by private
respondent. The case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June 1933 and has then used it on various kinds of
wearing apparel. On August 14, 1934, Opposer obtained from the United States Patent Office a more recent registration of the said
mark under Certificate of Registration No. 316,161. On March 1, 1949, Opposer obtained from the United States Patent Office a more
recent registration for the said trademark under Certificate of Registration No. 507,214, a copy of which is herewith attached as Annex
`A.' Said Certificate of Registration covers the following goods-- wearing apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and Bee design and used the said mark in various
kinds of wearing apparel. On March 15, 1977, Opposer secured from the United States Patent Office a registration of the said mark
under Certificate of Registration No. 1,061,277, a copy of which is herein enclosed as Annex `B.' The said Certificate of Registration
covers the following goods: robes, pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a Representation of a Woman and thereafter used
the said trademark on various kinds of wearing apparel. Opposer obtained from the United States Patent Office registration of the said
mark on April 5, 1983 under Certificate of Registration No. 1,233,666 for the following goods: wearing apparel: robes, pajamas,
nightgowns and lingerie. A copy of the said certificate of registration is herewith enclosed as Annex `C.'
(d) All the above registrations are subsisting and in force and Opposer has not abandoned the use of the said trademarks. In fact,
Opposer, through a wholly-owned Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing the goods
covered by said registrations and selling them to various countries, thereby earning valuable foreign exchange for the country. As a
result of respondent-applicant's misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie Corporation is prevented from
selling its goods in the local market, to the damage and prejudice of Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been used in many countries, including the Philippines, for at least
40 years and has enjoyed international reputation and good will for their quality. To protect its registrations in countries where the
goods covered by the registrations are being sold, Opposer has procured the registration of the trademark BARBIZON in the following
countries:Australia, Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia, Denmark, Ecuador, France,
West Germany, Greece, Guatemala, Hongkong, Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New Zealand,
Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and Iran, among others;
(f) To enhance its international reputation for quality goods and to further promote goodwill over its name, marks and products,
Opposer has extensively advertised its products, trademarks and name in various publications which are circulated in the United States
and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one Lolita R. Escobar under Registration No. 21920,
issued on September 11, 1974, in violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the Trademark
Law. Herein respondent applicant acquired by assignment the `rights' to the said mark previously registered by Lolita Escobar, hence
respondent-applicant's title is vitiated by the same fraud and criminal act. Besides, Certificate of Registration No. 21920 has been
cancelled for failure of either Lolita Escobar or herein respondent-applicant, to seasonably file the statutory affidavit of use. By applying
for a re-registration of the mark BARBIZON subject of this opposition, respondent-applicant seeks to perpetuate the fraud and criminal
act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON and Representation of a Woman trademarks
qualify as well-known trademarks entitled to protection under Article 6bisof the Convention of Paris for the Protection of Industrial
Property and further amplified by the Memorandum of the Minister of Trade to the Honorable Director of Patents dated October 25,
1983 [sic],[4]Executive Order No. 913 dated October 7, 1963 and the Memorandum of the Minister of Trade and Industry to the
Honorable Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's BARBIZON trademark and constitutes the dominant part
of Opposer's two other marks namely, BARBIZON and Bee design and BARBIZON and a Representation of a Woman. The continued
use by respondent-applicant of Opposer's trademark BARBIZON on goods belonging to Class 25 constitutes a clear case of
commercial and criminal piracy and if allowed registration will violate not only the Trademark Law but also Article 189 of the Revised
Penal Code and the commitment of the Philippines to an international treaty."[5]
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon International." Petitioner registered the
name with the Department of Trade and Industry (DTI) for which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for cancellation of petitioner's business
name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of registration, and declared private
respondent the owner and prior user of the business name "Barbizon International." Thus:
"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. x x x."[6]
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of Patents. On June 18, 1992, the Director
rendered a decision declaring private respondent's opposition barred by res judicata and giving due course to petitioner's application for
registration, to wit:
"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby DECLARED BARRED by res judicata and is hereby
DISMISSED. Accordingly, Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is GIVEN DUE COURSE.
SO ORDERED."[7]
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of
Appeals reversed the Director of Patents finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and ordered that the case
be remanded to the Bureau of Patents for further proceedings, viz:
"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director of Patents in Inter Partes Case No. 2049 is
hereby SET ASIDE; and the case is hereby remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs."[8]
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its decision.[9] Hence, this recourse.
Before us, petitioner raises the following issues:
"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 686 RENDERED ON
JUNE 18, 1974, ANNEX C HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE DIRECTOR OF
PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE PRINCIPLE 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 ADDUCE EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE PARTIES TO A CASE ON THE
BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS
WITHIN THE MEANING OF 'JUDGMENT ON THE MERITS' AS ONE OF THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY CANCELLING PETITIONER'S FIRM NAME
'BARBIZON INTERNATIONAL' AND WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER OFFERED IN EVIDENCE
BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION
NOT ON THE BASIS OF THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC TRADE) BUT ON THE
BASIS OF THE PARIS CONVENTION AND THE TRADEMARK LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND
EXCLUSIVE JURISDICTION OF THE DIRECTOR OF PATENTS."[10]
Before ruling on the issues of the case, there is need for a brief background on the function and historical development of trademarks
and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others."[11] This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of the
Philippines, which defines a "trademark" as "any visible sign capable of distinguishing goods."[12] In Philippine jurisprudence, the function
of a trademark is to point out distinctly the origin or ownership of the goods to which it is affixed; to secure to him, who has been
instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to assure the public that they
are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against substitution and sale of an
inferior and different article as his product.[13]
Modern authorities on trademark law view trademarks as performing three distinct functions: (1) they indicate origin or ownership
of the articles to which they are attached; (2) they guarantee that those articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize.[14]
Symbols have been used to identify the ownership or origin of articles for several centuries.[15] As early as 5,000 B.C., markings on
pottery have been found by archaeologists. Cave drawings in southwestern Europe show bison with symbols on their
flanks.[16] Archaeological discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious stones,
glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These marks were affixed by the creator or
maker of the article, or by public authorities as indicators for the payment of tax, for disclosing state monopoly, or devices for the
settlement of accounts between an entrepreneur and his workmen.[17]
In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's
marks, watermarks on paper, etc.[18] Every guild had its own mark and every master belonging to it had a special mark of his own. The
marks were not trademarks but police marks compulsorily imposed by the sovereign to let the public know that the goods were not
"foreign" goods smuggled into an area where the guild had a monopoly, as well as to aid in tracing defective work or poor craftsmanship
to the artisan.[19] For a similar reason, merchants also used merchants' marks. Merchants dealt in goods acquired from many sources
and the marks enabled them to identify and reclaim their goods upon recovery after shipwreck or piracy.[20]
With constant use, the mark acquired popularity and became voluntarily adopted. It was not intended to create or continue monopoly
but to give the customer an index or guarantee of quality.[21] It was in the late 18th century when the industrial revolution gave rise to
mass production and distribution of consumer goods that the mark became an important instrumentality of trade and commerce. [22] By
this time, trademarks did not merely identify the goods; they also indicated the goods to be of satisfactory quality, and thereby stimulated
further purchases by the consuming public.[23] Eventually, they came to symbolize the goodwill and business reputation of the owner of
the product and became a property right protected by law.[24] The common law developed the doctrine of trademarks and tradenames "to
prevent a person from palming off his goods as another's, from getting another's business or injuring his reputation by unfair means, and,
from defrauding the public."[25] Subsequently, England and the United States enacted national legislation on trademarks as part of the
law regulating unfair trade.[26] It became the right of the trademark owner to exclude others from the use of his mark, or of a confusingly
similar mark where confusion resulted in diversion of trade or financial injury. At the same time, the trademark served as a warning
against the imitation or faking of products to prevent the imposition of fraud upon the public.[27]
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective agent for the actual creation and
protection of goodwill. It imprints upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further
satisfaction. In other words, the mark actually sells the goods.[28] The mark has become the "silent salesman," the conduit through which
direct contact between the trademark owner and the consumer is assured. It has invaded popular culture in ways never anticipated that
it has become a more convincing selling point than even the quality of the article to which it refers.[29] In the last half century, the
unparalleled growth of industry and the rapid development of communications technology have enabled trademarks, tradenames and
other distinctive signs of a product to penetrate regions where the owner does not actually manufacture or sell the product itself. Goodwill
is no longer confined to the territory of actual market penetration; it extends to zones where the marked article has been fixed in the
public mind through advertising.[30] Whether in the print, broadcast or electronic communications medium, particularly on the
Internet,[31]advertising has paved the way for growth and expansion of the product by creating and earning a reputation that crosses over
borders, virtually turning the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming that "Barbizon" products have been sold
in the Philippines since 1970. Petitioner developed this market by working long hours and spending considerable sums of money on
advertisements and promotion of the trademark and its products. Now, almost thirty years later, private respondent, a foreign corporation,
"swaggers into the country like a conquering hero," usurps the trademark and invades petitioner's market.[32] Justice and fairness dictate
that private respondent be prevented from appropriating what is not its own. Legally, at the same time, private respondent is barred from
questioning petitioner's ownership of the trademark because of res judicata.[33]
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by
judgment.[34] In res judicata, the judgment in the first action is considered conclusive as to every matter offered and received therein, as
to any other admissible matter which might have been offered for that purpose, and all other matters that could have been adjudged
therein.[35] Res judicatais an absolute bar to a subsequent action for the same cause; and its requisites are: (a) the former judgment or
order must be final; (b) the judgment or order must be one on the merits; (c) it must have been rendered by a court having jurisdiction
over the subject matter and parties; (d) there must be between the first and second actions, identity of parties, of subject matter and of
causes of action.[36]
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with petitioner. Both claim that all the four
elements of res judicata have been complied with: that the judgment in IPC No. 686 was final and was rendered by the Director of Patents
who had jurisdiction over the subject matter and parties; that the judgment in IPC No. 686 was on the merits; and that the lack of a hearing
was immaterial because substantial issues were raised by the parties and passed upon by the Director of Patents.[37]
The decision in IPC No. 686 reads as follows:
"x x x.
Neither party took testimony nor adduced documentary evidence. They submitted the case for decision based on the pleadings which,
together with the pertinent records, have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer would probably be damaged by the registration of
the trademark BARBIZON sought by the respondent-applicant on the ground that it so resembles the trademark BARBIZON allegedly
used and owned by the former to be `likely to cause confusion, mistake or to deceive purchasers.'
On record, there can be no doubt that respondent-applicant's sought-to-be-registered trademark BARBIZON is similar, in fact obviously
identical, to opposer's alleged trademark BARBIZON, in spelling and pronunciation. The only appreciable but very negligible difference
lies in their respective appearances or manner of presentation. Respondent-applicant's trademark is in bold letters (set against a black
background), while that of the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or commerce in the Philippines prior to the date of
application for the registration of the identical mark BARBIZON by the respondent-applicant. However, the allegation of facts in
opposer's verified notice of opposition is devoid of such material information. In fact, a reading of the text of said verified opposition
reveals an apparent, if not deliberate, omission of the date (or year) when opposer's alleged trademark BARBIZON was first used in
trade in the Philippines (see par. No. 1, p. 2, Verified Notice of Opposition, Rec.).Thus, it cannot here and now be ascertained whether
opposer's alleged use of the trademark BARBIZON could be prior to the use of the identical mark by the herein respondent-applicant,
since the opposer attempted neither to substantiate its claim of use in local commerce with any proof or evidence. Instead, the opposer
submitted the case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended application for registration that she first used the trademark
BARBIZON for brassiere (or 'brasseire') and ladies underwear garments and panties as early as March 3, 1970. Be that as it may,
there being no testimony taken as to said date of first use, respondent-applicant will be limited to the filing date, June 15, 1970, of her
application as the date of first use (Rule 173, Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable damage by the registration of the respondent-
applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly, Application Serial No. 19010, for the registration of
the trademark BARBIZON of respondent Lolita R. Escobar, is given due course."[38]
The decision in IPC No. 686 was a judgment on the merits and it was error for the Court of Appeals to rule that it was not. A judgment
is on the merits when it determines the rights and liabilities of the parties based on the disclosed facts, irrespective of formal, technical
or dilatory objections.[39] It is not necessary that a trial should have been conducted. If the court's judgment is general, and not based on
any technical defect or objection, and the parties had a full legal opportunity to be heard on their respective claims and contentions, it is
on the merits although there was no actual hearing or arguments on the facts of the case. [40] In the case at bar, the Director of Patents
did not dismiss private respondent's opposition on a sheer technicality. Although no hearing was conducted, both parties filed their
respective pleadings and were given opportunity to present evidence. They, however, waived their right to do so and submitted the case
for decision based on their pleadings. The lack of evidence did not deter the Director of Patents from ruling on the case, particularly on
the issue of prior use, which goes into the very substance of the relief sought by the parties. Since private respondent failed to prove
prior use of its trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General allege that IPC No. 686 and IPC No. 2049
also comply with the fourth requisite of res judicata, i.e., they involve the same parties and the same subject matter, and have identical
causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same subject matter. Petitioner herein is the assignee
of Escobar while private respondent is the same American corporation in the first case. The subject matter of both cases is the trademark
"Barbizon." Private respondent counter-argues, however, that the two cases do not have identical causes of action. New causes of action
were allegedly introduced in IPC No. 2049, such as the prior use and registration of the trademark in the United States and other countries
worldwide, prior use in the Philippines, and the fraudulent registration of the mark in violation of Article 189 of the Revised Penal
Code. Private respondent also cited protection of the trademark under the Convention of Paris for the Protection of Industrial Property,
specifically Article 6bis thereof, and the implementation of Article 6bis by two Memoranda dated November 20, 1980 and October 25,
1983 of the Minister of Trade and Industry to the Director of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, is a multilateral treaty
that seeks to protect industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade names
and indications of source or appellations of origin, and at the same time aims to repress unfair competition. [41] The Convention is
essentially a compact among various countries which, as members of the Union, have pledged to accord to citizens of the other member
countries trademark and other rights comparable to those accorded their own citizens by their domestic laws for an effective protection
against unfair competition.[42] In short, foreign nationals are to be given the same treatment in each of the member countries as that
country makes available to its own citizens.[43] Nationals of the various member nations are thus assured of a certain minimum of
international protection of their industrial property.[44]
The Convention was first signed by eleven countries in Paris on March 20, 1883. [45] It underwent several revisions-- at Brussels in
1900, at Washington in 1911, at The Hague in 1925, at London in 1934, at Lisbon in 1958, [46] and at Stockholm in 1967. Both the
Philippines and the United States of America, herein private respondent's country, are signatories to the Convention. The United States
acceded on May 30, 1887 while the Philippines, through its Senate, concurred on May 10, 1965. [47] The Philippines' adhesion became
effective on September 27, 1965,[48] and from this date, the country obligated itself to honor and enforce the provisions of the
Convention.[49]
In the case at bar, private respondent anchors its cause of action on the first paragraph of Article 6bis of the Paris Convention which
reads as follows:
"Article 6bis
(1) The countries of the Union undertake, either administratively if their legislation so permits, or at the request of an
interested party, to refuse or to cancel the registration and to prohibit the use, of a trademark which constitutes a
reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the
country of registration or use to be well-known in that country as being already the mark of a person entitled to the benefits
of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the
mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for seeking the cancellation of such a mark. The
countries of the Union may provide for a period within which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use of marks registered or used in bad faith."[50]
This Article governs protection of well-known trademarks. Under the first paragraph, each country of the Union bound itself to
undertake to refuse or cancel the registration, and prohibit the use of a trademark which is a reproduction, imitation or translation, or any
essential part of which trademark constitutes a reproduction, liable to create confusion, of a mark considered by the competent authority
of the country where protection is sought, to be well-known in the country as being already the mark of a person entitled to the benefits
of the Convention, and used for identical or similar goods.
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:
"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-making and adjudicatory powers of the Minister
of Trade and Industry and provides inter alia, that `such rule-making and adjudicatory powers should be revitalized in order that the
Minister of Trade and Industry can x x x apply more swift and effective solutions and remedies to old and new problems x x x such as
infringement of internationally-known tradenames and trademarks x x x' 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 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 6 bis 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.
x x x."[58]
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to reject all pending applications for
Philippine registration of signature and other world-famous trademarks by applicants other than their original owners or users. The
Minister enumerated several internationally-known trademarks and ordered the Director of Patents to require Philippine registrants of
such marks to surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known trademarks but laid down guidelines
for the Director of Patents to observe in determining whether a trademark is entitled to protection as a well-known mark in the Philippines
under Article 6bis of the Paris Convention. This was to be established through Philippine Patent Office procedures in inter partesand 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.[60] This court ruled therein that under the provisions of Article 6bis of the Paris Convention, the Minister of
Trade and Industry was the "competent authority" to determine whether a trademark is well-known in this country.[61]
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of the Paris Convention in 1965. In the
case at bar, the first inter partes case, IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but five (5) years after the
effectivity of the Paris Convention. Article 6bis was already in effect five years before the first case was instituted. Private respondent,
however, did not cite the protection of Article 6bis, neither did it mention the Paris Convention at all. It was only in 1981 when IPC No.
2049 was instituted that the Paris Convention and the Villafuerte Memorandum, and, during the pendency of the case, the 1983 Ongpin
Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the Convention and the two Memoranda is
barred by res judicata has already been answered in Wolverine Worldwide, Inc. v. Court of Appeals.[62] In this case, petitioner Wolverine,
a foreign corporation, filed with the Philippine Patent Office a petition for cancellation of the registration certificate of private respondent,
a Filipino citizen, for the trademark "Hush Puppies" and "Dog Device." Petitioner alleged that it was the registrant of the internationally-
known trademark in the United States and other countries, and cited protection under the Paris Convention and the Ongpin
Memorandum. The petition was dismissed by the Patent Office on the ground of res judicata. It was found that in 1973 petitioner's
predecessor-in-interest filed two petitions for cancellation of the same trademark against respondent's predecessor-in-interest. The
Patent Office dismissed the petitions, ordered the cancellation of registration of petitioner's trademark, and gave due course to
respondent's application for registration. This decision was sustained by the Court of Appeals, which decision was not elevated to us and
became final and executory.[63]
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the Trademark Law, its subsequent petition was
based on a new cause of action, i.e., the Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous decision. We
held that the said Memorandum and E.O. did not grant a new cause of action because it did "not amend the Trademark Law," x x x "nor
did it indicate a new policy with respect to the registration in the Philippines of world-famous trademarks."[64] This conclusion was based
on the finding that Wolverine's two previous petitions and subsequent petition dealt with the same issue of ownership of the
trademark.[65] In other words, since the first and second cases involved the same issue of ownership, then the first case was a bar to the
second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC No. 686. Private respondent's
opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private respondent's business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark previously used in the Philippines which act is
penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products such as robes, pajamas, lingerie, nightgowns and
slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent Office in 1934 and 1949; and that variations of the
same trademark, i.e., "BARBIZON" with Bee design and "BARBIZON" with the representation of a woman were also registered with the
U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many countries all over the world for over forty years. "Barbizon"
products have been advertised in international publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on fraud; and this fraudulent registration was
cancelled in 1979, stripping Escobar of whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark under Article 6bis of the Paris Convention, Executive
Order No. 913, and the two Memoranda dated November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to the
Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same class of goods as the latter's amounts to a violation
of the Trademark Law and Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the trademark in the United States and
other countries, and the international recognition and reputation of the trademark established by extensive use and advertisement of
private respondent's products for over forty years here and abroad. These are different from the issues of confusing similarity and damage
in IPC No. 686. The issue of prior use may have been raised in IPC No. 686 but this claim was limited to prior use in the Philippines
only. Prior use in IPC No. 2049 stems from private respondent's claim as originator of the word and symbol "Barbizon,"[66] as the first
and registered user of the mark attached to its products which have been sold and advertised worldwide for a considerable number of
years prior to petitioner's first application for registration of her trademark in the Philippines. Indeed, these are substantial allegations that
raised new issues and necessarily gave private respondent a new cause of action.Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute separate or distinct causes of action and were not put in
issue in the former action.[67]
Respondent corporation also introduced in the second case a fact that did not exist at the time the first case was filed and
terminated. The cancellation of petitioner's certificate of registration for failure to file the affidavit of use arose only after IPC No. 686. It
did not and could not have occurred in the first case, and this gave respondent another cause to oppose the second application. Res
judicata extends only to facts and conditions as they existed at the time judgment was rendered and to the legal rights and relations of
the parties fixed by the facts so determined.[68] When new facts or conditions intervene before the second suit, furnishing a new basis for
the claims and defenses of the parties, the issues are no longer the same, and the former judgment cannot be pleaded as a bar to the
subsequent action.[69]
It is also noted that the oppositions in the first and second cases are based on different laws. The opposition in IPC No. 686 was
based on specific provisions of the Trademark Law, i.e., Section 4 (d) [70]on confusing similarity of trademarks and Section 8[71] on the
requisite damage to file an opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris Convention,
particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister of Trade and Industry. This opposition also invoked
Article 189 of the Revised Penal Code which is a statute totally different from the Trademark Law.[72] Causes of action which are distinct
and independent from each other, although arising out of the same contract, transaction, or state of facts, may be sued on separately,
recovery on one being no bar to subsequent actions on others.[73] The mere fact that the same relief is sought in the subsequent action
will not render the judgment in the prior action operative as res judicata, such as where the two actions are based on different
statutes.[74] Res judicata therefore does not apply to the instant case and respondent Court of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple property cases. Trademarks deal with the psychological function of
symbols and the effect of these symbols on the public at large.[75]Trademarks play a significant role in communication, commerce and
trade, and serve valuable and interrelated business functions, both nationally and internationally. For this reason, all agreements
concerning industrial property, like those on trademarks and tradenames, are intimately connected with economic
development.[76] Industrial property encourages investments in new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of technology and industrialization, and thereby bring about social and economic
progress.[77] These advantages have been acknowledged by the Philippine government itself. The Intellectual Property Code of the
Philippines declares that "an effective intellectual and industrial property system is vital to the development of domestic and creative
activity, facilitates transfer of technology, it attracts foreign investments, and ensures market access for our products."[78] The Intellectual
Property Code took effect on January 1, 1998 and by its express provision,[79] repealed the Trademark Law,[80] the Patent Law,[81] Articles
188 and 189 of the Revised Penal Code, the Decree on Intellectual Property,[82] and the Decree on Compulsory Reprinting of Foreign
Textbooks.[83] The Code was enacted to strengthen the intellectual and industrial property system in the Philippines as mandated by the
country's accession to the Agreement Establishing the World Trade Organization (WTO).[84]
The WTO is a common institutional framework for the conduct of trade relations among its members in matters related to the
multilateral and plurilateral trade agreements annexed to the WTO Agreement.[85] The WTO framework ensures a "single undertaking
approach" to the administration and operation of all agreements and arrangements attached to the WTO Agreement. Among those
annexed is the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPs.[86] Members to this Agreement "desire to
reduce distortions and impediments to international trade, taking into account the need to promote effective and adequate protection of
intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become
barriers to legitimate trade." To fulfill these objectives, the members have agreed to adhere to minimum standards of protection set by
several Conventions.[87] These Conventions are: the Berne Convention for the Protection of Literary and Artistic Works (1971), the Rome
Convention or the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations,
the Treaty on Intellectual Property in Respect of Integrated Circuits, and the Paris Convention (1967), as revised in Stockholm on July
14, 1967.[88]
A major proportion of international trade depends on the protection of intellectual property rights.[89] Since the late 1970's, the
unauthorized counterfeiting of industrial property and trademarked products has had a considerable adverse impact on domestic and
international trade revenues.[90] The TRIPs Agreement seeks to grant adequate protection of intellectual property rights by creating a
favorable economic environment to encourage the inflow of foreign investments, and strengthening the multi-lateral trading system to
bring about economic, cultural and technological independence.[91] The Philippines and the United States of America have acceded to
the WTO Agreement. This Agreement has revolutionized international business and economic relations among states, and has propelled
the world towards trade liberalization and economic globalization.[92] Protectionism and isolationism belong to the past. Trade is no longer
confined to a bilateral system. There is now "a new era of global economic cooperation, reflecting the widespread desire to operate in a
fairer and more open multilateral trading system."[93] Conformably, the State must reaffirm its commitment to the global community and
take part in evolving a new international economic order at the dawn of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are
affirmed.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Pardo, and Ynares-Santiago, JJ., concur.
EN BANC
[G.R. No. 118295. May 2, 1997]
WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate and as taxpayers; GREGORIO
ANDOLANA and JOKER ARROYO as members of the House of Representatives and as taxpayers; NICANOR P.
PERLAS and HORACIO R. MORALES, both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG
KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT, DEMOKRATIKONG KILUSAN
NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers
and as non-governmental organizations, petitioners, vs. EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-
SHAHANI, HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO HERRERA,
JOSE LINA, GLORIA MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA RASUL,
RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their respective capacities as members
of the Philippine Senate who concurred in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget and
Management; CARIDAD VALDEHUESA, in her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as
Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE
OCAMPO, in his capacity as Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs;
and TEOFISTO T. GUINGONA, in his capacity as Executive Secretary, respondents.
DECISION
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership thereto of the vast majority of
countries has revolutionized international business and economic relations amongst states. It has irreversibly propelled the world towards
trade liberalization and economic globalization. Liberalization, globalization, deregulation and privatization, the third-millennium buzz
words, are ushering in a new borderless world of business by sweeping away as mere historical relics the heretofore traditional modes
of promoting and protecting national economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and
currency controls. Finding market niches and becoming the best in specific industries in a market-driven and export-oriented global
scenario are replacing age-old beggar-thy-neighbor policies that unilaterally protect weak and inefficient domestic producers of goods
and services. In the words of Peter Drucker, the well-known management guru, Increased participation in the world economy has become
the key to domestic economic growth and prosperity.
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the establishment of three
multilateral institutions -- inspired by that grand political body, the United Nations -- were discussed at Dumbarton Oaks and Bretton
Woods. The first was the World Bank (WB) which was to address the rehabilitation and reconstruction of war-ravaged and later
developing countries; the second, the International Monetary Fund (IMF) which was to deal with currency problems; and the third, the
International Trade Organization (ITO), which was to foster order and predictability in world trade and to minimize unilateral protectionist
policies that invite challenge, even retaliation, from other states. However, for a variety of reasons, including its non-ratification by the
United States, the ITO, unlike the IMF and WB, never took off. What remained was only GATT -- the General Agreement on Tariffs and
Trade. GATT was a collection of treaties governing access to the economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute settlement.
After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the Tokyo Round and the Uruguay
Round, the world finally gave birth to that administering body -- the World Trade Organization -- with the signing of the Final Act in
Marrakesh, Morocco and the ratification of the WTO Agreement by its members.[1]
Like many other developing countries, the Philippines joined WTO as a founding member with the goal, as articulated by President
Fidel V. Ramos in two letters to the Senate (infra), of improving Philippine access to foreign markets, especially its major trading partners,
through the reduction of tariffs on its exports, particularly agricultural and industrial products. The President also saw in the WTO the
opening of new opportunities for the services sector x x x, (the reduction of) costs and uncertainty associated with exporting x x x, and
(the attraction of) more investments into the country. Although the Chief Executive did not expressly mention it in his letter, the Philippines
- - and this is of special interest to the legal profession - - will benefit from the WTO system of dispute settlement by judicial adjudication
through the independent WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal.Heretofore, trade
disputes were settled mainly through negotiations where solutions were arrived at frequently on the basis of relative bargaining strengths,
and where naturally, weak and underdeveloped countries were at a disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines to place nationals and products of member-countries on the same footing
as Filipinos and local products and (2) that the WTO intrudes, limits and/or impairs the constitutional powers of both Congress and the
Supreme Court, the instant petition before this Court assails the WTO Agreement for violating the mandate of the 1987 Constitution to
develop a self-reliant and independent national economy effectively controlled by Filipinos x x x (to) give preference to qualified Filipinos
(and to) promote the preferential use of Filipino labor, domestic materials and locally produced goods.
Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade liberalization and economic
globalization? Does it prescribe Philippine integration into a global economy that is liberalized, deregulated and privatized? These are
the main questions raised in this petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the
nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the ratification by the President of the Philippines
of the Agreement Establishing the World Trade Organization (WTO Agreement, for brevity) and (2) for the prohibition of its implementation
and enforcement through the release and utilization of public funds, the assignment of public officials and employees, as well as the use
of government properties and resources by respondent-heads of various executive offices concerned therewith. This concurrence is
embodied in Senate Resolution No. 97, dated December 14, 1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of the Department of Trade and Industry (Secretary Navarro, for
brevity), representing the Government of the Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the
Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act,[2] Secretary Navarro on behalf of the Republic of the Philippines, agreed:
(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities, with a view to
seeking approval of the Agreement in accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.
On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994 from the President of the
Philippines,[3] stating among others that the Uruguay Round Final Act is hereby submitted to the Senate for its concurrence pursuant to
Section 21, Article VII of the Constitution.
On August 13, 1994, the members of the Philippine Senate received another letter from the President of the Philippines[4] likewise
dated August 11, 1994, which stated among others that the Uruguay Round Final Act, the Agreement Establishing the World Trade
Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby
submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.
On December 9, 1994, the President of the Philippines certified the necessity of the immediate adoption of P.S. 1083, a resolution
entitled Concurring in the Ratification of the Agreement Establishing the World Trade Organization.[5]
On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which Resolved, as it is hereby resolved, that the Senate
concur, as it hereby concurs, in the ratification by the President of the Philippines of the Agreement Establishing the World Trade
Organization.[6] The text of the WTO Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of
Multilateral Trade Negotiations and includes various agreements and associated legal instruments (identified in the said Agreement as
Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral Trade Agreements, for brevity) as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
Agreement on Implementation of Article VII of the General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating Measures
Agreement on Safeguards
Annex 1B: General Agreement on Trade in Services and Annexes
Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights
ANNEX 2
Understanding on Rules and Procedures Governing the Settlement of Disputes
ANNEX 3
Trade Policy Review Mechanism
On December 16, 1994, the President of the Philippines signed[7] the Instrument of Ratification, declaring:
NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines, after having seen and
considered the aforementioned Agreement Establishing the World Trade Organization and the agreements and associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are integral parts thereof, signed at Marrakesh,
Morocco on 15 April 1994, do hereby ratify and confirm the same and every Article and Clause thereof.
To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the Agreement Proper and the
associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are integral parts thereof.
On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO Agreement (and its integral annexes
aforementioned) but also (1) the Ministerial Declarations and Decisions and (2) the Understanding on Commitments in Financial
Services. In his Memorandum dated May 13, 1996,[8] the Solicitor General describes these two latter documents as follows:
The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide range of matters, such as measures in
favor of least developed countries, notification procedures, relationship of WTO with the International Monetary Fund (IMF), and
agreements on technical barriers to trade and on dispute settlement.
The Understanding on Commitments in Financial Services dwell on, among other things, standstill or limitations and qualifications of
commitments to existing non-conforming measures, market access, national treatment, and definitions of non-resident supplier of
financial services, commercial presence and new financial service.
On December 29, 1994, the present petition was filed. After careful deliberation on respondents comment and petitioners reply
thereto, the Court resolved on December 12, 1995, to give due course to the petition, and the parties thereafter filed their respective
memoranda. The Court also requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations stationed in
Geneva, Switzerland, to submit a paper, hereafter referred to as Bautista Paper,[9] for brevity, (1) providing a historical background of and
(2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2) the transcript of
proceedings/hearings in the Senate; and
(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed prior to the Philippine adherence to
the WTO Agreement, which derogate from Philippine sovereignty and (2) copies of the multi-volume WTO Agreement and other
documents mentioned in the Final Act, as soon as possible.
After receipt of the foregoing documents, the Court said it would consider the case submitted for resolution. In a Compliance dated
September 16, 1996, the Solicitor General submitted a printed copy of the 36-volume Uruguay Round of Multilateral Trade Negotiations,
and in another Compliance dated October 24, 1996, he listed the various bilateral or multilateral treaties or international instruments
involving derogation of Philippine sovereignty. Petitioners, on the other hand, submitted their Compliance dated January 28, 1997, on
January 30, 1997.
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:
A. Whether the petition presents a political question or is otherwise not justiciable.
B. Whether the petitioner members of the Senate who participated in the deliberations and voting leading to the concurrence are
estopped from impugning the validity of the Agreement Establishing the World Trade Organization or of the validity of the
concurrence.
C. Whether the provisions of the Agreement Establishing the World Trade Organization contravene the provisions of Sec. 19,
Article II, and Secs. 10 and 12, Article XII, all of the 1987 Philippine Constitution.
D. Whether provisions of the Agreement Establishing the World Trade Organization unduly limit, restrict and impair Philippine
sovereignty specifically the legislative power which, under Sec. 2, Article VI, 1987 Philippine Constitution is vested in the
Congress of the Philippines;
E. Whether provisions of the Agreement Establishing the World Trade Organization interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction
when they voted for concurrence in the ratification of the constitutionally-infirm Agreement Establishing the World Trade
Organization.
G. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction
when they concurred only in the ratification of the Agreement Establishing the World Trade Organization, and not with the
Presidential submission which included the Final Act, Ministerial Declaration and Decisions, and the Understanding on
Commitments in Financial Services.
On the other hand, the Solicitor General as counsel for respondents synthesized the several issues raised by petitioners into the
following:[10]
1. Whether or not the provisions of the Agreement Establishing the World Trade Organization and the Agreements and Associated
Legal Instruments included in Annexes one (1), two (2) and three (3) of that agreement cited by petitioners directly contravene or
undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.
2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative power by Congress.
3. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this Honorable Court in promulgating the
rules of evidence.
4. Whether or not the concurrence of the Senate in the ratification by the President of the Philippines of the Agreement establishing the
World Trade Organization implied rejection of the treaty embodied in the Final Act.
By raising and arguing only four issues against the seven presented by petitioners, the Solicitor General has effectively ignored
three, namely: (1) whether the petition presents a political question or is otherwise not justiciable; (2) whether petitioner-members of the
Senate (Wigberto E. Taada and Anna Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-members
of the Senate acted in grave abuse of discretion when they voted for concurrence in the ratification of the WTO Agreement. The foregoing
notwithstanding, this Court resolved to deal with these three issues thus:
(1) The political question issue -- being very fundamental and vital, and being a matter that probes into the very jurisdiction of this Court
to hear and decide this case -- was deliberated upon by the Court and will thus be ruled upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense is waivable and the respondents have effectively waived it by not
pursuing it in any of their pleadings; in any event, this issue, even if ruled in respondents favor, will not cause the petitions dismissal as
there are petitioners other than the two senators, who are not vulnerable to the defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an integral part of the
disposition of the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents did not question the locus standi of petitioners. Hence,
they are also deemed to have waived the benefit of such issue. They probably realized that grave constitutional issues, expenditures of
public funds and serious international commitments of the nation are involved here, and that transcendental public interest requires that
the substantive issues be met head on and decided on the merits, rather than skirted or deflected by procedural matters. [11]
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE PETITION
INVOLVE A POLITICAL QUESTION OVER WHICH THIS COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES CONTRAVENE SEC. 19, ARTICLE II,
AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE EXERCISE OF
LEGISLATIVE POWER BY CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL POWER BY THIS
COURT IN PROMULGATING RULES ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES SUFFICIENT AND/OR
VALID, CONSIDERING THAT IT DID NOT INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND
DECISIONS, AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?
The First Issue: Does the Court Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises
a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not
only the right but in fact the duty of the judiciary to settle the dispute. The question thus posed is judicial rather than political. The duty (to
adjudicate) remains to assure that the supremacy of the Constitution is upheld.[12] Once a controversy as to the application or
interpretation of a constitutional provision is raised before this Court (as in the instant case), it becomes a legal issue which the Court is
bound by constitutional mandate to decide.[13]
The jurisdiction of this Court to adjudicate the matters[14] raised in the petition is clearly set out in the 1987 Constitution,[15] as follows:
Judicial power 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.
The foregoing text emphasizes the judicial departments duty and power to strike down grave abuse of discretion on the part of any
branch or instrumentality of government including Congress. It is an innovation in our political law.[16] As explained by former Chief Justice
Roberto Concepcion,[17] the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials
has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of
jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many cases,[18] it will not shirk, digress from or abandon its sacred duty and
authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by
any officer, agency, instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate remedy in the ordinary course
of law, we have no hesitation at all in holding that this petition should be given due course and the vital questions raised therein ruled
upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional
issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this Court will not review the wisdom of the decision of the
President and the Senate in enlisting the country into the WTO, or pass upon the merits of trade liberalization as a policy espoused by
said international body. Neither will it rule on the propriety of the governments economic policy of reducing/removing tariffs, taxes,
subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its constitutional duty to determine whether
or not there had been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Senate in ratifying the
WTO Agreement and its three annexes.
Second Issue: The WTO Agreement and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the letter, spirit and intent of the Constitution mandating economic nationalism are violated by the
so-called parity provisions and national treatment clauses scattered in various parts not only of the WTO Agreement and its annexes but
also in the Ministerial Decisions and Declarations and in the Understanding on Commitments in Financial Services.
Specifically, the flagship constitutional provisions referred to are Sec. 19, Article II, and Secs. 10 and 12, Article XII, of the
Constitution, which are worded as follows:
Article II
DECLARATION OF PRINCIPLES AND STATE POLICIES
xx xx xx xx
Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.
xx xx xx xx
Article XII
NATIONAL ECONOMY AND PATRIMONY
xx xx xx xx
Sec. 10. x x x. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is
wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to
qualified Filipinos.
xx xx xx xx
Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt
measures that help make them competitive.
Petitioners aver that these sacred constitutional principles are desecrated by the following WTO provisions quoted in their
memorandum:[19]
a) In the area of investment measures related to trade in goods (TRIMS, for brevity):
Article 2
National Treatment and Quantitative Restrictions.
1. Without prejudice to other rights and obligations under GATT 1994. no Member shall apply any TRIM that is inconsistent
with the provisions of Article III or Article XI of GATT 1994.
2. An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions
provided for in paragraph I of Article XI of GATT 1994 is contained in the Annex to this Agreement. (Agreement on Trade-
Related Investment Measures, Vol. 27, Uruguay Round, Legal Instruments, p.22121, emphasis supplied).
The Annex referred to reads as follows:
ANNEX
Illustrative List
1. TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT
1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or
compliance with which is necessary to obtain an advantage, and which require:
(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in
terms of particular products, in terms of volume or value of products, or in terms of proportion of volume or value of its
local production; or
(b) that an enterprises purchases or use of imported products be limited to an amount related to the volume or value of local
products that it exports.
2. TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided for in paragraph 1 of
Article XI of GATT 1994 include those which are mandatory or enforceable under domestic laws or under administrative
rulings, or compliance with which is necessary to obtain an advantage, and which restrict:
(a) the importation by an enterprise of products used in or related to the local production that it exports;
(b) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign
exchange inflows attributable to the enterprise; or
(c) the exportation or sale for export specified in terms of particular products, in terms of volume or value of products, or in
terms of a preparation of volume or value of its local production. (Annex to the Agreement on Trade-Related Investment
Measures, Vol. 27, Uruguay Round Legal Documents, p.22125, emphasis supplied).
The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:
The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded
treatment no less favorable than that accorded to like products of national origin in respect of laws, regulations and requirements
affecting their internal sale, offering for sale, purchase, transportation, distribution or use. the provisions of this paragraph shall not
prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the
means of transport and not on the nationality of the product. (Article III, GATT 1947, as amended by the Protocol Modifying Part II, and
Article XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on Tariffs and
Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p.177, emphasis supplied).
b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):
Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own
nationals with regard to the protection of intellectual property... (par. 1, Article 3, Agreement on Trade-Related Aspect of Intellectual
Property rights, Vol. 31, Uruguay Round, Legal Instruments, p.25432 (emphasis supplied)
(c) In the area of the General Agreement on Trade in Services:
National Treatment
1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out therein, each Member
shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than it accords to its own like services and service suppliers.
2. A Member may meet the requirement of paragraph I by according to services and service suppliers of any other Member,
either formally identical treatment or formally different treatment to that it accords to its own like services and service
suppliers.
3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of
completion in favour of services or service suppliers of the Member compared to like services or service suppliers of any
other Member. (Article XVII, General Agreement on Trade in Services, Vol. 28, Uruguay Round Legal Instruments,
p.22610 emphasis supplied).
It is petitioners position that the foregoing national treatment and parity provisions of the WTO Agreement place nationals and
products of member countries on the same footing as Filipinos and local products, in contravention of the Filipino First policy of the
Constitution. They allegedly render meaningless the phrase effectively controlled by Filipinos. The constitutional conflict becomes more
manifest when viewed in the context of the clear duty imposed on the Philippines as a WTO member to ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed agreements. [20] Petitioners further argue that
these provisions contravene constitutional limitations on the role exports play in national development and negate the preferential
treatment accorded to Filipino labor, domestic materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1) that such Charter provisions are not self-executing and
merely set out general policies; (2) that these nationalistic portions of the Constitution invoked by petitioners should not be read in isolation
but should be related to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO
clauses do not conflict with the Constitution; and (4) that the WTO Agreement contains sufficient provisions to protect developing countries
like the Philippines from the harshness of sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles Not Self-Executing
By its very title, Article II of the Constitution is a declaration of principles and state policies. The counterpart of this article in the 1935
Constitution[21] is called the basic political creed of the nation by Dean Vicente Sinco.[22] These principles in Article II are not intended to
be self-executing principles ready for enforcement through the courts.[23] They are used by the judiciary as aids or as guides in the
exercise of its power of judicial review, and by the legislature in its enactment of laws. As held in the leading case of Kilosbayan,
Incorporated vs. Morato,[24] the principles and state policies enumerated in Article II and some sections of Article XII are not self-executing
provisions, the disregard of which can give rise to a cause of action in the courts.They do not embody judicially enforceable constitutional
rights but guidelines for legislation.
In the same light, we held in Basco vs. Pagcor[25] that broad constitutional principles need legislative enactments to implement them,
thus:
On petitioners allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13 (Role of Youth) of Article II; Section
13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that
these are merely statements of principles and policies. As such, they are basically not self-executing, meaning a law should be passed
by Congress to clearly define and effectuate such principles.
In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement through the
courts. They were rather directives addressed to the executive and to the legislature. If the executive and the legislature failed to heed
the directives of the article, the available remedy was not judicial but political. The electorate could express their displeasure with the
failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement of broad constitutional principles are sourced from basic
considerations of due process and the lack of judicial authority to wade into the uncharted ocean of social and economic policy
making. Mr. Justice Florentino P. Feliciano in his concurring opinion in Oposa vs. Factoran, Jr.,[26] explained these reasons as follows:
My suggestion is simply that petitioners must, before the trial court, show a more specific legal right -- a right cast in language of a
significantly lower order of generality than Article II (15) of the Constitution -- that is or may be violated by the actions, or failures to act,
imputed to the public respondent by petitioners so that the trial court can validly render judgment granting all or part of the relief prayed
for. To my mind, the court should be understood as simply saying that such a more specific legal right or rights may well exist in our
corpus of law, considering the general policy principles found in the Constitution and the existence of the Philippine Environment Code,
and that the trial court should have given petitioners an effective opportunity so to demonstrate, instead of aborting the proceedings on
a motion to dismiss.
It seems to me important that the legal right which is an essential component of a cause of action be a specific, operable legal right,
rather than a constitutional or statutory policy, for at least two (2) reasons.One is that unless the legal right claimed to have been
violated or disregarded is given specification in operational terms, defendants may well be unable to defend themselves intelligently
and effectively; in other words, there are due process dimensions to this matter.
The second is a broader-gauge consideration -- where a specific violation of law or applicable regulation is not alleged or proved,
petitioners can be expected to fall back on the expanded conception of judicial power in the second paragraph of Section 1 of Article
VIII of the Constitution which reads:
Section 1. x x x
Judicial power 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. (Emphases supplied)
When substantive standards as general as the right to a balanced and healthy ecology and the right to health are combined with
remedial standards as broad ranging as a grave abuse of discretion amounting to lack or excess of jurisdiction, the result will be, it is
respectfully submitted, to propel courts into the uncharted ocean of social and economic policy making. At least in respect of the vast
area of environmental protection and management, our courts have no claim to special technical competence and experience and
professional qualification. Where no specific, operable norms and standards are shown to exist, then the policy making departments --
the legislative and executive departments -- must be given a real and effective opportunity to fashion and promulgate those norms and
standards, and to implement them before the courts should intervene.
Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles relating to the national economy
and patrimony, should be read and understood in relation to the other sections in said article, especially Secs. 1 and 13 thereof which
read:
Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as
the key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through
industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign
markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. x
xx
xxxxxxxxx
Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on
the basis of equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by the nation for the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all especially the underprivileged.
With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by expressing preference in favor
of qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony [27] and in the use of
Filipino labor, domestic materials and locally-produced goods; (2) by mandating the State to adopt measures that help make them
competitive;[28] and (3) by requiring the State to develop a self-reliant and independent national economy effectively controlled by
Filipinos.[29] In similar language, the Constitution takes into account the realities of the outside world as it requires the pursuit of a trade
policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity;[30] and
speaks of industries which are competitive in both domestic and foreign markets as well as of the protection of Filipino enterprises against
unfair foreign competition and trade practices.
It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et al.,[31] this Court held that Sec.
10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further
guidelines or implementing laws or rules for its enforcement. From its very words the provision does not require any legislation to put it
in operation. It is per se judicially enforceable. However, as the constitutional provision itself states, it is enforceable only in regard to the
grants of rights, privileges and concessions covering national economy and patrimony and not to every aspect of trade and commerce. It
refers to exceptions rather than the rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather,
the issue is whether, as a rule, there are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine
concurrence in the WTO Agreement. And we hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same time,
it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of
Filipino enterprises only against foreign competition and trade practices that are unfair.[32] In other words, the Constitution did not intend
to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine
economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it
does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition
that is unfair.
WTO Recognizes Need to Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to protect weak and developing
economies, which comprise the vast majority of its members. Unlike in the UN where major states have permanent seats and veto powers
in the Security Council, in the WTO, decisions are made on the basis of sovereign equality, with each members vote equal in weight to
that of any other. There is no WTO equivalent of the UN Security Council.
WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference and the General Council shall be
taken by the majority of the votes cast, except in cases of interpretation of the Agreement or waiver of the obligation of a member which
would require three fourths vote. Amendments would require two thirds vote in general. Amendments to MFN provisions and the
Amendments provision will require assent of all members. Any member may withdraw from the Agreement upon the expiration of six
months from the date of notice of withdrawals.[33]
Hence, poor countries can protect their common interests more effectively through the WTO than through one-on-one negotiations
with developed countries. Within the WTO, developing countries can form powerful blocs to push their economic agenda more decisively
than outside the Organization. This is not merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic
principles underlying the WTO Agreement recognize the need of developing countries like the Philippines to share in the growth in
international trade commensurate with the needs of their economic development. These basic principles are found in the preamble[34] of
the WTO Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of
living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the
production of and trade in goods and services, while allowing for the optimal use of the worlds resources in accordance with the
objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in
a manner consistent with their respective needs and concerns at different levels of economic development,
Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least
developed among them, secure a share in the growth in international trade commensurate with the needs of their economic
development,
Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the
substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade
relations,
Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the General
Agreement on Tariffs and Trade, the results of past trade liberalization efforts, and all of the results of the Uruguay Round of
Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the objectives underlying this multilateral trading system, x x x. (underscoring
supplied.)
Specific WTO Provisos Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic principles, the WTO Agreement
grants developing countries a more lenient treatment, giving their domestic industries some protection from the rush of foreign
competition. Thus, with respect to tariffs in general, preferential treatment is given to developing countries in terms of the amount of tariff
reduction and the period within which the reduction is to be spread out. Specifically, GATT requires an average tariff reduction rate of
36% for developed countries to be effected within a period of six (6) years while developing countries -- including the Philippines --
are required to effect an average tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to agricultural products by 20%
over six (6) years, as compared to only 13% for developing countries to be effected within ten (10) years.
In regard to export subsidy for agricultural products, GATT requires developed countries to reduce their budgetary outlays for export
subsidy by 36% and export volumes receiving export subsidy by 21% within a period of six (6) years. For developing countries, however,
the reduction rate is only two-thirds of that prescribed for developed countries and a longer period of ten (10) years within which to effect
such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade practices including anti-dumping
measures, countervailing measures and safeguards against import surges. Where local businesses are jeopardized by unfair foreign
competition, the Philippines can avail of these measures. There is hardly therefore any basis for the statement that under the WTO, local
industries and enterprises will all be wiped out and that Filipinos will be deprived of control of the economy. Quite the contrary, the weaker
situations of developing nations like the Philippines have been taken into account; thus, there would be no basis to say that in joining the
WTO, the respondents have gravely abused their discretion.True, they have made a bold decision to steer the ship of state into the yet
uncharted sea of economic liberalization. But such decision cannot be set aside on the ground of grave abuse of discretion, simply
because we disagree with it or simply because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction
of this case will not pass upon the advantages and disadvantages of trade liberalization as an economic policy. It will only perform its
constitutional duty of determining whether the Senate committed grave abuse of discretion.
Constitution Does Not Rule Out Foreign Competition
Furthermore, the constitutional policy of a self-reliant and independent national economy[35] does not necessarily rule out the entry
of foreign investments, goods and services. It contemplates neither economic seclusion nor mendicancy in the international
community. As explained by Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:
Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence on external assistance
for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means avoiding mendicancy in the
international community. Independence refers to the freedom from undue foreign control of the national economy, especially in such
strategic industries as in the development of natural resources and public utilities.[36]
The WTO reliance on most favored nation, national treatment, and trade without discrimination cannot be struck down as
unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy
based on equality and reciprocity,[37] the fundamental law encourages industries that are competitive in both domestic and foreign
markets, thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual
development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises
have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers
in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire.
Constitution Favors Consumers, Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor does it contain any specific
pronouncement that Filipino companies should be pampered with a total
proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to make available to the Filipino
consumer the best goods and services obtainable anywhere in the world at the most reasonable prices. Consequently, the question boils
down to whether WTO/GATT will favor the general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos general welfare because it will -- as promised by its promoters -- expand the
countrys exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality products at the most reasonable rates to the Filipino public?
The responses to these questions involve judgment calls by our policy makers, for which they are answerable to our people during
appropriate electoral exercises. Such questions and the answers thereto are not subject to judicial pronouncements based on grave
abuse of discretion.
Constitution Designed to Meet Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and ratified in 1987. That does not mean
however that the Charter is necessarily flawed in the sense that its framers might not have anticipated the advent of a borderless world
of business. By the same token, the United Nations was not yet in existence when the 1935 Constitution became effective. Did that
necessarily mean that the then Constitution might not have contemplated a diminution of the absoluteness of sovereignty when the
Philippines signed the UN Charter, thereby effectively surrendering part of its control over its foreign relations to the decisions of various
UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of contemporary events. They
should be interpreted to cover even future and unknown circumstances. It is to the credit of its drafters that a Constitution can withstand
the assaults of bigots and infidels but at the same time bend with the refreshing winds of change necessitated by unfolding events. As
one eminent political law writer and respected jurist[38] explains:
The Constitution must be quintessential rather than superficial, the root and not the blossom, the base and framework only of the
edifice that is yet to rise. It is but the core of the dream that must take shape, not in a twinkling by mandate of our delegates, but slowly
in the crucible of Filipino minds and hearts, where it will in time develop its sinews and gradually gather its strength and finally achieve
its substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown from the brow of the Constitutional Convention,
nor can it conjure by mere fiat an instant Utopia. It must grow with the society it seeks to re-structure and march apace with the
progress of the race, drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from becoming a petrified
rule, a pulsing, living law attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that (e)ach Member shall ensure the conformity of its laws, regulations and administrative procedures
with its obligations as provided in the annexed Agreements.[39] Petitioners maintain that this undertaking unduly limits, restricts and impairs
Philippine sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the
Congress of the Philippines. It is an assault on the sovereign powers of the Philippines because this means that Congress could not pass
legislation that will be good for our national interest and general welfare if such legislation will not conform with the WTO Agreement,
which not only relates to the trade in goods x x x but also to the flow of investments and money x x x as well as to a whole slew of
agreements on socio-cultural matters x x x.[40]
More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is lodged in the Congress.[41] And
while the Constitution allows Congress to authorize the President to fix tariff rates, import and export quotas, tonnage and wharfage dues,
and other duties or imposts, such authority is subject to specified limits and x x x such limitations and restrictions as Congress may
provide,[42] as in fact it did under Sec. 401 of the Tariff and Customs Code.
Sovereignty Limited by International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners stressed their arguments on this issue. However,
while sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it is however subject to restrictions
and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the
Constitution did not envision a hermit-type isolation of the country from the rest of the world. In its Declaration of Principles and State
Policies, the Constitution adopts the generally accepted principles of international law as part of the law of the land, and adheres to the
policy of peace, equality, justice, freedom, cooperation and amity, with all nations."[43] By the doctrine of incorporation, the country is
bound by generally accepted principles of international law, which are considered to be automatically part of our own laws.[44] One of the
oldest and most fundamental rules in international law is pacta sunt servanda -- international agreements must be performed in good
faith. A treaty engagement is not a mere moral obligation but creates a legally binding obligation on the parties x x x. A state which has
contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the
fulfillment of the obligations undertaken.[45]
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender
some aspects of their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like
individuals, live with coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the
exercise of their otherwise absolute rights. Thus, treaties have been used to record agreements between States concerning such widely
diverse matters as, for example, the lease of naval bases, the sale or cession of territory, the termination of war, the regulation of conduct
of hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims, the laying down of rules governing
conduct in peace and the establishment of international organizations.[46] The sovereignty of a state therefore cannot in fact and in reality
be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family
of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy, Today, no nation can build its destiny
alone. The age of self-sufficient nationalism is over. The age of interdependence is here.[47]
UN Charter and Other Treaties Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented to restrict its sovereign rights
under the concept of sovereignty as auto-limitation.47-A Under Article 2 of the UN Charter, (a)ll members shall give the United Nations
every assistance in any action it takes in accordance with the present Charter, and shall refrain from giving assistance to any state against
which the United Nations is taking preventive or enforcement action. Such assistance includes payment of its corresponding share not
merely in administrative expenses but also in expenditures for the peace-keeping operations of the organization. In its advisory opinion
of July 20, 1961, the International Court of Justice held that money used by the United Nations Emergency Force in the Middle East and
in the Congo were expenses of the United Nations under Article 17, paragraph 2, of the UN Charter. Hence, all its members must bear
their corresponding share in such expenses. In this sense, the Philippine Congress is restricted in its power to appropriate. It is compelled
to appropriate funds whether it agrees with such peace-keeping expenses or not. So too, under Article 105 of the said Charter, the UN
and its representatives enjoy diplomatic privileges and immunities, thereby limiting again the exercise of sovereignty of members within
their own territory. Another example: although sovereign equality and domestic jurisdiction of all members are set forth as underlying
principles in the UN Charter, such provisos are however subject to enforcement measures decided by the Security Council for the
maintenance of international peace and security under Chapter VII of the Charter. A final example: under Article 103, (i)n the event of a
conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other
international agreement, their obligation under the present charter shall prevail, thus unquestionably denying the Philippines -- as a
member -- the sovereign power to make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other international pacts -- both bilateral and multilateral -- that
involve limitations on Philippine sovereignty. These are enumerated by the Solicitor General in his Compliance dated October 24, 1996,
as follows:
(a) Bilateral convention with the United States regarding taxes on income, where the Philippines agreed, among others, to exempt
from tax, income received in the Philippines by, among others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private Investment Corporation of the United States. Likewise, in
said convention, wages, salaries and similar remunerations paid by the United States to its citizens for labor and personal
services performed by them as employees or officials of the United States are exempt from income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of double taxation with respect to taxes on
income.
(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.
(d) Bilateral convention with the French Republic for the avoidance of double taxation.
(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt from all customs duties, inspection fees
and other duties or taxes aircrafts of South Korea and the regular equipment, spare parts and supplies arriving with said
aircrafts.
(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt from customs duties, excise taxes,
inspection fees and other similar duties, taxes or charges fuel, lubricating oils, spare parts, regular equipment, stores on
board Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers the same privileges as those
granted to Japanese and Korean air carriers under separate air service agreements.
(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines exempted Israeli nationals from the
requirement of obtaining transit or visitor visas for a sojourn in the Philippines not exceeding 59 days.
(I) Bilateral agreement with France exempting French nationals from the requirement of obtaining transit and visitor visa for a
sojourn not exceeding 59 days.
(j) Multilateral Convention on Special Missions, where the Philippines agreed that premises of Special Missions in the Philippines
are inviolable and its agents can not enter said premises without consent of the Head of Mission concerned. Special Missions
are also exempted from customs duties, taxes and related charges.
(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be governed by the Vienna
Convention on the Law of Treaties.
(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of the International Court of Justice. The
International Court of Justice has jurisdiction in all legal disputes concerning the interpretation of a treaty, any question of
international law, the existence of any fact which, if established, would constitute a breach of international obligation.
In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign powers of taxation, eminent
domain and police power. The underlying consideration in this partial surrender of sovereignty is the reciprocal commitment of the other
contracting states in granting the same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity
characterizes the Philippine commitments under WTO-GATT.
International treaties, whether relating to nuclear disarmament, human rights, the environment, the law of the sea, or trade, constrain
domestic political sovereignty through the assumption of external obligations. But unless anarchy in international relations is preferred
as an alternative, in most cases we accept that the benefits of the reciprocal obligations involved outweigh the costs associated with
any loss of political sovereignty. (T)rade treaties that structure relations by reference to durable, well-defined substantive norms and
objective dispute resolution procedures reduce the risks of larger countries exploiting raw economic power to bully smaller countries, by
subjecting power relations to some form of legal ordering. In addition, smaller countries typically stand to gain disproportionately from
trade liberalization. This is due to the simple fact that liberalization will provide access to a larger set of potential new trading
relationship than in case of the larger country gaining enhanced success to the smaller countrys market.[48]
The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without violating the Constitution,
based on the rationale that the Philippines adopts the generally accepted principles of international law as part of the law of the land and
adheres to the policy of x x x cooperation and amity with all nations.
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS)[49]intrudes on the power of the Supreme Court to promulgate rules concerning pleading,
practice and procedures.[50]
To understand the scope and meaning of Article 34, TRIPS,[51] it will be fruitful to restate its full text as follows:
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in paragraph 1(b) of
Article 28, if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to
order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore,
Members shall provide, in at least one of the following circumstances, that any identical product when produced without the
consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented
process:
(a) if the product obtained by the patented process is new;
(b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has
been unable through reasonable efforts to determine the process actually used.
2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if
the condition referred to in subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is fulfilled.
3. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business
secrets shall be taken into account.
From the above, a WTO Member is required to provide a rule of disputable (note the words in the absence of proof to the contrary)
presumption that a product shown to be identical to one produced with the use of a patented process shall be deemed to have been
obtained by the (illegal) use of the said patented process, (1) where such product obtained by the patented product is new, or (2) where
there is substantial likelihood that the identical product was made with the use of the said patented process but the owner of the patent
could not determine the exact process used in obtaining such identical product. Hence, the burden of proof contemplated by Article 34
should actually be understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden, properly
understood, actually refers to the burden of evidence (burden of going forward) placed on the producer of the identical (or fake) product
to show that his product was produced without the use of the patented process.
The foregoing notwithstanding, the patent owner still has the burden of proof since, regardless of the presumption provided under
paragraph 1 of Article 34, such owner still has to introduce evidence of the existence of the alleged identical product, the fact that it is
identical to the genuine one produced by the patented process and the fact of newness of the genuine product or the fact of substantial
likelihood that the identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the present law on the subject, Republic Act
No. 165, as amended, otherwise known as the Patent Law, provides a similar presumption in cases of infringement of patented design
or utility model, thus:
SEC. 60. Infringement. - Infringement of a design patent or of a patent for utility model shall consist in unauthorized copying of the
patented design or utility model for the purpose of trade or industry in the article or product and in the making, using or selling of the
article or product copying the patented design or utility model. Identity or substantial identity with the patented design or utility model
shall constitute evidence of copying. (underscoring supplied)
Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies only if (1) the product
obtained by the patented process is NEW or (2) there is a substantial likelihood that the identical product was made by the process and
the process owner has not been able through reasonable effort to determine the process used. Where either of these two provisos does
not obtain, members shall be free to determine the appropriate method of implementing the provisions of TRIPS within their own internal
systems and processes.
By and large, the arguments adduced in connection with our disposition of the third issue -- derogation of legislative power - will
apply to this fourth issue also. Suffice it to say that the reciprocity clause more than justifies such intrusion, if any actually exists. Besides,
Article 34 does not contain an unreasonable burden, consistent as it is with due process and the concept of adversarial dispute settlement
inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions on patents, trademarks and copyrights, the adjustment
in legislation and rules of procedure will not be substantial.[52]
Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes -- but not in the other documents referred
to in the Final Act, namely the Ministerial Declaration and Decisions and the Understanding on Commitments in Financial Services -- is
defective and insufficient and thus constitutes abuse of discretion. They submit that such concurrence in the WTO Agreement alone is
flawed because it is in effect a rejection of the Final Act, which in turn was the document signed by Secretary Navarro, in representation
of the Republic upon authority of the President. They contend that the second letter of the President to the Senate[53] which enumerated
what constitutes the Final Act should have been the subject of concurrence of the Senate.
A final act, sometimes called protocol de clture, is an instrument which records the winding up of the proceedings of a diplomatic
conference and usually includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed upon and
signed by the plenipotentiaries attending the conference.[54] It is not the treaty itself. It is rather a summary of the proceedings of a
protracted conference which may have taken place over several years. The text of the Final Act Embodying the Results of the Uruguay
Round of Multilateral Trade Negotiations is contained in just one page[55] in Vol. I of the 36-volume Uruguay Round of Multilateral Trade
Negotiations. By signing said Final Act, Secretary Navarro as representative of the Republic of the Philippines undertook:
"(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities with a view to
seeking approval of the Agreement in accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions."
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from its signatories, namely,
concurrence of the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They were approved by the ministers
by virtue of Article XXV: 1 of GATT which provides that representatives of the members can meet to give effect to those provisions of this
Agreement which invoke joint action, and generally with a view to facilitating the operation and furthering the objectives of this
Agreement.[56]
The Understanding on Commitments in Financial Services also approved in Marrakesh does not apply to the Philippines. It applies
only to those 27 Members which have indicated in their respective schedules of commitments on standstill, elimination of monopoly,
expansion of operation of existing financial service suppliers, temporary entry of personnel, free transfer and processing of information,
and national treatment with respect to access to payment, clearing systems and refinancing available in the normal course of business.[57]
On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed included as its integral
parts,[58] as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters to
the agreements and associated legal instruments included in the Annexes to this Agreement.
2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter referred to as Multilateral
Agreements) are integral parts of this Agreement, binding on all Members.
3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as Plurilateral Trade
Agreements) are also part of this Agreement for those Members that have accepted them, and are binding on those
Members. The Plurilateral Trade Agreements do not create either obligation or rights for Members that have not accepted them.
4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter referred to as GATT 1994) is legally
distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the
conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, as
subsequently rectified, amended or modified (hereinafter referred to as GATT 1947).
It should be added that the Senate was well-aware of what it was concurring in as shown by the members deliberation on August
25, 1994. After reading the letter of President Ramos dated August 11, 1994,[59] the senators of the Republic minutely dissected what the
Senate was concurring in, as follows: [60]
THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day hearing of this Committee
yesterday. Was the observation made by Senator Taada that what was submitted to the Senate was not the agreement on establishing
the World Trade Organization by the final act of the Uruguay Round which is not the same as the agreement establishing the World
Trade Organization?And on that basis, Senator Tolentino raised a point of order which, however, he agreed to withdraw upon
understanding that his suggestion for an alternative solution at that time was acceptable. That suggestion was to treat the proceedings
of the Committee as being in the nature of briefings for Senators until the question of the submission could be clarified.
And so, Secretary Romulo, in effect, is the President submitting a new... is he making a new submission which improves on the clarity
of the first submission?
MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no misunderstanding, it was his intention to clarify
all matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and later on Senator Tolentino since they were the ones that raised this question
yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to the Senate for ratification is not
the Final Act of the Uruguay Round, but rather the Agreement on the World Trade Organization as well as the Ministerial Declarations
and Decisions, and the Understanding and Commitments in Financial Services.
I am now satisfied with the wording of the new submission of President Ramos.
SEN. TAADA. . . . of President Ramos, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator Tolentino? And after him Senator Neptali Gonzales and
Senator Lina.
SEN TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I saw the draft of his earlier, and I
think it now complies with the provisions of the Constitution, and with the Final Act itself. The Constitution does not require us to ratify
the Final Act. It requires us to ratify the Agreement which is now being submitted. The Final Act itself specifies what is going to be
submitted to with the governments of the participants.
In paragraph 2 of the Final Act, we read and I quote:
By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO Agreement for the consideration of
the respective competent authorities with a view to seeking approval of the Agreement in accordance with their procedures.
In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification or acceptance as whatever
their constitutional procedures may provide but it is the World Trade Organization Agreement. And if that is the one that is being
submitted now, I think it satisfies both the Constitution and the Final Act itself.
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had been adequately reflected in
the journal of yesterdays session and I dont see any need for repeating the same.
Now, I would consider the new submission as an act ex abudante cautela.
THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on this?
SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out of the abundance of question. Then the
new submission is, I believe, stating the obvious and therefore I have no further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are invoking this Courts constitutionally
imposed duty to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the Senate in giving its concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorari grounded on grave
abuse of discretion may be issued by the Court under Rule 65 of the Rules of Court when it is amply shown that petitioners have no other
plain, speedy and adequate remedy in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction.[61] Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary
or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[62] Failure on the part of the petitioner
to show grave abuse of discretion will result in the dismissal of the petition.[63]
In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of
Congress and is thus entitled to great respect in its actions. It is itself a constitutional body independent and coordinate, and thus its
actions are presumed regular and done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow
such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted definition of grave abuse of
discretion and the presumption of regularity in the Senates processes, this Court cannot find any cogent reason to impute grave abuse
of discretion to the Senates exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the
Constitution.[64]
It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an independent national economy
effectively controlled by Filipinos; and to protect and/or prefer Filipino labor, products, domestic materials and locally produced goods. But
it is equally true that such principles -- while serving as judicial and legislative guides -- are not in themselves sources of causes of
action. Moreover, there are other equally fundamental constitutional principles relied upon by the Senate which mandate the pursuit of a
trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity
and the promotion of industries which are competitive in both domestic and foreign markets, thereby justifying its acceptance of said
treaty. So too, the alleged impairment of sovereignty in the exercise of legislative and judicial powers is balanced by the adoption of the
generally accepted principles of international law as part of the law of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the WTO Agreement thereby
making it a part of the law of the land is a legitimate exercise of its sovereign duty and power. We find no patent and gross arbitrariness
or despotism by reason of passion or personal hostility in such exercise. It is not impossible to surmise that this Court, or at least some
of its members, may even agree with petitioners that it is more advantageous to the national interest to strike down Senate Resolution
No. 97. But that is not a legal reason to attribute grave abuse of discretion to the Senate and to nullify its decision. To do so would
constitute grave abuse in the exercise of our own judicial power and duty.Ineludably, what the Senate did was a valid exercise of its
authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter
between the elected policy makers and the people. As to whether the nation should join the worldwide march toward trade liberalization
and economic globalization is a matter that our people should determine in electing their policy makers. After all, the WTO Agreement
allows withdrawal of membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian Renaissance[65] where the East will
become the dominant region of the world economically, politically and culturally in the next century. He refers to the free market espoused
by WTO as the catalyst in this coming Asian ascendancy. There are at present about 31 countries including China, Russia and Saudi
Arabia negotiating for membership in the WTO. Notwithstanding objections against possible limitations on national sovereignty, the WTO
remains as the only viable structure for multilateral trading and the veritable forum for the development of international trade law. The
alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of the
advantages and disadvantages of globalization with its on-line experience, and endowed with a vision of the future, the Philippines now
straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium. Let the people, through
their duly authorized elected officers, make their free choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco, Hermosisima, Jr., and Torres,
Jr., JJ., concur.
Padilla, and Vitug, JJ., in the result.