G.R. No.

114508 November 19, 1999

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

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

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 (g) The trademark BARBIZON was fraudulently registered in the Philippines by one Lolita R. Escobar under Registration No.
21920, issued on September 11, 1974, in violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by assignment the "rights" to the said mark previously registered by Lolita
Escobar, hence respondent-applicant's title is vitiated by the same fraud and criminal act. Besides, Certificate of Registration No.
21920 has been cancelled for failure of either Lolita Escobar or herein respondent-applicant, to seasonably file the statutory
affidavit of use. By applying for a re-registration of the mark BARBIZON subject of this opposition, respondent-applicant seeks
to perpetuate the fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON and Representation of a Woman
trademarks qualify as well-known trademarks entitled to protection under Article 6bis of the Convention of Paris for the
Protection of Industrial Property and further amplified by the Memorandum of the Minister of Trade to the Honorable Director of
Patents dated October 25, 1983 [sic], 4 Executive Order No. 913 dated October 7, 1963 and the Memorandum of the Minister of
Trade and Industry to the Honorable Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's BARBIZON trademark and constitutes the
dominant part of Opposer's two other marks namely, BARBIZON and Bee design and BARBIZON and a Representation of a
Woman. The continued use by respondent-applicant of Opposer's trademark BARBIZON on goods belonging to Class 25
constitutes a clear case of commercial and criminal piracy and if allowed registration will violate not only the Trademark Law but
also Article 189 of the Revised Penal Code and the commitment of the Philippines to an international treaty. 5
Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon International." Petitioner registered the name with the
Department of Trade and Industry (DTI) for which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of registration, and declared private respondent the owner
and prior user of the business name "Barbizon International." Thus:
WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner and prior user of the business name
"BARBIZON INTERNATIONAL" under Certificate of Registration No. 87-09000 dated March 10, 1987 and issued in the name
of respondent, is [sic] hereby ordered revoked and cancelled. . . . . 6
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of Patents. On June 18, 1992, the Director rendered a
decision declaring private respondent's opposition barred by res judicata and giving due course to petitioner's application for registration, to wit:
WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby DECLARED BARRED by res judicata and is
hereby DISMISSED. Accordingly, Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is
GIVEN DUE COURSE.
SO ORDERED. 7
Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of Appeals reversed
the Director of Patents finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and ordered that the case be remanded to the Bureau of
Patents for further proceedings, viz:
WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director of Patents in Inter Partes Case No. 2049 is
hereby SET ASIDE; and the case is hereby remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs. 8
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 686
RENDERED ON JUNE 18, 1974, ANNEX C HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE
BEFORE THE DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE PRINCIPLE OFRES JUDICATA IN
DISMISSING PRIVATE RESPONDENT BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR
REGISTRATION FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO CERTIFICATE OF
REGISTRATION NO. 53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A "JUDGMENT ON THE MERITS" REQUIRED A "HEARING WHERE
BOTH PARTIES ARE SUPPOSED TO ADDUCE EVIDENCE" AND WHETHER THE JOINT SUBMISSION OF THE
PARTIES TO A CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT PRESENTING TESTIMONIAL
OR DOCUMENTARY EVIDENCE FALLS WITHIN THE MEANING OF "JUDGMENT ON THE MERITS" AS ONE OF
THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY CANCELLING PETITIONER'S FIRM
NAME "BARBIZON INTERNATIONAL" AND WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER
OFFERED IN EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS THE RIGHT
TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF THE BUSINESS NAME LAW (AS IMPLEMENTED BY
THE BUREAU OF DOMESTIC TRADE) BUT ON THE BASIS OF THE PARIS CONVENTION AND THE TRADEMARK
LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DIRECTOR OF
PATENTS. 10
Before ruling on the issues of the case, there is need for a brief background on the function and historical development of trademarks and trademark
law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or any combination
thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in by
others. 11 This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of the Philippines, which defines a "trademark" as "any
visible sign capable of distinguishing goods." 12 In Philippine jurisprudence, the function of a trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to secure to him, who has been instrumental in bringing into the market a superior article of

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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 judicata is an absolute bar to a subsequent
action for the same cause; and its requisites are: (a) the former judgment or order must be final; (b) the judgment or order must be one on the merits;
(c) it must have been rendered by a court having jurisdiction over the subject matter and parties; (d) there must be between the first and second
actions, identity of parties, of subject matter and of causes of action. 36
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with petitioner. Both claim that all the four elements of res
judicata have been complied with: that the judgment in IPC No. 686 was final and was rendered by the Director of Patents who had jurisdiction over
the subject matter and parties; that the judgment in IPC No. 686 was on the merits; and that the lack of a hearing was immaterial because substantial
issues were raised by the parties and passed upon by the Director of Patents. 37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
Neither party took testimony nor adduced documentary evidence. They submitted the case for decision based on the pleadings
which, together with the pertinent records, have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer would probably be damaged by the
registration of the trademark BARBIZON sought by the respondent-applicant on the ground that it so resembles the trademark
BARBIZON allegedly used and owned by the former to be "likely to cause confusion, mistake or to deceive purchasers."
On record, there can be no doubt that respondent-applicant's sought-to-be-registered trademark BARBIZON is similar, in fact
obviously identical, to opposer's alleged trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of presentation. Respondent-applicant's trademark is in bold
letters (set against a black background), while that of the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or commerce in the Philippines prior to the date of
application for the registration of the identical mark BARBIZON by the respondent-applicant. However, the allegation of facts in

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 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.
Art. 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952. 51 It is a self-executing provision and does not require legislative
enactment to give it effect in the member country. 52 It may be applied directly by the tribunals and officials of each member country by the mere
publication or proclamation of the Convention, after its ratification according to the public law of each state and the order for its execution. 53

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

5
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-known trademarks but laid down guidelines for the Director
of Patents to observe in determining whether a trademark is entitled to protection as a well-known mark in the Philippines under Article 6bis of the
Paris Convention. This was to be established through Philippine Patent Office procedures in inter partes and ex parte cases pursuant to the criteria
enumerated therein. The Philippine Patent Office was ordered to refuse applications for, or cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a person who is a citizen of a member of the Union. All pending applications for
registration of world-famous trademarks by persons other than their original owners were to be rejected forthwith. The Ongpin Memorandum was
issued pursuant to Executive Order No. 913 dated October 7, 1983 of then President Marcos which strengthened the rule-making and adjudicatory
powers of the Minister of Trade and Industry for the effective protection of consumers and the application of swift solutions to problems in trade and
industry. 59
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in the 1984 landmark case ofLa Chemise Lacoste, S.A. v.
Fernandez. 60 This court ruled therein that under the provisions of Article 6bis of the Paris Convention, the Minister of Trade and Industry was the
"competent authority" to determine whether a trademark is well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of the Paris Convention in 1965. In the case at bar, the
first inter partes case, IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but five (5) years after the effectivity of the Paris
Convention. Article 6bis was already in effect five years before the first case was instituted. Private respondent, however, did not cite the protection
of Article 6bis, neither did it mention the Paris Convention at all. It was only in 1981 when IPC No. 2049 was instituted that the Paris Convention and
the Villafuerte Memorandum, and, during the pendency of the case, the 1983 Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the Convention and the two Memoranda is barred by res
judicata has already been answered in Wolverine Worldwide, Inc. v. Court of
Appeals. 62 In this case, petitioner Wolverine, a foreign corporation, filed with the Philippine Patent Office a petition for cancellation of the
registration certificate of private respondent, a Filipino citizen, for the trademark "Hush Puppies" and "Dog Device." Petitioner alleged that it was the
registrant of the internationally-known trademark in the United States and other countries, and cited protection under the Paris Convention and the
Ongpin Memorandum. The petition was dismissed by the Patent Office on the ground of res judicata. It was found that in 1973 petitioner's
predecessor-in-interest filed two petitions for cancellation of the same trademark against respondent's predecessor-in-interest. The Patent Office
dismissed the petitions, ordered the cancellation of registration of petitioner's trademark, and gave due course to respondent's application for
registration. This decision was sustained by the Court of Appeals, which decision was not elevated to us and became final and
executory. 63
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the Trademark Law, its subsequent petition was based on a new
cause of action, i.e., the Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous decision. We held that the said
Memorandum and E.O. did not grant a new cause of action because it did "not amend the Trademark Law," . . . "nor did it indicate a new policy with
respect to the registration in the Philippines of world-famous trademarks." 64 This conclusion was based on the finding that Wolverine's two previous
petitions and subsequent petition dealt with the same issue of ownership of the trademark. 65 In other words, since the first and second cases involved
the same issue of ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC No. 686. Private respondent's opposition therein was
merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private respondent's business reputation and
goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a mark previously used in the Philippines which
act is penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products such as robes, pajamas, lingerie, nightgowns
and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent Office in 1934 and 1949; and that variations of
the same trademark, i.e., "BARBIZON" with Bee design and "BARBIZON" with the representation of a woman were also
registered with the U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many countries all over the world for over forty years. "Barbizon"
products have been advertised in international publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on fraud; and this fraudulent registration was
cancelled in 1979, stripping Escobar of whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark under Article 6bis of the Paris Convention,
Executive Order No. 913, and the two Memoranda dated November 20, 1980 and October 25, 1983 of the Minister of Trade and
Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same class of goods as the latter's amounts to a
violation of the Trademark Law and Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the trademark in the United States and other
countries, and the international recognition and reputation of the trademark established by extensive use and advertisement of private
respondent's products for over forty years here and abroad. These are different from the issues of confusing similarity and damage in IPC
No. 686. The issue of prior use may have been raised in IPC No. 686 but this claim was limited to prior use in the Philippines only. Prior
use in IPC No. 2049 stems from private respondent's claim as originator of the word and symbol "Barbizon," 66 as the first and registered
user of the mark attached to its products which have been sold and advertised worldwide for a considerable number of years prior to
petitioner's first application for registration of her trademark in the Philippines. Indeed, these are substantial allegations that raised new
issues and necessarily gave private respondent a new cause of action. Res judicata does not apply to rights, claims or demands, although
growing out of the same subject matter, which constitute separate or distinct causes of action and were not put in issue in the former
action. 67

6
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.
Facts:
Lolita Escobar applied for the registration of the trademark Barbizon for her products such as brassieres and ladies undergarments. Respondent
Barbizon Corporation, an American corporation, opposed alleging that petitioners mark is confusingly similar to its own trademark Barbizon.
Escobars application was given due course and her trademark was registered. Later, Escobar assigned all her rights to petitioner Mirpuri who failed
to file an Affidavit of Use resulting in the cancellation of the trademark. Petitioner then applied for registration of the trademark to which respondent
Barbizon again opposed, now invoking the protection under Article 6bis of the Paris Convention. The Director of Patents declaring respondents
opposition was already barred, petitioners application was given due course. CA reversed the judgment.
Issue:
Whether or not respondent may invoke the protection under Article 6bis of the Paris Convention.
Ruling: YES.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, is a multilateral treaty that seeks to
protect industrial property consisting of patents, utility models, industrial designs, trademarks, service marks, trade names and indications of source
or appellations of origin, and at the same time aims to repress unfair competition. The Convention is essentially a compact among various countries
which, as members of the Union, have pledged to accord to citizens of the other member countries trademark and other rights comparable to those
accorded their own citizens by their domestic laws for an effective protection against unfair competition. Art. 6 bis is a self-executing provision and
does not require legislative enactment to give it effect in the member country. It may be applied directly by the tribunals and officials of each member

7
country by the mere publication or proclamation of the Convention, after its ratification according to the public law of each state and the order for its
execution.
The Philippines and the United States of America have acceded to the WTO Agreement. Conformably, the State must reaffirm its commitment to the
global community and take part in evolving a new international economic order at the dawn of the new millennium.

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

FACTS

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

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

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

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

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

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

Petitioner raised the defense of res judicata.

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

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

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

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

ISSUES

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

Whether or not petitioner is liable for trademark infringement

DECISION

The Paris Convention, is a multilateral treaty that seeks to protect industrial property consisting of patents, utility models, industrial designs,
trademarks, service marks, trade names and indications of source or appellations of origin, and at the same time aims to repress unfair competition. It
is essentially a compact among various countries which, as members of the Union, have pledged to accord to citizens of the other member countries
trademark and other rights comparable to those accorded their own citizens by their domestic laws for an effective protection against unfair
competition. Both the Philippines and the United States of America, are signatories to the Convention.

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

8
Art. 6bis is a self-executing provision and does not require legislative enactment to give it effect in the member country. It may be applied directly by
the tribunals and officials of each member country by the mere publication or proclamation of the Convention, after its ratification according to the
public law of each state and the order for its execution.

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

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

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

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

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

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

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

Respondent corporation also introduced in the second case a fact that did not exist at the time the first case was filed and terminated: the cancellation
of petitioner's certificate of registration for failure to file the affidavit of use. It did not and could not have occurred in the first case, and this gave
respondent another cause to oppose the second application. Res judicata extends only to facts and conditions as they existed at the time judgment was
rendered and to the legal rights and relations of the parties fixed by the facts so determined. When new facts or conditions intervene before the
second suit, furnishing a new basis for the claims and defenses of the parties, the issues are no longer the same, and the former judgment cannot be
pleaded as a bar to the subsequent action.

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

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

9
G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner,
vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.

DECISION

CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek
to annul, reverse and set aside: (a) the November 15, 2001 decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the
November 26, 1998 decision,2 as modified by the June 24, 1999 order,3 of the Regional Trial Court of Makati City, Branch 57 (Makati RTC) in Civil
Case No. 93-850, which held petitioners liable for, and permanently enjoined them from, committing trademark infringement and unfair competition,
and which ordered them to pay damages to respondents E. & J. Gallo Winery (Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the
July 11, 2002 CA resolution denying their motion for reconsideration4 and (c) the aforesaid Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and existing under the laws of the State of
California, United States of America (U.S.), where all its wineries are located. Gallo Winery produces different kinds of wines and brandy products
and sells them in many countries under different registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and distributor in the Philippines since 1991, selling
these products in its own name and for its own account. 5
Gallo Winerys GALLO wine trademark was registered in the principal register of the Philippine Patent Office (now Intellectual Property Office) on
November 16, 1971 under Certificate of Registration No. 17021 which was renewed on November 16, 1991 for another 20 years. 6 Gallo Winery also
applied for registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990 under Application Serial No. 901011-00073599-PN
but the records do not disclose if it was ever approved by the Director of Patents. 7
On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco Industries of the Philippines (Tobacco
Industries), are engaged in the cultivation, manufacture, distribution and sale of tobacco products for which they have been using the GALLO
cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the manufacture and sale of its cigarette products. In 1976, Tobacco Industries filed its manufacturers
sworn statement as basis for BIRs collection of specific tax on GALLO cigarettes. 9
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the GALLO cigarette trademark in the
principal register of the then Philippine Patent Office. 10
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July 16, 1985, applied for trademark
registration in the Philippine Patent Office.11 On July 17, 1985, the National Library issued Certificate of Copyright Registration No. 5834 for La
Campanas lifetime copyright claim over GALLO cigarette labels. 12
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO trademark. 13 BIR approved Mighty
Corporations use of GALLO 100s cigarette brand, under licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100s cigarette brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco Industries, then by La Campana and
finally by Mighty Corporation.15
On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971, respondents claim that they first introduced and
sold the GALLO and ERNEST & JULIO GALLO wines in the Philippines circa1974 within the then U.S. military facilities only. By 1979, they had
expanded their Philippine market through authorized distributors and independent outlets. 16
Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao supermarket wine cellar section. 17 Forthwith, respondents sent a demand letter to petitioners
asking them to stop using the GALLO trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename infringement and unfair competition, with a prayer
for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6 bis of the Paris Convention for the Protection of Industrial Property (Paris Convention) 18 and
RA 166 (Trademark Law), 19 specifically, Sections 22 and 23 (for trademark infringement), 20 29 and 3021 (for unfair competition and false designation
of origin) and 37 (for tradename infringement). 22 They claimed that petitioners adopted the GALLO trademark to ride on Gallo Winerys GALLO
and ERNEST & JULIO GALLO trademarks established reputation and popularity, thus causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winerys wines. Respondents prayed
for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as actual and compensatory damages, at
least P500,000 as exemplary and moral damages, and at least P500,000 as attorneys fees and litigation expenses. 23
In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO cigarettes and Gallo Winerys wines were totally
unrelated products; Gallo Winerys GALLO trademark registration certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO
wines were sold through different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-cost
items compared to Gallo Winerys high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo Winerys wines was the
middle or high-income bracket with at least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen, laborers and other
low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device with the manufacturers name clearly indicated as
MIGHTY CORPORATION while, in the case of Gallo Winerys wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or

10
just their surname GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel; and petitioners acted with honesty, justice
and good faith in the exercise of their right to manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993,24 the Makati RTC denied, for lack of merit, respondents prayer for the issuance of a writ of preliminary
injunction,25 holding that respondents GALLO trademark registration certificate covered wines only, that respondents wines and petitioners
cigarettes were not related goods and respondents failed to prove material damage or great irreparable injury as required by Section 5, Rule 58 of the
Rules of Court.26
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents motion for reconsideration. The court reiterated that respondents wines
and petitioners cigarettes were not related goods since the likelihood of deception and confusion on the part of the consuming public was very
remote. The trial court emphasized that it could not rely on foreign rulings cited by respondents "because the[se] cases were decided by foreign courts
on the basis of unknown facts peculiar to each case or upon factual surroundings which may exist only within their jurisdiction. Moreover, there
[was] no showing that [these cases had] been tested or found applicable in our jurisdiction." 27
On February 20, 1995, the CA likewise dismissed respondents petition for review on certiorari, docketed as CA-G.R. No. 32626, thereby affirming
the Makati RTCs denial of the application for issuance of a writ of preliminary injunction against petitioners. 28
After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable for, and permanently enjoined them from,
committing trademark infringement and unfair competition with respect to the GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their distributors, trade outlets, and all persons acting for them or under their
instructions, from (i) using E & Js registered trademark GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with other words, designs or emblems and other acts of similar nature,
and (ii) committing other acts of unfair competition against plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs
(i) actual and compensatory damages for the injury and prejudice and impairment of plaintiffs business and goodwill
as a result of the acts and conduct pleaded as basis for this suit, in an amount equal to 10% of FOURTEEN MILLION
TWO HUNDRED THIRTY FIVE THOUSAND PESOS (PHP14,235,000.00) from the filing of the complaint until
fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondents motion for partial reconsideration and increased the award of actual and compensatory
damages to 10% of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws and jurisprudence when it held that: [a] RA 8293
(Intellectual Property Code of the Philippines [IP Code]) was applicable in this case; [b] GALLO cigarettes and GALLO wines were identical, similar
or related goods for the reason alone that they were purportedly forms of vice; [c] both goods passed through the same channels of trade and [d]
petitioners were liable for trademark infringement, unfair competition and damages. 31
Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve pure questions of law, and hence, must be dismissed
outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of law" 32 (that is, the doubt pertains to the application
and interpretation of law to a certain set of facts) and not "questions of fact" (where the doubt concerns the truth or falsehood of alleged
facts),33 otherwise, the petition will be denied. We are not a trier of facts and the Court of Appeals factual findings are generally conclusive upon us. 34
This case involves questions of fact which are directly related and intertwined with questions of law. The resolution of the factual issues concerning
the goods similarity, identity, relation, channels of trade, and acts of trademark infringement and unfair competition is greatly dependent on the
interpretation of applicable laws. The controversy here is not simply the identity or similarity of both parties trademarks but whether or not
infringement or unfair competition was committed, a conclusion based on statutory interpretation. Furthermore, one or more of the following
exceptional circumstances oblige us to review the evidence on record: 35
(1) the conclusion is grounded entirely on speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the case, and the same are contrary to the admissions of both the
appellant and the appellee;
(6) the findings are without citation of specific evidence on which they are based;
(7) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted [by the evidence] on record. 36
In this light, after thoroughly examining the evidence on record, weighing, analyzing and balancing all factors to determine whether trademark
infringement and/or unfair competition has been committed, we conclude that both the Court of Appeals and the trial court veered away from the law
and well-settled jurisprudence.

11
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair competition committed during the effectivity of
the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the aforesaid governing laws but also under the IP
Code which took effect only on January 1, 1998,37 or about five years after the filing of the complaint:
Defendants unauthorized use of the GALLO trademark constitutes trademark infringement pursuant to Section 22 of Republic Act No.
166, Section 155 of the IP Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS Agreement as it causes confusion,
deception and mistake on the part of the purchasing public. 38 (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants use of the GALLO trademark on its cigarettes is likely to create confusion with the GALLO
trademark on wines previously registered and used in the Philippines by appellee E & J Gallo Winery, the trial court thus did not err in
holding that appellants acts not onlyviolated the provisions of the our trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but also
Article 6bis of the Paris Convention.39 (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has first been promulgated. A law that is not
yet effective cannot be considered as conclusively known by the populace. To make a law binding even before it takes effect may lead to the arbitrary
exercise of the legislative power.40 Nova constitutio futuris formam imponere debet non praeteritis. A new state of the law ought to affect the future,
not the past. Any doubt must generally be resolved against the retroactive operation of laws, whether these are original enactments, amendments or
repeals.41 There are only a few instances when laws may be given retroactive effect, 42 none of which is present in this case.
The IP Code, repealing the Trademark Law,43 was approved on June 6, 1997. Section 241 thereof expressly decreed that it was to take effect only on
January 1, 1998, without any provision for retroactive application. Thus, the Makati RTC and the CA should have limited the consideration of the
present case within the parameters of the Trademark Law and the Paris Convention, the laws in force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a common conception at their root, that is, a person shall not be permitted
to misrepresent his goods or his business as the goods or business of another, the law on unfair competition is broader and more inclusive than the
law on trademark infringement. The latter is more limited but it recognizes a more exclusive right derived from the trademark adoption and
registration by the person whose goods or business is first associated with it. The law on trademarks is thus a specialized subject distinct from the law
on unfair competition, although the two subjects are entwined with each other and are dealt with together in the Trademark Law (now, both are
covered by the IP Code). Hence, even if one fails to establish his exclusive property right to a trademark, he may still obtain relief on the ground of
his competitors unfairness or fraud. Conduct constitutes unfair competition if the effect is to pass off on the public the goods of one man as the
goods of another. It is not necessary that any particular means should be used to this end. 44
In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those
of another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition
registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international agreement binding on the Philippines and the United States (Gallo Winerys country of
domicile and origin) prohibits "the [registration] or use of a trademark which constitutes a reproduction, imitation or translation, liable to create
confusion, of a mark considered by the competent authority of the country of registration or use to be well-known in that country as being already the
mark of a person entitled to the benefits of the [Paris] Convention and used for identical or similar goods. [This rule also applies] when the essential
part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith." There is no time limit
for seeking the prohibition of the use of marks used in bad faith. 47
Thus, under Article 6bis of the Paris Convention, the following are the elements of trademark infringement:
(a) registration or use by another person of a trademark which is a reproduction, imitation or translationliable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or use 48 to be well-knownin that country and is already
the mark of a person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for infringement when, among others, he "uses without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for
sale, or advertising of any goods, business or services or in connection with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably
imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or services." 49 Trademark registration and actual
use are material to the complaining partys cause of action.
Corollary to this, Section 20 of the Trademark Law 50 considers the trademark registration certificate as prima facie evidence of the validity of the
registration, the registrants ownership and exclusive right to use the trademark in connection with the goods, business or services as classified by the
Director of Patents51 and as specified in the certificate, subject to the conditions and limitations stated therein. Sections 2 and 2-A 52 of the Trademark

12
Law emphasize the importance of the trademarks actual use in commerce in the Philippines prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of laches, estoppel, and acquiescence may be considered and applied. 53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in
connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services as to likely cause confusion or mistake or
to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic authorities), while the Trademark Law
protects all trademarks, whether well-known or not, provided that they have been registered and are in actual commercial use in the Philippines.
Following universal acquiescence and comity, in case of domestic legal disputes on any conflicting provisions between the Paris Convention (which
is an international agreement) and the Trademark law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is limited only to goods identical or similar to
those in respect of which such trademark is registered and only when there is likelihood of confusion. Under both laws, the time element in
commencing infringement cases is material in ascertaining the registrants express or implied consent to anothers use of its trademark or a colorable
imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrants otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO wine trademark was registered in the Philippines in November 1971 but the wine itself was first
marketed and sold in the country only in 1974 and only within the former U.S. military facilities, and outside thereof, only in 1979. To prove
commercial use of the GALLO wine trademark in the Philippines, respondents presented sales invoice no. 29991 dated July 9, 1981 addressed to
Conrad Company Inc., Makati, Philippines and sales invoice no. 85926 dated March 22, 1996 addressed to Andresons Global, Inc., Quezon City,
Philippines. Both invoices were for the sale and shipment of GALLO wines to the Philippines during that period. 55 Nothing at all, however, was
presented to evidence the alleged sales of GALLO wines in the Philippines in 1974 or, for that matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and manufacturers sworn statement, it appears that
petitioners and its predecessor-in-interest, Tobacco Industries, have indeed been using and selling GALLO cigarettes in the Philippines since 1973 or
before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we reiterated our rulings in Pagasa Industrial Corporation vs. Court of
Appeals,58 Converse Rubber Corporation vs. Universal Rubber Products, Inc., 59 Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate Court,61 and Philip Morris vs. Court of Appeals,62 giving utmost importance to
theactual commercial use of a trademark in the Philippines prior to its registration, notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention that private respondent failed to prove prior actual
commercial use of its "LEE" trademark in the Philippines before filing its application for registration with the BPTTT and hence,
has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a trademark pursuant to
Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial Property relied upon by private respondent and Sec. 21-A of
the Trademark Law (R.A. No. 166) were sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement of actual use in
the Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made part of the law
of the land does not by any means imply the primacy of international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not superior, to
national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack of business
activity in the Philippines on account of Section 21-A of the Trademark Law but the question of whether they have an
exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim
that when a foreign corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need
not be actually using the trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a
suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the local
market.
xxx xxx xxx

13
 Undisputably, private respondent is the senior registrant, having obtained several registration certificates for its various trademarks
"LEE," "LEE RIDERS," and "LEESURES" in both the supplemental and principal registers, as early as 1969 to 1973. However,
registration alone will not suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214
[1969]; Reiterated in Kabushi Isetan vs. Intermediate Appellate Court (203 SCRA 583 [1991]) we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down through the years is thatactual use in commerce or
business is a prerequisite in the acquisition of the right of ownership over a trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership and exclusive use,
is qualified. A registration certificate serves merely as prima facieevidence. It is not conclusive but can and may be rebutted by
controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents and the Court of Appeals.After a meticulous study of the
records, we observe that the Director of Patents and the Court of Appeals relied mainly on the registration certificates as proof of
use by private respondent of the trademark "LEE" which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its "LEE" mark first reached the Philippines in the 1960's through local sales by the
Post Exchanges of the U.S. Military Bases in the Philippines (Rollo, p. 177) based as it was solely on the self-serving statements of
Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein
private respondent. (Original Records, p. 52) Similarly, we give little weight to the numerous vouchers representing various
advertising expenses in the Philippines for "LEE" products. It is well to note that these expenses were incurred only in 1981 and
1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with private respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans and other garments adopting its
"STYLISTIC MR. LEE" trademark since 1975 as evidenced by appropriate sales invoices to various stores and retailers. (Exhibit 1-e to
1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526 [1982]) and Converse Rubber Corp. v. Universal Rubber
Products, Inc., (147 SCRA 154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior to its registration. There is no dispute that
respondent corporation was the first registrant, yet it failed to fully substantiate its claim that it used in trade or business
in the Philippines the subject mark; it did not present proof to invest it with exclusive, continuous adoption of the
trademark which should consist among others, of considerable sales since its first use. The invoices submitted by
respondent which were dated way back in 1957 show that the zippers sent to the Philippines were to be used as "samples"
and "of no commercial value." The evidence for respondent must be clear, definite and free from inconsistencies. "Samples"
are not for sale and therefore, the fact of exporting them to the Philippines cannot be considered to be equivalent to the "use"
contemplated by law. Respondent did not expect income from such "samples." There were no receipts to establish sale, and no
proof were presented to show that they were subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own mark and for failure
to establish confusing similarity between said trademarks, private respondent's action for infringement must necessarily
fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents judicial admission that the actual commercial use of the GALLO wine trademark
was subsequent to its registration in 1971 and to Tobacco Industries commercial use of the GALLO cigarette trademark in 1973, we rule that, on this
account, respondents never enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco Industries and its successors-
in-interest, herein petitioners, either under the Trademark Law or the Paris Convention.
Respondents GALLO trademark
registration is limited to wines only
We also note that the GALLO trademark registration certificates in the Philippines and in other countries expressly state that they cover wines only,
without any evidence or indication that registrant Gallo Winery expanded or intended to expand its business to cigarettes. 63
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use the GALLO trademark should be limited to
wines, the only product indicated in its registration certificates. This strict statutory limitation on the exclusive right to use trademarks was amply
clarified in our ruling in Faberge, Inc. vs. Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the case before Us, it is not difficult to discern from the foregoing statutory enactments that
private respondent may be permitted to register the trademark "BRUTE" for briefs produced by it notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its own set of items which are limited to: after-shave lotion, shaving cream, deodorant, talcum
powder and toilet soap. Inasmuch as petitioner has not ventured in the production of briefs, an item which is not listed in its
certificate of registration, petitioner cannot and should not be allowed to feign that private respondent had invaded petitioner's
exclusive domain. To be sure, it is significant that petitioner failed to annex in its Brief the so-called "eloquent proof that petitioner indeed
intended to expand its mark BRUT to other goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even then, a mere application by
petitioner in this aspect does not suffice and may not vest an exclusive right in its favor that can ordinarily be protected by the Trademark
Law. In short, paraphrasing Section 20 of the Trademark Law as applied to the documentary evidence adduced by petitioner, the
certificate of registration issued by the Director of Patents can confer upon petitioner the exclusive right to use its own symbol only
to those goods specified in the certificate, subject to any conditions and limitations stated therein. This basic point is perhaps the
unwritten rationale of Justice Escolin inPhilippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]), when he stressed the principle
enunciated by the United States Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L ed 317, 46 Sct. 160) that
one who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others
for products which are of a different description. Verily, this Court had the occasion to observe in the 1966 case of George W. Luft Co.,

14
 Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no serious objection was posed by the petitioner therein since the applicant utilized the
emblem "Tango" for no other product than hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private respondent sought to belie as regards petitioner's alleged
expansion of its business. It may be recalled that petitioner claimed that it has a pending application for registration of the emblem "BRUT
33" for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic wisdom imparted by Justice JBL Reyes
in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to the effect that dissimilarity of goods will not preclude relief if the junior user's
goods are not remote from any other product which the first user would be likely to make or sell (vide, at page 1025). Commenting
on the former provision of the Trademark Law now embodied substantially under Section 4(d) of Republic Act No. 166, as amended, the
erudite jurist opined that the law in point "does not require that the articles of manufacture of the previous user and late user of the mark
should possess the same descriptive properties or should fall into the same categories as to bar the latter from registering his mark in the
principal register." (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to the goods used by the first user
as specified in the certificate of registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was relied upon by Justice JBL Reyes in the Sta.
Ana case and Section 20? It would seem that Section 4(d) does not require that the goods manufactured by the second user be
related to the goods produced by the senior user while Section 20 limits the exclusive right of the senior user only to those goods
specified in the certificate of registration. But the rule has been laid down that the clause which comes later shall be given paramount
significance over an anterior proviso upon the presumption that it expresses the latest and dominant purpose. (Graham Paper Co. vs.
National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo,
26 N.E., p. 1061; cited by Martin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its symbol for the briefs it manufactures because as aptly remarked
by Justice Sanchez in Sterling Products International Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
"Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may
arise whereby an applicant may be tempted to register a trademark on any and all goods which his mind may conceive
even if he had never intended to use the trademark for the said goods. We believe that such omnibus registration is not
contemplated by our Trademark Law." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or origin of the goods or
identity of the business as a consequence of using a certain mark. Likelihood of confusion is admittedly a relative term, to be determined rigidly
according to the particular (and sometimes peculiar) circumstances of each case. Thus, in trademark cases, more than in other kinds of litigation,
precedents must be studied in the light of each particular case. 65
There are two types of confusion in trademark infringement. The first is "confusion of goods" when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which case defendants goods are then bought as the plaintiffs and its poor quality
reflects badly on the plaintiffs reputation. The other is "confusion of business" wherein the goods of the parties are different but the defendants
product can reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the public into believing that there is some
connection between the plaintiff and defendant which, in fact, does not exist. 66
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the trademarks; [b] the similarity of the goods to
which the trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants express or implied consent and other fair and
equitable considerations.
Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products. But, as held in the following cases, the
use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we ordered the approval of Acoje Minings application for registration of the
trademark LOTUS for its soy sauce even though Philippine Refining Company had prior registration and use of such identical mark for its
edible oil which, like soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 68 we upheld the Patent Directors registration of the same
trademark CAMIA for Ng Sams ham under Class 47, despite Philippine Refining Companys prior trademark registration and actual use of
such mark on its lard, butter, cooking oil (all of which belonged to Class 47), abrasive detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong, 69 we dismissed Hickoks petition to cancel private
respondents HICKOK trademark registration for its Marikina shoes as against petitioners earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute resolution, we dismissed the petition for review for lack of merit
and affirmed the Patent Offices registration of the trademark SHELL used in the cigarettes manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Companys opposition as the prior registrant of the same trademark for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed ESSOs complaint for trademark infringement against United
Cigarette Corporation and allowed the latter to use the trademark ESSO for its cigarettes, the same trademark used by ESSO for its
petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,72 we affirmed the rulings of the Patent Office and the
CA that NSR Rubber Corporation could use the trademark CANON for its sandals (Class 25) despite Canon Kabushiki Kaishas prior
registration and use of the same trademark for its paints, chemical products, toner and dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation" 73 which has been defined as "such similarity
in form, content, words, sound, meaning, special arrangement or general appearance of the trademark or tradename in their overall presentation or in

15
their essential and substantive and distinctive parts as would likely mislead or confuse persons in the ordinary course of purchasing the genuine
article."74
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance: 75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals 76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Appeals78 and its preceding cases.79
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception, and
thus infringement. If the competing trademark contains the main, essential or dominant features of another, and confusion or deception is likely to
result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to
imitate. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or deceive
purchasers.80
On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in resolving confusing similarity. Comparison of
words is not the only determining factor. The trademarks in their entirety as they appear in their respective labels or hang tags must also be
considered in relation to the goods to which they are attached. The discerning eye of the observer must focus not only on the predominant words but
also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other. 81
In comparing the resemblance or colorable imitation of marks, various factors have been considered, such as the dominant color, style, size, form,
meaning of letters, words, designs and emblems used, the likelihood of deception of the mark or name's tendency to confuse 82 and the commercial
impression likely to be conveyed by the trademarks if used in conjunction with the respective goods of the parties. 83
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette trademark is the device of a large rooster
facing left, outlined in black against a gold background. The roosters color is either green or red green for GALLO menthols and red for GALLO
filters. Directly below the large rooster device is the word GALLO. The rooster device is given prominence in the GALLO cigarette packs in terms of
size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all to the product but was chosen merely as a
trademark due to the fondness for fighting cocks of the son of petitioners president. Furthermore, petitioners adopted GALLO, the Spanish word for
rooster, as a cigarette trademark to appeal to one of their target markets, the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves, 86 on the side of the GALLO cigarette packs are the words "MADE BY MIGHTY CORPORATION,"
thus clearly informing the public as to the identity of the manufacturer of the cigarettes.
On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a few, one or two small roosters facing right or facing each other (atop the EJG crest, surrounded by
leaves or ribbons), with additional designs in green, red and yellow colors, appear as minor features thereof. 87 Directly below or above these sketches
is the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO," 88 which appears in different fonts,
sizes, styles and labels, unlike petitioners uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
CALIFORNIA."89
The many different features like color schemes, art works and other markings of both products drown out the similarity between them the use of the
word GALLO a family surname for the Gallo Winerys wines and a Spanish word for rooster for petitioners cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise between non-competing interests as
well.90
Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6 bis of the Paris Convention which proscribe trademark
infringement not only of goods specified in the certificate of registration but also of identical or similar goods, we have also uniformly recognized
and applied the modern concept of "related goods." 91 Simply stated, when goods are so related that the public may be, or is actually, deceived and
misled that they come from the same maker or manufacturer, trademark infringement occurs. 92
Non-competing goods may be those which, though they are not in actual competition, are so related to each other that it can reasonably be assumed
that they originate from one manufacturer, in which case, confusion of business can arise out of the use of similar marks. 93 They may also be those
which, being entirely unrelated, cannot be assumed to have a common source; hence, there is no confusion of business, even though similar marks
are used.94 Thus, there is no trademark infringement if the public does not expect the plaintiff to make or sell the same class of goods as those made
or sold by the defendant.95
In resolving whether goods are related,96 several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption, 100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased 103 and
(j) the channels of trade through which the goods flow,104 how they are distributed, marketed, displayed and sold. 105
The wisdom of this approach is its recognition that each trademark infringement case presents its own unique set of facts. No single factor is
preeminent, nor can the presence or absence of one determine, without analysis of the others, the outcome of an infringement suit. Rather, the court is
required to sift the evidence relevant to each of the criteria. This requires that the entire panoply of elements constituting the relevant factual
landscape be comprehensively examined. 106 It is a weighing and balancing process. With reference to this ultimate question, and from a balancing of
the determinations reached on all of the factors, a conclusion is reached whether the parties have a right to the relief sought. 107

16
A very important circumstance though is whether there exists a likelihood that an appreciable number of ordinarily prudent purchasers will be misled,
or simply confused, as to the source of the goods in question. 108 The "purchaser" is not the "completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved. 109 He is "accustomed to buy, and therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or
the possibility of deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent between
that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase." 110
Hence, in the adjudication of trademark infringement, we give due regard to the goods usual purchasers character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark is not likely to cause confusion or mistake, or to
deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both as to the identity of the goods, their source and origin, or identity of the
business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the same class of goods. Respondents GALLO
wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark Cases while petitioners GALLO cigarettes fall
under Class 34.
We are mindful that product classification alone cannot serve as the decisive factor in the resolution of whether or not wines and cigarettes are related
goods. Emphasis should be on the similarity of the products involved and not on the arbitrary classification or general description of their properties
or characteristics. But the mere fact that one person has adopted and used a particular trademark for his goods does not prevent the adoption and use
of the same trademark by others on articles of a different description. 112
Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are related forms of vice, harmful when taken
in excess, and used for pleasure and relaxation" and (2) "they are grouped or classified in the same section of supermarkets and groceries."
We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines and cigarettes are related products within the
contemplation of the Trademark Law and the Paris Convention.
First, anything - not only wines and cigarettes can be used for pleasure and relaxation and can be harmful when taken in excess. Indeed, it would
be a grave abuse of discretion to treat wines and cigarettes as similar or related products likely to cause confusion just because they are pleasure-
giving, relaxing or potentially harmful. Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products and the goods here involved, wines and
cigarettes, have nothing whatsoever in common with respect to their essential characteristics, quality, quantity, size, including the nature of their
packages, wrappers or containers.113
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold in one store under the same roof does not
automatically mean that buyers are likely to be confused as to the goods respective sources, connections or sponsorships. The fact that different
products are available in the same store is an insufficient standard, in and of itself, to warrant a finding of likelihood of confusion. 114
In this regard, we adopted the Director of Patents finding in Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents:115
In his decision, the Director of Patents enumerated the factors that set respondents products apart from the goods of petitioner. He opined
and we quote:
"I have taken into account such factors as probable purchaser attitude and habits, marketing activities, retail outlets, and
commercial impression likely to be conveyed by the trademarks if used in conjunction with the respective goods of the parties, I
believe that ham on one hand, and lard, butter, oil, and soap on the other are products that would not move in the same
manner through the same channels of trade. They pertain to unrelated fields of manufacture, might be distributed and
marketed under dissimilar conditions, and are displayed separately even though they frequently may be sold through the
same retail food establishments. Opposers products are ordinary day-to-day household items whereas ham is not necessarily
so. Thus, the goods of the parties are not of a character which purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The particular goods of the parties are so unrelated that consumers,
would not, in any probability mistake one as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing and are totally unrelated products not likely to cause confusion vis--
vis the goods or the business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked. There is a whale of a difference between
their descriptive properties, physical attributes or essential characteristics like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by middle-to-high-income earners while
GALLO cigarettes appeal only to simple folks like farmers, fishermen, laborers and other low-income workers. 116 Indeed, the big price difference of
these two products is an important factor in proving that they are in fact unrelated and that they travel in different channels of trade. There is a distinct
price segmentation based on vastly different social classes of purchasers. 117
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes are Philippine-made and petitioners
neither claim nor pass off their goods as imported or emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through
ambulant and sidewalk vendors, small localsari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan,
Bohol, and Cebu.118 On the other hand, GALLO wines are imported, distributed and sold in the Philippines through Gallo Winerys exclusive
contracts with a domestic entity, which is currently Andresons. By respondents own testimonial evidence, GALLO wines are sold in hotels,
expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-sari stores or ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip Morris, Inc.120to support its finding that GALLO
wines and GALLO cigarettes are related goods. The courts a quo should have taken into consideration the subsequent case of IDV North America,
Inc. and R & A Bailey Co. Limited vs. S & M Brands, Inc.:121
IDV correctly acknowledges, however, that there is no per se rule that the use of the same mark on alcohol and tobacco products always
will result in a likelihood of confusion. Nonetheless, IDV relies heavily on the decision in John Walker & Sons, Ltd. vs. Tampa Cigar
Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), affd,222 F. 2d 460 (5th Cir. 1955), wherein the court enjoined the use of the mark "JOHNNIE
WALKER" on cigars because the fame of the plaintiffs mark for scotch whiskey and because the plaintiff advertised its scotch whiskey on,

17
 or in connection with tobacco products. The court, in John Walker & Sons, placed great significance on the finding that the infringers
use was a deliberate attempt to capitalize on the senior marks fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip
Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendants use of the mark "BLACK
LABEL" for cigarettes because it was likely to cause confusion with the plaintiffs well-known mark "BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle that tobacco products and alcohol products should be
considered related only in cases involving special circumstances. Schenley Distillers, Inc. v. General Cigar Co., 57C.C.P.A. 1213, 427
F. 2d 783, 785 (1970). The presence of special circumstances has been found to exist where there is a finding of unfair competition
or where a famous or well-known mark is involved and there is a demonstrated intent to capitalize on that mark. For example,
in John Walker & Sons, the court was persuaded to find a relationship between products, and hence a likelihood of confusion, because of
the plaintiffs long use and extensive advertising of its mark and placed great emphasis on the fact that the defendant used the trademark
Johnnie Walker with full knowledge of its fame and reputation and with the intention of taking advantage thereof. John Walker &
Sons, 124 F. Supp. At 256; see Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959) (holding that
the decision in John Walker & Sons was merely the law on the particular case based upon its own peculiar facts); see also Alfred
Dunhill, 350 F. Supp. At 1363 (defendants adoption of Dunhill mark was not innocent). However, inSchenley, the court noted that the
relation between tobacco and whiskey products is significant where a widely known arbitrary mark has long been used for diversified
products emanating from a single source and a newcomer seeks to use the same mark on unrelated goods. Schenley, 427 F.2d. at 785.
Significantly, in Schenley, the court looked at the industry practice and the facts of the case in order to determine the nature and extent of
the relationship between the mark on the tobacco product and the mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS liqueurs in conjunction with tobacco or tobacco
accessory products and that IDV has no intent to do so. And, unlike the defendant in Dunhill, S & M Brands does not market bar
accessories, or liqueur related products, with its cigarettes. The advertising and promotional materials presented a trial in this action
demonstrate a complete lack of affiliation between the tobacco and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by adopting the family nameBaileys as the mark for its
cigarettes, to capitalize upon the fame of the BAILEYS mark for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will be discussed
below, and as found in Mckesson & Robbins, the survey evidence refutes the contention that cigarettes and alcoholic beverages are
so intimately associated in the public mind that they cannot under any circumstances be sold under the same mark without causing
confusion. See Mckesson & Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the special circumstances in which courts have found a relationship
between tobacco and alcohol products sufficient to tip the similarity of goods analysis in favor of the protected mark and against the
allegedly infringing mark. It is true that BAILEYS liqueur, the worlds best selling liqueur and the second best selling in the United
States, is a well-known product. That fact alone, however, is insufficient to invoke the special circumstances connection here where
so much other evidence and so many other factors disprove a likelihood of confusion. The similarity of products analysis, therefore,
augers against finding that there is a likelihood of confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases involving special circumstanceswhich exist only if a famous mark is
involved and there is a demonstrated intent to capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s and the 1990s, that is, after Tobacco Industries use of
the GALLO cigarette trademark in 1973 and petitioners use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite element under both the Trademark Law
and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines. Respondents do not dispute the documentary
evidence that aside from Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on
September 4, 1992 Certificate of Registration No. 53356 under the Principal Register approving Productos Alimenticios Gallo, S.As April 19, 1990
application for GALLO trademark registration and use for its "noodles, prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar,
species and ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO"
cannot be considered a "well-known" mark within the contemplation and protection of the Paris Convention in this case since wines and cigarettes
are not identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the applicability of Article 8 of the Paris Convention is that
established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no automatic protection
afforded an entity whose tradename is alleged to have been infringed through the use of that name as a trademark by a
local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No. 75420, 15 November 1991, the Honorable
Supreme Court held that:
The Paris Convention for the Protection of Industrial Property does not automatically exclude all countries of
the world which have signed it from using a tradename which happens to be used in one country. To illustrate
if a taxicab or bus company in a town in the United Kingdom or India happens to use the tradename Rapid

18
 Transportation, it does not necessarily follow that Rapid can no longer be registered in Uganda, Fiji, or the
Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection of Intellectual Property regarding well-known
marks and possible application thereof in this case. Petitioner, as this office sees it, is trying to seek refuge under its protective
mantle, claiming that the subject mark is well known in this country at the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin, issued a memorandum dated 25 October 1983 to
the Director of Patents, a set of guidelines in the implementation of Article 6bis of the Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or copyright or anything else;
c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris Convention.
Article by Dr. Bogsch, Director General of the World Intellectual Property Organization, Geneva, Switzerland, 1985)
From the set of facts found in the records, it is ruled that the Petitioner failed to comply with the third requirement of the said
memorandum that is the mark must be for use in the same or similar kinds of goods. The Petitioner is using the mark
"CANON" for products belonging to class 2 (paints, chemical products) while the Respondent is using the same mark for
sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the Respondent filed its application for the same
mark should fail." (Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which must be answered by weighing the conflicting interests of the litigants. 124
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade, that is, retail trade. If respondents assertion
is true, then both goods co-existed peacefully for a considerable period of time. It took respondents almost 20 years to know about the existence of
GALLO cigarettes and sue petitioners for trademark infringement. Given, on one hand, the long period of time that petitioners were engaged in the
manufacture, marketing, distribution and sale of GALLO cigarettes and, on the other, respondents delay in enforcing their rights (not to mention
implied consent, acquiescence or negligence) we hold that equity, justice and fairness require us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they intended to capitalize on respondents goodwill
in adopting the GALLO mark for their cigarettes which are totally unrelated to respondents GALLO wines. Thus, we rule out trademark
infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary to good faith by which he passes off the
goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who commits
any acts calculated to produce said result, is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature
of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods
with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in the mind of the public;
(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of another.
The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off one mans goods or business
as that of another constitutes unfair competition. Actual or probable deception and confusion on the part of customers by reason of defendants
practices must always appear.125 On this score, we find that petitioners never attempted to pass off their cigarettes as those of respondents. There is no
evidence of bad faith or fraud imputable to petitioners in using their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as those recognized by jurisprudence, we conclude that petitioners are not
liable for trademark infringement, unfair competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The questioned decision and resolution of the Court of
Appeals in CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, 1999 order of the Regional Trial Court of Makati, Branch
57 in Civil Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint against petitioners DISMISSED.
Costs against respondents.
SO ORDERED.

FACTS
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and existing under the laws of the State of
California, United States of America (U.S.), where all its wineries are located. Gallo Winery produces different kinds of wines and brandy products
and sells them in many countries under different registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive wine importer and distributor in the Philippines since 1991, selling
these products in its own name and for its own account.
Gallo Winerys GALLO wine trademark was registered in the principal register of the Philippine Patent Office (now Intellectual Property Office) on
November 16, 1971 under Certificate of Registration No. 17021 which was renewed on November 16, 1991 for another 20 years. Gallo Winery also

19
applied for registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990 under Application Serial No. 901011-00073599-PN
but the records do not disclose if it was ever approved by the Director of Patents.
On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco Industries of the Philippines (Tobacco
Industries), are engaged in the cultivation, manufacture, distribution and sale of tobacco products for which they have been using the GALLO
cigarette trademark since 1973.
The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of GALLO 100s cigarette mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the manufacture and sale of its cigarette products. In 1976, Tobacco Industries filed its manufacturers
sworn statement as basis for BIRs collection of specific tax on GALLO cigarettes.
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the GALLO cigarette trademark in the
principal register of the then Philippine Patent Office.
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on July 16, 1985, applied for trademark
registration in the Philippine Patent Office. On July 17, 1985, the National Library issued Certificate of Copyright Registration No. 5834 for La
Campanas lifetime copyright claim over GALLO cigarette labels.
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO trademark. BIR approved Mighty
Corporations use of GALLO 100s cigarette brand, under licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100s cigarette brand on April 3, 1989.
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by Tobacco Industries, then by La Campana and
finally by Mighty Corporation.
On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971, respondents claim that they first introduced and
sold the GALLO and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within the then U.S. military facilities only. By 1979, they had
expanded their Philippine market through authorized distributors and independent outlets.
Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao supermarket wine cellar section. Forthwith, respondents sent a demand letter to petitioners
asking them to stop using the GALLO trademark, to no avail.
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename infringement and unfair competition, with a prayer
for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6 of the Paris Convention for the Protection of Industrial Property (Paris Convention) and RA
166 (Trademark Law), specifically, Sections 22 and 23 (for trademark infringement), 29 and 30 (for unfair competition and false designation of
origin) and 37 (for tradename infringement). They claimed that petitioners adopted the GALLO trademark to ride on Gallo Winerys GALLO and
ERNEST & JULIO GALLO trademarks established reputation and popularity, thus causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST & JULIO GALLO trademarks with Gallo Winerys wines. Respondents prayed
for the issuance of a writ of preliminary injunction and ex parte restraining order, plus P2 million as actual and compensatory damages, at least
P500,000 as exemplary and moral damages, and at least P500,000 as attorneys fees and litigation expenses.
In their answer, petitioners alleged, among other affirmative defenses, that: petitioners GALLO cigarettes and Gallo Winerys wines were totally
unrelated products; Gallo Winerys GALLO trademark registration certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO
wines were sold through different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-cost
items compared to Gallo Winerys high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo Winerys wines was the
middle or high-income bracket with at least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen, laborers and other
low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device with the manufacturers name clearly indicated as
MIGHTY CORPORATION while, in the case of Gallo Winerys wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or
just their surname GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel; and petitioners acted with honesty, justice
and good faith in the exercise of their right to manufacture and sell GALLO cigarettes.
RTC denied, for lack of merit, respondents prayer for the issuance of a writ of preliminary injunction, holding that respondents GALLO trademark
registration certificate covered wines only, that respondents wines and petitioners cigarettes were not related goods and respondents failed to prove
material damage or great irreparable injury as required by Section 5, Rule 58 of the Rules of Court.
RTC denied, for lack of merit, respondents motion for reconsideration.
After trial on the merits, however, the Makati RTC, held petitioners liable for, and permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the GALLO trademark.
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioners motion for reconsideration.
ISSUE
Whether or not petitioners were liable for trademark infringement, unfair competition and damages. (No)
RULING
THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE APPLICABLE LAWS, NOT THE INTELLECTUAL PROPERTY
CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair competition committed during the effectivity of
the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the aforesaid governing laws but also under the IP
Code which took effect only on January 1, 1998,
The CA apparently did not notice the error and affirmed the Makati RTC decision.
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it has first been promulgated. A law that is not
yet effective cannot be considered as conclusively known by the populace. To make a law binding even before it takes effect may lead to the arbitrary
exercise of the legislative power.
DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION
In Del Monte Corporation vs. Court of Appeals, we distinguished trademark infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark, whereas unfair competition is the passing off of one's goods as those of another.

20
(2) In infringement of trademark fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a prerequisite to the action, whereas in unfair competition registration is not
necessary.
Pertinent Provisions on Trademark Infringement under the Paris Convention and the Trademark Law
Under Article 6 of the Paris Convention, the following are the elements of trademark infringement:
(a) registration or use by another person of a trademark which is a reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or use to be well-known in that country and is already the mark of a
person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in connection with
which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic authorities), while the Trademark Law
protects all trademarks, whether well-known or not, provided that they have been registered and are in actual commercial use in the Philippines.
Following universal acquiescence and comity, in case of domestic legal disputes on any conflicting provisions between the Paris Convention (which
is an international agreement) and the Trademark law (which is a municipal law) the latter will prevail.
Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is limited only to goods identical or similar to
those in respect of which such trademark is registered and only when there is likelihood of confusion. Under both laws, the time element in
commencing infringement cases is material in ascertaining the registrants express or implied consent to anothers use of its trademark or a colorable
imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrants otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO wine trademark was registered in the Philippines in November 1971 but the wine itself was first
marketed and sold in the country only in 1974 and only within the former U.S. military facilities, and outside thereof, only in 1979. To prove
commercial use of the GALLO wine trademark in the Philippines, respondents presented sales invoice no. 29991 dated July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and manufacturers sworn statement, it appears that
petitioners and its predecessor-in-interest, Tobacco Industries, have indeed been using and selling GALLO cigarettes in the Philippines since 1973 or
before July 9, 1981.
In Emerald Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our ruling of giving utmost importance to the actual
commercial use of a trademark in the Philippines prior to its registration, notwithstanding the provisions of the Paris Convention.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership over a trademark pursuant to Sec. 2 and
2-A of the Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack of business activity in the
Philippines on account of Section 21-A of the Trademark Law but the question of whether they have an exclusive right over their symbol as
to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of
the same law. It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines files a
complaint for infringement, the entity need not be actually using the trademark in commerce in the Philippines. Such a foreign corporation may have
the personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the
local market.
xxx xxx xxx
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of validity, ownership and exclusive use, is
qualified. A registration certificate serves merely as prima facie evidence. It is not conclusive but can and may be rebutted by controverting
evidence.
For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of its own mark and for failure to
establish confusing similarity between said trademarks, private respondent's action for infringement must necessarily fail.
In view of the foregoing jurisprudence and respondents judicial admission that the actual commercial use of the GALLO wine trademark was
subsequent to its registration in 1971 and to Tobacco Industries commercial use of the GALLO cigarette trademark in 1973, we rule that, on this
account, respondents never enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco Industries and its successors-
in-interest, herein petitioners, either under the Trademark Law or the Paris Convention.
Respondents GALLO trademark registration is limited to wines only
We also note that the GALLO trademark registration certificates in the Philippines and in other countries expressly state that they cover wines only,
without any evidence or indication that registrant Gallo Winery expanded or intended to expand its business to cigarettes.
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys exclusive right to use the GALLO trademark should be limited to
wines, the only product indicated in its registration certificates.
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law extends only to the goods used by the first user as
specified in the certificate of registration following the clear message conveyed by Section 20.
NO LIKELIHOOD OF CONFUSION, MISTAKE OR DECEIT AS TO THE IDENTITY OR SOURCE OF PETITIONERS AND
RESPONDENTS GOODS OR BUSINESS

21
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to the identity, source or origin of the goods or
identity of the business as a consequence of using a certain mark. Likelihood of confusion is admittedly a relative term, to be determined rigidly
according to the particular (and sometimes peculiar) circumstances of each case.
There are two types of confusion in trademark infringement. The first is "confusion of goods" when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which case defendants goods are then bought as the plaintiffs and its poor quality
reflects badly on the plaintiffs reputation. The other is "confusion of business" wherein the goods of the parties are different but the defendants
product can reasonably (though mistakenly) be assumed to originate from the plaintiff, thus deceiving the public into believing that there is some
connection between the plaintiff and defendant which, in fact, does not exist.
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the trademarks; [b] the similarity of the goods to
which the trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants express or implied consent and other fair and
equitable considerations.
Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine products. But, as held in the following cases, the
use of an identical mark does not, by itself, lead to a legal conclusion that there is trademark infringement.
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable imitation" which has been defined as "such
similarity in form, content, words, sound, meaning, special arrangement or general appearance of the trademark or tradename in their
overall presentation or in their essential and substantive and distinctive parts as would likely mislead or confuse persons in the ordinary
course of purchasing the genuine article."
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance:
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks which might cause confusion or deception, and
thus infringement. If the competing trademark contains the main, essential or dominant features of another, and confusion or deception is likely to
result, infringement takes place. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the
public or deceive purchasers.
On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in resolving confusing similarity. Comparison of
words is not the only determining factor. The trademarks in their entirety as they appear in their respective labels or hang tags must also be
considered in relation to the goods to which they are attached.
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette trademark is the device of a large rooster
facing left, outlined in black against a gold background. The roosters color is either green or red green for GALLO menthols and red for GALLO
filters. Directly below the large rooster device is the word GALLO. The rooster device is given prominence in the GALLO cigarette packs in terms of
size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all to the product but was chosen merely as a
trademark due to the fondness for fighting cocks of the son of petitioners president. Furthermore, petitioners adopted GALLO, the Spanish word for
rooster, as a cigarette trademark to appeal to one of their target markets, the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves, 86 on the side of the GALLO cigarette packs are the words "MADE BY MIGHTY CORPORATION,"
thus clearly informing the public as to the identity of the manufacturer of the cigarettes.
On the other hand, GALLO Winerys wine and brandy labels are diverse. In many of them, the labels are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a few, one or two small roosters facing right or facing each other (atop the EJG crest, surrounded by
leaves or ribbons), with additional designs in green, red and yellow colors, appear as minor features thereof. 87 Directly below or above these sketches
is the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO," 88 which appears in different fonts,
sizes, styles and labels, unlike petitioners uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
CALIFORNIA."89
The many different features like color schemes, art works and other markings of both products drown out the similarity between them the use of the
word GALLO a family surname for the Gallo Winerys wines and a Spanish word for rooster for petitioners cigarettes.
WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING OR RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but confusion of business may arise between non-competing interests as
well.90
Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6 bis of the Paris Convention which proscribe trademark
infringement not only of goods specified in the certificate of registration but also of identical or similar goods, we have also uniformly recognized
and applied the modern concept of "related goods." 91 Simply stated, when goods are so related that the public may be, or is actually, deceived and
misled that they come from the same maker or manufacturer, trademark infringement occurs. 92
In resolving whether goods are related,96 several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption, 100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased 103 and
(j) the channels of trade through which the goods flow,104 how they are distributed, marketed, displayed and sold. 105
Hence, in the adjudication of trademark infringement, we give due regard to the goods usual purchasers character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case, petitioners use of the GALLO cigarette trademark is not likely to cause confusion or mistake, or to
deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both as to the identity of the goods, their source and origin, or identity of the
business of petitioners and respondents.

22
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the same class of goods. Respondents GALLO
wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark Cases while petitioners GALLO cigarettes fall
under Class 34.
Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they are related forms of vice, harmful when taken
in excess, and used for pleasure and relaxation" and (2) "they are grouped or classified in the same section of supermarkets and groceries."
We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines and cigarettes are related products within the
contemplation of the Trademark Law and the Paris Convention.
First, anything - not only wines and cigarettes can be used for pleasure and relaxation and can be harmful when taken in excess.
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products and the goods here involved, wines and
cigarettes, have nothing whatsoever in common with respect to their essential characteristics, quality, quantity, size, including the nature of their
packages, wrappers or containers.
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are sold in one store under the same roof does not
automatically mean that buyers are likely to be confused as to the goods respective sources, connections or sponsorships. The fact that different
products are available in the same store is an insufficient standard, in and of itself, to warrant a finding of likelihood of confusion.
Wines and cigarettes are non-competing and are totally unrelated products not likely to cause confusion vis--vis the goods or the business of the
petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and smoked. There is a whale of a difference between
their descriptive properties, physical attributes or essential characteristics like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by middle-to-high-income earners while
GALLO cigarettes appeal only to simple folks like farmers, fishermen, laborers and other low-income workers. 116 Indeed, the big price difference of
these two products is an important factor in proving that they are in fact unrelated and that they travel in different channels of trade. There is a distinct
price segmentation based on vastly different social classes of purchasers. 117
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO cigarettes are Philippine-made and petitioners
neither claim nor pass off their goods as imported or emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through
ambulant and sidewalk vendors, small local sari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan,
Bohol, and Cebu.118 On the other hand, GALLO wines are imported, distributed and sold in the Philippines through Gallo Winerys exclusive
contracts with a domestic entity, which is currently Andresons. By respondents own testimonial evidence, GALLO wines are sold in hotels,
expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-sari stores or ambulant vendors.119
In short, tobacco and alcohol products may be considered related only in cases involving special circumstances which exist only if a famous mark is
involved and there is a demonstrated intent to capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE CONTEXT OF THE PARIS CONVENTION IN THIS
CASE SINCE WINES AND CIGARETTES ARE NOT IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s and the 1990s, that is, after Tobacco Industries use of
the GALLO cigarette trademark in 1973 and petitioners use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite element under both the Trademark Law
and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines. Respondents do not dispute the documentary
evidence that aside from Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on
September 4, 1992 Certificate of Registration No. 53356 under the Principal Register approving Productos Alimenticios Gallo, S.As April 19, 1990
application for GALLO trademark registration and use for its "noodles, prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar,
species and ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO"
cannot be considered a "well-known" mark within the contemplation and protection of the Paris Convention in this case since wines and cigarettes
are not identical or similar goods:
Consent of the Registrant and Other air, Just and Equitable Considerations
Each trademark infringement case presents a unique problem which must be answered by weighing the conflicting interests of the litigants. 124
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade, that is, retail trade. If respondents assertion
is true, then both goods co-existed peacefully for a considerable period of time. It took respondents almost 20 years to know about the existence of
GALLO cigarettes and sue petitioners for trademark infringement. Given, on one hand, the long period of time that petitioners were engaged in the
manufacture, marketing, distribution and sale of GALLO cigarettes and, on the other, respondents delay in enforcing their rights (not to mention
implied consent, acquiescence or negligence) we hold that equity, justice and fairness require us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they intended to capitalize on respondents goodwill
in adopting the GALLO mark for their cigarettes which are totally unrelated to respondents GALLO wines. Thus, we rule out trademark
infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary to good faith by which he passes off the
goods manufactured by him or in which he deals, or his business, or services for those of the one having established such goodwill, or who commits
any acts calculated to produce said result, is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general appearance of goods of another manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;

23
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the public;
(c) Any person who shall make any false statement in the course of trade or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off one mans goods or business
as that of another constitutes unfair competition. Actual or probable deception and confusion on the part of customers by reason of defendants
practices must always appear.125 On this score, we find that petitioners never attempted to pass off their cigarettes as those of respondents. There is no
evidence of bad faith or fraud imputable to petitioners in using their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as those recognized by jurisprudence, we conclude that petitioners are not
liable for trademark infringement, unfair competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The questioned decision and resolution of the Court of
Appeals in CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, 1999 order of the Regional Trial Court of Makati, Branch
57 in Civil Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint against petitioners DISMISSED.

G.R. No. 115758 March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY, petitioner,
vs.
HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and ANG TIAM CHAY, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court of Appeals setting aside and declaring as null and
void the Orders2 dated February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ
of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a prayer for the issuance of a writ of preliminary
injunction, docketed as Civil Case No. Q-91-10926, against the respondents Summerville General Merchandising and Company (Summerville, for
brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing business under the name and style of KEC Cosmetics Laboratory, is the registered owner of
the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358 and No. 0-
3678; that she also has patent rights onChin Chun Su & Device and Chin Chun Su for medicated cream after purchasing the same from Quintin
Cheng, the registered owner thereof in the Supplemental Register of the Philippine Patent Office on February 7, 1980 under Registration Certificate
No. 4529; that respondent Summerville advertised and sold petitioner's cream products under the brand name Chin Chun Su, in similar containers
that petitioner uses, thereby misleading the public, and resulting in the decline in the petitioner's business sales and income; and, that the respondents
should be enjoined from allegedly infringing on the copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and authorized importer, re-packer and distributor
of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing company authorized Summerville to
register its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office and other appropriate governmental agencies; that KEC
Cosmetics Laboratory of the petitioner obtained the copyrights through misrepresentation and falsification; and, that the authority of Quintin Cheng,
assignee of the patent registration certificate, to distribute and market Chin Chun Su products in the Philippines had already been terminated by the
said Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the same in an Order dated February 10, 1992, the dispositive
portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC Cosmetic Laboratory, for preliminary
injunction, is hereby granted. Consequentially, plaintiff is required to file with the Court a bond executed to defendants in the amount of
five hundred thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants all damages which defendants may sustain by
reason of the injunction if the Court should finally decide that plaintiff is not entitled thereto.
SO ORDERED.3
The respondents moved for reconsideration but their motion for reconsideration was denied by the trial court in an Order dated March 19, 1992. 4
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 27803, praying for the
nullification of the said writ of preliminary injunction issued by the trial court. After the respondents filed their reply and almost a month after
petitioner submitted her comment, or on August 14 1992, the latter moved to dismiss the petition for violation of Supreme Court Circular No. 28-91,
a circular prohibiting forum shopping. According to the petitioner, the respondents did not state the docket number of the civil case in the caption of
their petition and, more significantly, they did not include therein a certificate of non-forum shopping. The respondents opposed the petition and
submitted to the appellate court a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in favor of the respondents, the dispositive portion of
which reads:
WHEREFORE, the petition is hereby given due course and the orders of respondent court dated February 10, 1992 and March 19, 1992
granting the writ of preliminary injunction and denying petitioners' motion for reconsideration are hereby set aside and declared null and
void. Respondent court is directed to forthwith proceed with the trial of Civil Case No. Q-91-10926 and resolve the issue raised by the
parties on the merits.
SO ORDERED.5
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname "Chin Chun Su" by KEC with the supplemental register of the Bureau of Patents,
Trademarks and Technology Transfer cannot be equated with registration in the principal register, which is duly protected by the Trademark
Law.1wphi1.nt
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:

24
 "Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or has appropriated the
trademark. By the very fact that the trademark cannot as yet be on guard and there are certain defects, some obstacles which the
use must still overcome before he can claim legal ownership of the mark or ask the courts to vindicate his claims of an exclusive
right to the use of the same. It would be deceptive for a party with nothing more than a registration in the Supplemental Register
to posture before courts of justice as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on application Serial No. 30954 that
'registrants is presumed to be the owner of the mark until after the registration is declared cancelled' is, therefore, misplaced and
grounded on shaky foundation. The supposed presumption not only runs counter to the precept embodied in Rule 124 of the
Revised Rules of Practice before the Philippine Patent Office in Trademark Cases but considering all the facts ventilated before
us in the four interrelated petitions involving the petitioner and the respondent, it is devoid of factual basis. As even in cases
where presumption and precept may factually be reconciled, we have held that the presumption is rebuttable, not conclusive,
(People v. Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco & Co.,
14 Phil 534)."6
The petitioner filed a motion for reconsideration. This she followed with several motions to declare respondents in contempt of court for publishing
advertisements notifying the public of the promulgation of the assailed decision of the appellate court and stating that genuine Chin Chun Su products
could be obtained only from Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction and damages. On October 22, 1993, the trial court rendered
a Decision7 barring the petitioner from using the trademark Chin Chun Su and upholding the right of the respondents to use the same, but recognizing
the copyright of the petitioner over the oval shaped container of her beauty cream. The trial court did not award damages and costs to any of the
parties but to their respective counsels were awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed
the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution8 denying the petitioner's motions for reconsideration and for contempt of court in
CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:
I
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO RULE ON PETITIONER'S MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE HONORABLE COURT OF
APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO
DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT.9
The petitioner faults the appellate court for not dismissing the petition on the ground of violation of Supreme Court Circular No. 28-91. Also, the
petitioner contends that the appellate court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it failed to rule on
her motion for reconsideration within ninety (90) days from the time it is submitted for resolution. The appellate court ruled only after the lapse of
three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution thereof, the appellate court denied the petitioner's right to seek the
timely appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of court against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the issuance of a writ of preliminary injunction is a
proof that the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of
the act or acts complained of, either for a limited period or perpetually. Thus, a preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief demanded. 10 This is the reason why we have ruled that it must
be shown that the invasion of the right sought to be protected is material and substantial, that the right of complainant is clear and unmistakable, and,
that there is an urgent and paramount necessity for the writ to prevent serious damage. 11
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the ground that she is entitled to the use of the trademark
on Chin Chun Su and its container based on her copyright and patent over the same. We first find it appropriate to rule on whether the copyright and
patent over the name and container of a beauty cream product would entitle the registrant to the use and ownership over the same to the exclusion of
others.
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of
goods.12 In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. 13 Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation.14 Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which
is new, involves an inventive step and is industrially applicable. 15
Petitioner has no right to support her claim for the exclusive use of the subject trade name and its container. The name and container of a beauty
cream product are proper subjects of a trademark inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively use
the same in the sale of the beauty cream product, the user must sufficiently prove that she registered or used it before anybody else did. The
petitioner's copyright and patent registration of the name and container would not guarantee her the right to the exclusive use of the same for the
reason that they are not appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction order cannot be issued for the

25
reason that the petitioner has not proven that she has a clear right over the said name and container to the exclusion of others, not having proven that
she has registered a trademark thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The dispositive portion of said decision held
that the petitioner does not have trademark rights on the name and container of the beauty cream product. The said decision on the merits of the trial
court rendered the issuance of the writ of a preliminary injunction moot and academic notwithstanding the fact that the same has been appealed in the
Court of Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of Appeals16, to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at any time after the commencement of the action
and before judgment when it is established that the plaintiff is entitled to the relief demanded and only when his complaint shows facts
entitling such reliefs xxx and it appearing that the trial court had already granted the issuance of a final injunction in favor of petitioner in
its decision rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and
academic. An injunction issued by the trial court after it has already made a clear pronouncement as to the plaintiff's right thereto, that is,
after the same issue has been decided on the merits, the trial court having appreciated the evidence presented, is proper, notwithstanding
the fact that the decision rendered is not yet final xxx. Being an ancillary remedy, the proceedings for preliminary injunction cannot stand
separately or proceed independently of the decision rendered on the merit of the main case for injunction. The merit of the main case
having been already determined in favor of the applicant, the preliminary determination of its non-existence ceases to have any force and
effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminary injunctive order moot and academic
despite the fact that the decision granting a final injunction is pending appeal. Conversely, a decision denying the applicant-plaintiff's right to a final
injunction, although appealed, renders moot and academic any objection to the prior dissolution of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for non-compliance with the rule on forum shopping.
We disagree. First, the petitioner improperly raised the technical objection of non-compliance with Supreme Court Circular No. 28-91 by filing a
motion to dismiss the petition for certiorari filed in the appellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil
Procedure which provides that "(I)n petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56,
shall be observed. Before giving due course thereto, the court may require the respondents to file their comment to, and not a motion to dismiss, the
petition xxx (italics supplied)". Secondly, the issue was raised one month after petitioner had filed her answer/comment and after private respondent
had replied thereto. Under Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for but
before filing the answer to the complaint or pleading asserting a claim. She therefore could no longer submit a motion to dismiss nor raise defenses
and objections not included in the answer/comment she had earlier tendered. Thirdly, substantial justice and equity require this Court not to revive a
dissolved writ of injunction in favor of a party without any legal right thereto merely on a technical infirmity. The granting of an injunctive writ based
on a technical ground rather than compliance with the requisites for the issuance of the same is contrary to the primary objective of legal procedure
which is to serve as a means to dispense justice to the deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion for reconsideration. But we find that petitioner
contributed to this delay when she filed successive contentious motions in the same proceeding, the last of which was on October 27, 1993,
necessitating counter-manifestations from private respondents with the last one being filed on November 9, 1993. Nonetheless, it is well-settled that
non-observance of the period for deciding cases or their incidents does not render such judgments ineffective or void. 17 With respect to the purported
damages she suffered due to the alleged delay in resolving her motion for reconsideration, we find that the said issue has likewise been rendered moot
and academic by our ruling that she has no right over the trademark and, consequently, to the issuance of a writ of preliminary
injunction.1wphi1.nt
Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for contempt of court. There is nothing contemptuous
about the advertisements complained of which, as regards the proceedings in CA-G.R. SP No. 27803 merely announced in plain and straightforward
language the promulgation of the assailed Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the Revised Rules of Civil
Procedure, the said decision nullifying the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated May 24, 1993 and June 3, 1994, respectively,
are hereby AFFIRMED. With costs against the petitioner.
SO ORDERED.

FACTS:

The petitioner alleged that she is the registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case as evidenced by
certificates of copyright registrations and patent rights on Chun Chun Su & Device and Chin Chun Su (medicated cream) after she purchased it from
Quintin Cheng (previous registered owner in the Philippine Patent Office [PPO]).
Meanwhile, there was a decline in the petitioners business income due to the advertisement and sale made by Summerville on petitioners products
under the same brand name and in similar containers. According to Summerville, they are the exclusive and authorized importer, re-packer and
distributor of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan and that said company authorized them to register its trade name
Chin Chun Su Mediated Cream with the PPO.
The application for preliminary injunction filed by petitioner was granted. Hence, respondents moved for reconsideration, which was denied. The
respondents then moved for nullification of said preliminary injunction with the CA. The latter granted its petition.

ISSUE: WON the copyright and patent over the name and container of the beauty cream product entitle the registrant to its EXCLUSIVE use and
ownership .
HELD: NO. The petitioner has no right for the EXCLUSIVE use of the trade name and its container. In order to be entitled to its exclusive use, the
user must sufficiently prove that she registered or used it before anybody else did. This, petitioner failed to do.
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one 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

26
copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which
is new, involves an inventive step and is industrially applicable.

G.R. No. 161295 June 29, 2005

JESSIE G. CHING, petitioner,
vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS, ALONTO SOLAIMAN
SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of WILAWARE PRODUCT
CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:
This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 70411 affirming the
January 3, 2002 and February 14, 2002 Orders3 of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set aside Search Warrant
Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model, described as "Leaf
Spring Eye Bushing for Automobile" made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit of the said work
described therein as "Leaf Spring Eye Bushing for Automobile." 4
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the apprehension and
prosecution of illegal manufacturers, producers and/or distributors of the works. 5
After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the officers and
members of the Board of Directors of Wilaware Product Corporation. It was alleged that the respondents therein reproduced and distributed the said
models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293. The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official receipts. 6
The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles. 7 In the inventory
submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:
Leaf Spring eye bushing
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 set
b) Mold for spring eye bushing front 1 set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190 with metal 1 set
g) Mold for vehicle bearing cushion 1 set8
The respondents filed a motion to quash the search warrants on the following grounds:
2. The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:
a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of automobiles meaning there (sic) are original parts that they are designed to
replace. Hence, they are not original.9
The respondents averred that the works covered by the certificates issued by the National Library are not artistic in nature; they are considered
automotive spare parts and pertain to technology. They aver that the models are not original, and as such are the proper subject of a patent, not
copyright.10
In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper forum in which to articulate the
issue of the validity of the copyrights issued to him. Citing the ruling of the Court inMalaloan v. Court of Appeals,11 the petitioner stated that a search
warrant is merely a judicial process designed by the Rules of Court in anticipation of a criminal case. Until his copyright was nullified in a proper
proceeding, he enjoys rights of a registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order12 granting the motion, and quashed the search warrant on its finding that there was no probable
cause for its issuance. The court ruled that the work covered by the certificates issued to the petitioner pertained to solutions to technical problems,
not literary and artistic as provided in Article 172 of the Intellectual Property Code.
His motion for reconsideration of the order having been denied by the trial courts Order of February 14, 2002, the petitioner filed a petition
for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and resolve the validity of the copyright certificates issued to him

27
by the National Library. He insisted that his works are covered by Sections 172.1 and 172.2 of the Intellectual Property Code. The petitioner averred
that the copyright certificates are prima facie evidence of its validity, citing the ruling of the United States Court of Appeals in Wildlife Express
Corporation v. Carol Wright Sales, Inc.13 The petitioner asserted that the respondents failed to adduce evidence to support their motion to quash the
search warrants. The petitioner noted that respondent William Salinas, Jr. was not being honest, as he was able to secure a similar copyright
registration of a similar product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit any grave abuse of its
discretion in issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a search warrant. In
a number of cases decided by the Supreme Court, the same is explicitly provided, thus:
"The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally examine in the form
of searching questions and answers, in writing and under oath, the complainant and any witness he may produce, on facts personally known to them
and attach to the record their sworn statements together with any affidavit submitted.
"In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or quashal of the
search warrant."
In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the offense of Violation
of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act 8293, when the objects subject of the
same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative works (Sec. 173).
The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first place, the item subject of the
petition is not entitled to be protected by the law on copyright, how can there be any violation? 14
The petitioners motion for reconsideration of the said decision suffered the same fate. The petitioner forthwith filed the present petition for review
on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not in a search warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding to quash a search
warrant for allegedly infringing items, the RTC committed a grave abuse of its discretion when it declared that his works are not copyrightable in the
first place. He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of the Philippines, which took effect on January 1, 1998,
provides in no uncertain terms that copyright protection automatically attaches to a work by the sole fact of its creation, irrespective of its mode or
form of expression, as well as of its content, quality or purpose. 15 The law gives a non-inclusive definition of "work" as referring to original
intellectual creations in the literary and artistic domain protected from the moment of their creation; and includes original ornamental designs
or models for articles of manufacture, whether or not registrable as an industrial design and other works of applied art under Section 172.1(h) of R.A.
No. 8293.lawphil.net
As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise, encompasses
works which may have a bearing on the utility aspect to which the petitioners utility designs were classified. Moreover, according to the petitioner,
what the Copyright Law protects is the authors intellectual creation, regardless of whether it is one with utilitarian functions or incorporated in a
useful article produced on an industrial scale.
The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent bars or invalidates
its registration under the Law on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for the copyright and invention of
original and ornamental design for design patents. 16 In like manner, the fact that his utility designs or models for articles of manufacture have been
expressed in the field of automotive parts, or based on something already in the public domain does not automatically remove them from the
protection of the Law on Copyright. 17
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed by an author who
claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable suspicion of the
commission of the offense. It is not equivalent to absolute certainty or a finding of actual and positive cause. 18 He assists that the determination of
probable cause does not concern the issue of whether or not the alleged work is copyrightable. He maintains that to justify a finding of probable cause
in the issuance of a search warrant, it is enough that there exists a reasonable suspicion of the commission of the offense.
The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of overturning this
presumption is on the alleged infringers, the respondents herein. But this burden cannot be carried in a hearing on a proceeding to quash the search
warrants, as the issue therein is whether there was probable cause for the issuance of the search warrant. The petitioner concludes that the issue of
probable cause should be resolved without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution to the problem of wear and
tear in automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic material
strong enough to endure pressure brought about by the vibration of the counter bearing and thus brings bushings. Such work, the respondents assert,
is the subject of copyright under Section 172.1 of R.A. No. 8293. The respondents posit that a technical solution in any field of human activity which
is novel may be the subject of a patent, and not of a copyright. They insist that the certificates issued by the National Library are only certifications
that, at a point in time, a certain work was deposited in the said office. Furthermore, the registration of copyrights does not provide for automatic
protection. Citing Section 218.2(b) of R.A. No. 8293, the respondents aver that no copyright is said to exist if a party categorically questions its
existence and legality. Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit of work is not
conclusive as to copyright outlay or the time of copyright or the right of the copyright owner. The respondents maintain that a copyright exists only
when the work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioners utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. It bears stressing that upon the filing of the application for search warrant, the RTC was duty-bound to
determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure:
SEC. 4. Requisite for issuing search warrant. A search warrant shall not issue but upon probable cause in connection with one specific offense to be
determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and,
particularly, describing the place to be searched and the things to be seized.

28
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the determination of probable cause, the court must
necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one already issued by the court.
Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a reasonably cautious and prudent man to
believe that an offense has been committed or is being committed. Besides, in Section 3, Rule 126 of the Rules of Criminal Procedure, a search
warrant may be issued for the search and seizure of personal property (a) subject of the offense; (b) stolen or embezzled and other proceeds or fruits
of the offense; or (c) used or intended to be used as the means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court cannot abdicate its
constitutional obligation by refusing to determine whether an offense has been committed. 20 The absence of probable cause will cause the outright
nullification of the search warrant. 21
For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the petitioner-applicant
was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and (b) the copyrighted material
was being copied and distributed by the respondents. Thus, the ownership of a valid copyright is essential. 22
Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was not copied, and
evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same minimal degree of
creativity.23 Copying is shown by proof of access to copyrighted material and substantial similarity between the two works. 24 The applicant must thus
demonstrate the existence and the validity of his copyright because in the absence of copyright protection, even original creation may be freely
copied.25
By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under R.A. No. 8293 against the
respondents, the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the validity of the copyright which
he claimed he had over the utility models. The petitioner cannot seek relief from the RTC based on his claim that he was the copyright owner over the
utility models and, at the same time, repudiate the courts jurisdiction to ascertain the validity of his claim without running afoul to the doctrine of
estoppel.
To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence. 26 A copyright
certificate provides prima facie evidence of originality which is one element of copyright validity. It constitutes prima facie evidence of both validity
and ownership27 and the validity of the facts stated in the certificate. 28 The presumption of validity to a certificate of copyright registration merely
orders the burden of proof. The applicant should not ordinarily be forced, in the first instance, to prove all the multiple facts that underline the
validity of the copyright unless the respondent, effectively challenging them, shifts the burden of doing so to the applicant. 29 Indeed, Section 218.2 of
R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if the defendant does not put in
issue the question whether copyright subsists in the work or other subject matter; and
(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright if he claims to be
the owner of the copyright and the defendant does not put in issue the question of his ownership.
A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt on the question. In
such a case, validity will not be presumed.30
To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the petitioner-applicant submitted to
the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and September 4, 2001, respectively, issued by
the National Library covering work identified as Leaf Spring Eye Bushing for Automobile and Vehicle Bearing Cushion both classified under Section
172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works, hereinafter referred to as "works," are original intellectual creations in the
literary and artistic domain protected from the moment of their creation and shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other works of applied
art.
Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic creation with utilitarian functions or incorporated
in a useful article, whether made by hand or produced on an industrial scale.
But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf Spring Eye
Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial bore that is centrally located
and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the peripheral walls of said body, with the
bushing made of plastic that is either polyvinyl chloride or polypropylene.31 Likewise, the Vehicle Bearing Cushion is illustrated as a bearing cushion
comprising a generally semi-circular body having a central hole to secure a conventional bearing and a plurality of ridges provided therefore, with
said cushion bearing being made of the same plastic materials. 32 Plainly, these are not literary or artistic works. They are not intellectual creations in
the literary and artistic domain, or works of applied art. They are certainly not ornamental designs or one having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The central inquiry is whether the article
is a work of art.33 Works for applied art include all original pictorials, graphics, and sculptural works that are intended to be or have been embodied in
useful article regardless of factors such as mass production, commercial exploitation, and the potential availability of design patent protection. 34
As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having an intrinsic
utilitarian function that is not merely to portray the appearance of the article or to convey information. Indeed, while works of applied art, original
intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are not. 35 A useful article may be copyrightable
only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are
capable of existing independently of the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the authors intellectual creation, regardless of whether
it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is protected by copyright law. However, the
law refers to a "work of applied art which is an artistic creation." It bears stressing that there is no copyright protection for works of applied art or
industrial design which have aesthetic or artistic features that cannot be identified separately from the utilitarian aspects of the article. 36 Functional

29
components of useful articles, no matter how artistically designed, have generally been denied copyright protection unless they are separable from the
useful article.37
In this case, the petitioners models are not works of applied art, nor artistic works. They are utility models, useful articles, albeit with no artistic
design or value. Thus, the petitioner described the utility model as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of the leaf spring.
The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant soft texture
plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure brought about by the up and
down movement of said leaf spring.
Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the rubber bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to reinforce the plastic
eye bushing when in engaged with the steel material of the leaf spring.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction
with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is shown a utility model
for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a cylindrical metal jacket
14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring
eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than those without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard polypropylene
plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and replacement therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17 to reinforce the
inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf spring and the
automobiles chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction. Said another
embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14 may also be applied to this
embodiment as an option thereof. 38
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These rubber bushings after a time, upon
subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling of the center bearing.
The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture plastic material
which causes cushion to the propellers center bearing, yet strong enough to endure pressure brought about by the vibration of the center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using simple and
ordinary molding equipment.
These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction
with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown a utility model for
a vehicle-bearing cushion generally designated as reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about by the rotating movement of the propeller shaft of the vehicle. 39
A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable. It may be, or may relate
to, a product, or process, or an improvement of any of the aforesaid. 40Essentially, a utility model refers to an invention in the mechanical field. This is
the reason why its object is sometimes described as a device or useful object. 41 A utility model varies from an invention, for which a patent for
invention is, likewise, available, on at least three aspects: first, the requisite of "inventive step" 42 in a patent for invention is not required; second, the
maximum term of protection is only seven 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

30
art. They are not even artistic creations with incidental utilitarian functions or works incorporated in a useful article. In actuality, the personal
properties described in the search warrants are mechanical works, the principal function of which is utility sansany aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase "other literary, scholarly,
scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which states that "where a statute
describes things of a particular class or kind accompanied by words of a generic character, the generic word will usually be limited to things of a
similar nature with those particularly enumerated, unless there be something in the context of the state which would repel such inference," 46 the Leaf
Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the same kind and nature as the works enumerated in Section
172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright registration and the
deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed, inJoaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.), Incorporated v.
Shoemart, Incorporated,48 the Court ruled that:
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not simply a pre-
existing right regulated by it. Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, it can cover only the works falling within
the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for violation of
copyright laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,50 the Court ruled that "these
copyright and patent rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably
to cover items or works that exclusively pertain to the others." The Court expounded further, thus:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.
The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein51 to buttress his petition. In that case, the artifacts
involved in that case were statuettes of dancing male and female figures made of semi-vitreous china. The controversy therein centered on the fact
that although copyrighted as "works of art," the statuettes were intended for use and used as bases for table lamps, with electric wiring, sockets and
lampshades attached. The issue raised was whether the statuettes were copyright protected in the United States, considering that the copyright
applicant intended primarily to use them as lamp bases to be made and sold in quantity, and carried such intentions into effect. At that time, the
Copyright Office interpreted the 1909 Copyright Act to cover works of artistic craftsmanship insofar as their form, but not the utilitarian aspects,
were concerned. After reviewing the history and intent of the US Congress on its copyright legislation and the interpretation of the copyright office,
the US Supreme Court declared that the statuettes were held copyrightable works of art or models or designs for works of art. The High Court ruled
that:
"Works of art (Class G) (a) In General. This class includes works of artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works belonging to the fine arts, such as
paintings, drawings and sculpture. "
So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that would allow the
registration of such a statuette as is in question here. 52
The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not beauty and utility but art for the copyright and the
invention of original and ornamental design for design patents." Significantly, the copyright office promulgated a rule to implement Mazer to wit:
[I]f "the sole intrinsic function of an article is its utility, the fact that the work is unique and attractively shaped will not qualify it as a work of art."
In this case, the bushing and cushion are not works of art. They are, as the petitioner himself admitted, utility models which may be the subject of a
patent.
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are
ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.
Jessie Chingvs William Salinas (2005)

Facts:
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model, described as "Leaf
Spring Eye Bushing for Automobile" made up of plastic.
Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit of the said work described therein as
"Leaf Spring Eye Bushing for Automobile."
Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the apprehension and prosecution of illegal
manufacturers, producers and/or distributors of the works.
After due investigation, the NBI filed applications for search warrants against William Salinas, Sr. andWilaware Product Corporation. It was alleged
that the respondents therein reproduced and distributed the said models. The RTC granted the application and issued the search warrants for the
seizure of the aforecited articles.
William Salinas opposed the warrant alleging violations of the Intellectual Property Code particularly as to the propriety of the issuance of the
Copyright certificate. Petitioneropposed averring that the court which issued the search warrants was not the proper forum in which to articulate the
issue of the validity of the copyrights issued to him. The trial court favored Salinas and quashed the warrant. On appeal, the CA affirmed the decision
of the trial court.
Issue:
Whether or not the Utility Model Leaf Spring Eye Bushing for Automobile may be the proper object of a copyright law

31
Ruling:
Petition is DENIED.
The RTC had jurisdiction to delve into and resolve the issue whether the petitioners utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. It bears stressing that upon the filing of the application for search warrant, the RTC was duty-bound to
determine whether probable cause existed.
The Court held that in the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the
issuance of a search warrant or the quashal of one already issued by the court.
For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the petitioner-applicant
was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and (b) the copyrighted material
was being copied and distributed by the respondents. Thus, the ownership of a valid copyright is essential.
Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was not copied,
and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same minimal degree of
creativity.Copying is shown by proof of access to copyrighted materialand substantial similarity between the two works . The applicant must
thus demonstrate the existence and the validity of his copyright because in the absence of copyright protection, even original creation may be freely
copied.
To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence. A copyright
certificate provides prima facie evidence of originality which is one element of copyright validity. It constitutes prima facie evidence of both validity
and ownership and the validity of the facts stated in the certificate.The presumption of validity to a certificate of copyright registration merely
orders the burden of proof.
The said Leaf Spring Eye Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial
bore that is centrally located and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the peripheral
walls of said body, with the bushing made of plastic that is either polyvinyl chloride or polypropylene. Likewise, the Vehicle Bearing Cushion is
illustrated as a bearing cushion comprising a generally semi-circular body having a central hole to secure a conventional bearing and a plurality of
ridges provided therefore, with said cushion bearing being made of the same plastic materials. Plainly, these are not literary or artistic works. They
are not intellectual creations in the literary and artistic domain, or works of applied art. They are certainly not ornamental designs or one having
decorative quality or value.
A useful article may be copyrightable only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features that can be
identified separately from, and are capable of existing independently of the utilitarian aspects of the article.
A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable . It may be, or may
relate to, a product, or process, or an improvement of any of the aforesaid. Essentially, a utility model refers to an invention in the mechanical
field. This is the reason why its object is sometimes described as a device or useful object. A utility model varies from an invention, for which a
patent for invention is, likewise, available, on at least three aspects: first, the requisite of " inventive step" in a patent for invention is not required;
second, the maximum term of protection is only seven years compared to a patent which is twenty years, both reckoned from the date of the
application; and third, the provisions on utility model dispense with its substantive examination and prefer for a less complicated system.
Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the Leaf Spring Eye
Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that must characterize authentic works of applied
art. They are not even artistic creations with incidental utilitarian functions or works incorporated in a useful article. In actuality, the personal
properties described in the search warrants are mechanical works, the principal function of which is utility sans any aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase "other literary, scholarly,
scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis, the Leaf Spring Eye Bushing and
Vehicle Bearing Cushion are not copyrightable, being not of the same kind and nature as the works enumerated in Section 172 of R.A. No. 8293.
That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for violation of
copyright laws. The Court ruled that "these copyright and patent rights are completely distinct and separate from one another, and the protection
afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others.
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.

G.R. No. 167715 November 17, 2010

PHIL PHARMAWEALTH, INC., Petitioner,
vs.
PFIZER, INC. and PFIZER (PHIL.) INC., Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to annul and set aside the Resolutions dated January 18, 2005 1 and April 11, 20052 by
the Court of Appeals (CA) in CA-G.R. SP No. 82734.
The instant case arose from a Complaint 3 for patent infringement filed against petitioner Phil Pharmawealth, Inc. by respondent companies, Pfizer,
Inc. and Pfizer (Phil.), Inc., with the Bureau of Legal Affairs of the Intellectual Property Office (BLA-IPO). The Complaint alleged as follows:
xxxx
6. Pfizer is the registered owner of Philippine Letters Patent No. 21116 (the "Patent") which was issued by this Honorable Office on July
16, 1987. The patent is valid until July 16, 2004. The claims of this Patent are directed to "a method of increasing the effectiveness of a
beta-lactam antibiotic in a mammalian subject, which comprises co-administering to said subject a beta-lactam antibiotic effectiveness

32
 increasing amount of a compound of the formula IA." The scope of the claims of the Patent extends to a combination of penicillin such as
ampicillin sodium and beta-lactam antibiotic like sulbactam sodium.
7. Patent No. 21116 thus covers ampicillin sodium/sulbactam sodium (hereafter "Sulbactam Ampicillin"). Ampicillin sodium is a specific
example of the broad beta-lactam antibiotic disclosed and claimed in the Patent. It is the compound which efficacy is being enhanced by
co-administering the same with sulbactam sodium. Sulbactam sodium, on the other hand, is a specific compound of the formula IA
disclosed and claimed in the Patent.
8. Pfizer is marketing Sulbactam Ampicillin under the brand name "Unasyn." Pfizer's "Unasyn" products, which come in oral and IV
formulas, are covered by Certificates of Product Registration ("CPR") issued by the Bureau of Food and Drugs ("BFAD") under the name
of complainants. The sole and exclusive distributor of "Unasyn" products in the Philippines is Zuellig Pharma Corporation, pursuant to a
Distribution Services Agreement it executed with Pfizer Phils. on January 23, 2001.
9. Sometime in January and February 2003, complainants came to know that respondent [herein petitioner] submitted bids for the supply of
Sulbactam Ampicillin to several hospitals without the consent of complainants and in violation of the complainants' intellectual property
rights. x x x
xxxx
10. Complainants thus wrote the above hospitals and demanded that the latter immediately cease and desist from accepting bids for the
supply [of] Sulbactam Ampicillin or awarding the same to entities other than complainants. Complainants, in the same letters sent through
undersigned counsel, also demanded that respondent immediately withdraw its bids to supply Sulbactam Ampicillin.
11. In gross and evident bad faith, respondent and the hospitals named in paragraph 9 hereof, willfully ignored complainants' just, plain and
valid demands, refused to comply therewith and continued to infringe the Patent, all to the damage and prejudice of complainants. As
registered owner of the Patent, Pfizer is entitled to protection under Section 76 of the IP Code.
x x x x4
Respondents prayed for permanent injunction, damages and the forfeiture and impounding of the alleged infringing products. They also asked for the
issuance of a temporary restraining order and a preliminary injunction that would prevent herein petitioner, its agents, representatives and assigns,
from importing, distributing, selling or offering the subject product for sale to any entity in the Philippines.
In an Order5 dated July 15, 2003 the BLA-IPO issued a preliminary injunction which was effective for ninety days from petitioner's receipt of the
said Order.
Prior to the expiration of the ninety-day period, respondents filed a Motion for Extension of Writ of Preliminary Injunction 6 which, however, was
denied by the BLA-IPO in an Order7 dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the same was also denied by the BLA-IPO in a Resolution 8dated January 23, 2004.
Respondents then filed a special civil action for certiorari with the CA assailing the October 15, 2003 and January 23, 2004 Resolutions of the BLA-
IPO. Respondents also prayed for the issuance of a preliminary mandatory injunction for the reinstatement and extension of the writ of preliminary
injunction issued by the BLA-IPO.
While the case was pending before the CA, respondents filed a Complaint 9 with the Regional Trial Court (RTC) of Makati City for infringement and
unfair competition with damages against herein petitioner. In said case, respondents prayed for the issuance of a temporary restraining order and
preliminary injunction to prevent herein petitioner from importing, distributing, selling or offering for sale sulbactam ampicillin products to any
entity in the Philippines. Respondents asked the trial court that, after trial, judgment be rendered awarding damages in their favor and making the
injunction permanent.
On August 24, 2004, the RTC of Makati City issued an Order10 directing the issuance of a temporary restraining order conditioned upon respondents'
filing of a bond.
In a subsequent Order11 dated April 6, 2005, the same RTC directed the issuance of a writ of preliminary injunction "prohibiting and restraining
[petitioner], its agents, representatives and assigns from importing, distributing or selling Sulbactam Ampicillin products to any entity in the
Philippines."
Meanwhile, on November 16, 2004, petitioner filed a Motion to Dismiss 12 the petition filed with the CA on the ground of forum shopping, contending
that the case filed with the RTC has the same objective as the petition filed with the CA, which is to obtain an injunction prohibiting petitioner from
importing, distributing and selling Sulbactam Ampicillin products.
On January 18, 2005, the CA issued its questioned Resolution13 approving the bond posted by respondents pursuant to the Resolution issued by the
appellate court on March 23, 2004 which directed the issuance of a temporary restraining order conditioned upon the filing of a bond. On even date,
the CA issued a temporary restraining order14 which prohibited petitioner "from importing, distributing, selling or offering for sale Sulbactam
Ampicillin products to any hospital or to any other entity in the Philippines, or from infringing Pfizer Inc.'s Philippine Patent No. 21116 and
impounding all the sales invoices and other documents evidencing sales by [petitioner] of Sulbactam Ampicillin products."
On February 7, 2005, petitioner again filed a Motion to Dismiss 15 the case for being moot and academic, contending that respondents' patent had
already lapsed. In the same manner, petitioner also moved for the reconsideration of the temporary restraining order issued by the CA on the same
basis that the patent right sought to be protected has been extinguished due to the lapse of the patent license and on the ground that the CA has no
jurisdiction to review the order of the BLA-IPO as said jurisdiction is vested by law in the Office of the Director General of the IPO.
On April 11, 2005, the CA rendered its presently assailed Resolution denying the Motion to Dismiss, dated November 16, 2004, and the motion for
reconsideration, as well as Motion to Dismiss, both dated February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an action of patent infringement when the patent allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director of Legal Affairs of the Intellectual Property Office?
c) Is there forum shopping when a party files two actions with two seemingly different causes of action and yet pray for the same relief? 16
In the first issue raised, petitioner argues that respondents' exclusive right to monopolize the subject matter of the patent exists only within the term of
the patent. Petitioner claims that since respondents' patent expired on July 16, 2004, the latter no longer possess any right of monopoly and, as such,
there is no more basis for the issuance of a restraining order or injunction against petitioner insofar as the disputed patent is concerned.
The Court agrees.
Section 37 of Republic Act No. (RA) 165,17 which was the governing law at the time of the issuance of respondents' patent, provides:

33
Section 37. Rights of patentees. A patentee shall have the exclusive right to make, use and sell the patented machine, article or product, and to use
the patented process for the purpose of industry or commerce, throughout the territory of the Philippines for the term of the patent; and such
making, using, or selling by any person without the authorization of the patentee constitutes infringement of the patent. 18
It is clear from the above-quoted provision of law that the exclusive right of a patentee to make, use and sell a patented product, article or process
exists only during the term of the patent. In the instant case, Philippine Letters Patent No. 21116, which was the basis of respondents in filing their
complaint with the BLA-IPO, was issued on July 16, 1987. This fact was admitted by respondents themselves in their complaint. They also admitted
that the validity of the said patent is until July 16, 2004, which is in conformity with Section 21 of RA 165, providing that the term of a patent shall
be seventeen (17) years from the date of issuance thereof. Section 4, Rule 129 of the Rules of Court provides that an admission, verbal or written,
made by a party in the course of the proceedings in the same case, does not require proof and that the admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made. In the present case, there is no dispute as to respondents'
admission that the term of their patent expired on July 16, 2004. Neither is there evidence to show that their admission was made through palpable
mistake. Hence, contrary to the pronouncement of the CA, there is no longer any need to present evidence on the issue of expiration of respondents'
patent.
On the basis of the foregoing, the Court agrees with petitioner that after July 16, 2004, respondents no longer possess the exclusive right to make, use
and sell the articles or products covered by Philippine Letters Patent No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction, viz:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or
continuance of the acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.
In this connection, pertinent portions of Section 5, Rule 58 of the same Rules provide that if the matter is of extreme urgency and the applicant will
suffer grave injustice and irreparable injury, a temporary restraining order may be issued ex parte.
From the foregoing, it can be inferred that two requisites must exist to warrant the issuance of an injunctive relief, namely: (1) the existence of a clear
and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage. 19
In the instant case, it is clear that when the CA issued its January 18, 2005 Resolution approving the bond filed by respondents, the latter no longer
had a right that must be protected, considering that Philippine Letters Patent No. 21116 which was issued to them already expired on July 16, 2004.
Hence, the issuance by the CA of a temporary restraining order in favor of the respondents is not proper.
In fact, the CA should have granted petitioner's motion to dismiss the petition for certiorari filed before it as the only issue raised therein is the
propriety of extending the writ of preliminary injunction issued by the BLA-IPO. Since the patent which was the basis for issuing the injunction, was
no longer valid, any issue as to the propriety of extending the life of the injunction was already rendered moot and academic.
As to the second issue raised, the Court, is not persuaded by petitioner's argument that, pursuant to the doctrine of primary jurisdiction, the Director
General of the IPO and not the CA has jurisdiction to review the questioned Orders of the Director of the BLA-IPO.
It is true that under Section 7(b) of RA 8293, otherwise known as the Intellectual Property Code of the Philippines, which is the presently prevailing
law, the Director General of the IPO exercises exclusive appellate jurisdiction over all decisions rendered by the Director of the BLA-IPO. However,
what is being questioned before the CA is not a decision, but an interlocutory order of the BLA-IPO denying respondents' motion to extend the life of
the preliminary injunction issued in their favor.
RA 8293 is silent with respect to any remedy available to litigants who intend to question an interlocutory order issued by the BLA-IPO. Moreover,
Section 1(c), Rule 14 of the Rules and Regulations on Administrative Complaints for Violation of Laws Involving Intellectual Property Rights simply
provides that interlocutory orders shall not be appealable. The said Rules and Regulations do not prescribe a procedure within the administrative
machinery to be followed in assailing orders issued by the BLA-IPO pending final resolution of a case filed with them. Hence, in the absence of such
a remedy, the provisions of the Rules of Court shall apply in a suppletory manner, as provided under Section 3, Rule 1 of the same Rules and
Regulations. Hence, in the present case, respondents correctly resorted to the filing of a special civil action for certiorari with the CA to question the
assailed Orders of the BLA-IPO, as they cannot appeal therefrom and they have no other plain, speedy and adequate remedy in the ordinary course of
law. This is consistent with Sections 120 and 4,21 Rule 65 of the Rules of Court, as amended.
In the first place, respondents' act of filing their complaint originally with the BLA-IPO is already in consonance with the doctrine of primary
jurisdiction.
This Court has held that:
[i]n cases involving specialized disputes, the practice has been to refer the same to an administrative agency of special competence in observance of
the doctrine of primary jurisdiction. The Court has ratiocinated that it cannot or will not determine a controversy involving a question which is within
the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the regulatory statute administered. The
objective of the doctrine of primary jurisdiction is to guide a court in determining whether it should refrain from exercising its jurisdiction until after
an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. It applies where
the claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under
a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended
pending referral of such issues to the administrative body for its view.22
Based on the foregoing, the Court finds that respondents' initial filing of their complaint with the BLA-IPO, instead of the regular courts, is in
keeping with the doctrine of primary jurisdiction owing to the fact that the determination of the basic issue of whether petitioner violated respondents'
patent rights requires the exercise by the IPO of sound administrative discretion which is based on the agency's special competence, knowledge and
experience.
However, the propriety of extending the life of the writ of preliminary injunction issued by the BLA-IPO in the exercise of its quasi-judicial power is
no longer a matter that falls within the jurisdiction of the said administrative agency, particularly that of its Director General. The resolution of this

34
issue which was raised before the CA does not demand the exercise by the IPO of sound administrative discretion requiring special knowledge,
experience and services in determining technical and intricate matters of fact. It is settled that one of the exceptions to the doctrine of primary
jurisdiction is where the question involved is purely legal and will ultimately have to be decided by the courts of justice. 23 This is the case with
respect to the issue raised in the petition filed with the CA.
Moreover, as discussed earlier, RA 8293 and its implementing rules and regulations do not provide for a procedural remedy to question interlocutory
orders issued by the BLA-IPO. In this regard, it bears to reiterate that the judicial power of the courts, as provided for under the Constitution,
includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. 24 Judicial power also
includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government. 25Hence, the CA, and not the IPO Director General, has jurisdiction to determine whether the BLA-IPO committed
grave abuse of discretion in denying respondents' motion to extend the effectivity of the writ of preliminary injunction which the said office earlier
issued.
Lastly, petitioner avers that respondents are guilty of forum shopping for having filed separate actions before the IPO and the RTC praying for the
same relief.
The Court agrees.
Forum shopping is defined as the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and possibly
favorable) opinion in another forum (other than by appeal or the special civil action of certiorari), or the institution of two (2) or more actions or
proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. 26
The elements of forum shopping are: (a) identity of parties, or at least such parties that represent the same interests in both actions; (b) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the same facts; (c) identity of the two preceding particulars, such that any judgment
rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. 27
There is no question as to the identity of parties in the complaints filed with the IPO and the RTC.
Respondents argue that they cannot be held guilty of forum shopping because their complaints are based on different causes of action as shown by the
fact that the said complaints are founded on violations of different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates a right of another. In the instant case,
respondents' cause of action in their complaint filed with the IPO is the alleged act of petitioner in importing, distributing, selling or offering for sale
Sulbactam Ampicillin products, acts that are supposedly violative of respondents' right to the exclusive sale of the said products which are covered by
the latter's patent. However, a careful reading of the complaint filed with the RTC of Makati City would show that respondents have the same cause
of action as in their complaint filed with the IPO. They claim that they have the exclusive right to make, use and sell Sulbactam Ampicillin products
and that petitioner violated this right. Thus, it does not matter that the patents upon which the complaints were based are different. The fact remains
that in both complaints the rights violated and the acts violative of such rights are identical.
In fact, respondents seek substantially the same reliefs in their separate complaints with the IPO and the RTC for the purpose of accomplishing the
same objective.
It is settled by this Court in several cases that the filing by a party of two apparently different actions but with the same objective constitutes forum
shopping.28 The Court discussed this species of forum shopping as follows:
Very simply stated, the original complaint in the court a quo which gave rise to the instant petition was filed by the buyer (herein private respondent
and his predecessors-in-interest) against the seller (herein petitioners) to enforce the alleged perfected sale of real estate. On the other hand, the
complaint in the Second Case seeks to declare such purported sale involving the same real property "as unenforceable as against the Bank," which is
the petitioner herein. In other words, in the Second Case, the majority stockholders, in representation of the Bank, are seeking to accomplish what the
Bank itself failed to do in the original case in the trial court. In brief, the objective or the relief being sought, though worded differently, is the same,
namely, to enable the petitioner Bank to escape from the obligation to sell the property to respondent. 29
In Danville Maritime, Inc. v. Commission on Audit,30 the Court ruled as follows:
In the attempt to make the two actions appear to be different, petitioner impleaded different respondents therein PNOC in the case before the lower
court and the COA in the case before this Court and sought what seems to be different reliefs. Petitioner asks this Court to set aside the questioned
letter-directive of the COA dated October 10, 1988 and to direct said body to approve the Memorandum of Agreement entered into by and between
the PNOC and petitioner, while in the complaint before the lower court petitioner seeks to enjoin the PNOC from conducting a rebidding and from
selling to other parties the vessel "T/T Andres Bonifacio," and for an extension of time for it to comply with the paragraph 1 of the memorandum of
agreement and damages. One can see that although the relief prayed for in the two (2) actions are ostensibly different, the ultimate objective in both
actions is the same, that is, the approval of the sale of vessel in favor of petitioner, and to overturn the letter directive of the COA of October 10, 1988
disapproving the sale.31
In the instant case, the prayer of respondents in their complaint filed with the IPO is as follows:
A. Immediately upon the filing of this action, issue an ex parte order (a) temporarily restraining respondent, its agents, representatives and
assigns from importing, distributing, selling or offering for sale Sulbactam Ampicillin products to the hospitals named in paragraph 9 of
this Complaint or to any other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine Patent No. 21116; and (b)
impounding all the sales invoices and other documents evidencing sales by respondent of Sulbactam Ampicillin products.
B. After hearing, issue a writ of preliminary injunction enjoining respondent, its agents, representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam Ampicillin products to the hospitals named in paragraph 9 of the Complaint or to any
other entity in the Philippines, or from otherwise infringing Pfizer Inc.'s Philippine Patent No. 21116; and
C. After trial, render judgment:
(i) declaring that respondent has infringed Pfizer Inc.'s Philippine Patent No. 21116 and that respondent has no right whatsoever
over complainant's patent;
(ii) ordering respondent to pay complainants the following amounts:
(a) at least P1,000,000.00 as actual damages;
(b) P700,000.00 as attorney's fees and litigation expenses;
(d) P1,000,000.00 as exemplary damages; and

35
 (d) costs of this suit.
(iii) ordering the condemnation, seizure or forfeiture of respondent's infringing goods or products, wherever they may be found,
including the materials and implements used in the commission of infringement, to be disposed of in such manner as may be
deemed appropriate by this Honorable Office; and
(iv) making the injunction permanent. 32
In an almost identical manner, respondents prayed for the following in their complaint filed with the RTC:
(a) Immediately upon the filing of this action, issue an ex parte order:
(1) temporarily restraining Pharmawealth, its agents, representatives and assigns from importing, distributing, selling or offering
for sale infringing sulbactam ampicillin products to various government and private hospitals or to any other entity in the
Philippines, or from otherwise infringing Pfizer Inc.'s Philippine Patent No. 26810.
(2) impounding all the sales invoices and other documents evidencing sales by pharmawealth of sulbactam ampicillin products;
and
(3) disposing of the infringing goods outside the channels of commerce.
(b) After hearing, issue a writ of preliminary injunction:
(1) enjoining Pharmawealth, its agents, representatives and assigns from importing, distributing, selling or offering for sale
infringing sulbactam ampicillin products to various government hospitals or to any other entity in the Philippines, or from
otherwise infringing Patent No. 26810;
(2) impounding all the sales invoices and other documents evidencing sales by Pharmawealth of sulbactam ampicillin products;
and
(3) disposing of the infringing goods outside the channels of commerce.
(c) After trial, render judgment:
(1) finding Pharmawealth to have infringed Patent No. 26810 and declaring Pharmawealth to have no right whatsoever over
plaintiff's patent;
(2) ordering Pharmawealth to pay plaintiffs the following amounts:
(i) at least P3,000,000.00 as actual damages;
(ii) P500,000.00 as attorney's fees and P1,000,000.00 as litigation expenses;
(iii) P3,000,000.00 as exemplary damages; and
(iv) costs of this suit.
(3) ordering the condemnation, seizure or forfeiture of Pharmawealth's infringing goods or products, wherever they may be
found, including the materials and implements used in the commission of infringement, to be disposed of in such manner as may
be deemed appropriate by this Honorable Court; and
(4) making the injunction permanent. 33
It is clear from the foregoing that the ultimate objective which respondents seek to achieve in their separate complaints filed with the RTC and the
IPO, is to ask for damages for the alleged violation of their right to exclusively sell Sulbactam Ampicillin products and to permanently prevent or
prohibit petitioner from selling said products to any entity. Owing to the substantial identity of parties, reliefs and issues in the IPO and RTC cases, a
decision in one case will necessarily amount to res judicata in the other action.
It bears to reiterate that what is truly important to consider in determining whether forum shopping exists or not is the vexation caused the courts and
parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or
substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same
issue.341avvphi1
Thus, the Court agrees with petitioner that respondents are indeed guilty of forum shopping.
Jurisprudence holds that if the forum shopping is not considered willful and deliberate, the subsequent case shall be dismissed without prejudice, on
the ground of either litis pendentia or res judicata. 35 However, if the forum shopping is willful and deliberate, both (or all, if there are more than two)
actions shall be dismissed with prejudice.36 In the present case, the Court finds that respondents did not deliberately violate the rule on non-forum
shopping. Respondents may not be totally blamed for erroneously believing that they can file separate actions simply on the basis of different patents.
Moreover, in the suit filed with the RTC of Makati City, respondents were candid enough to inform the trial court of the pendency of the complaint
filed with the BLA-IPO as well as the petition for certiorari filed with the CA. On these bases, only Civil Case No. 04-754 should be dismissed on the
ground of litis pendentia.
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of the Court of Appeals, dated January 18, 2005 and April 11, 2005,
in CA-G.R. No. 82734, are REVERSED and SET ASIDE. The petition for certiorari filed with the Court of Appeals is DISMISSED for being moot
and academic.
Civil Case No. 04-754, filed with the Regional Trial Court of Makati City, Branch 138, is likewise DISMISSED on the ground of litis pendentia.
SO ORDERED.
Phil. Pharmawealth, Inc. v. Pfizer, Inc. & Pfizer (Phil.), Inc. G.R. No. 167715, 17 November 2010
Facts:
Pfizer is the registered owner of a patent pertaining to Sulbactam Ampicillin. It is marketed under the brand name Unasyn. Sometime in January
and February 2003, Pfizer discovered that Pharmawealth submitted bids for the supply of Sulbactam Ampicillin to several hospitals without the
Pfizers consent. Pfizer then demanded that the hospitals cease and desist from accepting such bids. Pfizer also demanded that Pharmawealth
immediately withdraw its bids to supply Sulbactam Ampicillin. Pharmawealth and the hospitals ignored the demands.

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

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

36
Pharmawealth filed a motion to dismiss the case in the CA, on the ground of forum shopping. Nevertheless, the CA issued a temporary restraining
order. Pharmawealth again filed a motion to dismiss, alleging that the patent, the main basis of the case, had already lapsed, thus making the case
moot, and that the CA had no jurisdiction to review the order of the IPO-BLA because this was granted to the Director General. The CA denied all the
motions. Pharmawealth filed a petition for review on Certiorari with the Supreme Court.

Issues:

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

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

Held:

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

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

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

G.R. No. 179127 December 24, 2008

IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITAS FRITES, INC., respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the Decision 1dated 18 July 2006 rendered by the
Court of Appeals in CA-G.R. SP No. 92785, which reversed the Decision 2dated 23 December 2005 of the Director General of the Intellectual
Property Office (IPO) in Appeal No. 10-05-01. The Court of Appeals, in its assailed Decision, decreed that the IPO Director of Legal Affairs and the
IPO Director General do not have jurisdiction over cases involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California, United States (US) of America, which is a
signatory to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in business in the Philippines. 3
Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the Philippines. 4
On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-
N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent
Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)." 5 By
virtue of a licensing agreement, Benita Frites, Inc. was able to use the registered mark of respondent Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against respondents for
unfair competition and cancellation of trademark registration. Petitioner averred in its complaint that it is the owner of the trade name IN-N-OUT and
the following trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-OUT Burger Logo." These trademarks are
registered with the Trademark Office of the US and in various parts of the world, are internationally well-known, and have become distinctive of its
business and goods through its long and exclusive commercial use. 6 Petitioner pointed out that its internationally well-known trademarks and the
mark of the respondents are all registered for the restaurant business and are clearly identical and confusingly similar. Petitioner claimed that
respondents are making it appear that their goods and services are those of the petitioner, thus, misleading ordinary and unsuspecting consumers that
they are purchasing petitioners products.7
Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing respondent Sehwani, Incorporated to cease and
desist from claiming ownership of the mark "IN-N-OUT" and to voluntarily cancel its trademark registration. In a letter-reply dated 23 October 2000,
respondents refused to accede to petitioner demand, but expressed willingness to surrender the registration of respondent Sehwani, Incorporated of
the "IN N OUT" trademark for a fair and reasonable consideration. 8
Petitioner was able to register the mark "Double Double" on 4 July 2002, based on their application filed on 2 June 1997. 9 It alleged that respondents
also used this mark, as well as the menu color scheme. Petitioners also averred that respondent Benitas receipts bore the phrase, "representing IN-N-
OUT Burger."10 It should be noted that that although respondent Sehwahi, Incorporated registered a mark which appeared as "IN N OUT (the inside
of the letter "O" formed like a star)," respondents used the mark "IN-N-OUT." 11
To counter petitioners complaint, respondents filed before the BLA-IPO an Answer with Counterclaim. Respondents asserted therein that they had
been using the mark "IN N OUT" in the Philippines since 15 October 1982. On 15 November 1991, respondent Sehwani, Incorporated filed with the
then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for the registration of the mark "IN N OUT (the inside of the
letter "O" formed like a star)." Upon approval of its application, a certificate of registration of the said mark was issued in the name of respondent
37
Sehwani, Incorporated on 17 December 1993. On 30 August 2000, respondents Sehwani, Incorporated and Benita Frites, Inc. entered into a
Licensing Agreement, wherein the former entitled the latter to use its registered mark, "IN N OUT." Respondents asserted that respondent Sehwani,
Incorporated, being the registered owner of the mark "IN N OUT," should be accorded the presumption of a valid registration of its mark with the
exclusive right to use the same. Respondents argued that none of the grounds provided under the Intellectual Property Code for the cancellation of a
certificate of registration are present in this case. Additionally, respondents maintained that petitioner had no legal capacity to sue as it had never
operated in the Philippines.12
Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision dated 22 December 2003, 13 in favor of petitioner.
According to said Decision, petitioner had the legal capacity to sue in the Philippines, since its country of origin or domicile was a member of and a
signatory to the Convention of Paris on Protection of Industrial Property. And although petitioner had never done business in the Philippines, it was
widely known in this country through the use herein of products bearing its corporate and trade name. Petitioners marks are internationally well-
known, given the world-wide registration of the mark "IN-N-OUT," and its numerous advertisements in various publications and in the Internet.
Moreover, the IPO had already declared in a previous inter partes case that "In-N-Out Burger and Arrow Design" was an internationally well-known
mark. Given these circumstances, the IPO Director for Legal Affairs pronounced in her Decision that petitioner had the right to use its tradename and
mark "IN-N-OUT" in the Philippines to the exclusion of others, including the respondents. However, respondents used the mark "IN N OUT" in good
faith and were not guilty of unfair competition, since respondent Sehwani, Incorporated did not evince any intent to ride upon petitioners goodwill
by copying the mark "IN-N-OUT Burger" exactly. The inside of the letter "O" in the mark used by respondents formed a star. In addition, the simple
act of respondent Sehwani, Incorporated of inquiring into the existence of a pending application for registration of the "IN-N-OUT" mark was not
deemed fraudulent. The dispositive part of the Decision of the IPO Director for Legal Affairs reads:
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17 December 1993 for the mark "IN-N-OUT" (the inside of the
letter "O" formed like a star) issued in favor of Sehwani, Incorporated is hereby CANCELLED. Consequently, respondents Sehwani, Inc.
and Benitas Frites are hereby ordered to permanently cease and desist from using the mark "IN-N-OUT" and "IN-N-OUT BURGER
LOGO" on its goods and in its business. With regards the mark "Double-Double," considering that as earlier discussed, the mark has been
approved by this Office for publication and that as shown by evidence, Complainant is the owner of the said mark, Respondents are so
hereby ordered to permanently cease and desist from using the mark Double-Double. NO COSTS. 14
Both parties filed their respective Motions for Reconsideration of the aforementioned Decision. Respondents Motion for Reconsideration 15 and
petitioners Motion for Partial Reconsideration16 were denied by the IPO Director for Legal Affairs in Resolution No. 2004-18 17 dated 28 October
2004 and Resolution No. 2005-05 dated 25 April 2005,18 respectively.
Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No. 179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004 denying their Motion for Reconsideration. Thus,
on 18 November 2004, respondents filed an Appeal Memorandum with IPO Director General Emma Francisco (Director General Francisco).
However, in an Order dated 7 December 2004, the appeal was dismissed by the IPO Director General for being filed beyond the 15-day reglementary
period to appeal.
Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules of Court, filed on 20 December 2004 and
docketed as CA-G.R. SP No. 88004, challenging the dismissal of their appeal by the IPO Director General, which effectively affirmed the Decision
dated 22 December 2003 of the IPO Director for Legal Affairs ordering the cancellation of the registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and enjoining respondents from using the same. In particular, respondents based their Petition on the following
grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING APPEAL NO. 14-2004-00004 ON A MERE
TECHNICALITY
THE BUREAU OF LEGAL AFFAIRS (SIC) DECISION AND RESOLUTION (1) CANCELLING RESPONDENTS CERTIFICATE OF
REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST
FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE CONTRARY TO LAW AND/OR IS NOT SUPPORTED
BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that this Honorable Court give due course to this petition, and thereafter order the Office of
the Director General of the Intellectual Property Office to reinstate and give due course to [respondent]s Appeal No. 14-2004-00004.
Other reliefs, just and equitable under the premises, are likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision denying respondents Petition in CA-G.R SP No. 88004 and affirming the Order dated
7 December 2004 of the IPO Director General. The appellate court confirmed that respondents appeal before the IPO Director General was filed out
of time and that it was only proper to cancel the registration of the disputed trademark in the name of respondent Sehwani, Incorporated and to
permanently enjoin respondents from using the same. Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs was likewise
affirmed. On 10 November 2005, respondents moved for the reconsideration of the said Decision. On 16 January 2006, the Court of Appeals denied
their motion for reconsideration.
Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the matter to the Supreme Court in a Petition for Review
under Rule 45 of the Rules of Court, filed on 30 January 2006, bearing the title Sehwani, Incorporated v. In-N-Out Burger and docketed as G.R. No.
171053.19
This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007, 20 finding that herein respondents failed to file their Appeal
Memorandum before the IPO Director General within the period prescribed by law and, consequently, they lost their right to appeal. The Court
further affirmed the Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding that herein petitioner had the legal capacity to sue
for the protection of its trademarks, even though it was not doing business in the Philippines, and ordering the cancellation of the registration
obtained by herein respondent Sehwani, Incorporated of the internationally well-known marks of petitioner, and directing respondents to stop using
the said marks. Respondents filed a Motion for Reconsideration of the Decision of this Court in G.R. No. 171053, but it was denied with finality in a
Resolution dated 21 January 2008.
G.R. No. 179127

38
Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of the IPO Director for Legal Affairs, petitioner
was able to file a timely appeal before the IPO Director General on 27 May 2005.
During the pendency of petitioners appeal before the IPO Director General, the Court of Appeals already rendered on 21 October 2005 its Decision
dismissing respondents Petition in CA-G.R. SP No. 88004.
In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioners appeal meritorious and modified the Decision
dated 22 December 2003 of the IPO Director of Legal Affairs. The IPO Director General declared that respondents were guilty of unfair competition.
Despite respondents claims that they had been using the mark since 1982, they only started constructing their restaurant sometime in 2000, after
petitioner had already demanded that they desist from claiming ownership of the mark "IN-N-OUT." Moreover, the sole distinction of the mark
registered in the name of respondent Sehwani, Incorporated, from those of the petitioner was the star inside the letter "O," a minor difference which
still deceived purchasers. Respondents were not even actually using the star in their mark because it was allegedly difficult to print. The IPO Director
General expressed his disbelief over the respondents reasoning for the non-use of the star symbol. The IPO Director General also considered
respondents use of petitioners registered mark "Double-Double" as a sign of bad faith and an intent to mislead the public. Thus, the IPO Director
General ruled that petitioner was entitled to an award for the actual damages it suffered by reason of respondents acts of unfair competition,
exemplary damages, and attorneys fees. 21 The fallo of the Decision reads:
WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair competition. Accordingly, Decision No. 2003-02
dated 22 December 2003 is hereby MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED SEVENTY FOUR AND
28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00);
3. Attorneys fees and expenses of litigation in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00).
All products of [herein respondents] including the labels, signs, prints, packages, wrappers, receptacles and materials used by them in
committing unfair competition should be without compensation of any sort be seized and disposed of outside the channels of commerce.
Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for appropriate action, and the records be returned to her
for proper disposition. Further, let a copy of this Decision be furnished the Documentation, Information and Technology Transfer Bureau
for their information and records purposes.22
Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of Appeals another Petition for Review under Rule 43 of
the Rules of Court, docketed as CA-G.R. SP No. 92785. Respondents based their second Petition before the appellate court on the following
grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING PETITIONERS LIABLE FOR UNFAIR
COMPETITION AND IN ORDERING THEM TO PAY DAMAGES AND ATTORNEYS FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU OF LEGAL AFFAIRS DECISION
(1) CANCELLING PETITIONERS CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2) ORDERING
PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS
Respondents assailed before the appellate court the foregoing 23 December 2005 Decision of the IPO Director General, alleging that their use of the
disputed mark was not tainted with fraudulent intent; hence, they should not be held liable for damages. They argued that petitioner had never entered
into any transaction involving its goods and services in the Philippines and, therefore, could not claim that its goods and services had already been
identified in the mind of the public. Respondents added that the disputed mark was not well-known. Finally, they maintained that petitioners
complaint was already barred by laches.23
At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:
WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:
(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO and [petitioner], their agents, successors and
assigns, from executing, enforcing and implementing the IPO Director Generals Decision dated 23 December 2005, which modified the
Decision No. 2003-02 dated 22 December 2003 of the BLA, until further orders from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner], their agents, successors and assigns, from executing, enforcing and
implementing the Decision dated 23 December 2005 of the Director General of the IPO in IPV No. 10-2001-00004 and to maintain the
status quo ante pending the resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23 December 2005 of the Director General of the IPO in IPV No. 10-2001-00004
finding the [respondents] guilty of unfair competition and awarding damages and attorneys fees to the respondent
(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December 2003 and Resolution No. 2005-05 of the BLA
dated 25 April 2005, insofar as it finds [respondents] not guilty of unfair competition and hence not liable to the [petitioner] for
damages and attorneys fees;
(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and Resolution No. 2005-05 of the BLA dated 25 April
2005, insofar as it upheld [petitioner]s legal capacity to sue; that [petitioner]s trademarks are well-known; and that respondent
has the exclusive right to use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed just or equitable. 24
On 18 July 2006, the Court of Appeals promulgated a Decision25 in CA-G.R. SP No. 92785 reversing the Decision dated 23 December 2005 of the
IPO Director General.
The Court of Appeals, in its Decision, initially addressed petitioners assertion that respondents had committed forum shopping by the institution of
CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It ruled that respondents were not guilty of forum shopping, distinguishing between the
respondents two Petitions. The subject of Respondents Petition in CA-G.R SP No. 88004 was the 7 December 2004 Decision of the IPO Director
General dismissing respondents appeal of the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents questioned therein the
cancellation of the trademark registration of respondent Sehwani, Incorporated and the order permanently enjoining respondents from using the
disputed trademark. Respondents Petition in CA-G.R. SP No. 92785 sought the review of the 23 December 2005 Decision of the IPO Director

39
General partially modifying the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents raised different issues in their second
petition before the appellate court, mainly concerning the finding of the IPO Director General that respondents were guilty of unfair competition and
the awarding of actual and exemplary damages, as well as attorneys fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not raised by the parties. The appellate court
declared that Section 163 of the Intellectual Property Code specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to
hear and decide cases involving provisions of the Intellectual Property Code, particularly trademarks. Consequently, the IPO Director General had no
jurisdiction to rule in its Decision dated 23 December 2005 on supposed violations of these provisions of the Intellectual Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The Decision dated 23 December 2005 rendered by the Director General of the Intellectual
Property Office of the Philippines in Appeal No. 10-05-01 is REVERSED and SET ASIDE. Insofar as they pertain to acts governed by
Article 168 of R.A. 8293 and other sections enumerated in Section 163 of the same Code, respondents claims in its Complaint docketed as
IPV No. 10-2001-00004 are hereby DISMISSED.26
The Court of Appeals, in a Resolution dated 31 July 2007,27 denied petitioners Motion for Reconsideration of its aforementioned Decision.
Hence, the present Petition, where petitioner raises the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISIONDATED 18 JULY 2006
AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER ADMINISTRATIVE
COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISIONDATED 18 JULY 2006
AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A) SUBMITTING
A PATENTLY FALSE CERTIFICATION OF NON-FORUM SHOPPING; AND (B) FORUM SHOPPING PROPER. 28
As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this Court already promulgated its Decision 29 in G.R.
No. 171053 on 15 October 2007, which affirmed the IPO Director Generals dismissal of respondents appeal for being filed beyond the reglementary
period, and left the 22 December 2003 Decision of the IPO Director for Legal Affairs, canceling the trademark registration of respondent Sehwani,
Incorporated and enjoining respondents from using the disputed marks.
Before discussing the merits of this case, this Court must first rule on the procedural flaws that each party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification executed by Atty. Edmund Jason Barranda of Villaraza and Angangco, which petitioner
attached to the present Petition, is defective and should result in the dismissal of the said Petition.
Respondents point out that the Secretarys Certificate executed by Arnold M. Wensinger on 20 August 2007, stating that petitioner had authorized the
lawyers of Villaraza and Angangco to represent it in the present Petition and to sign the Verification and Certification against Forum Shopping,
among other acts, was not properly notarized. The jurat of the aforementioned Secretarys Certificate reads:
Subscribed and sworn to me this 20th day of August 2007 in Irving California.
Rachel A. Blake (Sgd.)
Notary Public30
Respondents aver that the said Secretarys Certificate cannot properly authorize Atty. Barranda to sign the Verification/Certification on behalf of
petitioner because the notary public Rachel A. Blake failed to state that: (1) petitioners Corporate Secretary, Mr. Wensinger, was known to her; (2) he
was the same person who acknowledged the instrument; and (3) he acknowledged the same to be his free act and deed, as required under Section 2 of
Act No. 2103 and Landingin v. Republic of the Philippines.31
Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on Atty. Barandas Verification/Certification attached
to the instant Petition, noting the absence of (1) the serial number of the commission of the notary public; (2) the office address of the notary public;
(3) the roll of attorneys number and the IBP membership number; and (4) a statement that the Verification/Certification was notarized within the
notary publics territorial jurisdiction, as required under the 2004 Rules on Notarial Practice. 32
Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the present case. The requirements enumerated therein
refer to documents which require an acknowledgement, and not a mere jurat.
A jurat is that part of an affidavit in which the notary certifies that before him/her, the document was subscribed and sworn to by the executor.
Ordinarily, the language of the jurat should avow that the document was subscribed and sworn to before the notary public. In contrast, an
acknowledgment is the act of one who has executed a deed in going before some competent officer or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the signor actually declares to the notary that the executor of a document has attested to the notary that the
same is his/her own free act and deed.33 A Secretarys Certificate, as that executed by petitioner in favor of the lawyers of the Angangco and Villaraza
law office, only requires a jurat.34
Even assuming that the Secretarys Certificate was flawed, Atty. Barranda may still sign the Verification attached to the Petition at bar. A pleading is
verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based
on authentic records. 35 The party itself need not sign the verification. A partys representative, lawyer or any other person who personally knows the
truth of the facts alleged in the pleading may sign the verification. 36 Atty. Barranda, as petitioners counsel, was in the position to verify the truth and
correctness of the allegations of the present Petition. Hence, the Verification signed by Atty. Barranda substantially complies with the formal
requirements for such.
Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty. Barandas Verification. It must be borne in mind that
the purpose of requiring a verification is to secure an assurance that the allegations of the petition has been made in good faith; or are true and
correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and non-compliance therewith does not
necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement. In the interest of substantial justice, strict
observance of procedural rules may be dispensed with for compelling reasons. 37 The vital issues raised in the instant Petition on the jurisdiction of the

40
IPO Director for Legal Affairs and the IPO Director General over trademark cases justify the liberal application of the rules, so that the Court may
give the said Petition due course and resolve the same on the merits.
This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy, were less than careful with their jurats or notarial
certificates. Parties and their counsel should take care not to abuse the Courts zeal to resolve cases on their merits. Notaries public in the Philippines
are reminded to exert utmost care and effort in complying with the 2004 Rules on Notarial Practice. Parties and their counsel are further charged with
the responsibility of ensuring that documents notarized abroad be in their proper form before presenting said documents before Philippine courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R. SP No. 92785, following their earlier filing of the
Petition in CA-G.R SP No. 88004. Petitioner also asserts that respondents were guilty of submitting to the Court of Appeals a patently false
Certification of Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein the pendency of CA-G.R SP No. 88004.
Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court
would make a favorable disposition. It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes. In
determining whether or not there is forum shopping, what is important is the vexation caused the courts and parties-litigants by a party who asks
different courts and/or administrative bodies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being rendered by the different bodies upon the same issues. 38
Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2) rights or causes of action and reliefs prayed for, and
(3) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful,
amount to res judicata in the action under consideration.39
After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785, it would at first seem that respondents are guilty of
forum shopping.
There is no question that both Petitions involved identical parties, and raised at least one similar ground for which they sought the same relief.
Among the grounds stated by the respondents for their Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal Affairs (sic) Decision and
Resolution (1) canceling [herein respondent Sehwani, Incorporated]s certificate of registration for the mark IN-N-OUT and (2) ordering [herein
respondents] to permanently cease and desist from using the subject mark on its goods and business are contrary to law and/or is (sic) not supported
by evidence."40 The same ground was again invoked by respondents in their Petition in CA-G.R. SP No. 92785, rephrased as follows: "The IPO
Director General committed grave error in affirming the Bureau of Legal Affairs (sic) Decision (1) canceling [herein respondent Sehwani,
Incorporated]s certificate of registration for the mark "IN-N-OUT," and (2) ordering [herein respondents] to permanently cease and desist from using
the subject mark on its goods and business."41 Both Petitions, in effect, seek the reversal of the 22 December 2003 Decision of the IPO Director of
Legal Affairs. Undoubtedly, a judgment in either one of these Petitions affirming or reversing the said Decision of the IPO Director of Legal Affairs
based on the merits thereof would bar the Court of Appeals from making a contrary ruling in the other Petition, under the principle of res judicata.
Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which respondents did not raise in CA-G.R. SP No. 88004,
but can be found in CA-G.R. SP No. 92785, i.e., whether respondents are liable for unfair competition. Hence, respondents seek additional reliefs in
CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO Director General that they are guilty of unfair competition, and the
nullification of the award of damages in favor of petitioner resulting from said finding. Undoubtedly, respondents could not have raised the issue of
unfair competition in CA-G.R. SP No. 88004 because at the time they filed their Petition therein on 28 December 2004, the IPO Director General had
not yet rendered its Decision dated 23 December 2005 wherein it ruled that respondents were guilty thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it is only predictable, although not necessarily
legally tenable, for respondents to reassert their right to register, own, and use the disputed mark. Respondents again raise the issue of who has the
better right to the disputed mark, because their defense from the award of damages for unfair competition depends on the resolution of said issue in
their favor. While this reasoning may be legally unsound, this Court cannot readily presume bad faith on the part of respondents in filing their
Petition in CA-G.R. SP No. 92785; or hold that respondents breached the rule on forum shopping by the mere filing of the second petition before the
Court of Appeals.
True, respondents should have referred to CA-G.R. SP No. 88004 in the Certification of Non-Forum Shopping, which they attached to their Petition
in CA-G.R. SP No. 92785. Nonetheless, the factual background of this case and the importance of resolving the jurisdictional and substantive issues
raised herein, justify the relaxation of another procedural rule. Although the submission of a certificate against forum shopping is deemed obligatory,
it is not jurisdictional.42 Hence, in this case in which such a certification was in fact submitted, only it was defective, the Court may still refuse to
dismiss and, instead, give due course to the Petition in light of attendant exceptional circumstances.
The parties and their counsel, however, are once again warned against taking procedural rules lightly. It will do them well to remember that the
Courts have taken a stricter stance against the disregard of procedural rules, especially in connection with the submission of the certificate against
forum shopping, and it will not hesitate to dismiss a Petition for non-compliance therewith in the absence of justifiable circumstances.
The Jurisdiction of the IPO
The Court now proceeds to resolve an important issue which arose from the Court of Appeals Decision dated 18 July 2006 in CA-G.R. SP No. 92785.
In the afore-stated Decision, the Court of Appeals adjudged that the IPO Director for Legal Affairs and the IPO Director General had no jurisdiction
over the administrative proceedings below to rule on issue of unfair competition, because Section 163 of the Intellectual Property Code confers
jurisdiction over particular provisions in the law on trademarks on regular courts exclusively. According to the said provision:
Section 163. Jurisdiction of Court.All actions under Sections 150, 155, 164, and 166 to 169 shall be brought before the proper courts with
appropriate jurisdiction under existing laws.
The provisions referred to in Section 163 are: Section 150 on License Contracts; Section 155 on Remedies on Infringement; Section 164 on Notice of
Filing Suit Given to the Director; Section 166 on Goods Bearing Infringing Marks or Trade Names; Section 167 on Collective Marks; Section 168 on
Unfair Competition, Rights, Regulation and Remedies; and Section 169 on False Designations of Origin, False Description or Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following functions:
10.1 Hear and decide opposition to the application for registration of marks; cancellation of trademarks; subject to the provisions of
Section 64, cancellation of patents and utility models, and industrial designs; and petitions for compulsory licensing of patents;

41
 10.2 (a) Exercise original jurisdiction in administrative complaints for violations of laws involving intellectual property
rights; Provided, That its jurisdiction is limited to complaints where the total damages claimed are not less than Two hundred
thousand pesos (P200,000): Provided, futher, That availment of the provisional remedies may be granted in accordance with the
Rules of Court. The Director of Legal Affairs shall have the power to hold and punish for contempt all those who disregard orders or writs
issued in the course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the acts that the respondent shall cease and desist from and shall
require him to submit a compliance report within a reasonable time which shall be fixed in the order;
(ii) The acceptance of a voluntary assurance of compliance or discontinuance as may be imposed. Such voluntary assurance may
include one or more of the following:
(1) An assurance to comply with the provisions of the intellectual property law violated;
(2) An assurance to refrain from engaging in unlawful and unfair acts and practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the money value of defective goods distributed in commerce; and
(4) An assurance to reimburse the complainant the expenses and costs incurred in prosecuting the case in the Bureau of
Legal Affairs.
The Director of Legal Affairs may also require the respondent to submit periodic compliance reports and file a bond to
guarantee compliance of his undertaking.
(iii) The condemnation or seizure of products which are subject of the offense. The goods seized hereunder shall be disposed of in
such manner as may be deemed appropriate by the Director of Legal Affairs, such as by sale, donation to distressed local
governments or to charitable or relief institutions, exportation, recycling into other goods, or any combination thereof, under such
guidelines as he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties which have been used in the commission of the offense;
(v) The imposition of administrative fines in such amount as deemed reasonable by the Director of Legal Affairs, which shall in
no case be less than Five thousand pesos (P5,000) nor more than One hundred fifty thousand pesos (P150,000). In addition, an
additional fine of not more than One thousand pesos (P1,000) shall be imposed for each day of continuing violation;
(vi) The cancellation of any permit, license, authority, or registration which may have been granted by the Office, or the
suspension of the validity thereof for such period of time as the Director of Legal Affairs may deem reasonable which shall not
exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration which is being secured by the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the procedure to govern the implementation of this Section. 43 (Emphasis
provided.)
Unquestionably, petitioners complaint, which seeks the cancellation of the disputed mark in the name of respondent Sehwani, Incorporated, and
damages for violation of petitioners intellectual property rights, falls within the jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes the appellate jurisdiction of the IPO Director General over the decisions of the IPO Director
of Legal Affairs, to wit:
Section 7. The Director General and Deputies Director General. 7.1 Fuctions.The Director General shall exercise the following powers
and functions:
xxxx
b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal Affairs, the Director of Patents, the Director
of Trademarks, and the Director of Documentation, Information and Technology Transfer Bureau. The decisions of the Director General in
the exercise of his appellate jurisdiction in respect of the decisions of the Director of Patents, and the Director of Trademarks shall be
appealable to the Court of Appeals in accordance with the Rules of Court; and those in respect of the decisions of the Director of
Documentation, Information and Technology Transfer Bureau shall be appealable to the Secretary of Trade and Industry;
The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code, conferring upon the BLA-IPO jurisdiction over
administrative complaints for violations of intellectual property rights, is a general provision, over which the specific provision of Section 163 of the
same Code, found under Part III thereof particularly governing trademarks, service marks, and tradenames, must prevail. Proceeding therefrom, the
Court of Appeals incorrectly concluded that all actions involving trademarks, including charges of unfair competition, are under the exclusive
jurisdiction of civil courts.
Such interpretation is not supported by the provisions of the Intellectual Property Code. While Section 163 thereof vests in civil courts jurisdiction
over cases of unfair competition, nothing in the said section states that the regular courts have sole jurisdiction over unfair competition cases, to the
exclusion of administrative bodies. On the contrary, Sections 160 and 170, which are also found under Part III of the Intellectual Property Code,
recognize the concurrent jurisdiction of civil courts and the IPO over unfair competition cases. These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark Enforcement Action.Any foreign national or juridical
person who meets the requirements of Section 3 of this Act and does not engage in business in the Philippines may bring a civil
or administrative action hereunder for opposition, cancellation, infringement, unfair competition, or false designation of origin and false
description, whether or not it is licensed to do business in the Philippines under existing laws.
xxxx
Section 170. Penalties.Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from
two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be
imposed on any person who is found guilty of committing any of the acts mentioned in Section 155, Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the petitioners administrative case against
respondents and the IPO Director General had exclusive jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.
Unfair Competition

42
The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003 Decision of the IPO Director of Legal Affairs
which: (1) directed the cancellation of the certificate of registration of respondent Sehwani, Incorporated for the mark "IN-N-OUT" and (2) ordered
respondents to permanently cease and desist from using the disputed mark on its goods and business. Such an issue has already been settled by this
Court in its final and executory Decision dated 15 October 2007 in G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger,44 ultimately
affirming the foregoing judgment of the IPO Director of Legal Affairs. That petitioner has the superior right to own and use the "IN-N-OUT"
trademarks vis--vis respondents is a finding which this Court may no longer disturb under the doctrine of conclusiveness of judgment. In
conclusiveness of judgment, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a
competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between
the parties and their privies whether or not the claims, demands, purposes, or subject matters of the two actions are the same. 45
Thus, the only remaining issue for this Court to resolve is whether the IPO Director General correctly found respondents guilty of unfair competition
for which he awarded damages to petitioner.
The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods and (2) intent to deceive
the public and defraud a competitor. The confusing similarity may or may not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive and defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public. Actual fraudulent intent need not be shown. 46
In his Decision dated 23 December 2005, the IPO Director General ably explains the basis for his finding of the existence of unfair competition in
this case, viz:
The evidence on record shows that the [herein respondents] were not using their registered trademark but that of the [petitioner].
[Respondent] SEHWANI, INC. was issued a Certificate of Registration for IN N OUT (with the Inside of the Letter "O" Formed like a
Star) for restaurant business in 1993. The restaurant opened only in 2000 but under the name IN-N-OUT BURGER. Apparently, the
[respondents] started constructing the restaurant only after the [petitioner] demanded that the latter desist from claiming ownership of the
mark IN-N-OUT and voluntarily cancel their trademark registration. Moreover, [respondents] are also using [petitioners] registered mark
Double-Double for use on hamburger products. In fact, the burger wrappers and the French fries receptacles the [respondents] are using do
not bear the mark registered by the [respondent], but the [petitioners] IN-N-OUT Burgers name and trademark IN-N-OUT with Arrow
design.
There is no evidence that the [respondents] were authorized by the [petitioner] to use the latters marks in the business. [Respondents]
explanation that they are not using their own registered trademark due to the difficulty in printing the "star" does not justify the
unauthorized use of the [petitioners] trademark instead.
Further, [respondents] are giving their products the general appearance that would likely influence purchasers to believe that these products
are those of the [petitioner]. The intention to deceive may be inferred from the similarity of the goods as packed and offered for sale, and,
thus, action will lie to restrain such unfair competition. x x x.
xxxx
[Respondents] use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive purchasers. Exhibit "GG," which
shows the business establishment of [respondents] illustrates the imitation of [petitioners] corporate name IN-N-OUT and signage IN-N-
OUT BURGER. Even the Director noticed it and held:
"We also note that In-N-Out Burger is likewise, [petitioners] corporate name. It has used the "IN-N-OUT" Burger name in its
restaurant business in Baldwin Park, California in the United States of America since 1948. Thus it has the exclusive right to use
the tradenems "In-N-Out" Burger in the Philippines and the respondents are unlawfully using and appropriating the same."
The Office cannot give credence to the [respondents] claim of good faith and that they have openly and continuously used the subject mark
since 1982 and is (sic) in the process of expanding its business. They contend that assuming that there is value in the foreign registrations
presented as evidence by the [petitioner], the purported exclusive right to the use of the subject mark based on such foreign registrations is
not essential to a right of action for unfair competition. [Respondents] also claim that actual or probable deception and confusion on the
part of customers by reason of respondents practices must always appear, and in the present case, the BLA has found none. This Office
finds the arguments untenable.
In contrast, the [respondents] have the burden of evidence to prove that they do not have fraudulent intent in using the mark IN-N-OUT. To
prove their good faith, [respondents] could have easily offered evidence of use of their registered trademark, which they claimed to be
using as early as 1982, but did not.
[Respondents] also failed to explain why they are using the marks of [petitioner] particularly DOUBLE DOUBLE, and the mark IN-N-
OUT Burger and Arrow Design. Even in their listing of menus, [respondents] used [Appellants] marks of DOUBLE DOUBLE and IN-N-
OUT Burger and Arrow Design. In addition, in the wrappers and receptacles being used by the [respondents] which also contained the
marks of the [petitioner], there is no notice in such wrappers and receptacles that the hamburger and French fries are products of the
[respondents]. Furthermore, the receipts issued by the [respondents] even indicate "representing IN-N-OUT." These acts cannot be
considered acts in good faith. 47
Administrative proceedings are governed by the "substantial evidence rule." A finding of guilt in an administrative case would have to be sustained
for as long as it is supported by substantial evidence that the respondent has committed acts stated in the complaint or formal charge. As defined,
substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. 48 As recounted by the IPO
Director General in his decision, there is more than enough substantial evidence to support his finding that respondents are guilty of unfair
competition.
With such finding, the award of damages in favor of petitioner is but proper. This is in accordance with Section 168.4 of the Intellectual Property
Code, which provides that the remedies under Sections 156, 157 and 161 for infringement shall apply mutatis mutandis to unfair competition. The
remedies provided under Section 156 include the right to damages, to be computed in the following manner:
Section 156. Actions, and Damages and Injunction for Infringement.156.1 The owner of a registered mark may recover damages from any
person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party
would have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in
the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a

43
 reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which the mark
or trade name was used in the infringement of the rights of the complaining party.
In the present case, the Court deems it just and fair that the IPO Director General computed the damages due to petitioner by applying the reasonable
percentage of 30% to the respondents gross sales, and then doubling the amount thereof on account of respondents actual intent to mislead the
public or defraud the petitioner,49 thus, arriving at the amount of actual damages of P212,574.28.
Taking into account the deliberate intent of respondents to engage in unfair competition, it is only proper that petitioner be awarded exemplary
damages. Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction for the public good, such as
the enhancement of the protection accorded to intellectual property and the prevention of similar acts of unfair competition. However, exemplary
damages are not meant to enrich one party or to impoverish another, but to serve as a deterrent against or as a negative incentive to curb socially
deleterious action.50 While there is no hard and fast rule in determining the fair amount of exemplary damages, the award of exemplary damages
should be commensurate with the actual loss or injury suffered. 51 Thus, exemplary damages of P500,000.00 should be reduced to P250,000.00 which
more closely approximates the actual damages awarded.
In accordance with Article 2208(1) of the Civil Code, attorneys fees may likewise be awarded to petitioner since exemplary damages are awarded to
it. Petitioner was compelled to protect its rights over the disputed mark. The amount of P500,000.00 is more than reasonable, given the fact that the
case has dragged on for more than seven years, despite the respondents failure to present countervailing evidence. Considering moreover the
reputation of petitioners counsel, the actual attorneys fees paid by petitioner would far exceed the amount that was awarded to it. 52
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 92785,
promulgated on 18 July 2006, is REVERSED. The Decision of the IPO Director General, dated 23 December 2005, is hereby REINSTATED IN
PART, with the modification that the amount of exemplary damages awarded be reduced to P250,000.00.
SO ORDERED.
In-N-Out Burger, Inc vs Sehwani, Inc
G.R. No. 179127 : December 24, 2008
Facts: Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of US, which is a signatory to the Convention of Paris on
Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Petitioner is engaged mainly
in the restaurant business, but it has never engaged in business in the Philippines. Respondents Sehwani, Incorporated and Benita Frites, Inc. are
corporations organized in the Philippines.
On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-
N-OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent
Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)."
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against respondents for
unfair competition and cancellation of trademark registration. Respondents asserted therein that they had been using the mark "IN N OUT" in the
Philippines since 15 October 1982. Respondent then filed with the BPTTT an application for the registration of the mark. BPTTT approved its
application and issued the corresponding certificate of registration in favor of the respondent.
On Dec 22, 2003, IPO Director of Legal Affairs rendered a decision in favor of petitioner stating petitioner had the right to use its tradename and
mark in the Philippines to the exclusion of others. However, the decision also includes that respondent is not guilty of unfair competition. Upon
appeal by petitioner, the new IPO Director General declared that respondents were guilty of unfair competition on December 23, 2005 . On 18 July
2006, the Court of Appeals promulgated a Decision reversing the Decision dated 23 December 2005 of the IPO Director General. The appellate court
declared that Section 163 of the Intellectual Property Code specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to
hear and decide cases involving provisions of the Intellectual Property Code, particularly trademarks. Hence, the present petition.
Issue: (1) Whether the IPO (administrative bodies) have jurisdiction to cases involving unfair competition
(2) Whether respondent Sehwani is liable of unfair competition
Held: (1) Yes. Sec. 160 and 170, which are found under Part III of the IP Code, recognize the concurrent jurisdiction of civil courts and the IPO over
unfair competition cases. Therefore, the IPO Director of Legal Affairs have jurisdiction to decide the petitioner's administrative case against
respondents and the IPO Director General have exclusive jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.
(2) Yes. The evidence on record shows that the respondents were not using their registered trademark but that of the petitioner. Further, respondents
are giving their products the general appearance that would likely influence purchasers to believe that these products are those of the petitioner. The
intention to deceive may be inferred from the similarity of the goods as packed and offered for sale, and, thus, action will lie to restrain such unfair
competition. Also, respondents use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive purchasers.
N.B.
The essential elements of an action for unfair competition are 1) confusing similarity in the general appearance of the goods and (2) intent to deceive
the public and defraud a competitor.

G.R. No. 161693 June 28, 2005

MANOLO P. SAMSON, petitioner,
vs.
HON. VICTORIANO B. CABANOS, In his capacity as Acting Presiding Judge, Regional Trial Court of Antipolo City, Branch 71,
PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.
DECISION
PUNO, J.:
Petitioner Manolo P. Samson seeks the reversal of the orders dated January 22, 2003 and November 17, 2003 issued by Presiding Judge Felix S.
Caballes and Acting Presiding Judge Victoriano B. Cabanos, respectively, of the Regional Trial Court (RTC) of Antipolo City, Branch 71, in relation
44
to Criminal Case No. 02-23183. The assailed orders denied petitioners motion to quash the information for unfair competition filed against him
before said court.1 Petitioner also prayed that a temporary restraining order and/or preliminary injunction be issued to enjoin respondent judge from
further proceeding with Criminal Case No. 02-23183 until the resolution of the instant petition. The Court issued a temporary restraining order on
February 18, 2004.2
The background facts: Petitioner was charged with the crime of unfair competition before the RTC of Antipolo City in an Information that states:
The undersigned Senior State Prosecutor of the Department of Justice hereby accuses MANOLO P. SAMSON for violation of Sec. 168.3 (a) in
relation to Secs. 123.1 (e), 131.3 and 170 of RA 8293 otherwise known as the Intellectual Property Code of the Philippines, committed as follows:
That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Cainta, Rizal, Philippines, and within the jurisdiction
of this Honorable Court, above-named accused, owner/proprietor of ITTI Shoes Corporation located at F.P. Felix Avenue, Cainta, Rizal, did then and
there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing, bags,
accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic Caterpillar products and likewise using
trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of the buying public to the damage and prejudice of
CATERPILLAR, INC., the prior adopter, user and owner of the following internationally famous marks: "CATERPILLAR", "CAT",
"CATERPILLAR", "CAT", "CATERPILLAR & DESIGN", "CAT AND DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR &
DESIGN".
CONTRARY TO LAW.3
Petitioner moved to quash the information on the ground that the court has no jurisdiction over the offense charged in the Information. He argued that
Section 170 of Republic Act (R.A.) No. 82934 provides that the penalty for violation of Section 168 thereof is imprisonment from two (2) to five (5)
years and a fine ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00), and R.A. No. 76915 amending Batas
Pambansa (B.P.) Blg. 1296 vested the Metropolitan Trial Courts (MTC) exclusive original jurisdiction over all offenses punishable with imprisonment
not exceeding six (6) years irrespective of the amount of the fine. 7Presiding Judge Felix S. Caballes denied the motion for lack of merit in his order
dated January 22, 2003.8Petitioner filed a motion for reconsideration which was likewise denied by Acting Presiding Judge Victoriano B. Cabanos. 9
Petitioner filed the instant petition for certiorari before this Court on pure question of law:
Whether or not the respondent Regional Trial Court has jurisdiction over the offenses charged in the subject information where the penalty therein
range from two (2) years to five (5) years, pursuant to Section 170 of R.A. 8293, in the light of the enactment of Republic Act No. 7691, amending
B.P. Blg. 129, which vests exclusive original jurisdiction on the Metropolitan Trial Courts over all offenses punishable with "imprisonment not
exceeding six (6) years irrespective of the amount of fine", in relation to Section 163 of R.A. No. 8293. 10
Petitioner reiterates his argument before the trial court in support of his motion to quash. He contends that Section 170 of R.A. No. 8293 provides that
the penalty to be imposed upon any person guilty of violation of Section 168 of the law is "imprisonment from two (2) to five (5) years and a fine
ranging from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00)." Under Section 2 of R.A. No. 7691, amending Section
32 of B.P. 129, the MTC shall exercise exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years
irrespective of the fine. As petitioner is charged with an offense penalized by imprisonment not exceeding six (6) years, the jurisdiction to try the case
lies with the MTC and not the RTC. In addition, petitioner submits that the old Trademark Law, R.A. No. 166, conferring jurisdiction on the Courts
of First Instance (now RTC) over complaints for unfair competition, has been repealed by Section 239 of R.A. No. 8293. He cites the Courts
decision in Mirpuri vs. Court of Appeals.11
The petition must be dismissed.
It appears that petitioner had already raised the same issue and argument before this Court in the case ofSamson vs. Daway,12 decided on July 21,
2004. That case involved exactly the same facts and issue as in this case, except that the information for unfair competition against petitioner was
filed before the RTC of Quezon City. We held in that case:
The issues posed for resolution are - (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property rights? xxx
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks, unfair
competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty
Thousand Pesos to Two Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years
to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00) shall be imposed on any
person who is found guilty of committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and Section
169.1 [False Designation of Origin and False Description or Representation].
Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall
be brought before the proper courts with appropriate jurisdiction under existing laws, thus -
SEC. 163. Jurisdiction of Court. - All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts with appropriate
jurisdiction under existing laws. (Emphasis supplied)
The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over
cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is lodged with the
Court of First Instance (now Regional Trial Court) -
SEC. 27. Jurisdiction of Court of First Instance. - All actions under this Chapter [V - Infringement] and Chapters VI [Unfair Competition] and VII
[False Designatiion of Origin and False Description or Representation], hereof shall be brought before the Court of First Instance.1avvphi1.net
We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293, reads
-
SEC. 239. Repeals. - 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act No. 165, as amended; Republic Act No.
166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as
amended, are hereby repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases "parts of Acts" and
"inconsistent herewith;" and it would have simply stated "Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188
and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed." It would
have removed all doubts that said specific laws had been rendered without force and effect. The use of the phrases "parts of Acts" and "inconsistent
herewith" only means that the repeal pertains only to provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293.

45
Section 27 of R.A. No. 166, however, is consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest
jurisdiction over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163
thereof.
Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must prevail.
Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal Trial Courts.
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations of intellectual property rights to the
Regional Trial Court. They should therefore prevail over R.A. No. 7691, which is a general law. Hence, jurisdiction over the instant criminal case for
unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5
years and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court
issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the
Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission
cases in specific Regional Trial Courts designated as Special Commercial Courts.
The case of Mirpuri v. Court of Appeals, invoked by petitioner finds no application in the present case. Nowhere inMirpuri did we state that Section
27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did we make a categorical ruling therein that jurisdiction over cases for violation of
intellectual property rights is lodged with the Municipal Trial Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293
was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus be construed as a jurisdictional
pronouncement in cases for violation of intellectual property rights.
The foregoing ruling is the law of the case and thus lays to rest the issue posed by petitioner. We see no reason in this case to deviate therefrom. It is a
basic legal principle that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the case
continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue
to be the facts of the case before the court. 13
IN VIEW WHEREOF, the petition is DISMISSED. The temporary restraining order issued by this Court on February 18, 2004 is hereby LIFTED.
So ordered.

G.R. No. 148222 August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,
vs.
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22,
2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2of the Regional Trial Court of Makati, Branch 133, in Civil Case No.
92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light
boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to
secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes were marketed
under the trademark "Poster Ads". The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean
employed the services of Metro Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985, Pearl and Deans General Manager, Rodolfo Vergara, submitted for signature the contracts covering
SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement
for installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati due to
non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without
basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light
boxes for Shoemarts chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI.
After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes.
Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood section of SM
Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures
were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMIs different
branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease using the subject
light boxes and to remove the same from SMIs establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).

46
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its advertisements
for "Poster Ads" from the lighted display units in SMIs stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean
filed this instant case for infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known techniques and
available technology, without notice of or reference to Pearl and Deans copyright. SMI noted that the registration of the mark "Poster Ads" was only
for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be
appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed
for in its complaint since its advertising display units contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and
Dean had no cause of action against it and that the suit was purely intended to malign SMIs good name. On this basis, SMI, aside from praying for
the dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Deans Certification of
Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. It
repleaded SMIs averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended,
and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro Industrial
Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiffs light boxes and its trademark "Poster Ads".
Defendants counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or
box wraps, to be properly classified as a copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted were
the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellants will not extend to the actual
object. It has so been held under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained
a copyright protection for a book entitled "Seldens Condensed Ledger or Bookkeeping Simplified" which purported to explain a new system of
bookkeeping. Included as part of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for use in
connection with the system explained in the work. These forms showed the entire operation of a day or a week or a month on a single page, or on two
pages following each other. The defendant Baker then produced forms which were similar to the forms illustrated in Seldens copyrighted books. The
Court held that exclusivity to the actual forms is not extended by a copyright. The reason was that "to grant a monopoly in the underlying art when no
examination of its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not of
copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass the rigorous examination of a patent
application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to a copyright registration which merely
employs a recordal system without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case,
Muller had obtained a copyright over an unpublished drawing entitled "Bridge Approach the drawing showed a novel bridge approach to unsnarl
traffic congestion". The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiffs
drawings. In this case it was held that protection of the drawing does not extend to the unauthorized duplication of the object drawn because
copyright extends only to the description or expression of the object and not to the object itself. It does not prevent one from using the drawings to
construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no
copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the
copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright over the technical drawings of the latters advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective mantle of the Trademark Law
extends only to the goods used by the first user as specified in the certificate of registration, following the clear mandate conveyed by Section 20 of
Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a mark or trade-name shall be prima
facie evidence of the validity of the registration, the registrants ownership of the mark or trade-name, and of the registrants exclusive right to use the

47
same in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein."
(underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads" with the Bureau of Patents,
Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads, envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of the words
"Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit permission to a
manufacturer to venture into the production of goods and allow that producer to appropriate the brand name of the senior registrant on goods other
than those stated in the certificate of registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated,
through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise whereby an applicant
may be tempted to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Deans registered trademark and defendants-appellants "Poster Ads" design, as
well as the parallel use by which said words were used in the parties respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who
used the same words in their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But,
having already done so, it must stand by the consequence of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction of the generic term poster
advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that Pearl and
Deans exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".
There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary award granted by the lower court
to Pearl and Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for lack of merit. 5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED
BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEANS
TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE
LATTERS FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN
ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL &
DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper perspective four main concerns of intellectual property law
patents, copyrights, trademarks and unfair competition arising from infringement of any of the first three. We shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate
of registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology
Transfer (now Intellectual Property Office) in addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of a term
descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes when SMI had the units manufactured by Metro and EYD
Rainbow Advertising for its own account. Obviously, petitioners position was premised on its belief that its copyright over the engineering drawings
extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the Court of
Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court.
First, petitioners application for a copyright certificate as well as Copyright Certificate No. PD-R2588 issued by the National Library on January
20, 1981 clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then
prevailing. Said Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioners copyright certificate was entitled "Advertising Display Units" (which depicted the box-type electrical devices), its claim of
copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It
may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute. 7 Accordingly,
it can cover only the works falling within the statutory enumeration or description. 8
P & D secured its copyright under the classification class "O" work. This being so, petitioners copyright protection extended only to the technical
drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags

48
and box wraps." Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only to the technical
drawings within the category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict
application9 of the laws enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright certificate was
entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic
piece which could be copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without license from P & D, then no doubt they would have
been guilty of copyright infringement. But this was not the case. SMIs and NEMIs acts complained of by P & D were to have units similar or
identical to the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioners copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an "engineering or marketing
invention."10 Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and
trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are completely distinct and separate from one
another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which
is new, involves an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents
cannot be held legally liable for infringement of P & Ds copyright over itstechnical drawings of the said light boxes, should they be liable instead for
infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its
invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially
using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that "there can be no infringement of a patent until a patent
has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by
offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a
patentee, he has the exclusive right of making, selling or using the invention. 13 On the assumption that petitioners advertising units were patentable
inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent,
no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure. 14 Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint. 15
On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie
vs. ODonnel,16 "The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others
from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new
and useful inventions by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the
exclusive privileges granted the benefit of such inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances
in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret
and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive
enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus
enabled to practice it and profit by its use."17
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to
stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent
protection seek to ensure that ideas in the public domain remain there for the free use of the public." 18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required because "in rewarding
a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight
technological advance in art."19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the creation of a
work. The law confers the copyright from the moment of creation 20 and the copyright certificate is issued upon registration with the National Library
of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or
commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize the light boxs eligibility as a
patentable invention. The irony here is that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through the
simplified procedure of copyright-registration with the National Library without undergoing the rigor of defending the patentability of its
invention before the IPO and the public the petitioner would be protected for 50 years. This situation could not have been the intention of the law.
In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the expression of an idea is protected by copyright, not the
idea itself. In that case, the plaintiff held the copyright of a book which expounded on a new accounting system he had developed. The publication

49
illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to those illustrated in the plaintiffs copyrighted
book. The US Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be the subject of a copyright;
but, then, it is claimed only as a book. x x x. But there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate.
The mere statement of the proposition is so evident that it requires hardly any argument to support it. The same distinction may be predicated of
every other art as well as that of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the
effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to
the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty or
want of novelty of its subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To
give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially
made, would be asurprise and a fraud upon the public. That is the province of letters patent, not of copyright. The claim to an invention of
discovery of an art or manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be
obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just enumerated. Take the case of
medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and publishes a book on the subject (as
regular physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he
desires to acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or composition of matter. He may
copyright his book, if he pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other
inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the modes of
drawing described, though they may never have been known or used before. By publishing the book without getting a patent for the art, the latter is
given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any
person may practice and use the art itself which he has described and illustrated therein. The use of the art is a totally different thing from a
publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to make, sell and use account
books prepared upon the plan set forth in such book. Whether the art might or might not have been patented, is a question, which is not before us. It
was not patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of accounts must
necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by the peculiar nature of the art
described in the books, which have been made the subject of copyright. In describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the
object of the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by letters
patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioners president said was a contraction of "poster advertising." P &
D was able to secure a trademark certificate for it, but one where the goods specified were "stationeries such as letterheads, envelopes, calling cards
and newsletters."22 Petitioner admitted it did not commercially engage in or market these goods. On the contrary, it dealt in electrically operated
backlit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,23where we, invoking Section 20 of the
old Trademark Law, ruled that "the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use
its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has
adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a
different description."24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on
the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.1wphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had no registration. 26 However,
while the petitioners complaint in the RTC also cited unfair competition, the trial court did not find private respondents liable therefor. Petitioner
did not appeal this particular point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of
trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use by a business (such that
the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair
competition.27 In this case, there was no evidence that P & Ds use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals,
petitioners expert witnesses himself had testified that " Poster Ads was too generic a name. So it was difficult to identify it with any company,
honestly speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind
of the public, the goods and services carrying the trademark "Poster Ads" could not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being used as a trademark
because it was used in the field of poster advertising, the very business engaged in by petitioner. "Secondary meaning" means that a word or phrase
originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might
nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his property. 29 The admission by petitioners own expert witness that he
himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the application of this exception.

50
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated
G.R. No. 148222, August 15, 2003

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

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

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

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

3. Court agrees with CA that the certificate of registration issued by the Director of Patents can confer the exclusive right to use its own
symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate. One who has
adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are
of a different description.

51
 Assuming arguendo that Poster Ads could validly qualify as a trademark, the failure of petitioner to secure a trademark
registration for specific use on the light boxes meant that there could not have been any trademark infringement since registration was an
essential element thereof.
There is no evidence that petitioners use of poster Ads was distinctive or well-known. As noted by CA, petitioners expert
witness himself had testified that Poster Ads was not too generic a name. SO it was difficult to identify it with any company. This fact
also prevented the application of the doctrine of secondary meaning. Poster Ads was generic and incapable of being used as a trademark
because it was used in the field of poster advertising the very business engaged in by petitioner. Secondary meaning means that a word or
phrase originally incapable of exclusive appropriation with reference to an article in the market might nevertheless have been used for so
long and so exclusively by one producer with reference to his article that , in the trade and to that branch of the purchasing public, the word
or phrase has come to mean that the article was his property.
PETITION WAS DENIED.

G.R. No. 113388 September 5, 1997

ANGELITA MANZANO, petitioner,
vs.
COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY MANUFACTURING
CORPORATION, respondents.

BELLOSILLO, J.:
The primary purpose of the patent system is not the reward of the individual but the advancement of the arts and sciences. The function of a patent is
to add to the sum of useful knowledge and one of the purposes of the patent system is to encourage dissemination of information concerning
discoveries and inventions. This is a matter which is properly within the competence of the Patent Office the official action of which has the
presumption of correctness and may not be interfered with in the absence of new evidence carrying thorough conviction that the Office has erred.
Since the Patent Office is an expert body preeminently qualified to determine questions of patentability, its findings must be accepted if they are
consistent with the evidence, with doubts as to patentability resolved in favor of the Patent Office. 1
Petitioner Angelita Manzano filed with the Philippine Patent Office on 19 February 1982 an action for the cancellation of Letters Patent No. UM-
4609 for a gas burner registered in the name of respondent Melecia Madolaria who subsequently assigned the letters patent to New United Foundry
and Manufacturing Corporation (UNITED FOUNDRY, for brevity). Petitioner alleged that (a) the utility model covered by the letters patent, in this
case, an LPG gas burner, was not inventive, new or useful; (b) the specification of the letters patent did not comply with the requirements of Sec. 14,
RA No. 165, as amended; (c) respondent Melecia Madolaria was not the original, true and actual inventor nor did she derive her rights from the
original, true and actual inventor of the utility model covered by the letters patent; and, (d) the letters patent was secured by means of fraud or
misrepresentation. In support of her petition for cancellation petitioner further alleged that (a) the utility model covered by the letters patent of
respondent had been known or used by others in the Philippines for more than one (1) year before she filed her application for letters patent on 9
December 1979; (b) the products which were produced in accordance with the utility model covered by the letters patent had been in public use or on
sale in the Philippines for more than one (1) year before the application for patent therefor was filed.
Petitioner presented the following documents which she correspondingly marked as exhibits: (a) affidavit of petitioner alleging the existence of prior
art, marked Exh. "A;" (b) a brochure distributed by Manila Gas Corporation disclosing a pictorial representation of Ransome Burner made by
Ransome Torch and Burner Company, USA, marked Exh. "D;" and, (c) a brochure distributed by Esso Gasul or Esso Standard Eastern, Inc., of the
Philippines showing a picture of another similar burner with top elevation view and another perspective view of the same burner, marked Exh. "E."
Testifying for herself petitioner narrated that her husband Ong Bun Tua worked as a helper in the UNITED FOUNDRY where respondent Melecia
Madolaria used to be affiliated with from 1965 to 1970; that Ong helped in the casting of an LPG burner which was the same utility model of a
burner for which Letters Patent No. UM-4609 was issued, and that after her husband's separation from the shop she organized Besco Metal
Manufacturing (BESCO METAL, for brevity) for the casting of LPG burners one of which had the configuration, form and component parts similar
to those being manufactured by UNITED FOUNDRY. Petitioner presented in evidence an alleged model of an LPG burner marked Exh. "K" and
covered by the Letters Patent of respondent, and testified that it was given to her in January 1982 by one of her customers who allegedly acquired it
from UNITED FOUNDRY. Petitioner also presented in evidence her own model of an LPG burner called "Ransome" burner marked Exh. "L," which
was allegedly manufactured in 1974 or 1975 and sold by her in the course of her business operation in the name of BESCO METAL. Petitioner
claimed that this "Ransome" burner (Exh. "L") had the same configuration and mechanism as that of the model which was patented in favor of
private respondent Melecia Madolaria. Also presented by petitioner was a burner cup of an imported "Ransome" burner marked Exh "M" which was
allegedly existing even before the patent application of private respondent.
Petitioner presented two (2) other witnesses, namely, her husband Ong Bun Tua and Fidel Francisco. Ong testified that he worked as a helper in the
UNITED FOUNDRY from 1965 to 1970 where he helped in the casting of LPG burners with the same form, configuration and mechanism as that of
the model covered by the Letters Patent issued to private respondent. Francisco testified that he had been employed with the Manila Gas Corporation
from 1930 to 1941 and from 1952 up to 1969 where he retired as supervisor and that Manila Gas Corporation imported "Ransome" burners way back
in 1965 which were advertised through brochures to promote their sale.
Private respondent, on the other hand, presented only one witness, Rolando Madolaria, who testified, among others, that he was the General
Supervisor of the UNITED FOUNDRY in the foundry, machine and buffing section; that in his early years with the company, UNITED FOUNDRY
was engaged in the manufacture of different kinds of gas stoves as well as burners based on sketches and specifications furnished by customers; that
the company manufactured early models of single-piece types of burners where the mouth and throat were not detachable; that in the latter part of
1978 respondent Melecia Madolaria confided in him that complaints were being brought to her attention concerning the early models being
manufactured; that he was then instructed by private respondent to cast several experimental models based on revised sketches and specifications;
that private respondent again made some innovations; that after a few months, private respondent discovered the solution to all the defects of the
earlier models and, based on her latest sketches and specifications, he was able to cast several models incorporating the additions to the innovations
introduced in the models. Various tests were conducted on the latest model in the presence and under the supervision of Melecia Madolaria and they

52
obtained perfect results. Rolando Madolaria testified that private respondent decided to file her application for utility model patent in December
1979.
On 7 July 1986 the Director of Patents Cesar C. Sandiego issued Decision No. 86-56 denying the petition for cancellation and holding that the
evidence of petitioner was not able to establish convincingly that the patented utility model of private respondent was anticipated. Not one of the
various pictorial representations of business clearly and convincingly showed that the devices presented by petitioner was identical or substantially
identical with the utility model of the respondent. The decision also stated that even assuming that the brochures depicted clearly each and every
element of the patented gas burner device so that the prior art and patented device became identical although in truth they were not, they could not
serve as anticipatory bars for the reason that they were undated. The dates when they were distributed to the public were not indicated and, therefore,
were useless prior art references. The records and evidence also do not support the petitioner's contention that Letters Patent No. UM-4609 was
obtained by means of fraud and/or misrepresentation. No evidence whatsoever was presented by petitioner to show that the then applicant Melecia
Madolaria withheld with intent to deceive material facts which, if disclosed, would have resulted in the refusal by the Philippine Patent Office to
issue the Letters Patent under inquiry.
Petitioner elevated the decision of the Director of Patents to the Court of Appeals which on 15 October 1993 affirmed the decision of the Director of
Patents. Hence, this petition for review on certiorari alleging that the Court of Appeals erred (a) in relying on imaginary differences which in
actuality did not exist between the model of private respondent covered by Letters Patent No. UM-4609 and the previously known model of Esso
Standard Eastern, Inc., and Manila Gas Corporation, making such imaginary differences grounded entirely on speculation, surmises and conjectures;
(b) in rendering judgment based on misapprehension of facts; (c) in relying mainly on the testimony of private respondent's sole witness Rolando
Madolaria; and, (d) in not cancelling Letters Patent No. UM-4609 in the name of private respondent.
Petitioner submits that the differences cited by the Court of Appeals between the utility model of private respondent and the models of Manila Gas
Corporation and Esso Standard Eastern, Inc., are more imaginary than real. She alleges that based on Exhs. "E," "E-1," "F" and "F-1" or the
brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., presented by petitioner, the cup-shaped burner mouth and threaded hole on the
side are shown to be similar to the utility model of private respondent. The exhibits also show a detachable burner mouth having a plurality of
upwardly existing undulations adopted to act as gas passage when the cover is attached to the top of said cup-shaped mouth all of which are the same
as those in the patented model. Petitioner also denies as substantial difference the short cylindrical tube of the burner mouth appearing in the
brochures of the burners being sold by Manila Gas Corporation and the long cylindered tube of private respondent's model of the gas burner.
Petitioner argues that the actual demonstration made during the hearing disclosed the similarities in form, operation and mechanism and parts
between the utility model of private respondent and those depicted in the brochures. The findings of the Patent Office and the Court of Appeals that
the brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., are undated cannot overcome the fact of their circulation before private
respondent filed her application for utility model patent. Petitioner thus asks this Court to take judicial notice of the fact that Esso Standard Eastern,
Inc., disappeared before 1979 and reappeared only during the Martial Law years as Petrophil Corporation. Petitioner also emphasizes that the
brochures indicated the telephone number of Manila Gas Corporation as 5-79-81 which is a five (5) numbered telephone number existing before
1975 because telephones in Metro Manila started to have six (6) numbers only after that year.
Petitioner further contends that the utility model of private respondent is absolutely similar to the LPG burner being sold by petitioner in 1975 and
1976, and also to the "Ransome" burner depicted in the old brochures of Manila Gas Corporation and Esso Standard Eastern, Inc., fabricated by
Ransome Torch and Burner Company of Oakland, California, USA, especially when considered through actual physical examination, assembly and
disassembly of the models of petitioner and private respondent. Petitioner faults the Court of Appeals for disregarding the testimonies of Ong Bun
Tua and Fidel Francisco for their failure to produce documents on the alleged importation by Manila Gas Corporation of "Ransome" burners in 1965
which had the same configuration, form and mechanism as that of the private respondent's patented model.
Finally, it is argued that the testimony of private respondent's lone witness Rolando Madolaria should not have been given weight by the Patent
Office and the Court of Appeals because it contained mere after-thoughts and pretensions.
We cannot sustain petitioner. Section 7 of RA No. 165, as amended, which is the law on patents, expressly provides
Sec. 7. Inventians patentable. Any invention of a new and useful machine, manufactured product or substance, process or an improvement
of any of the foregoing, shall be patentable.
Further, Sec. 55 of the same law provides
Sec. 55. Design patents and patents for utility models. (a) Any new, original and ornamental design for an article of manufacture and (b)
any new model of implements or tools or of any industrial product or of part of the same, which does not possess the quality of invention,
but which is of practical utility by reason of its form, configuration, construction or composition, may be protected by the author thereof,
the former by a patent for a design and the latter by a patent for a utility model, in the same manner and subject to the same provisions and
requirements as relate to patents for inventions insofar as they are applicable except as otherwise herein provided.
The element of novelty is an essential requisite of the patentability of an invention or discovery. If a device or process has been known or used by
others prior to its invention or discovery by the applicant, an application for a patent therefor should be denied; and if the application has been
granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will hold it void and ineffective. 2 It has been
repeatedly held that an invention must possess the essential elements of novelty, originality and precedence, and for the patentee to be entitled to the
protection the invention must be new to the world. 3
In issuing Letters Patent No. UM-4609 to Melecia Madolaria for an "LPG Burner" on 22 July 1981, the Philippine Patent Office found her invention
novel and patentable. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the
original and first inventor. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear and
satisfactory proof which overcomes every reasonable doubt. 4 Hence, a utility model shall not be considered "new" if before the application for a
patent it has been publicly known or publicly used in this country or has been described in a printed publication or publications circulated within the
country, or if it is substantially similar to any other utility model so known, used or described within the country. 5
As found by the Director of Patents, the standard of evidence sufficient to overcome the presumption of legality of the issuance of UM-4609 to
respondent Madolaria was not legally met by petitioner in her action for the cancellation of the patent. Thus the Director of Patents explained his
reasons for the denial of the petition to cancel private respondent's patent
Scrutiny of Exhs. "D" and "E" readily reveals that the utility model (LPG Burner) is not anticipated. Not one of the various pictorial
representations of burners clearly and convincingly show that the device presented therein is identical or substantially identical in
construction with the aforesaid utility model. It is relevant and material to state that in determining whether novelty or newness is negatived

53
 by any prior art, only one item of the prior art may be used at a time. For anticipation to occur, the prior art must show that each element is
found either expressly or described or under principles of inherency in a single prior art reference or that the claimed invention was
probably known in a single prior art device or practice. (Kalman v. Kimberly Clark, 218 USPQ 781, 789)
Even assuming gratia arguendi that the aforesaid brochures do depict clearly on all fours each and every element of the patented gas burner
device so that the prior art and the said patented device become identical, although in truth they are not, they cannot serve as anticipatory
bars for the reason that they are undated. The dates when they were distributed to the public were not indicated and, therefore, they are
useless prior art references.
xxx xxx xxx
Furthermore, and more significantly, the model marked Exh. "K" does not show whether or not it was manufactured and/or cast before the
application for the issuance of patent for the LPG burner was filed by Melecia Madolaria.
With respect to Exh. "L," petitioner claimed it to be her own model of LPG burner allegedly manufactured sometime in 1974 or 1975 and
sold by her in the course of her business operation in the name of Besco Metal Manufacturing, which burner was denominated as
"Ransome" burner
xxx xxx xxx
But a careful examination of Exh. "L" would show that it does not bear the word "Ransome" which is the burner referred to as the product
being sold by the Petitioner. This is not the way to prove that Exh. "L" anticipates Letters Patent No. UM-4609 through Exhs. "C" and "D."
Another factor working against the Petitioner's claims is that an examination of Exh. "L" would disclose that there is no indication of the
time or date it was manufactured. This Office, thus has no way of determining whether Exh. "L" was really manufactured before the filing
of the aforesaid application which matured into Letters Patent No. UM-4609, subject matter of the cancellation proceeding.
At this juncture, it is worthwhile to point out that petitioner also presented Exh. "M" which is the alleged burner cup of an imported
"Ransome" burner. Again, this Office finds the same as unreliable evidence to show anticipation. It observed that there is no date indicated
therein as to when it was manufactured and/or imported before the filing of the application for issuance of patent of the subject utility
model. What is more, some component parts of Exh. "M" are missing, as only the cup was presented so that the same could not be
compared to the utility model (subject matter of this case) which consists of several other detachable parts in combination to form the
complete LPG burner.
xxx xxx xxx
It must likewise be pointed out that Ong Bun Tua testified on the brochures allegedly of Manila Gas and of Esso Gasul marked Exhs. "E"
and "F" and on the alleged fact that Manila Gas Corporation was importing from the United States "Ransome" burners. But the same could
not be given credence since he himself admitted during cross-examination that he has never been connected with Manila Gas Corporation.
He could not even present any importation papers relating to the alleged imported ransome burners. Neither did his wife. 6
The above findings and conclusions of the Director of Patent were reiterated and affirmed by the Court of Appeals. 7
The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the inventiveness, novelty and
usefulness of the improved model of the LPG burner are matters which are better determined by the Patent Office. The technical staff of the
Philippine Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondent's model of gas
burner as a discovery. There is a presumption that the Office has correctly determined the patentability of the model 8 and such action must not be
interfered with in the absence of competent evidence to the contrary.
The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are conclusive on this Court
when supported by substantial evidence. Petitioner has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent
Office and the Court of Appeals.
The alleged failure of the Director of Patents and the Court of Appeals to accord evidentiary weight to the testimonies of the witnesses of petitioner
showing anticipation is not a justification to grant the petition. Pursuant to the requirement of clear and convincing evidence to overthrow the
presumption of validity of a patent, it has been held that oral testimony to show anticipation is open to suspicion and if uncorroborated by cogent
evidence, as what occurred in this case, it may be held insufficient. 9
Finally, petitioner would want this Court to review all over again the evidence she presented before the Patent Office. She argues that contrary to the
decision of the Patent Office and the Court of Appeals, the evidence she presented clearly proves that the patented model of private respondent is no
longer new and, therefore, fraud attended the acquisition of patent by private respondent.
It has been held that the question on priority of invention is one of fact. Novelty and utility are likewise questions of fact. The validity of patent is
decided on the basis of factual inquiries. Whether evidence presented comes within the scope of prior art is a factual issue to be resolved by the
Patent Office. 10 There is question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts or when the query
necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevance of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the situation. 11
Time and again we have held that it is not the function of the Supreme Court to analyze or weigh all over again the evidence and credibility of
witnesses presented before the lower tribunal or office. The Supreme Court is not a trier of facts. Its jurisdiction is limited to reviewing and revising
errors of law imputed to the lower court, its findings of fact being conclusive and not reviewable by this Court.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals affirming that of the Philippine Patent Office is AFFIRMED. Costs
against petitioner.
SO ORDERED.

FIRST DIVISION
[G.R. No. 113388. September 5, 1997]
ANGELITA MANZANO, petitioner, vs. COURT OF APPEALS, and MELECIA MADOLARIA, as Assignor to NEW UNITED FOUNDRY
MANUFACTURING CORPORATION, respondents.

FACTS:
The petitioner filed an action for the cancellation of Letters of Patent covering a gas burner registered in the name of responded Melecia
Madolaria who subsequently assigned the letter of patent to United Foundry. Petitioner alleged that the private respondent was not the original, true

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and actual inventor nor did she derive her rights from the original, true and actual inventor of the utility model covered by the letter of patent; further
alleged that the utility model covered by the subject letter of patent had been known or used by others in the Philippines for than one (1) year before
she filed her application for letter of patent on Dec 1979. For failure to present substantive proof of her allegations, the lower court and Court of
Appeals denied the action for cancellation. Hence, the present petition.
ISSUE:
Whether or not the respondent court wrongfully denied the cancellation of letter of patent registered under the private respondent.
HELD:
No. The issuance of such patent creates a presumption which yields only to clear and cogent evidence that the patentee was the original and
first inventor. The burden of proving want of novelty is on him who avers it and the burden is a heavy one which is met only by clear and
satisfactory proof which overcomes every reasonable doubt. Clearly enough, the petitioner failed to present clear and satisfactory proof to overcome
every reasonable doubt to afford the cancellation of the patent to the private respondent.

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