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G.R. No. L-23035 July 31, 1975 PHILIPPINE NUT INDUSTRY, INC., petitioner, vs. STANDARD RANDS INC!RP!

RATED "#$ TI URCI! S. E%ALLE "& D'()*+o( o, P"+)#+&, respondents. Perfecta E. De Vera for petitioner. Paredes, Poblador, Cruz and Nazareno for private respondent. Office of the Solicitor General Arturo A. Alafriz, Actin Assistant Solicitor General !sidro C. "orro#eo and Solicitor $rancisco %. "autista for respondent Director.

-UN!. PAL-A, J.: Challenged in this petition for review is the decision of respondent Director of Patents which orders the cancellation of Certificate of Registration No. SR-416 issued in favor of herein petitioner Philippine Nut ndustr!, nc. "hereinafter called Philippine Nut# for the trade$ar% &P' ( PP N) P(*N+)RS C,RD *( P)*N-+S,& upon co$plaint of Standard .rands nc. "hereinafter to /e called Standard .rands#. +he records of the case show the following incidents0 Philippine Nut, a do$estic corporation, o/tained fro$ the Patent ,ffice on *ugust 11, 1261, Certificate of Registration No. SR-416 covering the trade$ar% &P' ( PP N) P(*N+)RS C,RD *( P)*N-+S,& the la/el used on its product of salted peanuts. ,n 3a! 14, 1264, Standard .rands a foreign corporation, 1 filed with the Director of Patents nter Partes Case No. 465 as%ing for the cancellation of Philippine Nut6s certificate of registration on the ground that &the registrant was not entitled to register the $ar% at the ti$e of its application for registration thereof& for the reason that it "Standard .rands# is the owner of the trade$ar% &P(*N+)RS C,C7+* ( P)*N-+S& covered /! Certificate of Registration No. SR-184, issued /! the Patent ,ffice on 9ul! 45, 12:5. Standard .rands alleged in its petition that Philippine Nut6s trade$ar% &P' ( PP N) P(*N+)RS C,RD *( P)*N-+S& closel! rese$/les and is confusingl! si$ilar to its trade$ar% &P(*N+)RS C,C7+* ( P)*N-+S& used also on salted peanuts, and that the registration of the for$er is li%el! to deceive the /u!ing pu/lic and cause da$age to it. ,n 9une 1, 1264, Philippine Nut filed its answer invo%ing the special defense that its registered la/el is not confusingl! si$ilar to that of Standard .rands as the latter alleges. *t the hearing of ,cto/er 4, 1264, the parties su/$itted a partial stipulation of facts. ,n Dece$/er 14, 1264, an a$ended partial stipulation of facts was su/$itted, the pertinent agree$ents contained in which are0 "1# that Standard .rands is the present owner of the trade$ar% &P(*N+)RS C,C7+* ( P)*N-+S& covered /! Certificate of Registration No. SR-184 issued on 9ul! 45, 12:5; "4# that Standard .rands trade$ar% was first used in co$$erce in the Philippines in Dece$/er, 12<5 and "<# that Philippine Nut6s trade$ar% &P' ( PP N) P(*N+)RS C,RD *( P)*N-+S& was first used in the Philippines on Dece$/er 41, 12:5 and registered with the Patent ,ffice on *ugust 11, 1261.

,n Dece$/er 11, 126<, after the presentation of oral and docu$entar! evidence and the filing /! the parties of their $e$oranda, respondent Director of Patents rendered Decision No. 451 giving due course to Standard .rand6s petition and ordering the cancellation of Philippine Nut6s Certificate of Registration No. SR-416. +he Director of Patents found and held that in the la/els using the two trade$ar%s in =uestion, the do#inant part is the &ord 'Planters' , displa!ed &in a ver! si$ilar $anner& so $uch so that &as to appearance and general i$pression& there is &a ver! confusing si$ilarit!,& and he concluded that Philippine Nut &was not entitled to register the $ar% at the ti$e of its filing the application for registration& as Standard .rands will /e da$aged /! the registration of the sa$e. ts $otion for reconsideration having /een denied, Philippine Nut ca$e up to this Court for a review of said decision. n see%ing a reversal of the decision of respondent Director of Patents, petitioner /rings forth eleven assigned errors all of which revolve around one $ain issue0 is the trade$ar% &P' ( PP N) P(*N+)RS C,RD *( P)*N-+S& used /! Philippine Nut on its la/el for salted peanuts confusin l( si#ilar to the trade$ar% &P(*N+)RS C,C7+* ( P)*N-+S& used /! Standard .rands on its product so as to constitute an infringe$ent of the latter6s trade$ar% rights and >ustif! its cancellation? 2 +he applica/le law to the case is found in Repu/lic *ct 166 otherwise %nown as the +rade-3ar% (aw fro$ which @e =uote the following pertinent provisions0 Chapter -*. A Sec. 4. Registration of trade-$ar%s, trade-na$es and service-$ar%s on the principal register. A +here is here/! esta/lished a register of trade-$ar%s, trade-na$es and service-$ar%s which shall /e %nown as the principal register. +he owner of a trade$ar%, trade-na$e or service-$ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e on the principal register, unless it0 "d# Consists of or co$prises a $ar% or trade-na$e &hich so rese#bles a #ar) or trade*na#eregistered in the Philippines or a #ar) or trade-na$e previousl! used in the Philippines b( anotherand not a/andoned, as to /e li%el!, when applied to or used in connection with the goods, /usiness or services of the applicant, to cause confusion or $ista%e or to deceive purchasers; ... "e$phasis ,urs# Sec. 18. Brounds for cancellation A *n! person, who /elieves that he is or will /e da$aged /! the registration of a $ar% or trade-na$e, $a!, upon the pa!$ent of the prescri/ed fee, appl! to cancel said registration upon an! of the following grounds0 "c# +hat the registration was o/tained fraudulentl! or contrar! to the provisions of section four, Chapter hereof; .... Sec. 44. !nfrin e#ent, &hat constitutes. A *n! person who shall use, without the consent of the registrant, an! reproduction, counterfeit, cop! or colora/le i$itation of an! registered $ar% or trade-na$e in connection with the sale, offering for sale, or advertising of an! goods, /usiness or services on or in connection with which such use is li)el( to cause confusion or #ista)e or to deceive purchasers or others as to the source or ori in of such oods or services, or identit! of such /usiness; or reproduce, counterfeit, cop! or colora/l! i$itate an! such $ar% or trade-na$e and appl! such reproduction, counterfeit, cop!, or colora/le i$itation to la/els, signs, prints, pac%ages, wrappers, receptacles or advertise$ents intended to /e used upon

or in connection with such goods, /usiness or services, shall /e lia/le to a civil action /! the registrant for an! or all of the re$edies herein provided. "e$phasis supplied#. n the cases involving infringe$ent of trade$ar% /rought /efore the Court it has /een consistentl! held that there is infringe$ent of trade$ar% when the use of the $ar% involved would /e li%el! to cause confusion or $ista%e in the $ind of the pu/lic or to deceive purchasers as to the origin or source of the co$$odit!; that whether or not a trade$ar% causes confusion and is li%el! to deceive the pu/lic is a =uestion of fact which is to /e resolved /! appl!ing the &test of do$inanc!&, $eaning, if the co$peting trade$ar% contains the $ain or essential or do$inant features of another /! reason of which confusion and deception are li%el! to result, then infringe$ent ta%es p ace; that duplication or i$itation is not necessar!, a si$ilarit! in the do$inant features of the trade$ar%s would /e sufficient. 3 1. +he first argu$ent advanced /! petitioner which @e /elieve goes to the core of the $atter in litigation is that the Director of Patents erred in holding that the do$inant portion of the la/el of Standard .rands in its cans of salted peanuts consists of the word P(*N+)RS which has /een used in the la/el of Philippine Nut for its own product. *ccording to petitioner, P(*N+)RS cannot /e considered as the do$inant feature of the trade$ar%s in =uestion /ecause it is a $ere descriptive ter$, an ordinar! word which is defined in @e/ster nternational Dictionar! as &one who or that which plants or sows, a far$er or an agriculturist.& "pp. 11-11, petitioner6s /rief# @e find the argu$ent without $erit. @hile it is true that P(*N+)RS is an ordinar! word, nevertheless it is used in the la/els not to descri/e the nature of the product, /ut to pro>ect the source or origin of the salted peanuts contained in the cans. +he word P(*N+)RS printed across the upper portion of the la/el in /old letters easil! attracts and catches the e!e of the ordinar! consu$er and it is that word and none other that stic%s in his $ind when he thin%s of salted peanuts. n cases of this nature there can /e no /etter evidence as to what is the do$inant feature of a la/el and as to whether there is a confusing si$ilarit! in the contesting trade$ar%s than the la/els the$selves. * visual and graphic presentation of the la/els will constitute the /est argu$ent for one or the other, hence, we are reproducing hereunder a picture of the cans of salted peanuts of the parties to the case. +he picture /elow is part of the docu$entar! evidence appearing in the original records, and it clearl! de$onstrates the correctness of the finding of respondent Director that the word P(*N+)RS is the do$inant, stri%ing $ar% of the la/els in =uestion. t is true that there are other words used such as &Cordial& in petitioner6s can and &Coc%tail& in Standard .rands6, which are also pro$inentl! displa!ed, /ut these words are $ere ad>ectives descri/ing the t!pe of peanuts in the la/eled containers and are not sufficient to warn the unwar! custo$er that the two products co$e for$ distinct sources. *s a whole it is the word P(*N+)RS which draws the attention of the /u!er and leads hi$ to conclude that the salted peanuts contained in the two cans originate fro$ one and the sa$e $anufacturer. n fact, when a housewife sends her house$aid to the $ar%et to /u! canned salted peanuts, she will descri/e the /rand she wants /! using the word P(*N+)RS and not &Cordial& nor &Coc%tail&. 4. +he neCt argu$ent of petitioner is that respondent Director should not have /ased his decision si$pl! on the use of the ter$ P(*N+)RS, and that what he should have resolved is whether there is a confusing si$ilarit! in the trade$ar%s of the parties. t is =uite o/vious fro$ the record, that respondent Director6s decision is /ased not onl! on the fact that petitioner herein adopted the sa$e do$inant $ar% of Standard .rands, that is, the word

P(*N+)RS, /ut that it also used in its la/el the sa$e coloring sche$e of gold, /lue, and white, and /asicall! the sa$e la!-out of words such as &salted peanuts& and &vacuu$ pac%ed& with si$ilar t!pe and siDe of lettering as appearing in Standard .rands6 own trade$ar%, all of which result in a confusing si$ilarit! /etween the two la/els. / +hus, the decision states0 &Eurther$ore, as to appearance and general i$pression of the two trade$ar%s, find a ver! confusin si#ilarit(.& ")$phasis supplied# 5 Referring again to the picture @e have reproduced, the stri%ing si$ilarit! /etween the two la/els is =uite evident not onl! in the co$$on use of P(*N+)RS /ut also in the other words e$plo!ed. *s a $atter of fact, the capital letter &C& of petitioner6s &Cordial& is ali%e to the capital &C& of Standard6s &Coc%tail&, with /oth words ending with an &1&. *d$ittedl!, no producer or $anufacturer $a! have a $onopol! of an! color sche$e or for$ of words in a la/el. .ut when a co$petitor adopts a distinctive or do$inant $ar% or feature of another6s trade$ar% and with it $a%es use of the sa$e color ense$/le, e$plo!s si$ilar words written in a st!le, t!pe and siDe of lettering al$ost identical with those found in the other trade$ar%, the intent to pass to the pu/lic his product as that of the other is =uite o/vious. 'ence, there is good reason for Standard .rands6 to as% wh! did petitioner herein use the word P(*N+)RS, the sa$e coloring sche$e, even al$ost identical siDe and contour of the cans, the sa$e la!-out of words on its la/el when there is a $!riad of other words, colors, phrases, s!$/ols, and arrange$ents to choose fro$ to distinguish its product fro$ Standard .rands, if petitioner was not $otivated to si$ulate the la/el of the latter for its own can of salted peanuts, and there/! deceive the pu/lic? * si$ilar =uestion was as%ed /! this Court in Clar)e vs. +anila Cand( Co., <6 Phil. 111, when it resolved in favor of plaintiff a case of unfair co$petition /ased on an i$itation of Clar%e6s pac%ages and wrappers of its candies the $ain feature of which was one rooster. +he Court =ueried thus0 &... wh!, with all the /irds in the air, and all the fishes in the sea, and all the ani$als on the face of the earth to choose fro$, the defendant co$pan! "3anila Cand! Co.# selected two roosters as its trade$ar%, although its directors and $anagers $ust have /een well aware of the long-continued use of a rooster /! the plaintiff with the sale and advertise$ent of its goods? ... * cat, a dog, a cara/ao, a shar% or an eagle sta$ped upon the container in which candies are sold would serve as well as a rooster for purposes of identification as the product of defendant6s factor!. @h! did defendant select two roosters as its trade$ar% ?& "p.112, supra# Petitioner contends, however, that there are differences /etween the two trade$ar%s, such as, the presence of the word &Philippine& a/ove P(*N+)RS on its la/el, and other phrases, to wit0 &Eor Fualit! and Price, ts Gour ,utstanding .u!&, the address of the $anufacturer in FueDon Cit!, etc., plus a pictorial representation of peanuts overflowing fro$ a tin can, while in the la/el of Standard .rands it is stated that the product is $anufactured in San Erancisco, California, and on top of the tin can is printed &3r. Peanut& and the representation of a &hu$aniDed peanut&. "pp. <1-<<, petitioner6s /rief# @e have ta%en note of those alleged differences /ut @e find the$ insignificant in the sense that the! are not sufficient to call the attention of the ordinar! /u!er that the la/eled cans co$e fro$ distinct and separate sources. +he word &Philippine& printed in s$all t!pe in petitioner6s la/el $a! si$pl! give to the purchaser the i$pression that that particular can of P(*N+)RS salted peanuts is locall! produced or canned /ut that what he is /u!ing is still P(*N+)RS canned salted peanuts and nothing else. *s regards &3r. Peanut& on Standard .rands6 la/el, the sa$e appears on the top cover and is not visi/le when the cans are displa!ed on the shelves, aside fro$ the fact that the figure of &3r. Peanut& is printed on the tin cover which is thrown awa! after opening the can, leaving no lasting i$pression on the consu$er. t is also for this reason that @e do not agree with petitioner that it is &3r. Peanut and the 'u$aniDed Peanut& which is the trade$ar% of Standard .rands salted

peanuts, it /eing a $ere descriptive pictorial representation of a peanut not pro$inentl! displa!ed on the ver! /od! of the la/el covering the can, unli%e the ter$ P(*N+)RS which do$inates the la/el. t is correctl! o/served /! respondent Director that the $erchandiDe or goods /eing sold /! the parties herein are ver! ordinar! co$$odities purchased /! the average person and $an! ti$es /! the ignorant and unlettered 6 and these are the persons who will not as a rule eCa$ine the printed s$all letterings on the container /ut will si$pl! /e guided /! the presence of the stri%ing $ar% P(*N+)RS on the la/el. Differences there will alwa!s /e, /ut whatever differences eCist, these pale into insignificance in the face of an evident si$ilarit! in the do$inant feature and overall appearance of the la/els of the parties. t is not necessar!, to constitute trade$ar% &infringe$ent&, that ever! word of a trade$ar% should /e appropriated, /ut it is sufficient that enough /e ta%en to deceive the pu/lic in the purchase of a protected article. ".unte .ros. v. Standard Chocolates, D.C. 3ass., 4: E. Supp. 485, 451# * trade-na$e in order to /e an Hinfringe$ent6 upon another need not /e eCactl! li%e it in for$ and sound, /ut it is enough if the one so rese$/les another as to deceive or $islead persons of ordinar! caution into the /elief that the! are dealing with the one concern when in fact the! are dealing with the other. "Eoss v. Cul/ertson, 1<6 P. 4d 811, 815, 18 @ash. 4d 611# @here a trade-$ar% contains a do$inating or distinguishing word, and purchasing pu/lic has co$e to %now and designate the article /! such do$inating word, the use of such word /! another in $ar%ing si$ilar goods $a! constitute nfringe$ent though the $ar%s aside fro$ such do$inating word $a! /e dissi$ilar. "Fueen 3fg. Co. v. lsaac Bins/erg I .ros., C.C.*. 3on., 4: E. 4d 454, 458# "d# & nfringe$ent& of trade-$ar% does not depend on the use of identical words, nor on the =uestion whether the! are so si$ilar that a person loo%ing at one would /e deceived into the /elief that it was the other; it /eing sufficient if one $ar% is so li%e another in for$, spelling, or sound that one with not a ver! definite or clear recollection as to the real $ar% is li%el! to /e confused or $isled. "Northa$ @arren Corporation v. -niversal Cos$etic Co., C. C. *; ., 15 E. 4d 884, 88:# <. @hat is neCt su/$itted /! petitioner is that it was error for respondent Director to have en>oined it fro$ using P(*N+)RS in the a/sence of evidence showing that the ter$ has ac=uired secondar! $eaning. Petitioner, invo%ing *$erican >urisprudence, asserts that the first user of a tradena$e co$posed of co$$on words is given no special preference unless it is shown that such words have ac=uired secondar! $eaning, and this, respondent Standard .rands failed to do when no evidence was presented to esta/lish that fact. "pp. 14-16, petitioner6s /rief# +he doctrine of secondar! $eaning is found in Sec. 4 "f#, Chapter -* of the +rade-3ar% (aw, viz0 )Ccept as eCpressl! eCcluded in paragraphs "a#, "/#, "c# and "d# of this section, nothing herein shall prevent the registration of a $ar% or trade-na$e used /! the applicant which has /eco$e distinctive of the applicant6s goods, /usiness or services. +he Director $a! accept as pri#a facie evidence that the $ar% or tradena$e has /eco$e distinctive, as applied to or used in connection with the applicant6s goods, /usiness or services, proof of su/stantiall! eCclusive and continuous use thereof as a $ar% or trade-na$e /! the applicant in connection with the sale of

goods, /usiness or services for the five !ears neCt preceding the date of the filing of the application for its registration. "*s a$ended /! Sec. <, Rep. *ct No. 6<5.# +his Court held that the doctrine is to the effect that a word or phrase originall! incapa/le of eCclusive appropriation with reference to an article on the $ar%et, /ecause geographicall! or otherwise descriptive, $ight nevertheless have /een used so long and so eCclusivel! /! one producer with reference to his article that, in that trade and to that /ranch of the purchasing pu/lic, the word or phrase has co$e to $ean that the article was his product. 7 .! wa! of illustration, is the word &Selecta& which according to this Court is a co$$on ordinar! ter$ in the sense that it $a! /e used or e$plo!ed /! an! one in pro$oting his /usiness or enterprise, /ut which once adopted or coined in connection with one6s /usiness as an e$/le$, sign or device to characteriDe its products, or as a /adge of authenticit!, $a! ac=uire a secondar( #eanin as to /e eCclusivel! associated with its products and /usiness, so that its use /! another $a! lead to confusion in trade and cause da$age to its /usiness. 0 +he applica/ilit! of the doctrine of secondar! $eaning to the situation now /efore -s is appropriate /ecause there is oral and docu$entar! evidence showing that the word P(*N+)RS has /een used /! and closel! associated with Standard .rands for its canned salted peanuts since 12<5 in this countr!. Not onl! is that fact ad$itted /! petitioner in the a$ended stipulation of facts "see p. 4 of this Decision#, /ut the $atter has /een esta/lished /! testi$onial "tsn ,cto/er 4, 1264, pp. 4-5# and docu$entar! evidence consisting of invoices covering the sale of &P(*N+)RS coc%tail peanuts&. ")Chi/its C to C-4; D to D-11; ) to )-11; E to E-4# n other words, there is evidence to show that the ter$ P(*N+)RS has /eco$e a distinctive $ar% or s!$/ol insofar as salted peanuts are concerned, and /! priorit! of use dating as far /ac% as 12<5, respondent Standard .rands has ac=uired a preferential right to its adoption as its trade$ar% warranting protection against its usurpation /! another. ,bi -us ibi re#ediu#. @here there is a right there is a re$ed!. Standard .rands has shown the eCistence of a propert! right"*rce Sons I Co. vs. Selecta .iscuit Co., nc., supra, pp. 464-46<# and respondent Director, has afforded the re$ed!. Still on this point, petitioner contends that Standard .rands6 use of the trade$ar% P(*N+)RS was interrupted during the 9apanese occupation and in fact was discontinued when the i$portation of peanuts was prohi/ited /! Central .an% regulations effective 9ul! 1, 12:<, hence it cannot /e presu$ed that it has ac=uired a secondar! $eaning. @e hold otherwise. Respondent Director correctl! applied the rule that non-use of a trade$ar% on an article of $erchandiDe due to legal restrictions or circu$stances /e!ond one6s control is not to /e considered as an a/andon$ent. n the case of Andres .o#ero vs. +aiden $or# "rassiere Co., !nc., (-15452, 3arch <1, 1264, 11 SCR* ::6, the sa$e =uestion was raised /! petitioner Ro$ero when he filed with the .ureau of Patents a petition to cancel the registration of the trade$ar% &*dagio& for /rassieres $anufactured /! 3aiden Eor$ .rassiere Co., nc. 'is petition having /een dis$issed /! the Director of Patents, Ro$ero appealed to this Court and one of the issues posed /! hi$ was that when the Bovern$ent i$posed restrictions on i$portations of /rassieres /earing that particular trade$ar%, there was a/andon$ent of the sa$e /! respondent co$pan! which entitled petitioner to adopt it for his own use and which in fact he had /een using for a nu$/er of !ears. +hat argu$ent was $et /! the Court in the words of 9ustice 9esus .arrera thus0 ... +he evidence on record shows, on the other hand, that the trade$ar% &*dagio& was first used eClusivel! in the Philippines /! appellee in the !ear 12<4. +here /eing no evidence of use of the $ar% /! others /efore 12<4, or that appellee a/andoned use thereof, the registration of the $ar% was $ade in accordance with the +rade$ar% (aw. Branting that appellant used the $ar% when appellee stopped using it during

the period of ti$e that the Bovern$ent i$posed restrictions on i$portation of respondent6s /rassiere /eing the trade$ar%, such te#porar( non*use did not affect the ri hts of appellee because it &as occasioned b( overn#ent restrictions and &as not per#anent, intentional, and voluntar( . +o wor% an a/andon$ent, the disuse $ust /e per$anent and not ephe$eral; it $ust, /e intentional and voluntar!, and not involuntar! or even co$pulsor!. +here $ust /e a thoroughgoing discontinuance of an! trade-$ar% use of the $ar% in =uestion "Call$an, -nfair Co$petition and +rade$ar%, 4nd )d., p. 1<41#.
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+he use of the trade$ar% /! other $anufacturers did not indicate an intention on the part of appellee to a/andon it. +he instances of the use /! others of the ter$ .udweiser, cited /! the defendant, fail, even when li/erall! construed, to indicate an intention upon the part of the co$plainant to a/andon its rights to that na$e. &+o esta/lish the defense of a/andon$ent, it is necessar! to show not onl! acts indicating a practical a/andon$ent, /ut an actual intention to a/andon.& Sanlehner v. )isener I 3endelson Co., 182 -.S. 12, 41 S. Ct. 8 "4: (. )d. 6.1#."*nheuser-.usch, nc, v. .udweiser 3alt Products Corp., 458 E. 44:.# CCC CCC CCC Non-use /ecause of legal restrictions is not evidence of an intent to a/andon. Nonuse of their ancient trade-$ar% and the adoption of new $ar%s /! the Carthusian 3on%s after the! had /een co$pelled to leave Erance was consistent with an intention to retain their right to use their old $ar%. */andon$ent will not /e inferred fro$ a disuse over a period of !ears occasioned /! statutor! restrictions on the na$e of li=uor. "Ni$s, -nfair Co$petition and +rade-3ar%, p. 1462.# "pp. :64-:64, supra# "e$phasis ,urs# *ppl!ing the words of 9ustice Ro$an ,Daeta in the &*ng +i/a!& case "*ng vs. +ori/io +eodoro, p. :6, supra# to the case now /efore -s, petitioner herein $ust not /e allowed to get a free ride on the reputation and selling power of Standard .rands P(*N+)RS salted peanuts, for a self-respecting person, or a reputa/le /usiness concern as is the case here, does not re$ain in the shelter of another6s popularit! and goodwill /ut /uilds one of his own. 4. Eindings of fact /! the Director of Patents are conclusive and /inding on this Court provided the! are supported /! su/stantial evidence. 2 +he testi$onial and docu$entar! evidence in addition to the stipulation of facts su/$itted /! the parties full! support the findings of respondent Director that"1# there is a confusing si$ilarit! /etween the la/els or trade$ar%s of Philippine Nut and Standard .rands used in their respective canned salted peanuts; "4# respondent Standard .rands has priorit! of adoption and use of the la/el with P(*N+)RS as the do$inant feature and the sa$e has ac=uired secondar! $eaning in relation to salted peanuts; and "<# there has /een no a/andon$ent or non-use of said trade$ar% /! Standard .rands which would >ustif! its adoption /! petitioner or an! other co$petitor for the sale of salted peanuts in the $ar%et. PR)3 S)S C,NS D)R)D, @e *EE R3 the decision of respondent Director of Patents with costs against petitioner. So ,rdered.

Castro 4Chair#an5, +a)asiar, Es uerra and +artin, %%., concur. 6eehan)ee, %., is on leave.
G.R. No. L-26557 February 18, 1970 AMERICAN WIRE & CA LE C!M"AN#, Petitioner, vs. $IREC%!R !F "A%EN%& a'( CEN%RAL ANA)AW IN$*&%RIE&, Respondents. RE#E&, +. .L., J.: Appeal filed by the American Wire & Cable Company, owner of the registered trademark DURA !"# for electric wires, $%estioning the correctness of the decision of the Director of &atents 'in (nter &artes Case )o. *+,- holding that the label D.)A !"# and Device for electric wires, so%ght to be registered by the Central /anahaw (nd%stries, (nc., is not similar to herein appellant0s patented mark.
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1n * 2%ne 3+4*, Central /anahaw (nd%stries, (nc., applied with the Director of &atents for registration of the trademark D.)A !"# and Device to be %sed in connection with electric wires, class *,, which mark applicant allegedly had been %sing since *+ 5arch 3+4*. 6he American Wire and Cable Co., (nc., another domestic corporation and a%thori7ed %ser since 3, April 3+89 of the registered trade mark DURA !"# and :lobe representation, for electric wires, apparat%s, machines and s%pplies, class *,, opposed the application on the gro%nd that applicant0s %se of the trade mark D.)A !"# wo%ld ca%se conf%sion or res%lt in mistake to p%rchasers intending to b%y DURA !"# electric wires and goods, the mark being registered allegedly having practically the same spelling, pron%nciation and so%nd, and covering the same good, as that of the opposer. /esides, opposer contended that there has been no contin%o%s %se in commerce of the applicant0s mark.
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After d%e hearing, the Director of &atents rendered decision holding the applicant0s mark D.)A !"# not to be similar to the previo%sly registered trademark DURA !"#. Conse$%ently, the application of Central /anahaw (nd%stries for registration of D.)A !"# was given d%e co%rse and the opposition thereto by American Wire & Cable Company dismissed. 6he latter interposed the present appeal.

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6he iss%e to be resolved in this proceeding is simple; whether or not the mark D.)A !"# and Device is registrable as label for electric wires, class *,, considering that the trademark DURA !"# and :lobe representation also for electric wires, machines and s%pplies %nder class *,, has been registered more than < years earlier.
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(n r%ling in favor of the herein application, the Director of &atents said; ... 6he applicant0s trademark is a composite mark consisting of the word D.)A !"# printed in small letters of the "nglish alphabet e=cept that letter >D> is capitali7ed, within a fancif%l device, on top of which is the encircled initials, in downward se$%ence, of the Respondent0s corporate name, and ?%tting o%t on two sides of the circle are bolts of lightning, symbolic of electricity.
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1n the other hand, 1pposer0s trademark is DURA !"# in Capitali7ed print, e=cept that one cross piece of the letter # is in the form of a bolt of lightning. 6he word slants slightly %pward, traversing the center of a fig%re of the earth or globe.
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Resorting now to the semantics of the words, it is clear that both marks are s%ffi=ed by the word !"#. 6he word appears in any dictionary having as common meaning >to bend.> (n Webster0s (nternational Dictionary, it is %sed by the /ritish on electric cord. @owever, one mark 'Respondent0sis prefi=ed with D.)A s%ggesting power. (t is not in itself a rootword b%t it has been commonly associated with any so%rce of power. At most, it co%ld have been derived from the :reek word >Dynamis> and, generally, the root words commonly derived therefrom are 00dynam00 and >dynamo>. 6he other '1pposer0s- is prefi=ed with DURA, s%ggesting d%rability, strength and end%rance.
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/ased on the foregoing comparisons, the trademarks of the parties are different in appearance, meaning, so%nd and connotation and hence, are not conf%singly similar. 6he pertinent law, Rep%blic Act 344, as amended, on registrability of trademarks, prescribes; A"C. <. B 6he owner of a trademark, trade name or serviceBmark %sed to disting%ish his goods, b%siness or services from the goods, b%siness or services of others shall have the right to register the same, %nless it;
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'd- Consists of or comprises a mark or trade name which so resembles a mark or tradeBname registered in the &hilippines by another and not abandoned, as to be likely, when applied to or %sed in connection with the goods, b%siness or services of the applicant, to cause confusion or mistake or to deceive purchasers. '"mphasis s%pplied(t is clear from the aboveB$%oted provision that the determinative factor in a contest involving registration of trade mark is not whether the challenged mark wo%ld actually ca%se conf%sion or deception of the p%rchasers b%t whether the %se of s%ch mark wo%ld likely ca%se conf%sion or mistake on the part of the b%ying p%blic. (n short, to constit%te an infringement of an e=isting trademark patent and warrant a denial of an application for registration, the law does not re$%ire that the competing trademarks m%st be so identical as to prod%ce act%al error or mistakeC it wo%ld be s%fficient, for p%rposes of the law, that the similarity between the two labels is s%ch that there is a possibility or likelihood of the p%rchaser of the older brand mistaking the newer brand for it.
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6he $%estion is, when is a trademark likely to conf%se or ca%se the p%blic to mistake one for anotherD "arlier r%lings of the Co%rt seem to indicate its reliance on the dominancy test or the assessment of the essential or dominant feat%res in the competing labels to determine whether they are conf%singly similar.1 1n this matter, the Co%rt said; (t has been consistently held that the $%estion of infringement of a trademark is to be determined by the test ofdominancy. Aimilarity in si7e, form, and color, while relevant, is not concl%sive. (f the competing trademark contains the main or essential or dominant feat%res of another, and conf%sion and deception is likely to res%lt, infringement takes place. D%plication or imitation is not necessary, nor is it necessary that the infringing label sho%ld s%ggest an effort to imitate 'C. )eilman /rewing Co. vs. (ndependent /rewing Co., 3+3 . <9+, <+8, citing "agle White !ead Co. vs. &fl%gh ECCF 39, ed. 8G+-. 6he $%estion at iss%e in cases of infringement of trademarks is whether the %se of the marks involved wo%ld be likely to ca%se conf%sion or mistakes in the mind of the p%blic or deceive p%rchasers.> ':o 6iong vs. Director of &atents, +8 &hil. 3, cited in !im @oa vs. Director of &atents, 3,, &hil. *3<-.2
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(n fact, even their similarity in so%nd is taken into consideration, where the marks refer to merchandise of the same descriptive properties, for the reason that trade idem sonans constit%tes a violation of trade mark patents., 6h%s, in he case of Marvex Commercial Co. vs. Hawpia & Co.,-the registration of the trademark >!ionpas> for medicated plaster was denied for being conf%singly similar in so%nd with >Aalonpas>, a registered mark also for medicated plaster, the Co%rt saying; 6wo letters of >AA!1)&AA> are missing in >!(1)&AA> the first letter a and the letter s. /e that as it may, when the two words are prono%nced, the so%nd effects are conf%singly similar. And where goods are advertised over the radio, similarity in so%nd is of especial significance 'Co 6iong Aa vs. Director of &atents, +8 &hil. 3, citing )ims, 6he !aw of Unfair Competition and 6rademarks, <th ed., vol. *, pp. 4G9B4G+-. >6he importance of this r%le is emphasi7ed by the increase of radio advertising in which we are deprived of help of o%r eyes and m%st depend entirely on the ear '1perators, (nc. vs. Director of &atents, supra.-

Along the same line are the r%lings denying registration of a mark containing the pict%re of a fish '/aHg%s-, as label for soy sa%ce, for being similar to another registered brand of soy sa%ce that bears the pict%re of the fish carpC5 or that of the mark bearing the pict%re of two roosters with the word >/antam>, as label for food seasoning 'vetsin-, which wo%ld conf%se the p%rchasers of the same article bearing the registered mark >@en /rand> that feat%res the pict%re of a hen. 6
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6he present case is governed by the principles laid down in the preceding cases. 6he similarity between the competing trademarks, DURA !"# and D.)A !"#, is apparent. )ot only are the initial letters and the last half of the appellations identical, b%t the difference e=ists only in two o%t of the eight literal elements of the designations. Co%pled with the fact that both marks cover ins%lated fle=ible wires %nder class *,C that both prod%cts are contained in bo=es of the same material, color, shape and si7eC that the dominant elements of the front designs are a red circle and a diagonal 7ig7ag commonly related to a spark or flash of electricityC that the back of both bo=es show similar circles of broken lines with arrows at the center pointing o%tward, with the identical legend >C%t 1%t Ring> >Draw rom (nside Circle>, no diffic%lty is e=perienced in reaching the concl%sion that there is a deceptive similarity that wo%ld lead the p%rchaser to conf%se one prod%ct with the other.
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6he Director of &atents has predicated his decision mostly on the semantic difference and connotation of the prefi=es >D%ra> and >Dyna> of the competing trademarks, %nfort%nately forgetting that the b%yers are less concerned with the etymology of the words as with their so%nd and the dominant feat%res of the design.
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1f co%rse, as pointed o%t in the decision now on appeal there are some differences in the mark on the front portion of the bo=. /%t they pale into insignificance in view of the close resemblance in the general appearance of the bo= and the tradenames of the articles. (ndeed, meas%red against the dominantBfeat%re standard, applicant0s mark m%st be disallowed. or, %ndeniably, the dominant and essential feat%re of the article is the trademark itself. Unlike in the case of commodities that are ordinarily picked %p by the p%rchaser himself from the grocery or market co%nters, electric wires are p%rchased not by their appearance b%t by the si7e 'voltage- and length and, most importantly, by brand. (t is even within layman0s knowledge that different brands of wire have different characteristics and propertiesC and for an essential b%ilding item as electric wires and s%pplies, the owner of the b%ilding wo%ld not dare risk his property, perhaps his life, on an %nknown or %ntested brand. @e wo%ld only demand for what is recogni7ed to be the best.
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Relying on the doctrine en%nciated in the "tepha case 7 and the earlier r%ling in im Hoa vs. !irector of Patents,8 applicantBappellee contends that the D.)A !"# mark wo%ld not conf%se or deceive the b%yers and s%bscribers of the DURA !"# brand, beca%se electrical wires are of great val%e and the p%rchasers thereof are generally intelligent B the architects, engineers and b%ilding contractors. (t m%st be reali7ed, however, that e=cept perhaps in big constr%ctions, the designing architect or engineer, or the contractor who will %ndertake the work of b%ilding, does not himself p%rchase or place the order for the p%rchase of the materials to be %sed therein. 6he task is oftentimes delegated to another. )or are said technical men the ones personally laying down the wiring system in the b%ilding that they co%ld possibly check on whether or not the correct wires are being %sed. Ao that even if the engineer or contractor will specify in the bill of materials the partic%lar brand of wires needed, there is no certainty that the desired prod%ct will be ac$%ired. or, %nlike the pharmacists or dr%ggists, the dispensers of hardware or electrical s%pplies are not generally known to pay as m%ch concern to the brand of articles asked for by the c%stomer and of a person who knows the name of the brand b%t is not ac$%ainted with it is appearance, the likelihood of the D.)A !"# prod%ct being mistaken for DURA !"# is not remote.
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1f co%rse, as in all other cases of colorable imitations, the %nanswered riddle is why, of the millions of terms and combinations of letters and designs available, the appellee had to choose those so closely similar to another0s trademark if there was no intent to take advantage of the goodwill generated by the other mark.
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1R 6@" 1R":1(): C1)A(D"RA6(1)A, the decision appealed from is hereby set aside, and the application for registration of the trademark D.)A !"# for electric wires, class *,, is ordered denied. )o costs. Concepcion, C."., !i#on, Makalintal, $aldivar, %anche#, Castro &ernando, 'arredo and (illamor, ""., concur.
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)eehankee, "., took no part. $EL M!N%E C!R"!RA%I!N-*&A, "A*L E. $ER #, +R., $ANIEL C!LLIN& a'( L*I& )I$ALG!, Petitioners, v. C1UR6 1 A&&"A!A, 2UD:" /(")I")(D1 !. R"."A in his capacity as &residing 2%dge, R6CB/r. G<, 5alabon, 5etro 5anila, 51)6"/U")1 5ARJ"6():, ()C., !(1): !(1): C. A. and AA/R1AA 11DA, ()C., Respondents. D"C(A(1) /"!!1A(!!1, ".; 6his Petition for Review on certiorari assails the 3G 2%ly 3++9 !ecision E3 of the Co%rt of Appeals affirming the 33 )ovember 3++G 1rder E* of the Regional 6rial Co%rt which denied petitioners Motion to %uspend Proceedin*s in Civil Case )o. *4KGB5). (t also $%estions the appellate co%rtsResolution EK of K, 1ctober 3++9 which denied petitioners Motion for Reconsideration. 1n 3 2%ly 3++<, in a Distrib%torship Agreement, petitioner Del 5onte CorporationBUAA 'D5CBUAAappointed private respondent 5onteb%eno 5arketing, (nc. '55(- as the sole and e=cl%sive distrib%tor of its Del 5onte prod%cts in the &hilippines for a period of five '8- years, renewable for two '*consec%tive five '8- year periods with the consent of the parties. 6he Agreement provided, among others, for an arbitration cla%se which states B 3*. :1I"R)(): !AW A)D AR/(6RA6(1)E< )his +*reement shall be *overned by the laws of the %tate of California and,or, if applicable, the -nited %tates of +merica. +ll disputes arisin* out of or relatin* to this +*reement or the parties relationship, includin* the termination thereof, shall be resolved by arbitration in the City of %an &rancisco, %tate of California, under the Rules of the +merican +rbitration +ssociation. )he arbitration panel shall consist of three members, one of whom shall be selected by !MC.-%+, one of whom shall be selected by MM/, and third of whom shall be selected by the other two members and shall have relevant experience in the industry x x x x (n 1ctober 3++< the appointment of private respondent 55( as the sole and e=cl%sive distrib%tor of Del 5onte prod%cts in the &hilippines was p%blished in several newspapers in the co%ntry. (mmediately after its appointment, private respondent 55( appointed Aabrosa oods, (nc. 'A (-, with the approval of petitioner D5CBUAA, as 55(s marketing arm to concentrate on its marketing and selling f%nction as well as to manage its critical relationship with the trade. 1n K 1ctober 3++4 private respondents 55(, A ( and 55(s 5anaging Director !iong !iong C. Ay '!(!. A.- filed a Complaint E8 against petitioners D5CBUAA, &a%l ". Derby, 2r., E4 Daniel Collins EG and !%is @idalgo, E9 and Dewey !td. E+ before the Regional 6rial Co%rt of 5alabon, 5etro 5anila. &rivate respondents predicated their complaint on the alleged violations by petitioners of Arts. *,, E3, *3 E33 and *K E3* of the Civil Code. According to private respondents, D5CBUAA prod%cts contin%ed to be bro%ght into the co%ntry by parallel importers despite the appointment of private respondent 55( as the sole and e=cl%sive distrib%tor of Del 5onte prod%cts thereby ca%sing them great embarrassment and s%bstantial damage. 6hey alleged that the prod%cts bro%ght into the co%ntry by these importers were aged, damaged, fake or co%nterfeit, so that in 5arch 3++8 they had to ca%se, after prior cons%ltation with Antonio 1ngpin, 5arket Director for Apecial 5arkets of Del

5onte &hilippines, (nc., the p%blication of a >warning to the trade> paid advertisement in leading newspapers. &etitioners D5CBUAA and &a%l ". Derby, 2r., apparently %pset with the p%blication, instr%cted private respondent 55( to stop coordinating with Antonio 1ngpin and to comm%nicate directly instead with petitioner D5CBUAA thro%gh &a%l ". Derby, 2r. &rivate respondents f%rther averred that petitioners knowingly and s%rreptitio%sly contin%ed to deal with the former in bad faith by involving disinterested third parties and by proposing sol%tions which were entirely o%t of their control. &rivate respondents claimed that they had e=ha%sted all possible aven%es for an amicable resol%tion and settlement of their grievancesC that as a res%lt of the fra%d, bad faith, malice and wanton attit%de of petitioners, they sho%ld be held responsible for all the act%al e=penses inc%rred by private respondents in the delayed shipment of orders which res%lted in the e=tra handling thereof, the act%al e=penses and cost of money for the %n%sed !etters of Credit '!Csand the s%bstantial opport%nity losses d%e to created o%tBofBstock sit%ations and %na%thori7ed shipments of Del 5onteBUAA prod%cts to the &hilippine D%ty ree Area and "conomic LoneC that the bad faith, fra%d%lent acts and willf%l negligence of petitioners, motivated by their determination to s$%ee7e private respondents o%t of the o%tstanding and ongoing Distrib%torship Agreement in favor of another party, had placed private respondent !(!. A. on tenterhooks since thenC and, that the shrewd and s%btle manner with which petitioners concocted imaginary violations by private respondent 55( of the Distrib%torship Agreement in order to ?%stify the %ntimely termination thereof was a s%bterf%ge. or the foregoing, private respondents claimed, among other reliefs, the payment of act%al damages, e=emplary damages, attorneys fees and litigation e=penses. 1n *3 1ctober 3++4 petitioners filed a Motion to %uspend Proceedin*s E3K invoking the arbitration cla%se in their Agreement with private Respondents. (n a Resol%tion E3< dated *K December 3++4 the trial co%rt deferred consideration of petitioners Motion to %uspend Proceedin*s as the gro%nds alleged therein did not constit%te the s%spension of the proceedings considering that the action was for damages with prayer for the iss%ance of0rit of Preliminary +ttachment and not on the Distrib%torship Agreement. 1n 38 2an%ary 3++G petitioners filed a Motion for Reconsideration to which private respondents filed their Comment,1pposition. 1n K3 2an%ary 3++G petitioners filed their Reply. A%bse$%ently, private respondents filed an -r*ent Motion for eave to +dmit %upplemental Pleadin* dated * April 3++G. 6his 5otion was admitted, over petitioners opposition, in an 1rder of the trial co%rt dated *G 2%ne 3++G. As a res%lt of the admission of the %upplemental Complaint, petitioners filed on ** 2%ly 3++G a Manifestation adopting their Motion to %uspend Proceedin*s of 3G 1ctober 3++4 and Motion for Reconsideration of 3< 2an%ary 3++G. 1n 33 )ovember 3++G the Motion to %uspend Proceedin*s was denied by the trial co%rt on the gro%nd that it 2will not serve the ends of 3ustice and to allow said suspension will only delay the determination of the issues, frustrate the 4uest of the parties for a 3udicious determination of their respective claims, and,or deprive and delay their ri*hts to seek redress .> E38 1n appeal, the Co%rt of Appeals affirmed the decision of the trial co%rt. (t held that the alleged damaging acts recited in the Complaint, constit%ting petitioners ca%ses of action, re$%ired the interpretation of Art. *3 of the Civil Code E34 and that in determining whether petitioners had violated it >wo%ld re$%ire a f%ll blown trial> making arbitration >o%t of the $%estion.> E3G &etitioners Motion for Reconsideration of the affirmation was denied. @ence, this Petition for Review. 6he cr%= of the controversy boils down to whether the disp%te between the parties warrants an order compelling them to s%bmit to arbitration. &etitioners contend that the s%b?ect matter of private respondents ca%ses of action arises o%t of or relates to the Agreement between petitioners and private respondents. 6h%s, considering that the arbitration cla%se of the Agreement provides that all disp%tes arising o%t of or relating to the

Agreement or the parties relationship, incl%ding the termination thereof, shall be resolved by arbitration, they insist on the s%spension of the proceedings in Civil Case )o. *4KGB5) as mandated by Aec. G of RA 9G4 E39 B %ec. 5. Atay of Civil Action. /f any suit or proceedin* be brou*ht upon an issue arisin* out of an a*reement providin* for arbitration thereof, the court in which such suit or proceedin* is pendin*, upon bein* satisfied that the issue involved in such suit or proceedin* is referable to arbitration, shall stay the action or proceedin* until an arbitration has been had in accordance with the terms of the a*reement. &rovided, )hat the applicant for the stay is not in default in proceedin* with such arbitration. &rivate respondents claim, on the other hand, that their ca%ses of action are rooted in Arts. *,, *3 and *K of the Civil Code, E3+ the determination of which demands a f%ll blown trial, as correctly held by the Co%rt of Appeals. 5oreover, they claim that the iss%es before the trial co%rt were not ?oined so that the @onorable 2%dge was not given the opport%nity to satisfy himself that the iss%e involved in the case was referable to arbitration. 6hey s%bmit that, apparently, petitioners filed a motion to s%spend proceedings instead of sending a written demand to private respondents to arbitrate beca%se petitioners were not s%re whether the case co%ld be a s%b?ect of arbitration. 6hey maintain that had petitioners done so and private respondents failed to answer the demand, petitioners co%ld have filed with the trial co%rt their demand for arbitration that wo%ld warrant a determination by the ?%dge whether to refer the case to arbitration. Accordingly, private respondents assert that arbitration is o%t of the $%estion. &rivate respondents f%rther contend that the arbitration cla%se centers more on ven%e rather than on arbitration. 6hey finally allege that petitioners filed their motion for e=tension of time to file this petition on the same date E*, petitioner D5CBUAA filed a petition to compel private respondent 55( to arbitrate before the United Atates District Co%rt in )orthern California, docketed as Case )o. CB+9B <<<4. 6hey insist that the filing of the petition to compel arbitration in the United Atates made the petition filed before this Co%rt an alternative remedy and, in a way, an abandonment of the ca%se they are fighting for here in the &hilippines, th%s warranting the dismissal of the present petition before this Co%rt. 6here is no do%bt that arbitration is valid and constit%tional in o%r ?%risdiction. E*3 "ven before the enactment of RA 9G4, this Co%rt has co%ntenanced the settlement of disp%tes thro%gh arbitration. Unless the agreement is s%ch as absol%tely to close the doors of the co%rts against the parties, which agreement wo%ld be void, the co%rts will look with favor %pon s%ch amicable arrangement and will only interfere with great rel%ctance to anticipate or n%llify the action of the arbitrator. E** 5oreover, as RA 9G4 e=pressly a%thori7es arbitration of domestic disp%tes, foreign arbitration as a system of settling commercial disp%tes was likewise recogni7ed when the &hilippines adhered to the United )ations 2Convention on the Reco*nition and the 6nforcement of &orei*n +rbitral +wards of 789:2 %nder the 3, 5ay 3+48 Resol%tion )o. G3 of the &hilippine Aenate, giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state. E*K A caref%l e=amination of the instant case shows that the arbitration cla%se in the Distrib%torship Agreement between petitioner D5CBUAA and private respondent 55( is valid and the disp%te between the parties is arbitrable. @owever, this Co%rt m%st deny the petition. 6he Agreement between petitioner D5CBUAA and private respondent 55( is a contract. 6he provision to s%bmit to arbitration any disp%te arising therefrom and the relationship of the parties is part of that contract and is itself a contract. As a r%le, contracts are respected as the law between the contracting parties and prod%ce effect as between them, their assigns and heirs. E*< Clearly, only parties to the Agreement, i.e ., petitioners D5CBUAA and its 5anaging Director for "=port Aales &a%l ". Derby, 2r., and private respondents 55( and its 5anaging Director !(!. A. are bo%nd by the Agreement and its arbitration cla%se as they are the only signatories thereto. &etitioners Daniel Collins and !%is @idalgo, and private respondent A (, not parties to the Agreement and cannot even be considered assigns or heirs of the parties, are not bo%nd by the Agreement and the arbitration cla%se therein. Conse$%ently,

referral to arbitration in the Atate of California p%rs%ant to the arbitration cla%se and the s%spension of the proceedings in Civil Case )o. *4KGB5) pending the ret%rn of the arbitral award co%ld be called for E*8 b%t only as to petitioners D5CBUAA and &a%l ". Derby, 2r., and private respondents 55( and !(!. A., and not as to the other parties in this case, in accordance with the recent case of Heirs of +u*usto . %alas, "r. v. aperal Realty Corporation, E*4 which s%perseded that of )oyota Motor Philippines Corp. v. Court of +ppeals. E*G (n )oyota, the Co%rt r%led that >EtFhe contention that the arbitration cla%se has become dysf%nctional beca%se of the presence of third parties is %ntenable ratiocinating that >EcFontracts are respected as the law between the contracting parties> E*9 and that >EaFs s%ch, the parties are thereby e=pected to abide with good faith in their contract%al commitments.> E*+ @owever, in %alas, "r., only parties to the Agreement, their assigns or heirs have the right to arbitrate or co%ld be compelled to arbitrate. 6he Co%rt went f%rther by declaring that in recogni7ing the right of the contracting parties to arbitrate or to compel arbitration, the splitting of the proceedings to arbitration as to some of the parties on one hand and trial for the others on the other hand, or the s%spension of trial pending arbitration between some of the parties, sho%ld not be allowed as it wo%ld, in effect, res%lt in m%ltiplicity of s%its, d%plicito%s proced%re and %nnecessary delay. EK, 6he ob?ect of arbitration is to allow the e=peditio%s determination of a disp%te. EK3 Clearly, the iss%e before %s co%ld not be speedily and efficiently resolved in its entirety if we allow sim%ltaneo%s arbitration proceedings and trial, or s%spension of trial pending arbitration. Accordingly, the interest of ?%stice wo%ld only be served if the trial co%rt hears and ad?%dicates the case in a single and complete proceeding. EK* W)EREF!RE , the petition is D")("D. 6he Decision of the Co%rt of Appeals affirming the 1rder of the Regional 6rial Co%rt of 5alabon, 5etro 5anila, in Civil Case )o. *4KGB5), which denied petitioners Motion to %uspend Proceedin*s, is A (R5"D. 6he Regional 6rial Co%rt concerned is directed to proceed with the hearing of Civil Case )o. *4KGB5) with dispatch. )o costs. A1 1RD"R"D. Mendoza, Buena, and De Leon, Jr., JJ., concur. Quisumbing, J., no part, related to counsel of a party. A%A IN$*&%RIE&, L%$., Petitioner, vs. %)E )!N!RA LE C!*R% !F A""EAL&. %I *RCI! &. E/ALLE, $IREC%!R !F "A%EN%&, NEW !L#M"IAN R* ER "R!$*C%& C!., INC., Respondents. R"A1!U6(1) A A$ &AN%!&, J.: 1n 1ctober *G, 3+9,, the petition in this case was denied for lack of merit. &etitioner moved to reconsider and as re$%ired, private respondent s%bmitted comments. A hearing on the motion for reconsideration was held on 2%ne G, 3+9*. 6his is 1%r resol%tion on the motion for reconsideration.

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(n (nter &artes Case )o. 48< of the &hilippine &atent 1ffice, )ew 1lympian R%bber &rod%cts Co., (nc. so%ght the registration of the mark /A6A for cas%al r%bber shoes. (t alleged that it has %sed the mark since 2%ly 3, 3+G,.
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Registration was opposed by /ata (nd%stries, !td., a Canadian corporation, which alleged that it owns and has not abandoned the trademark /A6A.
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Atip%lated by the parties were the following;

3. /ata (nd%stries, !td. has no license to do b%siness in the &hilippinesC *. (t is not presently selling footwear %nder the trademark /A6A in the &hilippinesC and K. (t has no licensing agreement with any local entity or firm to sell its prod%cts in the &hilippines.
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"vidence received by the &hilippine &atent 1ffice showed that /ata shoes made by :erbec and @rdina of C7echoslovakia were sold in the &hilippines prior to World War ((. Aome shoes made by /ata of Canada were perhaps also sold in the &hilippines %ntil 3+<9. @owever, the trademark /A6A was never registered in the &hilippines by any foreign entity. Under the circ%mstances, it was concl%ded that >opposer has, to all intents and p%rposes, technically abandoned its trademark /A6A in the &hilippines.> Upon the other hand, the &hilippine &atent 1ffice fo%nd that )ew 1lympian R%bber &rod%cts Co., (nc.; ... has overwhelmingly and convincingly established its right to the trademark /A6A and conse$%ently, its %se and registration in its favor. 6here is no gainsaying the tr%th that the respondent has spent a considerable amo%nt of money and effort in pop%lari7ing the trademark /A6A for shoes in the &hilippines thro%gh the advertising media since it was lawf%lly %sed in commerce on 2%ly 3, 3+G,. (t can not be denied, therefore, that it is the respondentBapplicant0s e=pense that created the enormo%s goodwill of the trademark /A6A in the &hilippines and not the opposer as claimed in its opposition to the registration of the /A6A mark by the respondent.
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Additionally, on evidence of record, having also sec%red 'three- copyright registrations for the word /A6A, respondentBapplicant0s right to claim ownership of the trademark /A6A in the &hilippines, which it claims to be a 6agalog word which literally means >a little child> '"=h. 8-, is all the more fortified. 6he &hilippine &atent 1ffice dismissed the opposition and ordered the registration of the trademark /A6A in favor of the domestic corporation.
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Appeal from the decision of the &hilippine &atent 1ffice was made to the Co%rt of Appeals by /ata (nd%stries, !td. (n a decision penned by 2%stice 2%stiniano &. Corte7 dated A%g%st +, 3+G+, with 2%stices 5ariano Aerrano and 2ose /. 2imene7 conc%rring, the &&1 decision was reversed. A motion for reconsideration filed by )ew 1lympian R%bber &rod%cts Co., (nc. was denied on 1ctober 3G, 3+G+, by the same ?%stices.
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@owever, in a resol%tion on a second motion for reconsideration penned by 2%stice @%go ". :%tierre7 who is now a member of this Co%rt, to which 2%stices Cora7on 2. Agrava and Rodolfo A. )ocon conc%rred 'with the former filing a separate opinion-, the decision of A%g%st +, 3+G+, was set aside and that of the Director of &atents was affirmed.
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(n addition to points of law, /ata (nd%stries, !td. $%estions >the circ%mstances s%rro%nding the iss%ance of the $%estioned resol%tions of the respondent Co%rt of Appeals.> (n effect, it insin%ates that there was something wrong when a new set of ?%stices rendered a completely different decision.
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(t sho%ld be stated that there is nothing wrong and %n%s%al when a decision is reconsidered. 6his is so when the reconsideration is made by a division composed of the same ?%stices who rendered the decision b%t m%ch more so when the reconsideration is made by a different set of ?%stices as happened in this case. 1bvio%sly, the new set of ?%stices wo%ld have a fresh perspective %nenc%mbered by the views e=pressed in the decision so%ght to be reconsidered. )or sho%ld it be a ca%se for wonder why 2%stices :%tierre7, Agrava and )ocon had replaced the original ?%stices. 2%stice Corte7 resigned to become a candidate for the governorship of Cagayan 'he was elected-, while 2%stices Aerrano and 2imene7 retired %pon reaching the age of 48.
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1n the merits, the e=tended resol%tion penned by 2%stice :%tierre7 does not have to be fortified by Us. We agree with 5r. 2%stice :%tierre7 when he says; We are satisfied from the evidence that any slight goodwill generated by the C7echoslovakian prod%ct d%ring the Commonwealth years was completely abandoned and lost in the more than K8 years that have passed since the liberation of 5anila from the 2apanese troops.
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6he applicantBappellee has reprod%ced e=cerpts from the testimonies of the opposerBappellant0s witnesses to prove that the opposerBappellant was never a %ser of the trademark /A6A either before or after the war, that the appellant is not the s%ccessorBinBinterest of :erbec and @rdina who were not is representatives or agents, and co%ld not have passed any rights to the appellant, that there was no privity of interest between the C7echoslovakian owner and the Canadian appellant and that the C7echoslovakian trademark has been abandoned in C7echoslovakia.
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We agree with the applicantBappellee that more than s%bstantial evidence s%pports the findings and concl%sions of the Director of &atents. 6he appellant has no &hilippine goodwill that wo%ld be damaged by the registration of the mark in the appellee0s favor. We agree with the decision of the Director of &atents which s%stains, on the basis of clear and convincing evidence, the right of the appellee to the registration and protection of its ind%strial property, the /A6A trademark.
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W@"R" 1R", the motion for reconsideration is hereby denied for lack of merit. )o special prono%ncement as to costs.
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A1 1RD"R"D. 'arredo ;Chairman<, +4uino, =uerrero, !e Castro and 6scolin, ""., concur. Concepcion, "r., "., is on leave.
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G.R. No. L-5/150 No1)23)( 19, 1902 PAGASA INDUSTRIAL C!RP!RATI!N, petitioner, vs. HE H!N!RA LE C!URT !4 APPEALS, TI URCI! S. E%ALLE D'()*+o( o, P"+)#+&, "#$ Y!SHIDA 5!GY! 5A USHI5I 5AISHA, respondents. 7uasha, Asperilla, Ancheta, Val#onte, Pe2a and +arcos for petitioner. $lorencio 8. Sioson counsel for private respondent. Ozaeta, .o#ulo, De 9eon, +abanta, "uenaventura, Sa(oc and De los An eles collaboratin counsel for private respondent.

DE CASTR!, J.: So$eti$e on Nove$/er 2, 1261, the Philippines Patent ,ffice issued Certificate of Registration No. 2<<1 in favor of respondent 7aisha covering the trade$ar% &G77& for slide fasteners and Dippers in class 41. ,n *pril 48, 1268 or :1J4 !ears after respondent6s registration was issued /! the Philippines Patent ,ffice, petitioner Pagasa filed an application for registration of eCactl! the sa$e or dentical

trade$ar% of &G77& for Dippers under class 41 which was allowed on *pril 4, 1265 with Certificate of Registration No. 1<8:6. *lleging that /oth trade$ar% "&G77&# are confusingl! si$ilar, /eing used on si$ilar products "slide fasteners or Dippers# under the sa$e classification of goods, respondent 7aisha filed with the Director of Patents a petition for cancellation of petitioner6s registration of eCactl! the sa$e trade$ar% &G77&. ,n 3a! :, 1288, the Director of Patents, finding the trade$ar% in =uestion &G77& /rand to /e confusingl! si$ilar, and regretting the negligence of his office in allowing the registration of the trade$ar% &G77& in favor of petitioner notwithstanding the fact that the sa$e trade$ar% had long /een previousl! registered in the na$e of respondent 7aisha, cancelled Registration No. 1<8:6 in the na$e of Petitioner Corporation. +he Director of Patents /ased his order of cancellation on Section 4 "d# of Repu/lic *ct No. 166, as a$ended "*n *ct to Provide for the Registration and Protection of +rade-3ar%s, +rade Na$es and Service-3ar%s; etc.#0 Sec. 4. Registration of trade-$ar%s, tradena$es, and service $ar%s on the principal register.-+here is here/! esta/lished a register of trade$ar%s, tradena$es and service $ar%s which shall /e %nown as the principal register. +he owner of a trade$ar%, tradena$e or service $ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e on the principal register unless it0 CCC CCC CCC "d# Consists of or co$prises a $ar% or trade na$e which so rese$/les a $ar% or trade na$e registered in the Philippines or a $ar% trade na$e previousl! used in the Philippines /! another and not a/andoned as to /e li%el!, when applied to or used in connection with the goods, /usiness or services of the applicant, to cause confusion or $ista%e or to deceive purchasers; or CCC CCC CCC +he $atter was elevated /! petitioner to the Court of *ppeals and argued that there was laches on the part of 7aisha considering that notwithstanding the fact that the trade$ar% was registered for the use of petitioner, it was not until 9anuar! 4<, 128:, that 7aisha filed a petition for cancellation after a lapse of al$ost seven "8# !ears. +he Court of *ppeals affir$ed the decision of the Director of Patents, and held that the e=uita/le principles of laches, estoppel and ac=uiescence would not appl! in this case for it has not /een shown that 7aisha a/andoned the use of the trade$ar%; that to appl! said principle in favor of petitioner Pagasa is far fro$ e=uita/le since evidence was shown, which was not refuted /! petitioner, that it has previousl! %nown the registration of said trade $ar% which is a contraction standing for the first three letters of respondent6s na$e Goshida 7og!o 7a/ushi%i, and was aware of such fact at the ti$e of registration since it appears that the president of respondent visited the factor! of petitioner and had preli$inar! /usiness tal%s with the official of the latter /ecause /oth are producing Dippers; that technical help was given /! the engineers of respondent to petitioner when the latter6s president, in turn, visited respondent6s co$pan! so$eti$e in 1261.

+hus, the appellate court concluded that0 CCC CCC CCC +here is therefore, no dou/t in ,ur 3ind that indeed, KpetitionerL %new of the use of trade$ar% &G77& /! KrespondentL which are the initials of the co$pan!, and notwithstanding this %nowledge it later on sought trade registration of the sa$e trade$ar% in its favor. +hus, to allow KpetitionerL to continue using the trade$ar% &G77& $erel! /ecause KrespondentL did not or was not a/le to i$$ediatel! see% the cancellation of the irregularit! issued registration in favor of KpetitionerL would /e far fro$ e=uita/le. +he second assigned error $erel! involves alleged lac% of proof of Krespondent6sL actual co$$ercial use in the Philippines of the trade$ar% &G77&. +his, to -s is of no $o$ent. @hat is i$portant is the fact that KrespondentL has /een allowed the use of the trade$ar% &G77& under the Certificate of Registration Nos. 2<<1 and 2<4: issued respectivel! on Nove$/er 2, 1261 and Nove$/er 44, 1261. @hat could pro/a/l! have saved the case for KpetitionerL is positive proof that KrespondentL has totall! a/andoned the use of said trade$ar% in accordance with ,ur aforecited Section 4 of Repu/lic *ct 166. 'owever, the records are /ereft of an! evidence to this effect. & 'ence, this present recourse wherein the petitioner assigned the following errors0

+he 'onora/le Court of *ppeals erred when it in effect ruled that the e=uita/le principles of laches, estoppel and ac=uiescence cannot /e applied in the instant case for lac% of showing that Goshida has a/andoned the trade$ar% in =uestion and for Pagasa6s failure to refute previous %nowledge of its eCistence and registration.

+he 'onora/le Court of *ppeals erred when it in effect ruled that it is the fact of registration that vests one6s right to a trade$ar%. *nent the first assigned error, petitioner argues that considering respondent 7aisha6s failure or neglect to assert its trade$ar% rights for $ore than five ":# !ears, respondent should now /e /arred fro$ filing the petitioner for cancellation of trade$ar% &G77& of petitioner under the e=uita/le principles of laches, estoppel and ac=uiescence; and that /ecause of respondent6s inaction, petitioner had /een led to /elieve that its use was uno/>ectiona/le or tolerated. t further argues that to /e entitled to the defense of estoppel /! laches, it is not necessar! for the petitioner either to show that respondent has a/andoned the trade$ar% or to prove its good faith if it is shown that respondent was aware of petitioner6s use of the trade$ar% without the for$er6s protest or o/>ection thereto leading petitioner to assu$e that its act did not constitute an invasion of respondent 7aisha6s trade$ar% rights. ,n the second assigned error, petitioner clai$s that 7aisha never ac=uired ownership of the trade$ar%, considering that the latter had no proof of actual co$$ercial use of &G77& trade$ar% in the Philippines; that the certificate of registration issued to 7aisha is void ab initio for without such co$$ercial use, no trade$ar% rights accrue; that respondent has not presented an! relia/le and co$petent evidence to show that the sa$ple Dippers sent to this countr! were actuall! sold here and

sa$ple products are not for sale; that no invoice or receipt were su/$itted and neither did respondent present testi$on! of an! /u!er or distri/utor to which said sa$ples were addressed. Petitioner li%ewise asserts that respondent failed to satisf! a condition sine :ua non i$posed /! law, that is, the two $onths co$$ercial use of the trade$ar% prior to the filing of6 an application for registration, as provided for in Section 4 of the +rade$ar% (aw0 Section 4. @hat are registra/le +rade$ar%s, trade-na$es, and service $ar%s owned /! persons, corporations, partnerships or associations do$iciled in the Philippines and /! persons, corporations, partnerships or associations do$iciled in an! foreign countr! $a! /e registered in accordance with the provisions of this *ct0 Provided, that said trade$ar%s, trade-na$es, or service $ar%s are actuall! in use in co$$erce and services not less than two $onths in the Philippines /efore the ti$e the applications for registration are filed. Respondent in its co$$ent, argued that the $ar% applied for /! petitioner not onl! rese$/les the $ar% which it previousl! registered /ut is eCactl! the sa$e or is dentical to respondent6s trade$ar%; that petitioner should have presented clear, positive proof that 7aisha a/andoned the trade$ar%, /ecause there eCists alread! a pri#a facieevidence of continuing use /! the latter /! virtue of its registration; that it was incu$/ent upon petitioner which raised the defense of laches, to esta/lish /! clear evidence that either respondent was aware of the use of its trade$ar% /! petitioner or that respondent has perfor$ed an act which $isled petitioner into /elieving that respondent was a/andoning its rights over the trade$ar%; and that respondent since its organiDation in 1245 has endeavoured to populariDe its trade$ar% and spent tre$endous su$ of $one! for this purpose, thus, it is un/elieva/le that it will >ust a/andon its product after spending so $an! !ears in developing the sa$e. Petitioner however argued that it adopted and first used the trade$ar% in co$$erce in the Philippines on Dece$/er 48, 12:5 and has continuousl! used the sa$e up to the present and that respondent6s eCportation in the Philippines of G77 /rand Dippers in 12:8 were /! its own official records designated as $erel! &sa$ples& and &of no co$$ercial value. @e find for the petitioner. +he Director of Patents, stressed in his order of cancellation, 1 that the trade$ar%s in =uestion are &confusingl! si$ilar&. 'owever, the discussion 2 $ade /! the Senior +rade$ar% )Ca$iner of the Patents ,ffice regarding the registra/ilit! of the $ar% revealed that &the concurrent registration of su/>ect $ar% is not li%el! to cause purchasers confusion, $ista%e or deception,& since the &over-all co$$ercial i$pression of the $ar%s are grossl! different and used on goods not onl! falling under different "Pat. ,ff.# classification, /ut also possessing different descriptive properties.& t was also e$phasiDed /! said eCa$iner that the! are sold through different trade channels or outlets and are non-co$peting. t is apparent that the foregoing was the /asis of respondent Director in allowing the registration of petitioner6s trade$ar%. +he Court o/serves that respondent Director $ade a sudden turna/out after the petition for cancellation was filed, when he stated in his order that &the then eCa$iner ... $isera/l! overloo%ed the fact that at the ti$e there was alread! an eCisting and validl! issued certificate of registration for the trade$ar% G77, ...,& for the records will show that the eCa$iner, /efore proceeding with her discussion, $entioned that &a verification of ndeC Eiles show that there is registered, the trade$ar% 6G77 and Blo/e Dev.6 in favor of Goshida 7og!o G77 ... .& +he Director6s order was affir$ed /! the Court of *ppeals whose decision is now /eing assailed.

+he +rade$ar% (aw is ver! clear. t re=uires actual co$$ercial use of the $ar% prior to its registration. +here is no dispute that respondent corporation was the first registrant, !et it failed to full! su/stantiate its clai$ that it used in trade or /usiness in the Philippines the su/>ect $ar%; it did not present proof to invest it with eCclusive, continuous adoption of the trade$ar% which should consist a$ong others, of considera/le sales since its first use. +he invoices 3 su/$itted /! respondent which were dated wa! /ac% in 12:8 show that the Dippers sent to the Philippines were to /e used as &sa$ples& and &of no co$$ercial, value.& +he evidence for respondent $ust, definite and free fro$ inconsistencies. / &Sa$ples& are not for sale and therefore, the fact of eCporting the$ to the Philippines cannot /e considered to /e e=uivalent to the &use& conte$plated /! the law. Respondent did not eCpect inco$e fro$ such &sa$ples.& +here were no receipts to esta/lish sale, and no proof were presented to show that the! were su/se=uentl! sold in the Philippines. t appears that it was onl! after $ore than seven "8# !ears when respondent sought the cancellation of the trade$ar%. *n unreasona/le length of ti$e had alread! passed /efore respondent asserted its right to the trade$ar%. +here is a presu$ption of neglect alread! a$ounting to &a/andon$ent& of a right after a part! had re$ained silent for =uite a long ti$e during which petitioner had /een openl! using the trade$ar% in =uestion. Such inaction on the part of respondent entitles petitioner to the e=uita/le principle of laches. * perusal of the pleadings showed no eCplanation wh! respondent allowed the use /! petitioner of the trade$ar% under a dul! approved application of registration thereof for as long as al$ost eight "5# !ears /efore filing the instant petition for cancellation. ,/viousl!, respondent wanted goodwill and a wide $ar%et esta/lished at the eCpense of the petitioner /ut for its /enefit. t is precisel! the intention of the law, including a provision on e=uita/le principle to protect onl! the vigilant, not those guilt! of laches. t is $ost unfair if at an! ti$e, a previous registrant, even after a lapse of $ore than five ":# !ears, can as% for the cancellation of a si$ilar or the sa$e trade$ar%, the registration of which was never opposed /! the prior registrant. @h!, in the first place did respondent not file an opposition to the application of petitioner, as it ought to have done? t could /e /ecause /! the fact that its own registration was defective for there /eing no co$pliance with the re=uire$ent of the law such as the two "4# $onths co$$ercial use of the trade$ar% prior to the filing of the application, its own registration $a! /e cancelled, speciall! as it had no evidence of actual use of the trade$ar% after its registration up to the ti$e of the filing of petitioner6s application, a fact easil! deduci/le fro$ the fact of respondent6s co$plete silence and having ta%en no action to cancel petitioner6s trade$ar% until after the lapse of $ore than seven "8# !ears fro$ the approval of petitioner6s application to respondent filing a petition for cancellation. Section 2-* of the +rade$ar% (aw as a$ended provides0 E:uitable principles to overn proceedin s 0 n opposition proceedings and all other inter partes proceedings in the Patent ,ffice under this *ct, e=uita/le principle of laches, estoppel and ac=uiescence where applica/le, $a! /e considered applied. Respondent /! its silence, $ust /e aware that its &title& to the su/>ect $ar% is defective since it failed to confor$ with the provision of the law regarding prior use of the $ar%; and it $ust have /een afraid that it cannot full! su/stantiate its clai$ that the $ar% was co$$erciall! used in the Philippines. Surel!, the evidence of respondent showing that it had advertised in $agaDines such as (ife and +i$e, cannot /e considered as co$pliance with the law, for it is of general %nowledge that said $agaDines are not pu/lished in the Philippines, nor was there an! showing that the product so advertised was even sold here. 'ence, to grant the application for cancellation would greatl! pre>udice petitioner since respondent would /e ta%ing advantage of the goodwill alread! esta/lished /! petitioner in selling its product, without the respondent having incurred in an! eCpense to gain this priceless asset.

)=uit! and >ustice, therefore, de$and that petitioner should /e allowed to continue the use of the su/>ect $ar% and the $ar% which was supposedl! registered under the na$e of respondent /e dee$ed cancelled. @')R)E,R), the decision dated Ee/ruar! 6, 1251 of the Court of *ppeals is here/! set aside. No costs. S, ,RD)R)D. +a)asiar 4Chair#an5, Concepcion, %r. and Guerrero, %%., concur. G.R. No. 70290 J"#u"(y 30, 1909 6!L%ERINE 6!RLD6IDE, INC., petitioner, vs. H!N!RA LE C!URT !4 APPEALS "#$ L!LIT! P. CRU., respondents. ;. V. $a(lona < Associates for petitioner. $lorencio 8. Sioson for private respondent 9olito P. Cruz.

SAR-IENT!, J.: +he su/>ect of this petition for review is the resolution of the Court of *ppeals 1 granting the private respondents6s $otion for reconsideration and reviving the decision of the Director of Patents which ordered the dis$issal, on the ground of res -udicata, of nter Partes Case No. 518 instituted /! the petitioner herein. ,n Ee/ruar! 5, 1254, the petitioner, a foreign corporation organiDed and eCisting under the laws of the -nited States, /rought a petition /efore the Philippine Patent ,ffice, doc%eted as nter Partes Case No. 1518, for the cancellation of Certificate of Registration No. 44256-. of the trade$ar% '-S' P-PP )S and D,B D)M C) issued to the private respondent, a Eilipino citiDen. n support of its petition for cancellation, the petitioner alleged, inter alia, that it is the registrant of the internationall! %nown trade$ar% '-S' P-PP )S and the D)M C) of a Dog in the -nited States and in other countries which are $e$/ers of the Paris Convention for the Protection of ndustrial Propert!; that the goods sold /! the private respondent, on the one hand, and /! the petitioner, on the other hand, /elong to the sa$e class such that the private respondent6s use of the sa$e trade$ar% in the Philippines "which is a $e$/er of said Paris Convention# in connection with the goods he sells constitutes an act of unfair co$petition, as denied in the Paris Convention. Su/se=uentl!, the private respondent $oved to dis$iss the petition on the ground of res -udicata, averring that in 128<, or $ore than ten !ears /efore this petition " nter Partes Case No. 1518# was filed, the sa$e petitioner filed two petitions for cancellation " nter Partes Cases Nos. 811 and 811# and was a part! to an interference proceeding " nter Partes Case No. 812#, all of which involved the trade$ar% '-S' P-PP )S and D)M C), /efore the Philippine Patent ,ffice. +he Director of Patents had ruled in all three inter parties cases in favor of Ra$on *ngeles, the private respondent6s predecessor-in-interest, to wit0

@')R)E,R), for all the foregoing considerations, 1. +he petitions see%ing cancellation of Registration Nos. SR-1122 and SR-1:46, respectivel!, are /oth denied and accordingl! D S3 SS)D; 4. Respondent-RegistrantJ9unior Part!-*pplicant, Ro$an *ngeles, is here/! ad>udged as the prior user and adopter of the trade$ar% '-S' P-PP )S I D)M C), under *ppl. Serial No. 18184, and therefore, the sa$e given due course; and
<. Registration No. 14262 of DeCter Sales Co$pan!, assignor to @olverine @orldwide, nc., covering the trade$ar% '-S' P-PP )S I Representation of a Dogie 'ead, is here/! C*NC)(()D. 2

,n 9une 42, 1282, the Court of *ppeals affir$ed tile a/ove decision, finding the sa$e to /e in accordance with law and supported /! su/stantial evidence. 3 n the present case, after /oth parties had su/$itted their respective $e$oranda, the Director of Patents rendered the =uestioned decision "in nter Partes Case No. 1518#, the dispositive portion of which states0 @')R)E,R), in view of the foregoing considerations this ,ffice is constrained to hold that Respondent6s 3otion to Dis$iss /e, as it is here/!, BR*N+)D and that the su/>ect Petition for Cancellation /e, as it is here/! D S3 SS)D.
*ccordingl!, Certificate of Registration No. 44256-. issued on 3a! <, 125< to the herein Respondent-Registrant, (olito P. CruD, for the trade$ar% &'-S' P-PP )S& for use on shoes is, as it is here/!, declared valid and su/sisting for the duration of its ter$ unless owner cancelled in accordance with law. /

,n appeal, the Court of *ppeals at first set aside the Director6s decision; 5 however, upon reconsideration the latter was revived. 7 +he principal legal =uestion raised in this petition for review is whether or not the present petition for cancellation " nter Partes Case No. 1518# is /arred /! res -udicata in the light of the final and eCecutor! decision in nter Partes Cases Nos. 811 811, and 812. @e rule in the affir$ative. +he Court has repeatedl! held that for a >udg$ent to /e a /ar to a su/se=uent case, the following re=uisites $ust concur0 "1# it $ust /e a final >udg$ent; "4# the court which rendered it had >urisdiction over the su/>ect $atter and the parties; "<# it $ust /e a >udg$ent on the $erits; and "4# there $ust /e dentit! /etween the two cases, as to parties, A su/>ect $atter, and cause of action. 7 Contrar! to the petitioner6s assertion, the >udg$ent in nter Partes Cases Nos. 811, 811, and 812 had long since /eco$e final and eCecutor!. +hat Sec. 18 of Repu/lic *ct 166, also %nown as the +rade$ar% (aw, allows the cancellation of a registered trade$ar% is not a valid pre$ise for the petitioner6s proposition that a decision granting registration of a trade$ar% cannot /e i$/ued with the character of a/solute finalit! as is re=uired in res -udicata. * >udg$ent or order is final, as to give it the authorit! of res -udicata, if it can no longer /e $odified /! the court issuing it or /! an! other court. 0 n the case at /ar, the decision of the Court of *ppeals affir$ing that of the Director of Patents, in the cancellation cases filed in 128<, was never appealed to us. Conse=uentl!, when the

period to appeal fro$ the Court of *ppeals to this Court lapsed, with no appeal having /een perfected, the foregoing >udg$ent den!ing cancellation of registration in the na$e of private respondent6s predecessor-in-interest /ut ordering cancellation of registration in the na$e of the petitioner6s predecessor-in-interest, /eca$e the settled law in the case. n the words of the Court of *ppeals0
+he su/se=uent failure of appellant-oppositor to elevate the decision of the Court of *ppeals, which affir$ed the ruling of the Director of Patents, to the Supre$e Court, sounded the death %nell of appellant-oppositor6s instant case. 'aving /eco$e final and eCecutor!, the decision in Case No. 268 now /ars the prosecution of the present action under the principle of res -udicata. 9

t $ust /e stressed anew that, generall!, the funda$ental principle of res -udicata applies to all cases and proceedings in whatever for$ the! $a! /e. 10 @e now eCpressl! affir$ that this principle applies, in the appropriate cases, to proceedings for cancellation of trade$ar%s /efore the Philippine Patent ,ffice "now .ureau of Patents, +rade$ar%s and +echnolog! +ransfer#. n !pe)-an +erchandisin Co., !nc. vs Court of 6a= Appeals, we said0
+o sa! that the doctrine applies eCclusivel! to decisions rendered /! what are usuall! understood as courts would /e to unreasona/l! circu$scri/e the scope thereof. +he $ore e=uita/le attitude is to allow eCtension of the defense to decisions of /odies upon who$ >udicial powers have /een conferred. 11

-ndou/tedl!, final decisions, orders, and resolutions, of the Director of Patents are clothed with a >udicial character as the! are, in fact, reviewa/le /! the Court of *ppeals and /! us. +he su/>ect >udg$ent is undenia/l! on the $erits of the case, rendered after /oth parties and actuall! su/$itted their evidence. .etween the earlier petitions and the present one there is su/stantial identit! of parties, su/>ect $atter, and cause of action. +he petitioner in all of these cases is @olverine @orldwide, nc. +he respondent-registrant in this case is the assignee of Randelson *gro- ndustrial Develop$ent, nc. "for$erl! %nown as Randelson Shoes, nc.# which in turn, ac=uired its right fro$ Ra$on *ngeles, the original respondentsregistrant. *s regards the su/>ect $atter, all of these cases refer to the cancellation of registration of the trade$ar% '-S' P-PP )S and D)M C) of a Dog. Einall!, there is identit! of cause of action, which is the alleged wrongful or erroneous registration of the trade$ar%. t is argued, however, that res -udicata does not appl! in this particular instance /ecause when the 3a! 2, 1288 decision was handed down /! the Director of Patents, )Cecutive ,rder No. 21< dated ,cto/er 8, 125< and the resulting $e$orandu$ of 3inister Ro/erto ,ngpin dated ,cto/er 4:, 125< had not !et /een issued. "+he validit! of this $e$orandu$ was later upheld /! this Court in (a Che#ise 9acoste, S.A. vs. $ernandeD and Su-anani vs. On pin5. 12 +he petitioner underscores the following specific directive contained in the a/ove$entioned $e$orandu$ of 3inister ,ngpin for the Director of Patents0

:. *ll pending applications for Philippine registration of signature and other world fa$ous trade$ar%s filed /! applicants other than their original owners or users shall /e re>ected forthwith. @here such applicants have alread! o/tained registration contrar! to the a/ove$entioned P*R S C,NM)N+ ,N andJor Philippine (aw, the! shall /e directed to surrender their Certificates of Registration to the Philippine Patent ,ffice for i$$ediate cancellation proceedings. 13

t is thus contended that despite the previous grant of registration to the private respondent, the present petition for cancellation could still /e /rought, and the sa$e should /e granted /! the Director of Patents, pursuant to the a/ove=uoted clause. Stated otherwise, the petitioner suggests that the petition is not /arred /! res -udicata/ecause while the for$er petitions were filed under Repu/lic *ct 166, the present one was /rought pursuant to the cited $e$orandu$ which eCpressl! sanctions the cancellation of registration of a trade$ar% granted even prior to the sa$e $e$orandu$. n the first place, the su/>ect $e$orandu$ never a$ended, nor was it $eant to a$end, the +rade$ar% (aw. t did not indicate a new polic! with respect to the registration in the Philippines of world-fa$ous trade$ar%s. +he protection against unfair co$petition, and other /enefits, accorded to owners of internationall! %nown $ar%s, as $andated /! the Paris Convention, is alread! guaranteed under the +rade$ar% (aw. 1/ +hus, the su/>ect $e$orandu$, as well as )Cecutive ,rder No. 21<, $erel! reiterated the polic! alread! eCisting at the ti$e of its issuance. *s accuratel! enunciated /! the Court of *ppeals0
Such /eing the case, appellant-oppositor could have properl! ventilated the issue of whether or not it fell within the protective a$/it of the Paris Convention in the previous proceedings which cul$inated in the registration of the 'ush Puppies trade$ar% in appellee-$ovant6s na$e, i.e., in Case No. 268 /efore the Philippine Patent ,ffice. +he Director of Patents in that case, after hearing /oth parties and thereafter, deciding that appellee-$ovant was entitled to the registration of the trade$ar% in its na$e, $ust have concluded that appellant-oppositor had not esta/lished the fact that it was entitled to the application of the favora/le provision; of the Paris Convention. 15

Eurther$ore, we agree with the conclusion of the Court of *ppeals that the $e$orandu$ discussed here is su/>ect to the doctrine of res -udicata. +he sa$e $e$orandu$ has, in the words of the Court of *ppeals0
... no roo$ for application where the oppositor previousl! availed of the sa$e re$ed! to contest and cancel the registration of su/>ect trade$ar% /ut did not prevail, against the sa$e registrant regarding the sa$e su/>ect $atter "the trade$ar% in =uestion# and for the sa$e cause of action. +his is the $ore so when, as in this present controvers!, the certificate of registration, cancellation of which is sought anew, was issued /! the Patent office after due hearing in the prior appropriate inter partes case, pursuant to a decision of the Director of Patents which was affir$ed on appeal /! the Court of *ppeals, and has /eco$e final and eCecutor!. 17

n the sa$e light, the repeated filing of petitions for cancellation founded on su/stantiall! the sa$e ground as provided in Sec. 18 of the +rade$ar% (aw, we rule, is not per$issi/le. Eor to allow without an! li$itation whatsoever such a practice would /e clearl! violative of the ti$e-honored doctrine of res -udicata. +he present petition for cancellation raises /asicall! the sa$e issue of ownership of the trade$ar% '-S' P-PP )S, which issue was alread! discussed and settled in nter Partes Cases Nos. 811, 811, and 812. *s pointed out /! the private respondent, the petitioner itself eCpressl! recogniDed the issue of ownership when in the /rief it filed in the Court of *ppeals it included the following in the assign$ent of errors0

+hat the Philippine Patent ,ffice erred in holding that respondent-appellee has esta/lished prior use and adoption of the trade$ar% '-S' P-PP )S and is the true and la&ful o&ner thereof, instead of petitioner-appellant herein. ")$phasis supplied#. 17 +he aforesaid cases, involving as the! were the registration of a trade$ar%, necessaril! litigated the issue of ownership of such trade$ar% /ecause ownership is, indeed, the /asis of registration of a trade$ar%. 10 +hus, Section 4 of R.*. 166 provides0 &. . . +he owner of a trade$ar%, trade na$e or service-$ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e on the principal register. . . ' .es -udicata now /ars the petitioner fro$ reopening, /! wa! of another petition for cancellation "the present nter Partes Case No. 1518#, the issue of ownership of the trade$ar% '-S' P-PP )S. ,therwise, there will never /e an end to litigation. @')R)E,R), the petition for review is D)N )D. S, ,RD)R)D. Paras, Padilla and .e alado, %%., concur. +elencio*>errera, %., too) no part.

G.R. No. 132993

Ju#) 29, 2005

LE%I STRAUSS 8PHILS.9, INC., petitioner, vs. %!GUE TRADERS CL!THING C!-PANY, respondent. D)C S ,N A.CUNA, J.: +his is a petition for review on certiorari see%ing to annul the decision1 of the Court of *ppeals, dated *ugust 1<, 1228, which annulled and set aside the orders, 4 dated Dece$/er 11, 1226 and *pril 11, 1228, issued /! the Regional +rial Court of 3anila, .ranch 1 and which directed the trial court to desist fro$ proceeding with the said case until the .ureau of Patents, +rade$ar%s and +echnolog! +ransfer ".P+++# has finall! resolved !nter PartesCases Nos. 4416 and 4418, and the resolution of the Court of *ppeals, dated 3arch :, 1225, den!ing petitionerNs $otion for reconsideration. +he factual antecedents are as follows0 n 1284, per &+rade$ar%, +echnical Data, and +echnical *ssistance *gree$ent,& < (evi Strauss I Co., the principal /ased in Delaware, -nited States of *$erica, granted petitioner (evi Strauss "Phils.# a non-eCclusive license to use ()M NS trade$ar%, design, and na$e in the $anufacturing, $ar%eting, distri/ution, and sale of its clothing and other goods. 4 +he licensing agree$ent was renewed several ti$es, the recent one /eing under Certificate of Registration No. 1<82-*. : (evi Strauss I Co. o/tained certificates of registration fro$ the .P+++ for the following trade$ar%s0 &()M NS&6; &:11&8; &+wo 'orse Design&5; &+wo 'orse (a/el&2; &+wo 'orse Patch&11; &+wo 'orse (a/el with Patterned *rcuate Design&11; &*rcuate Design&14; and the co$posite trade$ar%s,1< na$el!, &*rcuate,& &+a/,& and &+wo 'orse Patch.&

Petitioner discovered the eCistence of so$e trade$ar% registrations /elonging to respondent which, in its view, were confusingl! si$ilar to its trade$ar%s. +hus, it instituted two cases /efore the .P+++ for the cancellation of respondentNs trade$ar% registrations, to wit0 !nter Partes Case No. 4416, a petition for cancellation of Certificate of Registration No. :<215 "for &( M)NS&# and !nter Partes Case No. 4418, a petition for cancellation of Certificate of Registration No. 5565 "for &( M)NS& (a/el 3ar%#. Petitioner then applied for the issuance of a search warrant on the pre$ises of respondent Mogue +raders Clothing Co$pan!, owned /! one +on! (i$, with the Regional +rial Court of 3anila, .ranch <. ,n Dece$/er 14, 122:, said trial court issued Search @arrant No. 2:-8:8 14 and Search @arrant No. 2:-8:51: /ased on its finding of pro/a/le cause that the respondent had violated *rticle 152 of the Revised Penal Code16 in $anufacturing, selling, and incorporating designs or $ar%s in its >eans which were confusingl! si$ilar to petitionerNs &()M Ns >eans.& +hese search warrants co$$anded the seiDure of certain goods /earing copies or i$itations of the trade$ar%s which /elonged to petitioner.18 ,n Dece$/er 1<, 122:, the search warrants were enforced and several goods /elonging to respondent were seiDed.15 3eanwhile, it appears that cri$inal charges were filed against +on! (i$ of respondent co$pan! in the Depart$ent of 9ustice,12 /ut the sa$e were eventuall! dis$issed and the search warrants were =uashed. Conse=uentl!, on Ee/ruar! 1, 1226, respondent filed a co$plaint 41 for da$ages in the Regional +rial Court of 3anila, .ranch :1, against petitioner. +he co$plaint alleged that since 9anuar! 1, 1255, respondent, through *ntonio Sevilla, with /usiness address at 1154 Car$en Planas Street, +ondo, 3anila, had /een a lawful assignee and authoriDed user of0 "a# the trade$ar% &( M)NS& under Certificate of Registration No. :<215 issued /! the .P+++, "/# the trade$ar% &( M)NS (*.)( 3*R7& under Certificate of Registration No. SR 5565 issued /! the .P+++, and "c# the cop!right registrations of &( M)NS ,R B N*( 9)*NS,& its poc%et design, and hand tag; that the goods, articles, and effects seiDed fro$ respondentNs esta/lish$ent were $anufactured and used in its legiti$ate /usiness of $anufacturing and selling of the dul! registered trade$ar% &( M)NS& and &( M)NS ,R B N*( 9)*NS;& and that the trade$ar%s of respondent did not have an! deceptive rese$/lance with the trade$ar%s of petitioner. Respondent sought to recover the seiDed assorted sewing $aterials, e=uip$ent, and finished products or the value thereof, in case the sa$e had /een destro!ed or i$paired as a result of the seiDure. Respondent also pra!ed that, after due trial, >udg$ent /e rendered ordering the petitioner to pa! co$pensator! da$ages ofP<41,111 with an additional a$ount of da$ages of P11,111 per da! until the seiDed properties are restored;P4,111,111 as eCe$plar! da$ages; P111,111 for attorne!Ns fees with an additional a$ount of P111,111 in the event of an appeal plus P1,:11 per court appearance and the costs of the suit. n its a$ended answer with counterclai$, 41 petitioner countered that respondentNs ( M)NS /rand infringed upon its licensed /rand na$e ()M NS. t sought to cancel respondentNs Cop!right Registration No. -<5<5 and en>oin the respondent fro$ further $anufacturing, selling, offering for sale, and advertising the deni$ >eans or slac%s /! using a design su/stantiall!, if not eCactl! si$ilar to, or a colora/le i$itation of the trade$ar%s44 of petitioner. -pon $anifestationJ$otion4< /! petitioner, the R+C of 3anila, .ranch :1 issued an order dated 3a! 2, 1226,44forwarding the case to the )Cecutive 9udge "R+C of 3anila, .ranch 4<# for re-raffle a$ong the courts designated as Special Courts to tr! and decide cases involving violations of ntellectual Propert! Rights pursuant to *d$inistrative ,rder No. 11<-2:, dated ,cto/er 4, 122:. ,n 3a! 18, 1226, .ranch 4< issued an order4: directing that the case /e forwarded to .ranch 1 "a designated Special Court per said ad$inistrative order# for further proceedings. ,n the scheduled hearing on Dece$/er 4, 1226 in the R+C of 3anila, .ranch 1, respondent "as therein plaintiff# failed to appear. -pon $otion of petitioner, the trial court declared respondent to

have waived its right to present evidence to controvert petitionerNs application for a writ of preli$inar! in>unction.46 n an order dated Dece$/er 11, 1226, the trial court found that the respondent intended to appropriate, cop!, and slavishl! i$itate the genuine appearance of authentic ()M Ns >eans and pass off its ( M)Ns >eans as genuine ()M Ns >eans. +hus, n opposing defendantNs application for preli$inar! in in>unction, plaintiff alleges that it has o/tained Certificates of Registration for the trade$ar%s &( M)KOLS,& &( M)KOLS (*.)( 3*R7,& K&L( M)KOLS ,R B N*( 9)*NSK&L as well as the patch poc%et design and hand tag. t did not, however, present an! evidence to support the sa$e. n an! event, plaintiffNs /ac%poc%et design is not cop!righta/le, as it is neither an original wor% nor a novel design. Rather it is a cop! or slavish i$itation of (S I Co.J(SP Ns *rcuate trade$ar% which was first used /! (S I Co. worldwide in 158< and the Philippines Registration of which is /ased on (S I Co.Ns -S Certificate of Registration No. 41444<, issued on Nove$/er 16, 124<. +hus, no rights attendant to a cop!right can ever attach to plaintiffNs infringing /ac%poc%et design. *lso, it could not have /een pure chance or coincidence that plaintiffNs ( M)NS >eans use a trade$ar%, s!$/ol or design which is su/stantiall!, if not eCactl! si$ilar to, or a colora/le i$itation of (S I C,.J(SP trade$ar%s, since there is a practicall! li$itless arra! of other $ar%s, words, nu$/ers, devices, s!$/ols and designs which plaintiff could have used on its products to identif! and distinguish the$ fro$ those of defendant and other $anufacturers. *ll told, fro$ the $ass of evidence adduced, plaintiffNs intent to appropriate, cop!, and slavishl! i$itate the genuine appearance of authentic ()M Ns >eans and pass off its ( M)Ns >eans as genuine ()M NS >eans in $uch too star%. *s a/ove-discussed, through $ore than a centur!Ns use and continuous su/stantial pro$otions and advertising of the ()M Ns +R*D)3*R7S on its products A on >eans and trousers in particular A (S I Co. has cultivated, gained and esta/lished an invalua/le goodwill in its na$e &()M Ns S+R*-SS I C,3P*NG& and in the products which carr! such na$e and the ()M Ns +R*D)3*R7S. 'ence, unless plaintiff is i$$ediatel! en>oined fro$ further $anufacturing, selling, offering for sale and advertising deni$s, >eans or slac%s using a design su/stantiall!, if not eCactl! si$ilar to, or a colora/le i$itation of the (S I Co.J(SP trade$ar%s, it will continue to have a free ride on, and erode such invalua/le goodwill and reputation /! the $ere effortless eCpedient of i$itating the overall visual i$pression of genuine ()M Ns 9)*NS on its own designs, e$plo!ing $inute points of distinction sufficient to $uddle the overall conclusion which is actuall! generated, /ut do not dispel the si$ilitude /etween the trade$ar%s. @ell has /een said that the $ost successful for$ of cop!ing is to e$plo! enough points of si$ilarit! to confuse the pu/lic with enough points of difference to confuse the court. K"LDel 3onte Corporation vs. Court of *ppeals, 151 SCR* 415K#L. +here is no =uestion that the a/ove-discussed circu$stances call for the intervention of e=uit! to prevent further irrepara/le har$ to defendantNs goodwill and reputation. n consonance with Section < "a#, "/# and "c#, Rule :5 of the Rules, defendant is thus entitled to the ancillar! relief de$anded either for a li$ited period or perpetuall!. Corollaril!, defendant is here/! directed to eCecute a /ond to the part! en>oined to the effect that defendant will pa! to plaintiff all da$ages it $a! sustain /! reason of the in>unction if the court should finall! decide that defendant is not entitled thereto. @')R)E,R), upon the filing of a /ond in the su$ of E M) '-NDR)D +',-S*ND P)S,S "P:11,111.11#, let a writ of preli$inar! in>unction issue restraining plaintiff, its officers, e$plo!ees,

agents, representatives, dealers, retailers or assigns fro$ $anufacturing, distri/uting, selling, offering for sale, advertising or otherwise using deni$s or >eans with a design which is su/stantiall!, if not eCactl! si$ilar to defendantNs trade$ar%s. 3eanwhile, the hearing on the $ain cause of action is here/! set on Ee/ruar! : and 14, 1228, /oth at 2011 a.$. S, ,RD)R)D.48 ,n $otion for reconsideration, respondent pra!ed that the petitionerNs counterclai$ /e dis$issed and that the order dated Dece$/er 11, 1226, /e set aside. n an order dated *pril 11, 1228, the trial court denied the $otion, stating that0 Considering0 "1# +hat the defendantNs application for in>unctive relief was properl! directed against the real propert! in interest, the self-proclai$ed lawful assignee and authoriDed user of the su/>ect trade$ar%s, hence, the part! who would /e /enefited or in>ured /! this courtNs final decision on the application; "4# +hat the acts which plaintiff was en>oined fro$ doing are within the scope of the reliefs de$anded /! defendant; "<# +hat the institution of defendantNs counterclai$ for infringe$ent and da$ages does not a$ount to foru$-shopping in that the ele$ents of litis pendentia which for$ the /asis for a charge for foru$-shopping are not all present in the instant case; "4# +hat the in>unctive order sought to /e reconsidered, /! its ver! nature, is $erel! provisional and does not dispose of the case on the $erits. 'ence, it would not a$ount to a pre>udg$ent considering that the defendant still has the /urden of proving during trial on the $erits that it is entitled to protection and that confusion does, in fact, or li%el! to eCist, and, on the other hand, plaintiff would have its opportunit! to prove that confusion does not eCist or is not li%el! to happen; and ":# +hat the evidence on record >ustifies the in>unctive relief granted /! this court in favor of defendant. @')R)E,R), in view of all the foregoing, plaintiffNs $otion for reconsideration and supple$ental $otion for reconsideration are D)N )D for lac% of $erit. S, ,RD)R)D.45 Respondent too% the $atter to the Court of *ppeals. ,n *ugust 1<, 1228, the Court of *ppeals rendered a decision in favor of the respondent, en>oining the trial court fro$ further proceeding with the case. +he dispositive portion thereof reads0 @')R)E,R), the petition is GRANTED. +he assailed ,rders dated Dece$/er 11, 1226 and *pril 11, 1228 are annulled and set aside for having /een issued with grave a/use of discretion and in eCcess of >urisdiction. Respondent court is ordered to desist fro$ proceeding with Civil Case No. 2686244, entitled &Mogue +raders Clothing Co$pan!, Plaintiff, versus (evi Strauss "Phil.#, nc.,

Defendant.&, until the .ureau of Patents, +rade$ar%s and +echnolog! +ransfer has finall! resolved !nter Partes Cases Nos. 4416 and 4418. No costs. S, ,RD)R)D.42 *fter its $otion for reconsideration was denied, petitioner filed the present petition for review on certiorari, raising the following assign$ent of errors0

+') C,-R+ ,E *PP)*(S C,33 ++)D C()*R(G R)M)RS .() )RR,R N ',(D NB +'*+ +') D,C+R N) ,E PR 3*RG 9-R SD C+ ,N ,P)R*+)S +, S-SP)ND *NG *ND *(( PR,C))D NBS N C M ( C*S) N,. 26-86244, P*R+ C-(*R(G +') *. ( +G ,E +') +R *( C,-R+ +, SS-) PR)( 3 N*RG N9-NC+ M) R)( )E, *ND +'*+ +') +R *( C,-R+ 9-DB) +')R)E,R) C,33 ++)D *.-S) ,E D SCR)+ ,N N BR*N+ NB S-C' R)( )E.

+') C,-R+ ,E *PP)*(S )RR)D N E* ( NB +, ',(D +'*+ +') C)R+ E C*+ ,N *B* NS+ E,R-3-S',PP NB *++*C')D .G R)SP,ND)N+ +, +S P)+ + ,N E,R CE.6!O.A.! *ND PR,' . + ,N S E*+*((G D)E)C+ M).

+') C,-R+ ,E *PP)*(S )RR)D N ',(D NB +'*+ +') +R *( C,-R+ 9-DB) C,33 ++)D BR*M) *.-S) ,E D SCR)+ ,N N D)C(*R NB R)SP,ND)N+ +, '*M) @* M)D +S R B'+ +, *DD-C) )M D)NC) +, C,-N+)R P)+ + ,N)RNS )M D)NC) N S-PP,R+ ,E +S *PP( C*+ ,N E,R PR)( 3 N*RG N9-NC+ M) R)( )E. M +') C,-R+ ,E *PP)*(S )RR)D N ',(D NB +'*+ +') PR)( 3 N*RG N9-NC+ M) ,RD)R SS-)D N C M ( C*S) N,. 26-86244 PR)9-DB)S +') C*S).<1 +he petition has $erit. 4'(&+. Petitioner points out that while the Court of *ppeals categoricall! stated that it did not co$$it foru$-shopping when it filed its counterclai$ for infringe$ent "to the petitionerNs co$plaint for da$ages in the Regional +rial Court of 3anila, .ranch 1 A Civil Case No. 26-86244# as the causes of action in the said civil case and the two inter partes cases "!nter Partes Cases Nos. 4416 and 4418 pending /efore the .P+++# are different and do not involve the sa$e su/>ect $atter and issues, it erred in appl!ing the &doctrine of pri$ar! >urisdiction.& +he appeals court declared that the trial court never had the authorit! to hear and grant petitionerNs pra!er for in>unctive relief nor to proceed with the hearing of the case in view of the pendenc! of the two inter partes cases. Petitioner is a holder of Certificate of Registration No. 1<82-* for its (eviNs trade$ar%s. +he registration gives rise to a presu$ption of its validit! and the right to the eCclusive use of the sa$e. *s set forth in Section 18 of Repu/lic *ct "R.*.# No. 166 or &+he +rade$ar% (aw,& an entit! having a dul! registered trade$ar% can file a suit against another entit! for the protection of its right0

Sec. 18. Brounds for cancellation. A *n! person, who /elieves that he is or will /e da$aged /! the registration of a $ar% or trade-na$e, $a!, upon the pa!$ent of the prescri/ed fee, appl! to cancel said registration upon an! of the following grounds0 "a# +hat the registered $ar% or trade-na$e /eco$es the co$$on descriptive na$e of an article or su/stance on which the patent has eCpired; "/# +hat it has /een a/andoned; "c# +hat the registration was o/tained fraudulentl! or contrar! to the provisions of section four, Chapter hereof; "d# +hat the registered $ar% or trade-na$e has /een assigned, and is /eing used /!, or with the per$ission of, the assignee, so as to $isrepresent the source of the goods, /usiness or services in connection with which the $ar% or trade-na$e is used; or "e# +hat cancellation is authoriDed /! other provisions of this *ct. Section 48 thereof states that the proper Regional +rial Court shall have >urisdiction over the da$age suits. n Conrad and Co#pan(, !nc. v. Court of Appeals ,<1 as reiterated in the case of Shan ri*9a !nternational >otel +ana e#ent 9td. v. Court of Appeals ,<4 the Court clarified that while an ad$inistrative cancellation of a registered trade$ar%, on an! of the grounds under Section 18 of R.*. No. 166, is within the a$/it of the .P+++, an action for infringe$ent or an! other incidental re$ed! sought is within the >urisdiction of the ordinar! courts. +hus, . . . t $ight /e $entioned that while an application for the ad$inistrative cancellation of a registered trade$ar% on an! of the grounds enu$erated in Section 18 of Repu/lic *ct No. 166, as a$ended, otherwise %nown as the +rade-3ar% (aw, falls under the eCclusive cogniDance of .P+++ "Sec. 12, +rade-3ar% (aw#, an action, however, for infringe$ent or unfair co$petition, as well as the re$ed! of in>unction and relief for da$ages, is eCplicitl! and un=uestiona/l! within the co$petence and >urisdiction of ordinar! courts. ... Surel!, an application with .P+++ for an ad$inistrative cancellation of a registered trade $ar% cannot per se have the effect of restraining or preventing the courts fro$ the eCercise of their lawfull! conferred >urisdiction. * contrar! rule would undul! eCpand the doctrine of pri$ar! >urisdiction which, si$pl! eCpressed, would $erel! /ehoove regular courts, in controversies involving specialiDed disputes, to defer to the findings or resolutions of ad$inistrative tri/unals on certain technical $atters. +his rule, evidentl!, did not escape the appellate court for it li%ewise decreed that for &good cause shown, the lower court, in its sound discretion, $a! suspend the action pending outco$e of the cancellation proceedings& /efore .P+++. "-nderscoring supplied.# +he passage of Repu/lic *ct No. 542<, otherwise %nown as the & ntellectual Propert! Code of the Philippines,&<<eCpanded the rights accorded to an owner of a registered trade$ar%. Sections 1:1 "4#, 1:6, and 161 thereof state0 Section 1:1.4. Notwithstanding the foregoing provisions, the court or the ad$inistrative agenc! vested with >urisdiction to hear and ad>udicate an! action to enforce the rights to a registered $ar%

shall li%ewise eCercise >urisdiction to deter$ine whether the registration of said $ar% $a! /e cancelled in accordance with this *ct. +he filing of a suit to enforce the registered $ar% with the proper court or agenc! shall eCclude an! other court or agenc! fro$ assu$ing >urisdiction over a su/se=uentl! filed petition to cancel the sa$e $ar%. ,n the other hand, the earlier filing of petition to cancel the $ar% with the .ureau of (egal *ffairs Pfor$erl! .P+++L shall not constitute a pre>udicial =uestion that $ust /e resolved /efore an action to enforce the rights to sa$e registered $ar% $a! /e decided. "Sec. 18, R.*. No. 166a# Section 1:6. *ctions, and Da$ages and n>unction for nfringe$ent. A 1:6.1 +he owner of a registered $ar% $a! recover da$ages fro$ an! person who infringes his rights, and the $easure of the da$ages suffered shall /e either the reasona/le profit which the co$plaining part! would have $ade, had the defendant not infringed his rights, or the profit which the defendant actuall! $ade out of the infringe$ent, or in the event such $easure of da$ages cannot /e readil! ascertained with reasona/le certaint!, then the court $a! award as da$ages a reasona/le percentage /ased upon the a$ount of gross sales of the defendant or the value of the services in connection with which the $ar% or trade na$e was used in the infringe$ent of the rights of the co$plaining part! "Sec. 4<, first par., R.*. No. 166a#. 1:6.4 ,n application of the co$plainant, the court $a! i$pound during the pendenc! of the action, sales invoices and other docu$ents evidencing sales. "n# 1:6.<. n cases where actual intent to $islead the pu/lic or to defraud the co$plainant is shown, in the discretion of the court, the da$ages $a! /e dou/led. "Sec. 4<, first par., R.*. No. 166# 1:6.4 +he co$plainant, upon proper showing, $a! also /e granted in>unction. "Sec. 4<, second par., R.*. No. 166a# Section 161. Authorit( to Deter#ine .i ht to .e istration. A n an! action involving a registered $ar%, the court $a! deter$ine the right to registration, order the cancellation of a registration, in whole or in part, and otherwise rectif! the register with respect to the registration of an! part! to the action in the eCercise of this. 9udg$ent and orders shall /e certified /! the court to the Director, who shall $a%e appropriate entr! upon the records of the .ureau, and shall /e controlled there/! "Sec. 4:, R.*. No. 166a#. Sections 1:: "4#, 1:6, and 16< of the said law further provide for the re$ed! of an owner of a registered $ar% to institute an action for infringe$ent or da$ages against a person or entit! that $a! reproduce, counterfeit, cop! or colora/l! i$itate a registered $ar% or a do$inant feature thereof and appl! such reproduction, counterfeit, cop! or colora/le i$itation to la/els, signs, prints, pac%ages, wrappers, receptacles or advertise$ents intended to /e used in co$$erce upon or in connection with the sale, offering for sale, distri/ution, or advertising of goods or services on or in connection with which such use is li%el! to cause confusion, or to cause $ista%e, or to deceive. Einall!, Rule 5, Section 8 of the Regulations on !nter Partes Proceedings, provides0 Section 8. )ffect of filing of a suit /efore the .ureau or with the proper court. A +he filing of a suit to enforce the registered $ar% with the proper court or .ureau shall eCclude an! other court or agenc! fro$ assu$ing >urisdiction over a su/se=uentl! filed petition to cancel the sa$e $ar%. ,n the other hand, the earlier filing of petition to cancel the $ar% with the .ureau shall not constitute a pre>udicial =uestion that $ust /e resolved /efore an action to enforce the rights to sa$e registered $ar% $a! /e decided. ")$phasis supplied#

t /ears stressing that an action for infringe$ent or unfair co$petition, including the availa/le re$edies of in>unction and da$ages, in the regular courts can proceed independentl! or si$ultaneousl! with an action for the ad$inistrative cancellation of a registered trade$ar% in the .P+++. *s applied to the present case, petitionerNs prior filing of two inter partes cases against the respondent /efore the .P+++ for the cancellation of the latterNs trade$ar% registrations, na$el!, &( M)NS& and &( M)NS (a/el 3ar%,& does not preclude petitionerNs right "as a defendant# to include in its answer "to respondentNs co$plaint for da$ages in Civil Case No. No. 26-86244# a counterclai$ for infringe$ent with a pra!er for the issuance of a writ of preli$inar! in>unction. S)*o#$. *s to the procedural $atter, petitioner argues that the Court of *ppeals erred in giving due course to the respondentNs petition for certiorari even if it was the latterNs counsel, *tt!. Danilo *. Soriano, not one of its dul! authoriDed officers, who eCecuted the certification of non-foru$ shopping. Section :, Rule 8 of the Rules of Civil Procedure incorporating *d$inistrative Circular Nos. 45-21 "effective 9anuar! 1, 1224# and 14-24 "effective *pril 1, 1224# states the re=uire$ent of a plaintiff or petitioner to include in his initiator! pleading or petition a certification of non-foru$ shopping. +hus, Sec. :. Certification against foru$ shopping. A +he plaintiff or principal part! shall certif! under oath in the co$plaint or other initiator! pleading asserting a clai$ for relief, or in a sworn certification anneCed thereto and si$ultaneousl! filed therewith0 "a# that he has not theretofore co$$enced an! action or filed an! clai$ involving the sa$e issues in an! court, tri/unal or =uasi->udicial agenc! and, to the /est of his %nowledge, no such other action or clai$ is pending therein; "/# if there is such other pending action or clai$, a co$plete state$ent of the present status thereof; and "c# if he should thereafter learn that the sa$e or si$ilar action or clai$ has /een filed or is pending, he shall report that fact within five ":# da!s therefro$ to the court wherein his aforesaid co$plaint or initiator! pleading has /een filed. Eailure to co$pl! with the foregoing re=uire$ents shall not /e cura/le /! $ere a$end$ent of the co$plaint or other initiator! pleading /ut shall /e cause for the dis$issal of the case without pre>udice, unless otherwise provided, upon $otion and after hearing. +he su/$ission of a false certification or non-co$pliance with an! of the underta%ings therein shall constitute indirect conte$pt of court, without pre>udice to the corresponding ad$inistrative and cri$inal actions. f the acts of the part! or his counsel clearl! constitute willful and deli/erate foru$ shopping, the sa$e shall /e ground for su$$ar! dis$issal with pre>udice and shall constitute direct conte$pt, as well as a cause for ad$inistrative sanctions. n Di ital +icro&ave Corp. v. CA,<4 this Court gave the rationale for this rule, na$el!, that the certification against foru$ shopping is re=uired to /e acco$plished /! petitioner hi$self /ecause onl! the petitioner hi$self has actual %nowledge of whether or not he has initiated si$ilar actions or proceedings in different courts or agencies. )ven his counsel $a! /e unaware of such fact as he $a! onl! /e aware of the action for which he has /een retained. *s to corporations, the law re=uires that the certification could /e $ade /! its dul! authoriDed director or officer. +he Court also stresses that the petitionerNs non-co$pliance and utter disregard of the rules cannot /e rationaliDed /! invo%ing the polic! of li/eral construction. +he re=uire$ent of certification against foru$ shopping under the Rules is to /e eCecuted /! the petitioner, or in the case of a corporation, its dul! authoriDed director or officer, /ut not petitionerNs counsel whose professional services have /een engaged to handle the su/>ect case. +he reason is that it is the petitioner who has personal %nowledge whether there are cases of si$ilar nature pending with the other courts, tri/unals, or agencies. +hus, in the present case, the Court of *ppeals should have outrightl! dis$issed the petition for certiorari filed /! the respondent "as therein

petitioner in the appeals court# due to the defective certification of non-foru$ shopping. +he certification $ade /! *tt!. Soriano, counsel for the respondent, who is not one of its dul! authoriDed directors or officers, is defective.)ven if *tt!. Soriano was the &in-house counsel,& the fact re$ains that no /oard resolution, or even a Secretar!Ns Certificate containing the /oard resolution, was su/$itted to show that he was indeed authoriDed to file the said petition in the Court of *ppeals. T:'($. Petitioner avers that the Court of *ppeals erred in finding that the respondent was denied due process. t contends that the trial court had correctl! ruled that respondent was dee$ed to have waived its right to present evidence due to its non-appearance at the scheduled hearing "to oppose the petitionerNs application for the issuance of a writ of preli$inar! in>unction# on Dece$/er 4, 1226. +he records show that respondent, through its for$er counsel, *tt!. *lfonso R. Gatco, was present during the hearing on Nove$/er 6, 1226 as reflected in the $inutes of the court proceedings that da!. +he counsels for /oth parties had /een dul! notified in open court. +he .ranch Cler% of Court of R+C of 3anila, .ranch 1, *tt!. 9oselito C. Erial, even $ade a notation in the $inutes that respondent "as oppositor# shall /e given a period of 11 da!s to interpose its opposition to the petitionerNs pra!er for in>unctive relief.<: +he ,rder dated Nove$/er 6, 1226 states0 *fter witness *tt!. Bil/ert Ra!$ond +. Re!es Kwitness for the petitionerL had finished his testi$on!, the counsel for defendant Kherein petitionerL $oved for and was allowed ten "11# da!s fro$ toda! within which to file a written for$al offer of eChi/its, cop! furnishKedL the counsel for plaintiff Kherein respondentL who is allowed a si$ilar period of ti$e fro$ receipt thereof within which to file co$$ent andJor o/>ection. n the $eanti$e, let the hearing /e continued on Dece$/er 4 I 11, 1226, /oth at 2011 a.$. as previousl! scheduled. +he counsels are notified of this order in open court. S, ,RD)R)D.<6 'owever, on Dece$/er 4, 1226, *tt!. Gatco failed to appear without proferring an! valid reason which pro$pted the trial court to issue an order that respondent was dee$ed to have waived its right to present evidence0 ,n call for hearing, onl! the counsel for defendant Kherein petitionerL appeared. +here was no appearance for plaintiff Kherein respondentL although its counsel was dul! notified. n view thereof, upon $otion of counsel for defendant, plaintiff is considered to have waived its right to present evidence to controvert defendantNs application for a writ of preli$inar! in>unction, which, conse=uentl!, is here/! dee$ed su/$itted for resolution. +he counsel for defendant is notified in open court. Eurnish the counsel for plaintiff with a cop! hereof. S, ,RD)R)D.<8 Respondent eCplained to the trial court that its for$er counsel, *tt!. Gatco, had honestl! thought that the Dece$/er 4, 1226 hearing had /een rescheduled to Dece$/er 11, 1226 per agree$ent with the petitionerNs counsel. +his is not a sufficient ground. t was correct for the trial court, upon $otion of petitioner, to consider the $atter su/$itted for resolution on the /asis of petitionerNs evidence.

Respondent cannot find solace in its la$e eCcuse of honest $ista%e which was, in fact, negligence and lac% of vigilance. 4ou(+:. Petitioner clai$s that the assailed orders of the trial court, dated Dece$/er 11, 1226 and *pril 11, 1228, did not pre>udge the case. ,n the other hand, respondent counters that the trial courtNs order dated Dece$/er 11, 1226 a$ounted to a pre>udg$ent of the case, to wit0 that its ( M)Ns /ac%poc%et design was not cop!righta/le /ecause it was neither an original wor% nor a novel design; that it was a cop! or slavish i$itation of petitionerNs ()M Ns *rcuate trade$ar%; and that no rights attendant to a cop!right can ever attach to respondentNs /ac%poc%et design. +he trial court granted petitionerNs pra!er for the issuance of a writ of preli$inar! in>unction in its answer with counterclai$ "to respondentNs co$plaint for da$ages#. +he writ did not have the effect of pre>udging or disposing of the $erits of the case, /ut $erel! en>oined the respondentNs acts of $anufacturing, distri/uting, selling, or offering for sale the >eans which had allegedl! incorporated eCact or colora/le i$itations of the products /elonging to petitioner. +he ,rder dated *pril 11, 1228 of the trial court den!ing the respondentNs $otion for reconsideration categoricall! stated that the said ,rder did not a$ount to a pre>udg$ent of the case. Petitioner has !et to esta/lish during the trial that it is entitled to a per$anent in>unction /! reason of respondentNs confusingl! si$ilar ( M)NS products. ,therwise, the trial court could declare that the ( M)NS trade$ar% /elonging to respondent was not confusingl! si$ilar with the ()M Ns trade$ar% of petitioner. ndeed, a writ of preli$inar! in>unction is generall! /ased solel! on initial and inco$plete evidence adduced /! the applicant "herein petitioner#. +he evidence su/$itted during the hearing of the incident is not conclusive, for onl! a &sa$pling& is needed to give the trial court an idea of the >ustification for its issuance pending the decision of the case on the $erits. *s such, the findings of fact and opinion of a court when issuing the writ of preli$inar! in>unction are interlocutor! in nature. 3oreover, the sole o/>ect of a preli$inar! in>unction is to preserve the status :uo until the $erits of the case can /e heard. Since Section 4 of Rule :5 of the Rules of Civil Procedure gives the trial courts sufficient discretion to evaluate the conflicting clai$s in an application for a provisional writ which often involves a factual deter$ination, the appellate courts generall! will not interfere in the a/sence of $anifest a/use of such discretion.<5 * writ of preli$inar! in>unction would /eco$e a pre>udg$ent of a case onl! when it grants the $ain pra!er in the co$plaint or responsive pleading, so $uch so that there is nothing left for the trial court to tr! eCcept $erel! incidental $atters. <2 Such fact does not o/tain in the present case. 6HERE4!RE, the petition is BR*N+)D and the Decision of the Court of *ppeals dated *ugust 1<, 1228 and its Resolution dated 3arch :, 1225 are R)M)RS)D and S)+ *S D). +he Regional +rial Court of 3anila, .ranch 1 is ,RD)R)D to proceed with the hearing of Civil Case No. 26-86244 with dispatch. No costs. S, ,RD)R)D. G.R. No. 1035/3 July 5, 1993 ASIA RE6ERY, INC., petitioner, vs. THE H!N. C!URT !4 APPEALS "#$ SAN -IGUEL C!RP!RATI!N, respondents. Abad Santos < Associates and S(cip, Salazar, >ernandez < Gat#aitan for petitioner.

.oco, "una , ;apunan 9a& Office for private respondent.

GRI;!-A<UIN!, J.: ,n Septe$/er 1:, 1255, San 3iguel Corporation "S3C# filed a co$plaint against *sia .rewer! nc. "*. # for infringe$ent of trade$ar% and unfair co$petition on account of the latter6s .))R P*() P (S)N or .))R N* .))R product which has /een co$peting with S3C6s S*N 3 B-)( P*() P (S)N for a share of the local /eer $ar%et. "San 3iguel Corporation vs. *sia .rewer! nc., Civ. Case. No. :6<21, R+C .ranch 166, Pasig, 3etro 3anila.#. ,n *ugust 48, 1221, a decision was rendered /! the trial Court, presided over /! 9udge 9esus ,. .ersa$ira, dis$issing S3C6s co$plaint /ecause *. &has not co$$itted trade$ar% infringe$ent or unfair co$petition against& S3C "p. 152, .ollo#. S3C appealed to the Court of *ppeals "C.*.-B.R. CM No. 45114#. ,n Septe$/er <1, 1221, the Court of *ppeals "SiCth Division co$posed of 9ustice 9ose C. Ca$pos, 9r., chair$an and ponente, and 9ustices Menancio D. *ldecoa 9r. and Eile$on '. 3endoDa, as $e$/ers# reversed the trial court. +he dispositive part of the decision reads as follows0 n the light of the foregoing anal!sis and under the plain language of the applica/le rule and principle on the $atter, @e find the defendant *sia .rewer! ncorporated B- (+G of infringe$ent of trade$ar% and unfair co$petition. +he decision of the trial court is here/! R)M)RS)D, and a new >udg$ent entered in favor of the plaintiff and against the defendant as follows0 "1# +he defendant *sia .rewer! nc. its officers, agents, servants and e$plo!ees are here/! per$anentl! en>oined and restrained fro$ $anufacturing, putting up, selling, advertising, offering or announcing for sale, or suppl!ing .eer Pale Pilsen, or an! si$ilar preparation, $anufacture or /eer in /ottles and under la/els su/stantiall! identical with or li%e the said /ottles and la/els of plaintiff San 3iguel Corporation e$plo!ed for that purpose, or su/stantiall! identical with or li%e the /ottles and la/els now e$plo!ed /! the defendant for that purpose, or in /ottles or under la/els which are calculated to deceive purchasers and consu$ers into the /elief that the /eer is the product of the plaintiff or which will ena/le others to su/stitute, sell or pal$ off the said /eer of the defendant as and for the /eer of the plaintiff-co$plainant. "4# +he defendant *sia .rewer! nc. is here/! ordered to render an accounting and pa! the San 3iguel Corporation dou/le an! and all the pa!$ents derived /! defendant fro$ operations of its /usiness and the sale of goods /earing the $ar% &.eer Pale Pilsen& esti$ated at approCi$atel! Eive 3illion Pesos "P:,111,111.11#; to recall all its products /earing the $ar% &.eer Pale Pilsen& fro$ its retailers and deliver these as well as all la/els, signs, prints, pac%ages, wrappers, receptacles and advertise$ents /earing the infringing $ar% and all plates, $olds, $aterials and other $eans of $a%ing the sa$e to the Court authoriDed to eCecute this >udg$ent for destruction. "<# +he defendant is here/! ordered to pa! plaintiff the su$ of +wo 3illion Pesos "P4,111,111.11# as $oral da$ages and 'alf a 3illion Pesos "P:,111,111.11# /! wa! of eCe$plar! da$ages.

"4# +he defendant is further ordered to pa! the plaintiff attorne!6s fees in the a$ount of P4:1,111.11 plus costs to this suit. "p. 21, .ollo.# -pon a $otion for reconsideration filed /! *. , the a/ove dispositive part of the decision, was $odified /! the separate opinions of the Special SiCth Division 1 so that it should read thus0 n the light of the foregoing anal!sis and under the plain language of the applica/le rule and principle on the $atter, @e find the defendant *sia .rewer! ncorporated G,!96? of infrin e#ent of trade#ar) and unfair co#petition . +he decision of the trial court is here/! R)M)RS)D, and a new >udg$ent entered in favor of the plaintiff and against the defendant as follows0 "1# +he defendant *sia .rewer! nc., its officers, agents, servants and e$plo!ees are here/! per$anentl! en>oined and restrained fro$ $anufacturing, putting up, selling, advertising, offering or announcing for sale, or suppl!ing .eer Pale Pilsen, or an! si$ilar preparation, $anufacture or /eer in /ottles and under la/els su/stantiall! identical with or li%e the said /ottles and la/els of plaintiff San 3iguel Corporation e$plo!ed for that purpose, or su/stantiall! identical with or li%e the /ottles and la/els now e$plo!ed /! the defendant for that purpose, or in /ottles or under la/els which are calculated to deceive purchasers and consu$ers into the /elief that the /eer if the product of the plaintiff or which will ena/le others to su/stitute, sell or pal$ off the said /eer of the defendant as and for the /eer of the plaintiff-co$plainant.
"4# +he defendant *sia .rewer! nc. is here/! ordered 2 to recall all its products /earing the $ar% .eer Pale Pilsen fro$ its retailers and deliver these as well as all la/els, signs, prints, pac%ages, wrappers, receptacles and advertise$ents /earing the infringing $ar% and all plates, $olds, $aterials and other $eans of $a%ing the sa$e to the Court authoriDed to eCecute this >udg$ent for destruction.

"<# +he defendant is here/! ordered to pa! plaintiff the su$ of +wo 3illion Pesos "P4,111,111.11# as $oral da$ages and 'alf a 3illion Pesos "P:11,111.11# /! wa! of eCe$plar! da$ages. "4# +he defendant is further ordered to pa! the plaintiff attorne!6s fees in the a$ount of P4:1,111.11 plus costs of this suit. n due ti$e, *. appealed to this Court /! a petition for certiorari under Rule 4: of the Rules of Court. +he lone issue in this appeal is whether *. infringes S3C6s trade$ar%0 San +i uel Pale Pilsen &ith .ectan ular >ops and +alt Desi n, and there/! co$$its unfair co$petition against the latter. t is a factual issue "Phil. Nut ndustr! nc. v. Standard .rands nc., 6: SCR* :8:# and as a general rule, the findings of the Court of *ppeals upon factual =uestions are conclusive and ought not to /e distur/ed /! us. 'owever, there are eCceptions to this general rule, and the! are0 "1# @hen the conclusion is grounded entirel! on speculation, sur$ises and con>ectures; "4# @hen the inference of the Court of *ppeals fro$ its findings of fact is $anifestl! $ista%en, a/surd and i$possi/le; "<# @here there is grave a/use of discretion; "4# @hen the >udg$ent is /ased on a $isapprehension of facts;

":# @hen the appellate court, in $a%ing its findings, went /e!ond the issues of the case, and the sa$e are contrar! to the ad$issions of /oth the appellant and the appellee; "6# @hen the findings of said court are contrar! to those of the trial court; "8# @hen the findings are without citation of specific evidence on which the! are /ased; "5# @hen the facts set forth in the petition as well as in the petitioner6s $ain and repl! /riefs are not disputed /! the respondents; and "2# @hen the findings of facts of the Court of *ppeals are pre$ised on the a/sence of evidence and are contradicted on record. "Re!nolds Philippine Corporation vs. Court of *ppeals, 162 SCR* 441, 44< citing, 3endoDa vs. Court of *ppeals, 1:6 SCR* :28; 3anlapaD vs. Court of *ppeals, 148 SCR* 4<5; Saca! vs. Sandigan/a!an, 144 SCR* :2<, 612; Buita vs. C*, 1<2 SCR* :86; Casana!an vs. Court of *ppeals, 125 SCR* <<<, <<6; also *peC nvest$ent and Einancing Corp. vs. *C, 166 SCR* 4:5 Kciting +olentino vs. De 9esus, :6 SCR* 168; Carolina ndustries, nc. vs. C3S Stoc% .ro%erage, nc., 28 SCR* 8<4; 3anero vs. C*, 114 SCR* 518; and 3oran, 9r. vs. C*, 1<< SCR* 55L.# -nder an! of these eCceptions, the Court has to review the evidence in order to arrive at the correct findings /ased on the record "Ro$an Catholic .ishop of 3alolos, nc. vs. *C, 121 SCR* 411, 441.# @here findings of the Court of *ppeals and trial court are contrar! to each other, the Supre$e Court $a! scrutiniDe the evidence on record. "CruD vs. C*, 142 SCR* 444, 448.# +he present case is one of the eCceptions /ecause there is no concurrence /etween the trial court and the Court of *ppeals on the lone factual issue of whether *. , /! $anufacturing and selling its .))R P*() P (S)N in a$/er colored steinie /ottles of <41 $l. capacit! with a white painted rectangular la/el has co$$itted trade$ar% infringe$ent and unfair co$petition against S3C. nfringe$ent of trade$ar% is a for$ of unfair co$petition "Clar%e vs. 3anila Cand! Co., <6 Phil. 111, 116#. Sec. 44 of Repu/lic *ct No. 166, otherwise %nown as the +rade$ar% (aw, defines what constitutes infringe$ent0 Sec. 44. !nfrin e#ent, &hat constitutes. A *n! person who shall use, without the consent of the registrant, an! reproduction, counterfeit, cop! or colora/le i$itation of an! re istered $ar% or trade-na$e in connection with the sale, offering for sale, or advertising of an! goods, /usiness or services on or in connection with which such use is li%el! to cause confusion or $ista%e or to deceive purchasers or others as to the source or origin of such goods or services, or identit! of such /usiness; or reproduce, counterfeit, cop! or colora/l! i$itate an! such $ar% or trade-na$e and appl! such reproduction, counterfeit, cop!, or colora/le i$itation to la/els, signs, prints, pac%ages, wrappers, receptacles or advertise$ents intended to /e used upon or in connection with such goods, /usiness or services, shall /e lia/le to a civil action /! the registrant for an! or all of the re$edies herein provided. ")$phasis supplied.# +his definition i$plies that onl! re istered trade $ar%s, trade na$es and service $ar%s are protected against infringe$ent or unauthoriDed use /! another or others. +he use of so$eone else6s registered trade$ar%, trade na$e or service $ar% is unauthoriDed, hence, actiona/le, if it is done &without the consent of the registrant.& "!bid.#

+he registered trade$ar% of S3C for its pale pilsen /eer is0 San +i uel Pale Pilsen @ith .ectan ular >ops and +alt Desi n. "Philippine .ureau of Patents, +rade$ar%s and +echnolog! +ransfer +rade$ar% Certificate of Registration No. <611<, dated 4< ,ct. 1256, "p. 184, .ollo.# *s descri/ed /! the trial court in its decision "Page 188, .ollo#0 . . . . a rectangular design KisL /ordered /! what appears to /e #inute rains arran ed in ro&s of three in &hich there appear in each corner hop desi ns . *t the top is a phrase written in s$all print &Reg. Phil. Pat. ,ff.& and at the /otto$ &Net Contents0 <41 3l.& +he do$inant feature is the phrase &San +i uel& written horiDontall! at the upper portion. .elow are the words &Pale Pilsen& written diagonall! across the $iddle of the rectangular design. n /etween is a coat of ar$s and the phrase &)Cpertl! .rewed.& +he &S& in &San& and the &3& of &3iguel,& &P& of &Pale& and &Pilsen& are written in Bothic letters with fine stro%es of serifs, the %ind that first appeared in the 1851s in )ngland and used for printing Ber$an as distinguished fro$ Ro$an and talic. .elow &Pale Pilsen& is the state$ent &*nd .ottled /!& "first line, &San 3iguel .rewer!& "second line#, and &Philippines& "third line#. "p. 188, .ollo; )$phasis supplied.# ,n the other hand, *. 6s trade$ar%, as descri/ed /! the trial court, consists of0 . . . a rectangular design /ordered /! what appear to /e buds of flo&ers &ith leaves. +he do$inant feature is &"eer& written across the upper portion of the rectangular design. +he phrase &Pale Pilsen& appears i$$ediatel! /elow in s$aller /loc% letters. +o the left is a hop design and to the right, written in s$all prints, is the phrase &Net Contents <41 $l.& $$ediatel! /elow &Pale Pilsen& is the state$ent written in three lines &)speciall! /rewed and /ottled /!& "first line#, &*sia .rewer! ncorporated& "second line#, and &Philippines& "third line#, "p. 188, .ollo; )$phasis supplied.# Does *. 6s .))R P*() P (S)N la/el or &design& infringe upon S3C6s S*N 3 B-)( P*() P (S)N @ +' R)C+*NB-(*R 3*(+ *ND ',PS D)S BN? +he answer is &No.& nfringe$ent is deter$ined /! the &test of do$inanc!& rather than /! differences or variations in the details of one trade$ar% and of another. +he rule was for$ulated in Co 6ion Sa vs. Director of Patents, 2: Phil. 1, 4 "12:4#; reiterated in 9i# >oa vs. Director of Patents, 111 Phil. 414, 416-418 "12:6#, thus0 t has /een consistentl! held that the =uestion of infringe$ent of a trade$ar% is to /e deter$ined /! the test of do#inanc(. Si$ilarit! in siDe, for$ and color, while relevant, is not conclusive. f the co$peting trade$ar% contains the $ain or essential or do$inant features of another, and confusion and deception is li%el! to result, infringe$ent ta%es place. Duplication or i$itation is not necessar!; nor it is necessar! that the infringing la/el should suggest an effort to i$itate. KC. Neil$an .rewing Co. vs. ndependent .rewing Co., 121 E., 452, 42:, citing )agle @hite (ead Co., vs. Pflugh "CC# 151 Eed. :82L. +he =uestion at issue in cases of infringe$ent of trade$ar%s is whether the use of the $ar%s involved would /e li%el! to cause confusion or #ista)es in the #ind of the public or deceive purchasers . "*u/urn Ru//er Corporation vs. 'onover Ru//er Co., 118 E. 4d :55; . . . .# ")$phasis supplied.#

n $orbes, +unn < Co. 49td.5 vs. An San 6o, 41 Phil. 484, 48:, the test was si$ilarit! or &rese$/lance /etween the two "trade$ar%s# such as would /e li%el! to cause the one $ar% to /e $ista%en for the other. . . . K.utL this is not such si$ilitude as a$ounts to identit!.& !n Phil. Nut !ndustr( !nc. vs. Standard "rands !nc., 6: SCR* :8:, the court was $ore specific0 the test is &si$ilarit! in the do$inant features of the trade$ar%s.& @hat are the do$inant features of the co$peting trade$ar%s /efore us? +here is hardl! an! dispute that the do$inant feature of S3C6s trade$ar% is the na$e of the product0 S*N 3 B-)( P*() P (S)N, written in white Bothic letters with ela/orate serifs at the /eginning and end of the letters &S& and &3& on an a$/er /ac%ground across the upper portion of the rectangular design. ,n the other hand, the do$inant feature of *. 6s trade$ar% is the na$e0 .))R P*() P (S)N, with the word &.eer& written in large a$/er letters, larger than an! of the letters found in the S3C la/el. +he trial court perceptivel! o/served that the word &.))R& does not appear in S3C6s trade$ar%, >ust as the words &S*N 3 B-)(& do not appear in *. 6s trade$ar%. 'ence, there is a/solutel! no si$ilarit! in the do$inant features of /oth trade$ar%s. Neither in sound, spelling or appearance can .))R P*() P (S)N /e said to /e confusingl! si$ilar to S*N 3 B-)( P*() P (S)N. No one who purchases .))R P*() P (S)N can possi/l! /e deceived that it is S*N 3 B-)( P*() P (S)N. No evidence whatsoever was presented /! S3C proving otherwise. .esides the dissi$ilarit! in their na$es, the following other dissi$ilarities in the trade dress or appearance of the co$peting products a/ound0 "1# +he S*N 3 B-)( P*() P (S)N /ottle has a slender tapered nec%. +he .))R P*() P (S)N /ottle has a fat, /ulging nec%. "4# +he words &pale pilsen& on S3C6s la/el are printed in /old and laced letters along a dia onal /and, whereas the words &pale pilsen& on *. 6s /ottle are half the siDe and printed in slender /loc% letters on a straight horizontal/and. "See )Chi/it &5-a&.#. "<# +he na$es of the $anufacturers are pro$inentl! printed on their respective /ottles. S*N 3 B-)( P*() P (S)N is &.ottled /! the San 3iguel .rewer!, Philippines,& whereas .))R P*() P (S)N is &)speciall! /rewed and /ottled /! *sia .rewer! ncorporated, Philippines.& "4# ,n the /ac% of *. 6s /ottle is printed in /ig, /old letters, under a row of flower /uds and leaves, its cop!righted slogan0 &.))R N* .))RQ& @hereas S3C6s /ottle carries no slogan. ":# +he /ac% of the S*N 3 B-)( P*() P (S)N /ottle carries the S3C logo, whereas the .))R P*() P (S)N /ottle has no logo.

"6# +he S*N 3 B-)( P*() P (S)N /ottle cap is sta$ped with a coat of ar$s and the words &San 3iguel .rewer! Philippines& encircling the sa$e. +he .))R P*() P (S)N /ottle cap is sta$ped with the na$e &.))R& in the center, surrounded /! the words &*sia .rewer! ncorporated Philippines.& "8# Einall!, there is a su/stantial price difference /etween .))R P*() P (S)N "currentl! at P4.4: per /ottle# and S*N 3 B-)( P*() P (S)N "currentl! at P8.11 per /ottle#. ,ne who pa!s onl! P4.4: for a /ottle of /eer cannot eCpect to receive San 3iguel Pale Pilsen fro$ the store%eeper or /artender. +he fact that the words pale pilsen are part of *. 6s trade$ar% does not constitute an infringe$ent of S3C6s trade$ar%0 S*N 3 B-)( P*() P (S)N, for &pale pilsen& are generic words descriptive of the color "&pale&#, of a t!pe of /eer "&pilsen&#, which is a light /ohe$ian /eer with a strong hops flavor that originated in the Cit! of Pilsen in CDechoslova%ia and /eca$e fa$ous in the 3iddle *ges. "@e/ster6s +hird New nternational Dictionar! of the )nglish (anguage, -na/ridged. )dited /! Philip .a/coc% Bove. Springfield, 3ass.0 B I C 3erria$ Co., KcL 1286, page 1816.# &Pilsen& is a &pri$aril! geographicall! descriptive word,& "Sec. 4, su/par. KeL Repu/lic *ct No. 166, as inserted /! Sec. 4 of R.*. No. 6<5# hence, non-registera/le and not appropria/le /! an! /eer $anufacturer. +he +rade$ar% (aw provides0 Sec. 4. . . .. +he owner of trade-$ar%, trade-na$e or service-$ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e Kon the principal registerL, unless it0 CCC CCC CCC "e# Consists of a $ar% or trade-na$e which, when applied to or used in connection with the goods, /usiness or services of the applicant is #erel( descriptive or deceptivel( #isdescriptive of the#, or when applied to or used in connection with the goods, /usiness or services of the applicant ispri#aril( eo raphicall( descriptive or deceptivel! $isdescriptive of the$, or is pri$aril! $erel! a surna$e.& ")$phasis supplied.# +he words &pale pilsen& $a! not /e appropriated /! S3C for its eCclusive use even if the! are part of its registered trade$ar%0 S*N 3 B-)( P*() P (S)N, an! $ore than such descriptive words as &evaporated $il%,& &to$ato %etchup,& &cheddar cheese,& &corn fla%es& and &coo%ing oil& $a! /e appropriated /! an! single $anufacturer of these food products, for no other reason than that he was the first to use the$ in his registered trade$ar%. n+asso >er#anos, S.A. vs. Director of Patents, 24 Phil. 1<6, 1<2 "12:<#, it was held that a dealer in shoes cannot register &(eather Shoes& as his trade$ar% /ecause that would /e $erel! descriptive and it would /e un>ust to deprive other dealers in leather shoes of the right to use the sa$e words with reference to their $erchandise. No one $a! appropriate generic or descriptive words. +he! /elong to the pu/lic do$ain ",ng *i Bui vs. Director of Patents, 26 Phil. 68<, 686 K12::L#0 * word or a co$/ination of words which is $erel! descriptive of an article of trade, or of its co$position, characteristics, or =ualities, cannot /e appropriated and protected as a trade$ar% to the eCclusion of its use /! others. . . . inas$uch as all persons have an e=ual right to produce and vend si$ilar articles, the! also have the right to descri/e the$ properl! and to use an! appropriate language or words for that purpose, and no person can appropriate to hi#self e=clusivel( an( &ord or e=pression, properl( descriptive of the article, its :ualities, in redients or

characteristics, and thus li$it other persons in the use of language appropriate to the description of their $anufactures, the ri ht to the use of such lan ua e bein co##on to all. +his rule eCcluding descriptive ter$s has also /een held to appl! to trade-na$es. *s to whether words e$plo!ed fall within this prohi/ition, it is said that the true test is not whether the! are eChaustivel! descriptive of the article designated, /ut whether in the$selves, and as the! are co$$onl! used /! those who understand their $eaning, the! are reasona/l! indicative and descriptive of the thing intended. f the! are thus descriptive, and not ar/itrar!, the! cannot /e appropriated fro$ general use and /eco$e the eCclusive propert! of an!one. ":4 *$. 9ur. :44:4<.# . . . . ,thers $a! use the sa$e or si$ilar descriptive word in connection with their own wares, provided the! ta%e proper steps to prevent the pu/lic /eing deceived. "Rich$ond Re$edies Co. vs. Dr. 3iles 3edical Co., 16 ). K4dL :25.# . . . . * descriptive word $a! /e ad$ittedl! distinctive, especiall! if the user is the first creator of the article. t will, however, /e denied protection, not /ecause it lac%s distinctiveness, /ut rather /ecause others are e=uall! entitled to its use. "4 Call$an. -nfair Co$petition and +rade$ar%s, pp. 562-581.#& ")$phasis supplied.# +he circu$stance that the $anufacturer of .))R P*() P (S)N, *sia .rewer! ncorporated, has printed its na$e all over the /ottle of its /eer product0 on the la/el, on the /ac% of the /ottle, as well as on the /ottle cap, disproves S3C6s charge that *. dishonestl! and fraudulentl! intends to pal$ off its .))R P*() P (S)N as S3C6s product. n view of the visi/le differences /etween the two products, the Court /elieves it is =uite unli%el! that a custo$er of average intelligence would $ista%e a /ottle of .))R P*() P (S)N for S*N 3 B-)( P*() P (S)N. +he fact that .))R P*() P (S)N li%e S*N 3 B-)( P*() P (S)N is /ottled in a$/er-colored steinie /ottles of <41 $l. capacit! and is also advertised in print, /roadcast, and television $edia, does not necessaril! constitute unfair co$petition. -nfair co$petition is the e$plo!$ent of deception or an! other $eans contrar! to good faith /! which a person shall pass off the goods $anufactured /! hi$ or in which he deals, or his /usiness, or services, for those of another who has alread! esta/lished goodwill for his si$ilar goods, /usiness or services, or an! acts calculated to produce the sa$e result. "Sec. 42, Repu/lic *ct No. 166, as a$ended.# +he law further enu$erates the $ore co$$on wa!s of co$$itting unfair co$petition, thus0 Sec. 42. . . . n particular, and without in an! wa! li$iting the scope of unfair co$petition, the following shall /e dee$ed guilt! of unfair co$petition0 "a# *n! person, who in selling his goods shall give the$ the general appearance of goods of another $anufacturer or dealer, either as to the goods the$selves or in the wrapping of the pac%ages in which the! are contained, or the devices or words thereon, or in an! other feature of their appearance, which would /e li%el! to influence purchasers to /elieve that the goods offered are those of a $anufacturer or dealer other than the actual $anufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the pu/lic and defraud another of his legiti$ate trade, or an! su/se=uent vendor of such goods or an! agent of an! vendor engaged in selling such goods with a li%e purpose.

"/# *n! person who /! an! artifice, or device, or who e$plo!s an! other $eans calculated to induce the false /elief that such person is offering the services of another who has identified such services in the $ind of the pu/lic; or "c# *n! person who shall $a%e an! false state$ent in the course of trade or who shall co$$it an! other act contrar! to good faith of a nature calculated to discredit the goods, /usiness or services of another. n this case, the =uestion to /e deter$ined is whether *. is using a na$e or $ar% for its /eer that has previousl! co$e to designate S3C6s /eer, or whether *. is passing off its .))R P*() P (S)N as S3C6s S*N 3 B-)( P*() P (S)N. . . ..+he universal test =uestion is whether the pu/lic is li%el! to /e deceived. Nothing less than conduct tending to pass off one $an6s goods or /usiness as that of another will constitute unfair co$petition. *ctual or pro/a/le deception and confusion on the part of the custo$ers /! reason of defendant6s practices $ust alwa!s appear. "Shell Co., of the Philippines, (td. vs. nsular Petroleu$ Refining Co. (td. et al., 141 Phil. 4<4, 4<2.# +he use of *. of the steinie /ottle, si$ilar /ut not identical to the S*N 3 B-)( P*() P (S)N /ottle, is not unlawful. *s pointed out /! *. 6s counsel, S3C did not invent /ut $erel! /orrowed the steinie /ottle fro$ a/road and it clai$s neither patent nor trade$ar% protection for that /ottle shape and design. "See rollo, page ::.# +he CerveDa )special and the )fes Pale Pilsen use the &steinie& /ottle. "See )Chi/its :8-D, :8-).# +he trial court found no infringe$ent of S3C6s /ottle A +he court agrees with defendant that there is no infringe$ent of plaintiff6s /ottle, firstl!, /ecause according to plaintiff6s witness Deogracias Milladolid, it is a standard t!pe of /ottle called steinie, and to witness 9ose *ntonio Barcia, it is not a San 3iguel Corporation design /ut a design originall! developed in the -nited States /! the Blass Container 3anufacturer6s nstitute and therefore lac%s eCclusivit!. Secondl!, the shape was never registered as a trade$ar%. )Chi/it &C& is not a registration of a /eer /ottle design re=uired under Rep. *ct 16: /ut the registration of the na$e and other $ar%s of ownership sta$ped on containers as re=uired /! Rep. *ct 64<. +hirdl!, the nec% of defendant6s /ottle is $uch larger and has a distinct /ulge in its upper$ost part. "p. 156, .ollo.# +he petitioner6s contention that /ottle siDe, shape and color $a! not /e the eCclusive propert! of an! one /eer $anufacturer is well ta%en. S3C6s /eing the first to use the steinie /ottle does not give S3C a vested right to use it to the eCclusion of ever!one else. .eing of functional or co$$on use, and not the eCclusive invention of an! one, it is availa/le to all who $ight need to use it within the industr!. No/od! can ac=uire an! eCclusive right to $ar%et articles suppl!ing si$ple hu$an needs in containers or wrappers of the general for$, siDe and character co$$onl! and i$$ediatel! used in $ar%eting such articles "D! .uncio vs. +an +iao .o%, 44 Phil. 121, 124-12:.# . . . protection against i$itation should /e properl! confined to nonfunctional features. )ven if purel! functional ele$ents are slavishl! copied, the rese$/lance will not support an action for unfair co$petition, and the first user cannot clai$ secondar! $eaning protection. Nor can the first user predicate his clai$ to protection on the argu$ent that his /usiness was esta/lished in reliance on an! such unpatented nonfunctional feature, even &at large eCpenditure of $one!.& "Call$an -nfair Co$petition, +rade$ar%s and 3onopolies, Sec. 12.<< K4th )d.L.# "Petition for Review, p. 45.#

*. does not use S3C6s steinie /ottle. Neither did *. cop! it. *. $a%es its own steinie /ottle which has a fat /ulging nec% to differentiate it fro$ S3C6s /ottle. +he a$/er color is a functional feature of the /eer /ottle. *s pointed out /! *. , all /ottled /eer produced in the Philippines is contained and sold in a$/er-colored /ottles /ecause a$/er is the $ost effective color in preventing trans$ission of light and provides the $aCi$u$ protection to /eer. *s was ruled in California Crushed $ruit Corporation vs. 6a(lor ". and Cand( Co., <5 E4d 55:, a $erchant cannot /e en>oined fro$ using a t!pe or color of /ottle where the sa$e has the useful purpose of protecting the contents fro$ the deleterious effects of light ra!s. 3oreover, no one $a! have a $onopol! of an! color. Not onl! /eer, /ut $ost $edicines, whether in li=uid or ta/let for$, are sold in a$/er-colored /ottles. +hat the *. /ottle has a <41 $l. capacit! is not due to a desire to i$itate S3C6s /ottle /ecause that /ottle capacit! is the standard prescri/ed under 3etrication Circular No. 885, dated 4 Dece$/er 1282, of the Depart$ent of +rade, 3etric S!ste$ .oard. @ith regard to the white la/el of /oth /eer /ottles, *. eCplained that it used the color white for its la/el /ecause white presents the strongest contrast to the a$/er color of *. 6s /ottle; it is also the $ost econo$ical to use on la/els, and the easiest to &/a%e& in the furnace "p. 16, +SN of Septe$/er 41, 1255#. No one can have a $onopol! of the color a$/er for /ottles, nor of white for la/els, nor of the rectangular shape which is the usual configuration of la/els. Needless to sa!, the shape of the /ottle and of the la/el is uni$portant. @hat is all i$portant is the na$e of the product written on the la/el of the /ottle for that is how one /eer $a! /e distinguished for$ the others. n D( "uncio v. 6an 6iao "o), 44 Phil. 121, 126-128, where two co$peting tea products were /oth la/elled as Eor$osan tea, /oth sold in :-ounce pac%ages $ade of ordinar! wrapping paper of conventional color, /oth with la/els containing designs drawn in green in% and Chinese characters written in red in%, one la/el showing a dou/le-dec%ed >ar in the center, the other, a flower pot, this court found that the rese$/lances /etween the designs were not sufficient to $islead the ordinar! intelligent /u!er, hence, there was no unfair co$petition. +he Court held0 . . . . n order that there $a! /e deception of the /u!ing pu/lic in the sense necessar! to constitute unfair co$petition, it is necessar! to suppose a pu/lic accusto$ed to /u!, and therefore to so$e eCtent fa$iliar with, the goods in =uestion. +he test of fraudulent si$ulation is to /e found in the li%elihood of the deception of persons in so$e $easure ac=uainted with an esta/lished design and desirous of purchasing the co$$odit! with which that design has /een associated. +he test is not found in the deception, or possi/ilit! of the deception, of the person who %nows nothing a/out the design which has /een counterfeited, and who $ust /e indifferent as /etween that and the other. +he si$ulation, in order to /e o/>ectiona/le, $ust /e such as appears li%el! to $islead the ordinaril! intelligent /u!er who has a need to suppl! and is fa$iliar with the article that he see%s to purchase. +he $ain thrust of S3C6s co$plaint if not infringe$ent of its trade$ar%, /ut unfair co$petition arising for$ the allegedl! &confusing si$ilarit!& in the general appearance or trade dress of *. 6s .))R P*() P (S)N /eside S3C6s S*N 3 B-)( P*() P (S)N "p. 412, .ollo# S3C clai$s that the &trade dress& of .))R P*() P (S)N is &confusingl! si$ilar& to its S*N 3 B-)( P*() P (S)N /ecause /oth are /ottled in <41 $l. steinie t!pe, a$/er-colored /ottles with white rectangular la/els. 'owever, when as in this case, the na$es of the co$peting products are clearl! different and their respective sources are pro$inentl! printed on the la/el and on other parts of the /ottle, $ere si$ilarit! in the shape and siDe of the container and la/el, does not constitute unfair co$petition. +he

steinie /ottle is a standard /ottle for /eer and is universall! used. S3C did not invent it nor patent it. +he fact that S3C6s /ottle is registered under R.*. No. 64< "as a$ended /! R* :811, *n *ct to Regulate the -se of Dul! Sta$ped or 3ar%ed .ottles, .oCes, Cas%s, 7egs, .arrels and ,ther Si$ilar Containers# si$pl! prohi/its $anufacturers of other foodstuffs fro$ the unauthoriDed use of S3C6s /ottles /! refilling these with their products. t was not unco$$on then for products such as patis "fish sauce# and to(o "so! sauce# to /e sold in rec!cled S*N 3 B-)( P*() P (S)N /ottles. Registration of S3C6s /eer /ottles did not give S3C a patent on the steinie or on /ottles of si$ilar siDe, shape or color. 3ost containers are standardiDed /ecause the! are usuall! $ade /! the sa$e $anufacturer. 3il%, whether in powdered or li=uid for$, is sold in unifor$ tin cans. +he sa$e can /e said of the standard %etchup or vinegar /ottle with its fa$iliar elongated nec%. 3an! other grocer! ite$s such as coffee, $a!onnaise, pic%les and peanut /utter are sold in standard glass >ars. +he $anufacturers of these foodstuffs have e=ual right to use these standards tins, /ottles and >ars for their products. ,nl! their respective la/els distinguish the$ fro$ each other. 9ust as no $il% producer $a! sue the others for unfair co$petition /ecause the! sell their $il% in the sa$e siDe and shape of $il% can which he uses, neither $a! S3C clai$ unfair co$petition arising fro$ the fact that *. 6s .))R P*() P (S)N is sold, li%e S3C6s S*N 3 B-)( P*() P (S)N in a$/er steinie /ottles. +he record does not /ear out S3C6s apprehension that .))R P*() P (S)N is /eing passed off as S*N 3 B-)( P*() P (S)N. +his is unli%el! to happen for consu$ers or /u!ers of /eer generall! order their /eer /! /rand. *s pointed out /! *. 6s counsel, in super$ar%ets and tiendas, /eer is ordered /! /rand, and the custo$er surrenders his e$pt! replace$ent /ottles or pa!s a deposit to guarantee the return of the e$pties. f his e$pties are S*N 3 B-)( P*() P (S)N, he will get S*N 3 B-)( P*() P (S)N as replace$ent. n sari-sari stores, /eer is also ordered fro$ the tindera /! /rand. +he sa$e is true in restaurants, pu/s and /eer gardens A /eer is ordered fro$ the waiters /! /rand. "Op. cit. page :1.# Considering further that S*N 3 B-)( P*() P (S)N has virtuall! $onopoliDed the do$estic /eer $ar%et for the past hundred !ears, those who have /een drin%ing no other /eer /ut S*N 3 B-)( P*() P (S)N these $an! !ears certainl! %now their /eer too well to /e deceived /! a newco$er in the $ar%et. f the! gravitate to *. 6s cheaper /eer, it will not /e /ecause the! are confused or deceived, /ut /ecause the! find the co$peting product to their taste. ,ur decision in this case will not di$inish our ruling in &Del 3onte Corporation vs. Court of *ppeals and Sunshine Sauce 3anufacturing ndustries,& 151 SCR* 411, 412, 3 that0 . . . to deter$ine whether a trade$ar% has /een infringed, we $ust consider the $ar% as a whole and not as dissected. f the /u!er is deceived, it is attri/uta/le to the $ar%s as a totalit!, not usuall! to an! part of it. +hat ruling $a! not appl! to all %inds of products. +he Court itself cautioned that in resolving cases of infringe$ent and unfair co$petition, the courts should &ta%e into consideration several factors which would affect its conclusion, to wit0 the age, training and education of the usual purchaser, the nature and cost of the article, whether the article is /ought for i$$ediate consu$ption and also the conditions under which it is usuall! purchased& "151 SCR* 411, 415-412#. +he Del 3onte case involved catsup, a co$$on household ite$ which is /ought off the store shelves /! housewives and house help who, if the! are illiterate and cannot identif! the product /! na$e or /rand, would ver! li%el! identif! it /! $ere recollection of its appearance. Since the co$petitor, Sunshine Sauce 3fg. ndustries, not onl! used rec!cled Del 3onte /ottles for its catsup "despite the warning e$/ossed on the /ottles0 &Del 3onte Corporation. Not to /e refilled.&# /ut also

used la/els which were &a colora/le i$itation& of Del 3onte6s la/el, we held that there was infringe$ent of Del 3onte6s trade$ar% and unfair co$petition /! Sunshine. ,ur ruling in Del 3onte would not appl! to /eer which is not usuall! pic%ed fro$ a store shelf /ut ordered /! /rand /! the /eer drin%er hi$self fro$ the store%eeper or waiter in a pu/ or restaurant. 3oreover, S3C6s /rand or trade$ar%0 &S*N 3 B-)( P*() P (S)N& is not infringed /! *. 6s $ar%0 &.))R N* .))R& or &.))R P*() P (S)N.& *. $a%es its own /ottle with a /ulging nec% to differentiate it fro$ S3C6s /ottle, and prints *. 6s na$e in three "<# places on said /ottle "front, /ac% and /ottle cap# to prove that it has no intention to pass of its &.))R& as &S*N 3 B-)(.& +here is no confusing si$ilarit! /etween the co$peting /eers for the na$e of one is &S*N 3 B-)(& while the co$petitor is plain &.))R& and the points of dissi$ilarit! /etween the two outnu$/er their points of si$ilarit!. Petitioner *. has neither infringed S3C6s trade$ar% nor co$$itted unfair co$petition with the latter6s S*N 3 B-)( P*() P (S)N product. @hile its .))R P*() P (S)N ad$ittedl! co$petes with the latter in the open $ar%et, that co$petition is neither unfair nor fraudulent. 'ence, we $ust den! S3C6s pra!er to suppress it. @')R)E,R), finding the petition for review $eritorious, the sa$e is here/! granted. +he decision and resolution of the Court of *ppeals in C*-B.R. CM No. 45114 are here/! set aside and that of the trial court is R) NS+*+)D and *EE R3)D. Costs against the private respondent. S, ,RD)R)D. Narvasa, C.%., "idin, .e alado, .o#ero, Nocon, "ellosillo and +elo, %%., concur. $eliciano, %., too) no part.

G.R. No&. L-27/25 = L-30505 A>('l 20, 1900

C!N%ERSE RU ER C!RP!RATI!N "#$ ED6ARDS!N -ANU4ACTURING C!RP!RATI!N,plaintiffs-appellants,


vs. JACINT! RU ER = PLASTICS C!., INC., "#$ ACE RU C!RP!RATI!N, defendants-appellants. S(cip, Salazar, 9una < Associates plaintiff*appellants. %uan .. David for defendants*appellants. ER = PLASTICS

ARRED!, J.:

Direct appeal in B.R. No. (-4844: /! /oth plaintiffs and defendants fro$ the decision of the Court of Eirst nstance of RiDal in its Civil Case No. 2<51, a case alleged unfair co$petition, the dispositive part of which reads0 -pon the foregoing, >udg$ent is here/! rendered0 1. Per$anentl! restraining the defendants, their agents, e$plo!ees and other persons acting in their /ehalf fro$ $anufacturing and selling in the Philippines ru//er shoes having the sa$e or confusingl! si$ilar appearance as plaintiff Converse Ru//er6s Converse Chuc% +a!lor *ll Star6 ru//er shoes, particularl! fro$ $anufacturing and selling in the Philippines ru//er Shoes with "a# an%le patch with a five-pointed /lue star against a white /ac%ground, "/# red and /lue /ands, "c# white toe patch with raised dia$ond shaped areas, and "d# /rown sole of the sa$e or si$ilar design as the sole of &Converse Chuc% +a!lor *ll Star& ru//er-soled canvas footwear; 4. ,rdering defendant 9acinto Ru//er I Plastics Co$pan!, nc. to change the design and appearance of &Custo$/uilt& shoes in accordance with the s%etch su/$itted /! defendant 9acinto Ru//er to plaintiff Converse Ru//er on ,cto/er <, 1264 and to desist fro$ using a star /oth as a s!$/ol and as a word; <. ,rdering defendant 9acinto Ru//er I Plastics Co$pan!, nc. to pa! plaintiffs the su$ of P161,111.11 as co$pensator! da$ages for the !ears 1264 to 126: plus :R of the gross sales of &Custo$/uilt& shoes fro$ 1266 until defendant 9acinto Ru//er I Plastics Co$pan!, nc. stop selling &Custo$/uilt& shoes of the present design and appearance; 4. ,rdering defendants >ointl! and severall! to pa! plaintiffs P11,111.11 as attorne!6s fees. S, ,RD)R)D. "Pages 445-442, Record on *ppeal.# plaintiffs pra!ing for a /igger a$ount of da$ages and defendants as%ing that the decision /e declared null and void for lac% of >urisdiction, or, alternativel!, that the sa$e /e reversed co$pletel! /! dis$issing the co$plaint; and another direct appeal, in B. R. No. (-<1:1: /! a/ove defendant 9acinto Ru//er I Plastics Co., nc. and, a new part!, Philippine 3ar%eting and 3anage$ent Corporation fro$ the sa$e trial court6s order in the sa$e $ain civil case finding the$ in conte$pt of court &in disregarding the per$anent in>unction& contained in the appealed decision. .E G. .. NO 9*ABCAD .eing co$prehensive and well prepared, @e consider it sufficient to =uote the following portions of the i$pugned decision as /asis for the resolution of the conflicting appeals afore$entioned0 +his is an action for unfair co$petition. Plaintiff Converse Ru//er Corporation, "is# an *$erican Corporation, $anufacturer "of# canvas ru//er shoes under the trade na$e &Converse Chuc% +a!lor *ll Star&; in the Philippines, it has an eCclusive licensee, plaintiff )dwardson 3anufacturing Corporation, for the $anufacture and sale in the Philippines of its product. Plaintiff Converse is the owner of trade$ar%s and patent, registered with -nited States Patent ,ffice, covering the words. &*ll Star&, the representation and design of a five-pointed star, and the design of the sole. +he

trade$ar% &Chuc% +a!lor& was registered /! plaintiff Converse with the Philippines Patent ,ffice on 3arch <, 1266. Since 1246, &Chuc% +a!lor& is /eing sold in the Philippines. t has /een used eCclusivel! /! Philippine /as%et/all tea$s co$peting in international co$petitions. t is also popular a$ong pla!ers in various /as%et/all leagues, li%e the 3 C** and the NC**, /ecause of its high =ualit! and attractive st!le. &Chuc% +a!lor& currentl! retails at P46.11 per pair. Defendant 9acinto Ru//er I Plastics Co$pan!, nc., a local corporation, li%ewise, $anufactures and sells canvas ru//er shoes. t sells its product under the trade na$es &Custo$/uilt Miscount&, &Custo$/uilt Challenger&, and &Custo$/uilt 9a!son6s&. ts trade$ar% &Custo$/uilt 9a!son6s& was registered /! the Philippines Patent ,ffice on Nove$/er 42, 12:8. +he gross sales fro$ 1264 to 126: of &Custo$/uilt& shoes total P16,484,11<.86.&Custo$/uilt& is retailed at P11.11. n 126<, plaintiff Converse and defendant 9acinto entered into protracted negotiations for a licensing agree$ent where/! defendant 9acinto would /e the eCclusive license of plaintiff Converse in the Philippines for the $anufacture and sale of &Chuc% +a!lor& shoes /ut with the right to continue $anufacturing and selling its own products. ,ne of the points ta%en up /! parties was the design and general appearance of &Custo$/uilt& shoes. Plaintiff Converse insisted on the condition that defendant 9acinto change the design of &Custo$/uilt& shoes so as to give &Custo$/uilt& a general appearance different fro$ &Chuc% +a!lor.& *fter an eCtensive discussion, defendant 9acinto gave into to the de$and of plaintiff Converse; it su/$itted to plaintiff Converse for the latter6s approval a s%etch of a new design for &Custo$/uilt&. +his design was accepted /! plaintiff Converse. Defendant 9acinto Ru//er then proposed that the licensing agree$ent /e $ade in favor of its affiliates, defendant *ce Ru//er. ,n 9anuar! 44, 126:, defendant *ce Ru//er signed the licensing agree$ent while defendant 9acinto Ru//er and *rturo 9acinto signed the guarantee agree$ent to secure the perfor$ance /! defendant *ce Ru//er of its o/ligations under the licensing agree$ent. .oth docu$ents, it should /e noted, contained the following covenants0 2. "a# *ce ac%nowledges that Converse is the eCclusive owner of the said Converse - na$es and design, as used in connection with the $anufacture, advertising and sale of footwear0 that Converse has the eCclusive right to use said Converse na$es in such connection throughout the world. su/>ect to the ter$s of this *gree$ent; and that neither *ce nor an! person acting /!, through or under *ce will, at an!ti$e, =uestion or dispute said ownership or the eCclusive rights of Converse with respect thereto "/# Nothing herein shall /e dee$ed to constitute a warrant! /! Converse as to the non-eCistence of infringe$ents of Conversena$es in the Repu/lic of the Philippines. +he ter$ &infringe$ent&as used in this *gree$ent shall include practices which give rise to a cause of action for da$ages or to in>unctive relief under Sections 4< and 42 of R. *. No. 166 of the Repu/lic of the Philippines or an! other applica/le law of said Repu/lic. During the ter$ thereof, *ce at its eCpense shall diligentl! investigate all infringe$ents of the use of said Converse-na$es, whether or not such infringe$ents violate laws pertaining to the registration of trade$ar%s or trade na$es, and shall notif! Converse pro$ptl! as to an! infringe$ents of said Converse

na$es within said territor!, and shall at its eCpense use its /est efforts to prevent such infringe$ents /! an reasona/le $eans, including the prosecution of litigation where necessar! or advisa/le. *n! award for da$ages which *ce $a! recover in such litigation shall accrue to the /enefit of, and shall /e owned and retained /! *ce. 14. *ce shall not,during the ter$ hereof, $anufacture or sell footwear which would, /! reason of its appearance andJor design, /e li%el!, or tend, to /e confused /! the pu/lic with an! of the Converse-na$ed products to /e $anufactured and sold hereunder, or shall in an! $anner, infringe Converse designs. f at an! ti$e and fro$ ti$e to ti$e the $anufacture of footwear under Converse-na$es for sale hereunder does not full! utiliDe *ce6s production capacit!, *ce shalt on Converse6s order, within the li$its of such surplus capacit!, $anufacture footwear of %inds and in a$ounts specified /! Converse, at a price no higher than the lowest price at which si$ilar footwear has /een sold to custo$er of *ce during the period of one "1# !ear i$$ediatel! preceding the date of such order, and upon no less favora/le discounts and ter$s of sale than si$ilar footwear is custo$aril! offered /! *ce to its $ost favored custo$er, pa!a/le in -nited States funds, if the earned ro!alt! hereunder is then so pa!a/le, otherwise in Repu/lic of the Philippines funds. 41. t /eing the $utual intention of the parties that Converse6s eCclusive propert! interests in the Converse-na$es shall at all ti$es /e protected to the full eCtent of the law, *ce agrees that it will eCecute all a$end$ents to this *gree$ent which $a! /e proposed fro$ ti$e to ti$e /! Converse for the purpose of full! protecting said interests. 'owever, the licensing agree$ent did not $aterialiDe, /ecause 'er$ogenes 9acinto refused to sign the guarantee. Plaintiff Converse and plaintiff )dwardson then eCecuted licensing agree$ent, $a%ing plaintiff )dwardson the eCclusive Philippine licensee for the $anufacture and sale of &Chuc% +a!lor.& ,n 9une 15, 1266, plaintiffs sent a written de$and to defendants to stop $anufacturing and selling &Custo$/uilt& shoes of dentical appearance as &Chuc% +a!lor&. Defendants did not repl! to plaintiffs6 letter. 'ence, this suit. Plaintiffs contend that &Custo$/uilt& shoes are dentical in design and Beneral appearance to &Chuc% +a!lor& and, clai$ing prior dentification of &Chuc% +a!lor& in the $ind of the /u!ing pu/lic in the Philippines, the! contend that defendants are guilt! of unfair co$petition /! selling &Custo$/uilt& of the design and with the general appearance of &Chuc% +a!lor&. +he design and appearance of /oth products, as shown /! the sa$ples and photographs of /oth products, are not disputed. Defendants insist that "a# there is no si$ilarit! in design and general appearance /etween &Custo$/uilt& and &Chuc% +a!lor&, pointing out that &Custo$/uilt& is readil! dentifia/le /! the tradena$e &Custo$/uilt& appearing on the an%le patch, the heel patch, and on the sole. t is also vigorousl! contended /! defendants that the registration of defendant 9acinto Ru//er6s trade$ar% &Custo$/uilt& /eing prior to the registration in the Philippines of plaintiff Converse Ru//er6s trade$ar% &Chuc% +a!lor&, plaintiffs have no cause of action. t appears that defendant started to $anufacture and sell &Custo$/uilt& of its present design and with its present appearance in 1264. ,n the other hand, as earlier $entioned, &Chuc% +a!lor& started

to /e sold in the Philippines in 1246 and has /een en>o!ing a reputation for =ualit! a$ong /as%et/all pla!ers in the Philippines. +he Court sees no difficult! in finding that the co$peting products are dentical in appearance eCcept for the trade na$es. +he respective designs, the shapes and the color of the an%le patch, the /ands, the toe patch and the sole of the two products are eCactl! the sa$e. *t a distance of a few $eters, it is i$possi/le to distinguish Custo$/uilt6 fro$ &Chuc% +a!lor&. +he casual /u!er is thus lia/le to $ista%e one for the other. ,nl! /! a close-eCa$ination and /! pa!ing attention to the trade na$es will the ordinar! /u!er /e a/le to tell that the product is either &Custo$/uilt& or &Chuc% +a!lor&, as the case $a! /e. )ven so, he will $ost li%el! thin% that the co$peting products, /ecause the! are stri%ingl! dentical in design and appearance are $anufactured /! one and the sa$e $anufacturer. Clearl!, this case satisfied the test of unfair co$petition. Priorit! in registration in the Philippines of a trade$ar% is not $aterial in an action for unfair co$petition as distinguished fro$ an action for infringe$ent of trade$ar%. +he /asis of an action for unfair co$petition is confusing and $isleading si$ilarit! in general appearance, not si$ilarit! of trade$ar%s. +he Court is not i$pressed /! defendants6 good faith in clai$ing that the! have the right to continue $anufacturing &Custo$/uilt& of dentical design and appearance as &Chuc% +a!lor&. @hile it is true that the licensing agree$ent /etween plaintiff Converse and defendant did not $aterialiDe, the eCecution of the docu$ents /! the defendants constitute an ad$ission on the part of plaintiff Converse Ru//er6s propert! right in design and appearance of &Chuc% +a!lor&. +he covenants, =uoted a/ove, show that defendants ac%nowledged that plaintiff Converse Ru//er &is the eCclusive owner of the said Converse-na$es and design.& Defendants further covenanted not to &$anufacture or sell footwear which would /! reason of its appearance andJor design, /e li%el!, or tend, to /e confused /! the pu/lic with an! of the Converse-na$ed products ... or shall, in an! $anner, infringe Converse designs&. +hat defendants are full! aware that &Custo$/uilt& is dentical in design and appearance to &Chuc% +a!lor& has conclusivel! /een ad$itted /! the$ in their correspondence with plaintiff Converse leading to the su/$ission /! defendants to plaintiff Converse of a s%etch of a new design that should give &Custo$/uilt& an appearance different fro$ that of &Chuc% +a!lor&. *side fro$ the written ad$ission of defendants, the facts clearl! indicate that defendants copied the design of &Chuc% +a!lor& with intent to gain &Chuc% +a!lor&, as has /een noted earlier, was ahead ot Custo$/uilt6 in the Philippines $ar%et and has /een en>oining a high reputation for =ualit! and st!le. )ven defendants6 own eChi/its leave no roo$ for dou/t that defendants copied the design and appearance of &Chuc% +a!lor& for the purpose of cashing in on the reputation of &Chuc% +a!lor&. +he sa$ples of defendants6 product show, indeed, as announced /! defendants6 counsel the &$eta$orphosis& of defendants6 product. n the /eginning, the design of defendants6 product was entirel! different fro$ its present design and the design of &Chuc% +a!lor&. t was onl! in 1264, or 16 !ears after &Chuc% +a!lor& has /een in the $ar%et, that defendants adopted the present design of &Custo$/uilt&. t is also noteworth! that &Custo$/uilt& sells at P<: less than &Chuc% +a!lor&; thus the casual /u!er is led to /elieve that he is /u!ing the sa$e product at a lower price. Not surprisingl!, the volu$e of sales of &Custo$/uilt& increased fro$ <:R to 8:R of defendants6 total sales after the! incorporated in their product the design and appearance of &Chuc% +a!lor&.

t is thus clear that defendants are guilt! of unfair co$petition /! giving &Custo$/uilt& the sa$e general appearance as &Chuc% +a!lor&. t is e=uall! clear that defendants in so doing are guilt! of /ad faith. +here re$ains for the Court to consider the da$ages that defendants should /e lia/le for to plaintiffs. Plaintiffs clai$ co$pensator! da$ages e=uivalent to <1R of the gross sales of &Custo$/uilt& and attorne!6s fees in the a$ount of P4:,111.11. .! defendants6 own evidence, the gross sales of &Custo$/uilt& fro$ 1264, the !ear defendants adopted the present design of their product, to 126: total P16,484,11<.86. f the Court should grant plaintiffs6 pra!er for co$pensator! da$ages e=uivalent to <1R of defendants6 gross sales, the co$pensator! da$ages would a$ount to P4,244,4<1.1<. Considering the a$ount of gross sales of &Custo$/uilt&, an award to plaintiffs for <1R of defendants6 annual gross sales would seriousl! ripple, if not /an%rupt, defendant co$panies. +he Court is aware that defendants6 invest$ent is su/stantial and that defendants support a su/stantial nu$/er of e$plo!ees and la/orers. +his /eing so, the Court is of the opinion that plaintiffs are entitled to onl! one "1# per cent of annual gross sales of &Custo$/uilt& shoes of current design. *s for attorne! s fees, the Court is of the opinion that, P11,111.11 is reasona/le. "Pages 418-445, Record on *ppeal.# Defendants-appellants have assigned the following alleged errors0

+') C,-R+ * F-, )RR)D N *SS-3 NB 9-R SD C+ ,N ,M)R +') C,3P(* N+ ,E P(* N+ EES-*PP)(())S.

+') C,-R+ * F-, )RR)D N *RR M NB *+ +') C,NC(-S ,N +'*+ +') D)E)ND*N+S *R) B- (+G ,E -NE* R C,3P)+ + ,N @')N D)E)ND*N+ 9*C N+, R-..)R I P(*S+ CS C,., NC., 3*N-E*C+-R)D *ND S,(D R-..)R-S,()D C*NM*SS S',)S -ND)R +S R)B S+)R)D +R*D) 3*R7 &C-S+,3.- (+&.

+') C,-R+ * F-, )RR)D N *D9-D C*+ NB N E*M,R ,E +') P(* N+ EE +') S-3 ,E P161,111.11 *S C,3P)NS*+,RG D*3*B)S *ND P11,111.11 *S *++,RN)G6S E))S. "Pp. * I ., .rief for Defendants-*ppellants.# @e have carefull! gone over the records and reviewed the evidence to satisf! ,urselves of the si$ilarit! of the shoes $anufactured and sold /! plaintiffs with those sold /! defendants, and @e find the conclusions of the trial court to /e correct in all respects. n fact, in their /rief, defendants do not contest at all the findings of the trial court insofar as $aterial dentit! /etween the two %inds of shoes in =uestion is concerned. @e have ,urselves eCa$ined the eChi/its in detail, particularl!, the co$parative pictures and other representations if the shoes in =uestion, and @e do not hesitate in holding that he plaintiffs co$plaint of unfair co$petition is a$pl! >ustified. Ero$ said eCa$ination, @e find the shoes $anufactured /! defendants to contain, as found /! the trial court, practicall! all the features of those of the plaintiff Converse Ru//er Corporation and $anufactured, sold or $ar%eted /! plaintiff )dwardson 3anufacturing Corporation, eCcept for heir respective /rands, of course. @e full! agree with the trial court that &the respective designs, shapes, the colors of the an%le patches, the /ands, the toe patch and the soles of the two products are

eCactl! the sa$e ... "such that# at a distance of a few $eters, it is i$possi/le to distinguish &Custo$/uilt& fro$ &Chuc% +a!lor&. +hese ele$ents are $ore than sufficient to serve as /asis for a charge of unfair co$petition. )ven if not all the details >ust $entioned were dentical, with the general appearances alone of the two products, an! ordinar!, or even perhaps even a not too perceptive and discri$inating custo$er could /e deceived, and, therefore, Custo$/uilt could easil! /e passed off for Chuc% +a!lor. 9urisprudence supports the view that under such circu$stances, the i$itator $ust /e held lia/le. n .. $. < %. Ale=ander < Co. 9td. et al. vs. An et al., 28 Phil. 1:8, at p. 161, this Court held0 .! &purchasers& and &pu/lic& li%el! to /e deceived /! the appearance of the goods, the statute $eans the &ordinar! purchaser&. *nd although this Court apparentl! shifted its position a /it in D( "uncio vs. 6an 6iao "o), 44 Phil. 121, /! referring to si$ulations li%el! to $islead &the ordinaril! intelligent /u!er&, it turned to the general accepted doctrine in E. Spinner < Co. vs. Neuss >esslein, :4 Phil. 444, where it spo%e of &the casual purchasers& &who %nows the goods onl! /! na$e.& t stands to reason that when the law spea%s of purchasers6 it generall! refers to ordinar! or average purchasers. ... in cases of unfair co$petition, while the re=uisite degree of rese$/lance or si$ilarit! /etween the na$es, /rands, or other indicia is not capa/le of eCact definition, it $a! /e stated generall! that the si$ilarit! $ust /e such, /ut need onl! /e such, as is li%el! to $islead purchasers of ordinar! caution and prudence; or in other words, the ordinar! /u!er, into the /elief that the goods or wares are those, or that the na$e or /usiness is that, of another producer or trades$an. t is not necessar! in either case that the rese$/lance /e sufficient to deceive eCperts, dealers, or other persons speciall! fa$iliar with the trade$ar% or goods involved. Nor is it $aterial that a critical inspection and co$parison would disclose differences, or that persons seeing the trade$ar%s or articles side /! side would not /e deceived ":4 *$. 9ur. pp. 611-611#. ".rief for Plaintiffs as *ppellees, pp. 45-42, p. 81, Record.# ndeed, the ver! teCt of the law on unfair co$petition in this countr! is clear enough. t is found in Chapter M of Repu/lic *ct 166 reading thus0 S)C. 42. ,nfair co#petition, ri hts and re#edies . - * person who has dentified in the $ind of the pu/lic the goods he $anufactures or deals in, his /usiness or services fro$ those of others, whether or not a $ar% or trade na$e is e$plo!ed, has a propert! right in the goodwill of the said goods, /usiness or services so dentified, which will /e protected in the sa$e $anner as other propert! rights. Such a person shall have the re$edies provided in section twent!-three, Chapter M hereof. *n! person who shall e$plo! deception or an! other $eans contrar! to good faith /! which he shall pass off the goods $anufactured /! hi$ or in which he deals, or his /usiness, or services of those of the one having esta/lished such goodwill, or who shall co$$it an! acts calculated to produce said result, shall /e guilt! of unfair co$petition, and shall /e su/>ect to an action therefor. n particular, and without in an! wa! li$iting the scope of unfair co$petition, the following shall /e dee$ed guilt! of unfair co$petition0

"a# *n! person, who in selling his goods shall give the$ the general appearance of goods of another $anufacturer or dealer, either as to the goods the$selves or in the wrapping of the pac%ages in which the! are contained, or the devices or words thereon, or in an! other feature of their appearance, which would /e li%el! to influence purchasers to /elieve that the goods offered are those of a $anufacturer or dealer other than the actual $anufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the pu/lic and defraud another of his legiti$ate trade, or an! su/se=uent vendor of such goods or an! agent of an! vendor engaged in selling such goods with a li%e purpose; "/# *n! person who /! an! artifice, or device, or who e$plo!s an! other $eans calculated to induce the false /elief that such person is offering the services of another who has dentified such services in the $ind of the pu/lic; or "c# *n! person who shall $a%e an! false state$ent in the course of trade or who shall co$$it an! other act contrar! to good faith of a nature calculated to discredit the goods, /usiness or services of another. t is the theor! of defendants-appellants, however, that plaintiffs-appellees have failed to esta/lish a case of unfair co$petition /ecause &inas$uch as the for$er "Converse Chuc% +a!lor# was not sold in the local $ar%ets fro$ 1242 to 1268, no co$petition, fair or unfair, could have /een offered to it /! the latter product "Custo$/uilt Challenger# during the said period.& @hile the argu$ent, it $a! /e conceded, $a%es sense as a proposition in practical logic, as indeed, it served as a legal defense in >urisprudence in the past, the $odern view, as contended /! plaintiffs &represents a tendenc! to $old, and even to eCpand; legal re$edies in this field to confor$ to ethical practices.& ".rief of Plaintiffs as *ppellees, pp. 16-18.# *s a $atter of fact, in An vs. 6oribio, 84 Phil. 142, this Court aptl! pointed out0 ... *s trade has developed and co$$ercial changes have co$e a/out, the law of unfair co$petition has eCpanded to %eep pace with the ti$es and the ele$ents of strict co$petition in itself has ceased to /e the deter$ining factor. +he owner of a trade$ar% or trade-na$e has propert! right in which he is entitled to protection, since there is da$age to hi$ fro$ confusion of reputation or goodwill in the $ind of the pu/lic as well as fro$ confusion of goods. +he $odern trend is to give e$phasis to the unfairness of the acts and to classif! and treat the issue as fraud. *dditionall!, @e =uote with approval counsel6s contention thus0 n no uncertain ter$s, the statute on unfair co$petition eCtends protection to the goodwill of a $anufacturer or dealer. t attaches no fetish to the word &co$petition&. n plain language it declares that a &person who has dentified in the pu/lic the goods he $anufactures or deals in, his /usiness or services fro$ those of others, whether or not a right in the goodwill of the said goods, /usiness or services so dentified, which will /e protected in the sa$e $anner as other propert! rights.& t deno$inates as &unfair co$petition& &an! acts& calculated to result in the passing off of other goods &for those of the one having esta/lished such goodwill.& Singularl! a/sent is a re=uire$ent that the goodwill sought to /e protected in an action for unfair co$petition $ust have /een esta/lished in an actual co$petitive situation. Nor does the law re=uire that the deception or other $eans contrar! to good faith or an! acts calculated to pass off other goods for those of one who has esta/lished a goodwill $ust have /een co$$itted in an actual co$petitive situation.

+o read such conditions, as defendants-appellants see% to do, in the plain prescription of the law is to re-construct it. ndeed, good-will esta/lished in other than a co$petitive $ilieu is no less a propert! right that deserves protection fro$ un>ust appropriation or in>ur!. +his, to us, is precisel! the clear sense of the law when it declares without e=uivocation that a &person who has dentified in the $ind of the pu/lic the goods he $anufactures or deals in, his /usiness or services fro$ those of others, has a propert! right in the goodwill of the said goods, /usiness or services so dentified, which will /e protected in the sa$e $anner as other propert! rights.& Plaintiffs-appellees have a esta/lished goodwill. +his goodwill, the trial court found, defendants-appellants have pirated in clear /ad faith to their un>ust enrich$ent. t is strange that defendants-appellants now sa! that the! should /e spared fro$ the penalt! of the law, /ecause the! were not reall! in co$petition with plaintiffsappellees. "Pp. 41-44, !d.# n a desperate atte$pt to escape lia/ilit!, in their first assigned error, defendants-appellants assail the >urisdiction of the trial court, contending that inas$uch as Converse Ru//er Corporation is a non-resident corporation, it has no legal right to sue in the courts of the Philippines, citing +arshall* @ells Co. vs. Elser < C., 46 Phil. 81 andCo##issioner of !nternal .evenue vs. ,nited States 9ines Co., B. R. No. (-165:1, 3a! <1, 1264 ": SCR* 18:# and, further$ore, that plaintiff )dwardson 3anufacturing Corporation, although &a do$estic corporation, is nothing /ut a licensee of Converse Ru//er Corporation in the local $anufacturing, advertise$ent, sale and distri/ution of the ru//er-soled footwear&, hence, it is e=uall! without such personalit!. "p. 15, .rief of Defendants*ppellants#. @e are not i$pressed. +he eas! and, @e hold to /e correct, refutation of defendants6 position is stated ade=uatel! and understanda/l! in plaintiffs6 /rief as appellees as follows0 +he disa/ilit! under Section 62 of the Corporation (aw of an unlicensed foreign corporation refers to transacting /usiness in the Philippines and $aintaining a &suit for the recover! of an! de/t, clai$, or de$and whatever& arising fro$ its transacting /usiness in the Philippines. n 3arshall-@ells, this Court precisel! re>ected a reading of Section 62 of the Corporation (aw as &would give it a literal $eaning&, i.e., &No foreign corporation shall /e per$itted /! itself or assignee an! suit for the recover! of an! deed, clai$, or de$and unless it shall have the license prescri/ed /! Section 65 of the (aw.& &+he effect of the statute,& declared this Court, &preventing foreign corporations fro$ doing /usiness and fro$ /ringing actions in the local courts, eCcept on co$pliance with ela/orate re=uire$ents, $ust not /e undul! eCtended or i$properl! applied "at page 8:#. n Co##issioner of !nternal .evenue v. ,nited States 9ines Co#pan(, this Court did not hold that an unlicensed foreign corporation $a! not sue in the Philippines. +he Court si$pl! held that a foreign shipping co$pan!, represented /! a local agent, is doing /usiness in the Philippines so as to su/>ect it to the &operation of our revenue and taC.& @estern E:uip#ent and Suppl( Co. v. .e(es, :1 Phil. 11:, $ade clear that the disa/ilit! of a foreign corporation fro$ suing in the Philippines is li$ited to suits &to enforce an! legal or contract rights arising fro$, or growing out, of an! /usiness which it has transacted in thePhilippine slands.& ... ,n the other hand, where the purpose of a suit is &to protect its reputation, its corporate na$e, its goodwill, whenever that reputation, corporate na$e or goodwill have, through the natural develop$ent of its trade, esta/lished the$selves,& an unlicensed foreign corporation $a! sue in the Philippines "at page 145#. So interpreted /! the Supre$e Court, it is

clear that Section 62 of the Corporation (aw does not dis=ualif! plaintiff-appellee Converse Ru//er, which does not have a /ranch office in an! part of the Philippines and is not &doing /usiness& in the Philippines "Record on *ppeal, pp. 121-121#, fro$ filing and prosecuting this action for unfair co$petition. +he futilit! of the error assigned /! defendants-appellants /eco$es $ore evident in light of the eCplicit provision of Section 41 "a# of Repu/lic *ct No. 166, as a$ended, that a foreign corporation, whether or not licensed to transact /usiness in the Philippines $a! /ring an action for unfair co$petition provided the countr! of which it &is a citiDen, or in which it is do$iciled, /! treat!, convention or law, grants a si$ilar privilege to >uristic persons in the Philippines.& +he Convention of Paris for the Protection of ndustrial Propert!, to which the Philippines adheres, provides, on a reciprocal /asis that citiDens of a union $e$/er $a! file an action for unfair co$petition and infringe$ent of trade$ar%s, patents, etc. "611. B. 5111# in and of the union $e$/ers. +he -nited States of *$erica, of which Converse Ru//er is a citiDen, is also a signator! to this Convention. Section 1146 "/# and "h# of Pu/lic (aw 452 of the -nited States of *$erica allows corporations organiDed under the laws of the Philippines to file an action for unfair co$petition in the -nited States of *$erica, whether or not it is licensed to do /usiness in the -nited States. "*nneC &'& of Partial Stipulation of Eacts, Record on *ppeal, p. 124#. *s regards the other plaintiff-appellee, )dwardson 3anufacturing Corporation, it is indisputa/le that it has a direct interest in the success of this action0 as eCclusive licensee of Converse Ru//er in the $anufacture and sale of &Chuc% +a!lor& shoes in the Philippines, naturall! it would /e directl! affected /! the continued $anufacture and sale /! defendants-appellants of shoes that are confusingl! dentical in appearance and design with &Chuc% +a!lor.& ".rief of Plaintiffs as *ppellees, pp. 1114.# *s can /e seen, what is actuall! the onl! controversial $atter in this case is that which refers to the assess$ent ot da$ages /! the trial court, which /oth plaintiffs and defendants consider erroneous, defendants $aintaining, of course, that it is eCcessive, even /aseless, while, on the other hand, plaintiffs posit that it is far short fro$ what the law and the relevant circu$stances re=uire. -nder Section 42 of the Repu/lic *ct 166, afore=uoted, it will /e o/served that the first paragraph thereof refers to the propert! rights in goodwill of a &person who has dentified in the $ind of the pu/lic goods he $anufactures or deals in, his /usiness or offices fro$ those of others, whether or not a $ar% or trade na$e is e$plo!ed&, while the second paragraph spea%s of &an! person who shall e$plo! deception or an! other $eans contrar! to good faith /! which he shall pass off the goods $anufactured /! hi$ ... for those of the one having esta/lished such goodwill.& +his second paragraph, which $a! /e read together with the first paragraph, $a%es the deceiver or i$itator &guilt! of unfair co$petition and shall /e su/>ected to an action therefore&, $eaning what the first paragraph refers to as the &re$edies provided in Section twent!-three, Chapter M& of the *ct. t is i$plicit in the decision of the trial court and the /riefs of the parties that ever!one here concerned has acted on the /asis of the assu$ptions >ust stated. Now, Section 4< reads0 Actions, and da#a es and in-unction for infrin e#ent . - *n! person entitled to the eCclusive use of a registered $ar% or trade na$e $a! recover da$ages in a civil action fro$ an! person who infringes his rights, and the $easure of the da$ages suffered shall /e either the reasona/le profit which the co$plaining part! would have

$ade, had the defendant not infringed his said rights, or the profit which the defendant actuall! $ade out of the infringe$ent, or in the event such $easure of da$ages cannot /e readil! ascertained with reasona/le certaint!, then the court $a! award as da$ages a reasona/le percentage /ased upon the a$ount of gross sales of the defendant of the value of the services in connection with which the $ar% or trade na$e was used in the infringe$ent of the rights of the co$plaining part!. n cases where actual intent to $islead the pu/lic or to defraud the co$plaining part! shall /e shown, in the discretion of the court, the da$ages $a! /e dou/led. +he co$plaining part!, upon proper showing, $a! also /e granted in>unction. n the light of the foregoing provision, @e find difficult! in seeing the /asis of the trial court for reducing the <1R, clai$ed /! plaintiffs, of the gross earnings of defendants fro$ the sale of Custo$/uilt fro$ 1264 to $erel! 1R as the $easure of co$pensator! da$ages to which plaintiffs are entitled for that period. Perhaps, as 'is 'onor pessi$isticall! argued, defendants would suffer crippling of their /usiness. .ut it is =uite clear fro$ the circu$stances surrounding their act of deli/eratel! passing off the ru//er shoes produced /! the$ for those over which plaintiffs had priorl! esta/lished goodwill, that defendants had tre$endousl! increased their volu$e of /usiness and profits in the i$itated shoes and have precisel! incurred, strictl! spea%ing, the lia/ilit! of the da$ages to /e paid /! the$ /e dou/led, per the last sentence of Section 4<. @e are of the considered opinion that the trial court was overl! li/eral to the defendants-appellants. +he P161,111.11 awarded /! 'is 'onor as co$pensator! da$ages for the !ears 1264 to 126: are utterl! inade=uate. )ven the :R of the gross sales of &Custo$/uilt& shoes fro$ 1266 until its in>unction is full! o/e!ed are short of what the law conte$plates in cases of this nature. @e hold that considering that the gross sales of defendants-appellants increased to P16,484,11<.86, "as ad$itted in defendants-appellants6 own /rief, p. 4#, onl! 8:R of which, plaintiffs-appellants generousl! assert corresponded to Custo$/uilt sales, it would /e /ut fair and >ust to award plaintiffs-appellants 1:R of such 8:R as co$pensator! da$ages fro$ 1264 up to the finalit! of this decision. n other words, 8:R of P16,484,11<.86 would /e P14,<::,:88.54 and 1:R of this last a$ount would /e P1,5:<,<<6.68, which should /e awarded to plaintiffs-appellants for the whole period alread! stated, without an! interest, without pre>udice to plaintiffs-appellants see%ing /! $otion in the trial court in this sa$e case an! further da$age should defendants-appellants continue to diso/e! the in>unction herein affir$ed after the finalit! of this decision. @e feel that this award is reasona/le. t is not farfetched to assu$e that the net profit of the i$itator which, after all is what the law conte$plates as /asis for da$ages if it were onl! actuall! ascertaina/le, in the $anufacture of ru//er shoes should not /e less than 41 to 4:R of the gross sales. Regretta/l!, neither of the parties presented positive evidence in this respect, and the Court is left to use as /asis its own pro>ection in the light of usual /usiness practices. @e could, to /e sure, return this case to the lower court for further evidence on this point, /ut, inas$uch as this litigation started wa! /ac% a/out fourteen !ears ago and it would ta%e $ore !ears /efore an! final disposition is $ade hereof should ta%e the course, @e are convinced that the a/ove straight co$putation, without an! penalt! of interest, is in accordance with the spirit of the law governing this case. !n re G. .. No. 9*EFDFD +he su/>ect $atter of this appeal is the order of the trial court, incident to its $ain decision @e have >ust reviewed a/ove, dis$issing &for lac% 6f >urisdiction the conte$pt charge filed /! plaintiffs against defendant 9acinto Ru//er I Plastics Co. nc., *ce Ru//er I Plastics Corporation; Philippine I 3anage$ent Corporation and their respective corporate officers.

$portantl!, it is necessar! to i$$ediatel! clear up the $inds of appellees in regard to so$e aspects of the argu$ent on dou/le >eopard! discussed /! their distinguished counsel in his preli$inar! argu$ent in his /rief "pp. 2-1<#. t is contended therein that inas$uch as the denial orders of *ugust 4<, 1268, Dece$/er 42, 1268 and 9anuar! 44, 1265 have the character of ac=uittals, conte$pt proceedings /eing cri$inal in nature, this appeal su/>ects appellees to dou/le >eopard!. Such contention $isses, however, the i$portant consideration that the said denial orders, were, as eCplained /! 'is 'onor hi$self in his last two orders, /ased on the assu$ption that he had lost >urisdiction over the incident /! virtue of the earlier perfection of the appeals of /oth parties fro$ the decision on the $erits. t is thus the effect of this assu$ption, revealed later /! the trial >udge, on the first order of *ugust 4<, 1268 that needs clarificator! dis=uisition, considering that the said first order was eCclusivel! /ased on &the interests of >ustice& and &lac% of $erit& and $ade no reference at all to >urisdiction. f indeed the trial court had lost >urisdiction, it would /e clear that said order could have no legal standing, and the argu$ent of dou/le >eopard! would have no /asis. .ut after $ature deli/eration, and in the light of Cia General de 6abacos de $ilipinas vs. Alha#bra Ci ar < Ci arette +anufacturin Co., << Phil. :1<, cited /! appellant6s counsel in his /rief, @e are convinced that the trial court in the case at /ar had >urisdiction to entertain and decide the $otion for conte$pt in =uestion. ndeed, the enforce$ent of either final or preli$inar!-$ade-final in>unctions in decisions of trial courts are i$$ediatel! eCecutor!. +he reason for this rule lies in the nature itself of the re$ed!. f a preli$inar! in>unction, especiall! one issued after a hearing is enforcea/le i$$ediatel! to protect the rights of the one as%ing for it, independentl! of the pendenc! of the $ain action, there is no reason wh! when that preli$inar! in>unction is $ade final after further and fuller hearing the $erits of the plaintiff6s cause of action, its enforcea/ilit! should lesser, force. +he sa$e $ust /e true with stronger /asis in the case of a per$anent in>unction issued as part ot the >udg$ent. +he ai$ is to stop the act co$plained of i$$ediatel! /ecause the court has found it necessar! to serve the interests of >ustice involved in the litigation alread! resolve /! it after hearing and reception of the evidence of /oth parties. *s a $atter ot fact, it is =uite o/vious that an action for unfair co$petition with pra!er for an in>unction parta%es of the nature of an action for in>unction within the conte$plation of Section 4 of Rule <2, and this cited provision states eCplicitl! that &unless otherwise ordered /! the court, a >udg$ent in an action for in>unction - shall not /e sta!ed after its rendition and /efore an appeal is ta%en or during the pendenc! of an appeal.& n the a/ove-$entioned case of Cia. Beneral de +a/acos, the Court held0 +he applicant contends here0 Eirst, that the in>unction is indefinite and uncertain to such an eCtent that a person of ordinar! intelligence would /e una/le to co$pl! with it and still protect his ac%nowledged rights; second, that the in>unction is void for the reason that the >udg$ent of the court on which it 6s /ased is not responsive to the pleadings or to the evidence in the case and has nothing in the record to support it; third, that the court erred in assu$ing >urisdiction and fining defendant after an appeal had /een ta%en fro$ the >udg$ent of the court and the perpetual in>unction issued thereon. +here are other o/>ections that need no particular discussion. Discussing these =uestions generall! it $a! /e ad$itted, as we stated in our decision in the $ain case "B. R No. 114:1, ante p. 45:# that, while the co$plaint set forth an action on a trade-na$e and for unfair co$petition, accepting the plaintiff6s interpretation of it, the trial court /ased its >udg$ent on the violation of a trade-$ar%, although the co$plaint contained no allegation with respect to a trade-$ar% and no issue was >oined on that su/>ect /! the pleadings and no evidence was introduced on

the trial with respect thereto. +here *as however, so$e evidence in the case with respect to the plaintiff6s ownership of the trade-na$e & sa/ela,& for the violation of which the plaintiff was suing, and there was so$e evidence which $ight support an action of unfair co$petition, if such an action could /e sustained under the statute. +herefore, although the >udg$ent of the trial court was /ased on the violation of a trade-$ar%, there was so$e evidence to sustain the >udg$ent if it had /een founded on a violation of the trade-na$e or on unfair co$petition. +he >udg$ent, as we have alread! found in the $ain case, was erroneous and was reversed for that reason; /ut having so$e evidence to sustain it, it was not void and the in>unction issued in that action was one which the court had power to issue. *lthough the >udg$ent was clearl! erroneous and without /asis in law, it was, nevertheless a >udg$ent of a court of co$petent >urisdiction which had authorit! to render that particular >udg$ent and to issue a per$anent in>unction thereon. CCC CCC CCC ... +he =uestion is not was the >udg$ent correct on the law and the facts, /ut was it a valid >udg$ent? f so, and if the in>unction issued thereon was definite and certain and was within the su/>ect $atter of the >udg$ent, the defendant was /ound to o/e! it, however erroneous it $a! have /een. "Pp. :1:-:16, :16, << Phil.# t is interesting to note that while the trial court was of the opinion that it had lost >urisdiction over the $otion for conte$pt, upon insistence of the plaintiffs, in its order of 9anuar! 44, 1265, it $ade the following findings of fact0 t is not controverted on Dece$/er 14, 1266, the Philippine 3ar%eting and 3anage$ent sold to Mirginia Mentures 14 pairs of &Custo$/uilt& ru//er shoes /earing an dentical design and general appearance as that prohi/ited in the in>unction. t is li%ewise not controverted that su/se=uent to Dece$/er 14, 1266 the sale of the said ru//er shoes was advertised /! Philippine 3ar%eting and 3anage$ent Corporation in several $etropolitan newspapers even during the pendenc! of the conte$pt proceedings. +he onl! issue of fact is whether or not in selling and advertising the sale of the prescri/ed shoes the Philippine 3ar%eting and 3anage$ent Corporation conspired with the defendants, particularl! defendant 9acinto Ru//er, or acted as its agent, e$plo!ee or in an! other capacit! with %nowledge of the issuance of the said per$anent in>unction. ,n this point, the evidence of the plaintiffs shows that 'er$ogenes 9acinto, *rturo 9acinto, Eernando 9acinto and 3ilagros 9. 9ose constitute the $a>orit! of the /oard of directors of the Philippine 3ar%eting and 3anage$ent Corporation; that 'er$ogenes 9acinto is the president, *rturo 9acinto is the vice-president, and Eernando 9acinto and 3ilagros 9. 9ose are directors, of defendant 9acinto Ru//er; that 3ilagros 9. 9ose is the treasurer of the Philippine 3ar%eting and 3anage$ent Corporation; and that Ra$on M. +upas, corporate secretar! of the Philippine 3ar%eting and 3anage$ent Corporation, activel! assisted /! *tt!. 9uan +. David, counsel of record of the defendants, in defending the defendants in this case. t also appears fro$ the different advertise$ents pu/lished in the $etropolitan papers that Philippine 3ar%eting and 3anage$ent Corporation is the eCclusive distri/utor of the =uestioned &Custo$/uilt& ru//er shoes. 3oreover, during the trial of this case on the $erits the defendants ad$itted that the Philippine 3ar%eting and 3anage$ent Corporation is a sister corporation of defendant 9acinto Ru//er, /oth corporations having dentical stoc%holders, and 'er$ogenes 9acinto

and Eernando 9acinto are stoc%holders and incorporators of the Philippine 3ar%eting and 3anage$ent Corporation. ,n the other hand, the defendants, particularl! defendant 9acinto Ru//er, presented no evidence to disprove its intra-corporate relationship with the Philippine 3ar%eting and 3anage$ent Corporation. nstead it presented, over the o/>ection of the plaintiffs, the affidavit of its eCecutive vice-president, Beroni$o 9acinto, who affir$ed that defendant 9acinto Ru//er had no %nowledge of, or participation in, the acts co$plained of in the $otion to declare the$ in conte$pt of Court and that it has not in an! wa! violated an! order of this Court. ,n its part, the Philippine 3ar%eting and 3anage$ent Corporation presented as a witness its general $anager, *niceto +an, who testified that the Philippine 3ar%eting and 3anage$ent Corporation is not an agent or sister corporation of defendant 9acinto Ru//er; that he ca$e to %now of the pendenc! of this case and the issuance of the per$anent in>unction onl! on Dece$/er 12, 1266 when served with a cop! of plaintiffs6 $otion; and that the Philippine 3ar%eting and 3anage$ent Corporation /u!s the &Custo$/uilt Ru//er& shoes fro$ defendant 9acinto Ru//er which it resells to the general pu/lic. t is noteworth!, however, that this particular witness $ade several ad$issions in the course of his testi$on! which shed light on the =uestion at issue. +hus, he ad$itted that prior to the for$al organiDation of the Philippine 3ar%eting and 3anage$ent Corporation in 9anuar! 1266 he was the sales $anager of defendant 9acinto Ru//er; that after the organiDation of the said corporation, he was infor$ed that defendant 9acinto Ru//er would discontinue its sales operations and instead give the eCclusive distri/ution of the shoes to the Philippine 3ar%eting and 3anage$ent Corporation; and that he was then offered the position of sales $anager of Philippine 3ar%eting and 3anage$ent /ecause of his eCtensive eCperience in the distri/ution of &Custo$/uilt& ru//er shoes. *lso, he testified that the su/scri/ed capital stoc% of the Philippine 3ar%eting and 3anage$ent Corporation is onl! P111,111.11 out of which P4:,111.11 has /een paid whereas its average $onthl! purchases of &Custo$/uilt& ru//er shoes is /etween P<11,111.11 to P411,111.11 or /etween P4,111,111.11 to P:,111,111.11 annuall!. Such huge purchases Philippine 3ar%eting and 3anage$ent Corporation is a/le to $a%e, in spite of its $eager capital, /ecause defendant 9acinto Ru//er allows it to /u! on credit. Considering the su/stantial dentit! of the responsi/le corporate officers of the defendant 9acinto Ru//er and the Philippine 3ar%eting and 3anage$ent Corporation, the huge volu$e of alleged purchases of &Custo$/uilt& shoes /! the Philippine 3ar%eting and 3anage$ent Corporation co$pared to its paid in capital, and the cessation of the sales operations of defendant 9acinto Ru//er after the organiDation of the for$er, the Court is convinced /e!ond reasona/le dou/t that the Philippine 3ar%eting and 3anage$ent Corporation is the selling ar$ or /ranch of defendant 9acinto Ru//er and that /oth corporations are controlled /! su/stantiall! the sa$e persons, the 9acinto fa$il!. +he contention of the Philippine 3ar%eting and 3anage$ent Corporation that it sold the 14 pairs of &Custo$/uilt& shoes on Dece$/er 14, 1266 without %nowledge of the issuance of the in>unction is /elied /! its conduct of continuing the sale and the advertise$ent of said shoes even during the pendenc! of the conte$pt proceedings. +his conduct clearl! reveals the wilfulness and contu$ac! with which it had disregarded the in>unction. .esides, it is inherentl! i$pro/a/le that defendant 9acinto Ru//er and *tt!. Ra$on .. +upas did not infor$ the Philippine 3ar%eting and 3anage$ent Corporation of the issuance of the in>unction, a fact which undou/tedl! has a $aterial adverse effect on its /usiness.

-pon the foregoing, the Court is convinced that defendants and Philippine 3ar%eting and 3anage$ent Corporation are guilt! of conte$pt of court in disregarding the per$anent in>unction issued /! this Court in its decision on the $erits of the $ain case. 'owever, for the reasons stated in the ,rder of Dece$/er 42, 1268, the Court $aintains that it has lost >urisdiction over the case. "Pp. 11:-141, Record on *ppeal.# Stated differentl!, since the trial court had >urisdiction to ta%e cogniDance of the $otion, its findings of facts should as a rule /ind the parties, and, in this connection, appellees do not seriousl! challenge said findings. *nd since @e are holding that the trial court had >urisdiction, the a/ove findings $a! /e deter$inative of the factual issues a$ong the parties herein. @e are thus faced with the following situations0 +he first order of dis$issal of *ugust 4<, 1268, al/eit issued with >urisdiction, was inco$plete /ecause it contained no state$ents of facts and law on which it was /ased in violation of the pertinent constitutional precept. t could not stand as it was. +he second of Dece$/er 42, 1268 was still inco$plete, with the added flaw that his 'onor declared hi$self therein as having lost >urisdiction. ,n other hand, while the third order of 9anuar! 44, 1265 filled the o$$issions of the first two orders, it, however, the reiterated the erroneous ruling of the second order regarding lost of >urisdiction of the court over the incident. Co$/ining the three orders, it can /e seen that the result is that the trial court found fro$ the evidence that its in>unction had /een violated, /ut it erroneousl! considered itself devoid of authorit! to i$pose the appropriate penalt!, for want of >urisdiction. -pon these pre$ises, @e hold that the factual findings of the trial court in its third order $a! well stand as /asis tor the i$position of the proper penalt!. +o /e sure, appellees are al$ost in the right trac% in contending that the first denial order of the trial court found the$ not guilt!. @hat the! have overloo%ed however is that such a finding cannot /e e=uated with an ac=uittal in a cri$inal case that /ars a su/se=uent >eopard!. +rue it is that generall!, conte$pt proceedings are characteriDed as cri$inal in nature, /ut the $ore accurate >uridical concept is that conte$pt proceedings $a! actuall! /e either civil or cri$inal, even if the distinction /etween one and the other $a! /e so thin as to /e al$ost i$percepti/le. .ut it does eCist in law. t is cri$inal when the purpose is to vindicate the authorit! of the court and protect its outraged dignit!. t is civil when there is failure to do so$ething ordered /! a court to /e done for the /enefit of a part!. "< 3oran, Rules of Court, pp. <4<-<44, 1281 ed; see also Per%ins vs. Director of Prisons, :5 Phil. 484; 'arden vs. Director of Prisons, 51 Phil. 841.# *nd with this distinction in $ind, the fact that the in>unction in the instant case is $anifestl! for the /enefit of plaintiffs $a%es of the conte$pt herein involved civil, not cri$inal. *ccordingl!, the conclusion is inevita/le that appellees have /een virtuall! found /! the trial court guilt! of civil conte$pt, not cri$inal conte$pt, hence the rule on dou/le >eopard! $a! not /e invo%ed. @')R)E,R), >udg$ent is here/! rendered - in B. R. No. (-4844: - affir$ing the decision of the trial court with the $odification of the a$ount of the da$ages awarded to plaintiffs in the $anner hereina/ove indicated; and in B.R. No. (-<1:1: - the three orders of dis$issal of the trial court of the conte$pt charges against appellees are all here/! reversed, and on the /asis of the factual findings $ade /! said court in its last order of 9anuar! 44, 1265, appellees are here/! declared in conte$pt of court and the records of the conte$pt proceedings "B. R. No. (-<1:1:# are ordered returned to the trial court for further proceedings in line with the a/ove opinion, na$el! for the i$position of the proper penalt!, its decision /eing inco$plete in that respect. Costs against

appellees in B. R. No. (-4844:, no costs in B. R. No. (-<1:1:. +hese decisions $a! /e eCecuted separatel!. Concepcion %r., Guerrero and De Castro, %%., concur. Antonio, %., is on leave. A:uino, %., concur in the result. G.R. No. 70/13 No1)23)( 0, 1909 CAGAYAN %ALLEY ENTERPRISES, INC., R)>()&)#+)$ 3y '+& P()&'$)#+, Ro?)l'o <. L'2, petitioner, vs. THE H!N. C!URT !4 APPEALS "#$ LA T!NDE;A, INC., respondents. Efren +. Cacatian for petitioners. San %ose, Enri:ue, 9acas, Santos and "or-e for private respondent.

REGALAD!, J.: +his petition for review on certiorari see%s the nullification of the decision of the Court of *ppeals of Dece$/er :, 1256 in C*-B.R. CM No. 1665: which reversed the decision of the trial court, and its resolution dated 3a! :, 1258 den!ing petitioner6s $otion for reconsideration. +he following antecedent facts generative of the present controvers! are not in dispute. So$eti$e in 12:<, (a +ondeSa, nc. "hereafter, (+ for short# registered with the Philippine Patent ,ffice pursuant to Repu/lic *ct No. 64< 1 the <:1 c.c. white flint /ottles it has /een using for its gin popularl! %nown as &Bine/ra San 3iguel&. +his registration was su/se=uentl! renewed on Dece$/er 4, 1284. 2 ,n Nove$/er 11, 1251, (+ filed Civil Case No. 4665 for in>unction and da$ages in the then .ranch 1, Court of Eirst nstance of sa/ela against Caga!an Malle! )nterprises, nc. "Caga!an, for /revit!# for using the <:1 c.c., white flint /ottles with the $ar% &(a +ondeSa nc.& and &Bine/ra San 3iguel& sta$ped or /lown-in therein /! filling the sa$e with Caga!an6s li=uor product /earing the la/el &Sonn! .o!& for co$$ercial sale and distri/ution, without (+ 6s written consent and in violation of Section 4 of Repu/lic *ct No. 64<, as a$ended /! Repu/lic *ct No. :811. ,n the sa$e date, (+ further filed an e= parte petition for the issuance of a writ of preli$inar! in>unction against the defendant therein. 3 ,n Nove$/er 16, 1251, the court a :uo issued a te$porar! restraining order against Caga!an and its officers and e$plo!ees fro$ using the <:1 c.c. /ottles with the $ar%s &(a +ondeSa& and &Bine/ra San 3iguel.& / Caga!an, in its answer, 5 alleged the following defenses0 1. (+ has no cause of action due to its failure to co$pl! with Section 41 of Repu/lic *ct No. 166 which re=uires the giving of notice that its aforesaid $ar%s are registered

/! displa!ing and printing the words &Registered in the Phil. Patent ,ffice& or &Reg Phil. Pat. ,ff.,& hence no suit, civil or cri$inal, can /e filed against Caga!an; 4. (+ is not entitled to an! protection under Repu/lic *ct No. 64<, as a$ended /! Repu/lic *ct No. :811, /ecause its products, consisting of hard li=uor, are not a$ong those conte$plated therein. @hat is protected under said law are /everages li%e Coca-cola, Ro!al +ru-,range, (e$-o-(i$e and si$ilar /everages the /ottles whereof /ear the words &Reg Phil. Pat. ,ff.;& <. No reservation of ownership on its /ottles was $ade /! (+ in its sales invoices nor does it re=uire an! deposit for the retention of said /ottles; and 4. +here was no infringe$ent of the goods or products of (+ since Caga!an uses its own la/els and trade$ar% on its product. n its su/se=uent pleadings, Caga!an contended that the /ottles the! are using are not the registered /ottles of (+ since the for$er was using the /ottles $ar%ed with &(a +ondeSa, nc.& and &Bine/ra San 3iguel& /ut without the words &propert! of& indicated in said /ottles as stated in the sworn state$ent attached to the certificate of registration of (+ for said /ottles. ,n Dece$/er 15, 1251, the lower court issued a writ of preli$inar! in>unction, upon the filing of a /ond /! (+ in the su$ of P:1,111.11, en>oining Caga!an, its officers and agents fro$ using the aforesaid registered /ottles of (+ . 7 *fter a protracted trial, which entailed five ":# $otions for conte$pt filed /! (+ against Caga!an, the trial court rendered >udg$ent 7 in favor of Caga!an, ruling that the co$plaint does not state a cause of action and that Caga!an was not guilt! of conte$pt. Eurther$ore, it awarded da$ages in favor of Caga!an. (+ appealed to the Court of *ppeals which, on Dece$/er :, 1256 rendered a decision in favor of said appellant, the dispositive portion whereof reads0 @')R)E,R), the decision appealed fro$ is here/! S)+ *S D) and >udg$ent is rendered per$anentl! en>oining the defendant, its officers and agents fro$ using the <:1 c.c. white flint /ottles with the $ar%s of ownership &(a +ondeSa, nc.& and &Bine/ra San 3iguel&, /lown-in or sta$ped on said /ottles as containers for defendant6s products. +he writ of preli$inar! in>unction issued /! the trial court is therefore $ade per$anent. Defendant is ordered to pa! the a$ounts of0 "1# P1:,111.11 as no$inal or te$perate da$ages; "4# P:1,111.11 as eCe$plar! da$ages; "<# P11,111.11 as attorne!6s fees; and
"4# Costs of suit. 0

,n Dece$/er 4<, 1256, Caga!an filed a $otion for reconsideration which was denied /! the respondent court in its resolution dated 3a! :, 1258, hence the present petition, with the following assign$ent of errors0 . +he Court of *ppeals gravel! erred in the decision granting that &there is, therefore, no need for plaintiff to displa! the words &Reg. Phil. Pat. ,ff.& in order for it to succeed in /ringing an! in>unction suit against defendant for the illegal use of its /ottles. Rep. *ct No. 64<, as a$ended /! Rep. *ct No. :811 si$pl! provides and re=uires that the $ar%s or na$es shall /e sta$ped or $ar%ed on the containers.& . +he Court of *ppeals gravel! erred in deciding that &neither is there a reason to distinguish /etween the two "4# sets of $ar%ed /ottles-those which contain the $ar%s &Propert! of (a +ondeSa, nc., Bine/ra San 3iguel,& and those si$pl! $ar%ed (a +ondeSa nc., Bine/ra San 3iguel6. .! o$itting the words &propert! of& plaintiff did not open itself to violation of Repu/lic *ct No. 64<, as a$ended, as having registered its $ar%s or na$es it is protected under the law.& . +he 'onora/le Court of *ppeals gravel! erred in deciding that the words &(a +ondeSa, nc. and Bine/ra San 3iguel& are sufficient notice to the defendant which should have in=uired fro$ the plaintiff or the Philippine Patent ,ffice, if it was lawful for it to re-use the e$pt! /ottles of the plaintiff. M. +he 'onora/le Court of *ppeals gravel! erred in deciding that defendant-appellee cannot clai$ good faith fro$ using the /ottles of plaintiff with $ar%s &(a +ondeSa, nc.& alone, short for the description contained in the sworn state$ent of 3r. Carlos Palanca, 9r., which was a re=uisite of its original and renewal registrations. M. +he 'onora/le Court of *ppeals gravel! erred in acco$$odating the appeal on the dis$issals of the five ":# conte$pt charges.
M . +he 'onora/le Court of *ppeals gravel! erred in deciding that the award of da$ages in favor of the defendant-appellee, petitioner herein, is not in order. nstead it awarded no$inal or te$perate, eCe$plar! da$ages and attorne!6s fees without proof of /ad faith. 9

+he pertinent provisions of Repu/lic *ct No. 64<, as a$ended /! Repu/lic *ct No. :811, provides0 S)C+ ,N 1. Persons engaged or licensed to engage in the $anufacture, /ottling, or selling of soda water, $ineral or aerated waters, cider, $il%, crea$ or other lawful /everages in /ottles, /oCes, cas%s, %egs, or /arrels and other si$ilar containers, or in the $anufacturing, co$pressing or selling of gases such as oC!gen, ac!telene, nitrogen, car/on dioCide a$$onia, h!drogen, chloride, heliu$, sulphur, dioCide, /utane, propane, freon, $elth!l chloride or si$ilar gases contained in steel c!linders, tan%s, flas%s, accu$ulators or si$ilar containers, with the na$e or the na$es of their principals or products, or other $ar%s of ownership sta$ped or $ar%ed thereon, $a! register with the Philippine Patent ,ffice a description of the na$es or $ar%s, and the purpose for which the containers so $ar%ed and used /! the$, under the sa$e

conditions, rules, and regulations, $ade applica/le /! law or regulation to the issuance of trade$ar%s. S)C. 4. t shall /e unlawful for an! person, without the written consent of the $anufacturer, /ottler, or seller, who has succesfull! registered the $ar%s of ownership in accordance with the provisions of the neCt preceding section, to fill such /ottles, /oCes, %egs, /arrels, steel c!linders, tan%s, flas%s, accu$ulators or other si$ilar containers so $ar%ed or sta$ped, for the purpose of sale, or to sell, disposed of, /u! or traffic in, or wantonl! destro! the sa$e, whether filled or not, to use the sa$e, for drin%ing vessels or glasses or drain pipes, foundation pipes, for an! other purpose than that registered /! the $anufacturer, /ottler or seller. *n! violation of this section shall /e punished /! a fine of not $ore than one thousand pesos or i$prison$ent of not $ore than one !ear or /oth. S)C. <. +he use /! an! person other than the registered $anufacturer, /ottler or seller, without written per$ission of the latter of an! such /ottle, cas%, /arrel, %eg, /oC, steel c!linders, tan%s, flas%, accu$ulators, or other si$ilar containers, or the possession thereof without written per$ission of the $anufacturer, /! an! >un% dealer or dealer in cas%s, /arrels, %egs /oCes, steel c!linders, tan%s, flas%s, accu$ulators or other si$ilar containers, the sa$e /eing dul! $ar%ed or sta$ped and registered as herein provided, shall give rise to a pri#a facie presu$ption that such use or possession is unlawful. +he a/ove-=uoted provisions grant protection to a =ualified $anufacturer who successfull! registered with the Philippine Patent ,ffice its dul! sta$ped or $ar%ed /ottles, /oCes, cas%s and other si$ilar containers. +he $ere use of registered /ottles or containers without the written consent of the $anufacturer is prohi/ited, the onl! eCceptions /eing when the! are used as containers for &sisi,& /agoong,& &patis& and si$ilar native products. 10 t is an ad$itted fact that herein petitioner Caga!an /u!s fro$ >un% dealers and retailers /ottles which /ear the $ar%s or na$es (a +ondeSa nc.& and &Bine/ra San 3iguel& and uses the$ as containers for its own li=uor products. +he contention of Caga!an that the afore$entioned /ottles without the words &propert! of& indicated thereon are not the registered /ottles of (+ , since the! do not confor$ with the state$ent or description in the supporting affidavits attached to the original registration certificate and renewal, is untena/le. Repu/lic *ct No. 64< which governs the registration of $ar%ed /ottles and containers $erel! re=uires that the /ottles, in order to /e eligi/le for registration, $ust /e sta$ped or $ar%ed with the na$es of the $anufacturers or the na$es of their principals or products, or other $ar%s of ownership. No drawings or la/els are re=uired /ut, instead, two photographs of the container, dul! signed /! the applicant, showing clearl! and legi/l! the na$es and other $ar%s of ownership sought to /e registered and a /ottle showing the na$e or other $ar% or ownership, irre$ova/l! sta$ped or $ar%ed, shall /e su/$itted. 11 +he ter$ &Na$e or ,ther 3ar% of ,wnership& 12 $eans the na$e of the applicant or the na$e of his principal, or of the product, or other $ar% of ownership. +he second set of /ottles of (+ without the words &propert! of& su/stantiall! co$plied with the re=uire$ents of Repu/lic *ct No. 64<, as a$ended, since the! /ear the na$e of the principal, (a +ondeSa nc., and of its product, Bine/ra San 3iguel. +he o$itted words &propert! of& are not of such vital indispensa/ilit! such that the o$ission thereof will re$ove the /ottles fro$ the protection of the law. +he owner of a trade-$ar% or trade-na$e, and in this case the $ar%ed containers, does not a/andon it /! $a%ing $inor $odifications in the $ar% or na$e itself. 13 @ith $uch $ore reason will this /e true where what is

involved is the $ere o$ission of the words &propert! of& since even without said words the ownership of the /ottles is easil! dentifia/le. +he words &(a +ondeSa nc.& and &Bine/ra San 3iguel& sta$ped on the /ottles, even without the words &propert! of,& are sufficient notice to the pu/lic that those /ottles so $ar%ed are owned /! (+ . +he clai$ of petitioner that hard li=uor is not included under the ter$ &other lawful /everages& as provided in Section of Repu/lic *ct No. 64<, as a$ended /! Repu/lic *ct No. :811, is without $erit. +he title of the law itself, which reads & *n *ct to Regulate the -se of Dul! Sta$ped or 3ar%ed .ottles, .oCes, Cas%s, 7egs, .arrels and ,ther Si$ilar Containers& clearl! shows the legislative intent to give protection to all $ar%ed /ottles and containers of all lawful /everages regardless of the nature of their contents. +he words &other lawful /everages& is used in its general sense, referring to all /everages not prohi/ited /! law. .everage is defined as a li=uor or li=uid for drin%ing. 1/ 'ard li=uor, although regulated, is not prohi/ited /! law, hence it is within the purview and coverage of Repu/lic *ct No. 64<, as a$ended. Repu/lic *ct No. 64<, as a$ended, has for its purpose the protection of the health of the general pu/lic and the prevention of the spread of contagious diseases. t further see%s to safeguard the propert! rights of an i$portant sector of Philippine industr!. 15 *s held /! this Court in Destileria A(ala, !nc. vs. 6an 6a( < Co., 17 the purpose of then *ct <181, was to afford a person a $eans of dentif!ing the containers he uses in the $anufacture, preservation, pac%ing or sale of his products so that he $a! secure their registration with the .ureau of Co$$erce and ndustr! and thus prevent other persons fro$ using the$. Said *ct <181 was su/stantiall! reenacted as Repu/lic *ct No. 64<. 17 +he proposition that Repu/lic *ct No. 64<, as a$ended, protects onl! the containers of the soft drin%s enu$erated /! petitioner and those si$ilar thereto, is unwarranted and specious. +he rule of e-usde# eneriscannot /e applied in this case. +o li$it the coverage of the law onl! to those enu$erated or of the sa$e %ind or class as those specificall! $entioned will defeat the ver! purpose of the law. Such rule of e-usde# eneris is to /e resorted to onl! for the purpose of deter$ining what the intent of the legislature was in enacting the law. f that intent clearl! appears fro$ other parts of the law, and such intent thus clearl! $anifested is contrar! to the result which would /e reached /! the appreciation of the rule of e-usde# eneris, the latter $ust give wa!. 10 3oreover, the a/ove conclusions are supported /! the fact that the Philippine Patent ,ffice, which is the proper and co$petent govern$ent agenc! vested with the authorit! to enforce and i$ple$ent Repu/lic *ct No. 64<, registered the /ottles of respondent (+ as containers for gin and issued in its na$e a certificate of registration with the following findings0
t appearing, upon due eCa$ination that the applicant is entitled to have the said 3*R7S ,R N*3)S registered under R.*. No. 64<, the said $ar%s or na$es have /een dul! registered this da! in the P*+)N+ ,EE C) under the said *ct, for gin, Bine/ra San 3iguel. 19

@hile eCecutive construction is not necessaril! /inding upon the courts, it is entitled to great weight and consideration. +he reason for this is that such construction co$es fro$ the particular /ranch of govern$ent called upon to i$ple$ent the particular law involved. 20 9ust as i$puissant is petitioners contention that respondent court erred in holding that there is no need for (+ to displa! the words &Reg Phil. Pat. ,ff.& in order to succeed in its in>unction suit against Caga!an for the illegal use of the /ottles. +o repeat, Repu/lic *ct No. 64< governs the registration of $ar%ed /ottles and containers and $erel! re=uires that the /ottles andJor containers /e $ar%ed or sta$ped /! the na$es of the $anufacturer or the na$es of their principals or products or other

$ar%s of ownership. +he owner upon registration of its $ar%ed /ottles, is vested /! law with an eCclusive right to use the sa$e to the eCclusion of others, eCcept as a container for native products. * violation of said right gives use to a cause of action against the violator or infringer. @hile Repu/lic *ct No. 64<, as a$ended, provides for a cri$inal action in case of violation, a civil action for da$ages is proper under *rticle 41 of the Civil Code which provides that ever! person who, contrar! to law, wilfull! or negligentl! causes da$age to another, shall inde$nif! the latter for the sa$e. +his particular provision of the Civil Case was clearl! $eant to co$ple$ent all legal provisions which $a! have inadvertentl! failed to provide for inde$nification or reparation of da$ages when proper or called for. n the language of the Code Co$$ission &"t#he foregoing rule pervades the entire legal s!ste$, and renders it i$possi/le that a person who suffers da$age /ecause another has violated so$e legal provisions, should find hi$self without relief.& 21 3oreover, under Section 4< of Repu/lic *ct No. 166, as a$ended, a person entitled to the eCclusive use of a registered $ar% or tradena$e $a! recover da$ages in a civil action fro$ an! person who infringes his rights. 'e $a! also, upon proper showing, /e granted in>unction. t is true that the aforesaid law on trade$ar%s provides0 S)C. 41. .e:uire#ents of notice of re istration of trade*#ar).-+he registrant of a trade-$ar%, heretofore registered or registered under the provisions of this *ct, shall give notice that his $ar% is registered /! displa!ing with the sa$e as used the words 6Registered in the Philippines Patent ,ffice6 or 6Reg Phil. Pat. ,ff.6; and in an! suit for infringe$ent under this *ct /! a registrant failing so to $ar% the goods /earing the registered trade-$ar%, no da$ages shall /e recovered under the provisions of this *ct, unless the defendant has actual notice of the registration.

)ven assu$ing that said provision is applica/le in this case, the failure of (+ to $a%e said $ar%ing will not /ar civil action against petitioner Caga!an. +he aforesaid re=uire$ent is not a condition sine :ua non for filing of a civil action against the infringer for other reliefs to which the plaintiff $a! /e entitled. +he failure to give notice of registration will not deprive the aggrieved part! of a cause of action against the infringer /ut, at the $ost, such failure $a! /ar recover! of da$ages /ut onl! under the provisions of Repu/lic *ct No. 166. 'owever, in this case an award of da$ages to (+ is inelucta/l! called for. Petitioner cannot clai$ good faith. +he record shows that it had actual %nowledge that the /ottles with the /lown-in $ar%s &(a +ondeSa nc.& and &Bine/ra San 3iguel& are dul! registered. n Civil Case No. 1145:2 of the Court of Eirst nstance of 3anila, entitled &(a +ondeSa nc. versus Diego (i$, doing /usiness under the na$e and st!le 6Caga!an Malle! Distiller!,6 & a decision was rendered in favor of plaintiff therein on the /asis of the ad$ission andJor ac%nowledg$ent $ade /! the defendant that the /ottles $ar%ed onl! with the words &(a +ondeSa nc.& and &Bine/ra San 3iguel& are registered /ottles of (+ . 22 Petitioner cannot avoid the effect of the ad$ission andJor ac%nowledg$ent $ade /! Diego (i$ in the said case. @hile a corporation is an entit! separate and distinct fro$ its stoc%-holders and fro$ other corporations with which it $a! /e connected, where the discreteness of its personalit! is used to defeat pu/lic convenience, >ustif! wrong, protect fraud, or defend cri$e, the law will regard the corporation as an association of persons, or in the case of two corporations, $erge the$ into one. @hen the corporation is the $ere alter e o or /usiness conduit of a person, it $a! /e disregaded. 23

Petitioner6s clai$ that it is separate and distinct fro$ the for$er Caga!an Malle! Distiller! is /elied /! the evidence on record. +he following facts warrant the conclusion that petitioner, as a corporate entit!, and Caga!an Malle! Distiller! are one and the sa$e. to wit0 "1# petitioner is /eing $anaged /! Rogelio (i$, the son of Diego (i$, the owner and $anager of Caga!an Malle! Disteller!; "4# it is a fa$il! corporation; 2/ "<# it is an ad$itted fact that /efore petitioner was incorporated it was under a single proprietorship; 25 "4# petitioner is engaged in the sa$e /usiness as Caga!an Malle! Distiller!, the $anufacture of wines and li=uors; and ":# the factor! of petitioner is located in the sa$e place as the factor! of the for$er Caga!an Malle! Distiller!. t is thus clear that herein petitioner is a $ere continuation and successor of Caga!an Malle! Distiller!. t is li%ewise indu/ita/le that the ad$ission $ade in the for$er case, as earlier eCplained, is /inding on it as cogent proof that even /efore the filing of this case it had actual %nowledge that the /ottles in dispute were registered containers of (+ *s held in 9a Ca#pana Coffee $actor(, !nc., et al. vs. ;aisahan N + a +an a a&a sa 9a Ca#pana 4;;+5, et al ., 27 where the $ain purpose in for$ing the corporation was to evade one6s su/sidiar! lia/ilit! for da$ages in a cri$inal case, the corporation $a! not /e heard to sa! that it has a personalit! separate and distinct fro$ its $e$/ers, /ecause to allow it to do so would /e to sanction the use of the fiction of corporate entit! as a shield to further an end su/versive of >ustice. *nent the several $otions of private respondent (+ to have petitioner cited for conte$pt, we re>ect the argu$ent of petitioner that an appeal fro$ a verdict of ac=uittal in a conte$pt, proceeding constitutes dou/le >eopard!. * failure to do so$ething ordered /! the court for the /enefit of a part! constitutes civil conte$pt. 27 *s we held inConverse .ubber Corporation vs. %acinto .ubber < Plastics Co., !nc.G
...+rue it is that generall!, conte$pt proceedings are characteriDed as cri$inal in nature, /ut the $ore accurate >uridical concept is that conte$pt proceedings $a! actuall! /e either civil or cri$inal, even if the distinction /etween one and the other $a! /e so thin as to /e al$ost i$percepti/le. .ut it does eCist in law. t is cri$inal when the purpose is to vindicate the authorit! of the court and protect its outraged dignit!. t is civil when there is failure to do so$ething ordered /! a court to /e done for the /enefit of a part! "< 3oran Rules of Court, pp. <4<-<44, 1281 ed.; see also Per%ins vs. Director of Prisons, :5 Phil. 484; 'arden vs. Director of Prisons, 51 Phil. 841.# *nd with this distinction in $ind, the fact that the in>unction in the instant case is $anifestl! for the /enefit of plaintiffs $a%es of the conte$pt herein involved civil, not cri$inal. *ccordingl!, the conclusion is inevita/le that appellees have /een virtuall! found /! the trial court guilt! of civil conte$pt, not cri$inal conte$pt, hence, the rule on dou/le >eopard! $a! not /e invo%ed. 20

+he conte$pt involved in this case is civil and constructive in nature, it having arisen fro$ the act of Caga!an in violating the writ of preli$inar! in>unction of the lower court which clearl! defined the for/idden act, to wit0
N,@ +')R)E,R), pending the resolution of this case /! the court, !ou are en>oined fro$ using the <:1 c.c. white flint /ottles with the $ar%s (a +ondeSa nc.,6 and 6Bine/ra San 3iguel6 /lown-in or sta$ped into the /ottles as containers for the defendant6s products. 19

,n this incident, two considerations $ust /e /orne in $ind. Eirstl!, an in>unction dul! issued $ust /e o/e!ed, however erroneous the action of the court $a! /e, until its decision is overruled /! itself or /! a higher court. 30Secondl!, the *$erican rule that the power to >udge a conte$pt rests eCclusivel! with the court conte$ned does not appl! in this 9urisdiction. +he provision of the present Section 4, Rule 81 of the Rules of Court as to where the charge $a! /e filed is per$issive in nature and is

$erel! declarator! of the inherent power of courts to punish contu$acious conduct. Said rules do not eCtend to the deter$ination of the >urisdiction of Philippine courts. 31 n appropriate case therefore, this Court $a!, in the interest of eCpedient >ustice, i$pose sanctions on conte$ners of the lower courts. Section < of Repu/lic *ct No. 64<, as a$ended, creates a pri#a facie presu$ption against Caga!an for its unlawful use of the /ottles registered in the na$e of (+ Corollaril!, the writ of in>unction directing petitioner to desist fro$ using the su/>ect /ottles was properl! issued /! the trial court. 'ence, said writ could not /e si$pl! disregarded /! Caga!an without adducing proof sufficient to overco$e the aforesaid presu$ption. *lso, /ased on the findings of respondent court, and the records /efore us /eing sufficient for ar/itra$ent without re$anding the incident to the court a :uo petitioner can /e ad>udged guilt! of conte$pt and i$posed a sanction in this appeal since it is a cherished rule of procedure for this Court to alwa!s strive to settle the entire controvers! in a single proceeding, 32 @e so i$pose such penalt! concordant with the preservative principle and as de$anded /! the respect due the orders, writs and processes of the courts of >ustice. @')R)E,R), >udg$ent is here/! rendered D)NG NB the petition in this case and *EE R3 NB the decision of respondent Court of *ppeals. Petitioner is here/! declared in conte$pt of court and ,RD)R)D to pa! a fine of ,ne +housand Pesos "P1,111.11#, with costs. S, ,RD)R)D. Paras, Padilla and Sar#iento, %%., concur. +elencio*>errera 4Chairperson5, %., is on leave.

G.R. No. 170191

Ju#) 0, 2007

T6IN ACE H!LDINGS C!RP!RATI!N, Petitioner, vs. RU4INA AND C!-PANY, Respondent. D)C S ,N CHIC!-NA.ARI!, J.: Ero$ the records, it appears that on < Dece$/er 1221, +win *ce 'oldings Corporation "+win *ce# filed a Co$plaint1 for recover! of possession of personal propert!, per$anent in>unction and da$ages with pra!er for the issuance of a writ of replevin, te$porar! restraining order and a writ of preli$inar! in>unction against Rufina and Co$pan! "Rufina#. *s alleged in the co$plaint, +win *ce is a private do$estic corporation engaged in the $anufacture of rhu$, wines and li=uor under the na$e and st!le &+andua! Distillers.& t has registered its $ar% of ownership of its /ottles with the .ureau of Patent, +rade$ar%s and +echnolog! +ransfer under Repu/lic *ct No. 64<. n the conduct of its /usiness, it sells its products to the pu/lic eCcluding the /ottles. t $a%es su/stantial invest$ents in /rand new /ottles which it /u!s fro$ glass factories and which the! use for a/out five ti$es in order to recover the cost of ac=uisition. +win *ce thus retrieves its used e$pt! /ottles, washes and uses the$ over and over again as containers for its products.

,n the other hand, Rufina is engaged in the production, eCtraction, fer$entation and $anufacture of patis and other food seasonings and is engaged in the /u!ing and selling of all %inds of foods, $erchandise and products for do$estic use or for eCport to other countries. n producing patis and other food seasonings, Rufina uses as containers /ottles owned /! +win *ce without an! authorit! or per$ission fro$ the latter. n the process, Rufina is undul! /enefited fro$ the use of the /ottles. -pon the posting of +win *ce of the re=uired /ond, the Regional +rial Court "R+C# of 3anila, .ranch 46, issued an ,rder dated : Ee/ruar! 1224 granting the application for the issuance of a writ of replevin.4 -pon the i$ple$entation of the said writ, Deput! Sheriff *$ado P. Sevilla was a/le to seiDe a total of 46,441 e$pt! /ottles $ar%ed &+*ND-*G D S+ (()RG, NC.,&< at the address of Rufina. n its *nswer with counter-application for a @rit of Preli$inar! n>unction, Rufina clai$ed that the $ar%ed /ottles it used as containers for its products were purchased fro$ >un% dealers; hence, it /eca$e the owner thereof. *fter hearing, the trial court rendered its decision dated 41 3a! 122: the dispositive portion of which states0 @')R)E,R), PR)3 S)S C,NS D)R)D, >udg$ent is here/! rendered in favor of the defendant as follows0 a# dis$issing the co$plaint for lac% of $erit; /# dissolving the order of replevin; c# ordering the plaintiff to return 46,441 /ottles to the defendant in the place where the /ottles were seiDed at the eCpense of the plaintiff within 45 hours fro$ receipt hereof; d# ordering the plaintiff to pa! the defendant the su$ of P111,111.11 as actual da$ages sustained /! the latter to /e ta%en fro$ the replevin /ond; e# ordering the plaintiff to pa! the defendant the su$ of P1,111,111.11 as da$ages for /es$irched reputation; f# ordering the plaintiff to pa! the su$ of P111,11.11 as no$inal da$ages; g# ordering the plaintiff to pa! the defendant the su$ of P:1,111.11 as attorne!Ns fee; and h# ordering the plaintiff to pa! the cost of the suit.4 +win *ce appealed to the Court of *ppeals. ,n 48 Septe$/er 4114, the appellate court rendered its decision:$odif!ing the decision of the trial court as follows0 @')R)E,R), in view of all the foregoing, the appealed decision dated 3a! 41, 122: of .ranch 46, Regional +rial Court, 3anila, in Civil Case No. 24-:2564 is 3,D E )D, in that the award of da$ages, eCcept no$inal da$ages, and attorne!Ns fees is D)()+)D for lac% of legal and factual /asis. +he award of no$inal da$ages is reduced toP:1,111.11. n all other respects, the assailed decision is *EE R3)D. Costs against plaintiff-appellant. 6

* $otion for reconsideration dated 12 ,cto/er 41148 filed /! +win *ce was denied in a resolution of the Court of *ppeals dated 42 Septe$/er 411<. 5 'ence, this Petition for Review. Eor resolution are the following issues0 . +') ',N,R*.() C,-R+ ,E *PP)*(S )RR)D N ',(D NB +'*+ R)SP,ND)N+ R-E N* S N,+ C,M)R)D @ +' N +') )T)3P+ ,N PR,M D)D .G S)C+ ,N 6 ,E R.*. 64<, *S *3)ND)D .G R.*. :811. . +') ',N,R*.() C,-R+ ,E *PP)*(S )RR)D N *@*RD NB N,3 N*( D*3*B)S *B* NS+ P)+ + ,N)R +@ N *C) C,NS D)R NB +'*+ + @*S +') ,N) @',S) R B'+S '*M) .))N M ,(*+)D ,R NM*D)D .G R)SP,ND)N+ R-E N*. . +') ',N,R*.() C,-R+ ,E *PP)*(S )RR)D N N,+ E ND NB +'*+ P)+ + ,N)R *S ,@N)R ,E +') S-.9)C+ .,++()S S )N+ +()D +, C,3P)NS*+ ,N E,R +S -N*-+',R U)D -S) .G R)SP,ND)N+ R-E N*.2 Pertinent provision of Repu/lic *ct No. 64<, 11 as a$ended /! Repu/lic *ct No. :811,11 is =uoted hereunder for clarit!0 Sec. 4. t shall /e unlawful for an! person, without the written consent of the $anufacturer, /ottler, or seller, who has successfull! registered the $ar%s of ownership in accordance with the provisions of the neCt preceding section, to fill such /ottles, /oCes, %egs, /arrels, steel c!linders, tan%s, flas%s, accu$ulators, or other si$ilar containers so $ar%ed or sta$ped, for the purpose of sale, or to sell, dispose of, /u! or traffic in, or wantonl! destro! the sa$e, whether filled or not to use the sa$e for drin%ing vessels or glasses or drain pipes, foundation pipes, for an! other purpose than that registered /! the $anufacturer, /ottler or seller. *n! violation of this section shall /e punished /! a fine of not $ore than one thousand pesos or i$prison$ent of not $ore than one !ear or /oth. Sec. <. +he use /! an! person other than the registered $anufacturer, /ottler or seller, without written per$ission of the latter of an! such /ottle, cas%, /arrel, %eg, /oC, steel c!linders, tan%s, flas%s, accu$ulators, or other si$ilar containers, or the possession thereof without written per$ission of the $anufacturer, /! an! >un% dealer or dealer in cas%s, /arrels, %egs, /oCes, steel c!linders, tan%s, flas%s, accu$ulators, or other si$ilar containers, the sa$e /eing dul! $ar%ed or sta$ped and registered as herein provided, shall give rise to a pri$a facie presu$ption that such use or possession is unlawful.14 Sec. 4. +he cri$inal action provided in this *ct shall in no wa! affect an! civil action to which the registered $anufacturer, /ottler, or seller, $a! /e entitled /! law or contract. Sec. :. No action shall /e /rought under this *ct against an! person to who$ the registered $anufacturer, /ottler, or seller, has transferred /! wa! of sale, an! of the containers herein referred to, /ut the sale of the /everage contained in the said containers shall not include the sale of the containers unless specificall! so provided.

Sec. 6. +he provisions of this *ct shall not /e interpreted as prohi/iting the use of /ottles as containers for &sisi,& &/agoong,& &patis,& and si$ilar native products. 1< n su$, +win *ce asserts that the provision under the law affords protection onl! to s$all scale producersJ$anufacturers who do not have the capacit! to /u! new /ottles for use in their products and cannot eCtend to Rufina which had une=uivoca/l! ad$itted in its *nswer 14 and affir$ed in the decision of the trial court that it is engaged, on a large scale /asis, in the production and $anufacture of food seasonings. Eor its part, Rufina counters that the law did not reall! distinguish /etween large scale $anufacturers and s$all ti$e producers. +he petition is not $eritorious. +he earlier case of 6&in Ace >oldin s Corporation v. Court of Appeals, 1: applies to the present petition. n said case, +win *ce filed a Co$plaint for Replevin against (orenDana Eood Corporation to recover three hundred eight! thousand /ottles allegedl! owned /! +win *ce /ut detained and used /! (orenDana Eood Corporation as containers for its native products without its eCpress per$ission, in violation of the law. n that case, this Court ac%nowledged that the eCe$ption under the law is un=ualified as the law did not $a%e a distinction that it onl! applies to s$all scale industries /ut not to large scale $anufacturers. +hus, even if the court in said case held that the eCe$ption is pri$aril! $eant to give protection to s$all scale industries, it did not =ualif! that the protection therein was intended and li$ited onl! to such. +he Court held0 Petitioner itself alleges that respondent (,R)NU*N* uses the su/>ect <:1 $l., <8: $l. and 8:1 $l. /ottles as containers for processed foods and other related products such as patis, to(o, ba oon , vinegar and other food seasonings. 'ence, Sec. 6 s=uarel! applies in private respondentNs favor. ,/viousl!, the contention of +@ N *C) that the eCe$ption refers onl! to cri$inal lia/ilit! /ut not to civil lia/ilit! is without $erit. t is inconceiva/le that an act specificall! allowed /! law, in other words legal, can /e the su/>ect of in>unctive relief and da$ages. .esides, the interpretation offered /! petitioner defeats the ver! purpose for which the eCe$ption was provided. Repu/lic *ct No. 64<, &*n *ct to Regulate the -se of Dul! Sta$ped or 3ar%ed .ottles, .oCes, Cas%s, 7egs, .arrels and ,ther Si$ilar Containers,& as a$ended /! R* No. :811, was $eant to protect the intellectual propert! rights of the registrants of the containers and prevent unfair trade practices and fraud on the pu/lic. 'owever, the eCe$ption granted in Sec. 6 thereof was dee$ed eCtre$el! necessar! to provide assistance and incentive to the /ac%!ard, cottage and s$all-scale $anufacturers of indigenous native products such as patis, sisi and to!o who do not have the capital to /u! /rand new /ottles as containers nor afford to pass the added cost to the $a>orit! of poor Eilipinos who use the products as their dail! condi$ents or viands. f the contention of petitioner is accepted, i.e., to construe the eCe$ption as to appl! to cri$inal lia/ilit! onl! /ut not to civil lia/ilit!, the ver! purpose for which the eCe$ption was granted will /e defeated. None of the s$all-scale $anufacturers of the indigenous native products protected would possi/l! wish to use the registered /ottles if the! are vulnera/le to civil suits. +he effect is a virtual eli$ination of the clear and un=ualified eCe$ption e$/odied in Sec. 6. t is worth! to note that 'ouse .ill No. 41:5: was co$pletel! re>ected /ecause it sought to eCpressl! and directl! eli$inate that which petitioner indirectl! proposes to do with this petition.16 ")$phasis supplied.# t is worth noting that (orenDana Eood Corporation which prevailed in the case filed /! +win *ce against it is certainl! not a s$all scale industr!. 9ust li%e Rufina, (orenDana Eood Corporation also $anufactures and eCports processed foods and other related products, e.g., patis, to!o, /agoong, vinegar and other food seasonings.

t is a /asic rule in statutor! construction that when the law is clear and free fro$ an! dou/t or a$/iguit!, there is no roo$ for construction or interpretation. *s has /een our consistent ruling, where the law spea%s in clear and categorical language, there is no occasion for interpretation; there is onl! roo$ for application.18 Nota/l!, atte$pts to a$end the protection afforded /! Section 6 of Repu/lic *ct No. 64<, /! giving protection onl! to s$all scale $anufacturers or those with a capitaliDation of five hundred thousand pesos or less "P:11,111.11#, through then 'ouse .ill No. 41:5:, 15 and su/se=uentl! through 'ouse .ill No. <1411,12 proved unsuccessful as the a$end$ent proposed in /oth .ills was never passed. n view of these considerations, we find and so hold that the eCe$ption contained in Section 6 of Rep. *ct No. 64< applies to all $anufacturers of sisi, /agoong, patis and si$ilar native products without distinction or =ualification as to whether the! are s$all, $ediu$ or large scale. ,n the issue of no$inal da$ages, *rticle 4444 of the Civil Code 41 states that the court $a! award no$inal da$ages in ever! o/ligation arising fro$ an! source enu$erated in *rticle 11:8, 41 or in ever! other case where an! propert! right has /een invaded. 44 No$inal da$ages are given in order that a right of the plaintiff, which has /een violated or invaded /! the defendant, $a! /e vindicated or recogniDed, and not for the purpose of inde$nif!ing the plaintiff for an! loss suffered /! hi$. 4< n another case,44 this Court held that when plaintiff suffers so$e species of in>ur! not enough to warrant an award of actual da$ages, the court $a! award no$inal da$ages. Considering the foregoing, we find that the award of no$inal da$ages to Rufina in the a$ount of fift! thousand pesos "P:1,111.11# is reasona/le, warranted and >ustified. *s to the third issue, Rule 61, Section 4"a#, of the Revised Rules of Court $andates that a part! pra!ing for the recover! of possession of personal propert! $ust show /! his own affidavit or that of so$e other person who personall! %nows the facts that he is the owner of the propert! clai$ed, particularl! descri/ing it, or is entitled to the possession thereof. 4: t $ust /e /orne in $ind that replevin is a possessor! action the gist of which focuses on the right of possession that, in turn, is dependent on a legal /asis that, not infre=uentl!, loo%s to the ownership of the o/>ect sought to /e replevied.46 @rongful detention /! the defendant of the properties sought in an action for replevin $ust /e satisfactoril! esta/lished. f onl! a $echanistic aver$ent thereof is offered, the writ should not /e issued.48 n this case, +win *ce has not shown that it is entitled to the possession of the /ottles in =uestion and conse=uentl! there is thus no /asis for the de$and /! it of due co$pensation. *s stated /! the court in the earlier case of +win *ce 'oldings Corporation v. Court of *ppeals45 0 Petitioner cannot see% refuge in Sec. : of R* No. 64< to support its clai$ of continuing ownership over the su/>ect /ottles. n -nited States v. 3anuel K8 Phil. 441 "1216#L we held that since the purchaser at his discretion could either retain or return the /ottles, the transaction $ust /e regarded as a sale of the /ottles when the purchaser actuall! eCercised that discretion and decided not to return the$ to the vendor. @e also ta%e >udicial notice of the standard practice toda! that the cost of the container is included in the selling price of the product such that the /u!er of li=uor or an! such product fro$ an! store is not re=uired to return the /ottle nor is the li=uor placed in a plastic container that possession of the /ottle is retained /! the store. @')R)E,R), pre$ises considered, the instant petition is D)N )D for lac% of $erit and the decision dated 48 Septe$/er 4114 and resolution dated 42 Septe$/er 411<, in C*-B.R. CM No. :45:4, /oth of the Court of *ppeals are *ffir$ed. S, ,RD)R)D.

-INITA %. CHIC!-NA.ARI! *ssociate 9ustice @) C,NC-R0 Repu/lic of the Philippines SUPRE-E C!URT 3anila S)C,ND D M S ,N G.R. No. 171295 Ju#) 29, 2005

JESSIE G. CHING, petitioner, vs. 6ILLIA- -. SALINAS, SR., 6ILLIA- -. SALINAS, JR., J!SEPHINE L. SALINAS, JENNI4ER Y. SALINAS, AL!NT! S!LAI-AN SALLE, J!HN ERIC I. SALINAS, N!EL -. YA UT 8 o"($ o, D'()*+o(& "#$ !,,'*)(& o, 6ILA6ARE PR!DUCT C!RP!RATI!N9, respondents. D)C S ,N CALLEJ!, SR., J.: +his petition for review on certiorari assails the Decision1 and Resolution4 of the Court of *ppeals "C*# in C*-B.R. SP No. 81411 affir$ing the 9anuar! <, 4114 and Ee/ruar! 14, 4114 ,rders < of the Regional +rial Court "R+C# of 3anila, .ranch 1, which =uashed and set aside Search @arrant Nos. 11-4411 and 11-4414 granted in favor of petitioner 9essie B. Ching. 9essie B. Ching is the owner and general $anager of 9eshicris 3anufacturing Co., the $a%er and $anufacturer of a -tilit! 3odel, descri/ed as &(eaf Spring )!e .ushing for *uto$o/ile& $ade up of plastic. ,n Septe$/er 4, 4111, Ching and 9oseph Gu were issued /! the National (i/rar! Certificates of Cop!right Registration and Deposit of the said wor% descri/ed therein as &(eaf Spring )!e .ushing for *uto$o/ile.&4 ,n Septe$/er 41, 4111, Ching re=uested the National .ureau of nvestigation "N. # for policeJinvestigative assistance for the apprehension and prosecution of illegal $anufacturers, producers andJor distri/utors of the wor%s.: *fter due investigation, the N. filed applications for search warrants in the R+C of 3anila against @illia$ Salinas, Sr. and the officers and $e$/ers of the .oard of Directors of @ilaware Product Corporation. t was alleged that the respondents therein reproduced and distri/uted the said $odels penaliDed under Sections 188.1 and 188.< of Repu/lic *ct "R.*.# No. 542<. +he applications sought the seiDure of the following0 a.# -ndeter$ined =uantit! of (eaf spring e!e /ushing for auto$o/ile that are $ade up of plastic pol!prop!lene; /.# -ndeter$ined =uantit! of (eaf spring e!e /ushing for auto$o/ile that are $ade up of pol!vin!l chloride plastic;

c.# -ndeter$ined =uantit! of Mehicle /earing cushion that is $ade up of pol!vin!l chloride plastic; d.# -ndeter$ined =uantit! of Dies and >igs, patterns and flas%s used in the $anufactureJfa/rication of ite$s a to d; e.# )vidences of sale which include deliver! receipts, invoices and official receipts. 6 +he R+C granted the application and issued Search @arrant Nos. 11-4411 and 11-4414 for the seiDure of the aforecited articles.8 n the inventor! su/$itted /! the N. agent, it appears that the following articlesJite$s were seiDed /ased on the search warrants0 (eaf Spring e!e /ushing a# Plastic Pol!prop!lene - C121 48 V - C441 rear 41 V - C441 front 41 V .*B 1 /# Pol!vin!l Chloride Plastic - C121 1< V c# Mehicle /earing cushion - center /earing cushion 11 V .udder for C121 $old 5 V Diesel 3old a# 3old for spring e!e /ushing rear 1 set /# 3old for spring e!e /ushing front 1 set c# 3old for spring e!e /ushing for C121 1 set d# 3old for C441 rear 1 piece of the set e# 3old for spring e!e /ushing for (<11 4 sets f# 3old for leaf spring e!e /ushing C121 with $etal 1 set g# 3old for vehicle /earing cushion 1 set5 +he respondents filed a $otion to =uash the search warrants on the following grounds0

4. +he cop!right registrations were issued in violation of the ntellectual Propert! Code on the ground that0 a# the su/>ect $atter of the registrations are not artistic or literar!; /# the su/>ect $atter of the registrations are spare parts of auto$o/iles $eaning W there " sic# are original parts that the! are designed to replace. 'ence, the! are not original. 2 +he respondents averred that the wor%s covered /! the certificates issued /! the National (i/rar! are not artistic in nature; the! are considered auto$otive spare parts and pertain to technolog!. +he! aver that the $odels are not original, and as such are the proper su/>ect of a patent, not cop!right. 11 n opposing the $otion, the petitioner averred that the court which issued the search warrants was not the proper foru$ in which to articulate the issue of the validit! of the cop!rights issued to hi$. Citing the ruling of the Court in+alaloan v. Court of Appeals,11 the petitioner stated that a search warrant is $erel! a >udicial process designed /! the Rules of Court in anticipation of a cri$inal case. -ntil his cop!right was nullified in a proper proceeding, he en>o!s rights of a registered ownerJholder thereof. ,n 9anuar! <, 4114, the trial court issued an ,rder 14 granting the $otion, and =uashed the search warrant on its finding that there was no pro/a/le cause for its issuance. +he court ruled that the wor% covered /! the certificates issued to the petitioner pertained to solutions to technical pro/le$s, not literar! and artistic as provided in *rticle 184 of the ntellectual Propert! Code. 'is $otion for reconsideration of the order having /een denied /! the trial courtNs ,rder of Ee/ruar! 14, 4114, the petitioner filed a petition for certiorari in the C*, contending that the R+C had no >urisdiction to delve into and resolve the validit! of the cop!right certificates issued to hi$ /! the National (i/rar!. 'e insisted that his wor%s are covered /! Sections 184.1 and 184.4 of the ntellectual Propert! Code. +he petitioner averred that the cop!right certificates are pri#a facie evidence of its validit!, citing the ruling of the -nited States Court of *ppeals in @ildlife E=press Corporation v. Carol @ri ht Sales, !nc.1< +he petitioner asserted that the respondents failed to adduce evidence to support their $otion to =uash the search warrants. +he petitioner noted that respondent @illia$ Salinas, 9r. was not /eing honest, as he was a/le to secure a si$ilar cop!right registration of a si$ilar product fro$ the National (i/rar! on 9anuar! 14, 4114. ,n Septe$/er 46, 411<, the C* rendered >udg$ent dis$issing the petition on its finding that the R+C did not co$$it an! grave a/use of its discretion in issuing the assailed order, to wit0 t is settled that preli$inaril!, there $ust /e a finding that a specific offense $ust have /een co$$itted to >ustif! the issuance of a search warrant. n a nu$/er of cases decided /! the Supre$e Court, the sa$e is eCplicitl! provided, thus0 &+he pro/a/le cause $ust /e in connection with one specific offense, and the >udge $ust, /efore issuing the warrant, personall! eCa$ine in the for$ of searching =uestions and answers, in writing and under oath, the co$plainant and an! witness he $a! produce, on facts personall! %nown to the$ and attach to the record their sworn state$ents together with an! affidavit su/$itted. & n the deter$ination of pro/a/le cause, the court $ust necessaril! resolve whether or not an offense eCists to >ustif! the issuance or =uashal of the search warrant.&

n the instant case, the petitioner is pra!ing for the reinstate$ent of the search warrants issued, /ut su/se=uentl! =uashed, for the offense of Violation of Class Desi nation of Cop(ri htable @or)s under Section /BB./ in relation to Section /BB.E of .epublic Act HAIE , when the o/>ects su/>ect of the sa$e, are patentl! not cop!righta/le. t is worth! to state that the wor%s protected under the (aw on Cop!right are0 literar! or artistic wor%s "Sec. 184# and derivative wor%s "Sec. 18<#. +he (eaf Spring )!e .ushing and Mehicle .earing Cushion fall on neither classification. *ccordingl!, if, in the first place, the ite$ su/>ect of the petition is not entitled to /e protected /! the law on cop!right, how can there /e an! violation? 14 +he petitionerNs $otion for reconsideration of the said decision suffered the sa$e fate. +he petitioner forthwith filed the present petition for review on certiorari, contending that the revocation of his cop!right certificates should /e raised in a direct action and not in a search warrant proceeding. +he petitioner posits that even assu$ing e= ar u#enti that the trial court $a! resolve the validit! of his cop!right in a proceeding to =uash a search warrant for allegedl! infringing ite$s, the R+C co$$itted a grave a/use of its discretion when it declared that his wor%s are not cop!righta/le in the first place. 'e clai$s that R.*. No. 542<, otherwise %nown as the ntellectual Propert! Code of the Philippines, which too% effect on 9anuar! 1, 1225, provides in no uncertain ter$s that cop!right protection auto$aticall! attaches to a wor% /! the sole fact of its creation, irrespective of its $ode or for$ of eCpression, as well as of its content, =ualit! or purpose. 1: +he law gives a non-inclusive definition of &wor%& as referring to original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation; and includes original orna$ental designs or #odels for articles of #anufacture, whether or not registra/le as an industrial design and other wor%s of applied art under Section 184.1"h# of R.*. No. 542<.
la&phil.net

*s such, the petitioner insists, notwithstanding the classification of the wor%s as either literar! andJor artistic, the said law, li%ewise, enco$passes wor%s which $a! have a /earing on the utilit! aspect to which the petitionerNs utilit! designs were classified. 3oreover, according to the petitioner, what the Cop!right (aw protects is the authorNs intellectual creation, regardless of whether it is one with utilitarian functions or incorporated in a useful article produced on an industrial scale. +he petitioner also $aintains that the law does not provide that the intended use or use in industr! of an article eligi/le for patent /ars or invalidates its registration under the (aw on Cop!right. +he test of protection for the aesthetic is not /eaut! and utilit!, /ut art for the cop!right and invention of original and orna$ental design for design patents. 16 n li%e $anner, the fact that his utilit! designs or $odels for articles of $anufacture have /een eCpressed in the field of auto$otive parts, or /ased on so$ething alread! in the pu/lic do$ain does not auto$aticall! re$ove the$ fro$ the protection of the (aw on Cop!right.18 +he petitioner faults the C* for ignoring Section 415 of R.*. No. 542< which gives the sa$e presu$ption to an affidavit eCecuted /! an author who clai$s cop!right ownership of his wor%. +he petitioner adds that a finding of pro/a/le cause to >ustif! the issuance of a search warrant $eans $erel! a reasona/le suspicion of the co$$ission of the offense. t is not e=uivalent to a/solute certaint! or a finding of actual and positive cause. 15 'e assists that the deter$ination of pro/a/le cause does not concern the issue of whether or not the alleged wor% is cop!righta/le. 'e $aintains that to >ustif! a finding of pro/a/le cause in the issuance of a search warrant, it is enough that there eCists a reasona/le suspicion of the co$$ission of the offense. +he petitioner contends that he has in his favor the /enefit of the presu$ption that his cop!right is valid; hence, the /urden of overturning this presu$ption is on the alleged infringers, the respondents

herein. .ut this /urden cannot /e carried in a hearing on a proceeding to =uash the search warrants, as the issue therein is whether there was pro/a/le cause for the issuance of the search warrant. +he petitioner concludes that the issue of pro/a/le cause should /e resolved without invalidating his cop!right. n their co$$ent on the petition, the respondents aver that the wor% of the petitioner is essentiall! a technical solution to the pro/le$ of wear and tear in auto$o/iles, the su/stitution of $aterials, i.e., fro$ ru//er to plastic $atter of pol!vin!l chloride, an oil resistant soft teCture plastic $aterial strong enough to endure pressure /rought a/out /! the vi/ration of the counter /earing and thus /rings /ushings. Such wor%, the respondents assert, is the su/>ect of cop!right under Section 184.1 of R.*. No. 542<. +he respondents posit that a technical solution in an! field of hu$an activit! which is novel $a! /e the su/>ect of a patent, and not of a cop!right. +he! insist that the certificates issued /! the National (i/rar! are onl! certifications that, at a point in ti$e, a certain wor% was deposited in the said office. Eurther$ore, the registration of cop!rights does not provide for auto$atic protection. Citing Section 415.4"/# of R.*. No. 542<, the respondents aver that no cop!right is said to eCist if a part! categoricall! =uestions its eCistence and legalit!. 3oreover, under Section 4, Rule 8 of the $ple$enting Rules of R.*. No. 542<, the registration and deposit of wor% is not conclusive as to cop!right outla! or the ti$e of cop!right or the right of the cop!right owner. +he respondents $aintain that a cop!right eCists onl! when the wor% is covered /! the protection of R.*. No. 542<. +he petition has no $erit. +he R+C had >urisdiction to delve into and resolve the issue whether the petitionerNs utilit! $odels are cop!righta/le and, if so, whether he is the owner of a cop!right over the said $odels. t /ears stressing that upon the filing of the application for search warrant, the R+C was dut!-/ound to deter$ine whether pro/a/le cause eCisted, in accordance with Section 4, Rule 146 of the Rules of Cri$inal Procedure0 S)C. 4. .e:uisite for issuin search &arrant. W * search warrant shall not issue /ut upon pro/a/le cause in connection with one specific offense to /e deter$ined personall! /! the >udge after eCa$ination under oath or affir$ation of the co$plainant and the witnesses he $a! produce, and, particularl!, descri/ing the place to /e searched and the things to /e seiDed. n Solid 6rian le Sales Corporation v. 6he Sheriff of .6C 7C, "r. IE,12 the Court held that in the deter$ination of pro/a/le cause, the court $ust necessaril! resolve whether or not an offense eCists to >ustif! the issuance of a search warrant or the =uashal of one alread! issued /! the court. ndeed, pro/a/le cause is dee$ed to eCist onl! where facts and circu$stances eCist which could lead a reasona/l! cautious and prudent $an to /elieve that an offense has /een co$$itted or is /eing co$$itted. .esides, in Section <, Rule 146 of the Rules of Cri$inal Procedure, a search warrant $a! /e issued for the search and seiDure of personal propert! "a# su/>ect of the offense; "/# stolen or e$/eDDled and other proceeds or fruits of the offense; or "c# used or intended to /e used as the $eans of co$$itting an offense. +he R+C is $andated under the Constitution and Rules of Cri$inal Procedure to deter$ine pro/a/le cause. +he court cannot a/dicate its constitutional o/ligation /! refusing to deter$ine whether an offense has /een co$$itted. 41 +he a/sence of pro/a/le cause will cause the outright nullification of the search warrant. 41 Eor the R+C to deter$ine whether the cri$e for infringe$ent under R.*. No. 542< as alleged in an application is co$$itted, the petitioner-applicant was /urdened to prove that "a# respondents 9essie Ching and 9oseph Gu were the owners of cop!righted $aterial; and "/# the cop!righted $aterial was

/eing copied and distri/uted /! the respondents. +hus, the ownership of a valid cop!right is essential.44 ,wnership of cop!righted $aterial is shown /! proof of originalit! and cop!righta/ilit!. .! originalit! is $eant that the $aterial was not copied, and evidences at least $ini$al creativit!; that it was independentl! created /! the author and that it possesses at least sa$e $ini$al degree of creativit!.4< Cop!ing is shown /! proof of access to cop!righted $aterial and su/stantial si$ilarit! /etween the two wor%s.44 +he applicant $ust thus de$onstrate the eCistence and the validit! of his cop!right /ecause in the a/sence of cop!right protection, even original creation $a! /e freel! copied.4: .! re=uesting the N. to investigate and, if feasi/le, file an application for a search warrant for infringe$ent under R.*. No. 542< against the respondents, the petitioner there/! authoriDed the R+C "in resolving the application#, to delve into and deter$ine the validit! of the cop!right which he clai$ed he had over the utilit! $odels. +he petitioner cannot see% relief fro$ the R+C /ased on his clai$ that he was the cop!right owner over the utilit! $odels and, at the sa$e ti$e, repudiate the courtNs >urisdiction to ascertain the validit! of his clai$ without running afoul to the doctrine of estoppel. +o discharge his /urden, the applicant $a! present the certificate of registration covering the wor% or, in its a/sence, other evidence. 46 * cop!right certificate provides pri#a facie evidence of originalit! which is one ele$ent of cop!right validit!. t constitutes pri#a facie evidence of /oth validit! and ownership48 and the validit! of the facts stated in the certificate. 45 +he presu$ption of validit! to a certificate of cop!right registration $erel! orders the /urden of proof. +he applicant should not ordinaril! /e forced, in the first instance, to prove all the $ultiple facts that underline the validit! of the cop!right unless the respondent, effectivel! challenging the$, shifts the /urden of doing so to the applicant.42 ndeed, Section 415.4 of R.*. No. 542< provides0 415.4. n an action under this Chapter0 "a# Cop!right shall /e presu$ed to su/sist in the wor% or other su/>ect $atter to which the action relates if the defendant does not put in issue the =uestion whether cop!right su/sists in the wor% or other su/>ect $atter; and "/# @here the su/sistence of the cop!right is esta/lished, the plaintiff shall /e presu$ed to /e the owner of the cop!right if he clai$s to /e the owner of the cop!right and the defendant does not put in issue the =uestion of his ownership. * certificate of registration creates no re/utta/le presu$ption of cop!right validit! where other evidence in the record casts dou/t on the =uestion. n such a case, validit! will not /e presu$ed. <1 +o discharge his /urden of pro/a/le cause for the issuance of a search warrant for violation of R.*. No. 542<, the petitioner-applicant su/$itted to the R+C Certificate of Cop!right Registration Nos. 4111-128 and 4111-414 dated Septe$/er <, 4111 and Septe$/er 4, 4111, respectivel!, issued /! the National (i/rar! covering wor% identified as (eaf Spring )!e .ushing for *uto$o/ile and Mehicle .earing Cushion /oth classified under Section 184.1"h# of R.*. No. 542<, to wit0 S)C. 184. 9iterar( and Artistic @or)s. W 184.1. (iterar! and artistic wor%s, hereinafter referred to as &wor%s,& are original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation and shall include in particular0

... "h# ,riginal orna$ental designs or $odels for articles of $anufacture, whether or not registra/le as an industrial design, and other wor%s of applied art. Related to the provision is Section 181.11, which provides that a &wor% of applied art& is an artistic creation with utilitarian functions or incorporated in a useful article, whether $ade /! hand or produced on an industrial scale. .ut, as gleaned fro$ the specifications appended to the application for a cop!right certificate filed /! the petitioner, the said (eaf Spring )!e .ushing for *uto$o/ile is $erel! a utilit! $odel descri/ed as co$prising a generall! c!lindrical /od! having a co-aCial /ore that is centrall! located and provided with a perpendicular flange on one of its ends and a c!lindrical $etal >ac%et surrounding the peripheral walls of said /od!, with the /ushing $ade of plastic that is either pol!vin!l chloride or pol!prop!lene.<1 (i%ewise, the Mehicle .earing Cushion is illustrated as a /earing cushion co$prising a generall! se$i-circular /od! having a central hole to secure a conventional /earing and a pluralit! of ridges provided therefore, with said cushion /earing /eing $ade of the sa$e plastic $aterials.<4 Plainl!, these are not literar! or artistic wor%s. +he! are not intellectual creations in the literar! and artistic do$ain, or wor%s of applied art. +he! are certainl! not orna$ental designs or one having decorative =ualit! or value. t /ears stressing that the focus of cop!right is the usefulness of the artistic design, and not its $ar%eta/ilit!. +he central in=uir! is whether the article is a wor% of art. << @or%s for applied art include all original pictorials, graphics, and sculptural wor%s that are intended to /e or have /een e$/odied in useful article regardless of factors such as $ass production, co$$ercial eCploitation, and the potential availa/ilit! of design patent protection. <4 *s gleaned fro$ the description of the $odels and their o/>ectives, these articles are useful articles which are defined as one having an intrinsic utilitarian function that is not $erel! to portra! the appearance of the article or to conve! infor$ation. ndeed, while wor%s of applied art, original intellectual, literar! and artistic wor%s are cop!righta/le, useful articles and wor%s of industrial design are not.<: * useful article $a! /e cop!righta/le onl! if and onl! to the eCtent that such design incorporates pictorial, graphic, or sculptural features that can /e identified separatel! fro$, and are capa/le of eCisting independentl! of the utilitarian aspects of the article. @e agree with the contention of the petitioner "citing Section 181.11 of R.*. No. 542<#, that the authorNs 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 /! cop!right law. 'owever, the law refers to a &wor% of applied art which is an artistic creation.& t /ears stressing that there is no cop!right protection for wor%s of applied art or industrial design which have aesthetic or artistic features that cannot /e identified separatel! fro$ the utilitarian aspects of the article.<6 Eunctional co$ponents of useful articles, no $atter how artisticall! designed, have generall! /een denied cop!right protection unless the! are separa/le fro$ the useful article. <8 n this case, the petitionerNs $odels are not wor%s of applied art, nor artistic wor%s. +he! are utilit! $odels, useful articles, al/eit with no artistic design or value. +hus, the petitioner descri/ed the utilit! $odel as follows0 ()*E SPR NB )G) .-S' NB E,R *-+,3,. ()

7nown /ushings inserted to leaf-spring e!e to hold leaf-springs of auto$o/ile are $ade of hard ru//er. +hese ru//er /ushings after a ti$e, upon su/>ecting the$ to so $uch or inter$ittent pressure would eventuall! wore "sic# out that would cause the wo//ling of the leaf spring. +he pri$ar! o/>ect of this utilit! $odel, therefore, is to provide a leaf-spring e!e /ushing for auto$o/ile that is $ade up of plastic. *nother o/>ect of this utilit! $odel is to provide a leaf-spring e!e /ushing for auto$o/iles $ade of pol!vin!l chloride, an oil resistant soft teCture plastic or pol!prop!lene, a hard plastic, !et /oth causes cushion to the leaf spring, !et strong enough to endure pressure /rought a/out /! the up and down $ove$ent of said leaf spring. Get, an o/>ect of this utilit! $odel is to provide a leaf-spring e!e /ushing for auto$o/iles that has a $uch longer life span than the ru//er /ushings. Still an o/>ect of this utilit! $odel is to provide a leaf-spring e!e /ushing for auto$o/iles that has a ver! si$ple construction and can /e $ade using si$ple and ordinar! $olding e=uip$ent. * further o/>ect of this utilit! $odel is to provide a leaf-spring e!e /ushing for auto$o/ile that is supplied with a $etal >ac%et to reinforce the plastic e!e /ushing when in engaged with the steel $aterial of the leaf spring. +hese and other o/>ects and advantages will co$e to view and /e understood upon a reading of the detailed description when ta%en in con>unction with the acco$pan!ing drawings. Eigure 1 is an eCploded perspective of a leaf-spring e!e /ushing according to the present utilit! $odel; Eigure 4 is a sectional view ta%en along line 4-4 of Eig. 1; Eigure < is a longitudinal sectional view of another e$/odi$ent of this utilit! $odel; Eigure 4 is a perspective view of a third e$/odi$ent; and Eigure : is a sectional view thereof. Referring now to the several views of the drawings wherein li%e reference nu$erals designated sa$e parts throughout, there is shown a utilit! $odel for a leaf-spring e!e /ushing for auto$o/ile generall! designated as reference nu$eral 11. Said leaf-spring e!e /ushing 11 co$prises a generall! c!lindrical /od! 11 having a co-aCial /ore 14 centrall! provided thereof. *s shown in Eigs. 1 and 4, said leaf-spring e!e /ushing 11 is provided with a perpendicular flange 1< on one of its ends and a c!lindrical $etal >ac%et 14 surrounding the peripheral walls 1: of said /od! 11. @hen said leaf-spring /ushing 11 is installed, the $etal >ac%et 14 acts with the leaf-spring e!e "not shown#, which is also $ade of steel or cast steel. n effect, the /ushing 11 will not /e directl! in contact with steel, /ut rather the $etal >ac%et, $a%ing the life of the /ushing 11 longer than those without the $etal >ac%et.

n Eigure 4, the /ushing 11 as shown is $ade of plastic, prefera/l! pol!vin!l chloride, an oil resistant soft teCture plastic or a hard pol!prop!lene plastic, /oth are capa/le to endure the pressure applied thereto, and, in effect, would lengthen the life and replace$ent therefor. Eigure <, on the other hand, shows the walls 16 of the co-aCial /ore 14 of said /ushing 11 is inserta/l! provided with a steel tu/e 18 to reinforce the inner portion thereof. +his steel tu/e 18 acco$$odates or engages with the leaf-spring /olt "not shown# connecting the leaf spring and the auto$o/ileNs chassis. Eigures 4 and : show another e$/odi$ent wherein the leaf e!e /ushing 11 is elongated and c!lindrical as to its construction. Said another e$/odi$ent is also $ade of pol!prop!lene or pol!vin!l chloride plastic $aterial. +he steel tu/e 18 and $etal >ac%et 14 $a! also /e applied to this e$/odi$ent as an option thereof.<5 M)' C() .)*R NB C-S' ,N 7nown /earing cushions inserted to /earing housings for vehicle propeller shafts are $ade of hard ru//er. +hese ru//er /ushings after a ti$e, upon su/>ecting the$ to so $uch or inter$ittent pressure would eventuall! /e worn out that would cause the wo//ling of the center /earing. +he pri$ar! o/>ect of this utilit! $odel therefore is to provide a vehicle-/earing cushion that is $ade up of plastic. *nother o/>ect of this utilit! $odel is to provide a vehicle /earing cushion $ade of pol!vin!l chloride, an oil resistant soft teCture plastic $aterial which causes cushion to the propellerNs center /earing, !et strong enough to endure pressure /rought a/out /! the vi/ration of the center /earing. Get, an o/>ect of this utilit! $odel is to provide a vehicle-/earing cushion that has a $uch longer life span than ru//er /ushings. Still an o/>ect of this utilit! $odel is to provide a vehicle /earing cushion that has a ver! si$ple construction and can /e $ade using si$ple and ordinar! $olding e=uip$ent. +hese and other o/>ects and advantages will co$e to view and /e understood upon a reading of the detailed description when ta%en in con>unction with the acco$pan!ing drawings. Eigure 1 is a perspective view of the present utilit! $odel for a vehicle-/earing cushion; and Eigure 4 is a sectional view thereof. Referring now to the several views of the drawing, wherein li%e reference nu$eral designate sa$e parts throughout, there is shown a utilit! $odel for a vehicle-/earing cushion generall! designated as reference nu$eral 11. Said /earing cushion 11 co$prises of a generall! se$i-circular /od! 11, having central hole 14 to house a conventional /earing "not shown#. *s shown in Eigure 1, said /od! 11 is provided with a pluralit! of ridges 1< which serves reinforcing $eans thereof. +he su/>ect /earing cushion 11 is $ade of pol!vin!l chloride, a soft teCture oil and che$ical resistant plastic $aterial which is strong, dura/le and capa/le of enduring severe pressure fro$ the center /earing /rought a/out /! the rotating $ove$ent of the propeller shaft of the vehicle. <2

* utilit! $odel is a technical solution to a pro/le$ in an! field of hu$an activit! which is new and industriall! applica/le. t $a! /e, or $a! relate to, a product, or process, or an i$prove$ent of an! of the aforesaid.41)ssentiall!, a utilit! $odel refers to an invention in the $echanical field. +his is the reason wh! its o/>ect is so$eti$es descri/ed as a device or useful o/>ect. 41 * utilit! $odel varies fro$ an invention, for which a patent for invention is, li%ewise, availa/le, on at least three aspects0 first, the re=uisite of &inventive step&44 in a patent for invention is not re=uired; second, the $aCi$u$ ter$ of protection is onl! seven !ears 4< co$pared to a patent which is twent! !ears, 44 /oth rec%oned fro$ the date of the application; and third, the provisions on utilit! $odel dispense with its su/stantive eCa$ination4: and prefer for a less co$plicated s!ste$. .eing plain auto$otive spare parts that $ust confor$ to the original structural design of the co$ponents the! see% to replace, the (eaf Spring )!e .ushing and Mehicle .earing Cushion are not orna$ental. +he! lac% the decorative =ualit! or value that $ust characteriDe authentic wor%s of applied art. +he! are not even artistic creations with incidental utilitarian functions or wor%s incorporated in a useful article. n actualit!, the personal properties descri/ed in the search warrants are $echanical wor%s, the principal function of which is utilit! sans an! aesthetic e$/ellish$ent. Neither are we to regard the (eaf Spring )!e .ushing and Mehicle .earing Cushion as included in the catch-all phrase &other literar!, scholarl!, scientific and artistic wor%s& in Section 184.1"a# of R.*. No. 542<. *ppl!ing the principle of e-usde# eneris which states that &where a statute descri/es things of a particular class or %ind acco$panied /! words of a generic character, the generic word will usuall! /e li$ited to things of a si$ilar nature with those particularl! enu$erated, unless there /e so$ething in the conteCt of the state which would repel such inference,& 46 the (eaf Spring )!e .ushing and Mehicle .earing Cushion are not cop!righta/le, /eing not of the sa$e %ind and nature as the wor%s enu$erated in Section 184 of R.*. No. 542<. No cop!right granted /! law can /e said to arise in favor of the petitioner despite the issuance of the certificates of cop!right registration and the deposit of the (eaf Spring )!e .ushing and Mehicle .earing Cushion. ndeed, in%oa:uin, %r. v. Drilon48 and Pearl < Dean 4Phil.5, !ncorporated v. Shoe#art, !ncorporated,45 the Court ruled that0 Cop!right, in the strict sense of the ter$, is purel! a statutor! right. t is a new or independent right granted /! the statute, and not si$pl! a pre-eCisting right regulated /! it. .eing a statutor! grant, the rights are onl! such as the statute confers, and $a! /e o/tained and en>o!ed onl! with respect to the su/>ects and /! the persons, and on ter$s and conditions specified in the statute. *ccordingl!, it can cover onl! the wor%s falling within the statutor! enu$eration or description. +hat the wor%s of the petitioner $a! /e the proper su/>ect of a patent does not entitle hi$ to the issuance of a search warrant for violation of cop!right laws. n ;ho v. Court of Appeals42 and Pearl < Dean 4Phil.5, !ncorporated v. Shoe#art, !ncorporated,:1 the Court ruled that &these cop!right and patent rights are co$pletel! distinct and separate fro$ one another, and the protection afforded /! one cannot /e used interchangea/l! to cover ite$s or wor%s that e=clusivel( pertain to the others.& +he Court eCpounded further, thus0 +rade$ar%, cop!right and patents are different intellectual propert! rights that cannot /e interchanged with one another. * trade$ar% is an! visi/le sign capa/le of distinguishing the goods "trade$ar%# or services "service $ar%# of an enterprise and shall include a sta$ped or $ar%ed container of goods. n relation thereto, a trade na$e $eans the na$e or designation identif!ing or distinguishing an enterprise. 3eanwhile, the scope of a cop!right is confined to literar! and artistic wor%s which are original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation. Patenta/le inventions, on the other hand, refer to an! technical solution of

a pro/le$ in an! field of hu$an activit! which is new, involves an inventive step and is industriall! applica/le. +he petitioner cannot find solace in the ruling of the -nited States Supre$e Court in +azer v. Stein:1 to /uttress his petition. n that case, the artifacts involved in that case were statuettes of dancing $ale and fe$ale figures $ade of se$i-vitreous china. +he controvers! therein centered on the fact that although cop!righted as &wor%s of art,& the statuettes were intended for use and used as /ases for ta/le la$ps, with electric wiring, soc%ets and la$pshades attached. +he issue raised was whether the statuettes were cop!right protected in the -nited States, considering that the cop!right applicant intended pri$aril! to use the$ as la$p /ases to /e $ade and sold in =uantit!, and carried such intentions into effect. *t that ti$e, the Cop!right ,ffice interpreted the 1212 Cop!right *ct to cover wor%s of artistic crafts$anship insofar as their for$, /ut not the utilitarian aspects, were concerned. *fter reviewing the histor! and intent of the -S Congress on its cop!right legislation and the interpretation of the cop!right office, the -S Supre$e Court declared that the statuettes were held cop!righta/le wor%s of art or $odels or designs for wor%s of art. +he 'igh Court ruled that0 &@or%s of art "Class B# W "a# W !n General. +his class includes wor%s of artistic crafts$anship, in so far as their for$ /ut not their $echanical or utilitarian aspects are concerned, such as artistic >ewelr!, ena$els, glassware, and tapestries, as well as all wor%s /elonging to the fine arts, such as paintings, drawings and sculpture. X& So we have a conte$poraneous and long-continued construction of the statutes /! the agenc! charged to ad$inister the$ that would allow the registration of such a statuette as is in =uestion here.:4 +he 'igh Court went on to state that &KtLhe dichoto$! of protection for the aesthetic is not /eaut! and utilit! /ut art for the cop!right and the invention of original and orna$ental design for design patents.& Significantl!, the cop!right office pro$ulgated a rule to i$ple$ent 3aDer to wit0 X K Lf &the sole intrinsic function of an article is its utilit!, the fact that the wor% is uni=ue and attractivel! shaped will not =ualif! it as a wor% of art.& n this case, the /ushing and cushion are not wor%s of art. +he! are, as the petitioner hi$self ad$itted, utilit! $odels which $a! /e the su/>ect of a patent. IN LIGHT !4 ALL THE 4!REG!ING, the instant petition is here/! D)N )D for lac% of $erit. +he assailed Decision and Resolution of the Court of *ppeals in C*-B.R. SP No. 81411 are *EE R3)D. Search @arrant Nos. 11-4411 and 11-4414 issued on ,cto/er 1:, 4111 are *NN-(()D *ND S)+ *S D). Costs against the petitioner. S, ,RD)R)D. Puno, "Chair$an#, *ustria-3artineD, +inga, and Chico-NaDario, 99., concur.

G.R. No. 1009/7 J"#u"(y 20, 1999 4RANCISC! G. J!A<UIN, JR., "#$ vs. J PR!DUCTI!NS, INC., petitioners,

H!N!RA LE 4RAN5LIN DRIL!N, GA RIEL .!SA, 6ILLIA- ESP!S!, 4ELIPE -EDINA, JR., "#$ CASEY 4RANCISC!, respondents.

-END!.A, J.: +his is a petition for certiorari. Petitioners see% to annul the resolution of the Depart$ent of 9ustice, dated *ugust 14, 1224, in Cri$inal Case No. F-24-485:4, entitled &Ba/riel Uosa, et al. v. Cit! Prosecutor of FueDon Cit! and Erancisco 9oa=uin, 9r.,& and its resolution, dated Dece$/er <, 1224, den!ing petitioner 9oa=uin6s $otion for reconsideration. Petitioner .9 Productions, nc. ".9P # is the holderJgrantee of Certificate of Cop!right No. 3244, dated 9anuar! 45, 1281, of .hoda and +e, a dating ga$e show aired fro$ 1281 to 1288. ,n 9une 45, 128<, petitioner .9P su/$itted to the National (i/rar! an addendu$ to its certificate of cop!right specif!ing the show6s for$at and st!le of presentation. ,n 9ul! 14, 1221, while watching television, petitioner Erancisco 9oa=uin, 9r., president of .9P , saw on RPN Channel 2 an episode of !tJs a Date, which was produced /! T( Productions, nc. " T(#. ,n 9ul! 15, 1221, he wrote a letter to private respondent Ba/riel 3. Uosa, president and general $anager of T(, infor$ing Uosa that .9P had a cop!right to .hoda and +e and de$anding that T( discontinue airing !tJs a Date. n a letter, dated 9ul! 12, 1221, private respondent Uosa apologiDed to petitioner 9oa=uin and re=uested a $eeting to discuss a possi/le settle$ent. T(, however, continued airing t6s a Date, pro$pting petitioner 9oa=uin to send a second letter on 9ul! 4:, 1221 in which he reiterated his de$and and warned that, if T( did not co$pl!, he would endorse the $atter to his attorne!s for proper legal action. 3eanwhile, private respondent Uosa sought to register T(6s cop!right to the first episode of t6s a Date for which it was issued /! the National (i/rar! a certificate of cop!right *ugust 14, 1221. -pon co$plaint of petitioners, an infor$ation for violation of P.D. No. 42 was filed against private respondent Uosa together with certain officers of RPN Channel 2, na$el!, @illia$ )sposo, Eelipe 3edina, and Case! Erancisco, in the Regional +rial Court of FueDon Cit! where it was doc%eted as Cri$inal Case No. 24-485:4 and assigned to .ranch 114 thereof. 'owever, private respondent Uosa sought a review of the resolution of the *ssistant Cit! Prosecutor /efore the Depart$ent of 9ustice. ,n *ugust 14, 1224, respondent Secretar! of 9ustice Eran%lin 3. Drilon reversed the *ssistant Cit! Prosecutor6s findings and directed hi$ to $ove for the dis$issal of the case against private 1 respondents. Petitioner 9oa=uin filed a $otion for reconsideration, /ut his $otion denied /! respondent Secretar! of 9ustice on Dece$/er <, 1224. 'ence, this petition. Petitioners contend that0 1. +he pu/lic respondent gravel! a/used his discretion a$ounting to lac% of >urisdiction A when he invo%ed non-presentation of the $aster tape as /eing fatal to the eCistence of pro/a/le cause to

prove infringe$ent, despite the fact that private respondents never raised the sa$e as a controverted issue. 4. +he pu/lic respondent gravel! a/used his discretion a$ounting to lac% of >urisdiction when he arrogated unto hi$self the deter$ination of what is cop!righta/le A an issue which is eCclusivel! within the >urisdiction of the regional trial court to assess in a proper proceeding. .oth pu/lic and private respondents $aintain that petitioners failed to esta/lish the eCistence of pro/a/le cause due to their failure to present the cop!righted $aster videotape of .hoda and +e. +he! contend that petitioner .9P 6s cop!right covers onl! a specific episode of .hoda and +e and that the for$ats or concepts of dating ga$e shows are not covered /! cop!right protection under P.D. No. 42. Non-*ssign$ent of )rror. Petitioners clai$ that their failure to su/$it the cop!righted $aster videotape of the television show Rhoda and 3e was not raised in issue /! private respondents during the preli$inar! investigation and, therefore, it was error for the Secretar! of 9ustice to reverse the investigating prosecutor6s finding of pro/a/le cause on this ground. * preli$inar! investigation falls under the authorit! of the state prosecutor who is given /! law the power to direct and control cri$inal 2 actions. 'e is, however, su/>ect to the control of the Secretar! of 9ustice. +hus, Rule 114, Y4 of the Revised Rules of Cri$inal Procedure, provides0 Sec. 4. Dut( of investi atin fiscal. A f the investigating fiscal finds cause to hold the respondent for trial, he shall prepare the resolution and corresponding infor$ation. 'e shall certif! under oath that he, or as shown /! the record, an authoriDed officer, has personall! eCa$ined the co$plainant and his witnesses, that there is reasona/le ground to /elieve that a cri$e has /een co$$itted and that the accused is pro/a/l! guilt! thereof, that the accused was infor$ed of the co$plaint and of the evidence su/$itted against hi$ and that he was given an opportunit! to su/$it controverting evidence. ,therwise, he shall reco$$end dis$issal of the co$plaint. n either case, he shall forward the records of the case to the provincial or cit! fiscal or chief state prosecutor within five ":# da!s fro$ his resolution. +he latter shall ta%e appropriate action thereon ten "11# da!s fro$ receipt thereof, i$$ediatel! infor$ing the parties of said action. No co$plaint or infor$ation $a! /e filed or dis$issed /! an investigating fiscal without the prior written authorit! or approval of the provincial or cit! fiscal or chief state prosecutor. @here the investigating assistant fiscal reco$$ends the dis$issal of the case /ut his findings are reversed /! the provincial or cit! fiscal or chief state prosecutor on the ground that a pro/a/le cause eCists, the latter $a!, /! hi$self, file the corresponding infor$ation against the respondent or direct an! other assistant fiscal or state prosecutor to do so, without conducting another preli$inar! investigation.

f upon petition /! a proper part!, the Secretar! of 9ustice reverses the resolution of the provincial or cit! fiscal or chief state prosecutor, he shall direct the fiscal concerned to file the corresponding infor$ation without conducting another preli$inar! investigation or to dis$iss or $ove for dis$issal of the co$plaint or infor$ation. n reviewing resolutions of prosecutors, the Secretar! of 9ustice is not precluded fro$ considering errors, although unassigned, for the purpose of deter$ining whether there is pro/a/le cause for filing cases in court. 'e $ust $a%e his own finding, of pro/a/le cause and is not confined to the issues raised /! the parties during preli$inar! investigation. 3oreover, his findings are not su/>ect to review unless shown to have /een $ade with grave a/use. ,pinion of the Secretar! of 9ustice Petitioners contend, however, that the deter$ination of the =uestion whether the for$at or $echanics of a show is entitled to cop!right protection is for the court, and not the Secretar! of 9ustice, to $a%e. +he! assail the following portion of the resolution of the respondent Secretar! of 9ustice0
K+Lhe essence of cop!right infringe$ent is the cop!ing, in whole or in part, of cop!righta/le $aterials as defined and enu$erated in Section 4 of PD. No. 42. Apart fro# the #anner in &hich it is actuall( e=pressed, ho&ever, the idea of a datin a#e sho& is, in the opinion of this Office, a non*cop(ri htable #aterial. !deas, concepts, for#ats, or sche#es in their abstract for# clearl( do not fall &ithin the class of &or)s or #aterials susceptible of cop(ri ht re istration as provided in PD. No. CI . added.#
3

")$phasis

t is indeed true that the =uestion whether the for$at or $echanics of petitioners television show is entitled to cop!right protection is a legal =uestion for the court to $a%e. +his does not, however, preclude respondent Secretar! of 9ustice fro$ $a%ing a preli$inar! deter$ination of this =uestion in resolving whether there is pro/a/le cause for filing the case in court. n doing so in this case, he did not co$$it an! grave error. Presentation of 3aster +ape Petitioners clai$ that respondent Secretar! of 9ustice gravel! a/used his discretion in ruling that the $aster videotape should have /een predented in order to deter$ine whether there was pro/a/le cause for cop!right infringe$ent. +he! contend that AFth Centur( $o= $il# Corporation v. Court of / Appeals, on which respondent Secretar! of 9ustice relied in reversing the resolution of the investigating prosecutor, is inapplica/le to the case at /ar /ecause in the present case, the parties presented sufficient evidence which clearl! esta/lish &lin%age /etween the cop!right show &Rhoda 5 and 3e& and the infringing +M show & t6s a Date.& +he case of 41th Centur! EoC Eil$ Corporation involved raids conducted on various videotape outlets allegedll! selling or renting out &pirated& videotapes. +he trial court found that the affidavits of N. agents, given in support of the application for the search warrant, were insufficient without the $aster tape. *ccordingl!, the trial court lifted the search warrants it had previousl! issued against 7 the defendants. ,n petition for review, this Court sustained the action of the trial court and ruled0

+he presentation of the $aster tapes of the cop!righted fil$s fro$ which the pirated fil$s were allegedl! copied, was necessar! for the validit! of search warrants against those who have in their possession the pirated fil$s. +he petitioner6s argu$ent to the effect that the presentation of the $aster tapes at the ti$e of application $a! not /e necessar! as these would /e $erel! evidentiar! in nature and not deter$inative of whether or not a pro/a/le cause eCists to >ustif! the issuance of the search warrants is not $eritorious. +he court cannot presu$e that duplicate or copied tapes were necessaril! reproduced fro$ $aster tapes that it owns. +he application for search warrants was directed against video tape outlets which allegedl! were engaged in the unauthoriDed sale and renting out of cop!righted fil$s /elonging to the petitioner pursuant to P.D. 42. +he essence of a cop!right infringe$ent is the si$ilarit! or at least su/stantial si$ilarit! of the purported pirated wor%s to the cop!righted wor%. 'ence, the applicant $ust present to the court the cop!righted fil$s to co$pare the$ with the purchased evidence of the video tapes allegedl! pirated to deter$ine whether the latter is an unauthoriDed reproduction of the for$er. +his lin%age of the cop!righted fil$s to the pirated fil$s $ust /e esta/lished to satisf! the re=uire$ents of pro/a/le cause. 3ere allegations as to the eCistence of the cop!righted fil$s cannot serve as /asis for the issuance of a search warrant. +his ruling was =ualified in the later case of Colu#bia Pictures, !nc. v. Court of Appeals which it was held0
7

in

n fine, the supposed pronuncia#ento in said case regarding the necessit! for the presentation of the $aster tapes of the cop!righted fil$s for the validit! of search warrants should at $ost /e understood to $erel! serve as a guidepost in deter$ining the eCistence of pro/a/le cause in cop!right infringe$ent cases &here there is doubt as to the true ne=us bet&een the #aster tape and the printed copies . *n o/>ective and careful reading of the decision in said case could lead to no other conclusion than that said directive was hardl! intended to /e a sweeping and infleCi/le re=uire$ent in all or si$ilar 0 cop!right infringe$ent cases. . .

n the case at /ar during the preli$inar! investigation, petitioners and private respondents presented written descriptions of the for$ats of their respective televisions shows, on the /asis of which the investigating prosecutor ruled0 *s $a! K/eL gleaned fro$ the evidence on record, the su/stance of the television productions co$plainant6s &R',D* *ND 3)& and Uosa6s & +6S * D*+)& is that two $atches are $ade /etween a $ale and a fe$ale, /oth single, and the two couples are treated to a night or two of dining andJor dancing at the eCpense of the show. +he $a>or concepts of /oth shows is the sa$e. *n! difference appear $ere variations of the $a>or concepts. +hat there is an infringe$ent on the cop!right of the show &R',D* *ND 3)& /oth in content and in the eCecution of the video presentation are esta/lished /ecause respondent6s & +6S * D*+)& is practicall! an eCact cop! of co$plainant6s &R',D* *ND 3)& /ecause of su/stantial si$ilarities as follows, to wit0
R',D* *ND 3) & +6S * D*+)&

Set 1

Set 1

a. -n$arried participant of one gender "searcher# appears on one side of a. sa$e a divider, while three "<# un$arried participants of the other gender are on the other side of the divider. +his arrange$ent is done to ensure that the searcher does not see the searchees. /. Searcher as%s a =uestion to /e answered /! each of the searchees. +he purpose is to deter$ine who a$ong the searchees is the $ost co$pati/le with the searcher. c. Searcher speculates on the $atch to the searchee. d. Selection is $ade /! the use of co$pute "sic# $ethods, or /! the wa! =uestions are answered, or si$ilar $ethods. Set 4 Sa$e as a/ove with the genders of the searcher and searchees 9 interchanged. /. sa$e

c. sa$e d. Selection is /ased on the answer of the Searchees. Set 4 sa$e

Petitioners assert that the for$at of .hoda and +e is a product of ingenuit! and s%ill and is thus entitled to cop!right protection. t is their position that the presentation of a point-/!-point co$parison of the for$ats of the two shows clearl! de$onstrates the neCus /etween the shows and hence esta/lishes the eCistence of pro/a/le cause for cop!right infringe$ent. Such /eing the case, the! did not have to produce the $aster tape. +o /egin with the for$at of a show is not cop!righta/le. Section 4 of P.D. No. 42, otherwise %nown as the D)CR)) ,N N+)(()C+-*( PR,P)R+G, enu$erates the classes of wor% entitled to cop!right protection, to wit0 Sec. 4. +he rights granted /! this Decree shall, fro$ the $o$ent of creation, su/sist with respect to an! of the following classes of wor%s0 "*# .oo%s, including co$posite and c!clopedic wor%s, $anuscripts, directories, and gaDetteers0 ".# Periodicals, including pa$phlets and newspapers; "C# (ectures, ser$ons, addresses, dissertations prepared for oral deliver!; "D# (etters; ")# Dra$atic or dra$atico-$usical co$positions; choreographic wor%s and entertain$ents in du$/ shows, the acting for$ of which is fiCed in writing or otherwise; "E# 3usical co$positions, with or without words; "B# @or%s of drawing, painting, architecture, sculpture, engraving, lithograph!, and other wor%s of art; $odels or designs for wor%s of art; "'# Reproductions of a wor% of art; " # ,riginal orna$ental designs or $odels for articles of $anufacture, whether or not patenta/le, and other wor%s of applied art; "9# 3aps, plans, s%etches, and charts;
10

"7# Drawings or plastic wor%s of a scientific or technical character; " # Photographic wor%s and wor%s produced /! a process analogous to photograph! lantern slides; "3# Cine$atographic wor%s and wor%s produced /! a process analogous to cine$atograph! or an! process for $a%ing audio-visual recordings; "N# Co$puter progra$s; ",# Prints, pictorial illustrations advertising copies, la/els tags, and /oC wraps; "P# Dra$atiDations, translations, adaptations, a/ridge$ents, arrange$ents and other alterations of literar!, $usical or artistic wor%s or of wor%s of the Philippine govern$ent as herein defined, which shall /e protected as provided in Section 5 of this Decree. "F# Collections of literar!, scholarl!, or artistic wor%s or of wor%s referred to in Section 2 of this Decree which /! reason of the selection and arrange$ent of their contents constitute intellectual creations, the sa$e to /e protected as such in accordance with Section 5 of this Decree. "R# ,ther literar!, scholarl!, scientific and artistic wor%s. +his provision is su/stantiall! the sa$e as Y184 of the N+)(()C+-*( PR,P)R+G C,D) ,E 11 P' ( PP N)S "R.*. No. 542<#. +he for$at or $echanics of a television show is not included in the list of protected wor%s in Y4 of P.D. No. 42. Eor this reason, the protection afforded /! the law cannot /e eCtended to cover the$.
Cop!right, in the strict sense of the ter$, is purel! a statutor! right. t is a new or independent right granted /! the statute, and not si$pl! a pre-eCisting right regulated /! the statute. .eing a statutor! grant, the rights are onl! such as the statute confers, and $a! /e o/tained and en>o!ed onl! with respect to the su/>ects and /! the persons and 12 on ter$s and conditions specified in the statute. Since . . . cop!right in pu/lished wor%s is purel! a statutor! creation, a cop!right $a! /e 13 o/tained onl! for a wor% falling within the statutor! enu$eration or description. Regardless of the historical viewpoint, it is authoritativel! settled in the -nited States that there is no cop!right eCcept that which is /oth created and secured /! act of Congress . . 1/ ...

P.D. No. 42, Y4, in enu$erating what are su/>ect to cop!right, refers to finished wor%s and not to concepts. +he cop!right does not eCtend to an idea, procedure, process, s!ste$, $ethod of operation, concept, principle, or discover!, regardless of the for$ in which it is descri/ed, eCplained, 15 illustrated, or e$/odied in such wor%. +hus, the new N+)(()C+-*( PR,P)R+G C,D) ,E +') P' ( PP N)S provides0 Sec. 18:. ,nprotected Sub-ect +atter. A Notwithstanding the provisions of Sections 184 and 18<, no protection shall eCtend, under this law, to an! idea, procedure,

s!ste$, $ethod or operation, concept, principle, discover! or $ere data as such, even if the! are eCpressed, eCplained, illustrated or e$/odied in a wor%; news of the da! and other $iscellaneous facts having the character of $ere ite$s of press infor$ation; or an! official teCt of a legislative, ad$inistrative or legal nature, as well as an! official translation thereof. @hat then is the su/>ect $atter of petitioners6 cop!right? +his Court is of the opinion that petitioner .9P 6s cop!right covers audio-visual recordings of each episode of .hoda and +e , as falling within the class of wor%s $entioned in P.D. 42, Y4"3#, to wit0 Cine$atographic wor%s and wor%s produced /! a process analogous to cine$atograph! or an! process for $a%ing audio-visual recordings; +he cop!right does not eCtend to the general concept or for$at of its dating ga$e show. *ccordingl!, /! the ver! nature of the su/>ect of petitioner .9P 6s cop!right, the investigating prosecutor should have the opportunit! to co$pare the videotapes of the two shows. 3ere description /! words of the general for$at of the two dating ga$e shows is insufficient; the presentation of the $aster videotape in evidence was indispensa/le to the deter$ination of the eCistence of pro/a/le cause. *s aptl! o/served /! respondent Secretar! of 9ustice0 * television show includes $ore than $ere words can descri/e /ecause it involves a whole spectru$ of visuals and effects, video and audio, such that no si$ilarit! or dissi$ilarit! $a! /e found /! $erel! descri/ing the general cop!rightJfor$at of /oth dating ga$e shows. @')R)E,R), the petition is here/! D S3 SS)D S, ,RD)R)D.
/K&phi/.nLt

Puno, 7uisu#bin and "uena, %%., concur. "ellosillo, %., too) no part. 4oo+#o+)&

G.R. No. 1/0222

Au?u&+ 15, 2003

PEARL = DEAN 8PHIL.9, INC!RP!RATED, Petitioner, vs. SH!E-ART, INC!RP!RATED, "#$ N!RTH EDSA -AR5ETING, INC!RP!RATED, Respondents. D)C S ,N C!R!NA, J.: n the instant petition for review on certiorari under Rule 4: of the Rules of Court, petitioner Pearl I Dean "Phil.# nc. "P I D# assails the 3a! 44, 4111 decision 1 of the Court of *ppeals reversing the

,cto/er <1, 1226 decision4of the Regional +rial Court of 3a%ati, .ranch 1<<, in Civil Case No. 24:16 which declared private respondents Shoe$art nc. "S3 # and North )dsa 3ar%eting nc. "N)3 # lia/le for infringe$ent of trade$ar% and cop!right, and unfair co$petition. E*C+-*( *N+)C)D)N+S +he 3a! 44, 4111 decision of the Court of *ppeals < contained a su$$ar! of this dispute0 &Plaintiff-appellant Pearl and Dean "Phil.#, nc. is a corporation engaged in the $anufacture of advertising displa! units si$pl! referred to as light /oCes. +hese units utiliDe speciall! printed posters sandwiched /etween plastic sheets and illu$inated with /ac% lights. Pearl and Dean was a/le to secure a Certificate of Cop!right Registration dated 9anuar! 41, 1251 over these illu$inated displa! units. +he advertising light /oCes were $ar%eted under the trade$ar% &Poster *ds&. +he application for registration of the trade$ar% was filed with the .ureau of Patents, +rade$ar%s and +echnolog! +ransfer on 9une 41, 125<, /ut was approved onl! on Septe$/er 14, 1255, per Registration No. 4116:. Ero$ 1251 to a/out 1255, Pearl and Dean e$plo!ed the services of 3etro ndustrial Services to $anufacture its advertising displa!s. So$eti$e in 125:, Pearl and Dean negotiated with defendant-appellant Shoe$art, nc. "S3 # for the lease and installation of the light /oCes in S3 Cit! North )dsa. Since S3 Cit! North )dsa was under construction at that ti$e, S3 offered as an alternative, S3 3a%ati and S3 Cu/ao, to which Pearl and Dean agreed. ,n Septe$/er 11, 125:, Pearl and DeanNs Beneral 3anager, Rodolfo Mergara, su/$itted for signature the contracts covering S3 Cu/ao and S3 3a%ati to S3 Ns *dvertising Pro$otions and Pu/licit! Division 3anager, Ra$onlito */ano. ,nl! the contract for S3 3a%ati, however, was returned signed. ,n ,cto/er 4, 125:, Mergara wrote */ano in=uiring a/out the other contract and re$inding hi$ that their agree$ent for installation of light /oCes was not onl! for its S3 3a%ati /ranch, /ut also for S3 Cu/ao. S3 did not /other to repl!. nstead, in a letter dated 9anuar! 14, 1256, S3 Ns house counsel infor$ed Pearl and Dean that it was rescinding the contract for S3 3a%ati due to non-perfor$ance of the ter$s thereof. n his repl! dated Ee/ruar! 18, 1256, Mergara protested the unilateral action of S3 , sa!ing it was without /asis. n the sa$e letter, he pushed for the signing of the contract for S3 Cu/ao. +wo !ears later, 3etro ndustrial Services, the co$pan! for$erl! contracted /! Pearl and Dean to fa/ricate its displa! units, offered to construct light /oCes for Shoe$artNs chain of stores. S3 approved the proposal and ten "11# light /oCes were su/se=uentl! fa/ricated /! 3etro ndustrial for S3 . *fter its contract with 3etro ndustrial was ter$inated, S3 engaged the services of )GD Rain/ow *dvertising Corporation to $a%e the light /oCes. So$e <11 units were fa/ricated in 1221. +hese were delivered on a staggered /asis and installed at S3 3ega$all and S3 Cit!. So$eti$e in 1252, Pearl and Dean, received reports that eCact copies of its light /oCes were installed at S3 Cit! and in the fastfood section of S3 Cu/ao. -pon investigation, Pearl and Dean found out that aside fro$ the two "4# reported S3 /ranches, light /oCes si$ilar to those it $anufactures were also installed in two "4# other S3 stores. t further discovered that defendantappellant North )dsa 3ar%eting nc. "N)3 #, through its $ar%eting ar$, Pri$e Spots 3ar%eting Services, was set up pri$aril! to sell advertising space in lighted displa! units located in S3 Ns different /ranches. Pearl and Dean noted that N)3 is a sister co$pan! of S3 . n the light of its discoveries, Pearl and Dean sent a letter dated Dece$/er 11, 1221 to /oth S3 and N)3 en>oining the$ to cease using the su/>ect light /oCes and to re$ove the sa$e fro$ S3 Ns esta/lish$ents. t also de$anded the discontinued use of the trade$ar% &Poster *ds,& and the

pa!$ent to Pearl and Dean of co$pensator! da$ages in the a$ount of +went! 3illion Pesos "P41,111,111.11#. -pon receipt of the de$and letter, S3 suspended the leasing of two hundred twent!-four "444# light /oCes and N)3 too% down its advertise$ents for &Poster *ds& fro$ the lighted displa! units in S3 Ns stores. Clai$ing that /oth S3 and N)3 failed to $eet all its de$ands, Pearl and Dean filed this instant case for infringe$ent of trade$ar% and cop!right, unfair co$petition and da$ages. n den!ing the charges hurled against it, S3 $aintained that it independentl! developed its poster panels using co$$onl! %nown techni=ues and availa/le technolog!, without notice of or reference to Pearl and DeanNs cop!right. S3 noted that the registration of the $ar% &Poster *ds& was onl! for stationeries such as letterheads, envelopes, and the li%e. .esides, according to S3 , the word &Poster *ds& is a generic ter$ which cannot /e appropriated as a trade$ar%, and, as such, registration of such $ar% is invalid. t also stressed that Pearl and Dean is not entitled to the reliefs pra!ed for in its co$plaint since its advertising displa! units contained no cop!right notice, in violation of Section 48 of P.D. 42. S3 alleged that Pearl and Dean had no cause of action against it and that the suit was purel! intended to $align S3 Ns good na$e. ,n this /asis, S3 , aside fro$ pra!ing for the dis$issal of the case, also counterclai$ed for $oral, actual and eCe$plar! da$ages and for the cancellation of Pearl and DeanNs Certification of Cop!right Registration No. PD-R-4::5 dated 9anuar! 41, 1251 and Certificate of +rade$ar% Registration No. 416: dated Septe$/er 14, 1255. N)3 , for its part, denied having $anufactured, installed or used an! advertising displa! units, nor having engaged in the /usiness of advertising. t repleaded S3 Ns aver$ents, ad$issions and denials and pra!ed for si$ilar reliefs and counterclai$s as S3 .& +he R+C of 3a%ati Cit! decided in favor of P I D0 @herefore, defendants S3 and N)3 are found >ointl! and severall! lia/le for infringe$ent of cop!right under Section 4 of PD 42, as a$ended, and infringe$ent of trade$ar% under Section 44 of R* No. 166, as a$ended, and are here/! penaliDed under Section 45 of PD 42, as a$ended, and Sections 4< and 44 of R* 166, as a$ended. *ccordingl!, defendants are here/! directed0 "1# to pa! plaintiff the following da$ages0 "a# actual da$ages - P16,611,111.11, representing profits derived /! defendants as a result of infringe$ent of plaintiffNs cop!right fro$ 1221 to 1224 "/# $oral da$ages - P1,111.111.11 "c# eCe$plar! da$ages - P1,111,111.11 "d# attorne!Ns fees - P1,111,111.11 plus "e# costs of suit;

"4# to deliver, under oath, for i$pounding in the National (i/rar!, all light /oCes of S3 which were fa/ricated /! 3etro ndustrial Services and )GD Rain/ow *dvertising Corporation; "<# to deliver, under oath, to the National (i/rar!, all filler-posters using the trade$ar% &Poster *ds&, for destruction; and "4# to per$anentl! refrain fro$ infringing the cop!right on plaintiffNs light /oCes and its trade$ar% &Poster *ds&. DefendantsN counterclai$s are here/! ordered dis$issed for lac% of $erit. S, ,RD)R)D.4 ,n appeal, however, the Court of *ppeals reversed the trial court0 Since the light /oCes cannot, /! an! stretch of the i$agination, /e considered as either prints, pictorial illustrations, advertising copies, la/els, tags or /oC wraps, to /e properl! classified as a cop!righta/le class &,& wor%, we have to agree with S3 when it posited that what was cop!righted were the technical drawings onl!, and not the light /oCes the$selves, thus0 44. @hen a drawing is technical and depicts a utilitarian o/>ect, a cop!right over the drawings li%e plaintiff-appellantNs will not eCtend to the actual o/>ect. t has so /een held under >urisprudence, of which the leading case is .a%er vs. Selden "111 -.S. 541 "1582#. n that case, Selden had o/tained a cop!right protection for a /oo% entitled &SeldenNs Condensed (edger or .oo%%eeping Si$plified& which purported to eCplain a new s!ste$ of /oo%%eeping. ncluded as part of the /oo% were /lan% for$s and illustrations consisting of ruled lines and headings, speciall! designed for use in connection with the s!ste$ eCplained in the wor%. +hese for$s showed the entire operation of a da! or a wee% or a $onth on a single page, or on two pages following each other. +he defendant .a%er then produced for$s which were si$ilar to the for$s illustrated in SeldenNs cop!righted /oo%s. +he Court held that eCclusivit! to the actual for$s is not eCtended /! a cop!right. +he reason was that &to grant a $onopol! in the underl!ing art when no eCa$ination of its novelt! has ever /een $ade would /e a surprise and a fraud upon the pu/lic; that is the province of letters patent, not of cop!right.& *nd that is precisel! the point. No dou/t aware that its alleged original design would never pass the rigorous eCa$ination of a patent application, plaintiff-appellant fought to foist a fraudulent $onopol! on the pu/lic /! convenientl! resorting to a cop!right registration which $erel! e$plo!s a recordal s!ste$ without the /enefit of an in-depth eCa$ination of novelt!. +he principle in "a)er vs. Selden was li%ewise applied in +uller vs. 6riborou h "rid e Authorit( K4< E. Supp. 425 "S.D.N.G. 1244#L. n this case, 3uller had o/tained a cop!right over an unpu/lished drawing entitled &.ridge *pproach W the drawing showed a novel /ridge approach to unsnarl traffic congestion&. +he defendant constructed a /ridge approach which was alleged to /e an infringe$ent of the new design illustrated in plaintiffNs drawings. n this case it was held that protection of the drawing does not eCtend to the unauthoriDed duplication of the o/>ect drawn /ecause cop!right eCtends onl! to the description or eCpression of the o/>ect and not to the o/>ect itself. t does not prevent one fro$ using the drawings to construct the o/>ect portra!ed in the drawing. n two other cases, !#perial >o#es Corp. v. 9a#ont , 4:5 E. 4d 52: and Scholtz >o#es, !nc. v. +addo=, <82 E. 4d 54, it was held that there is no cop!right infringe$ent when one who, without /eing authoriDed, uses a cop!righted architectural plan to construct a structure. +his is /ecause the cop!right does not eCtend to the structures the$selves.

n fine, we cannot find S3 lia/le for infringing Pearl and DeanNs cop!right over the technical drawings of the latterNs advertising displa! units. CCC CCC CCC +he Supre$e Court trenchantl! held in $aber e, !ncorporated vs. !nter#ediate Appellate Court that the protective $antle of the +rade$ar% (aw eCtends onl! to the goods used /! the first user as specified in the certificate of registration, following the clear $andate conve!ed /! Section 41 of Repu/lic *ct 166, as a$ended, otherwise %nown as the +rade$ar% (aw, which reads0 S)C. 41. Certification of re istration pri#a facie evidence of validit( .- * certificate of registration of a $ar% or trade-na$e shall /e pri#a facie evidence of the validit! of the registration, the registrantNs ownership of the $ar% or trade-na$e, and of the registrantNs eCclusive right to use the sa$e in connection with the goods, /usiness or services specified in the certificate, su/>ect to an! conditions and li$itations stated therein.& "underscorin supplied# +he records show that on 9une 41, 125<, Pearl and Dean applied for the registration of the trade$ar% &Poster *ds& with the .ureau of Patents, +rade$ar%s, and +echnolog! +ransfer. Said trade$ar% was recorded in the Principal Register on Septe$/er 14, 1255 under Registration No. 4116: covering the following products0 stationeries such as letterheads, envelopes and calling cards and newsletters. @ith this as factual /ac%drop, we see no legal /asis to the finding of lia/ilit! on the part of the defendants-appellants for their use of the words &Poster *ds&, in the advertising displa! units in suit. 9urisprudence has interpreted Section 41 of the +rade$ar% (aw as &an i$plicit per$ission to a $anufacturer to venture into the production of goods and allow that producer to appropriate the /rand na$e of the senior registrant on goods other than those stated in the certificate of registration.& +he Supre$e Court further e$phasiDed the restrictive $eaning of Section 41 when it stated, through 9ustice Conrado M. SancheD, that0 Reall!, if the certificate of registration were to /e dee$ed as including goods not specified therein, then a situation $a! arise where/! an applicant $a! /e te$pted to register a trade$ar% on an! and all goods which his $ind $a! conceive even if he had never intended to use the trade$ar% for the said goods. @e /elieve that such o$ni/us registration is not conte$plated /! our +rade$ar% (aw. @hile we do not discount the stri%ing si$ilarit! /etween Pearl and DeanNs registered trade$ar% and defendants-appellantsN &Poster *ds& design, as well as the parallel use /! which said words were used in the partiesN respective advertising copies, we cannot find defendants-appellants lia/le for infringe$ent of trade$ar%. &Poster *ds& was registered /! Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who used the sa$e words in their advertising displa! units. @h! Pearl and Dean li$ited the use of its trade$ar% to stationeries is si$pl! /e!ond us. .ut, having alread! done so, it $ust stand /! the conse=uence of the registration which it had caused. CCC CCC CCC @e are constrained to adopt the view of defendants-appellants that the words &Poster *ds& are a si$ple contraction of the generic ter$ poster advertising. n the a/sence of an! convincing proof that &Poster *ds& has ac=uired a secondar! $eaning in this >urisdiction, we find that Pearl and DeanNs eCclusive right to the use of &Poster *ds& is li$ited to what is written in its certificate of registration, na$el!, stationeries.

Defendants-appellants cannot thus /e held lia/le for infringe$ent of the trade$ar% &Poster *ds&. +here /eing no finding of either cop!right or trade$ar% infringe$ent on the part of S3 and N)3 , the $onetar! award granted /! the lower court to Pearl and Dean has no leg to stand on. CCC CCC CCC @')R)E,R), pre$ises considered, the assailed decision is R)M)RS)D and S)+ *S D), and another is rendered D S3 SS NB the co$plaint and counterclai$s in the a/ove-entitled case for lac% of $erit.: Dissatisfied with the a/ove decision, petitioner P I D filed the instant petition assigning the following errors for the CourtNs consideration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n resolving this ver! interesting case, we are challenged once again to put into proper perspective four $ain concerns of intellectual propert! law A patents, cop!rights, trade$ar%s and unfair co$petition arising fro$ infringe$ent of an! of the first three. @e shall focus then on the following issues0 "1# if the engineering or technical drawings of an advertising displa! unit "light /oC# are granted cop!right protection "cop!right certificate of registration# /! the National (i/rar!, is the light /oC depicted in such engineering drawings ipso facto also protected /! such cop!right? "4# or should the light /oC /e registered separatel! and protected /! a patent issued /! the .ureau of Patents +rade$ar%s and +echnolog! +ransfer "now ntellectual Propert! ,ffice# A in addition to the cop!right of the engineering drawings? "<# can the owner of a registered trade$ar% legall! prevent others fro$ using such trade$ar% if it is a $ere a//reviation of a ter$ descriptive of his goods, services or /usiness? ,N +') SS-) ,E C,PGR B'+ NER NB)3)N+

Petitioner P I DNs co$plaint was that S3 infringed on its cop!right over the light /oCes when S3 had the units $anufactured /! 3etro and )GD Rain/ow *dvertising for its own account. ,/viousl!, petitionerNs position was pre$ised on its /elief that its cop!right over the engineering drawings eCtended ipso facto to the light /oCes depicted or illustrated in said drawings. n ruling that there was no cop!right infringe$ent, the Court of *ppeals held that the cop!right was li$ited to the drawings alone and not to the light /oC itself. @e agree with the appellate court. Eirst, petitionerNs application for a cop!right certificate A as well as Cop!right Certificate No. PDR4:55 issued /! the National (i/rar! on 9anuar! 41, 1251 A clearl! stated that it was for a class &,& wor% under Section 4 ",# of PD 42 "+he ntellectual Propert! Decree# which was the statute then prevailing. Said Section 4 eCpressl! enu$erated the wor%s su/>ect to cop!right0 S)C. 4. +he rights granted /! this Decree shall, fro$ the $o$ent of creation, su/sist with respect to an! of the following wor%s0 CCC CCC CCC

",# Prints, pictorial illustrations, advertising copies, la/els, tags, and /oC wraps; CCC CCC CCC

*lthough petitionerNs cop!right certificate was entitled &*dvertising Displa! -nits& "which depicted the /oC-t!pe electrical devices#, its clai$ of cop!right infringe$ent cannot /e sustained. Cop!right, in the strict sense of the ter$, is purel! a statutor! right. .eing a $ere statutor! grant, the rights are li$ited to what the statute confers. t $a! /e o/tained and en>o!ed onl! with respect to the su/>ects and /! the persons, and on ter$s and conditions specified in the statute. 8 Accordin l(, it can cover onl( the &or)s fallin &ithin the statutor( enu#eration or description. 5 P I D secured its cop!right under the classification class 'O' &or). +his /eing so, petitionerNs cop!right protection eCtended onl! to the technical drawings and not to the light /oC itself /ecause the latter was not at all in the categor! of &prints, pictorial illustrations, advertising copies, la/els, tags and /oC wraps.& Stated otherwise, even as we find that P I D indeed owned a valid cop!right, the sa$e could have referred onl! to the technical drawings within the categor! of &pictorial illustrations.& t could not have possi/l! stretched out to include the underl!ing light /oC. +he strict application 2 of the lawNs enu$eration in Section 4 prevents us fro$ giving petitioner even a little leewa!, that is, even if its cop!right certificate was entitled &*dvertising Displa! -nits.& @hat the law does not include, it eCcludes, and for the good reason0 the light /oC was not a literar! or artistic piece which could /e cop!righted under the cop!right law. *nd no less clearl!, neither could the lac% of statutor! authorit! to $a%e the light /oC cop!righta/le /e re$edied /! the si$plistic act of entitling the cop!right certificate issued /! the National (i/rar! as &*dvertising Displa! -nits.& n fine, if S3 and N)3 reprinted P I DNs technical drawings for sale to the pu/lic without license fro$ P I D, then no dou/t the! would have /een guilt! of cop!right infringe$ent. .ut this was not the case. S3 Ns and N)3 Ns acts co$plained of /! P I D were to have units si$ilar or identical to the light /oC illustrated in the technical drawings $anufactured /! 3etro and )GD Rain/ow *dvertising, for leasing out to different advertisers. @as this an infringe$ent of petitionerNs cop!right over the technical drawings? @e do not thin% so. During the trial, the president of P I D hi$self ad$itted that the light /oC was neither a literar! not an artistic wor% /ut an &engineering or $ar%eting invention.& 11 ,/viousl!, there appeared to /e so$e

confusion regarding what ought or ought not to /e the proper su/>ects of cop!rights, patents and trade$ar%s. n the leading case of 7ho vs. Court of *ppeals,11 we ruled that these three legal rights are co$pletel! distinct and separate fro$ one another, and the protection afforded /! one cannot /e used interchangea/l! to cover ite$s or wor%s that eCclusivel! pertain to the others0 +rade$ar%, cop!right and patents are different intellectual propert! rights that cannot /e interchanged with one another. A trade#ar) is an( visible si n capable of distin uishin the oods 4trade#ar)5 or services 4service #ar)5 of an enterprise and shall include a sta#ped or #ar)ed container of oods. n relation thereto, a trade na$e $eans the na$e or designation identif!ing or distinguishing an enterprise. 3eanwhile, the scope of a cop(ri ht is confined to literar( and artistic &or)s which are original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation. Patentable inventions, on the other hand, refer to an( technical solution of a proble# in an( field of hu#an activit( which is new, involves an inventive step and is industriall! applica/le. ,N +') SS-) ,E P*+)N+ NER NB)3)N+ +his /rings us to the neCt point0 if, despite its $anufacture and co$$ercial use of the li ht bo=es without license fro$ petitioner, private respondents cannot /e held legall! lia/le for infringe$ent of P I DNs cop!right over itstechnical dra&in s of the said li ht bo=es, should the! /e lia/le instead for infringe$ent of patent? @e do not thin% so either. Eor so$e reason or another, petitioner never secured a patent for the light /oCes. t therefore ac=uired no patent rights which could have protected its invention, if in fact it reall! was. *nd /ecause it had no patent, petitioner could not legall! prevent an!one fro$ $anufacturing or co$$erciall! using the contraption. n Creser Precision S!ste$s, nc. vs. Court of *ppeals,14 we held that &there can /e no infringe$ent of a patent until a patent has /een issued, since whatever right one has to the invention covered /! the patent arises alone fro$ the grant of patent. C C C "*#n inventor has no co$$on law right to a $onopol! of his invention. 'e has the right to $a%e use of and vend his invention, /ut if he voluntaril! discloses it, such as /! offering it for sale, the world is free to cop! and use it with i$punit!. * patent, however, gives the inventor the right to eCclude all others. *s a patentee, he has the eCclusive right of $a%ing, selling or using the invention. 1< ,n the assu$ption that petitionerNs advertising units were patenta/le inventions, petitioner revealed the$ full! to the pu/lic /! su/$itting the engineering drawings thereof to the National (i/rar!. +o /e a/le to effectivel! and legall! preclude others fro$ cop!ing and profiting fro$ the invention, a patent is a pri$ordial re=uire$ent. No patent, no protection. +he ulti$ate goal of a patent s!ste$ is to /ring new designs and technologies into the pu/lic do$ain through disclosure. 14 deas, once disclosed to the pu/lic without the protection of a valid patent, are su/>ect to appropriation without significant restraint.1: ,n one side of the coin is the pu/lic which will /enefit fro$ new ideas; on the other are the inventors who $ust /e protected. *s held in "auer < Cie vs. OMDonnel,16 &+he act secured to the inventor the eCclusive right to $a%e use, and vend the thing patented, and conse=uentl! to prevent others fro$ eCercising li%e privileges without the consent of the patentee. t was passed for the purpose of encouraging useful invention and pro$oting new and useful inventions /! the protection and sti$ulation given to inventive genius, and was intended to secure to the pu/lic, after the lapse of the eCclusive privileges granted the /enefit of such inventions and i$prove$ents.& +he law atte$pts to stri%e an ideal /alance /etween the two interests0

&"+he p#atent s!ste$ thus e$/odies a carefull! crafted /argain for encouraging the creation and disclosure of new useful and non-o/vious advances in technolog! and design, in return for the eCclusive right to practice the invention for a nu$/er of !ears. +he inventor $a! %eep his invention secret and reap its fruits indefinitel!. n consideration of its disclosure and the conse=uent /enefit to the co$$unit!, the patent is granted. *n eCclusive en>o!$ent is guaranteed hi$ for 18 !ears, /ut upon the eCpiration of that period, the %nowledge of the invention inures to the people, who are thus ena/led to practice it and profit /! its use.&18 +he patent law has a three-fold purpose0 &first, patent law see%s to foster and reward invention; second, it pro$otes disclosures of inventions to sti$ulate further innovation and to per$it the pu/lic to practice the invention once the patent eCpires; third, the stringent re=uire$ents for patent protection see% to ensure that ideas in the pu/lic do$ain re$ain there for the free use of the pu/lic.&15 t is onl! after an eChaustive eCa$ination /! the patent office that a patent is issued. Such an indepth investigation is re=uired /ecause &in rewarding a useful invention, the rights and welfare of the co$$unit! $ust /e fairl! dealt with and effectivel! guarded. +o that end, the prere=uisites to o/taining a patent are strictl! o/served and when a patent is issued, the li$itations on its eCercise are e=uall! strictl! enforced. +o /egin with, a genuine invention or discover! $ust /e de$onstrated lest in the constant de$and for new appliances, the heav! hand of tri/ute /e laid on each slight technological advance in art.&12 +here is no such scrutin! in the case of cop!rights nor an! notice pu/lished /efore its grant to the effect that a person is clai$ing the creation of a wor%. +he law confers the cop!right fro$ the $o$ent of creation41 and the cop!right certificate is issued upon registration with the National (i/rar! of a sworn eC-parte clai$ of creation. +herefore, not having gone through the arduous eCa$ination for patents, the petitioner cannot eCclude others fro$ the $anufacture, sale or co$$ercial use of the light /oCes on the sole /asis of its cop!right certificate over the technical drawings. Stated otherwise, what petitioner see%s is eCclusivit! without an! opportunit! for the patent office " P,# to scrutiniDe the light /oCNs eligi/ilit! as a patenta/le invention. +he iron! here is that, had petitioner secured a patent instead, its eCclusivit! would have /een for 18 !ears onl!. .ut through the si$plified procedure of cop!right-registration with the National (i/rar! A without undergoing the rigor of defending the patenta/ilit! of its invention /efore the P, and the pu/lic A the petitioner would /e protected for :1 !ears. +his situation could not have /een the intention of the law. n the oft-cited case of .a%er vs. Selden 41, the -nited States Supre$e Court held that onl( the e=pression of an idea is protected b( cop(ri ht, not the idea itself . n that case, the plaintiff held the cop!right of a /oo% which eCpounded on a new accounting s!ste$ he had developed. +he pu/lication illustrated /lan% for$s of ledgers utiliDed in such a s!ste$. +he defendant reproduced for$s si$ilar to those illustrated in the plaintiffNs cop!righted /oo%. +he -S Supre$e Court ruled that0 &+here is no dou/t that a wor% on the su/>ect of /oo%-%eeping, though onl! eCplanator! of well %nown s!ste$s, $a! /e the su/>ect of a cop!right; /ut, then, it is clai$ed onl! as a /oo%. C C C. .ut there is a clear distinction /etween the /oo%s, as such, and the art, which it is, intended to illustrate. +he $ere state$ent of the proposition is so evident that it re=uires hardl! an! argu$ent to support it. +he sa$e distinction $a! /e predicated of ever! other art as well as that of /oo%%eeping. * treatise on the co$position and use of $edicines, /e the! old or new; on the construction and use of ploughs or watches or churns; or on the $iCture and application of colors for painting or d!eing; or

on the $ode of drawing lines to produce the effect of perspective, would /e the su/>ect of cop!right; /ut no one would contend that the cop!right of the treatise would give the eCclusive right to the art or $anufacture descri/ed therein. +he cop!right of the /oo%, if not pirated fro$ other wor%s, would /e valid without regard to the novelt! or want of novelt! of its su/>ect $atter. +he novelt! of the art or thing descri/ed or eCplained has nothing to do with the validit! of the cop!right. To ?'1) +o +:) "u+:o( o, +:) 3oo@ "# )A*lu&'1) >(o>)(+y '# +:) "(+ $)&*('3)$ +:)()'#, B:)# #o )A"2'#"+'o# o, '+& #o1)l+y :"& )1)( 3))# o,,'*'"lly 2"$), Boul$ 3) " &u(>('&) "#$ " ,("u$ u>o# +:) >u3l'*. T:"+ '& +:) >(o1'#*) o, l)++)(& >"+)#+, #o+ o, *o>y('?:+. T:) *l"'2 +o "# '#1)#+'o# o, $'&*o1)(y o, "# "(+ o( 2"#u,"*+u() 2u&+ 3) &u3C)*+)$ +o +:) )A"2'#"+'o# o, +:) P"+)#+ !,,'*) 3),o() "# )A*lu&'1) ('?:+ +:)()'# *"# 3) o3+"'#)$D "#$ " >"+)#+ ,(o2 +:) ?o1)(#2)#+ *"# o#ly &)*u() '+. +he difference /etween the two things, letters patent and cop!right, $a! /e illustrated /! reference to the su/>ects >ust enu$erated. +a%e the case of $edicines. Certain $iCtures are found to /e of great value in the healing art. I, +:) $'&*o1)()( B('+)& "#$ >u3l'&:)& " 3oo@ o# +:) &u3C)*+ 8"& ()?ul"( >:y&'*'"#& ?)#)("lly $o9, :) ?"'#& #o )A*lu&'1) ('?:+ +o +:) 2"#u,"*+u() "#$ &"l) o, +:) 2)$'*'#)D :) ?'1)& +:"+ +o +:) >u3l'*. I, :) $)&'()& +o "*Eu'() &u*: )A*lu&'1) ('?:+, :) 2u&+ o3+"'# " >"+)#+ ,o( +:) 2'A+u() "& " #)B "(+, 2"#u,"*+u() o( *o2>o&'+'o# o, 2"++)(. H) 2"y *o>y('?:+ :'& 3oo@, ', :) >l)"&)&D 3u+ +:"+ o#ly &)*u()& +o :'2 +:) )A*lu&'1) ('?:+ o, >('#+'#? "#$ >u3l'&:'#? :'& 3oo@. So o, "ll o+:)( '#1)#+'o#& o( $'&*o1)(')&. +he cop!right of a /oo% on perspective, no $atter how $an! drawings and illustrations it $a! contain, gives no eCclusive right to the $odes of drawing descri/ed, though the! $a! never have /een %nown or used /efore. .! pu/lishing the /oo% without getting a patent for the art, the latter is given to the pu/lic. CCC Now, whilst no one has a right to print or pu/lish his /oo%, or an! $aterial part thereof, as a /oo% intended to conve! instruction in the art, an! person $a! practice and use the art itself which he has descri/ed and illustrated therein. T:) u&) o, +:) "(+ '& " +o+"lly $',,)()#+ +:'#? ,(o2 " >u3l'*"+'o# o, +:) 3oo@ )A>l"'#'#? '+. +he cop!right of a /oo% on /oo%%eeping cannot secure the eCclusive right to $a%e, sell and use account /oo%s prepared upon the plan set forth in such /oo%. @hether the art $ight or $ight not have /een patented, is a =uestion, which is not /efore us. t was not patented, and is open and free to the use of the pu/lic. *nd, of course, in using the art, the ruled lines and headings of accounts $ust necessaril! /e used as incident to it. +he plausi/ilit! of the clai$ put forward /! the co$plainant in this case arises fro$ a confusion of ideas produced /! the peculiar nature of the art descri/ed in the /oo%s, which have /een $ade the su/>ect of cop!right. n descri/ing the art, the illustrations and diagra$s e$plo!ed happened to correspond $ore closel! than usual with the actual wor% perfor$ed /! the operator who uses the art. C C C T:) $)&*('>+'o# o, +:) "(+ '# " 3oo@, +:ou?: )#+'+l)$ +o +:) 3)#),'+ o, *o>y('?:+, l"y& #o ,ou#$"+'o# ,o( "# )A*lu&'1) *l"'2 +o +:) "(+ '+&)l,. T:) o3C)*+ o, +:) o#) '& )A>l"#"+'o#D +:) o3C)*+ o, +:) o+:)( '& u&). T:) ,o(2)( 2"y 3) &)*u()$ 3y *o>y('?:+. T:) l"++)( *"# o#ly 3) &)*u()$, ', '+ *"# 3) &)*u()$ "+ "ll, 3y l)++)(& >"+)#+.F "underscoring supplied# ,N +') SS-) ,E +R*D)3*R7 NER NB)3)N+ +his issue concerns the use /! respondents of the $ar% &Poster *ds& which petitionerNs president said was a contraction of &poster advertising.& P I D was a/le to secure a trade$ar% certificate for it, /ut one where the goods specified were &stationeries such as letterheads, envelopes, calling cards and newsletters.&44 Petitioner ad$itted it did not co$$erciall! engage in or $ar%et these goods. ,n

the contrar!, it dealt in electricall! operated /ac%lit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trade$ar% certificate. -nder the circu$stances, the Court of *ppeals correctl! cited $aber e !nc. vs. !nter#ediate Appellate Court,4<where we, invo%ing Section 41 of the old +rade$ar% (aw, ruled that &the certificate of registration issued /! the Director of Patents can confer "upon petitioner# the eCclusive right to use its own s!$/ol onl( to those oods specified in the certificate , su/>ect to an! conditions and li$itations specified in the certificate C C C. ,ne who has adopted and used a trade$ar% on his goods does not prevent the adoption and use of the sa#e trade#ar) b( others for products &hich are of a different description.&44 $aber e, !nc. was correct and was in fact recentl! reiterated in Canon ;abushi)i ;aisha vs. Court of Appeals .4: *ssu$ing ar uendo that &Poster *ds& could validl! =ualif! as a trade$ar%, the failure of P I D to secure a trade$ar% registration for specific use on the light /oCes $eant that there could not have /een an! trade$ar% infringe$ent since registration was an essential ele$ent thereof.
/K&phi/

,N +') SS-) ,E -NE* R C,3P)+ + ,N f at all, the cause of action should have /een for unfair co$petition, a situation which was possi/le even if P I D had no registration.46 'owever, while the petitionerNs co$plaint in the R+C also cited unfair co$petition, the trial court did not find private respondents lia/le therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its clai$ of unfair co$petition. .ut even disregarding procedural issues, we nevertheless cannot hold respondents guilt! of unfair co$petition. .! the nature of things, there can /e no unfair co$petition under the law on cop!rights although it is applica/le to disputes over the use of trade$ar%s. )ven a na$e or phrase incapa/le of appropriation as a trade$ar% or tradena$e $a!, /! long and eCclusive use /! a /usiness "such that the na$e or phrase /eco$es associated with the /usiness or product in the $ind of the purchasing pu/lic#, /e entitled to protection against unfair co$petition.48 n this case, there was no evidence that P I DNs use of &Poster *ds& was distinctive or well-%nown. *s noted /! the Court of *ppeals, petitionerNs eCpert witnesses hi$self had testified that & OPoster *dsN was too generic a na$e. So it was difficult to identif! it with an! co$pan!, honestl! spea%ing.&45 +his crucial ad$ission /! its own eCpert witness that &Poster *ds& could not /e associated with P I D showed that, in the $ind of the pu/lic, the goods and services carr!ing the trade$ar% &Poster *ds& could not /e distinguished fro$ the goods and services of other entities. +his fact also prevented the application of the doctrine of secondar! $eaning. &Poster *ds& was generic and incapa/le of /eing used as a trade$ar% /ecause it was used in the field of poster advertising, the ver! /usiness engaged in /! petitioner. &Secondar! $eaning& $eans that a word or phrase originall! incapa/le of eCclusive appropriation with reference to an article in the $ar%et "/ecause it is geographicall! or otherwise descriptive# $ight nevertheless have /een used for so long and so eCclusivel! /! one producer with reference to his article that, in the trade and to that /ranch of the purchasing pu/lic, the word or phrase has co$e to $ean that the article was his propert!.42 +he ad$ission /! petitionerNs own eCpert witness that he hi$self could not associate &Poster *ds& with petitioner P I D /ecause it was &too generic& definitel! precluded the application of this eCception. 'aving discussed the $ost i$portant and critical issues, we see no need to /ela/or the rest.

*ll told, the Court finds no reversi/le error co$$itted /! the Court of *ppeals when it reversed the Regional +rial Court of 3a%ati Cit!. 6HERE4!RE, the petition is here/! D)N )D and the decision of the Court of *ppeals dated 3a! 44, 4111 is *EE R3)D in toto. S, ,RD)R)D. Puno, "Chair$an#, Pangani/an, Sandoval-ButierreD, and Carpio-3orales, 99., concur. G.R. No. L-37/02 -"(*: 17, 1907 4ILIPIN! S!CIETY !4 C!-P!SERS, AUTH!RS AND PU LISHERS, INC., plaintiff-appellant, vs. ENJA-IN TAN, defendant-appellee. 9ichauco, Picazo < A caoili 9a& Office for plaintiff*appellant. .a#on A. Nieves for defendant*appellee.

PARAS, J.: *n appeal was $ade to the Court of *ppeals doc%eted as C*-B.R. No. 46<8<-R G entitled $ilipino Societ( of Co#posers, Authors, Publishers, !nc., Plaintiff*Appellant v. "en-a#in 6an, Defendant* Appellee, fro$ the decision of the Court of Eirst nstance of 3anila, .ranch M in Civil Case No. 81444 GG '$ilipino Societ( of Co#posers, Authors and Publishers, !nc., Plaintiff v. "en-a#in 6an, Defendant,' which had dis$issed plaintiffs6 co$plaint without special pronounce$ent as to costs. +he Court of *ppeals, finding that the case involves pure =uestions of law, certified the sa$e to the Supre$e Court for final deter$ination "Resolution, C*-B.R. No. 46<8<-R, Rollo, p. <6; Resolution of the Supre$e Court of Ee/ruar! 16, 128< in (-<6414, Rollo, p. <5#. +he undisputed facts of this case are as follows0 Plaintiff-appellant is a non-profit association of authors, co$posers and pu/lishers dul! organiDed under the Corporation (aw of the Philippines and registered with the Securities and )Cchange Co$$ission. Said association is the owner of certain $usical co$positions a$ong which are the songs entitled0 &Dahil Sa !o&, &Sapag%at %aw *! *%in,& &Sapag%at 7a$i *! +ao (a$ang& and &+he Nearness ,f Gou.& ,n the other hand, defendant-appellee is the operator of a restaurant %nown as &*leC Soda Eoundation and Restaurant& where a co$/o with professional singers, hired to pla! and sing $usical co$positions to entertain and a$use custo$ers therein, were pla!ing and singing the a/ove$entioned co$positions without an! license or per$ission fro$ the appellant to pla! or sing the sa$e. *ccordingl!, appellant de$anded fro$ the appellee pa!$ent of the necessar! license fee for the pla!ing and singing of aforesaid co$positions /ut the de$and was ignored.

'ence, on Nove$/er 8, 1268, appellant filed a co$plaint with the lower court for infringe$ent of cop!right against defendant-appellee for allowing the pla!ing in defendant-appellee6s restaurant of said songs cop!righted in the na$e of the for$er. Defendant-appellee, in his answer, countered that the co$plaint states no cause of action. @hile not den!ing the pla!ing of said cop!righted co$positions in his esta/lish$ent, appellee $aintains that the $ere singing and pla!ing of songs and popular tunes even if the! are cop!righted do not constitute an infringe$ent "Record on *ppeal, p. 11; Resolution, C*-B.R. N,. 46<8<-R, Rollo, pp. <4-<6# under the provisions of Section < of the Cop!right (aw "*ct <1<4 of the Philippine (egislature#. +he lower court, finding for the defendant, dis$issed the co$plaint "Record on *ppeal, p. 4:#. Plaintiff appealed to the Court of *ppeals which as alread! stated certified the case to the Supre$e Court for ad>udication on the legal =uestion involved. "Resolution, Court of *ppeals, Rollo, p. <6; Resolution of the Supre$e Court of Ee/ruar! 15, 128<, Rollo, p. <5#. n its /rief in the Court of *ppeals, appellant raised the following *ssign$ent of )rrors0

+') (,@)R C,-R+ )RR)D N ',(D NB +'*+ +') 3-S C*( C,3P,S + ,NS ,E +') *PP)((*N+ @)R) N +') N*+-R) ,E P-.( C PR,P)R+G @')N +')G @)R) C,PGR B'+)D ,R R)B S+)R)D.

+') (,@)R C,-R+ )RR)D N ',(D NB +'*+ +') 3-S C*( C,3P,S + ,NS ,E +') *PP)((*N+ @)R) P(*G)D *ND S-NB N +') S,D* E,-N+* N *ND R)S+*-R*N+ ,E +') *PP)(()) .G ND)P)ND)N+ C,N+R*C+,RS *ND ,N(G -P,N +') R)F-)S+ ,E C-S+,3)RS.

+') (,@)R C,-R+ )RR)D N ',(D NB +'*+ +') P(*G NB *ND S NB NB ,E C,PGR B'+)D 3-S C*( C,3P,S + ,NS N +') S,D* E,-N+* N *ND R)S+*-R*N+ ,E +') *PP)(()) *R) N,+ P-.( C P)RE,R3*NC)S E,R PR,E + ,E +') S* D C,3P,S + ,NS @ +' N +') 3)*N NB *ND C,N+)3P(*+ ,N ,E +') C,PGR B'+ (*@. M +') (,@)R C,-R+ )RR)D N N,+ ',(D NB +'*+ +') *PP)(()) S ( *.() +, +') *PP)((*N+ E,R E,-R "4# S)P*R*+) NER NB)3)N+S. ".rief for *ppellant, pp. * and .#. +he petition is devoid of $erit. +he principal issues in this case are whether or not the pla!ing and signing of $usical co$positions which have /een cop!righted under the provisions of the Cop!right (aw "*ct <1<4# inside the esta/lish$ent of the defendant-appellee constitute a pu/lic perfor$ance for profit within the $eaning and conte$plation of the Cop!right (aw of the Philippines; and assu$ing that there were indeed pu/lic perfor$ances for profit, whether or not appellee can /e held lia/le therefor.

*ppellant anchors its clai$ on Section <"c# of the Cop!right (aw which provides0 S)C. <. +he proprietor of a cop!right or his heirs or assigns shall have the eCclusive right0 CCC CCC CCC "c# +o eChi/it, perfor$, represent, produce, or reproduce the cop!righted wor% in an! $anner or /! an! $ethod whatever for profit or otherwise; if not reproduced in copies for sale, to sell an! $anuscripts or an! record whatsoever thereof; CCC CCC CCC t $aintains that pla!ing or singing a $usical co$position is universall! accepted as perfor$ing the $usical co$position and that pla!ing and singing of cop!righted $usic in the soda fountain and restaurant of the appellee for the entertain$ent of the custo$ers although the latter do not pa! for the $usic /ut onl! for the food and drin% constitute perfor$ance for profit under the Cop!right (aw ".rief for the *ppellant, pp. 12-4:#. @e concede that indeed there were &pu/lic perfor$ances for profit. & +he word &perfor$& as used in the *ct has /een applied to &,ne who pla!s a $usical co$position on a piano, there/! producing in the air sound waves which are heard as $usic ... and if the instru$ent he pla!s on is a piano plus a /roadcasting apparatus, so that waves are thrown out, not onl! upon the air, /ut upon the other, then also he is perfor$ing the $usical co$position.& ".uc%, et al. v. Duncan, et al.; Sa$e 9ewell (a Salle Realt! Co., <4E. 4d. Series <68#. n relation thereto, it has /een held that &+he pla!ing of $usic in dine and dance esta/lish$ent which was paid for /! the pu/lic in purchases of food and drin% constituted &perfor$ance for profit& within a Cop!right (aw.& ".uc%, et al. v. Russon No. 4452 4: E. Supp. <18#. +hus, it has /een eCplained that while it is possi/le in such esta/lish$ents for the patrons to purchase their food and drin%s and at the sa$e ti$e dance to the $usic of the orchestra, the $usic is furnished and used /! the orchestra for the purpose of inducing the pu/lic to patroniDe the esta/lish$ent and pa! for the entertain$ent in the purchase of food and drin%s. +he defendant conducts his place of /usiness for profit, and it is pu/lic; and the $usic is perfor$ed for profit "!bid, p. <12#. n a si$ilar case, the Court ruled that &+he Perfor$ance in a restaurant or hotel dining roo$, /! persons e$plo!ed /! the proprietor, of a cop!righted $usical co$position, for the entertain$ent of patrons, without charge for ad$ission to hear it, infringes the eCclusive right of the owner of the cop!right.& "'er/ert v. Shanle! Co.; 9ohn Church Co. v. 'illard 'otel Co., et al., 444 -.S. :21-:21#. n delivering the opinion of the Court in said two cases, 9ustice 'ol$es ela/orated thus0 f the rights under the cop!right are infringed onl! /! a perfor$ance where $one! is ta%en at the door, the! are ver! i$perfectl! protected. Perfor$ances not different in %ind fro$ those of the defendants could /e given that $ight co$pete with and even destro! the success of the $onopol! that the law intends the plaintiffs to have. t is enough to sa! that there is no need to construe the statute so narrowl!. +he defendants6 perfor$ances are not elee$os!nar!. +he! are part of a total for which the pu/lic pa!s, and the fact that the price of the whole is attri/uted to a particular ite$ which those present are eCpected to order is not i$portant. t is true that the $usic is not the sole o/>ect, /ut neither is the food, which pro/a/l! could /e got cheaper elsewhere. +he o/>ect is a repast in surroundings that to people having li$ited power of conversation or disli%ing the rival noise, give a luCurious pleasure not

to /e had fro$ eating a silent $eal. f $usic did not pa!, it would /e given up. f it pa!s, it pa!s out of the pu/lic6s poc%et. @hether it pa!s or not, the purpose of e$plo!ing it is profit, and that is enough. "!bid., p. :24#. n the case at /ar, it is ad$itted that the patrons of the restaurant in =uestion pa! onl! for the food and drin%s and apparentl! not for listening to the $usic. *s found /! the trial court, the $usic provided is for the purpose of entertaining and a$using the custo$ers in order to $a%e the esta/lish$ent $ore attractive and desira/le "Record on *ppeal, p. 41#. t will /e noted that for the pla!ing and singing the $usical co$positions involved, the co$/o was paid as independent contractors /! the appellant "Record on *ppeal, p. 44#. t is therefore o/vious that the eCpenses entailed there/! are added to the overhead of the restaurant which are either eventuall! charged in the price of the food and drin%s or to the overall total of additional inco$e produced /! the /igger volu$e of /usiness which the entertain$ent was progra$$ed to attract. Conse=uentl!, it is /e!ond =uestion that the pla!ing and singing of the co$/o in defendant-appellee6s restaurant constituted perfor$ance for profit conte$plated /! the Cop!right (aw. "*ct <1<4 a$ended /! P.D. No. 42, as a$ended#. Nevertheless, appellee cannot /e said to have infringed upon the Cop!right (aw. *ppellee6s allegation that the co$posers of the contested $usical co$positions &aived their right in favor of the general pu/lic when the! allowed their intellectual creations to /eco$e propert! of the pu/lic do$ain /efore appl!ing for the corresponding cop!rights for the sa$e ".rief for Defendant-*ppellee, pp. 141:# is correct. +he Supre$e Court has ruled that &Paragraph << of Patent ,ffice *d$inistrative ,rder No. < "as a$ended, dated Septe$/er 15, 1248# entitled 6Rules of Practice in the Philippines Patent ,ffice relating to the Registration of Cop!right Clai$s6 pro$ulgated pursuant to Repu/lic *ct 16:, provides a$ong other things that an intellectual creation should /e cop!righted thirt! "<1# da!s after its pu/lication, if $ade in 3anila, or within the "61# da!s if $ade elsewhere, failure of which renders such creation pu/lic propert!.& "Santos v. 3cCullough Printing Co$pan!, 14 SCR* <44-<4: K1264L. ndeed, if the general pu/lic has $ade use of the o/>ect sought to /e cop!righted for thirt! "<1# da!s prior to the cop!right application the law dee$s the o/>ect to have /een donated to the pu/lic do$ain and the sa$e can no longer /e cop!righted. * careful stud! of the records reveals that the song &Dahil Sa !o& which was registered on *pril 41, 12:6 ".rief for *ppellant, p. 11# /eca$e popular in radios, >u%e /oCes, etc. long /efore registration "+SN, 3a! 45, 1265, pp. <-:; 4:# while the song &+he Nearness ,f Gou& registered on 9anuar! 14, 12:: ".rief for *ppellant, p. 11# had /eco$e popular twent! five "4:# !ears prior to 1265, "the !ear of the hearing# or fro$ 124< "+SN, 3a! 45, 1265, p. 48# and the songs &Sapag%at %aw *! *%in& and &Sapag%at 7a$i *! +ao (a$ang& /oth registered on 9ul! 11, 1266, appear to have /een %nown and sang /! the witnesses as earl! as 126: or three !ears /efore the hearing in 1265. +he testi$onies of the witnesses at the hearing of this case on this su/>ect were unre/utted /! the appellant. "!bid, pp. 45; 42 and <1#. -nder the circu$stances, it is clear that the $usical co$positions in =uestion had long /eco$e pu/lic propert!, and are therefore /e!ond the protection of the Cop!right (aw. PR)3 S)S C,NS D)R)D, the appealed decision of the Court of Eirst nstance of 3anila in Civil Case No. 81444 is here/! *EE R3)D. S, ,RD)R)D. $ernan 4Chair#an5, Gutierrez, %r., Padilla, "idin and Cortes, %%., concur.

Ala#pa(, %., too) no part. G.R. No. L-19/39 !*+o3)( 31, 197/

-AUR! -ALANG SANT!S, plaintiff-appellant, vs. -CCULL!UGH PRINTING C!-PANY, defendant-appellee. 6a2ada 6eehan)ee < Carreon for plaintiff*appellant. Esposo < ,sison for defendant*appellee. PAREDES, J.: +his is an action for da$ages /ased on the provisions of *rticles 841 and 844 of the Civil Code of the Philippines, allegedl! on the unauthoriDed use, adoption and appropriation /! the defendant co$pan! of plaintiff6s intellectual creation or artistic design for a Christ$as Card. +he design depicts &a Philippine rural Christ$as ti$e scene consisting of a wo$an and a child in a nipa hut adorned with a star-shaped lantern and a $an astride a cara/ao, /eside a tree, underneath which appears the plaintiff6s pen na$e, 3alang.& +he co$plaint alleges that plaintiff 3auro 3alang Santos designed for for$er *$/assador Eelino Neri, for his personal Christ$as Card greetings for the !ear 12:2, the artistic $otif in =uestion. +he following !ear the defendant 3cCullough Printing Co$pan!, without the %nowledge and authorit! of plaintiff, displa!ed the ver! design in its al/u$ of Christ$as cards and offered it for sale, for a price. Eor such unauthoriDed act of defendant, plaintiff suffered $oral da$ages to the tune of P16,111.11, /ecause it has placed plaintiff6s professional integrit! and ethics under serious =uestion and caused hi$ grave e$/arrass$ent /efore *$/assador Neri. 'e further pra!ed for the additional su$ of P<,111.11 /! wa! of attorne!6s fee. Defendant in answer to the co$plaint, after so$e denials and ad$issions, $oved for a dis$issal of the action clai$ing that A "1# +he design clai$ed does not contain a clear notice that it /elonged to hi$ and that he prohi/ited its use /! others; "4# +he design in =uestion has /een pu/lished /ut does not contain a notice of cop!right, as in fact it had never /een cop!righted /! the plaintiff, for which reason this action is /arred /! the Cop!right (aw; "<# +he co$plaint does not state a cause of action. +he docu$entar! evidence su/$itted were the Christ$as cards, as originall! designed /! plaintiff, the design as printed for *$/assador Neri, and the su/se=uent reprints ordered /! other parties. +he case was su/$itted an a &Stipulation of Eact& the pertinent portions of which are hereunder reproduced0 1. +hat the plaintiff was the artist who created the design shown in )Chi/it *, ... 4. +hat the design carries the pen na$e of plaintiff, 3*(*NB, on its face ... and indicated in )Chi/it *, ...

<. +hat said design was created /! plaintiff in the latter part of 12:2 for the personal use of for$er *$/assador Eelino Neri; ... 4. +hat for$er *$/assador Neri had 511 such cards ... printed /! the defendant co$pan! in 12:2, ... which he distri/uted to his friends in Dece$/er, 12:2; :. +hat defendant co$pan! utiliDed plaintiff6s design in the !ear 1261 in its al/u$ of Christ$as card sa$ples displa!ed to its custo$ers ... . 6. +hat the Sa$paguita Pictures, nc., placed an order with defendant co$pan! for 811 of said cards ... while Raul -rra I Co. ordered 411 ..., which cards were sent out /! the$ to their respective correspondent, clients and friends during the Christ$as season of 1261; 8. +hat defendant co$pan!6s use of plaintiff6s design was without %nowledge, authorit! or consent of plaintiff; 5. +hat said design has not /een cop!righted; 2. +hat plaintiff is an artist of esta/lished na$e, good-will and reputation. ... . -pon the /asis of the facts stipulated, the lower court rendered >udg$ent on Dece$/er 1, 1261, the pertinent portions of which are recited /elow0 *s a general proposition, there can /e no dispute that the artist ac=uires ownership of the product of his art. *t the ti$e of its creation, he has the a/solute do$inion over it. +o help the author protect his rights the cop!right law was enacted. n intellectual creations, a distinction $ust /e $ade /etween two classes of propert! rights; the fact of authorship and the right to pu/lish andJor distri/ute copies of the creation. @ith regard to the first, i.e. the fact of authorship, the artist cannot /e divested of the sa$e. n other words, he $a! sell the right to print hundred of his wor% !et the purchaser of said right can never /e the author of the creation. t is the second right, i.e., the right to pu/lish, repu/lish, $ultipl! andJor distri/ute copies of the intellectual creation which the state, through the enact$ent of the cop!right law, see%s to protect. +he author or his assigns or heirs $a! have the wor% cop!righted and once this is legall! acco$plished an! infringe$ent of the cop!right will render the infringer lia/le to the owner of the cop!right. CCC CCC CCC

+he plaintiff in this case did not choose to protect his intellectual creation /! a cop!right. +he fact that the design was used in the Christ$as card of *$/assador Neri who distri/uted eight hundred copies thereof a$ong his friends during the Christ$as season of 12:2, shows that the, sa$e was pu/lished. -nless satisfactoril! eCplained a dela! in appl!ing for a cop!right, of $ore than thirt! da!s fro$ the date of its pu/lication, converts the propert! to one of pu/lic do$ain. Since the na$e of the author appears in each of the alleged infringing copies of the intellectual creation, the defendant $a! not /e said to have pirated the wor% nor guilt! of

plagiaris$ Conse=uentl!, the co$plaint does not state a cause of action against the defendant. CCC CCC ;CCC

@')R)E,R), the Court dis$isses the co$plaint without pronounce$ent as to costs. n his appeal to this Court, plaintiff-appellant pointed five ":# errors allegedl! co$$itted /! the trial court, all of which /ring to the fore, the following propositions0 "1# whether plaintiff is entitled to protection, notwithstanding the, fact that he has not cop!righted his design; "4# whether the pu/lication is li$ited, so as to prohi/it its use /! others, or it is general pu/lication, and "<# whether the provisions of the Civil Code or the Cop!right (aw should appl! in the case. @e will underta%e a collective discussion of these propositions. -nder the esta/lished facts, @e find that plaintiff is not entitled to a protection, the provision of the Civil Code, notwithstanding. Paragraph << of Patent ,ffice *d$inistrative ,rder No. < "as a$ended dated Septe$/er 15, 1248# entitled &Rules of Practice in the Philippines Patent ,ffice relating to the Registration of Cop!right Clai$s& pro$ulgated pursuant to Repu/lic *ct 16:, provides, a$ong others, that an intellectual creation should /e cop!righted thirt! "<1# da!s after its pu/lication, if $ade in 3anila, or within siCt! "61# da!6s if $ade elsewhere, failure of which renders such creation pu/lic propert!. n the case at /ar, even as of this $o$ent, there is no cop!right for the design in =uestion. @e are not also prepared to accept the contention of appellant that the pu/lication of the design was a li$ited one, or that there was an understanding that onl! *$/assador Neri should, have a/solute right to use the sa$e. n the first place, if such were the condition then *$/assador Neri would /e the aggrieved part!, and not the appellant. n the second place, if there was such a li$ited pu/lication or prohi/ition, the sa$e was not shown on the face of the design. @hen the purpose is a li$ited pu/lication, /ut the effect is general pu/lication, irrevoca/le rights thereupon /eco$e vested in the pu/lic, in conse=uence of which enforce$ent of the restriction /eco$es i$possi/le "Nutt vs. National nstitute, <1 E K4dL 4<6#. t has /een held that the effect of offering for sale a dress, for eCa$ple $anufactured in accordance with an original design which is not protected /! either a cop!right or a patent, is to divest the owner of his co$$on law rights therein /! virtue of the pu/lication of a 6cop!6 and thereafter an!one is free to cop! the design or the dress "Eashion ,riginators Build of *$erica v. Eederal +rade Co$$ission, 114 E K4dL 51#. @hen *$/assador Neri distri/uted 511 copies of the design in controvers!, the plaintiff lost control of his design and the necessar! i$plication was that there had /een a general pu/lication, there having /een no showing of a clear indication that a li$ited pu/lication was intended. +he author of a literar! co$position has a light to the first pu/lication thereof. 'e has a right to deter$ine whether it shall /e pu/lished at all, and if pu/lished, when, where, /! who$, and in what for$. +his eCclusive right is confined to the first pu/lication. @hen once pu/lished, it is dedicated to the pu/lic, and the author loses the eCclusive right to control su/se=uent pu/lication /! others, unless the wor% is placed under the protection of the cop!right law. "See +olentino6s Co$$ents on the Civil Code, p. 4<<, citing @right v. )isle 5< N.G. Supp. 558.# C,NE,R3*.(G @ +' *(( +') E,R)B, NB, @e find that the errors assigned have not /een co$$itted /! the lower court. +he decision appealed fro$, therefore, should /e, as it is here/! affir$ed. Costs taCed against plaintiff-appellant. "en zon, C.%., "autista An elo, Concepcion, .e(es, %.".9., "arrera, Dizon, +a)alintal, "en zon, %. P., and 8aldivar %%., concur. .e ala, %., too% no part. G.R. No. 175307 S)>+)23)( 20, 2005

-ANLY SP!RT6EAR -ANU4ACTURING, INC., Petitioners, vs. DAD!DETTE ENTERPRISES ANDH!R HER-ES SP!RTS CENTER, Respondent. D)C S ,N YNARES-SANTIAG!, J.0 +his petition for review on certiorari 1 under Rule 4: of the Revised Rules of Civil Procedure assails the 9ul! 1<, 4114 decision4 of the Court of *ppeals< in C*-B.R. SP No. 82558 and its Septe$/er 1:, 4114 resolution4den!ing reconsideration thereof. +he facts are as follows0 ,n 3arch 14, 411<, Special nvestigator )lieDer P. Salcedo of the National .ureau of nvestigation "N. # applied for a search warrant /efore the Regional +rial Court "R+C# of FueDon Cit!, /ased on the infor$ation that Dadodette )nterprises andJor 'er$es Sports Center were in possession of goods, the cop!right of which /elonged to 3anl! Sportswear 3fg., nc. "3*N(G#. : *fter finding reasona/le grounds that a violation of Sections 184 and 418 of Repu/lic *ct "R*# No. 542<6 has /een co$$itted, 9udge )strella +. )strada of R+C-FueDon Cit!, .ranch 5<, issued on 3arch 18, 411< Search @arrant No. 4144"1<#. 8 Respondents thereafter $oved to =uash and annul the search warrant contending that the sa$e is invalid since the re=uisites for its issuance have not /een co$plied with. +he! insisted that the sporting goods $anufactured /! andJor registered in the na$e of 3*N(G are ordinar! and co$$on hence, not a$ong the classes of wor% protected under Section 184 of R* 542<. ,n 9une 11, 411<, the trial court granted the $otion to =uash and declared Search @arrant No. 4144"1<# null and void /ased on its finding that the cop!righted products of 3*N(G do not appear to /e original creations and were /eing $anufactured and distri/uted /! different co$panies locall! and a/road under various /rands, and therefore un=ualified for protection under Section 184 of R* 542<. 3oreover, 3*N(GNs certificates of registrations were issued onl! in 4114, whereas there were certificates of registrations for the sa$e sports articles which were issued earlier than 3*N(GNs, thus further negating the clai$ that its cop!righted products were original creations. 5 ,n *ugust 11, 411<, the trial court denied2 3*N(GNs $otion for reconsideration. 'ence it filed a petition for certiorari11 /efore the Court of *ppeals which was denied for lac% of $erit. +he appellate court found that the trial court correctl! granted the $otion to =uash and that its ruling in the ancillar! proceeding did not pree$pt the findings of the intellectual propert! court as it did not resolve with finalit! the status or character of the seiDed ite$s. *fter denial of its $otion for reconsideration on Septe$/er 1:, 4114, 3*N(G filed the instant petition for review on certiorari raising the sole issue of whether or not the Court of *ppeals erred in finding that the trial court did not gravel! a/use its discretion in declaring in the hearing for the =uashal of the search warrant that the cop!righted products of 3*N(G are not original creations su/>ect to the protection of R* 542<. @e den! the petition.

+he power to issue search warrants is eCclusivel! vested with the trial >udges in the eCercise of their >udicial function.11 *s such, the power to =uash the sa$e also rests solel! with the$. *fter the >udge has issued a warrant, he is not precluded to su/se=uentl! =uash the sa$e, if he finds upon reevaluation of the evidence that no pro/a/le cause eCists. ,ur ruling in Solid 6rian le Sales Corp. v. Sheriff, .6C, 7.C., "r. IE14 is instructive, thus0 nherent in the courtsN power to issue search warrants is the power to =uash warrants alread! issued. n this connection, this Court has ruled that the $otion to =uash should /e filed in the court that issued the warrant unless a cri$inal case has alread! /een instituted in another court, in which case, the $otion should /e filed with the latter. +he ruling has since /een incorporated in Rule 146 of the Revised Rules of Cri$inal ProcedureK.L n the instant case, we find that the trial court did not a/use its discretion when it entertained the $otion to =uash considering that no cri$inal action has !et /een instituted when it was filed. +he trial court also properl! =uashed the search warrant it earlier issued after finding upon reevaluation of the evidence that no pro/a/le cause eCists to >ustif! its issuance in the first place. *s ruled /! the trial court, the cop!righted products do not appear to /e original creations of 3*N(G and are not a$ong the classes of wor% enu$erated under Section 184 of R* 542<. +he trial court, thus, $a! not /e faulted for overturning its initial assess$ent that there was pro/a/le cause in view of its inherent power to issue search warrants and to =uash the sa$e. No o/>ection $a! /e validl! posed to an order =uashing a warrant alread! issued as the court $ust /e provided with the opportunit! to correct itself of an error unwittingl! co$$itted, or, with li%e effect, to allow the aggrieved part! the chance to convince the court that its ruling is erroneous. 3oreover, the trial court was acting within /ounds when it ruled, in an ancillar! proceeding, that the cop!righted products of petitioner are not original creations. +his is /ecause in the deter$ination of the eCistence of pro/a/le cause for the issuance or =uashal of a warrant, it is inevita/le that the court $a! touch on issues properl! threshed out in a regular proceeding. n so doing, it does not usurp the power of, $uch less preclude, the court fro$ $a%ing a final >udicial deter$ination of the issues in a full-/lown trial. Conse=uentl!, 3*N(GNs assertion that the trial courtNs order =uashing the warrant pree$pted the finding of the intellectual propert! court has no legal /asis. *s pertinentl! held in Solid 6rian le Sales Corp. v. Sheriff, .6C, 7.C., "r. IE01< @hen the court, in deter$ining pro/a/le cause for issuing or =uashing a search warrant, finds that no offense has /een co$$itted, it does not interfere with or encroach upon the proceedings in the preli$inar! investigation. +he court does not o/lige the investigating officer not to file an infor$ation for the courtNs ruling that no cri$e eCists is onl! for purposes of issuing or =uashing the warrant. +his does not, as petitioners would li%e to /elieve, constitute a usurpation of the eCecutive function. ndeed, to shir% fro$ this dut! would a$ount to an a/dication of a constitutional o/ligation. ... ... +he finding /! the court that no cri$e eCists does not preclude the authoriDed officer conducting the preli$inar! investigation fro$ $a%ing his own deter$ination that a cri$e has /een co$$itted and that pro/a/le cause eCists for purposes of filing the infor$ation. *s correctl! o/served /! the Court of *ppeals, the trial courtNs finding that the seiDed products are not cop!righta/le was $erel! preli$inar! as it did not finall! and per$anentl! ad>udicate on the status and character of the seiDed ite$s. 3*N(G could still file a separate cop!right infringe$ent

suit against the respondents /ecause the order for the issuance or =uashal of a warrant is not res -udicata. +hus, in Vlasons Enterprises Corporation v. Court of Appeals 14 we held that0 +he proceeding for the seiDure of propert! in virtue of a search warrant does not end with the actual ta%ing of the propert! /! the proper officers and its deliver!, usuall! constructive, to the court. +he order for the issuance of the warrant is not a final one and cannot constitute res -udicata. Such an order does not ascertain and ad>udicate the per$anent status or character of the seiDed propert!. .! its ver! nature, it is provisional, interlocutor!. t is $erel! the first step in the process to deter$ine the character and title of the propert!. +hat deter$ination is done in the cri$inal action involving the cri$e or cri$es in connection with which the search warrant was issued. 'ence, such a cri$inal action should /e prosecuted, or co$$enced if not !et instituted, and prosecuted. +he outco$e of the cri$inal action will dictate the disposition of the seiDed propert!X @e have also ruled in Chin v. Salinas, Sr., et al.1: that0 +he R+C had >urisdiction to delve into and resolve the issue whether the petitionerNs utilit! $odels are cop!righta/le and, if so, whether he is the owner of a cop!right over the said $odels. t /ears stressing that upon the filing of the application for search warrant, the R+C was dut!-/ound to deter$ine whether pro/a/le cause eCisted, in accordance with Section 4, Rule 146 of the Rules of Cri$inal ProcedureK.L Eurther, the cop!right certificates issued in favor of 3*N(G constitute $erel! pri#a facie evidence of validit! and ownership. 'owever, no presu$ption of validit! is created where other evidence eCist that $a! cast dou/t on the cop!right validit!. 'ence, where there is sufficient proof that the cop!righted products are not original creations /ut are readil! availa/le in the $ar%et under various /rands, as in this case, validit! and originalit! will not /e presu$ed and the trial court $a! properl! =uash the issued warrant for lac% of pro/a/le cause. .esides, no cop!right accrues in favor of 3*N(G despite issuance of the certificates of registration and deposit16pursuant to Section 4, Rule 8 of the Cop!rights Safeguards and Regulations 18 which states0 Sec. 4 )ffects of Registration and Deposit of @or%. +he registration and deposit of the wor% is purel! for recording the date of registration and deposit of the wor% and shall not /e conclusive as to cop!right ownership or the ter$ of the cop!rights or the rights of the cop!right owner, including neigh/oring rights. *t $ost, the certificates of registration and deposit issued /! the National (i/rar! and the Supre$e Court (i/rar! serve $erel! as a notice of recording and registration of the wor% /ut do not confer an! right or title upon the registered cop!right owner or auto$aticall! put his wor% under the protective $antle of the cop!right law. t is not a conclusive proof of cop!right ownership. *s it is, nonregistration and deposit of the wor% within the prescri/ed period onl! $a%es the cop!right owner lia/le to pa! a fine.15 6HERE4!RE, the petition is DENIED. +he 9ul! 1<, 4114 decision of the Court of *ppeals in C*B.R. SP No. 82558 and resolution dated Septe$/er 1:, 4114, are A44IR-ED. S! !RDERED.

C!NSUEL! YNARES-SANTIAG! *ssociate 9ustice 6E C!NCUR0 G.R. No. 1/70/3 Ju#) 21, 2005

N I - -ICR!S!4T C!RP!RATI!N = L!TUS DE%EL!P-ENT C!RP., petitioners, vs. JUDY C. H6ANG, ENIT! 5EH = Y%!NNE 5. CHUAH ELTR!N C!-PUTER PHILIPPINES INC., J!NATHAN 5. CHUA, E-ILY 5. CHUA, ENIT! T. SANCHE., NANCY I. %ELASC!, AL4!NS! CHUA, AL ERT! CHUA, S!PHIA !NG, DEANNA CHUAHTAI6AN -ACHINERY DISPLAY = TRADE CENTER, INC., "#$ THE SECRETARY !4 JUSTICE, respondents. D)C S ,N CARPI!, J.: +he Case +his is a petition for certiorari1 of the Resolutions4 of the Depart$ent of 9ustice dis$issing for &lac% of $erit and insufficienc! of evidence& petitioner 3icrosoft CorporationNs co$plaint against respondents for cop!right infringe$ent and unfair co$petition. +he Eacts Petitioner 3icrosoft Corporation "&3icrosoft&#, a Delaware, -nited States corporation, owns the cop!right and trade$ar% to several co$puter software. < Respondents .enito 7eh and Gvonne 7eh are the PresidentJ3anaging Director and Beneral 3anager, respectivel!, of respondent .eltron Co$puter Philippines, nc. "&.eltron&#, a do$estic corporation. Respondents 9onathan 7. Chua, )$il! 7. Chua, .enito +. SancheD, and Nanc! . Melasco are .eltronNs Directors. ,n the other hand, respondents *lfonso Chua, *l/erto Chua, 9ud! 7. Chua 'wang, Sophia ,ng, and Deanna Chua are the Directors of respondent +aiwan 3achiner! Displa! I +rade Center, nc. "&+3+C&#, also a do$estic corporation.4 n 3a! 122<, 3icrosoft and .eltron entered into a (icensing *gree$ent "&*gree$ent&#. -nder Section 4"a# of the *gree$ent, as a$ended in 9anuar! 1224, 3icrosoft authoriDed .eltron, for a fee, to0 "i# CCC reproduce and install no $ore than one "1# cop! of K3icrosoftL software on each Custo$er S!ste$ hard dis% or Read ,nl! 3e$or! "&R,3&#; KandL "ii# CCC distri/ute directl! or indirectl! and license copies of the Product "reproduced as per Section 4"a#"i# andJor ac=uired fro$ *uthoriDed Replicator or *uthoriDed Distri/utor# in o/>ect code for$ to end usersK.L CCCC: +he *gree$ent also authoriDed 3icrosoft and .eltron to ter$inate the contract if the other fails to co$pl! with an! of the *gree$entNs provisions. 3icrosoft ter$inated the *gree$ent effective 44 9une 122: for .eltronNs non-pa!$ent of ro!alties.6

*fterwards, 3icrosoft learned that respondents were illegall! cop!ing and selling 3icrosoft software. Conse=uentl!, 3icrosoft, through its Philippine agent, 8 hired the services of Pin%erton Consulting Services "&PCS&#, a private investigative fir$. 3icrosoft also sought the assistance of the National .ureau of nvestigation "&N. &#. ,n 11 Nove$/er 122:, PCS e$plo!ee 9ohn .enedic 5 SacriD "&SacriD&# and N. agent Do$inador Sa$iano, 9r. "&Sa$iano&#, posing as representatives of a co$puter shop,2 /ought co$puter hardware "central processing unit "&CP-&# and co$puter $onitor# and software "14 co$puter dis%s "&CDs&# in read-onl! $e$or! "&R,3&# for$at# fro$ respondents. +he CP- contained pre-installed11 3icrosoft @indows <.1 and 3S-D,S software. +he 14 CD-R,3s, encased in plastic containers with 3icrosoft pac%aging, also contained 3icrosoft software. 11 *t least two of the CD-R,3s were &installers,& so-called /ecause the! contain several software "3icrosoft onl! or /oth 3icrosoft and non-3icrosoft#.14 SacriD and Sa$iano were not given the 3icrosoft enduser license agree$ents, userNs $anuals, registration cards or certificates of authenticit! for the articles the! purchased. +he receipt issued to SacriD and Sa$iano for the CP- and $onitor /ore the heading &+.3.+.C. "P' (S.# NC. .)(+R,N C,3P-+)R.&1< +he receipt for the 14 CD-R,3s did not indicate its source although the na$e &Berlie& appears /elow the entr! &delivered /!.& 14 ,n 18 Nove$/er 122:, 3icrosoft applied for search warrants against respondents in the Regional +rial Court, .ranch 4<, 3anila "&R+C&#.1: +he R+C granted 3icrosoftNs application and issued two search warrants "&Search @arrant Nos. 2:-654 and 2:-65:&#. 16 -sing Search @arrant Nos. 2:-654 and 2:-65:, the N. searched the pre$ises of .eltron and +3+C and seiDed several co$puterrelated hardware, software, accessories, and paraphernalia. *$ong these were 2,031 >')*)& o, CD-R!-& containing 3icrosoft software.18 .ased on the articles o/tained fro$ respondents, 3icrosoft and a certain (otus Develop$ent Corporation "&(otus Corporation&# charged respondents /efore the Depart$ent of 9ustice "&D,9&# with cop!right infringe$ent under Section :"*# in relation to Section 42 of Presidential Decree No. 42, as a$ended, "&PD 42&#15 and with unfair co$petition under *rticle 152"1#12 of the Revised Penal Code. n its Co$plaint "& .S. No. 26-12<&#, which the N. indorsed, 3icrosoft alleged that respondents illegall! copied and sold 3icrosoft software. 41 n their >oint counter-affidavit, respondents Gvonne 7eh "&respondent 7eh&# and )$il! 7. Chua "&respondent Chua&# denied the charges against respondents. Respondents 7eh and Chua alleged that0 "1# 3icrosoftNs real intention in filing the co$plaint under .S. No. 26-12< was to pressure .eltron to pa! its alleged unpaid ro!alties, thus 3icrosoft should have filed a collection suit instead of a cri$inal co$plaint; "4# +3+C /ought the confiscated :2 /oCes of 3S-D,S CDs fro$ a 3icrosoft dealer in Singapore "R.R. Donnell!#; "<# respondents are not the &source& of the 3icrosoft @indows <.1 software pre-installed in the CP- /ought /! SacriD and Sa$iano, /ut onl! of the 3S-D,S software; "4# 3icrosoftNs alleged proof of purchase "receipt# for the 14 CD-R,3s is inconclusive /ecause the receipt does not indicate its source; and ":# respondents .enito 7eh, 9onathan 7. Chua, *lfonso Chua, *l/erto Chua, 9ud! 7. Chua 'wang, Sophia ,ng, and Deanna Chua are stoc%holders of .eltron and +3+C in na$e onl! and thus cannot /e held cri$inall! lia/le. 41 +he other respondents did not file counter-affidavits. 3eanwhile, respondents $oved to =uash Search @arrant Nos. 2:-654 and 2:-65:. +he R+C partiall! granted their $otion in its ,rder of 16 *pril 1226. 3icrosoft sought reconsideration /ut the R+C denied 3icrosoftNs $otion in its ,rder of 12 9ul! 1226. 3icrosoft appealed to the Court of *ppeals in C*-B.R. CM No. :4611. n its Decision of 42 Nove$/er 4111, the Court of *ppeals granted 3icrosoftNs appeal and set aside the R+C ,rders of 16 *pril 1226 and 12 9ul! 1226. +he Court of *ppealsN Decision /eca$e final on 48 Dece$/er 4111. +he D,9 Resolutions

n the Resolution of 46 ,cto/er 1222, D,9 State Prosecutor 9ocel!n *. ,ng "&State Prosecutor ,ng&# reco$$ended the dis$issal of 3icrosoftNs co$plaint for lac% of $erit and insufficienc! of evidence. State Prosecutor ,ng also reco$$ended the dis$issal of (otus CorporationNs co$plaint for lac% of interest to prosecute and for insufficienc! of evidence. *ssistant Chief State Prosecutor (ualhati R. .uenafe "&*ssistant Chief State Prosecutor .uenafe&# approved State Prosecutor ,ngNs reco$$endations.44 +he 46 ,cto/er 1222 Resolution reads in part0 K+Lwo "4# issues have to /e resolved in this case, na$el!0 a# @hether or not .eltron Co$puter andJor its stoc%holders should /e held lia/le for the offenses charged. /# @hether or not pri$a facie case eCistKsL against +aiwan 3achiner! Displa! and +rade Center, nc. "+3+C# for violation of the offense charged. Co$plainant had alleged that fro$ the ti$e the license agree$ent was ter$inated, respondentJs isJare no longer authoriDed to cop!Jdistri/uteJsell 3icrosoft products. 'owever, respondentJs averred that the case is civil in nature, not cri$inal, considering that the case ste$$ed onl! out of the desire of co$plainant to collect fro$ the$ the a$ount of -SZ1<:,141.<4 and that the contract entered into /! the parties cannot /e unilaterall! ter$inated. n the order of 'onora/le @illia$ .a!hon dated 9ul! 12, 1226 Kden!ing reconsideration to the ,rder partiall! =uashing the search warrantsL, he o/served the following0 & t is further argued /! counsel for respondent that the act ta%en /! private co$plainant is to spite revenge against the respondent .eltron for the latter failed to pa! the alleged $onetar! o/ligation in the a$ount of -SZ1<:,141.<4. +hat respondent has so$e $onetar! o/ligation to co$plainant which is not denied /! the co$plainant.& K&L t appears therefore that prior to the issuance of the su/>ect search warrants, co$plainant had so$e /usiness transactions with the respondent K.eltronL along the sa$e line of products. Co$plainant failed to reveal the true circu$stances eCisting /etween the two of the$ as it now appears, indeed the search warrantKsL CCC KareL /eing used as a leverage to secure collection of the $one! o/ligation which the Court cannot allow.& Ero$ said order, it can /e gleaned that the KR+CL CCC, had ad$itted that the search warrants applied for /! co$plainant were $erel! used as a leverage for the collection of the alleged $onetar! o/ligation of the respondentJs. Ero$ said order, it can /e sur$ise "sic# that the o/ligations /etween the parties is civil in nature not cri$inal. 3oreover, co$plainant had ti$e and again harped that respondentJs isJare not authoriDed to sellJcop!Jdistri/ute 3icrosoft products at the ti$e of the eCecution of the search warrants. Still, this office has no power to pass upon said issue for one has then to interpret the provisions of the contract entered into /! the parties, which =uestion, should /e raised in a proper civil proceeding. *ccordingl!, a/senKtL a resolution fro$ the proper court of "sic# whether or not the contract is still /inding /etween the parties at the ti$e of the eCecution of the search warrants, this office cannot pass upon the issue of whether respondentJs is or are lia/le for the offense charged.

*s to the second issue, we find for the respondentJs. +3+C had provided sufficient evidence such as pro-for$a invoice fro$ R.R. Donnelle!; De/t *dvice of the .an% of Co$$erce; ,fficial Receipts fro$ the .ureau of Custo$s; and $port )ntr! Declaration of the .ureau of Custo$s to prove that indeed the 3icrosoft software in their possession were /ought fro$ Singapore. +hus, respondentJs in this case hasJhave no intent to defraud the pu/lic, as provided under *rticle 152 of the Revised Penal Code, for the! /ought said 3icrosoft 3S-D,S 6.1 fro$ an alleged licensee of 3icrosoft in Singapore, with all the necessar! papers. n their opinion, what the! have are genuine 3icrosoft software, therefore no unfair co$petition eCist. 3oreover, violation of P.D. 42 does not eCist, for respondentJs wasJwere not the $anufacturers of the 3icrosoft software seiDed and were selling their products as genuine 3icrosoft software, considering that the! /ought it fro$ a 3icrosoft licensee. Co$plainant, on the other hand, considering that it has the /urden of proving that the respondentJs isJare lia/le for the offense charged, has not presented an! evidence that the ite$s seiDed na$el! the :2 /oCes of 3S-D,S 6.1 software are counterfeit. +he certification issued on Dece$/er 14, 122: /! Christopher *ustin, Corporate *ttorne! of the co$plainant, does not disclose this fact. Eor the ter$ used /! 3r. *ustin was that the ite$s seiDed were unauthoriDed. +he =uestion now, is whether the products were unauthoriDed /ecause +3+C has no license to sell 3icrosoft products, or is it unauthoriDed /ecause R.R. Donnelle! has no authorit! to sell said products here in the Philippines. Still, to deter$ine the culpa/ilit! of the respondents, co$plainant should present evidence that what is in the possession of the respondentJs isJare counterfeit 3icrosoft products. +his it failed to do.4< 3icrosoft sought reconsideration and pra!ed for an ocular inspection of the articles seiDed fro$ respondents. 'owever, in the Resolution of < Dece$/er 1222, *ssistant Chief State Prosecutor .uenafe, upon State Prosecutor ,ngNs reco$$endation, denied 3icrosoftNs $otion. 44 3icrosoft appealed to the ,ffice of the D,9 Secretar!. n the Resolution of < *ugust 4111, D,9 -ndersecretar! Regis M. Puno dis$issed 3icrosoftNs appeal. 4: 3icrosoft sought reconsideration /ut its $otion was denied in the Resolution of 44 Dece$/er 4111. 46 'ence, this petition. 3icrosoft contends that0 . +') D,9 )RR)D N R-( NB +'*+ +') ( *. ( +G ,E R)SP,ND)N+S @*S ,N(G C M ( N N*+-R) .G M R+-) ,E +') ( C)NS) *BR))3)N+. . +') D,9 3 S*PPR)C *+)D +') E*C+ +'*+ R)SP,ND)N+S @)R) )NB*B)D N +') (()B*( 3P,R+*+ ,N, S*() *ND D S+R .-+ ,N ,E C,-N+)RE) + S,E+@*R) *S )M D)NC)D .G +') +)3S P-RC'*S)D D-R NB +') +)S+-.-G *ND +') +)3S S) U)D ER,3 R)SP,ND)N+SN PR)3 S)S. . +') D,9 3 S*PPR)C *+)D +') (*@ ,N C,PGR B'+ NER NB)3)N+ *ND -NE* R C,3P)+ + ,N.

M. ,N(G +@, ,-+ ,E +') N N) R)SP,ND)N+S .,+')R)D +, E () C,-N+)R*EE D*M +S; ')NC), +') C'*RB)S *B* NS+ S)M)N KR)SP,ND)N+SL R)3* N -NC,N+R,M)R+)D.48 n its Co$$ent, filed /! the Solicitor Beneral, the D,9 $aintains that it did not co$$it grave a/use of discretion in dis$issing 3icrosoftNs co$plaint. 45 Eor their part, respondents allege in their Co$$ent that 3icrosoft is guilt! of foru$-shopping /ecause its petition in C*-B.R. CM No. :4611 was filed ahead of, and has a &co$$on interest& with, this petition. ,n the $erits, respondents reiterate their clai$s in their $otion to =uash Search @arrant Nos. 2:-654 and 2:-65: that the articles seiDed fro$ the$ were either owned /! others, purchased fro$ legiti$ate sources, or not produced /! 3icrosoft. Respondents also insist that the *gree$ent entitled .eltron to &cop! and replicate or reproduce& 3icrosoft products. ,n the confiscated 4,5<1 CD-R,3s, respondents allege that a certain corporation 42 left the CD-R,3s with the$ for safe%eeping. (astl!, respondents clai$ that there is no proof that the CP- SacriD and Sa$iano /ought fro$ the$ contained pre-installed 3icrosoft software /ecause the receipt for the CP- does not indicate &KsLoftware hard dis%.& <1 n its Repl!, 3icrosoft counters that it is not lia/le for foru$-shopping /ecause its petition in C*-B.R. CM No. :4611 involved the ,rders of the R+C partiall! =uashing Search @arrant Nos. 2:-654 and 2:-65: while this petition concerns the D,9 Resolutions dis$issing its co$plaint against respondents for cop!right infringe$ent and unfair co$petition. ,n the $erits, 3icrosoft $aintains that respondents should /e indicted for cop!right infringe$ent and unfair co$petition. <1 +he ssues +he petition raises the following issues0 "1# @hether 3icrosoft engaged in foru$-shopping; and "4# @hether the D,9 acted with grave a/use of discretion in not finding pro/a/le cause to charge respondents with cop!right infringe$ent and unfair co$petition. +he Ruling of the Court +he petition has $erit. Microsoft did not Engage in Forum-Shopping Eoru$-shopping ta%es place when a litigant files $ultiple suits involving the sa$e parties, either si$ultaneousl! or successivel!, to secure a favora/le >udg$ent. <4 +hus, it eCists where the ele$ents of litis pendentia are present, na$el!0 "a# identit! of parties, or at least such parties who represent the sa$e interests in /oth actions; "/# identit! of rights asserted and relief pra!ed for, the relief /eing founded on the sa$e facts; and "c# the identit! with respect to the two preceding particulars in the two cases is such that an! >udg$ent that $a! /e rendered in the pending case, regardless of which part! is successful, would a$ount to res -udicata in the other case.<< Eoru$-shopping is an act of $alpractice /ecause it a/uses court processes.<4 +o chec% this pernicious practice, Section :, Rule 8 of the 1228 Rules of Civil Procedure re=uires the principal part! in an initiator! pleading to su/$it a certification against foru$-shopping.<: Eailure to co$pl! with this re=uire$ent is a cause for the dis$issal of the case and, in case of willful foru$-shopping, for the i$position of ad$inistrative sanctions.

'ere, 3icrosoft correctl! contends that it is not lia/le for foru$-shopping. @hat 3icrosoft appealed in C*-B.R. CM No. :4611 were the R+C ,rders partiall! =uashing Search @arrant Nos. 2:-654 and 2:-65:. n the present case, 3icrosoft is appealing fro$ the D,9 Resolutions dis$issing its co$plaint against respondents for cop!right infringe$ent and unfair co$petition. +hus, although the parties in C*-B.R. CM No. :4611 and this petition are identical, the rights asserted and the reliefs pra!ed for are not such that the >udg$ent in C*-B.R. CM No. :4611 does not a$ount to res -udicata in the present case. +his renders foru$-shopping i$possi/le here. The DOJ Acted with Gra e A!use of Discretion in not Finding "ro!a!#e $ause to $harge %espondents with $op&right 'nfringement and (nfair $ompetition Benerall!, this Court is loath to interfere in the prosecutorNs discretion in deter$ining pro/a/le cause<6 A unless such discretion is shown to have /een a/used. <8 +his case falls under the eCception. -nli%e the higher =uantu$ of proof /e!ond reasona/le dou/t re=uired to secure a conviction, it is the lower standard of pro/a/le cause which is applied during the preli$inar! investigation to deter$ine whether the accused should /e held for trial. +his standard is $et if the facts and circu$stances incite a reasona/le /elief that the act or o$ission co$plained of constitutes the offense charged. *s we eCplained in "i#api# . Sandigan!a&an0<5 +he ter$ Kpro/a/le causeL does not $ean &actual and positive cause& nor does it i$port a/solute certaint!. t is $erel! /ased on opinion and reasona/le /elief. +hus, a finding of pro/a/le cause does not re=uire an in=uir! into whether there is sufficient evidence to procure a conviction. t is enough that it is /elieved that the act or o$ission co$plained of constitutes the offense charged. Precisel!, there is a trial for the reception of evidence of the prosecution in support of the charge. "D )* and Artic#e +,*-+. Section :<2 of PD 42 "&Section :&# enu$erates the rights vested eCclusivel! on the cop!right owner. Contrar! to the D,9Ns ruling, the grava$en of cop!right infringe$ent is not $erel! the unauthoriDed &$anufacturing& of intellectual wor%s /ut rather the unauthoriDed perfor$ance of an! of the acts covered /! Section :. 'ence, an! person who perfor$s an! of the acts under Section : without o/taining the cop!right ownerNs prior consent renders hi$self civill! 41 and cri$inall!41 lia/le for cop!right infringe$ent. @e held in $o#um!ia "ictures/ 'nc. . $ourt of Appea#s044 nfringe$ent of a cop!right is a trespass on a private do$ain owned and occupied /! the owner of the cop!right, and, therefore, protected /! law, and infringe$ent of cop!right, or pirac!, which is a s!non!$ous ter$ in this connection, consists in the doing /! an! person, without the consent of the owner of the cop!right, of an!thing the sole right to do which is conferred /! statute on the owner of the cop!right. ")$phasis supplied# Significantl!, under Section :"*#, a cop!right owner is vested with the eCclusive right to &cop!, distri/ute, $ultipl!, KandL sell& his intellectual wor%s. ,n the other hand, the ele$ents of unfair co$petition under *rticle 152"1# 4< of the Revised Penal Code are0 "a# +hat the offender gives his goods the general appearance of the goods of another $anufacturer or dealer;

"/# +hat the general appearance is shown in the "1# goods the$selves, or in the "4# wrapping of their pac%ages, or in the "<# device or words therein, or in "4# an! other feature of their appearanceK;L "c# +hat the offender offers to sell or sells those goods or gives other persons a chance or opportunit! to do the sa$e with a li%e purposeK; andL "d# +hat there is actual intent to deceive the pu/lic or defraud a co$petitor.44 +he ele$ent of intent to deceive $a! /e inferred fro$ the si$ilarit! of the goods or their appearance.4: On the Sufficienc& of E idence to Support a Finding of "ro!a!#e $ause Against %espondents n its pleadings filed with the D,9, 3icrosoft invo%ed three clusters of evidence to support its co$plaint against respondents, na$el!0 "1# the 14 CD-R,3s containing 3icrosoft software SacriD and Sa$iano /ought fro$ respondents; "4# the CP- with pre-installed 3icrosoft software SacriD and Sa$iano also purchased fro$ respondents; and "<# the 4,5<1 CD-R,3s containing 3icrosoft software seiDed fro$ respondents.46 +he D,9, on the one hand, refused to pass upon the relevance of these pieces of evidence /ecause0 "1# the &o/ligations /etween the parties is civil and not cri$inal& considering that 3icrosoft $erel! sought the issuance of Search @arrant Nos. 2:-654 and 2:-65: to pressure .eltron to pa! its o/ligation under the *gree$ent, and "4# the validit! of 3icrosoftNs ter$ination of the *gree$ent $ust first /e resolved /! the &proper court.& ,n the other hand, the D,9 ruled that 3icrosoft failed to present evidence proving that what were o/tained fro$ respondents were counterfeit 3icrosoft products. +his is grave a/use of discretion. 48 $irst. .eing the cop!right and trade$ar% owner of 3icrosoft software, 3icrosoft acted well within its rights in filing the co$plaint under .S. No. 26-12< /ased on the incri$inating evidence o/tained fro$ respondents. 'ence, it was highl! irregular for the D,9 to hold, /ased on the R+C ,rder of 12 9ul! 1226, that 3icrosoft sought the issuance of Search @arrant Nos. 2:-654 and 2:-65:, and /! inference, the filing of the co$plaint under .S. No. 26-12<, $erel! to pressure .eltron to pa! its overdue ro!alties to 3icrosoft. Significantl!, in its Decision in C*-B.R. CM No. :4611 dated 42 Nove$/er 4111, the Court of *ppeals set aside the R+C ,rder of 12 9ul! 1226. Respondents no longer contested that ruling which /eca$e final on 48 Dece$/er 4111. Second. +here is no /asis for the D,9 to rule that 3icrosoft $ust await a prior &resolution fro$ the proper court of "sic# whether or not the K*gree$entL is still /inding /etween the parties.& .eltron has not filed an! suit to =uestion 3icrosoftNs ter$ination of the *gree$ent. 3icrosoft can neither /e eCpected nor co$pelled to wait until .eltron decides to sue /efore 3icrosoft can see% re$edies for violation of its intellectual propert! rights. Eurther$ore, so$e of the counterfeit CD-R,3s /ought fro$ respondents were &installer& CD-R,3s containing 3icrosoft software onl! or /oth 3icrosoft and non-3icrosoft software. +hese articles are counterfeit per se /ecause 3icrosoft does not "and could not have authoriDed an!one to# produce such CD-R,3s. +he cop!ing of the genuine 3icrosoft software to produce these fa%e CD-R,3s and their distri/ution are illegal even if the copier or distri/utor is a 3icrosoft licensee. *s far as these installer CD-R,3s are concerned, the

*gree$ent "and the alleged =uestion on the validit! of its ter$ination# is i$$aterial to the deter$ination of respondentsN lia/ilit! for cop!right infringe$ent and unfair co$petition. (astl!, Section 11"/#45 of the *gree$ent provides that 3icrosoftNs &rights and re$edies& under the contract are &not CCC eCclusive and are in addition to an! other rights and re$edies provided /! law or KtheL *gree$ent.& +hus, even if the *gree$ent still su/sists, 3icrosoft is not precluded fro$ see%ing re$edies under PD 42 and *rticle 152"1# of the Revised Penal Code to vindicate its rights. 6hird. +he Court finds that the 14 CD-R,3s "&installer& and &non-installer&# and the CP- with pre-installed 3icrosoft software SacriD and Sa$iano /ought fro$ respondents and the 4,5<1 3icrosoft CD-R,3s seiDed fro$ respondents suffice to support a finding of pro/a/le cause to indict respondents for cop!right infringe$ent under Section :"*# in relation to Section 42 of PD 42 for unauthoriDed cop!ing and selling of protected intellectual wor%s. +he installer CD-R,3s with 3icrosoft software, to repeat, are counterfeit per se. ,n the other hand, the illegalit! of the &non-installer& CD-R,3s purchased fro$ respondents and of the 3icrosoft software pre-installed in the CP- is shown /! the a/sence of the standard features acco$pan!ing authentic 3icrosoft products, na$el!, the 3icrosoft end-user license agree$ents, userNs $anuals, registration cards or certificates of authenticit!. ,n the 4,5<1 3icrosoft CD-R,3s42 seiDed fro$ respondents, respondent .eltron, the onl! respondent who was part! to the *gree$ent, could not have reproduced the$ under the *gree$ent as the Solicitor Beneral:1 and respondents contend. .eltronNs rights :1 under the *gree$ent were li$ited to0 "1# the &reproducKtionL and installKation ofL no $ore than o#) *o>y of K3icrosoftL software on each Custo$er S!ste$ hard dis% or Read ,nl! 3e$or! "&R,3&#&; and "4# the &distri/utKionL CCC and licensKing ofL copies of the K3icrosoftL Product I"& ()>(o$u*)$ "3o1)J "#$Ho( "*Eu'()$ ,(o2 Au+:o('K)$ R)>l'*"+o( o( Au+:o('K)$ D'&+('3u+o(9 '# o3C)*+ *o$) ,o(2 +o )#$ u&)(&.& +he *gree$ent defines an authoriDed replicator as &a third part! approved /! K3icrosoftL which $a! reproduce and $anufacture K3icrosoftL ProductKsL for K.eltronL CCC.& :4 *n authoriDed distri/utor, on the other hand, is a &third part! approved /! K3icrosoftL fro$ which K.eltronL $a! purchase 3)D:< Product.&:4 .eing a $ere reproducerJinstaller of one 3icrosoft software cop! on each custo$erNs hard dis% or R,3, .eltron could onl! have ac=uired the hundreds of 3icrosoft CD-R,3s found in respondentsN possession fro$ 3icrosoft distri/utors or replicators. 'owever, respondents $a%es no such clai$. @hat respondents contend is that these CD-R,3s were left to the$ for safe%eeping. .ut neither is this clai$ tena/le for lac% of su/stantiation. ndeed, respondents 7eh and Chua, the onl! respondents who filed counter-affidavits, did not $a%e this clai$ in the D,9. +hese circu$stances give rise to the reasona/le inference that respondents $assproduced the CD-R,3s in =uestion without securing 3icrosoftNs prior authoriDation. +he counterfeit &non-installer& CD-R,3s SacriD and Sa$iano /ought fro$ respondents also suffice to support a finding of pro/a/le cause to indict respondents for unfair co$petition under *rticle 152"1# of the Revised Penal Code for passing off 3icrosoft products. Ero$ the pictures of the CDR,3sN pac%aging,:: one cannot distinguish the$ fro$ the pac%aging of CD-R,3s containing genuine 3icrosoft software. Such replication, coupled with the si$ilarit! of content of these fa%e CDR,3s and the CD-R,3s with genuine 3icrosoft software, i$plies intent to deceive.

RespondentsN contention that the 14 CD-R,3s SacriD and Sa$iano purchased cannot /e traced to the$ /ecause the receipt for these articles does not indicate its source is unavailing. +he receipt in =uestion should /e ta%en together with 3icrosoftNs clai$ that SacriD and Sa$iano /ought the CDR,3s fro$ respondents.:6 +ogether, these considerations point to respondents as the vendor of the counterfeit CD-R,3s. Respondents do not give an! reason wh! the Court should not give credence to 3icrosoftNs clai$. Eor the sa$e reason, the fact that the receipt for the CP- does not indicate &KsLoftware hard dis%& does not $ean that the CP- had no pre-installed 3icrosoft software. Respondents 7eh and Chua ad$it in their counter-affidavit that respondents are the &source& of the pre-installed 3S-D,S software. 6HERE4!RE, we BR*N+ the petition. @e S)+ *S D) the Resolutions dated 46 ,cto/er 1222, < Dece$/er 1222, < *ugust 4111, and 44 Dece$/er 4111 of the Depart$ent of 9ustice. S, ,RD)R)D. Davide, 9r., C.9., "Chair$an#, Fuisu$/ing, Gnares-Santiago, and *Dcuna, 99., concur.

4oo+#o+)& G.R. No. 1/09/7 S)>+)23)( 13, 200/

-ICR!S!4T C!RP!RATI!N "#$ L!TUS DE%EL!P-ENT C!RP!RATI!N, petitioners, vs. -ALIC!RP, INC., respondent. D)C S ,N CARPI!, J.: T:) C"&) +his petition for review on certiorari 1 see%s to reverse the Court of *ppealsN Decision4 dated 4< Dece$/er 1225 and its Resolution dated 42 Nove$/er 1222 in C*-B.R. SP No. 44888. +he Court of *ppeals reversed the ,rder<of the Regional +rial Court, .ranch 4<, 3anila "&R+C&#, den!ing respondent 3aCicorp, nc.Ns "&3aCicorp&# $otion to =uash the search warrant that the R+C issued against 3aCicorp. Petitioners are the private co$plainants against 3aCicorp for cop!right infringe$ent under Section 42 of Presidential Decree No. 42 "&Section 42 of PD 42&# 4 and for unfair co$petition under *rticle 152 of the Revised Penal Code "&RPC&#. : A#+)*)$)#+ 4"*+& ,n 4: 9ul! 1226, National .ureau of nvestigation "&N. &# *gent Do$inador Sa$iano, 9r. "&N. *gent Sa$iano&# filed several applications for search warrants in the R+C against 3aCicorp for alleged violation of Section 42 of PD 42 and *rticle 152 of the RPC. *fter conducting a preli$inar! eCa$ination of the applicant and his witnesses, 9udge @illia$ 3. .a!hon issued Search @arrants Nos. 26-4:1, 26-4:4, 26-4:< and 26-4:4, all dated 4: 9ul! 1226, against 3aCicorp.

*r$ed with the search warrants, N. agents conducted on 4: 9ul! 1226 a search of 3aCicorpNs pre$ises and seiDed propert! fitting the description stated in the search warrants. ,n 4 Septe$/er 1226, 3aCicorp filed a $otion to =uash the search warrants alleging that there was no pro/a/le cause for their issuance and that the warrants are in the for$ of &general warrants.& +he R+C denied 3aCicorpNs $otion on 44 9anuar! 1228. +he R+C also denied 3aCicorpNs $otion for reconsideration. +he R+C found pro/a/le cause to issue the search warrants after eCa$ining N. *gent Sa$iano, 9ohn .enedict SacriD "&SacriD&#, and co$puter technician EeliC/erto Pante "&Pante&#. +he three testified on what the! discovered during their respective visits to 3aCicorp. N. *gent Sa$iano also presented certifications fro$ petitioners that the! have not authoriDed 3aCicorp to perfor$ the witnessed activities using petitionersN products. ,n 44 9ul! 1228, 3aCicorp filed a petition for certiorari with the Court of *ppeals see%ing to set aside the R+CNs order. ,n 4< Dece$/er 1225, the Court of *ppeals reversed the R+CNs order den!ing 3aCicorpNs $otion to =uash the search warrants. Petitioners $oved for reconsideration. +he Court of *ppeals denied petitionersN $otion on 42 Nove$/er 1222. +he Court of *ppeals held that N. *gent Sa$iano failed to present during the preli$inar! eCa$ination conclusive evidence that 3aCicorp produced or sold the counterfeit products. +he Court of *ppeals pointed out that the sales receipt N. *gent Sa$iano presented as evidence that he /ought the products fro$ 3aCicorp was in the na$e of a certain &9oel DiaD.& 'ence, this petition. T:) I&&u)& Petitioners see% a reversal and raise the following issues for resolution0 1. @')+')R +') P)+ + ,N R* S)S F-)S+ ,NS ,E (*@; 4. @')+')R P)+ + ,N)RS '*M) ()B*( P)RS,N*( +G +, E () +') P)+ + ,N; <. @')+')R +')R) @*S PR,.*.() C*-S) +, SS-) +') S)*RC' @*RR*N+S; 4. @')+')R +') S)*RC' @*RR*N+S *R) &B)N)R*( @*RR*N+S.& T:) Rul'#? o, +:) Cou(+ +he petition has $erit. On 0hether the "etition %aises 1uestions of 2aw 3aCicorp assails this petition as defective since it failed to raise =uestions of law. 3aCicorp insists that the argu$ents petitioners presented are =uestions of fact, which this Court should not consider in a Rule 4: petition for review. Petitioners counter that all the issues the! presented in this petition involve =uestions of law. Petitioners point out that the facts are not in dispute. * petition for review under Rule 4: of the Rules of Court should cover =uestions of law. 6 Fuestions of fact are not reviewa/le. *s a rule, the findings of fact of the Court of *ppeals are final and

conclusive and this Court will not review the$ on appeal, 8 su/>ect to eCceptions as when the findings of the appellate court conflict with the findings of the trial court. 5 +he distinction /etween =uestions of law and =uestions of fact is settled. * =uestion of law eCists when the dou/t or difference centers on what the law is on a certain state of facts. * =uestion of fact eCists if the dou/t centers on the truth or falsit! of the alleged facts. +hough this delineation see$s si$ple, deter$ining the true nature and eCtent of the distinction is so$eti$es pro/le$atic. Eor eCa$ple, it is incorrect to presu$e that "ll cases where the facts are not in dispute auto$aticall! involve purel! =uestions of law. +here is a =uestion of law if the issue raised is capa/le of /eing resolved without need of reviewing the pro/ative value of the evidence. 2 +he resolution of the issue $ust rest solel! on what the law provides on the given set of circu$stances. ,nce it is clear that the issue invites a review of the evidence presented, the =uestion posed is one of fact. 11 f the =uer! re=uires a re-evaluation of the credi/ilit! of witnesses, or the eCistence or relevance of surrounding circu$stances and their relation to each other, the issue in that =uer! is factual.11 ,ur ruling in"aterno . "aterno14 is illustrative on this point0 Such =uestions as whether certain ite$s of evidence should /e accorded pro/ative value or weight, or re>ected as fee/le or spurious, or whether or not the proofs on one side or the other are clear and convincing and ade=uate to esta/lish a proposition in issue, are without dou/t =uestions of fact. @hether or not the /od! of proofs presented /! a part!, weighed and anal!Ded in relation to contrar! evidence su/$itted /! adverse part!, $a! /e said to /e strong, clear and convincing; whether or not certain docu$ents presented /! one side should /e accorded full faith and credit in the face of protests as to their spurious character /! the other side; whether or not inconsistencies in the /od! of proofs of a part! are of such gravit! as to >ustif! refusing to give said proofs weight W all these are issues of fact. t is true that 3aCicorp did not contest the facts alleged /! petitioners. .ut this situation does not auto$aticall! transfor$ "ll issues raised in the petition into =uestions of law. +he issues $ust $eet the tests outlined in Paterno. ,f the three $ain issues raised in this petition W the legal personalit! of the petitioners, the nature of the warrants issued and the presence of pro/a/le cause W onl! the first two =ualif! as =uestions of law. +he pivotal issue of whether there was pro/a/le cause to issue the search warrants is a =uestion of fact. *t first glance, this issue appears to involve a =uestion of law since it does not concern itself with the truth or falsit! of certain facts. Still, the resolution of this issue would re=uire this Court to in=uire into the pro/ative value of the evidence presented /efore the R+C. Eor a =uestion to /e one of law, it $ust not involve an eCa$ination of the pro/ative value of the evidence presented /! the litigants or an! of the$.1< Get, this is precisel! what the petitioners as% us to do /! raising argu$ents re=uiring an eCa$ination of the +SNs and the docu$entar! evidence presented during the search warrant proceedings. n short, petitioners would have us su/stitute our own >udg$ent to that of the R+C and the Court of *ppeals /! conducting our own evaluation of the evidence. +his is eCactl! the situation which Section 1, Rule 4: of the Rules of Court prohi/its /! re=uiring the petition to raise onl! =uestions of law. +his Court is not a trier of facts. t is not the function of this court to anal!De or weigh evidence.14 @hen we give due course to such situations, it is solel! /! wa! of eCception. Such eCceptions appl! onl! in the presence of eCtre$el! $eritorious circu$stances. 1:

ndeed, this case falls under one of the eCceptions /ecause the findings of the Court of *ppeals conflict with the findings of the R+C.16 Since petitioners properl! raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction. On @hether Petitioners have the 9e al Personalit( to $ile this Petition 3aCicorp argues that petitioners have no legal personalit! to file this petition since the proper part! to do so in a cri$inal case is the ,ffice of the Solicitor Beneral as representative of the People of the Philippines. 3aCicorp states the general rule /ut the eCception governs this case. 18 @e ruled in $o#um!ia "ictures Entertainment/ 'nc. . $ourt of Appea#s 15 that the petitioner-co$plainant in a petition for review under Rule 4: could argue its case /efore this Court in lieu of the Solicitor Beneral if there is grave error co$$itted /! the lower court or lac% of due process. +his avoids a situation where a co$plainant who activel! participated in the prosecution of a case would suddenl! find itself powerless to pursue a re$ed! due to circu$stances /e!ond its control. +he circu$stances in $o#um!ia "ictures Entertainment are sufficientl! si$ilar to the present case to warrant the application of this doctrine. On @hether there &as Probable Cause to !ssue the Search @arrants Petitioners argue that the Court of *ppeals erred in reversing the R+C /ased on the fact that the sales receipt was not in the na$e of N. *gent Sa$iano. Petitioners point out that the Court of *ppeals disregarded the overwhel$ing evidence that the R+C considered in deter$ining the eCistence of pro/a/le cause. 3aCicorp counters that the Court of *ppeals did not err in reversing the R+C. 3aCicorp $aintains that the entire preli$inar! eCa$ination that the R+C conducted was defective. +he Court of *ppeals /ased its reversal on two factual findings of the R+C. Eirst, the fact that the sales receipt presented /! N. *gent Sa$iano as proof that he /ought counterfeit goods fro$ 3aCicorp was in the na$e of a certain &9oel DiaD.& Second, the fact that petitionersN other witness, 9ohn .enedict SacriD, ad$itted that he did not /u! counterfeit goods fro$ 3aCicorp. @e rule that the Court of *ppeals erred in reversing the R+CNs findings. Pro/a/le cause $eans &such reasons, supported /! facts and circu$stances as will warrant a cautious $an in the /elief that his action and the $eans ta%en in prosecuting it are legall! >ust and proper.&12 +hus, pro/a/le cause for a search warrant re=uires such facts and circu$stances that would lead a reasona/l! prudent $an to /elieve that an offense has /een co$$itted and the o/>ects sought in connection with that offense are in the place to /e searched. 41 +he >udge deter$ining pro/a/le cause $ust do so onl! after personall! eCa$ining under oath the co$plainant and his witnesses. +he oath re=uired $ust refer to &the truth of the facts within the >)(&o#"l @#oBl)$?) of the petitioner or his witnesses, /ecause the purpose thereof is to convince the co$$itting $agistrate, not the individual $a%ing the affidavit and see%ing the issuance of the warrant, of the eCistence of pro/a/le cause.& 41 +he applicant $ust have personal %nowledge of the circu$stances. &Relia/le infor$ation& is insufficient. 44 3ere affidavits are not enough, and the >udge $ust depose in writing the co$plainant and his witnesses.4< +he Court of *ppealsN reversal of the findings of the R+C centers on the fact that the two witnesses for petitioners during the preli$inar! eCa$ination failed to prove conclusivel! that the! /ought counterfeit software fro$ 3aCicorp. +he Court of *ppeals ruled that this a$ounted to a failure to prove the eCistence of a connection /etween the offense charged and the place searched.

+he offense charged against 3aCicorp is cop!right infringe$ent under Section 42 of PD 42 and unfair co$petition under *rticle 152 of the RPC. +o support these charges, petitioners presented the testi$onies of N. *gent Sa$iano, co$puter technician Pante, and SacriD, a civilian. +he offenses that petitioners charged 3aCicorp conte$plate several overt acts. +he sale of counterfeit products is /ut one of these acts. .oth N. *gent Sa$iano and SacriD related to the R+C how the! personall! saw 3aCicorp co$$it acts of infringe$ent and unfair co$petition. During the preli$inar! eCa$ination, the R+C su/>ected the testi$onies of the witnesses to the re=uisite eCa$ination. N. *gent Sa$iano testified that he saw 3aCicorp displa! and offer for sale counterfeit software in its pre$ises. 'e also saw how the counterfeit software were produced and pac%aged within 3aCicorpNs pre$ises. N. *gent Sa$iano categoricall! stated that he was certain the products were counterfeit /ecause 3aCicorp sold the$ to its custo$ers without giving the acco$pan!ing ownership $anuals, license agree$ents and certificates of authenticit!. SacriD testified that during his visits to 3aCicorp, he witnessed several instances when 3aCicorp installed petitionersN software into co$puters it had asse$/led. SacriD also testified that he saw the sale of petitionersN software within 3aCicorpNs pre$ises. Petitioners never authoriDed 3aCicorp to install or sell their software. +he testi$onies of these two witnesses, coupled with the o/>ect and docu$entar! evidence the! presented, are sufficient to esta/lish the eCistence of pro/a/le cause. Ero$ what the! have witnessed, there is reason to /elieve that 3aCicorp engaged in cop!right infringe$ent and unfair co$petition to the pre>udice of petitioners. .oth N. *gent Sa$iano and SacriD were clear and insistent that the counterfeit software were not onl! displa!ed and sold within 3aCicorpNs pre$ises, the! were also produced, pac%aged and in so$e cases, installed there. +he deter$ination of pro/a/le cause does not call for the application of rules and standards of proof that a >udg$ent of conviction re=uires after trial on the $erits. *s i$plied /! the words the$selves, &pro/a/le cause& is concerned with pro/a/ilit!, not a/solute or even $oral certaint!. +he prosecution need not present at this stage proof /e!ond reasona/le dou/t. +he standards of >udg$ent are those of a reasona/l! prudent $an,44 not the eCacting cali/rations of a >udge after a full-/lown trial. No law or rule states that pro/a/le cause re=uires a specific %ind of evidence. No for$ula or fiCed rule for its deter$ination eCists.4: Pro/a/le cause is deter$ined in the light of conditions o/taining in a given situation.46+hus, it was i$proper for the Court of *ppeals to reverse the R+CNs findings si$pl! /ecause the sales receipt evidencing N. *gent Sa$ianoNs purchase of counterfeit goods is not in his na$e. Eor purposes of deter$ining pro/a/le cause, the sales receipt is not the onl! proof that the sale of petitionersN software occurred. During the search warrant application proceedings, N. *gent Sa$iano presented to the >udge the co$puter unit that he purchased fro$ 3aCicorp, in which co$puter unit 3aCicorp had pre-installed petitionersN software. 48 SacriD, who was present when N. *gent Sa$iano purchased the co$puter unit, affir$ed that N. *gent Sa$iano purchased the co$puter unit.45 Pante, the co$puter technician, de$onstrated to the >udge the presence of petitionersN software on the sa$e co$puter unit.42 +here was a co$parison /etween petitionersN genuine software and 3aCicorpNs software pre-installed in the co$puter unit that N. *gent Sa$/iano purchased.<1 )ven if we disregard the sales receipt issued in the na$e of &9oel DiaD,& which petitioners eCplained was the alias N. *gent Sa$iano used in the operation, there still re$ains $ore than sufficient evidence to esta/lish pro/a/le cause for the issuance of the search warrants.

+his also applies to the Court of *ppealsN ruling on SacriDNs testi$on!. +he fact that SacriD did not actuall! purchase counterfeit software fro$ 3aCicorp does not eli$inate the eCistence of pro/a/le cause. Cop!right infringe$ent and unfair co$petition are not li$ited to the act of selling counterfeit goods. +he! cover a whole range of acts, fro$ cop!ing, asse$/ling, pac%aging to $ar%eting, including the $ere offering for sale of the counterfeit goods. +he clear and fir$ testi$onies of petitionersN witnesses on such other acts stand untarnished. +he Constitution and the Rules of Court onl! re=uire that the >udge eCa$ine personall! and thoroughl! the applicant for the warrant and his witnesses to deter$ine pro/a/le cause. +he R+C co$plied ade=uatel! with the re=uire$ent of the Constitution and the Rules of Court. Pro/a/le cause is dependent largel! on the opinion and findings of the >udge who conducted the eCa$ination and who had the opportunit! to =uestion the applicant and his witnesses. <1 Eor this reason, the findings of the >udge deserve great weight. +he reviewing court should overturn such findings onl! upon proof that the >udge disregarded the facts /efore hi$ or ignored the clear dictates of reason.<4 Nothing in the records of the preli$inar! eCa$ination proceedings reveal an! i$propriet! on the part of the >udge in this case. *s one can readil! see, here the >udge eCa$ined thoroughl! the applicant and his witnesses. +o de$and a higher degree of proof is unnecessar! and unti$el!. +he prosecution would /e placed in a co$pro$ising situation if it were re=uired to present all its evidence at such preli$inar! stage. Proof /e!ond reasona/le dou/t is /est left for trial. On @hether the Search @arrants are in the Nature of General @arrants * search warrant $ust state particularl! the place to /e searched and the o/>ects to /e seiDed. +he evident purpose for this re=uire$ent is to li$it the articles to /e seiDed onl! to those particularl! descri/ed in the search warrant. +his is a protection against potential a/use. t is necessar! to leave the officers of the law with no discretion regarding what articles the! shall seiDe, to the end that no unreasona/le searches and seiDures /e co$$itted. << n addition, under Section 4, Rule 146 of the Rules of Cri$inal Procedure, a search warrant shall issue &in connection with one specific offense.& +he articles descri/ed $ust /ear a direct relation to the offense for which the warrant is issued. <4 +hus, this rule re=uires that the warrant $ust state that the articles su/>ect of the search and seiDure are used or intended for use in the co$$ission of a specific offense. 3aCicorp argues that the warrants issued against it are too /road in scope and lac% the specificit! re=uired with respect to the o/>ects to /e seiDed. *fter eCa$ining the wording of the warrants issued, the Court of *ppeals ruled in favor of 3aCicorp and reversed the R+CNs ,rder thus0 -nder the foregoing language, al$ost an! ite$ in the petitionerNs store can /e seiDed on the ground that it is &used or intended to /e used& in the illegal or unauthoriDed cop!ing or reproduction of the private respondentsN software and their $anuals. <: +he Court of *ppeals /ased its reversal on its perceived infir$it! of paragraph "e# of the search warrants the R+C issued. +he appellate court found that si$ilarl! worded warrants, all of which noticea/l! e$plo! the phrase &used or intended to /e used,& were previousl! held void /! this Court.<6 +he disputed teCt of the search warrants in this case states0 a# Co$plete or partiall! co$plete reproductions or copies of 3icrosoft software /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N contained in CD-R,3s, dis%ettes and hard dis%s;

/# Co$plete or partiall! co$plete reproductions or copies of 3icrosoft instruction $anuals andJor literature /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; c# Sundr! ite$s such as la/els, /oCes, prints, pac%ages, wrappers, receptacles, advertise$ents and other paraphernalia /earing the cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; d# Sales invoices, deliver! receipts, official receipts, ledgers, >ournals, purchase orders and all other /oo%s of accounts and docu$ents used in the recording of the reproduction andJor asse$/l!, distri/ution and sales, and other transactions in connection with fa%e or counterfeit products /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; )9 Co2>u+)( :"($B"(), '#*lu$'#? *)#+("l >(o*)&&'#? u#'+& '#*lu$'#? :"($ $'&@&, CDR!- $('1)&, @)y3o"($&, 2o#'+o( &*())#& "#$ $'&@)++)&, >:o+o*o>y'#? 2"*:'#)& "#$ o+:)( )Eu'>2)#+ o( >"(">:)(#"l'" u&)$ o( '#+)#$)$ +o 3) u&)$ '# +:) 'll)?"l "#$ u#"u+:o('K)$ *o>y'#? o( ()>(o$u*+'o# o, -'*(o&o,+ &o,+B"() "#$ +:)'( 2"#u"l&, o( B:'*: *o#+"'#, $'&>l"y o( o+:)(B'&) )A:'3'+, B'+:ou+ +:) "u+:o('+y o, -ICR!S!4T C!RP!RATI!N, "#y "#$ "ll -'*(o&o,+ +("$)2"(@& "#$ *o>y('?:+&D "#$ f# Docu$ents relating to an! passwords or protocols in order to access all co$puter hard drives, data /ases and other infor$ation storage devices containing unauthoriDed 3icrosoft software.<8 ")$phasis supplied# t is onl! re=uired that a search warrant /e specific as far as the circu$stances will ordinaril! allow.<5 +he description of the propert! to /e seiDed need not /e technicall! accurate or precise. +he nature of the description should var! according to whether the identit! of the propert! or its character is a $atter of concern.<2 3easured against this standard we find that paragraph "e# is not a general warrant. +he articles to /e seiDed were not onl! sufficientl! identified ph!sicall!, the! were also specificall! identified /! stating their relation to the offense charged. Paragraph "e# specificall! refers to those articles used or intended for use in the illegal and unauthoriDed cop!ing of petitionersN software. +his language $eets the test of specificit!. 41 +he cases cited /! the Court of *ppeals are inapplica/le. n those cases, the Court found the warrants too /road /ecause of particular circu$stances, not /ecause of the $ere use of the phrase &used or intended to /e used.& n$o#um!ia "ictures/ 'nc. . F#ores, the warrants ordering the seiDure of &television sets, video cassette recorders, rewinders and tape cleaners C C C& were found too /road since the defendant there was a licensed distri/utor of video tapes. 41 +he $ere presence of counterfeit video tapes in the defendantNs store does not $ean that the $achines were used to produce the counterfeit tapes. +he situation in this case is different. 3aCicorp is not a licensed distri/utor of petitioners. n 3ache 4 $o. -"hi#../ 'nc./ et a#. . Judge %ui5/ et a#., the Court voided the warrants /ecause the! authoriDed the seiDure of records pertaining to &all /usiness transactions& of the defendant.44 *nd in 67th $entur& Fo8 Fi#m $orp. . $ourt of Appea#s, the Court =uashed the warrant /ecause it $erel! gave a list of articles to /e seiDed, aggravated /! the fact that such appliances are &generall! connected with the legiti$ate /usiness of renting out /eta$aC tapes.& 4< 'owever, we find paragraph "c# of the search warrants lac%ing in particularit!. Paragraph "c# states0 c# Sundr! ite$s such as la/els, /oCes, prints, pac%ages, wrappers, receptacles, advertise$ents and other paraphernalia /earing the cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N;

+he scope of this description is all-e$/racing since it covers propert! used for personal or other purposes not related to cop!right infringe$ent or unfair co$petition. 3oreover, the description covers propert! that 3aCicorp $a! have /ought legiti$atel! fro$ 3icrosoft or its licensed distri/utors. Paragraph "c# si$pl! calls for the seiDure of all ite$s /earing the 3icrosoft logo, whether legiti$atel! possessed or not. Neither does it li$it the seiDure to products used in cop!right infringe$ent or unfair co$petition. Still, no provision of law eCists which re=uires that a warrant, partiall! defective in specif!ing so$e ite$s sought to /e seiDed !et particular with respect to the other ite$s, should /e nullified as a whole. * partiall! defective warrant re$ains valid as to the ite$s specificall! descri/ed in the warrant.44 * search warrant is severa/le, the ite$s not sufficientl! descri/ed $a! /e cut off without destro!ing the whole warrant.4: +he eCclusionar! rule found in Section <"4# of *rticle of the Constitution renders inad$issi/le in an! proceeding all evidence o/tained through unreasona/le searches and seiDure. +hus, all ite$s seiDed under paragraph "c# of the search warrants, not falling under paragraphs a, /, d, e or f, should /e returned to 3aCicorp. 6HERE4!RE, we PARTIALLY GRANT the instant petition. +he Decision of the Court of *ppeals dated 4< Dece$/er 1225 and its Resolution dated 42 Nove$/er 1222 in C*-B.R. SP No. 44888 are RE%ERSED and SET ASIDE eCcept with respect to articles seiDed under paragraph "c# of Search @arrants Nos. 26-4:1, 26-4:4, 26-4:< and 26-4:4. *ll articles seiDed under paragraph "c# of the search warrants, not falling under paragraphs a, /, d, e or f, are ordered returned to 3aCicorp, nc. i$$ediatel!. S! !RDERED. Davide, %r., 7uisu#bin , ?nares*Santia o, and Azcuna, %%., concur. G.R. No. 1/09/7 S)>+)23)( 13, 200/

-ICR!S!4T C!RP!RATI!N "#$ L!TUS DE%EL!P-ENT C!RP!RATI!N, petitioners, vs. -ALIC!RP, INC., respondent. D)C S ,N CARPI!, J.: T:) C"&) +his petition for review on certiorari 1 see%s to reverse the Court of *ppealsN Decision4 dated 4< Dece$/er 1225 and its Resolution dated 42 Nove$/er 1222 in C*-B.R. SP No. 44888. +he Court of *ppeals reversed the ,rder<of the Regional +rial Court, .ranch 4<, 3anila "&R+C&#, den!ing respondent 3aCicorp, nc.Ns "&3aCicorp&# $otion to =uash the search warrant that the R+C issued against 3aCicorp. Petitioners are the private co$plainants against 3aCicorp for cop!right infringe$ent under Section 42 of Presidential Decree No. 42 "&Section 42 of PD 42&# 4 and for unfair co$petition under *rticle 152 of the Revised Penal Code "&RPC&#. : A#+)*)$)#+ 4"*+& ,n 4: 9ul! 1226, National .ureau of nvestigation "&N. &# *gent Do$inador Sa$iano, 9r. "&N. *gent Sa$iano&# filed several applications for search warrants in the R+C against 3aCicorp for

alleged violation of Section 42 of PD 42 and *rticle 152 of the RPC. *fter conducting a preli$inar! eCa$ination of the applicant and his witnesses, 9udge @illia$ 3. .a!hon issued Search @arrants Nos. 26-4:1, 26-4:4, 26-4:< and 26-4:4, all dated 4: 9ul! 1226, against 3aCicorp. *r$ed with the search warrants, N. agents conducted on 4: 9ul! 1226 a search of 3aCicorpNs pre$ises and seiDed propert! fitting the description stated in the search warrants. ,n 4 Septe$/er 1226, 3aCicorp filed a $otion to =uash the search warrants alleging that there was no pro/a/le cause for their issuance and that the warrants are in the for$ of &general warrants.& +he R+C denied 3aCicorpNs $otion on 44 9anuar! 1228. +he R+C also denied 3aCicorpNs $otion for reconsideration. +he R+C found pro/a/le cause to issue the search warrants after eCa$ining N. *gent Sa$iano, 9ohn .enedict SacriD "&SacriD&#, and co$puter technician EeliC/erto Pante "&Pante&#. +he three testified on what the! discovered during their respective visits to 3aCicorp. N. *gent Sa$iano also presented certifications fro$ petitioners that the! have not authoriDed 3aCicorp to perfor$ the witnessed activities using petitionersN products. ,n 44 9ul! 1228, 3aCicorp filed a petition for certiorari with the Court of *ppeals see%ing to set aside the R+CNs order. ,n 4< Dece$/er 1225, the Court of *ppeals reversed the R+CNs order den!ing 3aCicorpNs $otion to =uash the search warrants. Petitioners $oved for reconsideration. +he Court of *ppeals denied petitionersN $otion on 42 Nove$/er 1222. +he Court of *ppeals held that N. *gent Sa$iano failed to present during the preli$inar! eCa$ination conclusive evidence that 3aCicorp produced or sold the counterfeit products. +he Court of *ppeals pointed out that the sales receipt N. *gent Sa$iano presented as evidence that he /ought the products fro$ 3aCicorp was in the na$e of a certain &9oel DiaD.& 'ence, this petition. T:) I&&u)& Petitioners see% a reversal and raise the following issues for resolution0 1. @')+')R +') P)+ + ,N R* S)S F-)S+ ,NS ,E (*@; 4. @')+')R P)+ + ,N)RS '*M) ()B*( P)RS,N*( +G +, E () +') P)+ + ,N; <. @')+')R +')R) @*S PR,.*.() C*-S) +, SS-) +') S)*RC' @*RR*N+S; 4. @')+')R +') S)*RC' @*RR*N+S *R) &B)N)R*( @*RR*N+S.& T:) Rul'#? o, +:) Cou(+ +he petition has $erit. On 0hether the "etition %aises 1uestions of 2aw 3aCicorp assails this petition as defective since it failed to raise =uestions of law. 3aCicorp insists that the argu$ents petitioners presented are =uestions of fact, which this Court should not consider

in a Rule 4: petition for review. Petitioners counter that all the issues the! presented in this petition involve =uestions of law. Petitioners point out that the facts are not in dispute. * petition for review under Rule 4: of the Rules of Court should cover =uestions of law. 6 Fuestions of fact are not reviewa/le. *s a rule, the findings of fact of the Court of *ppeals are final and conclusive and this Court will not review the$ on appeal, 8 su/>ect to eCceptions as when the findings of the appellate court conflict with the findings of the trial court. 5 +he distinction /etween =uestions of law and =uestions of fact is settled. * =uestion of law eCists when the dou/t or difference centers on what the law is on a certain state of facts. * =uestion of fact eCists if the dou/t centers on the truth or falsit! of the alleged facts. +hough this delineation see$s si$ple, deter$ining the true nature and eCtent of the distinction is so$eti$es pro/le$atic. Eor eCa$ple, it is incorrect to presu$e that "ll cases where the facts are not in dispute auto$aticall! involve purel! =uestions of law. +here is a =uestion of law if the issue raised is capa/le of /eing resolved without need of reviewing the pro/ative value of the evidence. 2 +he resolution of the issue $ust rest solel! on what the law provides on the given set of circu$stances. ,nce it is clear that the issue invites a review of the evidence presented, the =uestion posed is one of fact. 11 f the =uer! re=uires a re-evaluation of the credi/ilit! of witnesses, or the eCistence or relevance of surrounding circu$stances and their relation to each other, the issue in that =uer! is factual.11 ,ur ruling in"aterno . "aterno14 is illustrative on this point0 Such =uestions as whether certain ite$s of evidence should /e accorded pro/ative value or weight, or re>ected as fee/le or spurious, or whether or not the proofs on one side or the other are clear and convincing and ade=uate to esta/lish a proposition in issue, are without dou/t =uestions of fact. @hether or not the /od! of proofs presented /! a part!, weighed and anal!Ded in relation to contrar! evidence su/$itted /! adverse part!, $a! /e said to /e strong, clear and convincing; whether or not certain docu$ents presented /! one side should /e accorded full faith and credit in the face of protests as to their spurious character /! the other side; whether or not inconsistencies in the /od! of proofs of a part! are of such gravit! as to >ustif! refusing to give said proofs weight W all these are issues of fact. t is true that 3aCicorp did not contest the facts alleged /! petitioners. .ut this situation does not auto$aticall! transfor$ "ll issues raised in the petition into =uestions of law. +he issues $ust $eet the tests outlined in Paterno. ,f the three $ain issues raised in this petition W the legal personalit! of the petitioners, the nature of the warrants issued and the presence of pro/a/le cause W onl! the first two =ualif! as =uestions of law. +he pivotal issue of whether there was pro/a/le cause to issue the search warrants is a =uestion of fact. *t first glance, this issue appears to involve a =uestion of law since it does not concern itself with the truth or falsit! of certain facts. Still, the resolution of this issue would re=uire this Court to in=uire into the pro/ative value of the evidence presented /efore the R+C. Eor a =uestion to /e one of law, it $ust not involve an eCa$ination of the pro/ative value of the evidence presented /! the litigants or an! of the$.1< Get, this is precisel! what the petitioners as% us to do /! raising argu$ents re=uiring an eCa$ination of the +SNs and the docu$entar! evidence presented during the search warrant proceedings. n short, petitioners would have us su/stitute our own >udg$ent to that of the R+C and the Court of *ppeals /! conducting our own evaluation of the evidence. +his is eCactl! the situation which Section 1, Rule 4: of the Rules of Court prohi/its /! re=uiring the petition to raise onl! =uestions of

law. +his Court is not a trier of facts. t is not the function of this court to anal!De or weigh evidence.14 @hen we give due course to such situations, it is solel! /! wa! of eCception. Such eCceptions appl! onl! in the presence of eCtre$el! $eritorious circu$stances. 1: ndeed, this case falls under one of the eCceptions /ecause the findings of the Court of *ppeals conflict with the findings of the R+C.16 Since petitioners properl! raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction. On @hether Petitioners have the 9e al Personalit( to $ile this Petition 3aCicorp argues that petitioners have no legal personalit! to file this petition since the proper part! to do so in a cri$inal case is the ,ffice of the Solicitor Beneral as representative of the People of the Philippines. 3aCicorp states the general rule /ut the eCception governs this case. 18 @e ruled in $o#um!ia "ictures Entertainment/ 'nc. . $ourt of Appea#s 15 that the petitioner-co$plainant in a petition for review under Rule 4: could argue its case /efore this Court in lieu of the Solicitor Beneral if there is grave error co$$itted /! the lower court or lac% of due process. +his avoids a situation where a co$plainant who activel! participated in the prosecution of a case would suddenl! find itself powerless to pursue a re$ed! due to circu$stances /e!ond its control. +he circu$stances in $o#um!ia "ictures Entertainment are sufficientl! si$ilar to the present case to warrant the application of this doctrine. On @hether there &as Probable Cause to !ssue the Search @arrants Petitioners argue that the Court of *ppeals erred in reversing the R+C /ased on the fact that the sales receipt was not in the na$e of N. *gent Sa$iano. Petitioners point out that the Court of *ppeals disregarded the overwhel$ing evidence that the R+C considered in deter$ining the eCistence of pro/a/le cause. 3aCicorp counters that the Court of *ppeals did not err in reversing the R+C. 3aCicorp $aintains that the entire preli$inar! eCa$ination that the R+C conducted was defective. +he Court of *ppeals /ased its reversal on two factual findings of the R+C. Eirst, the fact that the sales receipt presented /! N. *gent Sa$iano as proof that he /ought counterfeit goods fro$ 3aCicorp was in the na$e of a certain &9oel DiaD.& Second, the fact that petitionersN other witness, 9ohn .enedict SacriD, ad$itted that he did not /u! counterfeit goods fro$ 3aCicorp. @e rule that the Court of *ppeals erred in reversing the R+CNs findings. Pro/a/le cause $eans &such reasons, supported /! facts and circu$stances as will warrant a cautious $an in the /elief that his action and the $eans ta%en in prosecuting it are legall! >ust and proper.&12 +hus, pro/a/le cause for a search warrant re=uires such facts and circu$stances that would lead a reasona/l! prudent $an to /elieve that an offense has /een co$$itted and the o/>ects sought in connection with that offense are in the place to /e searched. 41 +he >udge deter$ining pro/a/le cause $ust do so onl! after personall! eCa$ining under oath the co$plainant and his witnesses. +he oath re=uired $ust refer to &the truth of the facts within the >)(&o#"l @#oBl)$?) of the petitioner or his witnesses, /ecause the purpose thereof is to convince the co$$itting $agistrate, not the individual $a%ing the affidavit and see%ing the issuance of the warrant, of the eCistence of pro/a/le cause.& 41 +he applicant $ust have personal %nowledge of the circu$stances. &Relia/le infor$ation& is insufficient. 44 3ere affidavits are not enough, and the >udge $ust depose in writing the co$plainant and his witnesses.4<

+he Court of *ppealsN reversal of the findings of the R+C centers on the fact that the two witnesses for petitioners during the preli$inar! eCa$ination failed to prove conclusivel! that the! /ought counterfeit software fro$ 3aCicorp. +he Court of *ppeals ruled that this a$ounted to a failure to prove the eCistence of a connection /etween the offense charged and the place searched. +he offense charged against 3aCicorp is cop!right infringe$ent under Section 42 of PD 42 and unfair co$petition under *rticle 152 of the RPC. +o support these charges, petitioners presented the testi$onies of N. *gent Sa$iano, co$puter technician Pante, and SacriD, a civilian. +he offenses that petitioners charged 3aCicorp conte$plate several overt acts. +he sale of counterfeit products is /ut one of these acts. .oth N. *gent Sa$iano and SacriD related to the R+C how the! personall! saw 3aCicorp co$$it acts of infringe$ent and unfair co$petition. During the preli$inar! eCa$ination, the R+C su/>ected the testi$onies of the witnesses to the re=uisite eCa$ination. N. *gent Sa$iano testified that he saw 3aCicorp displa! and offer for sale counterfeit software in its pre$ises. 'e also saw how the counterfeit software were produced and pac%aged within 3aCicorpNs pre$ises. N. *gent Sa$iano categoricall! stated that he was certain the products were counterfeit /ecause 3aCicorp sold the$ to its custo$ers without giving the acco$pan!ing ownership $anuals, license agree$ents and certificates of authenticit!. SacriD testified that during his visits to 3aCicorp, he witnessed several instances when 3aCicorp installed petitionersN software into co$puters it had asse$/led. SacriD also testified that he saw the sale of petitionersN software within 3aCicorpNs pre$ises. Petitioners never authoriDed 3aCicorp to install or sell their software. +he testi$onies of these two witnesses, coupled with the o/>ect and docu$entar! evidence the! presented, are sufficient to esta/lish the eCistence of pro/a/le cause. Ero$ what the! have witnessed, there is reason to /elieve that 3aCicorp engaged in cop!right infringe$ent and unfair co$petition to the pre>udice of petitioners. .oth N. *gent Sa$iano and SacriD were clear and insistent that the counterfeit software were not onl! displa!ed and sold within 3aCicorpNs pre$ises, the! were also produced, pac%aged and in so$e cases, installed there. +he deter$ination of pro/a/le cause does not call for the application of rules and standards of proof that a >udg$ent of conviction re=uires after trial on the $erits. *s i$plied /! the words the$selves, &pro/a/le cause& is concerned with pro/a/ilit!, not a/solute or even $oral certaint!. +he prosecution need not present at this stage proof /e!ond reasona/le dou/t. +he standards of >udg$ent are those of a reasona/l! prudent $an,44 not the eCacting cali/rations of a >udge after a full-/lown trial. No law or rule states that pro/a/le cause re=uires a specific %ind of evidence. No for$ula or fiCed rule for its deter$ination eCists.4: Pro/a/le cause is deter$ined in the light of conditions o/taining in a given situation.46+hus, it was i$proper for the Court of *ppeals to reverse the R+CNs findings si$pl! /ecause the sales receipt evidencing N. *gent Sa$ianoNs purchase of counterfeit goods is not in his na$e. Eor purposes of deter$ining pro/a/le cause, the sales receipt is not the onl! proof that the sale of petitionersN software occurred. During the search warrant application proceedings, N. *gent Sa$iano presented to the >udge the co$puter unit that he purchased fro$ 3aCicorp, in which co$puter unit 3aCicorp had pre-installed petitionersN software. 48 SacriD, who was present when N. *gent Sa$iano purchased the co$puter unit, affir$ed that N. *gent Sa$iano purchased the co$puter unit.45 Pante, the co$puter technician, de$onstrated to the >udge the presence of petitionersN software on the sa$e co$puter unit.42 +here was a co$parison /etween petitionersN genuine software and 3aCicorpNs software pre-installed in the co$puter unit that N. *gent

Sa$/iano purchased.<1 )ven if we disregard the sales receipt issued in the na$e of &9oel DiaD,& which petitioners eCplained was the alias N. *gent Sa$iano used in the operation, there still re$ains $ore than sufficient evidence to esta/lish pro/a/le cause for the issuance of the search warrants. +his also applies to the Court of *ppealsN ruling on SacriDNs testi$on!. +he fact that SacriD did not actuall! purchase counterfeit software fro$ 3aCicorp does not eli$inate the eCistence of pro/a/le cause. Cop!right infringe$ent and unfair co$petition are not li$ited to the act of selling counterfeit goods. +he! cover a whole range of acts, fro$ cop!ing, asse$/ling, pac%aging to $ar%eting, including the $ere offering for sale of the counterfeit goods. +he clear and fir$ testi$onies of petitionersN witnesses on such other acts stand untarnished. +he Constitution and the Rules of Court onl! re=uire that the >udge eCa$ine personall! and thoroughl! the applicant for the warrant and his witnesses to deter$ine pro/a/le cause. +he R+C co$plied ade=uatel! with the re=uire$ent of the Constitution and the Rules of Court. Pro/a/le cause is dependent largel! on the opinion and findings of the >udge who conducted the eCa$ination and who had the opportunit! to =uestion the applicant and his witnesses. <1 Eor this reason, the findings of the >udge deserve great weight. +he reviewing court should overturn such findings onl! upon proof that the >udge disregarded the facts /efore hi$ or ignored the clear dictates of reason.<4 Nothing in the records of the preli$inar! eCa$ination proceedings reveal an! i$propriet! on the part of the >udge in this case. *s one can readil! see, here the >udge eCa$ined thoroughl! the applicant and his witnesses. +o de$and a higher degree of proof is unnecessar! and unti$el!. +he prosecution would /e placed in a co$pro$ising situation if it were re=uired to present all its evidence at such preli$inar! stage. Proof /e!ond reasona/le dou/t is /est left for trial. On @hether the Search @arrants are in the Nature of General @arrants * search warrant $ust state particularl! the place to /e searched and the o/>ects to /e seiDed. +he evident purpose for this re=uire$ent is to li$it the articles to /e seiDed onl! to those particularl! descri/ed in the search warrant. +his is a protection against potential a/use. t is necessar! to leave the officers of the law with no discretion regarding what articles the! shall seiDe, to the end that no unreasona/le searches and seiDures /e co$$itted. << n addition, under Section 4, Rule 146 of the Rules of Cri$inal Procedure, a search warrant shall issue &in connection with one specific offense.& +he articles descri/ed $ust /ear a direct relation to the offense for which the warrant is issued. <4 +hus, this rule re=uires that the warrant $ust state that the articles su/>ect of the search and seiDure are used or intended for use in the co$$ission of a specific offense. 3aCicorp argues that the warrants issued against it are too /road in scope and lac% the specificit! re=uired with respect to the o/>ects to /e seiDed. *fter eCa$ining the wording of the warrants issued, the Court of *ppeals ruled in favor of 3aCicorp and reversed the R+CNs ,rder thus0 -nder the foregoing language, al$ost an! ite$ in the petitionerNs store can /e seiDed on the ground that it is &used or intended to /e used& in the illegal or unauthoriDed cop!ing or reproduction of the private respondentsN software and their $anuals. <: +he Court of *ppeals /ased its reversal on its perceived infir$it! of paragraph "e# of the search warrants the R+C issued. +he appellate court found that si$ilarl! worded warrants, all of which noticea/l! e$plo! the phrase &used or intended to /e used,& were previousl! held void /! this Court.<6 +he disputed teCt of the search warrants in this case states0

a# Co$plete or partiall! co$plete reproductions or copies of 3icrosoft software /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N contained in CD-R,3s, dis%ettes and hard dis%s; /# Co$plete or partiall! co$plete reproductions or copies of 3icrosoft instruction $anuals andJor literature /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; c# Sundr! ite$s such as la/els, /oCes, prints, pac%ages, wrappers, receptacles, advertise$ents and other paraphernalia /earing the cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; d# Sales invoices, deliver! receipts, official receipts, ledgers, >ournals, purchase orders and all other /oo%s of accounts and docu$ents used in the recording of the reproduction andJor asse$/l!, distri/ution and sales, and other transactions in connection with fa%e or counterfeit products /earing the 3icrosoft cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; )9 Co2>u+)( :"($B"(), '#*lu$'#? *)#+("l >(o*)&&'#? u#'+& '#*lu$'#? :"($ $'&@&, CDR!- $('1)&, @)y3o"($&, 2o#'+o( &*())#& "#$ $'&@)++)&, >:o+o*o>y'#? 2"*:'#)& "#$ o+:)( )Eu'>2)#+ o( >"(">:)(#"l'" u&)$ o( '#+)#$)$ +o 3) u&)$ '# +:) 'll)?"l "#$ u#"u+:o('K)$ *o>y'#? o( ()>(o$u*+'o# o, -'*(o&o,+ &o,+B"() "#$ +:)'( 2"#u"l&, o( B:'*: *o#+"'#, $'&>l"y o( o+:)(B'&) )A:'3'+, B'+:ou+ +:) "u+:o('+y o, -ICR!S!4T C!RP!RATI!N, "#y "#$ "ll -'*(o&o,+ +("$)2"(@& "#$ *o>y('?:+&D "#$ f# Docu$ents relating to an! passwords or protocols in order to access all co$puter hard drives, data /ases and other infor$ation storage devices containing unauthoriDed 3icrosoft software.<8 ")$phasis supplied# t is onl! re=uired that a search warrant /e specific as far as the circu$stances will ordinaril! allow.<5 +he description of the propert! to /e seiDed need not /e technicall! accurate or precise. +he nature of the description should var! according to whether the identit! of the propert! or its character is a $atter of concern.<2 3easured against this standard we find that paragraph "e# is not a general warrant. +he articles to /e seiDed were not onl! sufficientl! identified ph!sicall!, the! were also specificall! identified /! stating their relation to the offense charged. Paragraph "e# specificall! refers to those articles used or intended for use in the illegal and unauthoriDed cop!ing of petitionersN software. +his language $eets the test of specificit!. 41 +he cases cited /! the Court of *ppeals are inapplica/le. n those cases, the Court found the warrants too /road /ecause of particular circu$stances, not /ecause of the $ere use of the phrase &used or intended to /e used.& n$o#um!ia "ictures/ 'nc. . F#ores, the warrants ordering the seiDure of &television sets, video cassette recorders, rewinders and tape cleaners C C C& were found too /road since the defendant there was a licensed distri/utor of video tapes. 41 +he $ere presence of counterfeit video tapes in the defendantNs store does not $ean that the $achines were used to produce the counterfeit tapes. +he situation in this case is different. 3aCicorp is not a licensed distri/utor of petitioners. n 3ache 4 $o. -"hi#../ 'nc./ et a#. . Judge %ui5/ et a#., the Court voided the warrants /ecause the! authoriDed the seiDure of records pertaining to &all /usiness transactions& of the defendant.44 *nd in 67th $entur& Fo8 Fi#m $orp. . $ourt of Appea#s, the Court =uashed the warrant /ecause it $erel! gave a list of articles to /e seiDed, aggravated /! the fact that such appliances are &generall! connected with the legiti$ate /usiness of renting out /eta$aC tapes.& 4< 'owever, we find paragraph "c# of the search warrants lac%ing in particularit!. Paragraph "c# states0

c# Sundr! ite$s such as la/els, /oCes, prints, pac%ages, wrappers, receptacles, advertise$ents and other paraphernalia /earing the cop!rights andJor trade$ar%s owned /! 3 CR,S,E+ C,RP,R*+ ,N; +he scope of this description is all-e$/racing since it covers propert! used for personal or other purposes not related to cop!right infringe$ent or unfair co$petition. 3oreover, the description covers propert! that 3aCicorp $a! have /ought legiti$atel! fro$ 3icrosoft or its licensed distri/utors. Paragraph "c# si$pl! calls for the seiDure of all ite$s /earing the 3icrosoft logo, whether legiti$atel! possessed or not. Neither does it li$it the seiDure to products used in cop!right infringe$ent or unfair co$petition. Still, no provision of law eCists which re=uires that a warrant, partiall! defective in specif!ing so$e ite$s sought to /e seiDed !et particular with respect to the other ite$s, should /e nullified as a whole. * partiall! defective warrant re$ains valid as to the ite$s specificall! descri/ed in the warrant.44 * search warrant is severa/le, the ite$s not sufficientl! descri/ed $a! /e cut off without destro!ing the whole warrant.4: +he eCclusionar! rule found in Section <"4# of *rticle of the Constitution renders inad$issi/le in an! proceeding all evidence o/tained through unreasona/le searches and seiDure. +hus, all ite$s seiDed under paragraph "c# of the search warrants, not falling under paragraphs a, /, d, e or f, should /e returned to 3aCicorp. 6HERE4!RE, we PARTIALLY GRANT the instant petition. +he Decision of the Court of *ppeals dated 4< Dece$/er 1225 and its Resolution dated 42 Nove$/er 1222 in C*-B.R. SP No. 44888 are RE%ERSED and SET ASIDE eCcept with respect to articles seiDed under paragraph "c# of Search @arrants Nos. 26-4:1, 26-4:4, 26-4:< and 26-4:4. *ll articles seiDed under paragraph "c# of the search warrants, not falling under paragraphs a, /, d, e or f, are ordered returned to 3aCicorp, nc. i$$ediatel!. S! !RDERED. Davide, %r., 7uisu#bin , ?nares*Santia o, and Azcuna, %%., concur. G.R. No. 131522 July 19, 1999 PACITA I. HA ANA, ALICIA L. CINC! "#$ J!%ITA N. 4ERNAND!, petitioners, vs. 4ELICIDAD C. R! LES "#$ G!!D6ILL TRADING C!., INC., respondents.

PARD!, J.: +he case /efore us is a petition for review on certiorari 1 to set aside the "a# decision or the Court of *ppeals 2, and "/# the resolution den!ing petitioners6 $otion for reconsideration, 3 in which the appellate court affir$ed the trial court6s dis$issal of the co$plaint for infringe$ent andJor unfair co$petition and da$ages /ut deleted the award for attorne!6s fees.
/K&phi/.nLt

+he facts are as follows0 Petitioners are authors and cop!right owners of dul! issued certificates of cop!right registration covering their pu/lished wor%s, produced through their co$/ined resources and efforts, entitled

C,(()B) )NB( S' E,R +,D*G "C)+ for /revit!#, .oo%s 1 and 4, and @,R7.,,7 E,R C,(()B) ER)S'3*N )NB( S', Series 1. Respondent Eelicidad Ro/les and Boodwill +rading Co., nc. are the authorJpu/lisher and distri/utorJseller of another pu/lished wor% entitled &D)M)(,P NB )NB( S' PR,E C )NCG& "D)P for /revit!#, .oo%s 1 and 4 "125: edition# which /oo% was covered /! cop!rights issued to the$. n the course of revising their pu/lished wor%s, petitioners scouted and loo%ed around various /oo%stores to chec% on other teCt/oo%s dealing with the sa$e su/>ect $atter. .! chance the! ca$e upon the /oo% of respondent Ro/les and upon perusal of said /oo% the! were surprised to see that the /oo% was stri%ingl! si$ilar to the contents, sche$e of presentation, illustrations and illustrative eCa$ples in their own /oo%, C)+. *fter an ite$iDed eCa$ination and co$parison of the two /oo%s "C)+ and D)P#, petitioners found that several pages of the respondent6s /oo% are si$ilar, if not all together a cop! of petitioners6 /oo%, which is a case of plagiaris$ and cop!right infringe$ent. Petitioners then $ade de$ands for da$ages against respondents and also de$anded that the! cease and desist fro$ further selling and distri/uting to the general pu/lic the infringed copies of respondent Ro/les6 wor%s. 'owever, respondents ignored the de$ands, hence, on 9ul! 8, 1255; petitioners filed with the Regional +rial Court, 3a%ati, a co$plaint for & nfringe$ent andJor unfair co$petition with da$ages& / against private respondents. 5 n the co$plaint, petitioners alleged that in 125:, respondent Eelicidad C. Ro/les /eing su/stantiall! fa$iliar with the contents of petitioners6 wor%s, and without securing their per$ission, lifted, copied, plagiariDed andJor transposed certain portions of their /oo% C)+. +he teCtual contents and illustrations of C)+ were literall! reproduced in the /oo% D)P. +he plagiaris$, incorporation and reproduction of particular portions of the /oo% C)+ in the /oo% D)P, without the authorit! or consent of petitioners, and the $isrepresentations of respondent Ro/les that the sa$e was her original wor% and concept adversel! affected and su/stantiall! di$inished the sale of the petitioners6 /oo% and caused the$ actual da$ages /! wa! of unrealiDed inco$e. Despite the de$ands of the petitioners for respondents to desist fro$ co$$itting further acts of infringe$ent and for respondent to recall D)P fro$ the $ar%et, respondents refused. Petitioners as%ed the court to order the su/$ission of all copies of the /oo% D)P, together with the $olds, plates and fil$s and other $aterials used in its printing destro!ed, and for respondents to render an accounting of the proceeds of all sales and profits since the ti$e of its pu/lication and sale. Respondent Ro/les was i$pleaded in the suit /ecause she authored and directl! co$$itted the acts of infringe$ent co$plained of, while respondent Boodwill +rading Co., nc. was i$pleaded as the pu/lisher and >oint co-owner of the cop!right certificates of registration covering the two /oo%s authored and caused to /e pu/lished /! respondent Ro/les with o/vious connivance with one another. ,n 9ul! 48, 1255, respondent Ro/les filed a $otion for a /ill of particulars 7 which the trial court approved on *ugust 18, 1255. Petitioners co$plied with the desired particulariDation, and furnished respondent Ro/les the specific portions, inclusive of pages and lines, of the pu/lished and cop!righted /oo%s of the petitioners which were transposed, lifted, copied and plagiariDed andJor otherwise found their wa! into respondent6s /oo%.

,n *ugust 1, 1255, respondent Boodwill +rading Co., nc. filed its answer to the co$plaint 7 and alleged that petitioners had no cause of action against Boodwill +rading Co., nc. since it was not priv! to the $isrepresentation, plagiaris$, incorporation and reproduction of the portions of the /oo% of petitioners; that there was an agree$ent /etween Boodwill and the respondent Ro/les that Ro/les guaranteed Boodwill that the $aterials utiliDed in the $anuscript were her own or that she had secured the necessar! per$ission fro$ contri/utors and sources; that the author assu$ed sole responsi/ilit! and held the pu/lisher without an! lia/ilit!. ,n Nove$/er 45, 1255, respondent Ro/les filed her answer 0, and denied the allegations of plagiaris$ and cop!ing that petitioners clai$ed. Respondent stressed that "1# the /oo% D)P is the product of her independent researches, studies and eCperiences, and was not a cop! of an! eCisting valid cop!righted /oo%; "4# D)P followed the scope and se=uence or s!lla/us which are co$$on to all )nglish gra$$ar writers as reco$$ended /! the *ssociation of Philippine Colleges of *rts and Sciences "*PC*S#, so an! si$ilarit! /etween the respondents /oo% and that of the petitioners was due to the orientation of the authors to /oth wor%s and standards and s!lla/us; and "<# the si$ilarities $a! /e due to the authors6 eCercise of the &right to fair use of cop!rigthed $aterials, as guides.& Respondent interposed a counterclai$ for da$ages on the ground that /ad faith and $alice attended the filing of the co$plaint, /ecause petitioner 'a/ana was professionall! >ealous and the /oo% D)P replaced C)+ as the official teCt/oo% of the graduate studies depart$ent of the Ear )astern -niversit!. 9 During the pre-trial conference, the parties agreed to a stipulation of facts 10 and for the trial court to first resolve the issue of infringe$ent /efore disposing of the clai$ for da$ages. *fter the trial on the $erits, on *pril 4<, 122<, the trial court rendered its >udg$ent finding thus0 @')R)E,R), pre$ises considered, the court here/! orders that the co$plaint filed against defendants Eelicidad Ro/les and Boodwill +rading Co., nc. shall /e D S3 SS)D; that said plaintiffs solidaril! rei$/urse defendant Ro/les for P41,111.11 attorne!6s fees and defendant Boodwill for P:,111.11 attorne!6s fees. Plaintiffs are lia/le for cost of suit. + S S, ,RD)R)D. Done in the Cit! of 3anila this 4<rd da! of *pril, 122<. "sJt# 3*RM ) R. *.R*'*3 S NBS,N *ssisting 9udge
S. C. *d$. ,rder No. 144-24 11

,n 3a! 14, 122<, petitioners filed their notice of appeal with the trial court 12, and on 9ul! 12, 122<, the court directed its /ranch cler% of court to forward all the records of the case to the Court of *ppeals. 13 n the appeal, petitioners argued that the trial court co$pletel! disregarded their evidence and full! su/scri/ed to the argu$ents of respondent Ro/les that the /oo%s in issue were purel! the product of

her researches and studies and that the copied portions were inspired /! foreign authors and as such not su/>ect to cop!right. Petitioners also assailed the findings of the trial court that the! were ani$ated /! /ad faith in instituting the co$plaint. 1/ ,n 9une 48, 1228, the Court of *ppeals rendered >udg$ent in favor of respondents Ro/les and Boodwill +rading Co., nc. +he relevant portions of the decision state0 t $ust /e noted, however, that si$ilarit! of the allegedl! infringed wor% to the author6s or proprietor6s cop!righted wor% does not of itself esta/lish cop!right infringe$ent, especiall! if the si$ilarit! results fro$ the fact that /oth wor%s deal with the sa$e su/>ect or have the sa$e co$$on source, as in this case. *ppellee Ro/les has full! eCplained that the portion or $aterial of the /oo% clai$ed /! appellants to have /een copied or lifted fro$ foreign /oo%s. She has dul! proven that $ost of the topics or $aterials contained in her /oo%, with particular reference to those $atters clai$ed /! appellants to have /een plagiariDed were topics or $atters appearing not onl! in appellants and her /oo%s /ut also in earlier /oo%s on College )nglish, including foreign /oo%s, e.i. )d$und .ur%e6s &Speech on Conciliation&, .oerigs6 &Co$petence in )nglish& and .roughton6s, &)d$und .ur%e6s Collection.& CCC CCC CCC
*ppellant6s reliance on the last paragraph on Section is $isplaced. t $ust /e e$phasiDed that the! failed to prove that their /oo%s were $ade sources /! appellee.

15

+he Court of *ppeals was of the view that the award of attorne!s6 fees was not proper, since there was no /ad faith on the part of petitioners 'a/ana et al. in instituting the action against respondents. ,n 9ul! 14, 1228, petitioners filed a $otion for reconsideration, denied the sa$e in a Resolution 17 dated Nove$/er 4:, 1228. 'ence, this petition. n this appeal, petitioners su/$it that the appellate court erred in affir$ing the trial court6s decision. Petitioners raised the following issues0 "1# whether or not, despite the apparent teCtual, the$atic and se=uential si$ilarit! /etween D)P and C)+, respondents co$$itted no cop!right infringe$ent; "4# whether or not there wasani#us furandi on the part of respondent when the! refused to withdraw the copies of C)+ fro$ the $ar%et despite notice to withdraw the sa$e; and "<# whether or not respondent Ro/les a/used a writer6s right to fair use, in violation of Section 11 of Presidential Decree No. 42. 10 @e find the petition i$pressed with $erit. +he co$plaint for cop!right infringe$ent was filed at the ti$e that Presidential Decree No. 42 was in force. *t present, all laws dealing with the protection of intellectual propert! rights have /een consolidated and as the law now stands, the protection of cop!rights is governed /! Repu/lic *ct No. 542<. Notwithstanding the change in the law, the sa$e principles are reiterated in the new law under Section 188. t provides for the cop! or econo$ic rights of an owner of a cop!right as follows0
17

however, the Court of *ppeals

Sec. 188. Cop( or Econo#ic ri hts. A Su/>ect to the provisions of chapter M , cop!right or econo$ic rights shall consist of the eCclusive right to carr! out, authoriDe or prevent the following acts0 188.1 Reproduction of the wor% or substanlial portion of the wor%; 188.4 Dra$atiDation, translation, adaptation, a/ridge$ent, arrange$ent or other transfor$ation of the wor%; 188.< +he first pu/lic distri/ution of the original and each cop! of the wor% /! sale or other for$s of transfer of ownership; 188.4 Rental of the original or a cop! of an audiovisual or cine$atographic wor%, a wor% e$/odied in a sound recording, a co$puter progra$, a co$pilation of data and other $aterials or a $usical wor% in graphic for$, irrespective of the ownership of the original or the cop! which is the su/>ect of the rental; "n# 188.: Pu/lic displa! of the original or cop! of the wor%; 188.6 Pu/lic perfor$ance of the wor%; and
188.8 ,ther co$$unication to the pu/lic of the wor%
19

+he law also provided for the li$itations on cop!right, thus0 Sec. 154.1 9i#itations on cop(ri ht. A Notwithstanding the provisions of Chapter M, the following acts shall not constitute infringe$ent of cop!right0 "a# the recitation or perfor$ance of a wor%, once it has /een lawfull! $ade accessi/le to the pu/lic, if done privatel! and free of charge or if $ade strictl! for a charita/le or religious institution or societ!; KSec. 11"1#, P.D. No. 42L "/# +he $a%ing of =uotations fro$ a pu/lished wor% if the! are co$pati/le with fair use and onl! to the eCtent >ustified for the purpose, including =uotations fro$ newspaper articles and periodicals in the for$ of press su$$aries; Provided, that the source and the na$e of the author, if appearing on the wor% are $entioned; "Sec. 11 third par. P.D. 42# CCC CCC CCC
"e# 6he inclusion of a &or) in a publication, /roadcast, or other co$$unication to the pu/lic, sound recording of fil$, if such inclusion is $ade /! wa! of illustration for teaching purposes and is co$pati/le with fair use0Provided, 6hat the source and the na#e of the author, if appearin in the &or) is #entioned; 20

n the a/ove =uoted provisions, &wor%& has reference to literar! and artistic creations and this includes /oo%s and other literar!, scholarl! and scientific wor%s. 21

* perusal of the records !ields several pages of the /oo% D)P that are si$ilar if not identical with the teCt of C)+. ,n page 414 of petitioners6 .oo% 1 of College )nglish for +oda!, the authors wrote0 !te#s in dates and addresses0 'e died on 3onda!, *pril 1:, 128:. 3iss Re!es lives in 414 +aft *venue, 3anila 22 ,n page 8< of respondents .oo% 1 Developing )nglish +oda!, the! wrote0 'e died on 3onda!, *pril 4:, 128:. 3iss Re!es address is 414 +aft *venue 3anila 23 ,n Page 4:1 of C)+, there is this eCa$ple on parallelis$ or repetition of sentence structures, thus0 +he proposition is peace. Not peace through the $ediu$ of war; not peace to /e hunted through the la/!rinth of intricate and endless negotiations; not peace to arise out of universal discord, fo$ented fro$ principle, in all parts of the e$pire; not peace to depend on the >uridical deter$ination of perpleCing =uestions, or the precise $ar%ing of the /oundar! of a co$pleC govern$ent. t is si$ple peace; sought in its natural course, and in its ordinar! haunts. t is peace sought in the spirit of peace, and laid in principles purel! pacific. A )d$und .ur%e, &Speech on Criticis$.& 2/ ,n page 111 of the /oo% D)P 25, also in the topic of parallel structure and repetition, the sa$e eCa$ple is foundin toto. +he onl! difference is that petitioners ac%nowledged the author )d$und .ur%e, and respondents did not. n several other pages 27 the treat$ent and $anner of presentation of the topics of D)P are si$ilar if not a rehash of that contained in C)+. @e /elieve that respondent Ro/les6 act of lifting fro$ the /oo% of petitioners su/stantial portions of discussions and eCa$ples, and her failure to ac%nowledge the sa$e in her /oo% is an infringe$ent of petitioners6 cop!rights. @hen is there a su/stantial reproduction of a /oo%? t does not necessaril! re=uire that the entire cop!righted wor%, or even a large portion of it, /e copied. f so $uch is ta%en that the value of the original wor% is su/stantiall! di$inished, there is an infringe$ent of cop!right and to an in>urious eCtent, the wor% is appropriated. 27 n deter$ining the =uestion of infringe$ent, the a$ount of $atter copied fro$ the cop!righted wor% is an i$portant consideration. +o constitute infringe$ent, it is not necessar! that the whole or even a large portion of the wor% shall have /een copied. f so $uch is ta%en that the value of the original is

sensi/l! di$inished, or the la/ors of the original author are su/stantiall! and to an in>urious eCtent appropriated /! another, that is sufficient in point of law to constitute pirac!. 20 +he essence of intellectual pirac! should /e essa!ed in conceptual ter$s in order to underscore its gravit! /! an appropriate understanding thereof. nfringe$ent of a cop!right is a trespass on a private do$ain owned and occupied /! the owner of the cop!right, and, therefore, protected /! law, and infringe$ent of cop!right, or pirac!, which is a s!non!$ous ter$ in this connection, consists in the doing /! an! person, without the consent of the owner of the cop!right, of an!thing the sole right to do which is conferred /! statute on the owner of the cop!right. 29 +he respondents6 clai$ that the copied portions of the /oo% C)+ are also found in foreign /oo%s and other gra$$ar /oo%s, and that the si$ilarit! /etween her st!le and that of petitioners can not /e avoided since the! co$e fro$ the sa$e /ac%ground and orientation $a! /e true. 'owever, in this >urisdiction under Sec 154 of Repu/lic *ct 542< it is provided that0 (i$itations on Cop!right. Notwithstanding the provisions of Chapter M, the following shall not constitute infringe$ent of cop!right0 CCC CCC CCC "c# +he $a%ing of =uotations fro$ a pu/lished wor% if the! are co$pati/le with fair use and onl! to the eCtent >ustified for the purpose, including =uotations fro$ newspaper articles and periodicals in the for$ of press su$$aries0 Provided, +hat the source and the na$e of the author, if appearing on the wor%, are $entioned. * cop! of a pirac! is an infringe$ent of the original, and it is no defense that the pirate, in such cases, did not %now whether or not he was infringing an! cop!right; he at least %new that what he was cop!ing was not his, and he copied at his peril. 30 +he neCt =uestion to resolve is to what eCtent can cop!ing /e in>urious to the author of the /oo% /eing copied. s it enough that there are si$ilarities in so$e sections of the /oo%s or large seg$ents of the /oo%s are the sa$e? n the case at /ar, there is no =uestion that petitioners presented several pages of the /oo%s C)+ and D)P that $ore or less had the sa$e contents. t $a! /e correct that the /oo%s /eing gra$$ar /oo%s $a! contain $aterials si$ilar as to so$e technical contents with other gra$$ar /oo%s, such as the seg$ent a/out the &*uthor Card&. 'owever, the nu$erous pages that the petitioners presented showing si$ilarit! in the st!le and the $anner the /oo%s were presented and the identical eCa$ples can not pass as si$ilarities $erel! /ecause of technical consideration. +he respondents clai$ that their si$ilarit! in st!le can /e attri/uted to the fact that /oth of the$ were eCposed to the *PC*S s!lla/us and their respective acade$ic eCperience, teaching approach and $ethodolog! are al$ost identical /ecause the! were of the sa$e /ac%ground. 'owever, we /elieve that even if petitioners and respondent Ro/les were of the sa$e /ac%ground in ter$s of teaching eCperience and orientation, it is not an eCcuse for the$ to /e identical even in eCa$ples contained in their /oo%s. +he si$ilarities in eCa$ples and $aterial contents are so o/viousl! present in this case. 'ow can si$ilarJidentical eCa$ples not /e considered as a $ar% of cop!ing?

@e consider as an indicia of guilt or wrongdoing the act of respondent Ro/les of pulling out fro$ Boodwill /oo%stores the /oo% D)P upon learning of petitioners6 co$plaint while pharisaicall! den!ing petitioners6 de$and. t was further noted that when the /oo% D)P was re-issued as a revised version, all the pages cited /! petitioners to contain portion of their /oo% College )nglish for +oda! were eli$inated. n cases of infringe$ent, cop!ing alone is not what is prohi/ited. +he cop!ing $ust produce an &in>urious effect&. 'ere, the in>ur! consists in that respondent Ro/les lifted fro$ petitioners6 /oo% $aterials that were the result of the latter6s research wor% and co$pilation and $isrepresented the$ as her own. She circulated the /oo% D)P for co$$ercial use did not ac%nowledged petitioners as her source. 'ence, there is a clear case of appropriation of cop!righted wor% for her /enefit that respondent Ro/les co$$itted. Petitioners6 wor% as authors is the product of their long and assiduous research and for another to represent it as her own is in>ur! enough. n cop!righting /oo%s the purpose is to give protection to the intellectual product of an author. +his is precisel! what the law on cop!right protected, under Section 154.1 "/#. Fuotations fro$ a pu/lished wor% if the! are co$pati/le with fair use and onl! to the eCtent >ustified /! the purpose, including =uotations fro$ newspaper articles and periodicals in the for$ of press su$$aries are allowed provided that the source and the na$e of the author, if appearing on the wor%, are $entioned. n the case at /ar, the least that respondent Ro/les could have done was to ac%nowledge petitioners 'a/ana et.al. as the source of the portions of D)P. +he final product of an author6s toil is her /oo%. +o allow another to cop! the /oo% without appropriate ac%nowledg$ent is in>ur! enough. @')R)E,R), the petition is here/! BR*N+)D. +he decision and resolution of the Court of *ppeals in C*-B. R. CM No. 441:< are S)+ *S D). +he case is ordered re$anded to the trial court for further proceedings to receive evidence of the parties to ascertain the da$ages caused and sustained /! petitioners and to render decision in accordance with the evidence su/$itted to it. S, ,RD)R)D. ;apunan and ?nares*Santia o, %%., concur. Davide, %r., C.%., ! dissent, please see dissentin opinion. +elo, %., no part, personal reason.

S)>"("+) !>'#'o#&

DA%IDE, JR., $.J./ dissenting opinion0 a$ una/le to >oin the $a>orit! view.

Ero$ the following factual and procedural antecedents, find no alternative /ut to sustain /oth the trial court and the Court of *ppeals. ,n 14 9ul! 1255, '*.*N*, et al. filed with the trial court a co$plaint for infringe$ent and unfair co$petition, with da$ages against private respondent Eelicidad C. Ro/les "hereafter R,.()S# and her pu/lisher and distri/utor, Boodwill +rading Co., nc. "hereafter B,,D@ ((#. +he case was doc%eted as Civil Case No. 55-1<18. '*.*N*, et al. averred in their co$plaint that the! were the co-authors and >oint cop!right owners of their pu/lished wor%s College )nglish for +oda!, .oo%s 1 and 4 "hereafter C)+# and @or%/oo% for College Eresh$an )nglish, Series 1 1; the! discovered that R,.()S6 own pu/lished wor%s, Developing )nglish Proficienc!, .oo%s 1 and 4, "hereafter D)P#, pu/lished and distri/uted in 125:, eChi/ited an uncann! rese$/lance, if not outright ph!sical si$ilarit!, to C)+ as to content, sche$e, se=uence of topics and ideas, $anner of presentation and illustrative eCa$ples; the plagiaris$, incorporation and reproduction of particular portions of C)+ into D)P could not /e gainsaid since R,.()S was su/stantiall! fa$iliar with C)+ and the teCtual asportation was acco$plished without their authorit! andJor consent; R,.()S and B,,D@ (( >ointl! $isrepresented D)P "over which the! shared cop!right ownership# &as the for$er6s original pu/lished wor%s and concept;& and &notwithstanding for$al de$ands $ade . . . to cease and desist fro$ the sale and distri/ution of D)P, KR,.()S and B,,D@ ((L persistentl! failed and refused to co$pl! therewith.& '*.*N* et al. then pra!ed for the court to0 "1# order the su/$ission and thereafter the destruction of all copies of D)P, together with the $olds, plates, fil$s and other $aterials used in the printing thereof; "4# re=uire R,.()S and B,,D@ (( to render an accounting of the sales of the &infringing wor%s fro$ the ti$e of its "sic# inceptive pu/lication up to the ti$e of >udg$ent, as well as the a$ount of sales and profits . . . derived;& and "<# to en>oin R,.()S and B,,D@ (( to solidaril! pa! actual, $oral and eCe$plar! da$ages, as well as attorne!6s fees and eCpenses of litigation. n its *nswer, B,,D@ (( denied culpa/ilit! since &it had no %nowledge or infor$ation sufficient to for$ a /elief as to the allegations of plagiaris$, incorporation and reproduction& and hence &could not /e priv! to the sa$e, if "there were# an!;& and that in an *gree$ent with co-defendant R,.()S, the latter would /e solel! responsi/le for acts of plagiaris$ or violations of cop!right or an! other law, to the eCtent of answering for an! and all da$ages B,,D@ (( $a! suffer. B,,D@ (( also interposed a co$pulsor! counterclai$ against P*C +*, et al. and a crossclai$ against its codefendant anchored on the afore$entioned *gree$ent. n her answer, R,.()S asserted that0 "1# D)P was the eCclusive product of her independent research, studies and eCperience; "4# D)P, particularl! the seg$ents where the alleged literal si$ilitude appeared, were ad$ittedl! influenced or inspired /! earlier treatises, $ostl! /! foreign authors; /ut that &influences andJor inspirations fro$ other writers& li%e the $ethodolog! and techni=ues as to presentation, teaching concept and design, research and orientation which she e$plo!ed, fell within the a$/it of general infor$ation, ideas, principles of general or universal %nowledge which were co$$onl! and custo$aril! understood as incapa/le of private and eCclusive use, appropriation or cop!right; and "<# her wor%s were the result of the legiti$ate and reasona/le eCercise of an author6s &right to fair use of even cop!righted $aterials as KaL guide.& She further clai$ed that her various national and regional professional activities in general education, language and literature, as well as her teaching eCperience in graduate and post graduate education would o/viate the re$otest possi/ilit! of plagiaris$. R,.()S li%ewise suggested that an! si$ilarit! /etween D)P and C)+ as regards scope and se=uence could /e attri/uted to &the orientation of the authors to the scope and se=uence or s!lla/us A which incorporates standards %nown a$ong )nglish gra$$ar /oo% writers A of the su/>ect-$atter for .asic Co$$unication *rts reco$$ended /! the *ssociation of Philippine

Colleges of *rts and Sciences "*PC*S#.& @hile the s!lla/us was ad$ittedl! adopted in D)P, she clai$ed to have treated =uite differentl! in D)P the ver! ideas, techni=ues or principles eCpressed in C)+ such that neither teCt/oo% could /e considered a cop! or plagiaris$ of the other. *t the pre-trial conference, the parties agreed to a stipulation of facts 2 and for the court to first resolve the issue of infringe$ent /efore disposing of the clai$s for da$ages. *fter trial on the $erits, the trial court rendered its decision in favor of defendants, the dispositive portion of which reads0 @')R)E,R), pre$ises considered, the Court here/! orders that the co$plaint filed against defendants Eelicidad Ro/les and Boodwill +rading Co., nc. shall /e D S3 SS)D0 that said plaintiffs solidaril! rei$/urse defendant Ro/les for P41,111.11 attorne!6s fees and defendant Boodwill for P:,111.11 attorne!6s fees. Plaintiffs are lia/le for costs of suit. + S S, ,RD)R)D. 3 Noting that the law applica/le to the case was Presidential Decree No. 42, / the trial court found that '*.*N*, et al. failed to discharge their onus of proving that R,.()S and B,,D@ (( co$$itted acts constituting cop!right infringe$ent. 3oreover, the trial court found that &the cause of action or acts co$plained of KwereL not covered /! said decree& as Section 11 thereof /arred authors of wor%s alread! lawfull! $ade accessi/le to the pu/lic fro$ prohi/iting the reproductions, translations, adaptations, recitation and perfor$ance of the sa$e, while Section 11 allowed the utiliDation of reproductions, =uotations and eCcerpts of such wor%s. +he trial court thus agreed with R,.()S that &the co$plained acts KwereL of general and universal %nowledge and use which plaintiffs cannot clai$ originalit! or see% redress to the law for protection& and o/served that D)P and C)+ had the sa$e sources, consisting chiefl! of earlier wor%s, $ostl! foreign /oo%s. B,,D@ ((6s crossclai$ against R,.()S, counterclai$ against '*.*N*, et al. as well as R,.()S6 co$pulsor! counterclai$ against B,,D@ (( were all dis$issed for lac% of factual and legal /ases. '*.*N*, et al. appealed to the Court of *ppeals. +he case was doc%eted as C*-B.R. CM No. 441:<. .efore said court '*.*N*, et al., in the $ain, argued that the trial court totall! disregarded their evidence and $erel! su/scri/ed to R,.()S6 argu$ents. +he Court of *ppeals, however, li%ewise disposed of the controvers! in favor of R,.()S and B,,D@ ((. 5 'owever, the Court of *ppeals $odified the trial court6s decision /! reversing the award for attorne!6s fees. t held that the good faith and sincerit! of '*.*N*, et al. in co$$encing the action negated the /asis therefor. +heir $otion for reconsideration having /een denied for want of cogent reasons, '*.*N*, et al., instituted this petition. +he! clai$ that the Court of *ppeals co$$itted reversi/le error in failing to appreciate0 "1# the insupera/le evidence and facts ad$itted and proved de$onstrating plagiaris$ or pirac! and instead afforded full weight and credit to R,.()S6 $atriC of general, h!pothetical and sweeping state$ents andJor defenses; "4# R,.()S6 and B,,D@ ((6s ani#o furandi or intent to appropriate or cop! C)+ with the non-re$oval of the da$aging copies of D)P fro$ the /oo%stores despite notice to withdraw the sa$e; and "<# the fact that R,.()S a/used a writer6s right to fair use, in violation of Section 11 of P.D. No. 42. 7 +he! invo%e 9a)ta& v. Pa lina&an 7 which, the! theoriDe is on all fours with the case at /ar. R,.()S contends that appeal /! certiorari does not lie in this case for the challenged decision and the trial court6s >udg$ent were a$pl! supported /! evidence, pertinent laws and >urisprudence. 'ence, her counterclai$ for $oral da$ages should, therefore, /e granted or for us to order the re$and of the case to the trial court for reception of evidence on da$ages. B,,D@ ((, on its part, stood pat on its disclai$er, with the assertion that no proof was ever introduced. that it co-authored D)P or that it singl! or in ca/al with R,.()S co$$itted an! act constituting cop!right infringe$ent.

+he core issue then is whether or not the Court of *ppeals erred in affir$ing the trial court6s >udg$ent that despite the apparent teCtual, the$atic and se=uential si$ilarit! /etween D)P and C)+, no cop!right was co$$itted /! R,.()S and B,,D@ ((. @hile the co$plaint, in Civil Case No. 55-1<18 was filed during the effectivit! of P.D. No. 42, the provisions of the new intellectual propert! law, R.*. No. 542<, 0 nevertheless /ears significance here. t too% effect on 1 9anuar! 1225, /ut its Section 4<2.< clearl! states that its provisions shall appl! to wor%s in which cop!right protection o/tained prior to the effectivit! of the *ct su/sists, provided, however, that the application of the *ct shall not result in the di$inution of such protection. *lso, the philosoph! /ehind /oth statutes as well as the essential principles of cop!right protection and cop!right infringe$ent have, to a certain eCtent, re$ained the sa$e. * cop!right $a! /e accuratel! defined as the right granted /! statute to the proprietor of an intellectual production to its eCclusive use and en>o!$ent to the eCtent specified in the statute. 9 -nder Section 188 of R.*. No. 542<, 10the cop! or econo$ic right "cop!right and econo$ic right are used interchangea/l! in the statute# consists of the eCclusive right to carr! out, authoriDe or prevent the following acts0 188.1 Reproduction of the wor% or su/stantial portion of the wor%; 188.4 Dra$atiDation, translation, adaptation, a/ridg$ent, arrange$ent or other transfor$ation of the wor%; 188.< +he first pu/lic distri/ution of the original and each cop! of the wor% /! sale or other for$s of transfer of ownership; 188.4 Rental of the original or a cop! of an audiovisual or cine$atographic wor%, a wor% e$/odied in a sound recording, a co$puter progra$, a co$pilation of data and other $aterials or a $usical wor% in graphic for$, irrespective of the ownership of the original or the cop! which is the su/>ect of the rental; 188.: Pu/lic displa! of the original or a cop! of the wor%; 188.6 Pu/lic perfor$ance of the wor%; and 188.8 ,ther co$$unication to the pu/lic of the wor%. &+he wor%,& as repeatedl! $entioned, refers to the literar! and artistic wor%s defined as original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation and enu$erated in Section 184.1, which includes /oo%s and other literar!, scholarl!, scientific and artistic wor%s. 11 Stripped in the $eanti$e of its indisputa/le social and /eneficial functions, 12 the use of intellectual propert! or creations should /asicall! pro$ote the creator or author6s personal and econo$ic gain. 'ence, the cop!right protection eCtended to the creator should ensure his attain$ent of so$e for$ of personal satisfaction and econo$ic reward fro$ the wor% he produced. @ithout conceding the suita/ilit! of (a%taw as precedent, the Court there =uoted 3anresa and eCplained0
'e who writes a /oo%, or carves a statute, or $a%es an invention, has the a/solute right to reproduce or sell it, >ust as the owner of the land has the a/solute right to sell it or its fruits. .ut while the owner of the land, /! selling it and its fruits, perhaps full! realiDes all

its econo$ic value, /! receiving its /enefits and utilities, which are represented for eCa$ple, /! the price, on the other hand the author of a /oo%, statue or invention does not reap all the /enefits and advantages of his own propert! /! disposing of it, for the $ost i$portant for$ of realiDing the econo$ic advantages of a /oo%, statue or invention, consists in the right to reproduce it in si$ilar or li%e copies, ever!one of which serves to give to the person reproducing the$ all the conditions which the original re=uires in order to give the author the full en>o!$ent thereof. f the author of a /oo%, after its pu/lication, cannot prevent its reproduction /! an! person who $a! want to reproduce it, then the propert! right granted hi$ is reduced to a ver! insignificant thing and the effort $ade in the production of the /oo% is in no wa! rewarded. 13

+he eCecution, therefore, of an! one or $ore of the eCclusive rights conferred /! law on a cop!right owner, without his consent, constitutes cop!right infringe$ent. n essence, cop!right infringe$ent, %nown in general as &pirac!,& is a trespass on a do$ain owned and occupied /! a cop!right owner; it is violation of a private right protected /! law.1/ @ith the invasion of his propert! rights, a cop!right owner is naturall! entitled to see% redress, enforce and hold accounta/le the defrauder or usurper of said econo$ic rights. Now, did R,.()S and B,,D@ (( infringe upon the cop!right of '*.*N* et al. /! pu/lishing D)P, which the latter alleged to /e a reproduction, or in the least, a su/stantial reproduction of C)+? .oth the trial court and respondent court found in the negative. su/$it the! were correct. +o constitute infringe$ent, the usurper $ust have copied or appropriated the &original& wor% of an author or cop!right proprietor; 15 a/sent cop!ing, there can /e no infringe$ent of cop!right. 17 n turn, a wor% is dee$ed /! law an original if the author created it /! his own s%ill, la/or and >udg$ent. 17 ,n its part, a cop! is that which co$es so near to the original so as to give to ever! person seeing it the idea created /! the original. t has /een held that the test of cop!right infringe$ent is whether an ordinar! o/server co$paring the wor%s can readil! see that one has /een copied fro$ the other. 10 * visual co$parison of the portions of C)+ 19 >uCtaposed against certain pages of D)P, 20 would inescapa/l! lead to a conclusion that there is a discerni/le si$ilarit! /etween the two; however, as correctl! assessed /! respondent court and the lower court, no conclusion, can /e drawn that D)P, in legal conte$plation, is a cop! of C)+. @as D)P a su/stantial reproduction of C)+? +o constitutes a su/stantial reproduction, it is not necessar! that the entire cop!righted wor%, or even a large portion of it, /e copied, if so $uch is ta%en that the value of the original is su/stantiall! di$inished, or if the la/ors of the original author are su/stantiall!, and to an in>urious eCtent, appropriated. 21 .ut the si$ilarit! of the /oo%s here does not a$ount to an appropriation of a su/stantial portion of C)+. f the eCistence of su/stantial si$ilarities does not of itself esta/lish infringe$ent, 22 $ere si$ilarities "not su/stantial si$ilarities# in so$e sections of the /oo%s in =uestion decisivel! $ilitate against a clai$ for infringe$ent where the si$ilarities had /een convincingl! esta/lished as proceeding fro$ a nu$/er of reasons andJor factors. 1. *s /oth /oo%s are gra$$ar /oo%s, the! inevita/l! deal with the sa$e su/>ects t!picall! and ordinaril! treated /! writers of such genre, 23 e. ., s!ste$ of /oo% classification, the different %inds of card catalogs and their entries, use of punctuation $ar%s, paragraphs, the characteristics of an effective paragraph, language structure, different parts of a /oo%, etc. +hese standard su/>ects fall within the do$ain of ideas, concepts, universal and general %nowledge that have, as ad$itted /! the protagonists here, /een in eCistence for =uite a long ti$e. 2/ *s such, '*.*N*, et al. cannot de$and $onopol!, /! wa! of eCa$ple, in the use of the recogniDed li/rar! classification s!ste$s "Dewe! Deci$al S!ste$ and the (i/rar! of Congress S!ste$#, or how a /oo% can /e divided into parts "frontispiece, title page, cop!right page, preface, ta/le of contents, etc.# or to the different headings used in a card catalogue "title card, author card and su/>ect card#, since these are of

co$$on or general %nowledge. )ven in this >urisdiction, no protection can /e eCtended to such an idea, procedure, s!ste$ $ethod or operation, concept, principle, discover! or $ere data, even if eCpressed, eCplained, illustrated or e$/odied in a wor%. 25 4. *s found /! respondent court, C)+ and D)P had co$$on sources and $aterials, 27 such that the particular portions clai$ed to have /een lifted and literall! reproduced also appeared in earlier wor%s, $ostl! /! foreign authors. +his is clear fro$ the testi$on! of petitioner Dr. Pacita 'a/ana0 F (et6s clarif! !our position Dra. 'a/ana. @hen defendants test "sic# showed 11 words si$ilar to !ours, !ou so concluded it was "sic# copied fro$ !ours /ut when pointed out to !ou sa$e "sic# words contained in the earlier /oo% of @ills then !ou earlier in !our test in !our /oo% "sic# !ou refused to ad$it that it was copied fro$ @ills. * Ges, sir. @e have never A all <: words were copied fro$ there. F .ut what a$ as%ing how could !ou conclude that /! >ust si$ilarit! of 11 words of defendants words that was copied fro$ !ours KsicL and when point out to !ou the si$ilarit! of that sa$e words fro$ the words earlier than !ours "sic# !ou refused to ad$it that !ou copied? * would li%e to change the final state$ent now that in the case of defendant Ro/les !ou pointed out her source ver! clear. She copied it fro$ that /oo% /! @ills. F So, she did not cop! it fro$ !ours?
* *lright, $a!/e she did not cop! it /ut definitel! it is a pattern of plageris$ KsicL. 27

<. Si$ilarit! in orientation and st!le can li%ewise /e attri/uted to the eCposure of the authors to the *PC*S s!lla/us and their respective acade$ic eCperience, teaching approaches and $ethodolog!. t is not farfetched that the! could have even influenced each other as teCt/oo% writers. R,.()S and Dr. Pacita 'a/ana were facult! $e$/ers of the nstitute of )nglish of the Ear )astern -niversit! fro$ 1264 to 1284. 20 .oth were ardent students, researchers, lecturers, teCt/oo% writers and teachers of )nglish and gra$$ar. +he! even used to /e on friendl! ter$s with each other, to the eCtent that Dr. 'a/ana ad$itted that R,.()S assisted the for$er in the preparation of her doctoral dissertation. Biven their near-identical acade$ic and professional /ac%ground, it is natural the! would use $an! eCpressions and definitions peculiar to teaching )nglish gra$$ar. t co$es therefore with no surprise that there are si$ilarities in so$e parts of the rival /oo%s. ndeed, it is difficult to conceive how writers on the sa$e su/>ect $atter can ver! well avoid resorting to co$$on sources of infor$ation and $aterials and e$plo!ing si$ilar eCpressions and ter$s peculiar to the su/>ect the! are treating. 29 +o illustrate, an eCcerpt fro$ page 41 of C)+ reads0 *uthor Card +he author card is the $ain entr! card. t contains

1. the author6s co$plete na$e on the first line, surna$e first, which $a! /e followed /! the date of his /irth and death if he is no longer living; 4. the title of the /oo%, and the su/title, if there is one; <. the edition, if it is not the first; 4. the translator or illustrator, if there is an!; :. the i$print which includes the pu/lisher, the place and date of pu/lication; 6. the collation co$posed of the nu$/er of pages, volu$e, illustrations, and the siDe of the /oo%; 8. the su/>ects with which the /oo% deals KsicL; 5. the call nu$/er on the upper left-hand corner. Na$es /eginning with 3c, or 3 are filed in the card catalog as though spelled out as 3*C, for eCa$ple 3c Braw A 3acBraw. +he sa$e is true of St. and Saint. @hile a portion of D)P found on page 15 which discusses the author card provides0 +he author card is the $ain entr! card containing0 1. the author6s co$plete na$e on the first line, surna$e first, which $a! /e followed /! the date of his /irth and death if he is no longer living; 4. the title of the /oo%, and the su/title if there is one; <. the edition, if it is not the first; 4. the translator or illustrator, if an!; :. the i$print which includes the pu/lisher, the place and date of pu/lication; 6. the collation, co$posed of the nu$/er of pages, volu$e, illustrations, and the siDe of the /oo%; 8. the su/>ect with which the /oo% deals; and 5. the call nu$/er on the upper-left hand corner. Na$es /eginning with 3C, or 3 are filed in the card catalog considered spelled out as 3*C, for eCa$ple0 3cleod-3acleod. +his is true also of St. and Saint.

+he entries found in an author card, having /een developed over =uite so$eti$e, are eCpectedl! unifor$. 'ence, '*.*N* et al. and R,.()S would have no choice /ut to articulate the ter$s particular to the entries in an identical $anner. thus find that the ruling of the respondent court is totall! supported /! the evidence on record. ,f doctrinal persuasion is the principle that factual deter$inations of the Court of *ppeals and the trial court are conclusive and /inding upon this Court, and the latter will not, as a rule, distur/ these findings unless co$pelling and cogent reasons necessitate a reeCa$ination, if not a reversal, of the sa$e. 30 +ested against this >urisprudential canon, to su/>ect the challenged decision of the Court of *ppeals to further scrutin! would /e superfluous, if not, i$provident. a$ not persuaded /! the clai$ of '*.*N*, et al. that (a%taw is on all fours with and hence applica/le to the case at /ar. +here, this Court disposed that defendant, without the consent of and causing irrepara/le da$age to (a%taw, reproduced the latter6s literar! wor% Diccionario 'isapano+agalog, and i$properl! copied the greater part thereof in the wor% Diccionariong 7astila-+agalog pu/lished /! defendant, in violation of *rticle 8 of the (aw of 11 9anuar! 1582 on ntellectual Propert!. +his Court anchored its decision on the following o/servations0 "1# K,L the 4<,:61 Spanish words in the defendant6s dictionar! . . . onl! <,115 words are the defendant6s own, or, what is the sa$e thing, the defendant has added onl! this nu$/er of words to those that are in the plaintiff6s dictionar!, he having reproduced or copied the re$aining 41,4:4 words; "4# K+Lhe defendant also literall! reproduced and copied for the Spanish words in his dictionar!, the e=uivalents, definitions and different $eanings in +agalog, given in plaintiffs dictionar!, having reproduced, as to so$e words, ever!thing that appears in the plaintiff6s dictionar! for si$ilar Spanish words, although as to so$e he $ade so$e additions of his own. Said copies and reproductions are nu$erous. . .;
"<# K+Lhe printer6s errors in the plaintiff6s dictionar! as to the eCpression of so$e words in Spanish as well as their e=uivalents in +agalog are also reproduced, a fact which shows that the defendant, in preparing his dictionar!, literall! copied those Spanish words and their $eanings and e=uivalents in +agalog fro$ the plaintiff6s dictionar!. 31

Plainl!, the rationale in (a%taw does not appl! in this case. Eirst, aside fro$ an isolated accounting of the nu$/er of words supposedl! usurped in a seg$ent of D)P fro$ C)+, 32 the records do not disclose that all the words allegedl! copied were tallied and that the words thus tallied were nu$erous enough to support a finding of cop!ing. Second, as alread! conceded, while there is an identit! in the $anner /! which so$e of the ideas and concepts were articulated, this prescinded fro$ various factors alread! elucidated. .esides, R,.()S6 testi$on! that she $ade an independent investigation or research of the original wor%s or authors she consulted was unre/utted; 33 for ger$ane here is the =uestion of whether the alleged infringer could have o/tained the sa$e infor$ation /! going to the sa$e source /! her own independent research. 3/ R,.()S convinced the trial court and the Court of *ppeals on this; thus, we are /ound /! this factual deter$ination, as li%ewise eCplained earlier. +hird, reproduction of the printer6s errors or the author6s /lunders and inaccuracies in the infringing cop! does notipso facto constitute cop!ing or plagiaris$ or infringe$ent, /ut it is conceded that the! are telltale signs that infringe$ent $ight have /een co$$itted. 35 'owever, the records do not reveal this to /e the case. Eourth, the law on intellectual propert! violated in (a%taw was a world and ti$e apart fro$ R.*. No. 542< or even P.D. No. 42. +hus, under *rticle 8 of the (aw of 11 9anuar! 1582, the Court ruled that no/od! could reproduce another person6s wor% without the owner6s consent, even $erel! to annotate or add an!thing to it, or i$prove an! edition thereof. +he $ore recent laws on intellectual propert!, however, recogniDe

recent advance$ents in technolog! transfer and infor$ation disse$ination. +he! thus allow the use of cop!righted $aterials if co$pati/le with fair use and to the eCtent >ustified for the purpose. n particular, the new laws sanction the fair use of cop!righted wor% for criticis$, co$$ent, news reporting, teaching including $ultiple copies for classroo$ use, scholarship, research and si$ilar purposes. 37 Eurther, the li$itations of the eCclusive use of cop!righted $aterials under Sections 11 and 11 of P.D. No. 42 in consonance with the principle of fair use have /een reproduced and incorporated in the new law. 37 *ll told, (a%taw is inapplica/le.
/K&phi/.nLt

Eair use has /een defined as a privilege to use the cop!righted $aterial in a reasona/le $anner without the consent of the cop!right owner or as cop!ing the the$e or ideas rather than their eCpression. 30 No =uestion of fair or unfair use arises however, if no cop!ing is proved to /egin with. +his is in consonance with the principle that there can /e no infringe$ent if there was no cop!ing. 39 t is onl! where so$e for$ of cop!ing has /een shown that it /eco$es necessar! to deter$ine whether it has /een carried to an &unfair,& that is, illegal, eCtent. /0Conse=uentl!, there is no reason to address the issue of whether R,.()S a/used a writer6s right to fair use with the ascertain$ent that D)P was not a cop! or a su/stantial cop! of C)+. @')R)E,R), vote to D)NG the petition and to *EE R3 the challenged decision of 48 9une 1228 of the Court of *ppeals. S)>"("+) !>'#'o#& DA%IDE, JR., $.J./ dissenting opinion0 a$ una/le to >oin the $a>orit! view. Ero$ the following factual and procedural antecedents, find no alternative /ut to sustain /oth the trial court and the Court of *ppeals. ,n 14 9ul! 1255, '*.*N*, et al. filed with the trial court a co$plaint for infringe$ent and unfair co$petition, with da$ages against private respondent Eelicidad C. Ro/les "hereafter R,.()S# and her pu/lisher and distri/utor, Boodwill +rading Co., nc. "hereafter B,,D@ ((#. +he case was doc%eted as Civil Case No. 55-1<18. '*.*N*, et al. averred in their co$plaint that the! were the co-authors and >oint cop!right owners of their pu/lished wor%s College )nglish for +oda!, .oo%s 1 and 4 "hereafter C)+# and @or%/oo% for College Eresh$an )nglish, Series 1 1; the! discovered that R,.()S6 own pu/lished wor%s, Developing )nglish Proficienc!, .oo%s 1 and 4, "hereafter D)P#, pu/lished and distri/uted in 125:, eChi/ited an uncann! rese$/lance, if not outright ph!sical si$ilarit!, to C)+ as to content, sche$e, se=uence of topics and ideas, $anner of presentation and illustrative eCa$ples; the plagiaris$, incorporation and reproduction of particular portions of C)+ into D)P could not /e gainsaid since R,.()S was su/stantiall! fa$iliar with C)+ and the teCtual asportation was acco$plished without their authorit! andJor consent; R,.()S and B,,D@ (( >ointl! $isrepresented D)P "over which the! shared cop!right ownership# &as the for$er6s original pu/lished wor%s and concept;& and &notwithstanding for$al de$ands $ade . . . to cease and desist fro$ the sale and distri/ution of D)P, KR,.()S and B,,D@ ((L persistentl! failed and refused to co$pl! therewith.& '*.*N* et al. then pra!ed for the court to0 "1# order the su/$ission and thereafter the destruction of all copies of D)P, together with the $olds, plates, fil$s and other $aterials used in the printing thereof; "4# re=uire R,.()S and B,,D@ (( to render an accounting of the sales of the &infringing wor%s fro$ the ti$e of its "sic# inceptive pu/lication up to the ti$e of >udg$ent, as well as the a$ount of sales and profits . . . derived;& and "<# to en>oin R,.()S and B,,D@ (( to solidaril! pa! actual, $oral and eCe$plar! da$ages, as well as attorne!6s fees and eCpenses of litigation.

n its *nswer, B,,D@ (( denied culpa/ilit! since &it had no %nowledge or infor$ation sufficient to for$ a /elief as to the allegations of plagiaris$, incorporation and reproduction& and hence &could not /e priv! to the sa$e, if "there were# an!;& and that in an *gree$ent with co-defendant R,.()S, the latter would /e solel! responsi/le for acts of plagiaris$ or violations of cop!right or an! other law, to the eCtent of answering for an! and all da$ages B,,D@ (( $a! suffer. B,,D@ (( also interposed a co$pulsor! counterclai$ against P*C +*, et al. and a crossclai$ against its codefendant anchored on the afore$entioned *gree$ent. n her answer, R,.()S asserted that0 "1# D)P was the eCclusive product of her independent research, studies and eCperience; "4# D)P, particularl! the seg$ents where the alleged literal si$ilitude appeared, were ad$ittedl! influenced or inspired /! earlier treatises, $ostl! /! foreign authors; /ut that &influences andJor inspirations fro$ other writers& li%e the $ethodolog! and techni=ues as to presentation, teaching concept and design, research and orientation which she e$plo!ed, fell within the a$/it of general infor$ation, ideas, principles of general or universal %nowledge which were co$$onl! and custo$aril! understood as incapa/le of private and eCclusive use, appropriation or cop!right; and "<# her wor%s were the result of the legiti$ate and reasona/le eCercise of an author6s &right to fair use of even cop!righted $aterials as KaL guide.& She further clai$ed that her various national and regional professional activities in general education, language and literature, as well as her teaching eCperience in graduate and post graduate education would o/viate the re$otest possi/ilit! of plagiaris$. R,.()S li%ewise suggested that an! si$ilarit! /etween D)P and C)+ as regards scope and se=uence could /e attri/uted to &the orientation of the authors to the scope and se=uence or s!lla/us A which incorporates standards %nown a$ong )nglish gra$$ar /oo% writers A of the su/>ect-$atter for .asic Co$$unication *rts reco$$ended /! the *ssociation of Philippine Colleges of *rts and Sciences "*PC*S#.& @hile the s!lla/us was ad$ittedl! adopted in D)P, she clai$ed to have treated =uite differentl! in D)P the ver! ideas, techni=ues or principles eCpressed in C)+ such that neither teCt/oo% could /e considered a cop! or plagiaris$ of the other. *t the pre-trial conference, the parties agreed to a stipulation of facts 2 and for the court to first resolve the issue of infringe$ent /efore disposing of the clai$s for da$ages. *fter trial on the $erits, the trial court rendered its decision in favor of defendants, the dispositive portion of which reads0 @')R)E,R), pre$ises considered, the Court here/! orders that the co$plaint filed against defendants Eelicidad Ro/les and Boodwill +rading Co., nc. shall /e D S3 SS)D0 that said plaintiffs solidaril! rei$/urse defendant Ro/les for P41,111.11 attorne!6s fees and defendant Boodwill for P:,111.11 attorne!6s fees. Plaintiffs are lia/le for costs of suit. + S S, ,RD)R)D. 3 Noting that the law applica/le to the case was Presidential Decree No. 42, / the trial court found that '*.*N*, et al. failed to discharge their onus of proving that R,.()S and B,,D@ (( co$$itted acts constituting cop!right infringe$ent. 3oreover, the trial court found that &the cause of action or acts co$plained of KwereL not covered /! said decree& as Section 11 thereof /arred authors of wor%s alread! lawfull! $ade accessi/le to the pu/lic fro$ prohi/iting the reproductions, translations, adaptations, recitation and perfor$ance of the sa$e, while Section 11 allowed the utiliDation of reproductions, =uotations and eCcerpts of such wor%s. +he trial court thus agreed with R,.()S that &the co$plained acts KwereL of general and universal %nowledge and use which plaintiffs cannot clai$ originalit! or see% redress to the law for protection& and o/served that D)P and C)+ had the sa$e sources, consisting chiefl! of earlier wor%s, $ostl! foreign /oo%s. B,,D@ ((6s crossclai$

against R,.()S, counterclai$ against '*.*N*, et al. as well as R,.()S6 co$pulsor! counterclai$ against B,,D@ (( were all dis$issed for lac% of factual and legal /ases. '*.*N*, et al. appealed to the Court of *ppeals. +he case was doc%eted as C*-B.R. CM No. 441:<. .efore said court '*.*N*, et al., in the $ain, argued that the trial court totall! disregarded their evidence and $erel! su/scri/ed to R,.()S6 argu$ents. +he Court of *ppeals, however, li%ewise disposed of the controvers! in favor of R,.()S and B,,D@ ((. 5 'owever, the Court of *ppeals $odified the trial court6s decision /! reversing the award for attorne!6s fees. t held that the good faith and sincerit! of '*.*N*, et al. in co$$encing the action negated the /asis therefor. +heir $otion for reconsideration having /een denied for want of cogent reasons, '*.*N*, et al., instituted this petition. +he! clai$ that the Court of *ppeals co$$itted reversi/le error in failing to appreciate0 "1# the insupera/le evidence and facts ad$itted and proved de$onstrating plagiaris$ or pirac! and instead afforded full weight and credit to R,.()S6 $atriC of general, h!pothetical and sweeping state$ents andJor defenses; "4# R,.()S6 and B,,D@ ((6s ani#o furandi or intent to appropriate or cop! C)+ with the non-re$oval of the da$aging copies of D)P fro$ the /oo%stores despite notice to withdraw the sa$e; and "<# the fact that R,.()S a/used a writer6s right to fair use, in violation of Section 11 of P.D. No. 42. 7 +he! invo%e 9a)ta& v. Pa lina&an 7 which, the! theoriDe is on all fours with the case at /ar. R,.()S contends that appeal /! certiorari does not lie in this case for the challenged decision and the trial court6s >udg$ent were a$pl! supported /! evidence, pertinent laws and >urisprudence. 'ence, her counterclai$ for $oral da$ages should, therefore, /e granted or for us to order the re$and of the case to the trial court for reception of evidence on da$ages. B,,D@ ((, on its part, stood pat on its disclai$er, with the assertion that no proof was ever introduced. that it co-authored D)P or that it singl! or in ca/al with R,.()S co$$itted an! act constituting cop!right infringe$ent. +he core issue then is whether or not the Court of *ppeals erred in affir$ing the trial court6s >udg$ent that despite the apparent teCtual, the$atic and se=uential si$ilarit! /etween D)P and C)+, no cop!right was co$$itted /! R,.()S and B,,D@ ((. @hile the co$plaint, in Civil Case No. 55-1<18 was filed during the effectivit! of P.D. No. 42, the provisions of the new intellectual propert! law, R.*. No. 542<, 0 nevertheless /ears significance here. t too% effect on 1 9anuar! 1225, /ut its Section 4<2.< clearl! states that its provisions shall appl! to wor%s in which cop!right protection o/tained prior to the effectivit! of the *ct su/sists, provided, however, that the application of the *ct shall not result in the di$inution of such protection. *lso, the philosoph! /ehind /oth statutes as well as the essential principles of cop!right protection and cop!right infringe$ent have, to a certain eCtent, re$ained the sa$e. * cop!right $a! /e accuratel! defined as the right granted /! statute to the proprietor of an intellectual production to its eCclusive use and en>o!$ent to the eCtent specified in the statute. 9 -nder Section 188 of R.*. No. 542<, 10the cop! or econo$ic right "cop!right and econo$ic right are used interchangea/l! in the statute# consists of the eCclusive right to carr! out, authoriDe or prevent the following acts0 188.1 Reproduction of the wor% or su/stantial portion of the wor%; 188.4 Dra$atiDation, translation, adaptation, a/ridg$ent, arrange$ent or other transfor$ation of the wor%; 188.< +he first pu/lic distri/ution of the original and each cop! of the wor% /! sale or other for$s of transfer of ownership;

188.4 Rental of the original or a cop! of an audiovisual or cine$atographic wor%, a wor% e$/odied in a sound recording, a co$puter progra$, a co$pilation of data and other $aterials or a $usical wor% in graphic for$, irrespective of the ownership of the original or the cop! which is the su/>ect of the rental; 188.: Pu/lic displa! of the original or a cop! of the wor%; 188.6 Pu/lic perfor$ance of the wor%; and 188.8 ,ther co$$unication to the pu/lic of the wor%. &+he wor%,& as repeatedl! $entioned, refers to the literar! and artistic wor%s defined as original intellectual creations in the literar! and artistic do$ain protected fro$ the $o$ent of their creation and enu$erated in Section 184.1, which includes /oo%s and other literar!, scholarl!, scientific and artistic wor%s. 11 Stripped in the $eanti$e of its indisputa/le social and /eneficial functions, 12 the use of intellectual propert! or creations should /asicall! pro$ote the creator or author6s personal and econo$ic gain. 'ence, the cop!right protection eCtended to the creator should ensure his attain$ent of so$e for$ of personal satisfaction and econo$ic reward fro$ the wor% he produced. @ithout conceding the suita/ilit! of (a%taw as precedent, the Court there =uoted 3anresa and eCplained0
'e who writes a /oo%, or carves a statute, or $a%es an invention, has the a/solute right to reproduce or sell it, >ust as the owner of the land has the a/solute right to sell it or its fruits. .ut while the owner of the land, /! selling it and its fruits, perhaps full! realiDes all its econo$ic value, /! receiving its /enefits and utilities, which are represented for eCa$ple, /! the price, on the other hand the author of a /oo%, statue or invention does not reap all the /enefits and advantages of his own propert! /! disposing of it, for the $ost i$portant for$ of realiDing the econo$ic advantages of a /oo%, statue or invention, consists in the right to reproduce it in si$ilar or li%e copies, ever!one of which serves to give to the person reproducing the$ all the conditions which the original re=uires in order to give the author the full en>o!$ent thereof. f the author of a /oo%, after its pu/lication, cannot prevent its reproduction /! an! person who $a! want to reproduce it, then the propert! right granted hi$ is reduced to a ver! insignificant thing and the effort $ade in the production of the /oo% is in no wa! rewarded. 13

+he eCecution, therefore, of an! one or $ore of the eCclusive rights conferred /! law on a cop!right owner, without his consent, constitutes cop!right infringe$ent. n essence, cop!right infringe$ent, %nown in general as &pirac!,& is a trespass on a do$ain owned and occupied /! a cop!right owner; it is violation of a private right protected /! law.1/ @ith the invasion of his propert! rights, a cop!right owner is naturall! entitled to see% redress, enforce and hold accounta/le the defrauder or usurper of said econo$ic rights. Now, did R,.()S and B,,D@ (( infringe upon the cop!right of '*.*N* et al. /! pu/lishing D)P, which the latter alleged to /e a reproduction, or in the least, a su/stantial reproduction of C)+? .oth the trial court and respondent court found in the negative. su/$it the! were correct. +o constitute infringe$ent, the usurper $ust have copied or appropriated the &original& wor% of an author or cop!right proprietor; 15 a/sent cop!ing, there can /e no infringe$ent of cop!right. 17 n turn, a wor% is dee$ed /! law an original if the author created it /! his own s%ill, la/or and >udg$ent. 17 ,n its part, a cop! is that which co$es so near to the original so as to give to ever! person seeing it the idea created /! the original. t has /een held that the test of cop!right

infringe$ent is whether an ordinar! o/server co$paring the wor%s can readil! see that one has /een copied fro$ the other. 10 * visual co$parison of the portions of C)+ 19 >uCtaposed against certain pages of D)P, 20 would inescapa/l! lead to a conclusion that there is a discerni/le si$ilarit! /etween the two; however, as correctl! assessed /! respondent court and the lower court, no conclusion, can /e drawn that D)P, in legal conte$plation, is a cop! of C)+. @as D)P a su/stantial reproduction of C)+? +o constitutes a su/stantial reproduction, it is not necessar! that the entire cop!righted wor%, or even a large portion of it, /e copied, if so $uch is ta%en that the value of the original is su/stantiall! di$inished, or if the la/ors of the original author are su/stantiall!, and to an in>urious eCtent, appropriated. 21 .ut the si$ilarit! of the /oo%s here does not a$ount to an appropriation of a su/stantial portion of C)+. f the eCistence of su/stantial si$ilarities does not of itself esta/lish infringe$ent, 22 $ere si$ilarities "not su/stantial si$ilarities# in so$e sections of the /oo%s in =uestion decisivel! $ilitate against a clai$ for infringe$ent where the si$ilarities had /een convincingl! esta/lished as proceeding fro$ a nu$/er of reasons andJor factors. 1. *s /oth /oo%s are gra$$ar /oo%s, the! inevita/l! deal with the sa$e su/>ects t!picall! and ordinaril! treated /! writers of such genre, 23 e. ., s!ste$ of /oo% classification, the different %inds of card catalogs and their entries, use of punctuation $ar%s, paragraphs, the characteristics of an effective paragraph, language structure, different parts of a /oo%, etc. +hese standard su/>ects fall within the do$ain of ideas, concepts, universal and general %nowledge that have, as ad$itted /! the protagonists here, /een in eCistence for =uite a long ti$e. 2/ *s such, '*.*N*, et al. cannot de$and $onopol!, /! wa! of eCa$ple, in the use of the recogniDed li/rar! classification s!ste$s "Dewe! Deci$al S!ste$ and the (i/rar! of Congress S!ste$#, or how a /oo% can /e divided into parts "frontispiece, title page, cop!right page, preface, ta/le of contents, etc.# or to the different headings used in a card catalogue "title card, author card and su/>ect card#, since these are of co$$on or general %nowledge. )ven in this >urisdiction, no protection can /e eCtended to such an idea, procedure, s!ste$ $ethod or operation, concept, principle, discover! or $ere data, even if eCpressed, eCplained, illustrated or e$/odied in a wor%. 25 4. *s found /! respondent court, C)+ and D)P had co$$on sources and $aterials, 27 such that the particular portions clai$ed to have /een lifted and literall! reproduced also appeared in earlier wor%s, $ostl! /! foreign authors. +his is clear fro$ the testi$on! of petitioner Dr. Pacita 'a/ana0 F (et6s clarif! !our position Dra. 'a/ana. @hen defendants test "sic# showed 11 words si$ilar to !ours, !ou so concluded it was "sic# copied fro$ !ours /ut when pointed out to !ou sa$e "sic# words contained in the earlier /oo% of @ills then !ou earlier in !our test in !our /oo% "sic# !ou refused to ad$it that it was copied fro$ @ills. * Ges, sir. @e have never A all <: words were copied fro$ there. F .ut what a$ as%ing how could !ou conclude that /! >ust si$ilarit! of 11 words of defendants words that was copied fro$ !ours KsicL and when point out to !ou the si$ilarit! of that sa$e words fro$ the words earlier than !ours "sic# !ou refused to ad$it that !ou copied? * would li%e to change the final state$ent now that in the case of defendant Ro/les !ou pointed out her source ver! clear. She copied it fro$ that /oo% /! @ills. F So, she did not cop! it fro$ !ours?

* *lright, $a!/e she did not cop! it /ut definitel! it is a pattern of plageris$ KsicL. 27

<. Si$ilarit! in orientation and st!le can li%ewise /e attri/uted to the eCposure of the authors to the *PC*S s!lla/us and their respective acade$ic eCperience, teaching approaches and $ethodolog!. t is not farfetched that the! could have even influenced each other as teCt/oo% writers. R,.()S and Dr. Pacita 'a/ana were facult! $e$/ers of the nstitute of )nglish of the Ear )astern -niversit! fro$ 1264 to 1284. 20 .oth were ardent students, researchers, lecturers, teCt/oo% writers and teachers of )nglish and gra$$ar. +he! even used to /e on friendl! ter$s with each other, to the eCtent that Dr. 'a/ana ad$itted that R,.()S assisted the for$er in the preparation of her doctoral dissertation. Biven their near-identical acade$ic and professional /ac%ground, it is natural the! would use $an! eCpressions and definitions peculiar to teaching )nglish gra$$ar. t co$es therefore with no surprise that there are si$ilarities in so$e parts of the rival /oo%s. ndeed, it is difficult to conceive how writers on the sa$e su/>ect $atter can ver! well avoid resorting to co$$on sources of infor$ation and $aterials and e$plo!ing si$ilar eCpressions and ter$s peculiar to the su/>ect the! are treating. 29 +o illustrate, an eCcerpt fro$ page 41 of C)+ reads0 *uthor Card +he author card is the $ain entr! card. t contains 1. the author6s co$plete na$e on the first line, surna$e first, which $a! /e followed /! the date of his /irth and death if he is no longer living; 4. the title of the /oo%, and the su/title, if there is one; <. the edition, if it is not the first; 4. the translator or illustrator, if there is an!; :. the i$print which includes the pu/lisher, the place and date of pu/lication; 6. the collation co$posed of the nu$/er of pages, volu$e, illustrations, and the siDe of the /oo%; 8. the su/>ects with which the /oo% deals KsicL; 5. the call nu$/er on the upper left-hand corner. Na$es /eginning with 3c, or 3 are filed in the card catalog as though spelled out as 3*C, for eCa$ple 3c Braw A 3acBraw. +he sa$e is true of St. and Saint. @hile a portion of D)P found on page 15 which discusses the author card provides0 +he author card is the $ain entr! card containing0

1. the author6s co$plete na$e on the first line, surna$e first, which $a! /e followed /! the date of his /irth and death if he is no longer living; 4. the title of the /oo%, and the su/title if there is one; <. the edition, if it is not the first; 4. the translator or illustrator, if an!; :. the i$print which includes the pu/lisher, the place and date of pu/lication; 6. the collation, co$posed of the nu$/er of pages, volu$e, illustrations, and the siDe of the /oo%; 8. the su/>ect with which the /oo% deals; and 5. the call nu$/er on the upper-left hand corner. Na$es /eginning with 3C, or 3 are filed in the card catalog considered spelled out as 3*C, for eCa$ple0 3cleod-3acleod. +his is true also of St. and Saint. +he entries found in an author card, having /een developed over =uite so$eti$e, are eCpectedl! unifor$. 'ence, '*.*N* et al. and R,.()S would have no choice /ut to articulate the ter$s particular to the entries in an identical $anner. thus find that the ruling of the respondent court is totall! supported /! the evidence on record. ,f doctrinal persuasion is the principle that factual deter$inations of the Court of *ppeals and the trial court are conclusive and /inding upon this Court, and the latter will not, as a rule, distur/ these findings unless co$pelling and cogent reasons necessitate a reeCa$ination, if not a reversal, of the sa$e. 30 +ested against this >urisprudential canon, to su/>ect the challenged decision of the Court of *ppeals to further scrutin! would /e superfluous, if not, i$provident. a$ not persuaded /! the clai$ of '*.*N*, et al. that (a%taw is on all fours with and hence applica/le to the case at /ar. +here, this Court disposed that defendant, without the consent of and causing irrepara/le da$age to (a%taw, reproduced the latter6s literar! wor% Diccionario 'isapano+agalog, and i$properl! copied the greater part thereof in the wor% Diccionariong 7astila-+agalog pu/lished /! defendant, in violation of *rticle 8 of the (aw of 11 9anuar! 1582 on ntellectual Propert!. +his Court anchored its decision on the following o/servations0 "1# K,L the 4<,:61 Spanish words in the defendant6s dictionar! . . . onl! <,115 words are the defendant6s own, or, what is the sa$e thing, the defendant has added onl! this nu$/er of words to those that are in the plaintiff6s dictionar!, he having reproduced or copied the re$aining 41,4:4 words; "4# K+Lhe defendant also literall! reproduced and copied for the Spanish words in his dictionar!, the e=uivalents, definitions and different $eanings in +agalog, given in plaintiffs dictionar!, having reproduced, as to so$e words, ever!thing that appears in the plaintiff6s dictionar! for si$ilar Spanish words, although as to so$e he $ade so$e additions of his own. Said copies and reproductions are nu$erous. . .;

"<# K+Lhe printer6s errors in the plaintiff6s dictionar! as to the eCpression of so$e words in Spanish as well as their e=uivalents in +agalog are also reproduced, a fact which shows that the defendant, in preparing his dictionar!, literall! copied those Spanish words and their $eanings and e=uivalents in +agalog fro$ the plaintiff6s dictionar!. 31

Plainl!, the rationale in (a%taw does not appl! in this case. Eirst, aside fro$ an isolated accounting of the nu$/er of words supposedl! usurped in a seg$ent of D)P fro$ C)+, 32 the records do not disclose that all the words allegedl! copied were tallied and that the words thus tallied were nu$erous enough to support a finding of cop!ing. Second, as alread! conceded, while there is an identit! in the $anner /! which so$e of the ideas and concepts were articulated, this prescinded fro$ various factors alread! elucidated. .esides, R,.()S6 testi$on! that she $ade an independent investigation or research of the original wor%s or authors she consulted was unre/utted; 33 for ger$ane here is the =uestion of whether the alleged infringer could have o/tained the sa$e infor$ation /! going to the sa$e source /! her own independent research. 3/ R,.()S convinced the trial court and the Court of *ppeals on this; thus, we are /ound /! this factual deter$ination, as li%ewise eCplained earlier. +hird, reproduction of the printer6s errors or the author6s /lunders and inaccuracies in the infringing cop! does notipso facto constitute cop!ing or plagiaris$ or infringe$ent, /ut it is conceded that the! are telltale signs that infringe$ent $ight have /een co$$itted. 35 'owever, the records do not reveal this to /e the case. Eourth, the law on intellectual propert! violated in (a%taw was a world and ti$e apart fro$ R.*. No. 542< or even P.D. No. 42. +hus, under *rticle 8 of the (aw of 11 9anuar! 1582, the Court ruled that no/od! could reproduce another person6s wor% without the owner6s consent, even $erel! to annotate or add an!thing to it, or i$prove an! edition thereof. +he $ore recent laws on intellectual propert!, however, recogniDe recent advance$ents in technolog! transfer and infor$ation disse$ination. +he! thus allow the use of cop!righted $aterials if co$pati/le with fair use and to the eCtent >ustified for the purpose. n particular, the new laws sanction the fair use of cop!righted wor% for criticis$, co$$ent, news reporting, teaching including $ultiple copies for classroo$ use, scholarship, research and si$ilar purposes. 37 Eurther, the li$itations of the eCclusive use of cop!righted $aterials under Sections 11 and 11 of P.D. No. 42 in consonance with the principle of fair use have /een reproduced and incorporated in the new law. 37 *ll told, (a%taw is inapplica/le. Eair use has /een defined as a privilege to use the cop!righted $aterial in a reasona/le $anner without the consent of the cop!right owner or as cop!ing the the$e or ideas rather than their eCpression. 30 No =uestion of fair or unfair use arises however, if no cop!ing is proved to /egin with. +his is in consonance with the principle that there can /e no infringe$ent if there was no cop!ing. 39 t is onl! where so$e for$ of cop!ing has /een shown that it /eco$es necessar! to deter$ine whether it has /een carried to an &unfair,& that is, illegal, eCtent. /0Conse=uentl!, there is no reason to address the issue of whether R,.()S a/used a writer6s right to fair use with the ascertain$ent that D)P was not a cop! or a su/stantial cop! of C)+.
/K&phi/.nLt

@')R)E,R), vote to D)NG the petition and to *EE R3 the challenged decision of 48 9une 1228 of the Court of *ppeals. 4oo+#o+)& G.R. No. 130370 Au?u&+ 15, 2001

6ILS!N !NG CHING 5lAN CHUAN, petitioner, vs. H!N. C!URT !4 APPEALS "#$ L!REN.! TAN, respondents. <UISU- ING, J.:

+his petition for review1 see%s to annul the decision4 dated *ugust 48, 1228 of the Court of *ppeals which set aside the resolutions< dated ,cto/er 1< and Dece$/er 1:, 122< as well as the order dated 3arch 1, 1224 of the Regional +rial Court of FueDon Cit!, .ranch 24. 4 Petitioner @ilson ,ng Ching 7ian Chuan "&,ng&#, i$ports ver#icelli fro$ China National Cereals ,ils and Eoodstuffs $port and )Cport Corporation, /ased in .ei>ing, China, under the fir$ na$e C.7.C. +rading. 'e repac%s it in cellophane wrappers with a design of two-dragons and the +,@)R trade$ar% on the upper$ost portion. ,ng ac=uired a Certificate of Cop!right Registration fro$ the National (i/rar! on 9une 2, 122< on the said design. ,ng discovered that private respondent (orenDo +an repac%ed his v er#icelli he i$ports fro$ the sa$e co$pan! /ut /ased in Fingdao, China in a &nearl!& identical wrapper. ,n Septe$/er 16, 122<, ,ng filed against +an a verified co$plaint for infringe$ent of cop!right with da$ages and pra!er for te$porar! restraining order or writ of preli$inar! in>unction with the Regional +rial Court in FueDon Cit!. ,ng alleged that he was the holder of a Certificate of Cop!right Registration over the cellophane wrapper with the two-dragon design, and that +an used an identical wrapper in his /usiness. n his pra!er for a preli$inar! in>unction in addition to da$ages, he as%ed that +an /e restrained fro$ using the wrapper. 'e said he would post a /ond to guarantee the pa!$ent of da$ages resulting fro$ the issuance of the writ of preli$inar! in>unction.
/K&phi/.nLt

+he trial court issued a te$porar! restraining order on the sa$e date the co$plaint was filed. +an filed an opposition to ,ng6s application for a writ of preli$inar! in>unction with counter-application for the issuance of a si$ilar writ against ,ng. +an alleged that ,ng was not entitled to an in>unction. *ccording to +an, ,ng did not have a clear right over the use of the trade$ar% Pagoda and (ung%ow ver#icelli as these were registered in the na$e of C' N* N*+ ,N*( C)R)*(S , ( *ND E,,DS+-EES 3P,R+ *ND )TP,R+ C,RP,R*+ ,N, S'*ND,NB C)R)*(S *ND , (S .R*NC' "hereafter Ceroilfood Shandong#, /ased in Fingdao, China. Eurther, +an averred that he was the eCclusive distri/utor in the Philippines of the Pagoda and (ung%ow v er#icelli and was solel! authoriDed to use said trade$ar%. 'e added that ,ng $erel! copied the two-dragon design fro$ Ceroilfood Shandong which had the Certificates of Registration issued /! different countries. 'e concluded that ,ng6s Certificate of Cop!right Registration was not valid for lac% of originalit!. ,n Septe$/er <1, 122<, ,ng countered +an6s opposition to the issuance of the writ of preli$inar! in>unction. ,n ,cto/er 1<, 122<, the could issued the writ in ,ng6s favor upon his filing of a P111,111.11 /ond. : +an filed a $otion to dissolve the writ of preli$inar! in>unction, /ut the trial court denied it on Dece$/er 1:, 122<.6+he $otion for reconsideration was also denied on 3arch 1, 1224. +an elevated the case to the Court of *ppeals via a special civil action for certiorari with a pra!er for the issuance of a +R, andJor writ of preli$inar! in>unction. ,ng filed an opposition to +an6s pra!er for an issuance of +R, andJor writ of preli$inar! in>unction on the ground that the trial court did not co$$it a grave a/use of discretion in issuing the writ in his favor. *fter oral argu$ent, the Court of *ppeals rendered a decision on *ugust 5, 1224, setting aside the trial court6s order. t decreed0 6HERE4!RE, in the petition is B M)N, D-) C,-RS), and, BR*N+)D. +he order dated ,cto/er 1<, 122< and related orders, as well as the writ of preli$inar! in>unction issued /! the respondent court, are S)+ *S D) as issued with grave a/use of discretion. No costs.

S, ,RD)R)D.8 ,ng filed a $otion for reconsideration and on 9anuar! <, 122:, the Court of *ppeals $odified its *ugust 5, 1224 order as follows0 6HERE4!RE the phrase &the order dated ,cto/er 1<, 122< and related orders, as well as the writ of preli$inar! in>unction issued /! the respondent court, are S)+ *S D) as issued with grave a/use of discretion& is here/! deleted in our resolution dated 15 *ugust 1224. n all other respects, said resolution $ust /e $aintained. 'owever, let a writ of preli$inar! in>unction /e issued en>oining the herein respondents and an! and all persons acting for and in their /ehalf fro$ enforcing andJor i$ple$enting the @rit of Preli$inar! n>unction issued on ,cto/er 1:, 122< pursuant to the Resolution dated ,cto/er 1<, 122< of the P-.( C R)SP,ND)N+ in Civil Case No. F-2<-18645 entitled &@ (S,N ,NB C' NB 7 *N C'-*N, )+C. vs. (,R)NU, +*N, )+C.& upon petitioner6s filing of a /ond of P411,111.11. +he .ranch Cler% of Court of the R+C, .ranch 24, FueDon Cit! is directed to elevate the records of Civil Case No. 42<-18145 within +)N "11# D*GS fro$ notice. +he parties are given +' R+G "<1# D*GS fro$ notice to file their $e$orandu$ or an! pertinent $anifestation on the $atter, after which the case shall /e considered su/$itted for decision. S, ,RD)R)D.5 Pursuant to the Court of *ppeals6 resolution on 9anuar! 16, 1226, the parties su/$itted their $e$oranda. ,n *ugust 48, 1228, the appellate court pro$ulgated its decision, decreeing as follows0 6HERE4!RE, the resolutions dated ,cto/er 1<, 122< and Dece$/er 1:, 122< as well as the order dated 3arch 1, 1224 - all in Civil Case No. F-2<-18645 are here/! S)+ *S D) and our in>unction heretofore issued $ade per$anent. IT IS S! !RDERED.2 ,n ,cto/er 18, 1228, ,ng filed the instant petition for review, clai$ing that the Court of *ppeals co$$itted grave and serious errors tanta$ount to acting with grave a/use of discretion andJor acting without or in eCcess of its >urisdiction0 . ...@')N + SS-)D * P)R3*N)N+ PR)( 3 N*RG N9-NC+ ,N N E*M,R ,E +') PR M*+) R)SP,ND)N+ @')N +') (*++)R6S R B'+ +, S-C' * R)( )E S N,+ C()*R, D,-.+E-( *ND '*S N, ()B*( ,R E*C+-*( .*S S. *. C)R+ E C*+) ,E C,PGR B'+ R)B S+R*+ ,N 9-S+ EG SS-*NC) ,E @R + ,E PR)( 3 N*RG N9-NC+ ,N -ND)R P.D. N,. 42. .. SS-*NC) ,E PR)( 3 N*RG N9-NC+ ,N 3-S+ .) .*S)D ,N C()*R *ND -N3 S+*7*.() R B'+ @' C' P)+ + ,N)R '*D *ND @' C' R B'+ @*S NM*D)D .G +') PR M*+) R)SP,ND)N+.

C. C,-R+ ,E *PP)*(S6 D)C S ,N ,E *-B-S+ 5, 1224 *ND +S R)S,(-+ ,N ,E 9*N-*RG <, 122: R)S-(+S N C,NE-S ,N. . ....G 6 N+)RE)R NB6 @ +' +') 9-D C *( D SCR)+ ,N ,E +') +R *( C,-R+. *. R)SP,ND)N+ C,-R+ ,E *PP)*(S6 N+)RE)R)NC) @ +' +') D SCR)+ ,N ,E +R *( C,-R+ C,NS+ +-+)S BR*M) *.-S) ,E D SCR)+ ,N. . ....G SS- NB * @R + ,E PR)( 3 N*RG N9-NC+ ,N N E*M,R ,E +') PR M*+) R)SP,ND)N+ *ND D SR)B*RD NB +') @R + ,E PR)( 3 N*RG N9-NC+ ,N SS-)D .G +') +R *( C,-R+ @',3 "S C#, -ND)R +') 9*N-*RG 1<, 122: R)S,(-+ ,N ,E R)SP,ND)N+ C,-R+ ,E *PP)*(S, @*S 9-D C *((G ')(D N,+ +, '*M) C,33 ++)D *NG BR*M) *.-S) ,E D SCR)+ ,N N +') SS-*NC) ,E +') ,C+,.)R 1<, 122< *ND 6R)(*+)D ,RD)RS6. *. SS-*NC) ,E @R + ,E PR)( 3 N*RG N9-NC+ ,N *DDR)SS)D +, +') S,-ND D SCR)+ ,N ,E +') +R *( C,-R+. M. ...@')N + 3*D) +S ,@N E ND NBS *ND C,NC(-S ,NS, PR)-)3P+ NB +') +R *( C,-R+ *ND PR)-9-DB NB +') C*S), +'-S ()*M NB +') +R *( C,-R+ @ +' N,+' NB +, R-() -P,N. &*. C,-R+ ,E *PP)*(S PR)9-DB)D +') C*S) R)3*ND)D +, +') +R *( C,-R+ +he issues for our deter$ination are0 @as the issuance of the writ of preli$inar! in>unction proper? @as there grave a/use of discretion co$$itted /! the Court of *ppeals when it set aside the order of the trial court, then issued a >udg$ent touching on the $erits? Petitioner avers that the C* erred in issuing a preli$inar! in>unction in private respondent6s favor. 'e sa!s, firstl!, that he is $ore entitled to it. 'e states that as holder of the Certificate of Cop!right Registration of the twin-dragon design, he has the protection of P.D. No. 42. 11 Said law allows an in>unction in case of infringe$ent. Petitioner asserts that private respondent has no registered cop!right and $erel! relies on the trade$ar% of his principal a/road, which insofar as Philippine laws is concerned, cannot prevail over petitioner6s cop!right. Private respondent, for his part, avers that petitioner has no &clear right& over the use of the cop!righted wrapper since the P*B,D* trade$ar% and la/el were first adopted and used and have /een dul! registered /! Ceroilfood Shandong not onl! in China /ut in nearl! 41 countries and regions worldwide. Petitioner was not the original creator of the la/el, /ut $erel! copied the design of Ceroilfood Shandong. Private respondent presented copies of the certificates of cop!right registration in the na$e of Ceroilfood Shandong issued /! at least twent! countries and regions worldwide which although unauthenticated are, according to hi$, sufficient to provide a sa$pling of the evidence needed in the deter$ination of the grant of preli$inar! in>unction. 11 Private respondent alleges, that the trade$ar% P*B,D* .R*ND was registered in China on ,cto/er <1, 1282 14 while the trade$ar% (-NB7,@ M)R3 C)(( @ +' +@,-DR*B,N D)M C) was registered on *ugust 1:, 125:.1< +o resolve this controvers!, we have to return to /asics. * person to /e entitled to a cop!right $ust /e the original creator of the wor%. 'e $ust have created it /! his own s%ill, la/or and >udg$ent

without directl! cop!ing or evasivel! i$itating the wor% of another. 14 +he grant of preli$inar! in>unction in a case rests on the sound discretion of the court with the caveat that it should /e $ade with eCtre$e caution.1: ts grant depends chiefl! on the eCtent of dou/t on the validit! of the cop!right, eCistence of infringe$ent, and the da$ages sustained /! such infringe$ent. 16 n our view, the copies of the certificates of cop!right registered in the na$e of Ceroilfood Shandong sufficientl! raise reasona/le dou/t. @ith such a dou/t preli$inar! in>unction is unavailing. 18 n +edina vs. Cit( Sheriff, +anila, 486 SCR* 1<<, 1<2 "1228#, where the co$plainant6s title was disputed, we held that in>unction was not proper. Petitioner ,ng argues that the Court of *ppeals erred and contradicted itself in its 9anuar! <, 122: Resolution, where it deleted the phrase 'the order dated October 1<, 122< and related orders, as &ell as the &rit of preli#inar( in-unction issued b( the respondent court, are SE6 AS!DE as issued &ith rave abuse of discretion' in its *ugust 5, 1224 decision, and at the sa$e ti$e issued a writ of preli$inar! in>unction in +an6s favor. ,ng6s clai$ "that the Court of *ppeals n deleting the afore=uoted phrase in the *ugust 5, 1224 decision a/andoned its earlier finding of grave a/use of discretion on the part of the trial court#, however, is without logical /asis. +he appellate court $erel! restated n its own words the issue raised in the petition0 fro$ a# whether the R+C co$$itted grave a/use of discretion, to /# whether +an was entitled to an in>unctive relief. +hen it clarified that the relief sought is a prohi/ition against ,ng and his agents fro$ enforcing the writ of preli$inar! in>unction. Properl! understood, an order en>oining the enforce$ent of a writ of preli$inar! in>unction issued /! the R+C in a certiorari proceeding under Rule 6: of the Rules of Court effectivel!, sets aside the R+C order for /eing issued with grave a/use of discretion. +o /e entitled to an in>unctive writ, petitioner $ust show, inter alia, the eCistence of a clear and un$ista%a/le right and an urgent and para$ount necessit! for the writ to prevent serious da$age.15 Ero$ the a/ove discussion, we find that petitioner6s right has not /een clearl! and un$ista%a/l! de$onstrated. +hat right is what is in dispute and has !et to /e deter$ined. n Developers Group of Co#panies, !nc. vs. Court of Appeals, 412 SCR* 81:, 844-84< "122<#, we held that in the a/sence of proof of a legal right and the in>ur! sustained /! the plaintiff, an order of the trial court granting the issuance of an in>unctive writ will /e set aside, for having /een issued with grave a/use of discretion. Confor$a/l!, there was no a/use of discretion /! the Court of *ppeals when it issued its own order to restrain the enforce$ent of the preli$inar! in>unction issued /! the trial court. Einall!, we note that the co$plaint initiall! filed with the R+C was for infringe$ent of cop!right. +he trial court6s resolution su/>ect of +an6s petition under Rule 6: /efore the C* concerns the correctness of the grant of the writ of preli$inar! in>unction. +he onl! issue /rought /efore the C* involved the grave a/use of discretion allegedl! co$$itted /! the trial court in granting the writ of preli$inar! in>unction. +he Court of *ppeals in declaring that the wrapper of petitioner is a cop! of Ceroilfood Shandong6s wrapper went /e!ond that issue touched on the $erits of the infringe$ent case, which re$ains to /e decided /! the trial court. 12 n our view, it was pre$ature for the Court of *ppeals to declare that the design of petitioner6s wrapper is a cop! of the wrapper allegedl! registered /! Ceroilfood Shandong. +hat $atter re$ains for decision after appropriate proceedings at the trial court. 6HERE4!RE, the instant petition is PARTIALLY GRANTED. +he pra!er for a writ of preli$inar! in>unction to prohi/it +an fro$ using the cellophane wrapper with two-dragon device is denied, /ut the finding of the respondent appellate court that ,ng6s cop!righted wrapper is a cop! of that of Ceroilfood Shandong is SET ASIDEfor /eing pre$ature. +he Regional +rial Court of FueDon Cit!,

.ranch 24, is directed to proceed with the trial to deter$ine the $erits of Civil Case No. <<882 eCpeditiousl!. (et the records of this case /e RE-ANDED to said trial court pro$ptl!. No pronounce$ent as to costs. S! !RDERED "ellosillo, +endoza, "uena, De 9eon, %%. concur. G.R. No. 973/3 S)>+)23)( 13, 1993 PASCUAL G!DINES, petitioner, vs. THE H!N!RA LE C!URT !4 APPEALS, SPECIAL 4!URTH DI%ISI!N "#$ S%-AGR! ENTERPRISES, INC.,respondents. %esus S. Anonat for petitioner. Arturo +. Alinio for private respondent. R!-ER!, J.: +hrough this petition for review in certiorari of a decision of the Court of *ppeals affir$ing the decision of the trial court, petitioner Pascual Bodines see%s to reverse the adverse decision of the Court a :uo that he was lia/le for infringe$ent of patent and unfair co$petition. +he dispositive portion of the assailed decision is here/! =uoted to wit0
@')R)E,R), with the eli$ination of the award for attorne!6s fees, the >udg$ent appealed fro$ is here/! *EE R3)D, with costs against appellant. 1
/K&phi/.nLt

+he patent involved in this case is (etters Patent No. -3-44<6 issued /! the Philippine Patent ,ffice to one 3agdalena S. MillaruD on 9ul! 1:, 1286. t covers a utilit! $odel for a hand tractor or power tiller, the $ain co$ponents of which are the following0 &"1# a vacuu$atic house float; "4# a harrow with ad>usta/le operating handle; "<# a pair of padd! wheels; "4# a protective water covering for the engine $ain drive; ":# a trans$ission case; "6# an operating handle; "8# an engine foundation on the top $idportion of the vacuu$atic housing float to which the $ain engine drive is detachedl! installed; "5# a frontal fra$e eCtension a/ove the =uarter A circularl! shaped water covering hold "sic# in place the trans$ission case; "2# a M-/elt connection to the engine $ain drive with trans$ission gear through the pulle!, and "11# an idler pulle! installed on the engine foundation.& 2 +he patented hand tractor wor%s in the following $anner0 &the engine drives the trans$ission gear thru the M-/elt, a driven pulle! and a trans$ission shaft. +he engine drives the trans$ission gear /! tensioning of the M-/elt which is controlled /! the idler pulle!. +he M-/elt drives the pulle! attached to the trans$ission gear which in turn drives the shaft where the padd! wheels are attached. +he operator handles the hand tractor through a handle which is inclined upwardl! and supported /! a pair of su/standing pipes and reinforced /! a --shaped B. . pipe at the M-shaped end.& 3 +he a/ove $entioned patent was ac=uired /! SM-*gro ndustries )nterprises, nc., herein private respondent, fro$ 3agdalena MillaruD, its chair$an and president, /! virtue of a Deed of *ssign$ent eCecuted /! the latter in its favor. ,n ,cto/er <1, 1282, SM-*gro ndustries caused the pu/lication of the patent in .ulletin +oda!, a newspaper of general circulation.

n accordance with the patent, private respondent $anufactured and sold the patented power tillers with the patent i$printed on the$. n 1282, SM-*gro ndustries suffered a decline of $ore than :1R in sales in its 3olave, Ua$/oanga del Sur /ranch. -pon investigation, it discovered that power tillers si$ilar to those patented /! private respondent were /eing $anufactured and sold /! petitioner herein. Conse=uentl!, private respondent notified Pascual Bodines a/out the eCisting patent and de$anded that the latter stop selling and $anufacturing si$ilar power tillers. -pon petitioner6s failure to co$pl! with the de$and, SM-*gro ndustries filed /efore the Regional +rial Court a co$plaint for infringe$ent of patent and unfair co$petition. *fter trial, the court held Pascual Bodines lia/le for infringe$ent of patent and unfair co$petition. +he dispositive portion of the decision reads as follows0 @')R)E,R), pre$ises considered, 9-DB3)N+ is here/! rendered in favor of the plaintiff SM-*gro ndustries )nterprises, nc., and against defendant Pascual Bodines0 1. Declaring the writ of preli$inar! in>unction issued /! this Court against defendant as per$anent; 4. ,rdering defendant Pascual Bodines to pa! plaintiff the su$ of Eift! +housand Pesos "P:1,111.11# as da$ages to its /usiness reputation and goodwill, plus the further su$ of )ight! +housand Pesos "P51,111.11# for unrealiDed profits during the period defendant was $anufacturing and selling copied or i$itation floating power tiller; <. ,rdering the defendant to pa! the plaintiff, the further su$ of )ight +housand Pesos "P5,111.11# as rei$/urse$ent of attorne!6s fees and other eCpenses of litigation; and to pa! the costs of the suit.
S, ,RD)R)D. /

+he decision was affir$ed /! the appellate court. +hereafter, this petition was filed. Petitioner $aintains the defenses which he raised /efore the trial and appellate courts, to wit0 that he was not engaged in the $anufacture and sale of the power tillers as he $ade the$ onl! upon the special order of his custo$ers who gave their own specifications; hence, he could not /e lia/le for infringe$ent of patent and unfair co$petition; and that those $ade /! hi$ were different fro$ those /eing $anufactured and sold /! private respondent. @e find no $erit in his argu$ents. +he =uestion of whether petitioner was $anufacturing and selling power tillers is a =uestion of fact /etter addressed to the lower courts. n dis$issing the first argu$ent of petitioner herein, the Court of *ppeals =uoted the findings of the court, to wit0
t is the contention of defendant that he did not $anufacture or $a%e i$itations or copies of plaintiff6s turtle power tiller as what he $erel! did was to fa/ricate his floating power tiller upon specifications and designs of those who ordered the$. 'owever, this contention appears untena/le in the light of the following circu$stances0 1# he ad$its in his *nswer that he has /een $anufacturing power tillers or hand tractors, selling and distri/uting the$ long /efore plaintiff started selling its turtle power tiller in Ua$/oanga del Sur and 3isa$is ,ccidental, $eaning that defendant is principall! a $anufacturer of power tillers, not upon specification and design of /u!ers, /ut upon his own specification and design; 4# it would /e un/elieva/le that defendant would fa/ricate power tillers

si$ilar to the turtle power tillers of plaintiff upon specifications of /u!ers without re=uiring a >o/ order where the specification and designs of those ordered are specified. No docu$ent was "sic# ever /een presented showing such >o/ orders, and it is rather unusual for defendant to $anufacture so$ething without the specification and designs, considering that he is an engineer /! profession and proprietor of the ,Da$is )ngineering shop. ,n the other hand, it is also highl! unusual for /u!ers to order the fa/rication of a power tiller or hand tractor and allow defendant to $anufacture the$ $erel! /ased on their ver/al instructions. +his is contrar! to the usual /usiness and $anufacturing practice. +his is not onl! ti$e consu$ing, /ut costl! /ecause it involves a trial and error $ethod, repeat >o/s and $aterial wastage. Defendant >udiciall! ad$itted two "4# units of the turtle power tiller sold /! hi$ to Policarpio .erondo. 5

,f general acceptance is the rule i$/edded in our >urisprudence that &. . . the >urisdiction of the Supre$e Court in cases /rought to it fro$ the Court of *ppeals in a petition for certiorari under Rule 4: of the Rules of Court is li$ited to the review of errors of law, and that said appellate court6s findings of fact are conclusive upon this Court.& 7 +he fact that petitioner herein $anufactured and sold power tillers without patentee6s authorit! has /een esta/lished /! the courts despite petitioner6s clai$s to the contrar!. +he =uestion now arises0 Did petitioner6s product infringe upon the patent of private respondent? +ests have /een esta/lished to deter$ine infringe$ent. +hese are "a# literal infringe$ent; and "/# the doctrine of e=uivalents. 7 n using literal infringe$ent as a test, &. . . resort $ust /e had, in the first instance, to the words of the clai$. f accused $atter clearl! falls within the clai$, infringe$ent is $ade out and that is the end of it.& 0 +o deter$ine whether the particular ite$ falls within the literal $eaning of the patent clai$s, the court $ust >uCtapose the clai$s of the patent and the accused product within the overall conteCt of the clai$s and specifications, to deter$ine whether there is eCact identit! of all $aterial ele$ents. 9 +he trial court $ade the following o/servation0
Sa$ples of the defendant6s floating power tiller have /een produced and inspected /! the court and co$pared with that of the turtle power tiller of the plaintiff "see )Chi/its ' to '45#. n appearance and for$, /oth the floating power tillers of the defendant and the turtle power tiller of the plaintiff are virtuall! the sa$e. Defendant ad$itted to the Court that two "4# of the power inspected on 3arch 14, 1254, were $anufactured and sold /! hi$ "see +SN, 3arch 14, 1254, p. 8#. +he three power tillers were placed alongside with each other. *t the center was the turtle power tiller of plaintiff, and on /oth sides thereof were the floating power tillers of defendant ")Chi/its ' to '-4#. @itness Rodrigo too% photographs of the sa$e power tillers "front, side, top and /ac% views for purposes of co$parison "see )Chi/its '-4 to '-45#. Miewed fro$ an! perspective or angle, the power tiller of the defendant is identical and si$ilar to that of the turtle power tiller of plaintiff in for$, configuration, design and appearance. +he parts or co$ponents thereof are virtuall! the sa$e. .oth have the circularl!-shaped vacuu$atic housing float, a padd! in front, a protective water covering, a trans$ission /oC housing the trans$ission gears, a handle which is M-shaped and inclined upwardl!, attached to the side of the vacuu$atic housing float and supported /! the upstanding B. . pipes and an engine /ase at the top $idportion of the vacuu$atic housing float to which the engine drive $a! /e attached. n operation, the floating power tiller of the defendant operates also in si$ilar $anner as the turtle power tiller of plaintiff. +his was ad$itted /! the defendant hi$self in court that the! are operating on the sa$e principles. "+SN, *ugust 12, 1258, p. 1<# 10

3oreover, it is also o/served that petitioner also called his power tiller as a floating power tiller. +he patent issued /! the Patent ,ffice referred to a &far$ i$ple$ent /ut $ore particularl! to a turtle hand tractor having a vacuu$atic housing float on which the engine drive is held in place, the operating handle, the harrow housing with its operating handle and the padd! wheel protective covering.& 11 t appears fro$ the foregoing o/servation of the trial court that these clai$s of the patent and the features of the patented utilit! $odel were copied /! petitioner. @e are co$pelled to arrive at no other conclusion /ut that there was infringe$ent. Petitioner6s argu$ent that his power tillers were different fro$ private respondent6s is that of a drowning $an clutching at straws. RecogniDing that the logical fall/ac% position of one in the place of defendant is to aver that his product is different fro$ the patented one, courts have adopted the doctrine of e=uivalents which recogniDes that $inor $odifications in a patented invention are sufficient to put the ite$ /e!ond the scope of literal infringe$ent. 12 +hus, according to this doctrine, &"a#n infringe$ent also occurs when a device appropriates a prior invention /! incorporating its innovative concept and, al/eit with so$e $odification and change, perfor$s su/stantiall! the sa$e function in su/stantiall! the sa$e wa! to achieve su/stantiall! the sa$e result.& 13 +he reason for the doctrine of e=uivalents is that to per$it the i$itation of a patented invention which does not cop! an! literal detail would /e to convert the protection of the patent grant into a hollow and useless thing. Such i$itation would leave roo$ for A indeed encourage A the unscrupulous cop!ist to $a%e uni$portant and insu/stantial changes and su/stitutions in the patent which, though adding nothing, would /e enough to ta%e the copied $atter outside the clai$, and hence outside the reach of the law. 1/ n this case, the trial court o/served0
Defendant6s witness )duardo CaSete, e$plo!ed for 11 !ears as welder of the ,Da$is )ngineering, and therefore actuall! involved in the $a%ing of the floating power tillers of defendant tried to eCplain the difference /etween the floating power tillers $ade /! the defendant. .ut a careful eCa$ination /etween the two power tillers will show that the! will operate on the sa$e funda$ental principles. *nd, according to esta/lish >urisprudence, in infringe$ent of patent, si$ilarities or differences are to /e deter$ined, not /! the na$es of things, /ut in the light of what ele$ents do, and su/stantial, rather than technical, identit! in the test. 3ore specificall!, it is necessar! and sufficient to constitute e=uivalenc! that the sa$e function can /e perfor$ed in su/stantiall! the sa$e wa! or $anner, or /! the sa$e or su/stantiall! the sa$e, principle or $ode of operation; /ut where these tests are satisfied, $ere differences of for$ or na$e are i$$aterial. . . . 15

t also stated0 +o esta/lish an infringe$ent, it is not essential to show that the defendant adopted the device or process in ever! particular; Proof of an adoption of the su/stance of the thing will /e sufficient. & n one sense,& said 9ustice .rown, &it $a! /e said that no device can /e ad>udged an infringe$ent that does not su/stantiall! correspond with the patent. .ut another construction, which would li$it these words to eCact $echanis$ descri/ed in the patent, would /e so o/viousl! un>ust that no court could /e eCpected to adopt it. . . .
+he law will protect a patentee against i$itation of his patent /! other for$s and proportions. f two devices do the sa$e wor% in su/stantiall! the sa$e wa!, and acco$plish su/stantiall! the sa$e result, the! are the sa$e, even though the! differ in na$e, for$, or shape. 17

@e pronounce petitioner lia/le for infringe$ent in accordance with Section <8 of Repu/lic *ct No. 16:, as a$ended, providing, inter alia0 Sec. <8. .i ht of Patentees. A * patentee shall have the eCclusive right to $a%e, use and sell the patented $achine, article or product, and to use the patented process for the purpose of industr! or co$$erce, throughout the territor! of the Philippines for the ter$s of the patent; and such #a)in , usin , or sellin b( an( person &ithout the authorization of the Patentee constitutes infrin e#ent of the patent. ")$phasis ours# *s far as the issue regarding unfair co$petition is concerned, suffice it to sa! that Repu/lic *ct No. 166, as a$ended, provides, inter alia0 Sec. 42. ,nfair co#petition, ri hts and re#edies . A . . . CCC CCC CCC n particular, and without in an! wa! li$iting the scope of unfair co$petition, the following shall /e dee$ed guilt! of unfair co$petition0 "a# *n! person, who in selling his goods shall give the$ the general appearance of goods of another $anufacturer or dealer, either as to the goods the$selves or in the wrapping of the pac%ages in which the! are contained, or the devices or words thereon, or in an! other feature of their appearance, which would /e li%el! to influence purchasers that the goods offered are those of a $anufacturer or dealer other than the actual $anufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the pu/lic and defraud another of his legiti$ate trade. . . . CCC CCC CCC Considering the foregoing, we find no reversi/le error in the decision of the Court of *ppeals affir$ing with $odification the decision of the trial court. @')R)E,R), pre$ises considered, the decision of the Court of *ppeals is here/! *EE R3)D and this petition D)N )D for lac% of $erit. "idin, +elo and Vitu , %%., concur. $eliciano, %., is on leave. G.R. No. L-2035/ July 20, 1979

GERARD! SA-S!N, JR., petitioner, vs. 4ELIPE TARR!.A "#$ DIRECT!R !4 PATENTS, respondents. >er#ene ildo V. 9opez for petitioner. !saac S. Puno, %r. for respondent $elipe 6arroza. Office of the Solicitor General for respondent Director of Patents.

4ERNAND!, J.: @ith the statutor! recognition of patenta/ilit! /ased on the &practical utilit!& concept 1 thus rendering clear that a patent is not solel! to /e earned under the &flash of genius& theor!, 4 this petition for the cancellation of a utilit! $odel patent for a Side +ilting-Du$ping @heel/arrow granted to respondent Eelipe *. +arroDa was correctl! denied /! respondent Director of Patents. Petitioner Berardo Sa$son, 9r., hi$self the grantee of a utilit! $odel patent for a Du$ping and Detacha/le @heel/arrow, lac%ed an! legal >ustification for such a plea. So respondent Director ruled. Not satisfied, petitioner elevated the $atter to us for review. +here is no reason wh! a different outco$e is to /e eCpected. 'is appeal $ust fail. Petitioner was, on 3a! 44, 12:5, awarded -tilit! 3odel Patent No. 48 for the a/ove t!pe of wheel/arrow which, as noted in the decision, &consists of a wheeled carriage /ase and an upper pivoted and detacha/le carr!ing tra!. +he carriage /ase is co$prised of a wheel and two e=ual lengths of continuous pipes /ent to provide wheel for%s at the front and at the rear to support the /ac% portion of the tra!, with the ends of the pipes /eing adopted as the carr!ing handles for the wheel/arrow. +he two pipes thus /ent are >oined together /! cross /races in the front and at the rear. +he tra! is re$ova/l! pivoted at its front end through hoo% catches at its /otto$ corners, to the forward cross /race, and its rear end rests solidl! over the rear portion of the legs. +o du$p the load the user pulls a du$ping handle at the /ac% end to cause the tra! to pivot upwardl! a/out the front /race to a position of a/out 4: degrees with the horiDontal and with its front end panel /eing supported /! the wheel.& < Respondent6s Side +ilting-Du$ping @heel/arrow, on the other hand, consists &of a wheeled carriage $ade of tu/ular fra$es essentiall! as in petitioner6s. @elded transversel! to the parallel fra$es are two /rac%ets provided with holes designed to co$ple$ent si$ilar holes on /rac%ets provided on the tra!. +he /rac%ets on the tra! are so placed that with the provision of a /olt through the openings the tra! $a! /e tilted approCi$atel! 181 degrees to the left or to the right of the wheel/arrow with its aCis running longitudinall! through the center of the /otto$ face of the tra!.& 4 +here is an eCpress recognition under the Patent (aw, as alread! noted, that an! new $odel of i$ple$ents or tools or of an! industrial product even if not possessed of the =ualit! of invention /ut which is of &practical utilit!& is entitled to a &patent for a utilit! $odel.& Ero$ the a/ove description of the side tilting-du$ping wheel/arrow, the product of respondent6s ingenuit! and industr!, it is =uite apparent that it has a place in the $ar%et and possesses what the statute refers to as &practical utilit!.& +he re=uire$ent eCplicitl! set forth in the statute has thus /een $et. Respondent +arroDa is entitled to its /enefits. +he grant to hi$ of a patent for a utilit! $odel is in accordance with law. +here was no reason, therefore, for its cancellation. So it was held /! the Director of Patents. +hat decision as alread! noted should stand. 3oreover, in appeals fro$ a decision of the Director of Patents, onl! =uestions of law $a! /e reviewed, findings of facts /eing conclusive unless unsupported /! su/stantial evidence. So it was decided in Che v. Philippines Patent Office. : *s was e$phasiDed in "a ano v. Director of Patents0 & t is al$ost trite to state here that in cases of the nature as the one at /ar, onl! =uestions of law are to /e raised in order that this Court could eCercise its appellate >urisdiction and review the decision.& 6 +he a/ove well-settled doctrines suffice to de$onstrate that this petition for review, as noted at the outset, is without $erit. t was not error then, to reiterate, for the respondent Director of Patents to den! the cancellation of the utilit! patent granted respondent +arroDa. +o /orrow fro$ the language of the Che opinion0 &)ven on the sole issue alone, the petition for review $ust fail.& *nother alleged error was i$puted to respondent Director of Patents. t would find fault with his failing to hold that respondent +arroDa &was not the true and actual& author of the $echanical

contrivance for which he was granted a utilit! $odel patent. +his is what the appealed decision has to sa! on this point0 &Petitioner6s theor! with respect to the second ground for cancellation, to wit0 that respondent is not the true and actual inventor or designer of the utilit! $odel is pre$ised on the fact that /ecause of the proCi$it! of the two, the petitioner and the respondent /eing /rothers-in-law, and living in ad>oining residential lots, the latter has had a$ple ti$e and opportunit! to o/serve and cop! the for$er6s wheel/arrow. .ut the testi$onial evidence thus presented is not clear, satisfactor!, and free fro$ dou/t, in the face of allegations to the contrar! /! the respondent.& 8 +he futilit! of such an assign$ent of error is thus apparent. *gain, it is factual in character. t is not for us, as noted a/ove, to review or revise the sa$e, there /eing no showing of a lac% of su/stantial evidence in support thereof. @')R)E,R), the decision of *pril 1<, 1264 of respondent Director of Patents den!ing the petition for the cancellation of -tilit! 3odel (etters Patent No. 64 in favor of respondent +arroDa is here/! affir$ed. @ith costs against petitioner. Concepcion, C.%., .e(es, %.".9., Dizon, +a)alintal, 8aldivar, Sanchez, Castro, Capistrano, 6eehan)ee and "arredo, %%., concur.
/0&ph1/.23t

4oo+#o+)& G.R. No. L-7235 -"(*: 20, 1955

!NG AI GUI a#ias TAN AI GUI, applicant-petitioner, vs. +:) D'()*+o( o, +:) P:'l'>>'#)& P"+)#+ !,,'*), respondent. E. I. DU P!NT DE NE-!URS AND C!-PANY, intervenor. %ose P. 9aurel for petitioner. Solicitor General %uan .. 9i&a and Solicitor Pacifico P. de Castro for respondent. %. A. @olfson for intervenor. LA RAD!R, J.M ,n Nove$/er 5, 1245, ,ng *i Bui alias +an *i Bui filed an application "No. 51<# with the Director of Patents for the registration of the following trade-na$e0 &41th Centur! N!lon Shirts Eactor!.& t is stated in connection with the application that the trade-na$e was used for the first ti$e /! the applicant on Septe$/er 14, 1241 for his /usiness descri/ed as follows0 &Beneral $erchandise dealing principall! in teCtiles, ha/erdasheries; also operating as $anufacturer of shirts, pants and other $en6s and wo$an6s wears.& -pon the filing of the application, the sa$e was referred /! the Director to an eCa$iner. +he latter in a report dated *ugust 15, 12:1 held that the words &shirts factor!& are not registra/le; so the applicant $ade a disclai$er of said words "shirts factor!# inserting a state$ent to that effect in his original application. ,n *ugust 1<, 12:1 the Director ordered the pu/lication of the trade-na$e in the official BaDette. Pu/lication was $ade /ut /efore the eCpiration of the period for filing opposition, *tt!. 9. *. @olfson, on /ehalf of ). . De Pont de Ne$ours and Co$pan!, presented on Ee/ruar! 48, 12:4, an opposition on the ground that the word &n!lon& was a na$e coined /! ). . Du Pont de Ne$ours and Co$pan! as the generic na$e of a s!nthetic fa/ric $aterial, invented, patented, $anufactured and sold /! it and that this word is a generic ter$; that the use of the na$e &n!lon& is descriptive or deceptivel! $isdescriptive of the goods, /usiness of $anufactures of the applicant; that the use of the na$e would produce confusion in trade and would deceive the pu/lic; and that &n!lon& is not distinctive of applicant6s goods; /usiness and $anufactures and applicant does not clai$ that it has

so /eco$e. +his opposition, however, was dis$issed /! the Director on the ground that at the ti$e it was su/$itted *tt!. 9. *. @olfson did not have, nor did he su/$it, authorit! to file it "opposition# in the corporate na$e, and that the su/se=uent authoriDation fro$ the corporation to that effect did not cure the general defect in the opposition. .ut while he dis$issed the opposition, the Director ruled that the application $ust /e disapproved unless the word &n!lon& is also disclai$ed. +he grounds for the disapproval of the application were as follows0 &N!lon& is $erel! descriptive of the /usiness of shirt-$a%ing if the shirts are $ade of n!lon. t is deceptivel! $isdescriptive of said /usiness, if the shirts are not $ade of n!lon. n either case, its registration in the Principal Register as a trade-na$e, or as a part of a trade-na$e, is eCpressl! for/idden /! su/section "e# of Section 4 of Repu/lic *ct No. 166, as a$ended /! Section 4 of Repu/lic *ct No. 6<5. CCC CCC CCC

.ut even if the trade-na$e here in =uestion were applied for under the said su/section "f#, &N!lon& would still have to /e disclai$ed. -sed in connection with shirt-$a%ing, &N!lon& can never /eco$e distinctive, can never ac=uire secondar! $eaning, /ecause it is a generic ter$, li%e cotton, sil%, linen, or ra$ie. 9ust as no length of use and no a$ount of advertising will $a%e &cotton,& &sil%,& &linen,& or &ra$ie,& distinctive of shirts or of the /usiness of $a%ing the$, so no length of use and no a$ount of advertising will $a%e &n!lon& distinctive of shirts or of the /usiness of $anufacturing the$.& *gain the a/ove decision applicant has filed an appeal to this Court. During the pendenc! of this appeal, ). . Du Pont de Ne$ours and Co. filed a petition to intervene, which petition was granted. t has also, through counsel, filed a /rief answering the argu$ents of the applicant-appellant and supporting the decision appealed fro$. +here are two $ain =uestions raised in the appeal, one legal and the other procedural. +he legal =uestion is put up /! the clai$ of the applicant-appellant that while he ad$its that the ter$ &n!lon& is /! itself alone descriptive and generic, what he desires to register is not the said word alone /ut the whole co$/ination of &41th Centur! N!lon Shirts Eactor!.& t is to /e noted in answer to this contention that the Director of Patents has not co$pletel! denied the registration of the whole tradena$e. 'e has $ade a conditional denial onl!, per$itting the registration of the na$e /ut with the disclai$er of the ter$s &shirt factor!& and &n!lon.& +he i$port of the decision is that the trade-na$e $a! /e registered, /ut applicant-appellant $a! not /e entitled to the eCclusive use of the ter$s &shirts factor!& and &n!lon& as against an! other who $a! su/se=uentl! use the said ter$s, -uris publici, incapa/le of appropriation /! an! single individual to the eCclusion of others. +his is supported /! reason and authorit!. * word or a co$/ination of words which is $erel! descriptive of an article of trade, or of its co$position, characteristics, or =ualities, cannot /e appropriated and protected as a trade$ar% to the eCclusion of its use /! others. +he reason for this is that inas$uch as all persons have an e=ual right to produce and vend si$ilar articles, the! also have the right to descri/e the$ properl! and to use an! appropriate to hi$self eCclusivel! an! word or eCpression, properl! descriptive of the article, its =ualities, ingredients, or characteristics, and thus li$it other persons in the use of language appropriate to the description of their $anufactures, the right to the use of such language /eing co$$on to all. +his rule eCcluding descriptive ter$s has also /een held to appl! to trade-na$es. *s to whether words e$plo!ed fall within this prohi/ition, it is said that the true test is not whether the! are

eChaustivel! descriptive of the article designated, /ut whether in the$selves, and as the! are co$$onl! used /! those who understand their $eaning, the! are reasona/l! indicative and descriptive of the thing intended. f the! are thus descriptive, and not ar/itrar!, the! cannot /e appropriated fro$ general use and /eco$e the eCclusive propert! of an!one. ":4 *$. 9ur. :44-:4<.# . . . . f the trade-na$e consists of a descriptive word, no $onopol! of the right to use the sa$e can /e ac=uired. +his is /ut a corollar! of the proposition that a descriptive word cannot /e the su/>ect of a trade $ar%. B. I C. 3erria$ Co. vs. Salfield "C. C. *.# 125, <62. ,ther $a! use the sa$e or si$ilar descriptive word in connection with their own wares, provided the! ta%e proper steps to prevent the pu/lic /eing deceived. . . . "Rich$ond Re$edies Co. vs. Dr. 3iles 3edical Co., 16 ). "sd# :25.# . . . +he so-called descriptive ter$s, which $a! /e used to descri/ed the product ade=uatel!, can not /e $onopoliDed /! a single user and are availa/le to all. t is onl! natural that the trade will prefer those $ar%s which /ear so$e reference to the article itself. +herefore, even those descriptive $ar%s which are distinctive /! the$selves can /e appropriated /! others with i$punit!. * descriptive word $a! /e ad$ittedl! distinctive, especiall! if the user is the first creator of the article. t will, however, /e denied protection, not /ecause it lac%s distinctiveness, /ut rather /ecause others are e=uall! entitled to its use. . . "4 Call$an. -nfair Co$petition and +rade 3ar%s, pp. 562-581.# +he clai$ that a co$/ination of words $a! /e registered as a trade-na$e is no >ustification for not appl!ing the rules or principles hereina/ove $entioned. +he use of a generic ter$ in a trade-na$e is alwa!s conditional, i. e., su/>ect to the li$itation that the registrant does not ac=uire the eCclusive right to the descriptive or generic ter$ or word. . . . * co$/ination of $ar%s or words $a! constitute a valid trade$ar% or "in the case of words# a tradena$e even though so$e of the constituent portions thereof would not /e su/>ect, separatel!, to eCclusive appropriation as such. +hus, although a word $a! /e descriptive and not su/>ect to eCclusive use as a trade$ar%, it $a! properl! /eco$e the su/>ect of a trade$ar% /! co$/ination with another word or ter$ which is nondescriptive, although no eCclusive right to then descriptive word or ter$ id created . . . ":4 *$. 9ur. ::<.# +he citation of appellant hi$self supports the decision thus0 &. . . although perhaps not entitled to protection against infringe$ent /! the use of the descriptive $atter /! another.& "Erost vs. Rinds%opt, 44 Eed. 415.# t $ust also /e noted that no clai$ is $ade in the application that the trade-na$e sought to /e registered has ac=uired what is %nown as a secondar! $eaning within the provisions of paragraph "f# of section 4 of Repu/lic *ct No. 166. *ll that the applicant declares in his state$ent acco$pan!ing his application is that the said trade-na$e has /een continuousl! used /! it in /usiness in the Philippines for a/out seven !ears, without allegation or proof that the trade-na$e has /eco$e distinctive of the applicant6s /usiness or services. Eurther$ore, the use of the ter$ &n!lon& in the trade-na$e is /oth &descriptive& and &deceptivel! and $isdescriptive& of the applicantappellant6s /usiness, for apparentl! he does not use n!lon in the $anufacture of the shirts, pants and wears that he produces and sells. 'ow can a secondar! $eaning /e ac=uired if appellant6s products are not $ade of n!lon? Certainl! no eCclusive right can /e ac=uired /! deception of fraud. +he procedural =uestion arises fro$ the fact that after the Director had ordered pu/lication and notwithstanding dis$issal of an opposition, the Director nevertheless conditionall! denied the

application after its pu/lication and failed to give applicant opportunit! for a hearing, as specificall! re=uired /! section 8 of Repu/lic *ct No. 166. t is argued that after approval of the findings of the co$$issioner to who$ the application id referred and giving of the order of pu/lication, it /eco$es the $inisterial dut! of the Director to issue the corresponding certificate of registration and that his power is confined to this issuance alone. +he answer to this argu$ent is the fact that the law allows oppositions to /e filed after pu/lication, thus0 Sec. 5. Opposition. A *n! person who /elieves that he would /e da$aged /! the registration of a $ar% or trade-na$e $a!, upon pa!$ent of the re=uired fee and within thirt! da!s after the pu/lication under the first paragraph of section seven hereof, file with the Director an opposition to the application. Such opposition shall /e in writing and verified /! the oppositor, or /! an! person on his /ehalf who %nows the facts, and shall specif! the grounds on which it is /ased and include a state$ent of the facts relied upon. Copies of certificates of registration of $ar%s or trade-na$es registered in other countries or other supporting docu$ents $entioned in the opposition shall /e filed therewith, together with the translation thereof into )nglish, if not in the )nglish language. Eor good cause shown and upon pa!$ent of the re=uired surcharge, the ti$e for filing an opposition $a! /e eCtended for an additional thirt! da!s /! the Director, who shall notif! the applicant of such eCtension. "Repu/lic *ct No. 166.# ,f what use is the period given to oppositors to register their oppositions if such oppositions are not to /e given consideration at all, /ecause the Director has onl! the $inisterial dut! after pu/lication to issue the certificate of registration; the first is that conducted in the ,ffice of the Director and ta%ing place prior to pu/lication, and the second, that conducted after pu/lication, in which the pu/lic is given the opportunit! to contest the application. n the first, the application is referred to an eCa$iner, who, after stud! and investigation $a%es a report and reco$$endation to the Director who, upon finding that applicant is entitled to registration, orders pu/lication of the pu/lication. "Sec. 8, Rep. *ct No. 166.# f he finds that applicant is not entitled to registration, he $a! then and there dis$iss the application. n the second, opportunit! is offered the pu/lic or an! interested part! to co$e in and o/>ect to the petition "Sec. 5, !d.#, giving proofs and reasons for the o/>ection, applicant /eing given opportunit! also to su/$it proofs or argu$ents in support of the application. "Sec. 2, !d.# t is the decision of the Director, given after this hearing, or opportunit! to ever! interested part! to /e heard, that finall! ter$inates the proceedings and in which the registration is finall! approved or disapproved. +hereafter, notice of the issuance of the certificate of registration is pu/lished. "Sec. 11, !d.# t is evident that the decision of the Director after the first step, ordering pu/lication, can not have an! finalit!. ,f what use is the second step in the proceedings, if the Director is /ound /! his first decision, giving course to the pu/lication? 'is first decision is $erel! provisional, in the sense that the application appears to /e $eritorious and is entitled to /e given course leading to the $ore for$al and i$portant second step of hearing and trial, where the pu/lic and interested parties are allowed to ta%e part. +he argu$ent that the Director failed to co$pl! with paragraph 4 of section 8, Repu/lic *ct No. 166 cannot /e raised in the case at /ar, /ecause the Director did not find that the applicant is not entitled to registration. 'e actuall! found that he is entitled to registration and that is wh! an order for the pu/lication of the application was issued. 'ow can the Director co$pl! with the provisions of said paragraph 4 if he did not disapprove the applicant6s petition for registration?

@e, therefore, find that the errors assigned in the appeal have not /een co$$itted id here/! respondent Director of Patents. 'is decision is here/! affir$ed, with costs against the applicantappellant. Paras, C. %., Pablo, "en zon, Padilla, .e(es, A., %u o, "autista An elo, Concepcion, and .e(es, %. ". 9., %%.,concur. G.R. No. 100090 D)*)23)( 29, 1995 E-ERALD GAR-ENT -ANU4ACTURING C!RP!RATI!N, petitioner, vs. H!N. C!URT !4 APPEALS, UREAU !4 PATENTS, TRADE-AR5S AND TECHN!L!GY TRANS4ER "#$ H.D. LEE C!-PANY, INC., respondents.

5APUNAN, J.: n this petition for review on certiorari under Rule 4: of the Revised Rules of Court, )$erald Bar$ent 3anufacturing Corporation see%s to annul the decision of the Court of *ppeals dated 42 Nove$/er 1221 in C*-B.R. SP No. 1:466 declaring petitioner6s trade$ar% to /e confusingl! si$ilar to that of private respondent and the resolution dated 18 3a! 1221 den!ing petitioner6s $otion for reconsideration. +he record reveals the following antecedent facts0 ,n 15 Septe$/er 1251, private respondent '.D. (ee Co., nc., a foreign corporation organiDed under the laws of Delaware, -.S.*., filed with the .ureau of Patents, +rade$ar%s I +echnolog! +ransfer ".P+++# a Petition for Cancellation of Registration No. SR :1:4 "Supple$ental Register# for the trade$ar% &S+G( S+ C 3R. ())& used on s%irts, >eans, /louses, soc%s, /riefs, >ac%ets, >ogging suits, dresses, shorts, shirts and lingerie under Class 4:, issued on 48 ,cto/er 1251 in the na$e of petitioner )$erald Bar$ent 3anufacturing Corporation, a do$estic corporation organiDed and eCisting under Philippine laws. +he petition was doc%eted as nter Partes Case No. 1::5. 1 Private respondent, invo%ing Sec. <8 of R.*. No. 166 "+rade$ar% (aw# and *rt. M of the Paris Convention for the Protection of ndustrial Propert!, averred that petitioner6s trade$ar% &so closel! rese$/led its own trade$ar%, 6())6 as previousl! registered and used in the Philippines, and not a/andoned, as to /e li%el!, when applied to or used in connection with petitioner6s goods, to cause confusion, $ista%e and deception on the part of the purchasing pu/lic as to the origin of the goods.& 2 n its answer dated 4< 3arch 1254, petitioner contended that its trade$ar% was entirel! and un$ista%a/l! different fro$ that of private respondent and that its certificate of registration was legall! and validl! granted. 3 ,n 41 Ee/ruar! 1254, petitioner caused the pu/lication of its application for registration of the trade$ar% &S+G( S+ C 3R. ())& in the Principal Register.& / ,n 48 9ul! 1254, private respondent filed a notice of opposition to petitioner6s application for registration also on grounds that petitioner6s trade$ar% was confusingl! si$ilar to its &())& trade$ar%. 5 +he case was doc%eted as nter Partes Case No. 1561.

,n 41 9une 125:, the Director of Patents, on $otion filed /! private respondent dated 1: 3a! 125:, issued an order consolidating nter Partes Cases Nos. 1::5 and 1561 on grounds that a co$$on =uestion of law was involved. 7 ,n 12 9ul! 1255, the Director of Patents rendered a decision granting private respondent6s petition for cancellation and opposition to registration. +he Director of Patents found private respondent to /e the prior registrant of the trade$ar% &())& in the Philippines and that it had /een using said $ar% in the Philippines. 7 3oreover, the Director of Patents, using the test of do$inanc!, declared that petitioner6s trade$ar% was confusingl! si$ilar to private respondent6s $ar% /ecause &it is the word 6(ee6 which draws the attention of the /u!er and leads hi$ to conclude that the goods originated fro$ the sa$e $anufacturer. t is undenia/l! the do$inant feature of the $ar%.& 0 ,n < *ugust 1255, petitioner appealed to the Court of *ppeals and on 5 *ugust 1255, it filed with the .P+++ a 3otion to Sta! )Cecution of the 12 9ul! 1255 decision of the Director of Patents on grounds that the sa$e would cause it great and irrepara/le da$age and in>ur!. Private respondent su/$itted its opposition on 44 *ugust 1255. 9 ,n 4< Septe$/er 1255, the .P+++ issued Resolution No. 55-<< granting petitioner6s $otion to sta! eCecution su/>ect to the following ter$s and conditions0 1. +hat under this resolution, Respondent-Registrant is authoriDed onl! to dispose of its current stoc% using the $ar% &S+G( S+ C 3R. ())&; 4. +hat Respondent-Registrant is strictl! prohi/ited fro$ further production, regardless of $ode and source, of the $ar% in =uestion "S+G( S+ C 3R. ())# in addition to its current stoc%; <. +hat this relief ,rder shall auto$aticall! cease upon resolution of the *ppeal /! the Court of *ppeals and, if the Respondent6s appeal loses, all goods /earing the $ar% &S+G( S+ C 3R. ())& shall /e re$oved fro$ the $ar%et, otherwise such goods shall /e seiDed in accordance with the law.
S, ,RD)R)D. 10

,n 42 Nove$/er 1221, the Court of *ppeals pro$ulgated its decision affir$ing the decision of the Director of Patents dated 12 9ul! 1255 in all respects. 11 n said decision the Court of *ppeals eCpounded, thus0 CCC CCC CCC @hether or not a trade$ar% causes confusion and is li%el! to deceive the pu/lic is a =uestion of fact which is to /e resolved /! appl!ing the &test of do$inanc!&, $eaning, if the co$peting trade$ar% contains the $ain or essential or do$inant features of another /! reason of which confusion and deception are li%el! to result, then infringe$ent ta%es place; that duplication or i$itation is not necessar!, a si$ilarit! in the do$inant features of the trade$ar% would /e sufficient.

+he word &())& is the $ost pro$inent and distinctive feature of the appellant6s trade$ar% and all of the appellee6s &())& trade$ar%s. t is the $ar% which draws the attention of the /u!er and leads hi$ to conclude that the goods originated fro$ the sa$e $anufacturer. @hile it is true that there are other words such as &S+G( S+ C&, printed in the appellant6s la/el, such word is printed in such s$all letters over the word &())& that it is not conspicuous enough to draw the attention of ordinar! /u!ers whereas the word &())& is printed across the la/el in /ig, /old letters and of the sa$e color, st!le, t!pe and siDe of lettering as that of the trade$ar% of the appellee. +he alleged difference is too insu/stantial to /e noticea/le. )ven granting ar uendo that the word &S+G( S+ C& is conspicuous enough to draw attention, the goods $a! easil! /e $ista%en for >ust another variation or line of gar$ents under the ap appelle6s &())& trade$ar%s in view of the fact that the appellee has registered trade$ar%s which use other words in addition to the principal $ar% &())& such as &()) R D)RS&, &())S-R)S& and &()) ())NS&. +he li%elihood of confusion is further $ade $ore pro/a/le /! the fact that /oth parties are engaged in the sa$e line of /usiness. t is well to reiterate that the deter$inative factor in ascertaining whether or not the $ar%s are confusingl! si$ilar to each other is not whether the challenged $ar% would actuall! cause confusion or deception of the purchasers /ut whether the use of such $ar% would li%el! cause confusion or $ista%e on the part of the /u!ing pu/lic. CCC CCC CCC +he appellee has sufficientl! esta/lished its right to prior use and registration of the trade$ar% &())& in the Philippines and is thus entitled to protection fro$ an! infringe$ent upon the sa$e. t is thus aCio$atic that one who has identified a peculiar s!$/ol or $ar% with his goods there/! ac=uires a propert! right in such s!$/ol or $ar%, and if another infringes the trade$ar%, he there/! invo%es this propert! right.
+he $erchandise or goods /eing sold /! the parties are not that eCpensive as alleged to /e /! the appellant and are =uite ordinar! co$$odities purchased /! the average person and at ti$es, /! the ignorant and the unlettered. ,rdinar! purchasers will not as a rule eCa$ine the s$all letterings printed on the la/el /ut will si$pl! /e guided /! the presence of the stri%ing $ar% &())&. @hatever difference there $a! /e will pale in insignificance in the face of an evident si$ilarit! in the do$inant features and overall appearance of the la/els of the parties. 12

CCC CCC CCC ,n 12 Dece$/er 1221, petitioner filed a $otion for reconsideration of the a/ove-$entioned decision of the Court of *ppeals. Private respondent opposed said $otion on 5 9anuar! 1221 on grounds that it involved an i$per$issi/le change of theor! on appeal. Petitioner allegedl! raised entirel! new and unrelated argu$ents and defenses not previousl! raised in the proceedings /elow such as laches and a clai$ that private respondent appropriated the st!le and appearance of petitioner6s trade$ar% when it registered its &())& $ar% under Registration No. 44441. 13 ,n 18 3a! 1221, the Court of *ppeals issued a resolution re>ecting petitioner6s $otion for reconsideration and ruled thus0

CCC CCC CCC * defense not raised in the trial court cannot /e raised on appeal for the first ti$e. *n issue raised for the first ti$e on appeal and not raised ti$el! in the proceedings in the lower court is /arred /! estoppel. +he o/>ect of re=uiring the parties to present all =uestions and issues to the lower court /efore the! can /e presented to this Court is to have the lower court rule upon the$, so that this Court on appeal $a! deter$ine whether or not such ruling was erroneous. +he purpose is also in furtherance of >ustice to re=uire the part! to first present the =uestion he contends for in the lower court so that the other part! $a! not /e ta%en /! surprise and $a! present evidence to properl! $eet the issues raised. 3oreover, for a =uestion to /e raised on appeal, the sa$e $ust also /e within the issues raised /! the parties in their pleadings. Conse=uentl!, when a part! deli/eratel! adopts a certain theor!, and the case is tried and decided /ased upon such theor! presented in the court /elow, he will not /e per$itted to change his theor! on appeal. +o per$it hi$ to do so would /e unfair to the adverse part!. * =uestion raised for the first ti$e on appeal, there having opportunit! to raise the$ in the court of origin constitutes a change of theor! which is not per$issi/le on appeal. n the instant case, appellant6s $ain defense pleaded in its answer dated 3arch 4<, 1254 was that there was &no confusing si$ilarit! /etween the co$peting trade$ar% involved. ,n appeal, the appellant raised a single issue, to wit0 +he onl! issue involved in this case is whether or not respondentregistrant6s trade$ar% &S+G( S+ C 3R. ())& is confusingl! si$ilar with the petitioner6s trade$ar%s &()) or ())R D)RS, ())-())NS and ())-S-R)S.& *ppellant6s $ain argu$ent in this $otion for reconsideration on the other hand is that the appellee is estopped /! laches fro$ asserting its right to its trade$ar%. *ppellant clai$s although /elatedl! that appellee went to court with &unclean hands& /! changing the appearance of its trade$ar% to $a%e it identical to the appellant6s trade$ar%. Neither defenses were raised /! the appellant in the proceedings /efore the .ureau of Patents. *ppellant cannot raise the$ now for the first ti$e on appeal, let alone on a $ere $otion for reconsideration of the decision of this Court dis$issing the appellant6s appeal.
@hile there $a! /e instances and situations >ustif!ing relaCation of this rule, the circu$stance of the instant case, e=uit! would /e /etter served /! appl!ing the settled rule it appearing that appellant has not given an! reason at all as to wh! the defenses raised in its $otion for reconsideration was not invo%ed earlier. 1/

CCC CCC CCC +wice re/uffed, petitioner presents its case /efore this Court on the following assign$ent of errors0

. +') C,-R+ ,E *PP)*(S )RR)D N N,+ E ND NB +'*+ PR M*+) R)SP,ND)N+ C*-S)D +') SS-*NC) ,E * E,-R+' &())& +R*D)3*R7 3 +*+ NB +'*+ ,E +') P)+ + ,N)R6S ,N +A? D, /IHI ,R 3,R) +'*N ) B'+ 3,N+'S *E+)R +') .-R)*- ,E P*+)N+6S D)C S ,N D*+)D %,9? /I, /IHH. . +') C,-R+ ,E *PP)*(S )RR)D N R-( NB +'*+ +') D)E)NS) ,E )S+,PP)( .G (*C')S 3-S+ .) R* S)D N +') PR,C))D NBS .)E,R) +') .-R)*- ,E P*+)N+S, +R*D)3*R7S *ND +)C'N,(,BG +R*NSE)R.
. +') C,-R+ ,E *PP)*(S )RR)D @')N + C,NS D)R)D PR M*+) R)SP,ND)N+6S PR ,R R)B S+R*+ ,N ,E +S +R*D)3*R7 *ND D SR)B*RD)D +') E*C+ +'*+ PR M*+) R)SP,ND)N+ '*D E* ()D +, PR,M) C,33)RC *( -S) +')R),E .)E,R) E ( NB ,E *PP( C*+ ,N E,R R)B S+R*+ ,N. 15

n addition, petitioner reiterates the issues it raised in the Court of *ppeals0 . +') SS-) NM,(M)D N +' S C*S) S @')+')R ,R N,+ P)+ + ,N)R6S +R*D)3*R7 SG+( S+ C 3R. ()), S C,NE-S NB(G S 3 (*R @ +' +') PR M*+) R)SP,ND)N+6S +R*D)3*R7 ()) ,R ())-R D)R, ())-())NS *ND ())-S-R)S. . P)+ + ,N)R6S )M D)NC)S *R) C()*R *ND S-EE C )N+ +, S',@ +'*+ + S +') PR ,R -S)R *ND +S +R*D)3*R7 S D EE)R)N+ ER,3 +'*+ ,E +') PR M*+) R)SP,ND)N+. . P)+ + ,N)R6S +R*D)3*R7 S )N+ R)(G D EE)R)N+ ER,3 +') PR M*+) R)SP,ND)N+6S *ND +') R)B S+R*+ ,N ,E +S +R*D)3*R7 S P.!+A $AC!E )M D)NC) ,E B,,D E* +'.
M. P)+ + ,N)R6S &S+G( S+ C 3R. ())& +R*D)3*R7 C*NN,+ .) C,NE-S)D @ +' PR M*+) R)SP,ND)N+6S ()) +R*D)3*R7. 17

Petitioner contends that private respondent is estopped fro$ instituting an action for infringe$ent /efore the .P+++ under the e=uita/le principle of laches pursuant to Sec. 2-* of R.*. No. 166, otherwise %nown as the (aw on +rade-$ar%s, +rade-na$es and -nfair Co$petition0 Sec. 2-*. )=uita/le principles to govern proceedings. A n opposition proceedings and in all other inter partes proceedings in the patent office under this act, e=uita/le principles of laches, estoppel, and ac=uiescence, where applica/le, $a! /e considered and applied. Petitioner alleges that it has /een using its trade$ar% &S+G( S+ C 3R. ())& since 1 3a! 128:, !et, it was onl! on 15 Septe$/er 1251 that private respondent filed a petition for cancellation of petitioner6s certificate of registration for the said trade$ar%. Si$ilarl!, private respondent6s notice of opposition to petitioner6s application for registration in the principal register was /elatedl! filed on 48 9ul! 1254. 17 Private respondent counters /! $aintaining that petitioner was /arred fro$ raising new issues on appeal, the onl! contention in the proceedings /elow /eing the presence or a/sence of confusing si$ilarit! /etween the two trade$ar%s in =uestion. 10

@e re>ect petitioner6s contention. Petitioner6s trade$ar% is registered in the supple$ental register. +he +rade$ar% (aw "R.*. No. 166# provides that &$ar%s and tradena$es for the supple$ental register shall not /e pu/lished for or /e su/>ect to opposition, /ut shall /e pu/lished on registration in the ,fficial BaDette.& 19 +he rec%oning point, therefore, should not /e 1 3a! 128:, the date of alleged use /! petitioner of its assailed trade$ar% /ut 48 ,cto/er 1251, 20 the date the certificate of registration SR No. :1:4 was pu/lished in the ,fficial BaDette and issued to petitioner. t was onl! on the date of pu/lication and issuance of the registration certificate that private respondent $a! /e considered &officiall!& put on notice that petitioner has appropriated or is using said $ar%, which, after all, is the function and purpose of registration in the supple$ental register. 21 +he record is /ereft of evidence that private respondent was aware of petitioner6s trade$ar% /efore the date of said pu/lication and issuance. 'ence, when private respondent instituted cancellation proceedings on 15 Septe$/er 1251, less than a !ear had passed. Corollaril!, private respondent could hardl! /e accused of ineCcusa/le dela! in filing its notice of opposition to petitioner6s application for registration in the principal register since said application was pu/lished onl! on 41 Ee/ruar! 1254. 22 Ero$ the ti$e of pu/lication to the ti$e of filing the opposition on 48 9ul! 1254 /arel! five ":# $onths had elapsed. +o /e /arred fro$ /ringing suit on grounds of estoppel and laches, the dela! $ust /e length!. 23 3ore crucial is the issue of confusing si$ilarit! /etween the two trade$ar%s. Petitioner vehe$entl! contends that its trade$ar% &S+G( S+ C 3R. ())& is entirel! different fro$ and not confusingl! si$ilar to private respondent6s &())& trade$ar%. Private respondent $aintains otherwise. t asserts that petitioner6s trade$ar% tends to $islead and confuse the pu/lic and thus constitutes an infringe$ent of its own $ar%, since the do$inant feature therein is the word &()).& +he pertinent provision of R.*. No. 166 "+rade$ar% (aw# states thus0 Sec. 44. !nfrin e#ent, &hat constitutes. A *n! person who shall use, without the consent of the registrant, an! reproduction, counterfeit, cop! or colora/le i$itation of an! registered $ar% or trade-na$e in connection with the sale, offering for sale, or advertising of an! goods, /usiness or services on or in connection with which such use is li%el! to cause confusion or $ista%e or to deceive purchasers or others as to the source or origin of such goods or services, or identit! of such /usiness; or reproduce, counterfeit, cop! or colora/l! i$ita/le an! such $ar% or trade-na$e and appl! such reproduction, counterfeit, cop!, or colora/le i$itation to la/els, signs, prints, pac%ages, wrappers, receptacles or advertise$ents intended to /e used upon or in connection with such goods, /usiness or services; shall /e lia/le to a civil action /! the registrant for an! or all of the re$edies herein provided. Practical application, however, of the aforesaid provision is easier said than done. n the histor! of trade$ar% cases in the Philippines, particularl! in ascertaining whether one trade$ar% is confusingl! si$ilar to or is a colora/le i$itation of another, no set rules can /e deduced. )ach case $ust /e decided on its own $erits. n Esso Standard Eastern, !nc. v. Court of Appeals, 2/ we held0

. . . .ut li%elihood of confusion is a relative concept; to /e deter$ined onl! according to the particular, and so$eti$es peculiar, circu$stances of each case. t is un=uestiona/l! true that, as stated inCoburn vs. Puritan +ills, !nc.0 & n trade$ar% cases, even $ore than in other litigation, precedent $ust /e studied in the light of the facts of the particular case.& CCC CCC CCC (i%ewise, it has /een o/served that0
n deter$ining whether a particular na$e or $ar% is a &colora/le i$itation& of another, no all-e$/racing rule see$s possi/le in view of the great nu$/er of factors which $ust necessaril! /e considered in resolving this =uestion of fact, such as the class of product or /usiness to which the article /elongs; the product6s =ualit!, =uantit!, or siDe, including its wrapper or container; the do$inant color, st!le, siDe, for$, $eaning of letters, words, designs and e$/le$s used; the nature of the pac%age, wrapper or container; the character of the product6s purchasers; location of the /usiness; the li%elihood of deception or the $ar% or na$e6s tendenc! to confuse; etc. 25

Proceeding to the tas% at hand, the essential ele$ent of infringe$ent is colora/le i$itation. +his ter$ has /een defined as &such a close or ingenious i$itation as to /e calculated to deceive ordinar! purchasers, or such rese$/lance of the infringing $ar% to the original as to deceive an ordinar! purchaser giving such attention as a purchaser usuall! gives, and to cause hi$ to purchase the one supposing it to /e the other.& 27
Colora/le i$itation does not $ean such si$ilitude as a$ounts to identit!. Nor does it re=uire that all the details /e literall! copied. Colora/le i$itation refers to such si$ilarit! in for$, content, words, sound, $eaning, special arrange$ent, or general appearance of the trade$ar% or tradena$e with that of the other $ar% or tradena$e in their over-all presentation or in their essential, su/stantive and distinctive parts as would li%el! $islead or confuse persons in the ordinar! course of purchasing the genuine article. 27

n deter$ining whether colora/le i$itation eCists, >urisprudence has developed two %inds of tests A the Do$inanc! +est applied in Asia "re&er(, !nc. v. Court of Appeals 20 and other cases 29 and the 'olistic +est developed in Del +onte Corporation v. Court of Appeals 30 and its proponent cases. 31 *s its title i$plies, the test of do$inanc! focuses on the si$ilarit! of the prevalent features of the co$peting trade$ar%s which $ight cause confusion or deception and thus constitutes infringe$ent. CCC CCC CCC
. . . f the co$peting trade$ar% contains the $ain or essential or do$inant features of another, and confusion and deception is li%el! to result, infringe$ent ta%es place. Duplication or i$itation is not necessar!; nor it is necessar! that the infringing la/el should suggest an effort to i$itate. KC. Neil$an .rewing Co. v. ndependent .rewing Co., 121 E., 452, 42:, citin )agle @hite (ead Co., vs. Pflugh "CC# 151 Eed. :82L. +he =uestion at issue in cases of infringe$ent of trade$ar%s is whether the use of the $ar%s involved would /e li%el! to cause confusion or #ista)es in the #ind of the public or deceive purchasers. "*u/urn Ru//er Corporation vs. 'onover Ru//er Co., 118 E. 4d :55; . . .# 32

CCC CCC CCC

,n the other side of the spectru$, the holistic test $andates that the entiret! of the $ar%s in =uestion $ust /e considered in deter$ining confusing si$ilarit!. CCC CCC CCC
n deter$ining whether the trade$ar%s are confusingl! si$ilar, a co$parison of the words is not the onl! deter$inant factor. +he trade$ar%s in their entiret! as the! appear in their respective la/els or hang tags $ust also /e considered in relation to the goods to which the! are attached. +he discerning e!e of the o/server $ust focus not onl! on the predo$inant words /ut also on the other features appearing in /oth la/els in order that he $a! draw his conclusion whether one is confusingl! si$ilar to the other. 33

CCC CCC CCC *ppl!ing the foregoing tenets to the present controvers! and ta%ing into account the factual circu$stances of this case, we considered the trade$ar%s involved as a whole and rule that petitioner6s &S+G( S+ C 3R. ())& is not confusingl! si$ilar to private respondent6s &())& trade$ar%. Petitioner6s trade$ar% is the whole &S+G( S+ C 3R. ()).& *lthough on its la/el the word &())& is pro$inent, the trade$ar% should /e considered as a whole and not piece$eal. +he dissi$ilarities /etween the two $ar%s /eco$e conspicuous, noticea/le and su/stantial enough to $atter especiall! in the light of the following varia/les that $ust /e factored in. Eirst, the products involved in the case at /ar are, in the $ain, various %inds of >eans. +hese are not !our ordinar! household ite$s li%e catsup, so!sauce or soap which are of $ini$al cost. 3aong pants or >eans are not ineCpensive. *ccordingl!, the casual /u!er is predisposed to /e $ore cautious and discri$inating in and would prefer to $ull over his purchase. Confusion and deception, then, is less li%el!. n Del +onte Corporation v. Court of Appeals, 3/ we noted that0 . . . *$ong these, what essentiall! deter$ines the attitudes of the purchaser, specificall! his inclination to /e cautious, is the cost of the goods. +o /e sure, a person who /u!s a /oC of candies will not eCercise as $uch care as one who /u!s an eCpensive watch. *s a general rule, an ordinar! /u!er does not eCercise as $uch prudence in /u!ing an article for which he pa!s a few centavos as he does in purchasing a $ore valua/le thing. )Cpensive and valua/le ite$s are nor$all! /ought onl! after deli/erate, co$parative and anal!tical investigation. .ut $ass products, low priced articles in wide use, and $atters of ever!da! purchase re=uiring fre=uent replace$ent are /ought /! the casual consu$er without great care. . . . Second, li%e his /eer, the average Eilipino consu$er generall! /u!s his >eans /! /rand. 'e does not as% the sales cler% for generic >eans /ut for, sa!, a (evis, Buess, @rangler or even an *r$ani. 'e is, therefore, $ore or less %nowledgea/le and fa$iliar with his preference and will not easil! /e distracted. Einall!, in line with the foregoing discussions, $ore credit should /e given to the &ordinar! purchaser.& Cast in this particular controvers!, the ordinar! purchaser is not the &co$pletel! unwar! consu$er& /ut is the &ordinaril! intelligent /u!er& considering the t!pe of product involved. +he definition laid down in D( "uncio v. 6an 6iao "o) 35 is /etter suited to the present case. +here, the &ordinar! purchaser& was defined as one &accusto$ed to /u!, and therefore to so$e eCtent fa$iliar with, the goods in =uestion. +he test of fraudulent si$ulation is to /e found in the li%elihood

of the deception of so$e persons in so$e $easure ac=uainted with an esta/lished design and desirous of purchasing the co$$odit! with which that design has /een associated. +he test is not found in the deception, or the possi/ilit! of deception, of the person who %nows nothing a/out the design which has /een counterfeited, and who $ust /e indifferent /etween that and the other. +he si$ulation, in order to /e o/>ectiona/le, $ust /e such as appears li%el! to $islead the ordinar! intelligent /u!er who has a need to suppl! and is fa$iliar with the article that he see%s to purchase.& +here is no cause for the Court of *ppeal6s apprehension that petitioner6s products $ight /e $ista%en as &another variation or line of gar$ents under private respondent6s 6())6 trade$ar%&. 37 *s one would readil! o/serve, private respondent6s variation follows a standard for$at & 9EER D)RS,& &9EES-R)S& and &9EE())NS.& t is, therefore, i$pro/a/le that the pu/lic would i$$ediatel! and naturall! conclude that petitioner6s &S+G( S+ C 3R. ())& is /ut another variation under private respondent6s &())& $ar%. *s we have previousl! inti$ated the issue of confusing si$ilarit! /etween trade$ar%s is resolved /! considering the distinct characteristics of each case. n the present controvers!, ta%ing into account these uni=ue factors, we conclude that the si$ilarities in the trade$ar%s in =uestion are not sufficient as to li%el! cause deception and confusion tanta$ount to infringe$ent. *nother wa! of resolving the conflict is to consider the $ar%s involved fro$ the point of view of what $ar%s are registra/le pursuant to Sec. 4 of R.*. No. 166, particularl! paragraph 4 "e#0 C'*P+)R -*.A 6he Principal .e ister " nserted /! Sec. 4, Rep. *ct No. 6<5.# Sec. 4. .e istration of trade*#ar)s, trade*na#es and service*#ar)s on the principal re ister. A +here is here/! esta/lished a register of trade-$ar%s, trade-na$es and service-$ar%s which shall /e %nown as the principal register. +he owner of a trade$ar%, trade-na$e or service-$ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e on the principal register, unless it0 CCC CCC CCC "e# Consists of a $ar% or trade-na$e which, when applied to or used in connection with the goods, /usiness or services of the applicant is $erel! descriptive or deceptivel! $isdescriptive of the$, or when applied to or used in connection with the goods, /usiness or services of the applicant is pri$aril! geographicall! descriptive or deceptivel! $isdescriptive of the$, or is pri#aril( #erel( a surna#e; ")$phasis ours.# CCC CCC CCC &())& is pri$aril! a surna$e. Private respondent cannot, therefore, ac=uire eCclusive ownership over and singular use of said ter$.
. . . t has /een held that a personal na$e or surna$e $a! not /e $onopoliDed as a trade$ar% or tradena$e as against others of the sa$e na$e or surna$e. Eor in the a/sence of contract, fraud, or estoppel, an! $an $a! use his na$e or surna$e in all legiti$ate wa!s. +hus, &@ellington& is a surna$e, and its first user has no cause of action against the >unior user of &@ellington& as it is incapa/le of eCclusive appropriation. 37

n addition to the foregoing, we are constrained to agree with petitioner6s contention that private respondent failed to prove prior actual co$$ercial use of its &())& trade$ar% in the Philippines /efore filing its application for registration with the .P+++ and hence, has not ac=uired ownership over said $ar%. *ctual use in co$$erce in the Philippines is an essential prere=uisite for the ac=uisition of ownership over a trade$ar% pursuant to Sec. 4 and 4-* of the Philippine +rade$ar% (aw "R.*. No. 166# which eCplicitl! provides that0 C'*P+)R . Registration of 3ar%s and +rade-na$es. Sec. 4. @hat are re istrable. A +rade-$ar%s, trade-na$es, and service $ar%s owned /! persons, corporations, partnerships or associations do$iciled in the Philippines and /! persons, corporations, partnerships, or associations do$iciled in an! foreign countr! $a! /e registered in accordance with the provisions of this act0 Provided, 6hat said trade*#ar)s, trade*na#es, or service #ar)s are actuall( in use in co##erce and services not less than t&o #onths in the Philippines before the ti#e the applications for re istration are filed0 And Provided, further, +hat the countr! of which the applicant for registration is a citiDen grants /! law su/stantiall! si$ilar privileges to citiDens of the Philippines, and such fact is officiall! certified, with a certified true cop! of the foreign law translated into the )nglish language, /! the govern$ent of the foreign countr! to the Bovern$ent of the Repu/lic of the Philippines. "As a#ended.# ")$phasis ours.# Sec. 4-*. O&nership of trade*#ar)s, trade*na#es and service*#ar)s ; ho& ac:uired. A An(one &ho la&full( produces or deals in #erchandise of an( )ind or &ho en a es in la&ful business, or &ho renders an( la&ful service in co##erce, b( actual use hereof in #anufacture or trade, in business, and in the service rendered ; $a! appropriate to his eCclusive use a trade-$ar%, a trade-na$e, or a service-$ar% not so appropriated /! another, to distinguish his $erchandise, /usiness or services fro$ others. +he ownership or possession of trade-$ar%, trade-na$e, service-$ar%, heretofore or hereafter appropriated, as in this section provided, shall /e recogniDed and protected in the sa$e $anner and to the sa$e eCtent as are other propert! rights to the law. "*s a$ended.# ")$phasis ours.# +he provisions of the 126: Paris Convention for the Protection of ndustrial Propert! 30 relied upon /! private respondent and Sec. 41-* of the +rade$ar% (aw "R.*. No. 166# 39 were sufficientl! eCpounded upon and =ualified in the recent case of Philip +orris, !nc. v. Court of Appeals0 /0 CCC CCC CCC Eollowing universal ac=uiescence and co$it!, our $unicipal law on trade$ar%s regarding the re=uire$ent of actual use in the Philippines $ust su/ordinate an international agree$ent inas$uch as the apparent clash is /eing decided /! a $unicipal tri/unal "3ortisen vs. Peters, Breat .ritain, 'igh Court of 9udiciar! of Scotland, 1216, 5 Sessions, 2<; Paras, nternational (aw and @orld ,rganiDation, 1281 )d., p. 41#. @ithal, the fact that international law has /een $ade part of the law of the land does not /! an! $eans i$pl! the pri$ac! of international law over national law in the $unicipal sphere. -nder the doctrine of incorporation as applied in $ost countries, rules of international law are given a standing e=ual, not superior, to national legislative enact$ents.

CCC CCC CCC n other words, "a foreign corporation# $a! have the capacit! to sue for infringe$ent irrespective of lac% of /usiness activit! in the Philippines on account of Section 41-* of the +rade$ar% (aw /ut the =uestion of whether the! have an eCclusive right over their s!$/ol as to >ustif! issuance of the controversial writ will depend on actual use of their trade$ar%s in the Philippines in line with Sections 4 and 4-* of the sa$e law. t is thus incongruous for petitioners to clai$ that when a foreign corporation not licensed to do /usiness in the Philippines files a co$plaint for infringe$ent, the entit! need not /e actuall! using its trade$ar% in co$$erce in the Philippines. Such a foreign corporation $a! have the personalit! to file a suit for infringe$ent /ut it $a! not necessaril! /e entitled to protection due to a/sence of actual use of the e$/le$ in the local $ar%et. CCC CCC CCC -ndisputa/l!, private respondent is the senior registrant, having o/tained several registration certificates for its various trade$ar%s &()),& &())R D)RS,& and &())S-R)S& in /oth the supple$ental and principal registers, as earl! as 1262 to 128<. /1 'owever, registration alone will not suffice. n Sterlin Products !nternational, !nc. v.$arbenfabri)en "a(er A)tien esellschaft , /2 we declared0 CCC CCC CCC * rule widel! accepted and fir$l! entrenched /ecause it has co$e down through the !ears is that actual use in co$$erce or /usiness is a prere=uisite in the ac=uisition of the right of ownership over a trade$ar%. CCC CCC CCC t would see$ =uite clear that adoption alone of a trade$ar% would not give eCclusive right thereto. Such right &grows out of their actual use.& *doption is not use. ,ne $a! $a%e advertise$ents, issue circulars, give out price lists on certain goods; /ut these alone would not give eCclusive right of use. Eor trade$ar% is a creation of use. +he underl!ing reason for all these is that purchasers have co$e to understand the $ar% as indicating the origin of the wares. Elowing fro$ this is the trader6s right to protection in the trade he has /uilt up and the goodwill he has accu$ulated fro$ use of the trade$ar%. Registration of a trade$ar%, of course, has value0 it is an ad$inistrative act declarator! of a pre-eCisting right. .e istration does not, ho&ever, perfect a trade#ar) ri ht. ")$phasis ours.# CCC CCC CCC +o aug$ent its argu$ents that it was, not onl! the prior registrant, /ut also the prior user, private respondent invo%es Sec. 41 of the +rade$ar% (aw, thus0 Sec. 41. Certificate of registration pri#a facie evidence of validit!. A * certificate of registration of a $ar% or tradena$e shall /e a pri#a facie evidence of the validit! of the registration, the registrant6s ownership of the $ar% or trade-na$e, and of the registrant6s eCclusive right to use the sa$e in connection with the goods, /usiness or

services specified in the certificate, su/>ect to an! conditions and li$itations stated therein. +he credi/ilit! placed on a certificate of registration of one6s trade$ar%, or its weight as evidence of validit!, ownership and eCclusive use, is =ualified. * registration certificate serves $erel! as pri#a facie evidence. t is not conclusive /ut can and $a! /e re/utted /! controverting evidence. 3oreover, the afore=uoted provision applies onl! to registrations in the principal register. /3 Registrations in the supple$ental register do not en>o! a si$ilar privilege. * supple$ental register was created precisel! for the registration of $ar%s which are not registra/le on the principal register due to so$e defects. // +he deter$ination as to who is the prior user of the trade$ar% is a =uestion of fact and it is this Court6s wor%ing principle not to distur/ the findings of the Director of Patents on this issue in the a/sence of an! showing of grave a/use of discretion. +he findings of facts of the Director of Patents are conclusive upon the Supre$e Courtprovided the! are supported /! su/stantial evidence. /5 n the case at /ench, however, we reverse the findings of the Director of Patents and the Court of *ppeals. *fter a $eticulous stud! of the records, we o/serve that the Director of Patents and the Court of *ppeals relied $ainl! on the registration certificates as proof of use /! private respondent of the trade$ar% &())& which, as we have previousl! discussed are not sufficient. @e cannot give credence to private respondent6s clai$ that its &())& $ar% first reached the Philippines in the 12616s through local sales /! the Post )Cchanges of the -.S. 3ilitar! .ases in the Philippines /7 /ased as it was solel! on the self-serving state$ents of 3r. )dward Poste, Beneral 3anager of (ee "Phils.#, nc., a wholl! owned su/sidiar! of the '.D. (ee, Co., nc., -.S.*., herein private respondent. /7Si$ilarl!, we give little weight to the nu$erous vouchers representing various advertising eCpenses in the Philippines for &())& products. /0 t is well to note that these eCpenses were incurred onl! in 1251 and 1254 /! ()) "Phils.#, nc. after it entered into a licensing agree$ent with private respondent on 11 3a! 1251. /9 ,n the other hand, petitioner has sufficientl! shown that it has /een in the /usiness of selling >eans and other gar$ents adopting its &S+G( S+ C 3R. ())& trade$ar% since 128: as evidenced /! appropriate sales invoices to various stores and retailers. 50 ,ur rulings in Pa asa !ndustrial Corp. v. Court of Appeals 51 and Converse .ubber Corp. v. ,niversal .ubber Products, !nc., 52 respectivel!, are instructive0 +he +rade$ar% (aw is ver! clear. t re=uires actual co$$ercial use of the $ar% prior to its registration. +here is no dispute that respondent corporation was the first registrant, !et it failed to full! su/stantiate its clai$ that it used in trade or /usiness in the Philippines the su/>ect $ar%; it did not present proof to invest it with eCclusive, continuous adoption of the trade$ar% which should consist a$ong others, of considera/le sales since its first use. +he invoices su/$itted /! respondent which were dated wa! /ac% in 12:8 show that the Dippers sent to the Philippines were to /e used as &sa$ples& and &of no co$$ercial value.& +he evidence for respondent $ust /e clear, definite and free fro$ inconsistencies. &Sa$ples& are not for sale and therefore, the fact of eCporting the$ to the Philippines cannot /e considered to /e e=uivalent to the &use& conte$plated /! law. Respondent did not eCpect inco$e fro$ such &sa$ples.& +here were no receipts to esta/lish sale, and no proof were presented to show that the! were su/se=uentl! sold in the Philippines. CCC CCC CCC

+he sales invoices provide the /est proof that there were actual sales of petitioner6s product in the countr! and that there was actual use for a protracted period of petitioner6s trade$ar% or part thereof through these sales. Eor lac% of ade=uate proof of actual use of its trade$ar% in the Philippines prior to petitioner6s use of its own $ar% and for failure to esta/lish confusing si$ilarit! /etween said trade$ar%s, private respondent6s action for infringe$ent $ust necessaril! fail. @')R)E,R), pre$ises considered, the =uestioned decision and resolution are here/! R)M)RS)D and S)+ *S D). S, ,RD)R)D. "ellosillo and >er#osisi#a, %r., %%., concur.

G.R. No. L-15759

No1)23)( 30, 1972

THE DE LA RA-A STEA-SHIP C!-PANY, INC., plaintiff-appellee, vs. NATI!NAL DE%EL!P-ENT C!-PANY, defendant-appellant. V. E. del .osario for plaintiff*appellee. Govern#ent Corporate Counsel Si#eon +. Gopen co for defendant*appellant. LA RAD!R, J.: +his case is a se=uel to B.R. No. (-5854, pro$ulgated on 3a! 41, 12:6. .oth this case and the previous are the outco$e of an agree$ent entered into the De la Ra$a Stea$ship Co., nc. "hereafter %nown as De la Ra$a# and the National Develop$ent Co$pan! "hereafter referred to as NDC# dated ,cto/er 46, 1242 where/! De la Ra$a undertoo% the $anage$ent &DoSa& vessels purchased /! the Philippine Bovern$ent fro$ 9apan, with and through the advice and help De la De la Ra$a agreed to /u! and the NDC, agreed to sell, at the for$er6s option, each and the vessels purchased on the fifth !ear following date of purchase and deliver! of each and ever! at a purchase price which is to consist of the cost of each vessel, plus such eCpenses as De la Ra$a have incurred in connection with the construction fitting, provisioning and operation thereof. Should De la Ra$a fail to eCercise the right of option, paragraph < and 4 grant De la Ra$a the right to rei$/urse$ent for its eCpenses in $anning e=uipping, fueling, hauling, repairing the vessels and a loading co$$ission a discharging co$$ission and an overriding co$$ission su/-agent6s co$$ission, etc. n the previous case, B.R. No. (-5854, the principal =uestion arose out of the right granted /! the $anage$ent agree$ent to NDC to cancel upon one !ear6s the general agree$ent agenc! granted De la Ra$a. NDC decided to cancel the contract /ut was opposed /! De la Ra$a, which alleged that it had /een granted the option to purchase the vessels and in 12:4 eCercised the right of option to /u!. n our decision @e held that the NDC had the right to eCercise the right to cancel the agree$ent. So the option of De la Ra$a to purchase the vessels was declared ineffective. +he right of De la Ra$a to eCercise the option to purchase the vessels having /een denied, De la Ra$a filed on *ugust 41, 12:6, a &Supple$ental Pleading& "which initiates this second case# "1#

de$anding that the NDC cease to use the na$es of DoSa *urora&, &DoSa Nati& and &DoSa *licia& on the three vessels su/>ect of the original action, "4# see%ing to recover P1,:1:,61<.54 as rei$/urse$ent for supposed advances $ade to the vessels while the sa$e were under the $anage$ent contract under De la Ra$a, as well as for earned co$$issions as agents of NDC, and "<# P1,111,111.11 as da$ages. +he govern$ent corporate counsel, representing the NDC, opposed the ad$ission of the &supple$ental pleading& on the following grounds0 that De la Ra$a had /een held to /e without an! right of action and a part! $a! not file a supple$ental a$ended pleading if it has no valid and su/sisting cause; that the present causes of action are onl! re$otel! connected with and are not $aterial to the first action. ,ver this opposition the court /elow ad$itted the supple$ental pleading in an order dated ,cto/er 1:, 12:6; so NDC had to file an answer. *gainst the first cause of action the NDC alleged in its answer and /! wa! of defense, that the na$es of the vessels in =uestion cannot /e appropriated /! a private fir$ li%e plaintiff, /ecause the na$es represent the na$es of wives of for$er presidents of the Philippines. NDC also denied the $aterial allegations contained in the said second cause of action of plaintiff6s co$plaint and alleged that the alleged advance eCpenses and co$$issions clai$ed in the supple$ental pleading, were never alleged or clai$ed in the previous suit and the sa$e should now /e dee$ed dis$issed together with the principal action. *nswering the allegations of the third cause of action, NDC stated that the plaintiff6s de$ands are unreasona/le, plaintiff retaining the /enefits fro$ the operations of the vessels and shifting to the defendant the lia/ilities and o/ligations. .! wa! of special defendants NDC alleged that the plaintiff is estopped fro$ den!ing to the defendant the use of the na$es of the vessels, etc., that the additional clai$s should /e dee$ed dis$issed together with the principal action, etc., etc. .! wa! of counterclai$ the NDC alleged that the NDC had the su$ of P4,418,<86.24 up to Dece$/er <1, 12:6 the plaintiff his not re$itted the a$ount due 9anuar! 1, 12:4 to the ti$e that said vessels turned; that De la Ra$a had /een charging eCcessive co$$issions and it should render an accounting to NDC for the eCcess co$$ission actuall! received. +he answer is dated 3arch :, 12:8 and hearing supple$ental co$plaint was /egun on 3arch 6, 12:8. ,n 3arch 5, while the case was /eing heard, the court entered an order appointing a .oard of *ccountants to eCa$ine the clai$s of De la Ra$a. +he said record was given in open court and reads as follows0 n view of the fact that these are =uestions of accounting, the Court will appoint a co$$ittee, one $e$/er to /e suggested /! the plaintiff, another /! the defendant, and the third $e$/er /! the Court. *ll these =uestion of accounts will indorsed to the Co$$ittee who is here/! ordered to $a%e report, giving details as to what a$ount is due to the defendant, and to $a%e such reco$$endations as, in its opinion, is proper and the parties are given three da!s within which to su/$it the na$es of their respective representatives. $$ediatel! after their appoint$ent, the! shall hold office and su/$it report within thirt! da!s after the! shall have eCa$ine accounts. +he eCpenses of the representative of the plaintiff shall /e /orne /! the plaintiff; the eCpenses of the representative of the defendant shall /e /orne /! the defendant; eCpenses of the third $e$/er to /e appointed /! this shall /e considered as part of the costs. +he hearings were ter$inated on *pril 1:, 12:2. *t that ti$e the /oard of accountants appointed /! the court had not !et su/$itted their report. +he report chair$an of the /oard was su/$itted to the court on *pril 16, 12:2. +he procedure adopted /! the /oard is descri/ed in the said report of the /oard chair$an as follow0

1. n pursuance of agree$ent a$ong the Chair$an 3e$/ers of the .oard of *ccountants created /! the 'onora/le Court in an ,rder pro$ulgated on 3arch 41, 12:8, the *uditor, representing the defendant NDC, $ade an eChaustive audit of the accounts of R*3* as Beneral *gent, under the NDC R*3* 3anage$ent Contract of ,cto/er 46, 12:1 to Nove$/er 2, 12:6. +he NDC *uditor su/$itted his &*udit Report dated 3arch <1, 12:5 on the ,perations and 3anage$ent of DoSa vessels under the De la Ra$a Stea$ship Co$pan!, nc. Re-Civil Case No. 4:161&; original of which is enclosed as *nneC &*&. "Page 86, Report.# +he report states that the De la Ra$a representative to the /oard of accountants has su/$itted his co$$ents and suggestions and so did the NDC representative. .ut the latter did not su/$it an! co$$ent /ecause it as%ed for three wee%s to wind up its wor% and another three wee%s to consolidate the$ "co$$ent# and su/$it. its report which would /e the /asis of the chair$an6s co$$ent, /ut said final co$$ent was never su/$itted. *t the last part of the report the chair$an stated that the draft of the report contains the report of the two $e$/ers of the /oard of accountants as well as the chair$an6s co$$ent on each ite$ and issue, thus0 5. .oth the NDC representative and the R*3* representative have /een furnished copies of this .* Chair$an6s report so that if the! have an! further co$$ents, and the 'onora/le Court will approve, the! $a! su/$it their views direct to the 'onora/le Court. "Page 85, Report.# .ut as the report of the chair$an of the /oard was su/$itted on *pril 16, 12:2, and the >udge rendered the decision on *pril 42, 12:2, the NDC $e$/er of the /oard had no opportunit! to su/$it his co$$ents. t is to /e noted that contrar! to the provisions of Rule <4 of the Rules, re=uiring that parties /e notified of the su/$ission of the co$$issioner6s report "Sec. 11# and hearing thereon "Sec. 11#, no such notice of the su/$ission of the .oard Chair$an6s report was given NDC and no hearing was had /! the court on said report. $$ediatel! after the su/$ission of the report the court, without the notice and hearing re=uired, rendered its decision, thus violating not onl! the a/ove-$entioned provisions of the rules, /ut contrar! to what was reco$$ended /! the chair$an of the /oard of accountants. -pon the rendition of the >udg$ent the defendant NDC i$$ediatel! perfected its appeal fro$ the decision. No reasons were given wh! it did not present a $otion reconsideration for failure of the court to give it opportunit! to su/$it its o/>ections to the report. n the appeal two i$portant =uestions were raise first is the clai$ of the appellant NDC that the $ental pleading& was i$properl! ad$itted, and second, that the >udge rendered a decision on the contained in the report of the chair$an of the /oard of accountants without opportunit! on the part of the NDC to register its o/>ections thereto. +he first clai$ of the appellant NDC appears to /e well-founded. +he nature of a supple$ental pleading /een descri/ed in Phillips Code Pleading, thus0 Sec. 482. Nature and Purpose of Supple#ental Pleadin s . +he pleadings, original and a$ended, are confined to facts eCisting at the co$$ence$ent of the action. New facts to the action, and $aterial to the right or to the defense arise after the suit is /egun. n order that the particular have the /enefit of such new facts, and that the court render its >udg$ent upon the facts as the! eCist at the ti$e of rendition, it is provided that on such ter$s as to and costs as the court $a! prescri/e, the parties $a! /e allowed to file a supple$ental

co$plaint, answer, or repl! alleging $aterial facts which occur su/se=uent to the co$$ence$ent of the action. . . . nstances where supple$ental pleadings are allowed are given /! said author in section 451, as follows0 S)C. 451. Supple#ental Pleadin s N !llustration. n replevin for sheep, a supple$ental co$plaint $a! as% da$ages for increase in la$/s, and for wool shorn, these /eing in the nature of special da$ages; a supple$ental co$plaint $a! allege the further circulation of the li/el co$plained of; and if, pending suit, a third person assu$e the lia/ilit! of the defendant in respect to the $atter in litigation, he $a! /e $ade a part! /! supple$ental co$plaint. n an action for divorce, a supple$ental answer $a! the plaintiffs adulter! pending suit; and settle$ent after action /rought $a! /e so pleaded; and so $a! pa!$ent, lease pending suit, or an! agree$ent affecting the action well as a >udg$ent entered in another court /etween the parties to the present action. f, pending the action, the defendants ac=uire title to propert! in disputed, to avail hi$self of it, he plead it /! supple$ental answer. *dditional install$ents o/ligation, falling due pending the action, cannot /e recogniDe therein without a$end$ent or supple$ental pleading. . . . "Supra.# Referring to the present case, the causes of action $entioned in the &supple$ental pleading& are not in an! wa! relevant and $aterial to the action of De la Ra$a to co$pel the NDC to sell three of the DoSa vessels to it. +he! did not, in an! wa!, help or aid its defense or right to its option to purchase the vessels. *s a $atter of fact the causes of action stated in the supple$ental pleading are the conse=uences of the failure of De la Ra$a to enforce its right of option to purchase the vessels. +he cause of action set forth in the &supple$ental pleading& could well have /een alleged as an alternative cause of action in the first case, /ut De la Ra$a did not choose to include this cause as such alternative cause of action. +he right to enforce the option to /u! and the right to rei$/urse$ent for eCpenses could not /e >oined together in the previous suit, /ecause the right to purchase eCcludes the right to de$and rei$/urse$ent for the eCpenses; the de$and for rei$/urse$ent of the eCpenses and co$$issions cannot /e enforced if the De la Ra$a eCercise the option to purchase the vessels or is allowed to do so. @e do not, however, /elieve that it would serve the ends of a speed! ad$inistration of >ustice or a pro$pt dispatch of cases to order the dis$issal of the &supple$ental pleading& and cause a new pleading to /e filed. +his would dela! the ter$ination of the suit. So, @e have decided, in the interests of a pro$pt ter$ination of the case to order that the supple$ental pleading and all the pleadings and papers su/se=uent thereto, /e enrolled in the court /elow as a new action, /ut with the o/ligation on the part of De la Ra$a to pa! the fees for the registration of the case ta%ing into account the a$ount de$anded in the a$ended co$plaint, of P1,:1:,61<.54, and the a$ount in the second cause of action of P1,111,111 de$anded as da$ages. +he second ground of appeal should also /e sustained. +he understanding was, as suggested /! the chair$an of the /oard of accountants, for the court to give opportunit! to NDC to su/$it its o/>ections of the stated in the report of the chair$an of the /oard. .ut the court, ignoring the reco$$endation and in violation of sections 11 and 11 of Rule <4, and in disregard the right of an! part! to /e heard, pro$ptl! rendered the decision, naturall! /ased $ostl! on the finding reco$$endations of the chair$an of the /oard. +his action of the >udge is clearl! a violation of the right part! to /e heard and of the due process clause of the Constitution.

t is said, in defense of the action of the court, the cause of the failure of the defendant NDC to present $otion for reconsideration, it has waived the right to /e heard on this report of the chair$an of the /oard of accountants. @e cannot sustain this contention, as was no conduct a$ounting to a waiver of the right /ecause upon the rendition of the decision the appeal pro$ptl! presented, and the denial of the right heard on report of the /oard of accountants was as one of the errors assigned in the appeal. Such a valua/le right as that to /e heard, which is guaranteed /! the Constitution, cannot /e considered as having waived under the circu$stances of the case. +he case should /e re$anded to the court /elow with instructions to give the defendant NDC the opportunit! to su/$it its o/>ections to the report of the /oard of accountant to have a hearing on this report in accordance with rules as a/ove pointed out. @')R)E,R), the decision appealed fro$ is here/! set aside and the case re$anded to the court /elow instructions to enroll the pleadings and papers starting with the &supple$ental pleading,& registering the co$plaint, collecting the corresponding fee /ased on a$ounts de$anded in the co$plaint and entering co$plaint and all the papers in the doc%ets of the court. +hereafter the action shall proceed or continue in accordance with this decision. Costs against plaintiff-appellee. Padilla, "autista An elo, Concepcion, .e(es, %.".9., "arrera, Paredes, Dizon, .e ala and +a)alintal, %%., concur. "en zon, C.%., too% no part.

MAR/E0 C!MMERCIAL C!., INC., Petitioner, vs. "E%RA )AW"IA a'( C!., a'( %)E $IREC%!R !F "A%EN%&, Respondents. CA&%R!, J.:
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&etra @awpia & Co., a partnership d%ly organi7ed %nder the laws of the &hilippines and doing b%siness at 8<K 5. de Aantos '/otica Divisoria-, 5anila 'hereinafter referred to as the applicant-, on 1ctober 3<, 3+89 filed a petition for the registration of the trademark >!(1)&AA> %sed on medicated plaster, with the &hilippine &atent 1ffice, asserting its contin%o%s %se in the &hilippines since 2%ne +, 3+89.1 6he 5arve= Commercial Co., (nc., a corporation also d%ly organi7ed %nder the laws of the &hilippines 'hereinafter referred to as the oppositor-, on 2%ly *<, 3+8+ filed an opposition thereto, alleging that the registration of s%ch trademark wo%ld violate its right to and interest in the trademark >AA!1)&AA> %sed on another medicated plaster, which is registered in its name %nder Certificate of Registration 8<94, iss%ed by the Director of &atents on Aeptember *+, 3+84, and that both trademarks when %sed on medicated plaster wo%ld mislead the p%blic as they are conf%singly similar.
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After d%e hearing, the Director of &atents in his decision of A%g%st 39, 3+43 dismissed the opposition and gave d%e co%rse to the petition, stating in part that >conf%sion, mistake, or deception among the p%rchasers will not likely and reasonably occ%r> when both trademarks are applied to medicated plaster. 6he oppositor moved to have the decision reconsidered. 6his motion was denied in a resol%tion of )ovember *G, 3+43. 6he oppositor then interposed the present appeal.
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6he iss%es stated by the Director of &atents in his decision are the same ones now tendered by the oppositor for resol%tion, namely, '3- (s the applicant the owner of the trademark >!(1)&AA>DC '*Aho%ld the application be re?ected on the gro%nd that the applicant made false representations in placing the phrase >Reg. &hil. &at. 1ff.> below the trademark >!(1)&AA> on its cartonsD, and 'K- (s the trademark >!(1)&AA> conf%singly similar to the trademark >AA!1)&AA>D
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We do not consider the second iss%e of any importanceC we will th%s proceed to resolve the first and third iss%es.
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(s the applicant the owner of the trademark >!(1)&AAD>

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Under sections * and *BA of the 6rade 5ark !aw, as amended, the right to register trademarks, tradenames and service marks by any person, corporation, partnership or association domiciled in the &hilippines or in any foreign co%ntry, is based on ownership, and the b%rden is %pon the applicant to prove s%ch ownership '1perators, (nc. vs. 6he Director of &atents, et al., !B3G+,3, 1ct. *+, 3+48-.
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6he Director of &atents fo%nd, on the strength of e=hibits 8 and 4 for the applicant, that the latter has >satisfactorily shown> its ownership of the trademark so%ght to be registered. "=hibit 8 is a letter dated 2%ne *,, 3+89, sent by >1AAJA /1"J( JA(A@A, !6D.> to the applicant which tends to show that the former, for a M3 consideration, has assigned, ceded, and conveyed all its >rights, interests and goodwill in the tradename !(1)&AA 5edicated &laster . . .> in favor of the latter. "=hibit 4 is a ?oint >AW1R) A6A6"5")6> which appears to have been e=ec%ted by the presidents of >1AAJA /1"J( JA(A@A, !6D.> and >AAU)AR1 &@AR5AC"U6(CA! ()DUA6R. C1.>, and tends to confirm the contents of e=hibit 8.
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A caref%l scr%tiny of e=h. 8 will reveal, however, that the sender of the letter, >1AAJA /1"J( JA(A@A !6D.>, and which appears to be the seller, is merely a representative of the man%fact%rer >AAU)AR1 &@AR5AC"U6(CA! ()DUA6R. C1.> 6here is no proof that as s%ch representative, the former has been a%thori7ed by the latter to sell the trademark in $%estion. 5oreover, e=h. 8 on its face appears to have been signed only by someone whose position in the company0s >A%ndries Dept.> is not describedC the signat%re is not legible. (t is even contradicted by e=h. 4. While e=h. 8 shows that >1AAJA /1"J( JA(A@A, !6D.> is a representative of >AAU)AR1 &@AR5AC"U6(CA! ()DUA6R. C1.>C e=h. 4 asserts that the former is not a representative of the latter, b%t that it is the owner of the trademark >!(1)&AA> 'par. *, e=h. 4-. At all events, neither averment can be accorded the weight of an assignment of ownership of the trademark in $%estion %nder the 6rade 5ark !aw. "=h. 8 is not acknowledged. "=h. 4 does not bear the acknowledgment contemplated by the aforesaid law, partic%larly by the last paragraph of section KG and paragraph * of section K3 of R.A. 344, as amended, which provide as follows; 6he registration of a mark %nder the provisions of this section shall be independent of the registration in the co%ntry of origin andthe duration, validity or transfer in the Philippines of such re*istration shall be *overned by the provisions of this +ct. 'Aec. KG, last par.- '"mphasis o%rschanroble s virt%al law library

6he assignment m%st be in writing, acknowledged before a notary p%blic or other officer a%thori7ed to administer oaths or perform other notarial acts and certified %nder the hand and official seal of the notary or other officer. 'Aec. K3, par. *(n this case, altho%gh a sheet of paper is attached to e=h. 4, on which is typewritten a certification that the signat%res of the presidents of the two named companies 'referring to the signat%res in e=h. 4- >have been d%ly written by themselves>, this sheet is %nmarked, %npaged, %nsigned, %ndated and %nsealed. We have th%mbed the record in $%est of any definitive evidence that it is a correct translation of the 2apanese characters fo%nd on another %nmarked and %npaged sheet, and have fo%nd none.
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(t follows from the above dis$%isition that e=hs. 8 and 4 are legally ins%fficient to prove that the applicant is the owner of the trademark in $%estion.
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As a matter of fact, the other evidence on record concl%sively belies the import of e=h. 4. 6h%s e=h. A states that the applicant is merely the >e=cl%sive distrib%tor> in the &hilippines of the >!(1)&AA> penetrative plasterC e=h. AB3 describes the applicant as the >&hilippine sole distrib%tor> of >!(1)&AA>C e=h. / simply states that >!(1)&AA> is >man%fact%red e=cl%sively for &etra @awpia & Co. for distrib%tion in the &hilippines.>
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)ot being the owner of the trademark >!(1)&AA> b%t being merely an importer andNor distrib%tor of the said penetrative plaster, the applicant is not entitled %nder the law to register it in its name '1perators, (nc. vs. Director of &atents, supra-.
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Upon the third iss%e, the applicant preliminarily asserts that there is no ?%stification for this Co%rt to dist%rb any finding made by the Director of &atents on appeal. 6his assertion is not tenable. Altho%gh the Director of &atents is the official vested by law with the power to administer the registration of trademarks and tradenames, his opinion on the matter of similarity or dissimilarity of trademarks and tradenames is not concl%sive %pon this Co%rt which may pass %pon s%ch determination.
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6he >AA!1)&AA> mark is not before this Co%rt. 1%r metic%lo%s e=amination of the entire record has failed to yield a sample of s%ch mark. We have therefore proceeded to analy7e the two marks, visBaB vis each other, on the basis of what we can derive from the record for a comparative st%dy. And o%r concl%sion, in disagreement with that of the Director of &atents, is not based on a comparison of the appearance, form, style, shape, si7e or format of the trademarks, which we can not make beca%se, as we have already observed, the >AA!1)&AA> mark is not before %s, b%t on a comparison of the spelling, so%nd and pron%nciation of the two words.
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(t is o%r considered view that the trademarks >AA!1)&AA> and >!(1)&AA> are conf%singly similar in so%nd.
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/oth these words have the same s%ffi=, >&AA>, which is %sed to denote a plaster that adheres to the body with c%rative powers. >&as, being merely descriptive, f%rnishes no indication of the origin of the article and therefore is open for appropriation by anyone '"thepa vs. Director of &atents, !B*,4K8, 5arch K3, 3+44- and may properly become the s%b?ect of a trademark by combination with another word or phrase.
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6wo letters of >AA!1)&AA> are missing in >!(1)&AA>C the first letter a and the letter s. /e that as it may, when the two words are prono%nced, the so%nd effects are conf%singly similar. And where goods are advertised over the radio, similarity in so%nd is of especial significance 'Co 6iong Aa vs. Director of &atents, +8 &hil. 3 citing )ims, 6he !aw of Unfair Competition and 6rademarks, <th ed., vol. *, pp. 4G9B4G+-. >6he importance of this r%le is emphasi7ed by the increase of radio advertising in which we are deprived of help of o%r eyes and m%st depend entirely on the ear> '1perators, (nc. vs. Director of &atents, supra-.
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6he following random list of conf%singly similar so%nds in the matter of trademarks, c%lled from )ims, Unfair Competition and 6rade 5arks, 3+<G, vol. 3, will reinforce o%r view that >AA!1)&AA> and >!(1)&AA> are conf%singly similar in so%nd; >:old D%st> and >:old Drop>C >2ant7en> and >2a77BAea>C >Ailver lash> and >A%pperB lash>C >Cascarete> and >Celborite>C >Cell%loid> and >Cellonite>C >Chartre%se> and >Charse%rs>C >C%te=> and >C%ticlean>C >@ebe> and >5e?e>C >Jote=> and > emete=>C >L%so> and >@oo @oo>. !eon Amd%r, in his book >6rade5ark !aw and &ractice>, pp. <3+B<*3, cites, as coming within the p%rview of the idem sonans r%le, >.%sea> and >UBCBA>, >Ateinway &ianos> and >Ateinberg &ianos>, and >AevenBUp> and >!emonBUp>. (n Co 6iong vs. Director of &atents, this Co%rt %ne$%ivocally said that >Celd%ra> and >Cord%ra> are conf%singly similar in so%ndC this Co%rt held in Aapolin Co. vs. /almaceda, 4G &hil. G+8 that the name >!%solin> is an infringement of the trademark >Aapolin>, as the so%nd of the two names is almost the same.
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(n the case at bar, >AA!1)&AA> and >!(1)&AA>, when spoken, so%nd very m%ch alike. Aimilarity of so%nd is s%fficient gro%nd for this Co%rt to r%le that the two marks are conf%singly similar when applied to merchandise of the same descriptive properties 'see Celanese Corporation of America vs. ". (. D% &ont, 38< . *d. 3<4, 3<9-.
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6he registration of >!(1)&AA> cannot therefore be given d%e co%rse.

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ACC1RD():!., the decision of the respondent Director of &atents is set aside, and the petition below of the respondent &etra @awpia & Co. is hereby dismissed, at the cost of the latter respondent.

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Concepcion, C."., Reyes, ".'. ., !i#on, Re*ala, Makalintal, 'en*#on, ".P., $aldivar and %anche#, ""., conc%r. AN$RE& R!MER!, Petitioner, vs. MAI$EN F!RM RA&&IERE C!., INC., a'( %)E $IREC%!R !F "A%EN%&, Respondents. ARRERA, J.:
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rom the decision of the Director of &atents 'of 2an%ary 3G, 3+43- dismissing his petition for cancellation of the registration of the trademark >Adagio> for brassieres man%fact%red by respondent 5aiden orm /rassiere Co., (nc., petitioner Andres Romero, interposed this appeal.
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1n ebr%ary 3*, 3+8G, respondent company, a foreign corporation, filed with respondent Director of &atents an application for registration 'p%rs%ant to Rep%blic Act )o. 344- of the trademark >Adagio> for the brassieres man%fact%red by it. (n its application, respondent company alleged that said trademark was first %sed by it in the United Atates on 1ctober *4, 3+KG, and in the &hilippines on A%g%st K3, 3+<4C that it had been contin%o%sly %sed by it in trade in, or with the &hilippines for over 3, yearsC that said trademark >is on the date of this application, act%ally %sed by respondent company on the following goods, classified according to the official classification of goods 'R%le 9*- B /rassieres, Class <,>C and that said trademark is applied or affi=ed by respondent to the goods by placing thereon a woven label on which the trademark is shown.
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Acting on said application, respondent Director, on A%g%st 3K, 3+8G, approved for p%blication in the 1fficial :a7ette said trademark of respondent company, in accordance with Aection G of Rep%blic Act )o. 344 '6rademark !aw-, having fo%nd, inter alia, that said trademark is >a fancif%l and arbitrary %se of a foreign word adopted by applicant as a trademark for its prod%ctC that it is neither a s%rname nor a geographical term, nor any that comes within the p%rview of Aection < of Rep%blic Act )o. 344C and that the mark as %sed by respondent company convincingly shows that it identifies and disting%ishes respondent company0s goods from others.>
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1n 1ctober 3G, 3+8G, respondent Director iss%ed to respondent company a certificate of registration of with, trademark >Adagio>.
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1n ebr%ary *4, 3+89, petitioner filed with respondent Director a petition for cancellation of said trademark, on the gro%nds that it is a common descriptive name of an article or s%bstance on which the patent has e=piredC that its registration was obtained fra%d%lently or contrary to the provisions of Aection <, Chapter (( of Rep%blic Act )o. 344C and that the application for its registration was not filed in accordance with the provisions of Aection KG, Chapter #( of the same Act. &etitioner also alleged that said trademark has not become distinctive of respondent company0s goods or b%sinessC that it has been %sed by respondent company to classify the goods 'the brassieres- man%fact%red by it, in the same manner as petitioner %ses the sameC that said trademark has been %sed by petitioner for almost 4 yearsC that it has become a common descriptive nameC and that it is not registered in accordance with the re$%irements of Aection KG'a-, Chapter #( of Rep%blic Act )o. 344.
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(ss%es having been ?oined, the case was heard and, after hearing, respondent Director 'on 2an%ary 3G, 3+43- rendered the decision above adverted to.
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&etitioner filed a motion for reconsideration of said decision, on the gro%nds that '3- it is contrary to the evidence, and '*- it is contrary to law. Aaid motion was denied by respondent Director by resol%tion of 5arch G, 3+43.
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@ence, this appeal.

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Appellant claims that the trademark >Adagio> has become a common descriptive name of a partic%lar style of brassiere and is, therefore, %nregistrable. (t is %rged that said trademark had been %sed by local brassiere man%fact%rers since 3+<9, witho%t ob?ection on the part of respondent company.

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6his claim is witho%t basis in fact. 6he evidence shows that the trademark >Adagio> is a m%sical term, which means slowly or in an easy manner, and was %sed as a trademark by the owners thereof 'the Rosenthals of 5aiden orm Co., )ew .ork- beca%se they are m%sically inclined. /eing a m%sical term, it is %sed in an arbitrary 'fancif%l- sense as a trademark for brassieres man%fact%red by respondent company. (t also appears that respondent company has, likewise, adopted other m%sical terms s%ch as >"t%de> '"=h. WB*-, >Chansonette> '"=h. WBK-, >&rel%de> '"=h. WB<-, >1verBt%re> '"=h. WB4-, and >Concerto> '"=h. I-, to identify, as a trademark, the different styles or types of its brassieres. As respondent Director pointed o%t, >the fact that said mark is %sed also to designate a partic%lar style of brassiere, does not affect its registrability as a trademark> 'Jiekhaefer Corp. v. WillysB1verland 5otors, (nc., 333 UA&O 3,8-.
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(t is not tr%e that respondent company did not ob?ect to the %se of said trademark by petitioner and other local brassiere man%fact%rers. 6he records show that respondent company0s agent, 5r. Achwart7, warned the Ialleson Department Atore to desist from the sale of the >Adagio> Royal orm brassieres man%fact%red by petitioner 't.s.n., pp. *GB*9, 1ct. G, 3+89-, and even placed an advertisement '"=hs. K & <- in the local newspapers '5anila Daily /%lletin, 5anila 6imes, ookien 6imes, and others- warning the p%blic against %nlawf%l %se of said trademark 't.s.n., p. 38, A%g. 3G, 3+8+-. 6he advertisement '"=h. U- in the 5anila 6imes made by respondent company on ebr%ary +, 3+89, was bro%ght to petitioner0s attention 't.s.n., p. *<, 1ct. G, 3+89-, which m%st have prompted him to file this present petition for cancellation, on ebr%ary *4, 3+89.
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1n the other hand, respondent company0s long and contin%o%s %se of the trademark >Adagio> has not rendered it merely descriptive of the prod%ct. (n Winthrop Chemical Co. v. /lackman '*49 ).A 48K-, it was held that widespread dissemination does not ?%stify the defendants in the %se of the trademark. Ieronal has been widely sold in this co%ntry by the plaintiffC over 8,*8,,,,, packages have been sold since 3+3+. 6his is a conse$%ence of the long and contin%ed %se by the plaintiff of this trademark and is the res%lt of its efforts to inform the profession and the p%blic of its prod%ct. 6his widespread dissemination does not ?%stify the defendants in the %se of this trademark. (f this arg%ment were so%nd, then every time a plaintiff obtained the res%lt of having the p%blic p%rchase its article, that fact of itself wo%ld destroy a trademark. Arbitrary trademarks cannot become generic in this way. 2acobs v. /eecham, **3 U.A. *4K, K3 A. Ct. 888, 88 !. "d. G*+C CocaBCola Co. v. Joke Co. of American, *8< U.A. 3<K, <3 A. Ct. 33K, 48 !. "d. 39+. 'emphasis s%pplied.Appellant ne=t contends that the trademark >Adagio at the time it was registered 'in the &hilippineson 1ctober 3G, 3+8G, had long been %sed by respondent company, only >to designate a partic%lar style or $%ality of brassiere and, therefore, is %nregistrable as a trademark. (n s%pport of the contention, he alleges that the sentence >5aidenform bras are packaged for yo%r $%ick shopping convenience. or other pop%lar 5aidenform styles writ for free style booklet to; 5aiden orm /rassiere Co., (nc *,, 5adison Aven%e, )ew .ork 34, )...> printed on the package '"=h. W-, shows that the trademark >Adagio> is %sed to designate a partic%lar style or $%ality of brassiere. @e also cites portions of the testimonies of his witnesses /a%tista and /arro, to the effect that said trademark refers to the style of brassieres sold in the stores of which they are salesmen.
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6his contention is %ntenable. Aaid sentence appearing on the package '"=h. W-, standing alone, does not concl%sively indicate that the trademark >Adagio> is merely a style of brassiere. 6he testimony of 5r. Achwart7, witness of respondent company, belies petitioner0s claim; O. 6here is a statement at the bottom of "=hibit W which reads, 06here is a 5aidenform for every type of fig%re0. As yo% stated yo% are very familiar with these bras man%fact%re by 5aidenform /rassiere Company, what are these types of fig%res this "=hibit W refer toD
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A. 6his is a prod%ct sold primarily in the United Atates they have cold climate there, and a style to s%it the climate and we have different here. 6his kind of bra very seldom comes here. 6his type is very e=pensive and sold primarily in the United Atates. We do not sell it hereC it is very e=pensive an import restrictions do not allow o%r dollar allocations for s%ch sort.

As to the testimonies of /a%tista and /arro, they are me concl%sions of said witnesses. )ote that when /a%tista was asked why he considered the trademark >Adagio> as a style, he replied that the brand >Adagio> is attached disting%ish the style. @e stated as follows; O. .o% said that those bras mentioned by yo% s%ch as Adagio, &rel%de, Alloette, are styles, will yo% please tell %s the reason why yo% said that those are stylesD
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A. .o% know his brand like Adagio, Alloette are ?%st attached to the bras ?%st to disting%ish the style; (t is not the main brand. /arro, on the other hand, said that >Adagio> is a mark. Ahe declared as follows; O. .o% state that yo% %sed to sell brassieres in the store in which yo% workC when c%stomers come to yo%r store and ask for brassieres, what do they %s%ally ask from yo%D
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A. Well, ( tell yo% there are so many types and certain types of people ask for certain brassiere. 6here are people who ask for Royal orm Adagio and there are others who ask for D%chess (deal orm, and so many kinds of marks. /rassieres are %s%ally of different types or styles, and appellee has %sed different trademarks for every type as shown by its labels, "=hibits WB* '"t%de-, WBK 'Chansonette-, WB< '&rel%de-, WB8 '5aidenette-, and WB4, '1vert%re-. 6he mere fact that appellee %ses >Adagio> for one type or style, does not affect the validity of s%ch word as a trademark. (n. the case of Jiekhaefer Corp. v. WillysB 1verland 5otors, 333 UA&O 3,8, it was held that the fact that the word >@%rricane> was %sed to designate only one model of a%tomobile, did not affect the validity of that word as a trademark. (n 5innesota 5ining Co. I. 5otloid Co., G< UA&O *K8, the applicant so%ght to register the letters >55> in diagonal relationship within a circle. Applicant admitted that this mark was %sed only for its medi%m price and medi%m $%ality dent%reBbase materials. 6he Assistant Commissioner of &atents held; (t clearly appears, however, that the mark serves to indicate origin of applicant0s goodsC and the fact that it is %sed on only one of several types or grades does not affect its registrability as a trade mark. Appellant also claims that respondent Director erred in registering the trademark in $%estion, despite appellee0s nonBcompliance with Aection KG, paragraphs 3 and < 'a- of Rep%blic Act )o. 344.
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6his contention flows from a misconception of the application for registration of trademark of respondent. As we see it, respondent0s application was filed %nder the provisions of Aection * of Rep%blic Act )o. 344 as amended by Aection 3 of Rep%blic Act 948 which reads as follows; >A"C. *. What are registrable B 6rademarks, ... own by persons, corporations, partnerships or associations domiciled ... in any foreign co%ntry may be registered in accordance with the provisions of this Act; Provided, 6hat said trademarks, tradeBnames, or service marks are act%ally in %se in commerce and services not less than two months in the &hilippines before the time the applications for registration are filed; ...> Aection KG of Rep%blic Act )o. 344 can be availed of only where the &hilippines is a party to an international convention or treaty relating to trademarks, in which the tradeBmark so%ght to be registered need not be %se in the &hilippines. 6he applicability of Aection KG has been commented on by the Director of &atents, in this wise; 6rademark rights in the &hilippines, witho%t act%al %se the trademark in this co%ntry can, of co%rse, be created artificially by means of a treaty or convention with another co%ntry or co%ntries. Aection KG of the present &hilippine 6rademark !aw, Rep%blic Act )o. 344 'incorporated as R%le 9* in the R%les of &ractice for Registration of 6rademarks- envisions the event%al entrance of the &hilippines into s%ch convention treaty. (t is provided in said section that applications filed there%nder need not allege %se

in the &hilippines of the trade mark so%ght to be registered. 6he &hilippines has, however not yet entered into any s%ch treaty or convention and, %ntil she does, act%al %se in the &hilippines of the trademark so%ght to be registered and allegation in the application of s%ch fact, will be re$%ired in all applications for original or renewal registration s%bmitted to the &hilippine &atent 1ffice. 'Circ%lar Release )o. 9.Appellant, likewise, contends that the registration the trademark in $%estion was fra%d%lent or contrary Aection < of Rep%blic Act )o. 344. 6here is no evidence to show that the registration of the trademark >Adagio> was obtained fra%d%lently by appellee. 6he evidence record shows, on the other hand, that the trademark >Adagio> was first e=cl%sively in the &hilippines by a appellee in the year 3+K*. 6here being no evidence of %se of the mark by others before 3+K*, or that appellee abandoned %se thereof, the registration of the mark was made in accordance with the 6rademark !aw. :ranting that appellant %sed the mark when appellee stopped %sing it d%ring the period of time that the :overnment imposed restrictions on importation of respondent0s brassiere bearing the trademark, s%ch temporary nonB%se did not affect the rights of appellee beca%se it was occasioned by government restrictions and was not permanent, intentional, and vol%ntary. 6o work an abandonment, the dis%se m%st be permanent and not ephemeralC it m%st be intentional and vol%ntary, and not invol%ntary or even comp%lsory. 6here m%st be a thoro%ghBgoing discontin%ance of any tradeBmark %se of the mark in $%estion 'Callman, Unfair Competition and 6rademark, *nd "d., p. 3K<3-. 6he %se of the trademark by other man%fact%rers did not indicate an intention on the part of appellee to abandon it. >6he instances of the %se by others of the term 0/%dweiser, cited by the defendant, fail, even when liberally constr%ed, to indicate an intention %pon the part of the complainant to abandon its rights to that name. 06o establish the defense of abandonment, it is necessary to show not only acts indicating a practical abandonment, b%t an act%al intention to abandon. Aa=lehner v. "isener & 5endelson Co., 3G+ U.A. 3+, *3 A. Ct. G '<8 !. "d. 4,-. 'Anhe%serB/%sch, (nc. v. /%dweiser 5alt &rod%cts Corp., *9G . *<8.Appellant ne=t arg%es that respondent Director erred in declaring illegal the appropriation in the &hilippines of the trademark in $%estion by appellant and, therefore, said appropriation did not affect appellee0s right thereto and the s%bse$%ent registration thereof. Appellant %rges that its appropriation of the trademark in $%estion cannot be considered illegal %nder &hilippine laws, beca%se of nonB compliance by appellee of Aection KG of Rep%blic Act )o. 344. /%t we have already shown that Aection KG is not the provision invoked by respondent beca%se the &hilippines is not as yet a party to any international convention or treaty relating to trademarks. 6he case of United Dr%g Co. v. Rectan%s, *<9 U.A. +,, K+ A. Ct. <9, 4K !. "d. 3<3, cited by appellant, is not applicable to the present case, as the records show that appellee was the first %ser of the trademark in the &hilippines, whereas appellant was the later %ser. :ranting that appellant %sed the tradeBmark at the time appellee stopped %sing it d%e to government restrictions on certain importations, s%ch fact did not, as heretofore stated, constit%te abandonment of the trademark as to entitle anyone to its free %se. )onB%se beca%se of legal restrictions is not evidence of an intent to abandon. )onB%se of their ancient tradeBmark and the adoption of new marks by the Carth%sian 5onks after they had been compelled to leave rance was consistent with an intention to retain their right to %se their old mark. Abandonment will not be inferred from a dis%se over a period of years occasioned by stat%tory restrictions on the name of li$%or. ')ims Unfair Competition and 6radeB5ark p. 3*4+.() I("W 1 A!! 6@" 1R":1():, we are of the opinion and so hold, that respondent Director of &atents did not err in dismissing the present petition for cancellation of the registered trademark of appellee company, and the decision appealed from is therefore hereby affirmed, with costs against the appellant. Ao ordered.

'en*#on, C."., Padilla, 'autista +n*elo, abrador, Reyes, ".'. ., Paredes, !i#on, Re*ala and Makalintal, ""., concur. Concepcion, "., took no part.

G.R. No. 112012

A>('l /, 2001

S!CIETE DES PR!DUITS NESTLE, S.A. "#$ NESTLE PHILIPPINES, INC., petitioners, vs. C!URT !4 APPEALS "#$ C4C C!RP!RATI!N., respondents. YNARES-SANTIAG!, J.M +his is a petition for review assailing the Decision of the Court of *ppeals in C*-B.R. SP No. 44111,1 reversing and setting aside the decision of the .ureau of Patents, +rade$ar%s and +echnolog! +ransfer ".P+++#,4 which denied private respondentNs application for registration of the trade-$ar%, E(*M,R 3*S+)R. ,n 9anuar! 15, 1254, private respondent CEC Corporation filed with the .P+++ an application for the registration of the trade$ar% &E(*M,R 3*S+)R& for instant coffee, under Serial No. :4224. +he application, as a $atter of due course, was pu/lished in the 9ul! 15, 1255 issue of the .P+++Ns ,fficial BaDette. Petitioner Societe Des Produits Nestle, S.*., a Swiss co$pan! registered under Swiss laws and do$iciled in SwitDerland, filed an unverified Notice of ,pposition, < clai$ing that the trade$ar% of private respondentNs product is &confusingl! si$ilar to its trade$ar%s for coffee and coffee eCtracts, to wit0 3*S+)R R,*S+ and 3*S+)R .()ND.& (i%ewise, a verified Notice of ,pposition was filed /! Nestle Philippines, nc., a Philippine corporation and a licensee of Societe Des Produits Nestle S.*., against CECNs application for registration of the trade$ar% E(*M,R 3*S+)R.4 Nestle clai$ed that the use, if an!, /! CEC of the trade$ar% E(*M,R 3*S+)R and its registration would li%el! cause confusion in the trade; or deceive purchasers and would falsel! suggest to the purchasing pu/lic a connection in the /usiness of Nestle, as the do#inant &ord present in the three "<# trade$ar%s is &3*S+)R&; or that the goods of CEC $ight /e $ista%en as having originated fro$ the latter. n answer to the two oppositions, CEC argued that its trade$ar%, E(*M,R 3*S+)R, is not confusingl! si$ilar with the for$erNs trade$ar%s, 3*S+)R R,*S+ and 3*S+)R .()ND, alleging that, &eCcept for the word 3*S+)R "which cannot /e eCclusivel! appropriated /! an! person for /eing a descriptive or generic na$e#, the other words that are used respectivel! with said word in the three trade$ar%s are ver! different fro$ each other W in $eaning, spelling, pronunciation, and sound&. CEC further argued that its trade$ar%, E(*M,R 3*S+)R, &is clearl! ver! different fro$ an! of NestleNs alleged trade$ar%s 3*S+)R R,*S+ and 3*S+)R .()ND, especiall! when the $ar%s are viewed in their entiret!, /! considering their pictorial representations, color sche$es and the letters of their respective la/els.& n its Decision No. 21-48 dated Dece$/er 48, 1221, the .P+++ denied CECNs application for registration.: CEC elevated the $atter to the Court of *ppeals, where it was doc%eted as C*-B.R. SP No. 44111. +he Court of *ppeals defined the issue thus0 &Does appellant CECNs trade dress /ear a stri%ing rese$/lance with appelleeNs trade$ar%s as to create in the purchasing pu/licNs $ind the $ista%en i$pression that /oth coffee products co$e fro$ one and the sa$e source?&

*s stated a/ove, the Court of *ppeals, in the assailed decision dated Septe$/er 4<, 122<, reversed Decision No. 21-48 of the .P+++ and ordered the Director of Patents to approve CECNs application. +he Court of *ppeals ruled0 @ere @e to ta%e even a lac%adaisical glance at the overall appearance of the contending $ar%s, the ph!sical discrepancies /etween appellant CECNs and appelleeNs respective logos are so ostensi/le that the casual purchaser cannot li%el! $ista%e one for the other. *ppellant CECNs la/el ")Chi/it &4&# is predo$inantl! a /lend of dar% and lighter shade of orange where the words &E(*M,R 3*S+)R&, &E(*M,R& appearing on top of &3*S+)R&, shaded in $ocha with thin white inner and outer sidings per letter and identicall! lettered eCcept for the slightl! protruding /otto$ curve of the letter &S& ad>oining the /otto$ tip of the letter &*& in the word &3*S+)R&, are printed across the top of a si$$ering red coffee cup. -nderneath &E(*M,R 3*S+)R& appears &Pre$iu$ nstant Coffee& printed in white, sli$ and slanted letters. *ppelleesN &3*S+)R R,*S+& la/el ")Chi/it &8&#, however, is al$ost dou/le the width of appellant CECNs. *t the top is printed in /rown color the word &N)SC*E)& against a white /ac%drop. ,ccup!ing the center is a s=uare-shaped configuration shaded with dar% /rown and picturing a heap of coffee /eans, where the word &3*S+)R& is inscri/ed in the $iddle. &3*S+)R& in appelleesN la/el is printed in taller capital letters, with the letter &3& further capitaliDed. +he letters are shaded with red and /ounded with thin gold-colored inner and outer sidings. 9ust a/ove the word &3*S+)R& is a red window li%e portrait of what appears to /e a coffee shru/ clad in gold. .elow the &3*S+)R& appears the word &R,*S+& i$pressed in s$aller, white print. *nd further /elow are the inscriptions in white0 &* selection of pri$e *ra/ica and Ro/usta coffee.& @ith regard to appelleesN &3*S+)R .()ND& la/el ")Chi/it &6&# of which onl! a CeroCed cop! is su/$itted, the letters are /older and taller as co$pared to appellant CECNs and the word &3*S+)R& appears on top of the word &.()ND& and /elow it are the words &111R pure instant coffee& printed in s$all letters. Ero$ the foregoing description, while the contending $ar%s depict the sa$e product, the glaring dissi$ilarities in their presentation far outweigh and dispel an! aspect of si$ilitude. +o /orrow the words of the Supre$e Court in *$erican C!ana$id Co. v. Director of Patents "86 SCR* :65#, appellant CECNs and appelleesN la/els are entirel! different in siDe, /ac%ground, colors, contents and pictorial arrange$ent; in short, the general appearances of the la/els /earing the respective trade$ar%s are so distinct fro$ each other that appellees cannot assert that the do$inant features, if an!, of its trade$ar%s were used or appropriated in appellant CECNs own. +he distinctions are so well-defined so as to foreclose an! pro/a/ilit! or li%elihood of confusion or deception on the part of the nor$all! intelligent /u!er when he or she encounters /oth coffee products at the grocer! shelf. +he answer therefore to the =uer! is a clear-cut N,.6 Petitioners are now /efore this Court on the following assign$ent of errors0 1. R)SP,ND)N+ C,-R+ BR*M)(G )RR)D N R)M)RS NB *ND S)++ NB *S D) +') D)C S ,N "N,. 21-48# ,E +') D R)C+,R ,E +') .-R)*- ,E P*+)N+S, +R*D)3*R7S *ND +)C'N,(,BG +R*NSE)R ".P+++# D*+)D D)C)3.)R 48, 1221. 4. R)SP,ND)N+ C,-R+ )RR)D N E ND NB +'*+ *PP)((*N+ CECNS +R*D) DR)SS S .)G,ND +') SC,P) ,E +') PR,SCR P+ ,N (* D D,@N .G 9-R SPR-D)NC) *ND +') +R*D)3*R7 (*@. <. R)SP,ND)N+ C,-R+ )RR)D N ',(D NB +'*+ +') +,+*( +G R-(), R*+')R +'*N +') +)S+ ,E D,3 N*NCG, *PP( )S +, +') C*S).

4. R)SP,ND)N+ C,-R+ )RR)D N NM,7 NB +') +,+*( +G R-() *PP( )D N +') C*S)S ,E .R S+,( 3G)RS M. D R)C+,R ,E P*+)N+S, )+ *(. "18 SCR* 145#, 3)*D 9,'NS,N I C,. M. NM9 M*N D,RE (+D., "8 SCR* 865# *ND *3)R C*N CG*N*3 D C,. M. D R)C+,R ,E P*+)N+S "86 SCR* :65#. +he petition is i$pressed with $erit. * trade$ar% has /een generall! defined as &an! word, na$e, s!$/ol or device adopted and used /! a $anufacturer or $erchant to identif! his goods and distinguish the$ fro$ those $anufactured and sold /! others.&8 * $anufacturerNs trade$ar% is entitled to protection. *s 3r. 9ustice Eran%furter o/served in the case of +isha&a)a +f . Co. v. ;res e Co.05 +he protection of trade-$ar%s is the lawNs recognition of the ps!chological function of s!$/ols. f it is true that we live /! s!$/ols, it is no less true that we purchase goods /! the$. * trade-$ar% is a $erchandising short-cut which induces a purchaser to select what he wants, or what he has /een led to /elieve he wants. +he owner of a $ar% eCploits this hu$an propensit! /! $a%ing ever! effort to i$pregnate the at$osphere of the $ar%et with the drawing power of a congenial s!$/ol. @hatever the $eans e$plo!ed, the ai$ is the sa$e --- to conve! through the $ar%, in the $inds of potential custo$ers, the desira/ilit! of the co$$odit! upon which it appears. ,nce this is attained, the trade-$ar% owner has so$ething of value. f another poaches upon the co$$ercial $agnetis$ of the s!$/ol he has created, the owner can o/tain legal redress. Section 4 "d# of Repu/lic *ct No. 166 or the +rade$ar% (aw, as a$ended, which was in force at the ti$e, provides thus0 .e istration of trade*#ar)s, trade*na#es and service*#ar)s on the principal re ister . - +here is here/! esta/lished a register of trade-$ar%s, trade-na$es and service $ar%s which shall /e %nown as the principal register. +he owner of a trade-$ar%, trade-na$e or service-$ar% used to distinguish his goods, /usiness or services fro$ the goods, /usiness or services of others shall have the right to register the sa$e on the principal register, unless it0 CCC CCC CCC

"d# Consists of or co$prises a $ar% or trade-na$e which so rese$/les a $ar% or tradena$e registered in the Philippines or a $ar% or trade-na$e previousl! used in the Philippines /! another and not a/andoned,as to be li)el(, when applied to or used in connection with the goods, /usiness or services of the applicant, to cause confusion or #ista)e or to deceive purchasers; CCC CCC CCC

")$phasis supplied# +he law prescri/es a $ore stringent standard in that there should not onl! /e confusing si$ilarit! /ut that it should not li%el! cause confusion or $ista%e or deceive purchasers. 'ence, the =uestion in this case is whether there is a li%elihood that the trade$ar% E(*M,R 3*S+)R $a! cause confusion or $ista%e or $a! deceive purchasers that said product is the sa$e

or is $anufactured /! the sa$e co$pan!. n other words, the issue is whether the trade$ar% E(*M,R 3*S+)R is a colora/le i$itation of the trade$ar%s 3*S+)R R,*S+ and 3*S+)R .()ND. Colora/le i$itation denotes such a close or ingenious i$itation as to /e calculated to deceive ordinar! persons, or such a rese$/lance to the original as to deceive an ordinar! purchaser giving such attention as a purchaser usuall! gives, as to cause hi$ to purchase the one supposing it to /e the other.2 n deter$ining if colora/le i$itation eCists, >urisprudence has developed two %inds of tests - the Do$inanc! +est and the 'olistic +est.11 +he test of do$inanc! focuses on the si$ilarit! of the prevalent features of the co$peting trade$ar%s which $ight cause confusion or deception and thus constitute infringe$ent. ,n the other side of the spectru$, the holistic test $andates that the entiret! of the $ar%s in =uestion $ust /e considered in deter$ining confusing si$ilarit!. 11 n the case at /ar, the Court of *ppeals held that0 +he deter$ination of whether two trade$ar%s are indeed confusingl! si$ilar $ust /e ta%en fro$ the viewpoint of the ordinar! purchasers who are, in general, undiscerningl! rash in /u!ing the $ore co$$on and less eCpensive household products li%e coffee, and are therefore less inclined to closel! eCa$ine specific details of si$ilarities and dissi$ilarities /etween co$peting products. +he Supre$e Court in Del +onte Corporation v. CA, 151 SCR* 411, held that0 &+he =uestion is not whether the two articles are distinguisha/le /! their la/els when set side /! side /ut whether the general confusion $ade /! the article upon the e!e of the casual purchaser who is unsuspicious and off his guard, is such as to li%el! result in his confounding it with the original. *s o/served in several cases, the general i$pression of the ordinar! purchaser, /u!ing under the nor$all! prevalent conditions in trade and giving the attention such purchasers usuall! give in /u!ing that class of goods, is the touchstone.& Ero$ this perspective, the test of si$ilarit! is to consider the two $ar%s in their entiret!, as the! appear in the respective la/els, in relation to the goods to which the! are attached ""ristol +(ers Co#pan( v. Director of Patents, et al., 18 SCR* 145, citin +ead %ohnson < Co. v. NV% Van Dorp, 9td., et al., 8 SCR* 865#. +he $ar% $ust /e considered as a whole and not as dissected. f the /u!er is deceived, it is attri/uta/le to the $ar%s as a totalit!, not usuall! to an! part of it "Del +onte Corp. v. CA, supra#, as what appellees would want it to /e when the! essentiall! argue that $uch of the confusion springs fro$ appellant CECNs use of the word &3*S+)R& which appellees clai$ to /e the do$inant feature of their own trade$ar%s that captivates the prospective consu$ers. .e it further e$phasiDed that the discerning e!e of the o/server $ust focus not onl! on the predo$inant words /ut also on the other features appearing in /oth la/els in order that he $a! draw his conclusion whether one is confusingl! si$ilar to the other "+ead %ohnson < Co. v. NV% Van Dorp, 9td., supra#.14 +he Court of *ppeals applied so$e >udicial precedents which are not on all fours with this case. t $ust /e e$phasiDed that in infringe$ent or trade$ar% cases in the Philippines, particularl! in ascertaining whether one trade$ar% is confusingl! si$ilar to or is a colora/le i$itation of another, no set rules can /e deduced. )ach case $ust /e decided on its own $erits. 1< n Esso Standard, !nc. v. Court of Appeals,14 we ruled that the li%elihood of confusion is a relative concept; to /e deter$ined onl! according to the particular, and so$eti$es peculiar, circu$stances of each case. n trade$ar% cases, even $ore than in an! other litigation, precedent $ust /e studied in light of the facts of the particular case. +he wisdo$ of the li%elihood of confusion test lies in its recognition that each trade$ar% infringe$ent case presents its own uni=ue set of facts. ndeed, the co$pleCities attendant

to an accurate assess$ent of li%elihood of confusion re=uire that the entire panopl! of ele$ents constituting the relevant factual landscape /e co$prehensivel! eCa$ined. 1: +he Court of *ppealsN application of the case of Del +onte Corporation v. Court of Appeals 16 is, therefore, $isplaced. n Del +onte, the issue was a/out the alleged si$ilarit! of Del 3onteNs logo with that of Sunshine Sauce 3anufacturing ndustries. .oth corporations $ar%et the catsup product which is an ineCpensive and co$$on household ite$. Since Del 3onte alleged that SunshineNs logo was confusingl! si$ilar to or was a colora/le i$itation of the for$erNs logo, there was a need to go into the details of the two logos as well as the shapes of the la/els or $ar%s, the /rands printed on the la/els, the words or lettering on the la/els or $ar%s and the shapes and colors of the la/els or $ar%s. +he sa$e criteria, however, cannot /e applied in the instant petition as the facts and circu$stances herein are peculiarl! different fro$ those in the Del +onte case. n the sa$e $anner, the Court of *ppeals erred in appl!ing the totalit! rule as defined in the cases of "ristol +(ers v. Director of Patents;18 +ead %ohnson < Co. v. NV% Van Dorf 9td.;15 and A#erican C(ana#id Co. v. Director of Patents.12 +he totalit! rule states that &the test is not si$pl! to ta%e their words and co$pare the spelling and pronunciation of said words. n deter$ining whether two trade$ar%s are confusingl! si$ilar, the two $ar%s in their entiret! as the! appear in the respective la/els $ust /e considered in relation to the goods to which the! are attached; the discerning e!e of the o/server $ust focus not onl! on the predo$inant words /ut also on the other features appearing on /oth la/els.&41 *s this Court has often declared, each case $ust /e studied according to the peculiar circu$stances of each case. +hat is the reason wh! in trade$ar% cases, >urisprudential precedents should /e applied onl! to a case if the! are specificall! in point. n the a/ove cases cited /! the Court of *ppeals to >ustif! the application of the totalit! or holistic test to this instant case, the factual circu$stances are su/stantiall! different. n the "ristol +(ers case, this Court held that although /oth . ,E)R N and .-EE)R N are pri$aril! used for the relief of pains such as headaches and colds, and their na$es are practicall! the sa$e in spelling and pronunciation, /oth la/els have stri%ingl! different /ac%grounds and surroundings. n addition, one is dispensa/le onl! upon doctorNs prescription, while the other $a! /e purchased over-the-counter. n the +ead %ohnson case, the differences /etween *(*C+* and *(*S7* are glaring and stri%ing to the e!e. *lso, *(*C+* refers to &Phar$aceutical Preparations which Suppl! Nutritional Needs,& falling under Class 6 of the official classification of 3edicines and Phar$aceutical Preparations to /e used as prescri/ed /! ph!sicians. ,n the other hand, *(*S7* refers to &Eoods and ngredients of Eoods& falling under Class 48, and does not re=uire $edical prescription. n the A#erican C(ana#id case, the word S-(3)+ is distinguisha/le fro$ the word S-(3)+ N), as the for$er is derived fro$ a co$/ination of the s!lla/les &S-(& which is derived fro$ sulfa and &3)+& fro$ $eth!l, /oth of which are che$ical co$pounds present in the article $anufactured /! the contending parties. +his Court held that the addition of the s!lla/le & N)& in respondentNs la/el is sufficient to distinguish respondentNs product or trade$ar% fro$ that of petitioner. *lso, /oth products are for $edicinal veterinar! use and the /u!er will /e $ore war! of the nature of the product he is /u!ing. n an! case, /oth products are not identical as S-(3)+Ns la/el indicates that it is used in a drin%ing water solution while that of S-(3)+ N) indicates that the! are ta/lets. t cannot also /e said that the products in the a/ove cases can /e /ought off the shelf eCcept, perhaps, for *(*S7*. +he said products are not the usual &co$$on and ineCpensive& household

ite$s which an &undiscerningl! rash& /u!er would unthin%ingl! /u!. n the case at /ar, other than the fact that /oth NestleNs and CECNs products are ineCpensive and co$$on household ite$s, the si$ilarit! ends there. @hat is /eing =uestioned here is the use /! CEC of the trade$ar% 3*S+)R. n view of the difficult! of appl!ing >urisprudential precedents to trade$ar% cases due to the peculiarit! of each case, >udicial fora should not readil! appl! a certain test or standard >ust /ecause of see$ing si$ilarities. *s this Court has pointed a/ove, there could /e $ore telling differences than si$ilarities as to $a%e a >urisprudential precedent inapplica/le. Nestle points out that the do$inanc! test should have /een applied to deter$ine whether there is a confusing si$ilarit! /etween CECNs E(*M,R 3*S+)R and NestleNs 3*S+)R R,*S+ and 3*S+)R .()ND. @e agree. *s the Court of *ppeals itself has stated, &KtLhe deter$ination of whether two trade$ar%s are indeed confusingl! si$ilar $ust /e ta%en fro$ the viewpoint of the ordinar! purchasers who are, in general, undiscerningl! rash in /u!ing the $ore co$$on and less eCpensive household products li%e coffee, and are therefore less inclined to closel! eCa$ine specific details of si$ilarities and dissi$ilarities /etween co$peting products.&41 +he /asis for the Court of *ppealsN application of the totalit! or holistic test is the &ordinar! purchaser& /u!ing the product under &nor$all! prevalent conditions in trade& and the attention such products nor$all! elicit fro$ said ordinar! purchaser. *n ordinar! purchaser or /u!er does not usuall! $a%e such scrutin! nor does he usuall! have the ti$e to do so. +he average shopper is usuall! in a hurr! and does not inspect ever! product on the shelf as if he were /rowsing in a li/rar!.44 +he Court of *ppeals held that the test to /e applied should /e the totalit! or holistic test reasoning, since what is of para$ount consideration is the ordinar! purchaser who is, in general, undiscerningl! rash in /u!ing the $ore co$$on and less eCpensive household products li%e coffee, and is therefore less inclined to closel! eCa$ine specific details of si$ilarities and dissi$ilarities /etween co$peting products. +his Court cannot agree with the a/ove reasoning. f the ordinar! purchaser is &undiscerningl! rash& in /u!ing such co$$on and ineCpensive household products as instant coffee, and would therefore /e &less inclined to closel! eCa$ine specific details of si$ilarities and dissi$ilarities& /etween the two co$peting products, then it would /e less li%el! for the ordinar! purchaser to notice that CECNs trade$ar% E(*M,R 3*S+)R carries the colors orange and $ocha while that of NestleNs uses red and /rown. +he application of the totalit! or holistic test is i$proper since the ordinar! purchaser would not /e inclined to notice the specific features, si$ilarities or dissi$ilarities, considering that the product is an ineCpensive and co$$on household ite$. t $ust /e e$phasiDed that the products /earing the trade$ar%s in =uestion are &ineCpensive and co$$on& household ite$s /ought off the shelf /! &undiscerningl! rash& purchasers. *s such, if the ordinar! purchaser is &undiscerningl! rash&, then he would not have the ti$e nor the inclination to $a%e a %een and perceptive eCa$ination of the ph!sical discrepancies in the trade$ar%s of the products in order to eCercise his choice. @hile this Court agrees with the Court of *ppealsN detailed enu$eration of differences /etween the respective trade$ar%s of the two coffee products, this Court cannot agree that totalit! test is the one applica/le in this case. Rather, this Court /elieves that the do$inanc! test is $ore suita/le to this case in light of its peculiar factual $ilieu.

3oreover, the totalit! or holistic test is contrar! to the ele$entar! postulate of the law on trade$ar%s and unfair co$petition that confusing si$ilarit! is to /e deter$ined on the /asis of visual, aural, connotative co$parisons and overall i$pressions engendered /! the $ar%s in controvers! as the! are encountered in the realities of the $ar%etplace. 4< +he totalit! or holistic test onl! relies on visual co$parison /etween two trade$ar%s whereas the do$inanc! test relies not onl! on the visual /ut also on the aural and connotative co$parisons and overall i$pressions /etween the two trade$ar%s. Eor this reason, this Court agrees with the .P+++ when it applied the test of do$inanc! and held that0 Ero$ the evidence at hand, it is sufficientl! esta/lished that the word 3*S+)R is the do$inant feature of opposerNs $ar%. +he word 3*S+)R is printed across the $iddle portion of the la/el in /old letters al$ost twice the siDe of the printed word R,*S+. Eurther, the word 3*S+)R has alwa!s /een given e$phasis in the +M and radio co$$ercials and other advertise$ents $ade in pro$oting the product. +his can /e gleaned fro$ the fact that Ro/ert 9awors%i and *tt!. Ric Puno 9r.., the personalities engaged to pro$ote the product, are given the titles 3aster of the Ba$e and 3aster of the +al% Show, respectivel!. n due ti$e, /ecause of these advertising sche$es the $ind of the /u!ing pu/lic had co$e to learn to associate the word 3*S+)R with the opposerNs goods. C C C. t is the o/servation of this ,ffice that $uch of the do$inance which the word 3*S+)R has ac=uired through ,pposerNs advertising sche$es is carried over when the sa$e is incorporated into respondent-applicantNs trade$ar% E(*M,R 3*S+)R. +hus, when one loo%s at the la/el /earing the trade$ar% E(*M,R 3*S+)R ")Ch. 4# oneNs attention is easil! attracted to the word 3*S+)R, rather than to the dissi$ilarities that eCist. +herefore, the possi/ilit! of confusion as to the goods which /ear the co$peting $ar%s or as to the origins thereof is not farfetched. C C C.44 n addition, the word &3*S+)R& is neither a generic nor a descriptive ter$. *s such, said ter$ can not /e invalidated as a trade$ar% and, therefore, $a! /e legall! protected. Beneric ter$s 4: are those which constitute &the co$$on descriptive na$e of an article or su/stance,& or co$prise the &genus of which the particular product is a species,& or are &co$$onl! used as the na$e or description of a %ind of goods,& or &i$pl! reference to ever! $e$/er of a genus and the eCclusion of individuating characters,& or &refer to the /asic nature of the wares or services provided rather than to the $ore idios!ncratic characteristics of a particular product,& and are not legall! protecta/le. ,n the other hand, a ter$ is descriptive46 and therefore invalid as a trade$ar% if, as understood in its nor$al and natural sense, it &forthwith conve!s the characteristics, functions, =ualities or ingredients of a product to one who has never seen it and does not %now what it is,& or &if it forthwith conve!s an i$$ediate idea of the ingredients, =ualities or characteristics of the goods,& or if it clearl! denotes what goods or services are provided in such a wa! that the consu$er does not have to eCercise powers of perception or i$agination. Rather, the ter$ &3*S+)R& is a suggestive ter$ /rought a/out /! the advertising sche$e of Nestle. Suggestive ter$s48 are those which, in the phraseolog! of one court, re=uire &i$agination, thought and perception to reach a conclusion as to the nature of the goods.& Such ter$s, &which su/tl! connote so$ething a/out the product,& are eligi/le for protection in the a/sence of secondar! $eaning. @hile suggestive $ar%s are capa/le of shedding &so$e light& upon certain characteristics of the goods or services in dispute, the! nevertheless involve &an ele$ent of incongruit!,& &figurativeness,& or & i$aginative effort on the part of the o/server.&

+his is evident fro$ the advertising sche$e adopted /! Nestle in pro$oting its coffee products. n this case, Nestle has, over ti$e, pro$oted its products as &coffee perfection worth! of $asters li%e Ro/ert 9awors%i and Ric Puno 9r.& n associating its coffee products with the ter$ &3*S+)R& and there/! i$pressing the$ with the attri/utes of said ter$, Nestle advertised its products thus0 Ro/ert 9awors%i. (iving (egend. * true hard court hero. East on his feet. Sure in ever! shot he $a%es. * $aster strategist. n one word, un$atched. 3*S+)R R,*S+. )=uall! un$atched. Rich and deepl! satisf!ing. 3ade fro$ a uni=ue co$/ination of the /est coffee /eans - *ra/ica for superior taste and aro$a, Ro/usta for strength and /od!. * $asterpiece onl! N)SC*E), the worldNs coffee $asters, can create. 3*S+)R R,*S+. Coffee perfection worth! of $asters li%e Ro/ert 9awors%i. 45 n the art of conversation, Ric Puno 9r. is $aster. @itt!. @ell-infor$ed. Confident. n the art of coffee-$a%ing, nothing e=uals 3aster Roast, the coffee $asterpiece fro$ Nescafe, the worldNs coffee $asters. * uni=ue co$/ination of the /est coffee /eans *ra/ica for superior taste and aro$a, Ro/usta for strength and /od!. +rul! distinctive and rich in flavor. 3aster Roast. Coffee perfection worth! of $asters li%e Ric Puno 9r.42 +he ter$ &3*S+)R&, therefore, has ac=uired a certain connotation to $ean the coffee products 3*S+)R R,*S+ and 3*S+)R .()ND produced /! Nestle. *s such, the use /! CEC of the ter$ &3*S+)R& in the trade$ar% for its coffee product E(*M,R 3*S+)R is li%el! to cause confusion or $ista%e or even to deceive the ordinar! purchasers. n closing, it $a! not /e a$iss to =uote the case of A#erican Chicle Co. v. 6opps Che&in Gu#, !nc.,<1 to wit0 @h! it should have chosen a $ar% that had long /een e$plo!ed /! KplaintiffL and had /eco$e %nown to the trade instead of adopting so$e other $eans of identif!ing its goods is hard to see unless there was a deli/erate purpose to o/tain so$e advantage fro$ the trade that KplaintiffL had /uilt up. ndeed, it is generall! true that, as soon as we see that a second co$er in a $ar%et has, for no reason that he can assign, plagiariDed the &$a%e-up& of an earlier co$er, we need no $ore; . . . K@Le feel /ound to co$pel hi$ to eCercise his ingenuit! in =uarters further afield. @')R)E,R), in view of the foregoing, the decision of the Court of *ppeals in C*-B.R. SP No. 44111 is R)M)RS)D and S)+ *S D) and the decision of the .ureau of Patents, +rade$ar%s and +echnolog! +ransfer in nter Partes Cases Nos. <411 and <414 is R) NS+*+)D. S, ,RD)R)D. Davide, %r., C.%. 4Chair#an5, ;apunan, and Pardo, %%., concur. Puno %., on official leave. G.R. No. L-20735 -"(*: 31, 1977

ETEPHA, A.G., petitioner, vs. DIRECT!R !4 PATENTS "#$ 6EST-!NT PHAR-ACEUTICALS, INC., respondents. +cClure, Salas and Gonzalez, for petitioner. S(cip, Salazar, +analo, 9una and Associates, for respondent. SANCHE., J.: +o the =uestion0 3a! trade$ar% *+-SS N /e registered, given the fact that P)R+-SS N, another trade$ar%, had /een previousl! registered in the Patent ,ffice? A the Director of Patents answered affir$ativel!. 'ence this appeal. ,n *pril 4<, 12:2, respondent @est$ont Phar$aceuticals, nc., a New Gor% corporation, sought registration of trade$ar% &*tussin& placed on its &$edicinal preparation of eCpectorant antihista$inic, /ronchodilator sedative, ascor/ic acid "Mita$in C# used in the treat$ent of cough&. +he trade$ar% is used eCclusivel! in the Philippines since 9anuar! 41, 12:2. 1 Petitioner, )tepha, *. B., a (iechtenstin "principalit!# corporation, o/>ected. Petitioner clai$s that it will /e da$aged /ecause *tussin is so confusedl! si$ilar to its Pertussin "Registration No. 6152, issued on Septe$/er 4:, 12:8# used on a preparation for the treat$ent of coughs, that the /u!ing pu/lic will /e $isled into /elieving that @est$ont6s product is that of petitioner6s which allegedl! en>o!s goodwill. 1. +he o/>ects of a trade$ar% are &to point out distinctl! the origin or ownership of the articles to which it is affiCed, to secure to hi$ who has /een instru$ental in /ringing into $ar%et a superior article or $erchandise the fruit of his industr! and s%ill, and to prevent fraud and i$position.&4 ,ur over-all tas% then is to ascertain whether or not *tussin so rese$/les Pertussin &as to /e li%el!, when applied to or used in connection with the goods ... of the applicant, to cause confusion or $ista%e or to deceive purchasers&. < *nd, we are to /e guided /! the rule that the validit! of a cause for infringe$ent is predicated upon colora/le i$itation. +he phrase &colora/le i$itation& denotes such a &close or ingenious i$itation as to /e calculated to deceive ordinar! persons, or such a rese$/lance to the original as to deceive an ordinar! purchaser, giving such attention as a purchaser usuall! gives, and to cause hi$ to purchase the one supposing it to /e the other.& 4 4. +hat the word &tussin& figures as a co$ponent of /oth trade$ar%s is nothing to wonder at. +he Director of Patents aptl! o/serves that it is &the co$$on practice in the drug and phar$aceutical industries to 6fa/ricate6 $ar%s /! using s!lla/les or words suggestive of the ail$ents for which the! are intended and adding thereto distinctive prefiCes or suffiCes&. : *nd appropriatel! to /e considered now is the fact that, concededl!, the &tussin& "in Pertussin and *tussin# was derived fro$ the (atin root-word &tussis& $eaning cough. 6 &+ussin& is $erel! descriptive; it is generic; it furnishes to the /u!er no indication of the origin of the goods; it is open for appropriation /! an!one. t is accordingl! /arred fro$ registration as trade$ar%. @ith >urisprudence holding the line, we feel safe in $a%ing the state$ent that an! other conclusion would result in &appellant having practicall! a $onopol!& 8 of the word &tussin& in a trade$ar%.5 @hile &tussin& /! itself cannot thus /e used eCclusivel! to identif! one6s goods, it $a! properl! /eco$e the su/>ect of a trade$ar% &/! co$/ination with another word or

phrase&.2 *nd this union of words is reflected in petitioner6s Pertussin and respondent6s Atussin, the first with prefiC &Per& and the second with PrefiC &*&.

/0&ph1/.23t

<. * practical approach to the pro/le$ of si$ilarit! or dissi$ilarit! is to go into the &hole of the two trade$ar%s pictured in their $anner of displa!. nspection should /e underta%en fro$ the viewpoint of a prospective /u!er. +he trade$ar% co$plained of should /e co$pared and contrasted with the purchaser6s $e$or! "not in >uCtaposition# of the trade$ar% said to /e infringed. 11 So$e such factors as &sound; appearance; for$, st!le, shape, siDe or for$at; color; ideas connoted /! $ar%s; the $eaning, spelling, and pronunciation, of words used; and the setting in which the words appear& $a! /e considered. 11 Eor, indeed, trade$ar% infringe$ent is a for$ of unfair co$petition. 14 @e ta%e a casual loo% at the two la/els A without spelling out the details A /earing in $ind the eas!-to-re$e$/er ear$ar%s thereof. Respondent6s la/el underscores the trade$ar% *tussin in /old, /loc% letters horiDontall! written. n petitioner6s, on the other hand, Pertussin is printed diagonall! upwards and across in se$iscript st!le with flourishes and with onl! the first letter &P& capitaliDed. )ach la/el plainl! shows the source of the $edicine0 petitioner6s at the foot /ears &)tepha (td. Schaan El&, and on top, &*pothecar! ). +aeschner6s&; respondent6s pro>ects &@est$ont Phar$aceuticals, nc. New Gor%, -S*& at the /otto$s, and on the lower left side the word &@est$ont& upon a white dia$ond shaped enclosure and in red in% A a color different fro$ that of the words a/ove and /elow it. Printed pro$inentl! along the left, /otto$ and right edges of petitioner6s la/el are indications of the use0 &for /ronchial catarrh A whopping-cough A coughs and asth$a&. Respondent6s for its part /riefl! represents what its produce actuall! is - a &cough s!rup&. +he two la/els are entirel! different in colors, contents, arrange$ent of words thereon, siDes, shapes and general appearance. +he contrasts in pictorial effects and appeals to the e!e is so pronounced that the la/el of one cannot /e $ista%en for that of the other, not even /! persons unfa$iliar with the two trade$ar%s. 1< ,n this point the following culled fro$ a recent decision of the -nited States Court of Custo$s and Patent *ppeals "9une 1:, 12:6# is persuasive0 14 Confusion is li%el! /etween trade$ar%s, however, onl! if their over*all presentations in an! of the particulars of sound, appearance, or $eaning are such as would lead the purchasing pu/lic into /elieving that the products to which the $ar%s are applied e$anated fro$ the sa$e source. n testing this issue, fiCed legal rules eCist A if not in har$on!, certainl! in a/undance A /ut, in the final anal!sis, the application of these rules in an! given situation necessaril! reflects a $atter of individual >udg$ent largel! predicated on opinion. +here is, however, and can /e no disagree$ent with the rule that the purchaser is confused, if at all, /! the $ar%s as a &hole. 4. @e now consider eCclusivel! the two words A Pertussin and *tussin A as the! appear on the respective la/els. *s previousl! adverted to, these words are presented to the pu/lic in different st!les of writing and $ethods of design. +he horiDontal plain, /loc% letters of *tussin and the diagonall! and artisticall! upward writing of Pertussin leave distinct visual i$pressions. ,ne loo% is enough to denude the $ind of that illu$inating si$ilarit! so essential for a trade$ar% infringe$ent case to prosper. :. *s we ta%e up Pertussin and *tussin once again, we cannot escape notice of the fact that the two words do not sound ali%e A when pronounced. +here is not $uch phonetic si$ilarit! /etween the two. +he Solicitor Beneral well-o/served that in Pertussin the pronunciation of the prefiC &Per&, whether correct or incorrect, includes a co$/ination of three letters

P, e and r; whereas, in *tussin the whole starts with the single letter * added to suffiC &tussin&. *ppeals to the ear are disi$ilar. *nd this, /ecause in a word co$/ination, the part that co$es first is the #ost pronounced. *n eCpositor of the applica/le rule here is the decision in the S!rocol-Cheracol controvers!. 1: +here, the ruling is that trade$ar% S!rocol "a cough $edicine preparation# is not confusedl! si$ilar to trade$ar% Cheracol "also a cough $edicine preparation#. Reason0 the two words &do not loo% or sound enough ali%e to >ustif! a holding of trade$ar% infringe$ent&, and the &onl! si$ilarit! is in the last s!lla/le, and that is not unco$$on in na$es given drug co$pounds&. 6. n the solution of a trade$ar% infringe$ent pro/le$, regard too should /e given to the class of persons who /u! the particular product and the circu$stances ordinaril! attendant to its ac=uisition. 16 +he $edicinal preparation clothed with the trade$ar%s in =uestion, are unli%e articles of ever!da! use such as candies, ice crea$, $il%, soft drin%s and the li%e which $a! /e freel! o/tained /! an!one, an!ti$e, an!where. Petitioner6s and respondent6s products are to /e dispensed upon $edical prescription. +he respective la/els sa! so. *n intending /u!er $ust have to go first to a licensed doctor of $edicine; he receives instructions as to what to purchase; he reads the doctor6s prescription; he %nows what he is to /u!. 'e is not of the incautious, unwar!, uno/servant or unsuspecting t!pe; he eCa$ines the product sold to hi$; he chec%s to find out whether it confor$s to the $edical prescription. +he co$$on trade channel is the phar$ac! or the drugstore. Si$ilarl!, the phar$acist or druggist verifies the $edicine sold. +he $argin of error in the ac=uisition of one for the other is =uite re$ote. @e concede the possi/ilit! that /u!ers $ight /e a/le to o/tain Pertussin or *ttusin without prescription. @hen this happens, then the /u!er $ust /e one throughl! fa$iliar with what he intends to get, else he would not have the te$erit! to as% for a $edicine A specificall! needed to cure a given ail$ent. n which case, the $ore i$pro/a/le it will /e to pal$ off one for the other. Eor a person who purchases with open e!es is hardl! the $an to /e deceived. Eor the reasons given, the appealed decision of the respondent Director of Patents A giving due course to the application for the registration of trade$ar% *++-S N is here/! affir$ed. Costa against petitioner. So ordered. "en zon, C.%., "autista An elo, Concepcion, .e(es, %.".9., "arrera, .e ala, +a)alintal, "en zon, %. P., and 8aldivar, %%., concur. Dizon, %., too) no part.
MC$!NAL$1& C!R"!RA%I!N a'( MCGE!RGE F!!$ IN$*&%RIE&, INC., Petitioners, vs. L.C. IG MA2 *RGER, INC., FRANCI& . $#, E$NA A. $#, RENE . $#, WILLIAM . $#, +E&*& A#CAR$!, ARACELI A#CAR$!, a'( GRACE )*ER%!, Respondents.

$ECI&I!N

CAR"I!, J.3 %4e Ca5e

6his is a petition for review3 of the Decision dated *4 )ovember 3+++ of the Co%rt of Appeals * finding respondent !.C. /ig 5ak /%rger, (nc. not liable for trademark infringement and %nfair competition and ordering petitioners to pay respondents &3,+,,,,,, in damages, and of its Resol%tion dated 33 2%ly *,,, denying reconsideration. 6he Co%rt of Appeals0 Decision reversed the 8 Aeptember 3++< DecisionK of the Regional 6rial Co%rt of 5akati, /ranch 3KG, finding respondent !.C. /ig 5ak /%rger, (nc. liable for trademark infringement and %nfair competition. %4e Fa675 &etitioner 5cDonald0s Corporation '>5cDonald0s>- is a corporation organi7ed %nder the laws of Delaware, United Atates. 5cDonald0s operates, by itself or thro%gh its franchisees, a global chain of fastBfood resta%rants. 5cDonald0s< owns a family of marks8 incl%ding the >/ig 5ac> mark for its >do%bleBdecker hamb%rger sandwich.> 4 5cDonald0s registered this trademark with the United Atates 6rademark Registry on 34 1ctober 3+G+. G/ased on this @ome Registration, 5cDonald0s applied for the registration of the same mark in the Principal Register of the then &hilippine /%rea% of &atents, 6rademarks and 6echnology '>&/&66>-, now the (ntellect%al &roperty 1ffice '>(&1>-. Pendin* approval of its application, 5cDonald0s introd%ced its >/ig 5ac> hamb%rger sandwiches in the &hilippine market in Aeptember 3+93. 1n 39 2%ly 3+98, the &/&66 allowed registra tion ofthe >/ig 5ac> mark in the Principal Register based on its @ome Registration in the United Atates. !ike its other marks, 5cDonald0s displays the >/ig 5ac> mark in items 9 and paraphernalia+ in its resta%rants, and in its o%tdoor and indoor signages. rom 3+9* to 3++,, 5cDonald0s spent &3,.8 million in advertisement for >/ig 5ac> hamb%rger sandwiches alone. 3, &etitioner 5c:eorge ood (nd%stries '>petitioner 5c:eorge>-, a domestic corporation, is 5cDonald0s &hilippine franchisee.33 Respondent !.C. /ig 5ak /%rger, (nc. '>respondent corporation>- is a domestic corporation which operates fastBfood o%tlets and snack vans in 5etro 5anila and nearby provinces. 3* Respondent corporation0s men% incl%des hamb%rger sandwiches and other food items. 3K Respondents rancis /. Dy, "dna A. Dy, Rene /. Dy, William /. Dy, 2es%s Aycardo, Araceli Aycardo, and :race @%erto '>private respondents>- are the incorporators, stockholders and directors of respondent corporation. 3< 1n *3 1ctober 3+99, respondent corporation applied with the &/&66 for the registration of the >/ig 5ak> mark for its hamb%rger sandwiches. 5cDonald0s opposed respondent corporation0s application on the gro%nd that >/ig 5ak> was a colorable imitation of its registered >/ig 5ac> mark for the same food prod%cts. 5cDonald0s also informed respondent rancis Dy '>respondent Dy>-, the chairman of the /oard of Directors of respondent corporation, of its e=cl%sive right to the >/ig 5ac> mark and re$%ested him to desist from %sing the >/ig 5ac> mark or any similar mark. @aving received no reply from respondent Dy, petitioners on 4 2%ne 3++, s%ed respondents in the Regional 6rial Co%rt of 5akati, /ranch 3KG '>R6C>-, for trademark infringement and %nfair competition. (n its 1rder of 33 2%ly 3++,, the R6C iss%ed a temporary restraining order '>6R1>against respondents en?oining them from %sing the >/ig 5ak> mark in the operation of their b%siness in the )ational Capital Region.38 1n 34 A%g%st 3++,, the R6C iss%ed a writ of preliminary in?%nction replacing the 6R1.34 (n their Answer, respondents admitted that they have been %sing the name >/ig 5ak /%rger> for their fastBfood b%siness. Respondents claimed, however, that 5cDonald0s does not have an e=cl%sive right to the >/ig 5ac> mark or to any other similar mark. Respondents point o%t that the (saiyas :ro%p of Corporations '>(saiyas :ro%p>- registered the same mark for hamb%rger sandwiches with the &/&66 on K3 5arch 3+G+. 1ne Rodolfo 6opacio '>6opacio>- similarly registered the same mark on *< 2%ne 3+9K, prior to 5cDonald0s registration on 39 2%ly 3+98. +lternatively, respondents claimed that they are not liable for trademark infringement or for %nfair competition, as the >/ig 5ak> mark they so%ght to register does not constit%te a colorable imitation of the >/ig 5ac> mark. Respondents asserted that

they did not fra%d%lently pass off their hamb%rger sandwiches as those of petitioners0 /ig 5ac hamb%rgers.3G Respondents so%ght damages in their co%nterclaim. (n their Reply, petitioners denied respondents0 claim that 5cDonald0s is not the e=cl%sive owner of the >/ig 5ac> mark. &etitioners asserted that while the (saiyas :ro%p and 6opacio did register the >/ig 5ac> mark ahead of 5cDonald0s, the (saiyas :ro%p did so only in the A%pplemental Register of the &/&66 and s%ch registration does not provide any protection. 5cDonald0s disclosed that it had ac4uired 6opacio0s rights to his registration in a Deed of Assignment dated 39 5ay 3+93. 39 %4e %r8a9 Cour715 Ru98': 1n 8 Aeptember 3++<, the R6C rendered ?%dgment '>R6C Decision>- finding respondent corporation liable for trademark infringement and %nfair competition. However, the R6C dismissed the complaint against private respondents and the co%nterclaim against petitioners for lack of merit and ins%fficiency of evidence. 6he R6C held; Undeniably, the mark >/EigF 5EacF> is a registered trademark for plaintiff 5cDonald0s, and as s%ch, it is entitled EtoF protection against infringement. ==== )here exist some distinctions between the names >/EigF 5EacF> and >/EigF 5EakF> as appearing in the respective signages, wrappers and containers of the food prod%cts of the parties. /%t infringement goes beyond the physical feat%res of the $%estioned name and the original name. 6here are still other factors to be considered. ==== Aignificantly, the contending parties are both in the b%siness of fastBfood chains and resta%rants. An average person who is h%ngry and wants to eat a hamb%rger sandwich may not be discriminating eno%gh to look for a 5cDonald0s resta%rant and b%y a >/EigF 5EacF> hamb%rger. 1nce he sees a stall selling hamb%rger sandwich, in all likelihood, he will dip into his pocket and order a >/EigF 5EakF> hamb%rger sandwich. &laintiff 5cDonald0s fastBfood chain has attained wide pop%larity and acceptance by the cons%ming p%blic so m%ch so that its airBconditioned food o%tlets and resta%rants will perhaps not be mistaken by many to be the same as defendant corporation0s mobile snack vans located along b%sy streets or highways. /%t the thing is that what is being sold by bothcontending parties is a food item a hamb%rger sandwich which is for immediate cons%mption, so that a b%yer may easily be conf%sed or deceived into thinking that the >/EigF 5EakF> hamb%rger sandwich he bo%ght is a foodB prod%ct of plaintiff 5cDonald0s, or a s%bsidiary or allied o%tlet thereof. A%rely, defendant corporation has its own secret ingredients to make its hamb%rger sandwiches as palatable and as tasty as the other brands in the market, considering the keen competition among m%shrooming hamb%rger stands and m%ltinational fastBfood chains and resta%rants. Hence, the trademark >/EigF 5EacF> has been infringed by defendant corporation when it %sed the name >/EigF 5EakF> in its signages, wrappers, and containers in connection with its food b%siness. ==== Did the same acts of defendants in %sing the name >/EigF 5EakF> as a trademark or tradename in their signages, or in ca%sing the name >/EigF 5EakF> to be printed on the wrappers and containers of their food prod%cts also constit%te an act of %nfair competition %nder Aection *+ of the 6rademark !awD 6he answer is in the affirmative. ==== 6he === provision of the law concernin* %nfair competition is broader and more incl%sive than the law concernin* the infringement of trademark, which is of more limited range, b%t within its narrower range recogni7es a more e=cl%sive right derived by the adoption and registra tion of the trademark by the person whose goods or services are first associated therewith. === >otwithstandin* the distinction between an action for trademark infringement and an action for %nfair competition, however, the law

e=tends s%bstantially the same relief to the in?%red party for both cases. 'Aee Aections *K and *+ of Rep%blic Act )o. 344+ny cond%ct may be said to constit%te %nfair competition if the effect is to pass off on the p%blic the goods of one man as the goods of another. 6he choice of >/EigF 5EakF> as tradename by defendant corporation is not merely for sentimental reasons b%t was clearly made to take advantage of the rep%tation, pop%larity and the established goodwill of plaintiff 5cDonald0s. or, as stated in Aection *+, a person is g%ilty of %nfair competition who in selling his goods shall give them the general appearance, of goods of another man%fact%rer 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 feat%re of their appearance, which wo%ld likely infl%ence p%rchasers to believe that the goods offered are those of a man%fact%rer or dealer other than the actual man%fact%rer or dealer. )hus, plaintiffs have established their valid ca%se of action against the defendants for trademark infringement and %nfair competition and for damages. 3+ 6he dispositive portion of the R6C Decision provides; W@"R" 1R", ?%dgment is rendered in favor of plaintiffs 5cDonald0s Corporation and 5c:eorge ood (nd%stries, (nc. and against defendant !.C. /ig 5ak /%rger, (nc., as follows; 3. 6he writ of preliminary in?%nction iss%ed in this case on E34 A%g%st 3++,F is made permanentC *. Defendant !.C. /ig 5ak /%rger, (nc. is ordered to pay plaintiffs actual damages in the amount of &<,,,,,,.,,, e=emplary damages in the amount of &3,,,,,,.,,, and attorney0s fees and e=penses of litigation in the amount of &3,,,,,,.,,C K. 6he complaint against defendants rancis /. Dy, "dna A. Dy, Rene /. Dy, Wiliam /. Dy, 2es%s Aycardo, Araceli Aycardo and :race @%erto, as well as all co%nterBclaims, are dismissed for lack of merit as well as for ins%fficiency of evidence.*, Respondents appealed to the Co%rt of Appeals. %4e Ru98': o; 74e Cour7 o; A<<ea95 1n *4 )ovember 3+++, the Co%rt of Appeals rendered ?%dgment '>Co%rt of Appeals0 Decision>reversing the R6C Decision and ordering 5cDonald0s to pay respondents &3,4,,,,,, as actual and compensatory damages and &K,,,,,, as moral damages. 6he Co%rt of Appeals held; &laintiffsBappellees in the instant case wo%ld like to impress on this Co%rt that the use of defendantsB appellants of its corporate name the whole >!.C. /EigF 5EakF /E%rgerF, (EncF.> which appears on their food packages, signages and advertisements is an infringement of their trademark >/EigF 5EacF> which they %se to identify EtheirF do%ble decker sandwich, sold in a Atyrofoam bo= packaging material with the 5cDonald0s logo of %mbrella >5> stamped thereon, to*ether with the printed mark in red blEoFck capital letters, the words being separated by a sin*le space. Apecifically, plaintiffsBappellees arg%e that defendantsBappellants0 %se of their corporate name is a colorable imitation of their trademark >/ig 5ac>. ==== 6o 1%r mind, however, this Co%rt is f%lly convinced that no colorable imitation e=ists. As the definition dictates, it is not sufficient that a similarity e=ists in both names, b%t that more importantly, the overB all presentation, or in their essential, s%bstantive and distinctive parts is s%ch as wo%ld likely 5(A!"AD or C1) UA" persons in the ordinary co%rse of p%rchasing the gen%ine article. A careful comparison of the way the trademark >/EigF 5EacF> is being %sed by plaintiffsBappellees and corporate name !.C. /ig 5ak /%rger, (nc. by defendantsBappellants, wo%ld readily reveal that no conf%sion co%ld take place, or

that the ordinary p%rchasers wo%ld be misled by it. As pointed o%t by defendantsBappellants, the plaintiffsBappellees0 trademark is %sed to designate only one prod%ct, a do%ble decker sandwich sold in a Atyrofoam bo= with the >5cDonalds> logo. 1n the other hand, what the defendantsBappellants corporation is %sing is not a trademark for its food prod%ct b%t a b%siness or corporate name. 6hey %se the b%siness name >!.C. /ig 5ak /%rger, (nc.> in their resta%rant b%siness which serves diversified food items s%ch as siopao, noodles, pi77a, and sandwiches s%ch as hotdog, ham, fish b%rger and hamb%rger. %econdly, defendantsBappellants0 corporate or b%siness name appearing in the food packages and signages are written in silho%ette redBorange letters with the >b> and >m> in %pper case letters. Above the words >/ig 5ak> are the %pper case letter >!.C.>. /elow the words >/ig 5ak> are the words >/%rger, (nc.> spelled o%t in %pper case letters. &urthermore, said corporate or b%siness name appearing in s%ch food packages and signages is always accompanied by the company mascot, a yo%ng ch%bby boy named 5aky who wears a red 6Bshirt with the %pper case >m> appearingtherein and a bl%e lower garment. &inally, the defendantsBappellants0 food packages are made of plastic material. ==== === E(Ft is readily apparent to the naked eye that there appears a vast difference in the appearance of the prod%ct and the mannerthat the tradename >/ig 5ak> is being %sed and presented to the p%blic. As earlier noted, there are glaring dissimilarities between plaintiffsBappellees0 trademark and defendantsBappellants0 corporate name. &laintiffsBappellees0 prod%ct carrying the trademark >/EigF 5EacF> is a do%ble decker sandwich 'depicted in the tray mat containing photographs of the vario%s food prod%cts === sold in a Atyrofoam bo= with the >5cDonald0s> logo and trademark in red, blEoFck capital letters printed thereon === at a price which is more e=pensive than the defendantsBappellants0 comparable food prod%cts. /n order to b%y a >/ig 5ac>, a c%stomer needs to visit an airBconditioned >5cDonald0s> resta%rant %s%ally located in a nearby commercial center, advertised and identified by its logo B the %mbrella >5>, and its mascot >Ronald 5cDonald>. A typical 5cDonald0s resta%rant boasts of a playgro%nd for kids, a second floor to accommodate additional c%stomers, a driveBthr% to allow c%stomers with cars to make orders witho%t alighting from their vehicles, the interiors of the b%ilding are wellBlighted, distinctly decorated and painted with pastel colors ===. (n b%ying a >/EigF 5EacF>, it isnecessary to specify it by its trademark. )hus, a c%stomer needs to look for a >5cDonald0s> and enter it first before he can find a hamb%rger sandwich which carry the mark >/ig 5ac>. 1n the other hand, defendantsBappellants sell their goods thro%gh snack vans ==== Anent the allegation that defendantsBappellants are g%ilty of %nfair competition, We likewise find the same %ntenable. Unfair competition is defined as >the employment of deception or any other means contrary to good faith by which a person shallpass off the goods man%fact%red by him or in which he deals, or his b%siness, or service, for those of another who has already established good will for his similar good, b%siness or services, or any acts calc%lated to prod%ce the same res%lt> 'Aec. *+, Rep. Act )o. 344, as amended-. 6o constit%te %nfair competition therefore it m%st necessarily follow that there was malice and that the entity concerned was in bad faith. (n the case at bar, We find no sufficient evidence add%ced by plaintiffsBappellees that defendantsB appellants deliberately tried to pass off the goods man%fact%red by them for those of plaintiffsB appellees. 6he mere s%spected similarity in the so%nd of the defendantsBappellants0 corporate name with the plaintiffsBappellees0 trademark is not sufficient evidence to concl%de %nfair competition. DefendantsBappellants e=plained that the name >5EakF> in their corporate name was derived from both the first names of the mother and father of defendant rancis Dy, whose names are 5a=ima and Jimsoy. With this e=planation, it is %p to the plaintiffsBappellees to prove bad faith on the part of defendantsBappellants. (t is a settled r%le that the law always pres%mes good faith s%ch that any person who seeks to be awarded damages due to acts of another has the b%rden of provin* that the latter acted in bad faith or with ill motive. *3

&etitioners so%ght reconsideration of the Co%rt of Appeals0 Decision b%t the appellate co%rt denied their motion in its Resol%tion of 33 2%ly *,,,. Hence, this petition for review. &etitioners raise the following gro%nds for their petition; (. 6@" C1UR6 1 A&&"A!A "RR"D () ()D(): 6@A6 R"A&1)D")6A0 C1R&1RA6" )A5" >!.C. /(: 5AJ /UR:"R, ()C.> (A )16 A C1!1RA/!" (5(6A6(1) 1 6@" 5CD1)A!D0A 6RAD"5ARJ >/(: 5AC>, AUC@ C1!1RA/!" (5(6A6(1) /"(): A) 6 6M6>) 1&6RAD"5ARJ () R():"5")6. A. Respondents %se the words >/ig 5ak> as trademark for their prod%cts and not merely as their b%siness or corporate name. /. As a trademark, respondents0 >/ig 5ak> is %ndeniably and %n$%estionably similar to petitioners0 >/ig 5ac> trademark based on the dominancy test and the idem sonans test res%lting ine=orably in conf%sion on the part of the cons%ming p%blic. ((. 6@" C1UR6 1 A&&"A!A "RR"D () R" UA(): 61 C1)A(D"R 6@" ()@"R")6 A(5(!AR(6. /"6W"") 6@" 5ARJ >/(: 5AJ> A)D 6@" W1RD 5ARJ >/(: 5AC> AA A) />!/C+)/1> 1 R"A&1)D")6A0 ()6")6 61 D"C"(I" 1R D" RAUD 1R P-RP1%6% 1& 6%)+' /%H/>=U) A(R C15&"6(6(1).** &etitioners pray that we set aside the Co%rt of Appeals0 Decision and reinstate the R6C Decision. (n their Comment to the petition, respondents $%estion the propriety of this petition as it allegedly raises only $%estions of fact. 1n the merits, respondents contend that the Co%rt of Appeals committed no reversible error in finding them not liable for trademark infringement and %nfair competition and in ordering petitioners to pay damages. %4e I55ue5 6he iss%es are; 3. &roced%rally, whether the $%estions raised in this petition are proper for a petition for review %nder R%le <8. *. 1n the merits, 'a- whether respondents %sed the words >/ig 5ak> not only as part of the corporate name >!.C. /ig 5ak /%rger, (nc.> b%t also as a trademark for their hamb%rger prod%cts, and 'bwhether respondent corporation is liable for trademark infringement and %nfair competition. *K %4e Cour715 Ru98': 6he petition has merit. On W et er t e Questions !aised in t e "etition are "roper for a "etition for !e#ie$ A party intendin* to appeal from a ?%dgment of the Co%rt of Appeals may file with this Co%rt a petition for review %nder Aection 3 of R%le <8 '>Aection 3>- *< raising only $%estions of law. A $%estion of law e=ists when the do%bt or difference arises on what the law is on a certain state of facts. 6here is a $%estion of fact when the do%bt or difference arises on the tr%th or falsity of the alle*ed facts. *8 @ere, petitioners raise $%estions of fact and law in assailing the Co%rt of Appeals0 findings on respondent corporation0s nonBliability for trademark infringement and %nfair competition. 1rdinarily, the Co%rt can deny d%e co%rse to s%ch a petition. (n view, however, of the contradictory findings of

fact of the R6C and Co%rt of Appeals, the Co%rt opts to accept the petition, this being one of the recogni7ed e=ceptions to Aection 3.*4 We took a similar co%rse of action in %sia Bre$ery, &nc. #. 'ourt of %ppeals*G which also involved a s%it for trademark infringement and %nfair competition in which the trial co%rt and the Co%rt of Appeals arrived at conflicting findings. On t e Manner !espondents (sed )Big Ma*) in t eir Business &etitioners contend that the Co%rt of Appeals erred in r%ling that the corporate name >!.C. /ig 5ak /%rger, (nc.> appears in the packaging for respondents0 hamb%rger prod%cts and not the words >/ig 5ak> only. 6he contention has merit. 6he evidence presented d%ring the hearings on petitioners0 motion for the iss%ance of a writ of preliminary in?%nction shows that the plastic wrappings and plastic bags %sed by respondents for their hamb%rger sandwiches bore the words >/ig 5ak.> 6he other descriptive words >b%rger> and >3,,P p%re beef> were set in smaller type, along with the locations of branches. *9 Respondents0 cash invoices simply refer to their hamb%rger sandwiches as >/ig 5ak.> *+ (t is respondents0 snack vans that carry the words >!.C. /ig 5ak /%rger, (nc.>K, (t was only d%ring the trial that respondents presented in evidence the plastic wrappers and bags for their hamb%rger sandwiches relied on by the Co%rt of Appeals.K3 Respondents0 plastic wrappers and bags were identical with those petitioners presented d%ring the hearings for the in?%nctive writ e=cept that the letters >!.C.> and the words >/%rger, (nc.> in respondents0 evidence were added above and below the words >/ig 5ak,> respectively. Aince petitioners0 complaint was based on facts e=isting before and d%ring the hearings on the in?%nctive writ, the facts established d%ring those hearings are the proper fact%al bases for the disposition of the iss%es raised in this petition. On t e &ssue of +rademar* &nfringement Aection ** '>Aection **- of Rep%blic Act )o. 344, as amended '>RA 344>-, the law applicable to this case,K* defines trademark infringement as follows; (nfringement, what constit%tes. +ny person who E3F shall %se, witho%t the consent of the registrant, any reprod%ction, co%nterfeit, copy or colorable imitation of any registered mark or tradeB name in connection with the sale, offering for sale, or advertising of anygoods, b%siness or services on or in connection with which s%ch %se is likely to ca%se conf%sion or mistake or to deceive p%rchasers or others as to the so%rce or origin of s%ch goods or services, or identity of s%ch b%sinessC or E*F reprod%ce, co%nterfeit, copy, or colorably imitate any s%ch mark or tradeBname and apply s%ch reprod%ction, co%nterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be %sed upon or in connection with s%ch goods, b%siness or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.KK &etitioners base their ca%se of action %nder the first part of Aection **, i.e. respondents allegedly %sed, witho%t petitioners0 consent, a colorable imitation of the >/ig 5ac> mark in advertising and selling respondents0 hamb%rger sandwiches. 6his likely ca%sed conf%sion in the mind of the p%rchasing p%blic on the so%rce of the hamb%rgers or the identity of the b%siness. 6o establish trademark infringement, the following elements m%st be shown; '3- the validity of plaintiff0s markC '*- the plaintiff0s ownership of the markC and 'K- the use of the mark or its colorable imitation by the alle*ed infringer res%lts in >likelihood of conf%sion.>K< 1f these, it is the element of likelihood of conf%sion that is the gravamen of trademark infringement. K8

On t e ,alidity of t e )Big Mac)Mar* and McDonald-s O$ners ip of suc Mar* A mark is valid if it is >distinctive> and th%s not barred from registration %nder Aection < K4 of RA 344 '>Aection <>-. However, once registered, not only the mark0s validity b%t also the registrant0s ownership of the mark is prima facie pres%med.KG Respondents contend that of the two words in the >/ig 5ac> mark, it is only the word >5ac> that is valid beca%se the word >/ig> is generic and descriptive 'proscribed %nder Aection <EeF-, and th%s >incapable of e=cl%sive appropriation.>K9 6he contention has no merit. 6he >/ig 5ac> mark, which sho%ld be treated in its entirety and not dissected word for word,K+ is neither generic nor descriptive. :eneric marks are commonly %sed as the name or description of a *ind of goods,<, s%ch as >!ite> for beer<3 or >Chocolate %dge> for chocolate soda drink.<* Descriptive marks, on the other hand, convey the characteristics, functions, $%alities or ingredients of a prod%ct to one who has never seen it or does not know it e=ists, <K s%ch as >Arthriticare> for arthritis medication. << 1n the contrary, >/ig 5ac> falls %nder the class of fancif%l or arbitrary marks as it bears no logical relation to the actual characteristics of the prod%ct it represents.<8 +s such, it is highly distinctive and th%s valid. Aignificantly, the trademark >!ittle Debbie> for snack cakes was fo%nd arbitrary or fancif%l. <4 6he Co%rt also finds that petitioners have d%ly established 5cDonald0s e=cl%sive ownership of the >/ig 5ac> mark. Altho%gh 6opacio and the (saiyas :ro%p registered the >/ig 5ac> mark ahead of 5cDonald0s, 6opacio, as petitioners disclosed, had already assigned his rights to 5cDonald0s. 6he (saiyas :ro%p, on the other hand, registered its trademark only in the A%pplemental Register. A mark which is not registered in the Principal Register, and th%s not distinctive, has no real protection.<G (ndeed, we have held that registration in the A%pplemental Register is not even a prima facie evidence of the validity of the registrant0s e=cl%sive right to %se the mark on the goods specified in the certificate.<9 On +ypes of 'onfusion Aection ** covers two types of conf%sion arising from the use of similar or colorable imitation marks, namely, conf%sion of goods 'prod%ct conf%sion- and conf%sion of b%siness 'so%rce or origin conf%sion-. (n Aterling &rod%cts (nternational, (ncorporated v. arbenfabriken /ayer Aktiengesellschaft, et al.,<+ the Co%rt disting%ished these two types of conf%sion, th%s; ER%dolfF Callman notes two types of conf%sion. 6he first is the conf%sion of goods >in which event the ordinarily pr%dent p%rchaser wo%ld be ind%ced to p%rchase one prod%ct in the belief that he was p%rchasing the other.> === 6he other is the conf%sion of b%siness; >@ere tho%gh the goods of the parties are different, the defendant0s prod%ct is s%ch as might reasonably be ass%med to originate with the plaintiff, and the p%blic wo%ld then be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant which, in fact, does not e=ist.> Under Act )o. 444,8, the first trademark law, infringement was limited to conf%sion of goods only, when the infringing mark is %sed on >goods of a similar kind.> 83 6h%s, no relief was afforded to the party whose registered mark or its colorable imitation is %sed on different altho%gh related goods. 6o remedy this sit%ation, Congress enacted RA 344 on *, 2%ne 3+<G. (n defining trademark infringement, Aection ** of RA 344 deleted the re$%irement in $%estion and e=panded its scope to incl%de s%ch %se of the mark or its colorable imitation that is likely to res%lt in conf%sion on >the so%rce or origin of s%ch goods or services, or identity of s%ch b%siness.> 8* )hus, while there is conf%sion of goods when the prod%cts are competing, conf%sion of b%siness e=ists when the prod%cts are nonBcompeting b%t related eno%gh to prod%ce conf%sion of affiliation. 8K On W et er 'onfusion of .oods and 'onfusion of Business are %pplicable

&etitioners claim that respondents0 %se of the >/ig 5ak> mark on respondents0 hamb%rgers res%lts in conf%sion of goods, partic%larly with respect to petitioners0 hamb%rgers labeled >/ig 5ac.> )hus, petitioners alle*ed in their complaint; 3.38. Defendants have %nd%ly pre?%diced and clearly infringed upon the property rights of plaintiffs in the 5cDonald0s 5arks, partic%larly the mark >/EigF 5EacF>. Defendants0 %na%thori7ed acts are likely, and calc%lated, to conf%se, mislead or deceive the p%blic into believing that the prod%cts and services offered by defendant /ig 5ak /%rger, and the b%siness it is engaged in, are approved and sponsored by, or affiliated with, plaintiffs.8< '6mphasis suppliedAince respondents %sed the >/ig 5ak> mark on the same goods, i.e. hamb%rger sandwiches, that petitioners0 >/ig 5ac> mark is %sed, trademark infringement thro%gh conf%sion of goods is a proper iss%e in this case. &etitioners also claim that respondents0 %se of the >/ig 5ak> mark in the sale of hamb%rgers, the same b%siness that petitioners are engaged in, res%lts in conf%sion of b%siness. Petitioners alle*ed in their complaint; 3.3,. or some period of time, and witho%t the consent of plaintiff 5cDonald0s nor its licenseeNfranchisee, plaintiff 5c:eorge, and in clear violation of plaintiffs0 e=cl%sive right to %se and,or appropriate the 5cDonald0s marks, defendant /ig 5ak /%rger acting thro%gh individ%al defendants, has been operating >/ig 5ak /%rger>, a fast food resta%rant b%siness dealing in the sale of hamb%rger and cheeseb%rger sandwiches, french fries and other food prod%cts, and has ca%sed to be printed on the wrapper of defendant0s food prod%cts and incorporated in its signages the name >/ig 5ak /%rger>, which is conf%singly similar to and,or is a colorable imitation of the plaintiff 5cDonald0s mark >/EigF 5EacF>, ===. $e;e'(a'7 8: Ma= ur:er 4a5 74u5 u'>u579y 6rea7e( 74e 8?<re558o' 74a7 875 bu58'e55 85 a<<ro@e( a'( 5<o'5ore( by, or a;;898a7e( A874, <9a8'78;;5 . ==== *.* +s a conse4uence of the acts committed by defendants, which %nd%ly pre?%dice and infringe upon the property rights of plaintiffs 5cDonald0s and 5c:eorge as the real owner and rightf%l proprietor, and the licenseeNfranchisee, respectively, of the 5cDonald0s marks, and which are likely to have 6au5e( 6o';u58o' or (e6e8@e( 74e <ub986 as to 74e 7rue 5our6e, 5<o'5or548< or a;;898a78o' o; (e;e'(a'751 ;oo( <ro(u675 a'( re57aura'7 bu58'e55 , plaintiffs have s%ffered and contin%e to s%ffer actual damages in the form ofin?%ry to their b%siness rep%tation and goodwill, and of the dil%tion of the distinctive $%ality of the 5cDonald0s marks, in particular, the mark >/EigF 5EacF>.88 '6mphasis suppliedRespondents admit that their business includes sellin* hambur*er sandwiches, the same food product that petitioners sell usin* the 2'i* Mac2 mark. )hus , trademark infringement thro%gh conf%sion of b%siness is also a proper iss%e in this case. Respondents assert that their >/ig 5ak> hamb%rgers cater mainly to the lowBincome gro%p while petitioners0 >/ig 5ac> hamb%rgers cater to the middle and %pper income gro%ps. "ven if this is tr%e, the likelihood of conf%sion of b%siness remains, since the lowBincome gro%p might be led to believe that the >/ig 5ak> hamb%rgers are the lowBend hamb%rgers marketed by petitioners. After all, petitioners have the e=cl%sive right to %se the >/ig 5ac> mark. 1n the other hand, respondents wo%ld benefit by associating their lowBend hamb%rgers, thro%gh the use of the >/ig 5ak> mark, with petitioners0 highBend >/ig 5ac> hamb%rgers, leading to likelihood of conf%sion in the identity of b%siness. Respondents f%rther claim that petitioners %se the >/ig 5ac> mark only on petitioners0 do%bleBdecker hamb%rgers, while respondents %se the >/ig 5ak> mark on hamb%rgers and other prod%cts like siopao, noodles and pi77a. Respondents also point o%t that petitioners sell their /ig 5ac do%bleB deckers in a styrofoam bo= with the >5cDonald0s> logo and trademark in red, block letters at a price more e=pensive than the hamb%rgers of respondents. (n contrast, respondents sell their /ig 5ak hamb%rgers in plastic wrappers and plastic bags. Respondents f%rther point o%t that petitioners0

resta%rants are airBconditioned b%ildings with driveBthr% service, compared to respondents0 mobile vans. 6hese and other factors respondents cite cannot negate the %ndisp%ted fact that respondents %se their >/ig 5ak> mark on hamb%rgers, the same food prod%ct that petitioners0 sell with the use of their registered mark >/ig 5ac.> Whether a hamb%rger is single, do%ble or tripleBdecker, and whether wrapped in plastic or styrofoam, it remains the same hamb%rger food prod%ct. "ven respondents0 %se of the >/ig 5ak> mark on nonBhamb%rger food prod%cts cannot e=c%se their infringement of petitioners0 registered mark, otherwise registered marks will lose their protection %nder the law. 6he registered trademark owner may %se his mark on the same or similar prod%cts, in different segments of the market, and at different price levels depending on variations of the prod%cts for specific segments of the market. 6he Co%rt has recogni7ed that the registered trademark owner en?oys protection in prod%ct and market areas that are the 'or?a9 <o7e'78a9 eB<a'58o' o; 485 bu58'e55. )hus, the Co%rt has declared; 5odern law recogni7es that the protection to which the owner of a trademark is entitled is not limited to g%arding his goods or b%siness from actual market competition with identical or similar prod%cts of the parties, b%t e=tends to all cases in which the %se by a ?%nior appropriator of a tradeBmark or tradeBname is likely to lead to a conf%sion of so%rce, as where prospective p%rchasers wo%ld be misled into thinking that the complaining party has e=tended his b%siness into the field 'see 3<9 A!R 84 et se$C 8K Am 2%r. 8G4- or is in any way connected with the activities of the infringerC or when it forestalls the normal potential e=pansion of his b%siness 'v. 3<9 A!R, GG, 9<C 8* Am. 2%r. 8G4, 8GG-.84 '6mphasis suppliedOn W et er !espondents- (se of t e )Big Ma*) Mar* !esults in Li*eli ood of 'onfusion (n determinin* likelihood of conf%sion, ?%rispr%dence has developed two tests, the dominancy test and the holistic test.8G 6he dominancy test foc%ses on the similarity of the prevalent feat%res of the competing trademarks that might ca%se conf%sion. (n contrast, the holistic test re4uiresthe co%rt to consider the entirety of the marks as applied to the prod%cts, incl%ding the labels and packaging, in determinin* conf%sing similarity. 6he Co%rt of Appeals, in finding that there is no likelihood of conf%sion that co%ld arise in the use of respondents0 >/ig 5ak> mark on hamb%rgers, relied on the holistic test. )hus, the Co%rt of Appeals r%led that >it is not sufficient that a similarity e=ists in both name's-, b%t that more importantly, the overall presentation, or in their essential, s%bstantive and distinctive parts is s%ch as wo%ld likely 5(A!"AD or C1) UA" persons in the ordinary co%rse of p%rchasing the gen%ine article.> 6he holistic test considers the two marks in their entirety, as they appear on the goods with their labels and packaging. (t is not eno%gh to consider their words and compare the spelling and pron%nciation of the words.89 Respondents now vigoro%sly arg%e that the Co%rt of Appeals0 application of the holistic test to this case is correct and in accord with prevailing ?%rispr%dence. 6his Co%rt, however, has relied on the dominancy test rather than the holistic test. 6he dominancy test considers the dominant feat%res in the competing marks in determinin* whether they are conf%singly similar. Under the dominancy test, co%rts give greater weight to the similarity of the appearance of the prod%ct arising from the adoption of the dominant feat%res of the registered mark, disregarding minor differences.8+ Co%rts will consider more the a%ral and vis%al impressions created by the marks in the p%blic mind, giving little weight to factors like prices, $%ality, sales o%tlets and market segments. )hus, in the 3+8< case of 'o +iong /a #. Director of "atents,4, the Co%rt r%led;

=== (t has been consistently held that the $%estion of infringement of a trademark is to be determined by the test of dominancy. Aimilarity in si7e, form and color, while relevant, is not concl%sive. I; 74e 6o?<e78': 7ra(e?ar= 6o'7a8'5 74e ?a8' or e55e'78a9 or (o?8'a'7 ;ea7ure5 o; a'o74er, a'( 6o';u58o' a'( (e6e<78o' 85 98=e9y 7o re5u97, 8';r8':e?e'7 7a=e5 <9a6e . D%plication or imitation is not necessaryC nor is it necessary that the infringing label sho%ld s%ggest an effort to imitate. ':. @eilman /rewing Co. vs. (ndependent /rewing Co., 3+3 ., <9+, <+8, citing "agle White !ead Co. vs. &fl%gh 'CC- 39, ed. 8G+-. 6he $%estion at iss%e in cases of infringement of trademarks is whether the use of the marks involved wo%ld be likely to ca%se conf%sion or mistakes in the mind of the p%blic or deceive p%rchasers. 'A%b%rn R%bber Corporation vs. @onover R%bber Co., 3,G . *d 899C ===- '"mphasis s%pplied.6he Co%rt reiterated the dominancy test in Lim 0oa #. Director of "atents,43 " il. 1ut &ndustry, &nc. #. /tandard Brands &nc.,4* 'on#erse !ubber 'orporation #. (ni#ersal !ubber "roducts, &nc.,4K and %sia Bre$ery, &nc. #. 'ourt of %ppeals.4< (n the *,,3 case of /ociete Des "roduits 1estl2, /.%. #. 'ourt of %ppeals,48 the Co%rt e=plicitly re?ected the holistic test in this wise; E6Fhe 7o7a987y or 4o985786 7e57 85 6o'7rary 7o 74e e9e?e'7ary <o57u9a7e o; 74e 9aA o' 7ra(e?ar=5 a'( u';a8r 6o?<e7878o' that conf%sing similarity is to be determined on the basis of vis%al, a%ral, connotative comparisons and overall impressions e':e'(ere( by 74e ?ar=5 8' 6o'7ro@er5y as they are encountered in the realities of the marketplace. '6mphasis supplied6he test of dominancy is now e=plicitly incorporated into law in Aection 388.3 of the (ntellect%al &roperty Code which defines infringement as the>colorable imitation of a registered mark === or a (o?8'a'7 ;ea7ure thereof.> Applying the dominancy test, the Co%rt finds that respondents0 %se of the >/ig 5ak> mark res%lts in likelihood of conf%sion. irst, >/ig 5ak> so%nds exactly the same as >/ig 5ac.> Aecond, the first word in >/ig 5ak> is exactly the same as the first word in >/ig 5ac.> 6hird, the first two letters in >5ak> are the same as the first two letters in >5ac.> o%rth, the last letter in >5ak> while a >k> so%nds the same as >c> when the word >5ak> is prono%nced. ifth, in ilipino, the letter >k> replaces >c> in spelling, th%s >Caloocan> is spelled >Jalookan.> (n short, a%rally the two marks are the same, with the first word of both marks phonetically the same, and the second word of both marks also phonetically the same. Iis%ally, the two marks have both two words and si= letters, with the first word of both marks having the same letters and the second word having the same first two letters. (n spelling, considering the ilipino lang%age, even the last letters of both marks are the same. 'learly, respondents a#e adopted in )Big Ma*) not only t e dominant but also almost all t e features of )Big Mac.) Applied to the same food prod%ct of hamb%rgers, the two marks will likely res%lt in conf%sion in the p%blic mind. 6he Co%rt has taken into acco%nt the aura9 e;;e675 of the words and letters contained in the marks in determinin* the issue of conf%sing similarity. )hus, in Mar#e3 'ommercial 'o., &nc. #. "etra 0a$pia 4 'o., et al.,44 the Co%rt held; 6he following random list of conf%singly similar so%nds in the matter of trademarks, c%lled from )ims, Unfair Competition and 6rade 5arks, 3+<G, Iol. 3, will reinforce o%r view that >AA!1)&AA> and >!(1)&AA> are conf%singly similar in so%nd; >:old D%st> and >:old Drop>C >2ant7en> and >2assBAea>C >Ailver lash> and >A%pper lash>C >Cascarete> and >Celborite>C >Cell%loid> and >Cellonite>C >Chartre%se> and >Charse%rs>C >C%te=> and >C%ticlean>C >@ebe> and >5e?e>C >Jote=> and > emete=>C >L%so> and >@oo @oo>. !eon Amd%r, in his book >6radeB5ark !aw and &ractice>, pp. <3+B<*3, cities, as coming within the p%rview of the idem sonans r%le, >.%sea> and >UBCBA>, >Ateinway &ianos> and >Ateinberg &ianos>, and >AevenBUp> and >!emonBUp>. (n Co 6iong vs. Director of &atents, this Co%rt %ne$%ivocally said that >Celd%ra> and >Cord%ra> are conf%singly similar in so%ndC this Co%rt held in

Aapolin Co. vs. /almaceda, 4G &hil. G+8 that the name >!%solin> is an infringement of the trademark >Aapolin>, as the so%nd of the two names is almost the same. ' 6mphasis suppliedCertainly, >/ig 5ac> and >/ig 5ak> for hamb%rgers create even greater conf%sion, not only a%rally b%t also vis%ally. (ndeed, a person cannot disting%ish >/ig 5ac> from >/ig 5ak> by their so%nd. When one hears a >/ig 5ac> or >/ig 5ak> hamb%rger advertisement over the radio, one wo%ld not know whether the >5ac> or >5ak> ends with a >c> or a >k.> &etitioners0 aggressive promotion of the >/ig 5ac> mark, as borne by their advertisement expenses, has b%ilt goodwill and rep%tation for s%ch mark making it one of the easily recogni7able marks in the market today. 6his increases the likelihood that cons%mers will mistakenly associate petitioners0 hamb%rgers and b%siness with those of respondents0. Respondents0 inability to e=plain sufficiently how and why they came to choose >/ig 5ak> for their hamb%rger sandwiches indicates their intent to imitate petitioners0 >/ig 5ac> mark. Contrary to the Co%rt of Appeals0 finding, respondents0 claim that their >/ig 5ak> mark was inspired by the first names of respondent Dy0s mother '5a=ima- and father 'Jimsoy- is not credible. As petitioners well noted; ERFespondents, partic%larly Respondent 5r. rancis Dy, co%ld have arrived at a more creative choice for a corporate name by %sing the names of his parents, especially since he was allegedly driven by sentimental reasons. or one, he co%ld have p%t his father0s name ahead of his mother0s, as is %s%ally done in this patriarchal society, and derived letters from said names in that order. 1r, he co%ld have taken an e$%al number of letters 'i.e., two- from each name, as is the more %s%al thing done. A%rely, the more pla%sible reason behind Respondents0 choice of the word >5EakF>, especially when taken in con?%nction with the word >/EigF>, was their intent to take advantage of &etitioners0 === >/EigF 5EacF> trademark, with their alle*ed sentimentBfoc%sed >e=planation> merely tho%ght of as a convenient, albeit %navailing, e=c%se or defense for s%ch an %nfair choice of name. 4G Absent proof that respondents0 adoption of the >/ig 5ak> mark was due to honest mistake or was fort%ito%s,49 the inescapable concl%sion is that respondents adopted the >/ig 5ak> mark to >ride on the coattails> of the more established >/ig 5ac> mark.4+ 6his saves respondents m%ch of the e=pense in advertising to create market recognition of their mark and hamb%rgers. G, 6h%s, we hold that conf%sion is likely to res%lt in the p%blic mind. We s%stain petitioners0 claim of trademark infringement. On t e Lac* of "roof of %ctual 'onfusion &etitioners0 fail%re to present proof of actual conf%sion does not negate their claim of trademark infringement. As noted in %merican Wire 4 'able 'o. #. Director of "atents,G3 Aection ** re4uires the less stringent standard of >likelihood of conf%sion> only. 0hile proof of actualconf%sion is the best evidence of infringement, its absence is inconse$%ential. G* 1n the /ssue of -nfair Competition Aection *+ '>Aection *+>-GK of RA 344 defines %nfair competition, th%s; ==== +ny person who will employ deception or any other means contrary to good faith by which he shall pass off the goods man%fact%red by him or in which he deals, or his b%siness, or services for

those of the one having established s%ch goodwill, or who shall commitany acts calc%lated to prod%ce said res%lt, shall be g%ilty of %nfair competition, and shall be s%b?ect to an action therefor. /n particular, and witho%t in any way limiting the scope of %nfair competition, 74e ;o99oA8': s all be (ee?e( :u897y o; u';a8r 6o?<e7878o'; 'a- %ny <er5o', A4o 8' 5e998': 485 :oo(5 s all :8@e 74e? 74e :e'era9 a<<eara'6e o; :oo(5 o; a'o74er ?a'u;a67urer or (ea9er, e874er as to 74e :oo(5 74e?5e9@e5 or in the wrapping of the packages in which they are contained, or 74e (e@86e5 or Aor(5 74ereo', or in any feat%re of their appearance, which wo%ld be likely to infl%ence p%rchasers to believe that the goods offered are those of a man%fact%rer or dealer, other than the actual man%fact%rer or dealer, or who otherwise clothes the goods with s%ch appearance as shall deceive the p%blic and defra%d another of his legitimate trade, or any s%bse$%ent vendor of s%ch goods or anyagent of any vendor engaged in selling s%ch goods with a like p%rposeC 'b- +ny person who by any artifice, or device, or who employs any other means calc%lated to ind%ce the false belief that s%ch person is offering the services of another who has identified s%ch services in the mind of the p%blicC or 'c- +ny 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 nat%re calc%lated to discredit the goods, b%siness or services of another. '6mphasis supplied6he essential elements of an action for %nfair competition are '3- conf%sing similarity in the general appearance of the goods, and '*- intent to deceive the p%blic and defra%d a competitor. G< 6he conf%sing similarity may or may not res%lt from similarity in the marks, b%t may res%lt from other e=ternal factors in the packaging or presentation of the goods. 6he intent to deceive and defra%d may be inferred from the similarity of the appearance of the goods as offered for sale to the p%blic.G8 +ctual fra%d%lent intent need not be shown.G4 Unfair competition is broader than trademark infringement and incl%des passing off goods with or witho%t trademark infringement. 6rademark infringement is a form of %nfair competition. GG 6rademark infringement constit%tes %nfair competition when there is not merely likelihood of conf%sion, b%t also actual or probable deception on the p%blic beca%se of the general appearance of the goods. 6here can be trademark infringement witho%t %nfair competition as when the infringer discloses on the labels containing the mark that he man%fact%res the goods, th%s preventing the p%blic from being deceived that the goods originate from the trademark owner. G9 6o s%pport their claim of %nfair competition, petitioners allege that respondents fra%d%lently passed off their hamb%rgers as >/ig 5ac> hamb%rgers. &etitioners add that respondents0 fra%d%lent intent can be inferred from the similarity of the marks in $%estion. G+ &assing off 'or palming off- takes place where the defendant, by imitative devices on the general appearance of the goods, misleads prospective p%rchasers into b%ying his merchandise %nder the impression that they are b%ying that of his competitors. 9, )hus, the defendant gives his goods the general appearance of the goods of his competitor with the intention of deceiving the p%blic that the goods are those of his competitor. 6he R6C described the respective marks and the goods of petitioners and respondents in this wise; 6he mark >/EigF 5EacF> is %sed by plaintiff 5cDonald0s to identify its do%ble decker hamb%rger sandwich. 6he packaging material is astyrofoam bo= with the 5cDonald0s logo and trademark in red with block capital letters printed on it. All letters of the >/EigF 5EacF> mark are also in red and block capital letters. 1n the other hand, defendants0 >/EigF 5EakF> script print is in orange with only the letter >/> and >5> being capitali7ed and the packaging material is plastic wrapper. ==== %rther, plaintiffs0 logo and mascot are the %mbrella >5> and >Ronald 5cDonald0s>, respectively, compared to

the mascot of defendant Corporation which is a ch%bby boy called >5acky> displayed or printed between the words >/ig> and >5ak.>93 '6mphasis suppliedRespondents point to these dissimilarities as proof that they did not give their hamb%rgers the general appearance of petitioners0 >/ig 5ac> hamb%rgers. 6he dissimilarities in the packaging are minor compared to the 57ar= 58?89ar878e5 8' 74e Aor(5 that give respondents0 >/ig 5ak> hamb%rgers the general appearance of petitioners0 >/ig 5ac> hamb%rgers. Aection *+'a- e=pressly provides that the similarity in the general appearance of the goods may be in the >devices or words> %sed on the wrappings. Respondents have applied on their plastic wrappers and bags almost the 5a?e Aor(5 that petitioners %se on their styrofoam bo=. What attracts the attention of the b%ying p%blic are the words >/ig 5ak> which are almost the same, a%rally and vis%ally, as the words >/ig 5ac.> 6he dissimilarities in the material and other devices are insignificant compared to the glaring similarity in the words %sed in the wrappings. Aection *+'a- also provides that the defendant gives >his goods the general appearance of goods of another man%fact%rer.> Respondents0 goods are hamb%rgers which are also the goods of petitioners. (f respondents sold egg sandwiches only instead of hamb%rger sandwiches, their %se of the >/ig 5ak> mark wo%ld not give their goods the general appearance of petitioners0 >/ig 5ac> hamb%rgers. (n s%ch case, there is only trademark infringement b%t no %nfair competition. However, since respondents chose to apply the >/ig 5ak> mark on hamb%rgers, ?%st like petitioner0s %se of the >/ig 5ac> mark on hamb%rgers, respondents have obviously clothed their goods with the general appearance of petitioners0 goods. 5oreover, there is no notice to the p%blic that the >/ig 5ak> hamb%rgers are prod%cts of >!.C. /ig 5ak /%rger, (nc.> Respondents introd%ced d%ring the trial plastic wrappers and bags with the words >!.C. /ig 5ak /%rger, (nc.> to inform the p%blic of the name of the seller of the hamb%rgers. However, petitioners introd%ced d%ring the in?%nctive hearings plastic wrappers and bags with the >/ig 5ak> mark A874ou7 the name >!.C. /ig 5ak /%rger, (nc.> Respondents0 belated presentation of plastic wrappers and bags bearing the name of >!.C. /ig 5ak /%rger, (nc.> as the seller of the hamb%rgers is an afterBtho%ght designed to e=c%lpate them from their %nfair b%siness cond%ct. As earlier stated, we cannot consider respondents0 evidence since petitioners0 complaint was based on facts e=isting before and d%ring the in?%nctive hearings. )hus, there is actually no notice to the p%blic that the >/ig 5ak> hamb%rgers are prod%cts of >!.C. /ig 5ak /%rger, (nc.> and not those of petitioners who have the e=cl%sive right to the >/ig 5ac> mark. 6his clearly shows respondents0 intent to deceive the p%blic. @ad respondents0 placed a notice on their plastic wrappers and bags that the hamb%rgers are sold by >!.C. /ig 5ak /%rger, (nc.>, then they co%ld validly claim that they did not intend to deceive the p%blic. (n s%ch case, there is only trademark infringement b%t no %nfair competition. 9* Respondents, however, did not give s%ch notice. We hold that as fo%nd by the R6C, respondent corporation is liable for %nfair competition. )he Remedies +vailable to Petitioners Under Aection *K9K '>Aection *K>- in relation to Aection *+ of RA 344, a plaintiff who s%ccessf%lly maintains trademark infringement and %nfair competition claims is entitled to in?%nctive and monetary reliefs. @ere, the R6C did not err in iss%ing the in?%nctive writ of 34 A%g%st 3++, 'made permanent in its Decision of 8 Aeptember 3++<- and in ordering the payment of &<,,,,,, actual damages in favor of petitioners. 6he in?%nctive writ is indispensable to prevent f%rther acts of infringement by respondent corporation. Also, the amo%nt of act%al damages is a reasonable percentage '33.+P- of respondent corporation0s gross sales for three '3+99B3+9+ and 3++3- of the si= years '3+9<B3++,respondents have %sed the >/ig 5ak> mark.9< 6he R6C also did not err in awarding e=emplary damages by way of correction for the p%blic good 98 in view of the finding of %nfair competition where intent to deceive the p%blic is essential. 6he award of attorney0s fees and e=penses of litigation is also in order. 94

W)EREF!RE, we GRAN% the instant petition. We A"6 AA(D" the Decision dated *4 )ovember 3+++ of the Co%rt of Appeals and its Resol%tion dated 33 2%ly *,,, and R"()A6A6" the Decision dated 8 Aeptember 3++< of the Regional 6rial Co%rt of 5akati, /ranch 3KG, finding respondent !.C. /ig 5ak /%rger, (nc. liable for trademark infringement and %nfair competition. &! !R$ERE$. $a@8(e, C.+. 5' airman6, Cu85u?b8':, #'are5-&a'78a:o a'( AD6u'a, JJ., 6o'6ur. 2-6 Cor<ora78o', (o8': bu58'e55 u'(er 74e 'a?e a'( 57y9e o; R!LE0 M*&IC L!*NGE,, Petitioner, v. hon. Reynaldo b. daway, in his capacity as &residing 2%dge of /ranch +, of the Regional 6rial Co%rt of O%e7on City, 51)6R"A R1!"# A.A. and R1!"# C")6R" &@(!. !(5(6"D, respondents. D"C(A(1) .)AR"ABAA)6(A:1, ".; 6his is a petition for review on certiorari %nder R%le <8 of the 3++G R%les of Civil &roced%re assailing the )ovember *9, *,,* DecisionE3 of the Co%rt of Appeals in CAB:.R. A& )o. 4<44, which dismissed the petition for certiorari filed by petitioner, as well as the Resol%tion E* dated ebr%ary 3K, *,,K denying its motion for reconsideration. 6he %ndisp%ted facts show that on )ovember *4, 3++9, respondents 5ontres Role= A.A. and Role= Centre &hil., !imited, ownersNproprietors of Role= and Crown Device, filed against petitioner *<4 Corporation the instant s%it for trademark infringement and damages with prayer for the iss%ance of a restraining order or writ of preliminary in?%nction EK before the Regional 6rial Co%rt of O%e7on City, /ranch +,. Respondents alleged that sometime in 2%ly 3++4, petitioner adopted and, since then, has been %sing witho%t a%thority the mark Role= in its b%siness name Role= 5%sic !o%nge as well as in its newspaper advertisements as Role= 5%sic !o%nge, J6I, Disco & &arty Cl%b. (n its answer raising special affirmative defenses, petitioner arg%ed that respondents have no ca%se of action beca%se no trademark infringement e=istC that no conf%sion wo%ld arise from the %se by petitioner of the mark Role= considering that its entertainment b%siness is totally %nrelated to the items catered by respondents s%ch as watches, clocks, bracelets and parts thereof. (t also contended that the complaint was not properly verified and certified against for%m shopping considering that Atty. Alon7o Ancheta, the co%nsel of record of respondents who signed the verification and certification, was not a%thori7ed to represent respondents. E< 1n 2%ly *3, *,,,, petitioner filed a motion for preliminary hearing on its affirmative defenses. E8 A%bse$%ently, on motion of petitioner, the trial co%rt iss%ed a s%bpoena ad testificandum re$%iring Atty. Alon7o Ancheta to appear at the preliminary hearing. E4 Respondents, in the meantime, filed a Comment and 1ppositionEG to the motion for preliminary hearing and a motion to $%ash the s%bpoena ad testificandum. (n an 1rder dated 1ctober *G, *,,,, the trial co%rt $%ashed the s%bpoena ad testificandum and denied petitioners motion for preliminary hearing on affirmative defenses with motion to dismiss. E9 With the denial of the motion for reconsideration on 5arch 34, *,,3, petitioner filed a petition for certiorari with the Co%rt of Appeals contending that the trial co%rt gravely ab%sed its discretion in iss%ing the 1ctober *G, *,,, and 5arch 34, *,,3 orders. 1n )ovember *9, *,,*, the Co%rt of Appeals dismissed the petition. 6he motion for reconsideration filed by petitioner was denied. @ence, the instant petition anchored on the following gro%nds;

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() AR/(6RAR(!. A)D CA&R(C(1UA!. A (R5(): R"A&1)D")6 2UD:"A OUAA@A! 1 6@" AU/&1")A DA6"D 3< AU:UA6 *,,, D(R"C6"D A:A()A6 A66.. A!1)L1 A)C@"6A, 6@" @1)1RA/!" C1UR6 1 A&&"A!A I(1!A6"D )16 1)!. &"6(6(1)"RA AU/A6A)6(I" DU" &R1C"AA R(:@6A, /U6 A!A1 A"C6(1) +, RU!" 3K* A)D A"C6(1) G RU!" 3KK 1 6@" 3+9+ R"I(A"D RU!"A 1) "I(D")C", A)D 6@" RU!(): 1 6@(A @1)1RA/!" C1UR6 () 6@" CAA" 1 &"1&!" IA. R(I"RA.E+ Aimply p%t, the iss%es are as follows '3- whether the trial co%rt denied not only petitioners motion for preliminary hearing on its affirmative defenses b%t its motion to dismiss as wellC '*- if the answer is in the affirmative, whether or not the trial co%rt gravely ab%sed its discretion in denying said motionsC and 'K- whether the trial co%rt gravely ab%sed its discretion in $%ashing the s%bpoena ad testificandum iss%ed against Atty. Ancheta. Anent the first iss%e, we find that what was denied in the order dated 1ctober *G, *,,, was not only the motion for preliminary hearing b%t the motion to dismiss as well. A reading of the dispositive portion of said order shows that the trial co%rt neither $%alified its denial nor held in abeyance the r%ling on petitioners motion to dismiss th%s () I("W 1 6@" 1R":1():, the aforecited 5otion 6o O%ash A%bpoena Ad 6estificand%m is grantedC and the aforecited 5otion or &reliminary @earing 1n Defendants Affirmative Defenses W874 Mo78o' %o (85?855 %4e I'57a'7 Co?<9a8'7 a5e( !' &a8( A;;8r?a78@e $e;e'5e5 85 (e'8e( .E3,'6mphasis supplied(n iss%ing the assailed order, the trial co%rt r%led on the merits of petitioners 5otion to Dismiss vis.. vis respondents Comment and 1pposition which clearly traversed the affirmative defenses raised by petitioner, to wit; After caref%lly going over the pleadings, this Co%rt finds, on the first motion that the arg%ments raised in the said motion and the reply filed in connection thereto appear to be meritorio%sC and on the second motion, that the arg%ments raised in the comments and opposition and the re?oinder filed by the plaintiffs likewise appear to be meritorio%s. E33 5oreover, it is pres%med that all matters within an iss%e raised in a case were passed %pon by the co%rt. (n the absence of evidence to the contrary, the pres%mption is that the co%rt a 4uo discharged its task properly.E3* (n Municipality of 'ian a*una v. Court of +ppeals,E3K decided %nder the old R%les of Civil &roced%re, it was held that a preliminary hearing permitted %nder R%le 34, Aection 8, is not mandatory even when the same is prayed for. (t rests largely on the so%nd discretion of the trial co%rt, th%s A"C. 8. &leading gro%nds as affirmative defenses. Any of the gro%nds for dismissal provided for in this R%le, e=cept improper ven%e, may be pleaded as an affirmative defense, and a preliminary hearin* may be had thereon as if a motion to dismiss had been filed. '6mphasis supplied6he %se of the word >may> in the afore$%oted provision shows that s%ch a hearing is not a matter of right demandable from the trial co%rtC it is not mandatory b%t discretionary ; 5ay is an a%=iliary verb indicating liberty, opport%nity, permission and possibility. E3< A%ch interpretation is specifically stated %nder the 3++G R%les of Civil &roced%re. R%le 34, Aection 4, now provides that a grant of a preliminary hearing rests on the so%nd discretion of the co%rt, to wit A"C. 4. "9ea(8': :rou'(5 a5 a;;8r?a78@e (e;e'5e5. (f no motion to dismiss has been filed, any of the gro%nds for dismissal provided for in this R%le may be pleaded as an affirmative defense in the answer and, 8' 74e (856re78o' o; 74e 6our7, a <re98?8'ary 4ear8': ?ay be 4a( 74ereo' a5 8; a ?o78o' 7o (85?855 4a( bee' ;89e(. '6mphasis supplied-

(n the case at bar, the Co%rt of Appeals did not err in finding that no ab%se of discretion co%ld be ascribed to the trial co%rts denial of petitioners motion for preliminary hearing on its affirmative defenses with motion to dismiss. 6he iss%e of whether or not a trademark infringement e=ists, is a $%estion of fact that co%ld best be determined by the trial co%rt. Under the old 6rademark !awE38 where the goods for which the identical marks are %sed are %nrelated, there can be no likelihood of conf%sion and there is therefore no infringement in the %se by the ?%nior %ser of the registered mark on the entirely different goods. E34 6his r%ling, however, has been to some e=tent, modified by Aection 3*K.3'f- of the (ntellect%al &roperty Code 'Rep%blic Act )o. 9*+K-, which took effect on 2an%ary 3, 3++9. 6he said section reads; Aec. 3*K. Re*istrability. 3*K.3. A mark cannot be registered if it; === 'f- (s identical with, or conf%singly similar to, or constit%tes a translation of a mark considered wellB known in accordance with the preceding paragraph, which is registered in the &hilippines with respect to goods or services which are not similar to those with respect to which registration is applied for; "ro#ided, 6hat %se of the mark in relation to those goods or services wo%ld indicate a connection between those goods or services, and the owner of the registered mark; "ro#ided, furt er, 6hat the interest of the owner of the registered mark are likely to be damaged by s%ch %seC ' 6mphasis suppliedA ?%nior %ser of a wellBknown mark on goods or services which are not similar to the goods or services, and are therefore %nrelated, to those specified in the certificate of registration of the wellB known mark is precl%ded from %sing the same on the entirely %nrelated goods or services, s%b?ect to the following re$%isites, to wit; 3. 6he mark is wellBknown internationally and in the &hilippines. Under R%le 3,* of the R%les and Reg%lations on 6rademarks, Aervice 5arks, 6rade )ames and 5arked or Atamped Containers, E3G in determining whether a mark is well known, the following criteria or any combination thereof may be taken into acco%nt; 'a- the d%ration, e=tent and geographical area of any %se of the mark, in partic%lar, the d%ration, e=tent and geographical area of any promotion of the mark, incl%ding advertising or p%blicity and presentation, at fairs or e=hibitions, of the goods andNor services to which the mark appliesC 'b- the market share in the &hilippines and in other co%ntries, of the goods andNor services to which the mark appliesC 'c- the degree of the inherent or ac$%ired distinction of the markC 'd- the $%alityBimage or rep%tation ac$%ired by the markC 'e- the e=tent to which the mark has been registered in the worldC 'f- the e=cl%sivity of the registration attained by the mark in the worldC 'g- the e=tent to which the mark has been %sed in the worldC 'h- the e=cl%sivity of %se attained by the mark in the worldC 'i- the commercial val%e attrib%ted to the mark in the worldC

'?- the record of s%ccessf%l protection of the rights in the markC 'k- the o%tcome of litigations dealing with the iss%e of whether the mark is a wellBknown markC and 'l- the presence of absence of identical or similar marks validly registered for or %sed on identical or similar goods or services and owned by persons other than the person claiming that his mark is a wellB known mark. *. 6he %se of the wellBknown mark on the entirely %nrelated goods or services wo%ld indicate a connection between s%ch %nrelated goods or services and those goods or services specified in the certificate of registration in the well known mark. 6his re$%irement refers to the likelihood of conf%sion of origin or b%siness or some b%siness connection or relationship between the registrant and the %ser of the mark. K. 6he interests of the owner of the wellBknown mark are likely to be damaged. or instance, if the registrant will be precl%ded from e=panding its b%siness to those %nrelated good or services, or if the interests of the registrant of the wellBknown mark will be damaged beca%se of the inferior $%ality of the good or services of the %ser. E39 Aection 3*K.3'f- is clearly in point beca%se the 5%sic !o%nge of petitioner is entirely %nrelated to respondents b%siness involving watches, clocks, bracelets, etc. @owever, the Co%rt cannot yet resolve the merits of the present controversy considering that the re$%isites for the application of Aection 3*K.3'f-, which constit%te the kernel iss%e at bar, clearly re$%ire determination facts of which need to be resolved at the trial co%rt. 6he e=istence or absence of these re$%isites sho%ld be addressed in a f%ll blown hearing and not on a mere preliminary hearing. 6he respondent m%st be given ample opport%nity to prove its claim, and the petitioner to deb%nk the same. 6he same is tr%e with respect to the iss%e of whether Atty. Alon7o Ancheta was properly a%thori7ed to sign the verification and certification against for%m shopping in behalf of respondents. 6his co%ld be properly resolved d%ring the trial together with the s%bstantive iss%es raised by petitioner. Considering that the trial co%rt correctly denied petitioners motion for preliminary hearing on its affirmative defenses with motion to dismiss, there e=ists no reason to compel Atty. Ancheta to testify. @ence, no ab%se of discretion was committed by the trial co%rt in $%ashing the s%bpoena ad testificandum iss%ed against Atty. Ancheta. :rave ab%se of discretion implies s%ch capricio%s and whimsical e=ercise of ?%dgment as e$%ivalent to lack of ?%risdiction, or, in other words, where the power is e=ercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it m%st be so patent and gross as to amo%nt to an evasion of positive d%ty or to a virt%al ref%sal to perform the d%ty en?oined or to act at all in contemplation of law. )one of these was committed by the trial co%rtC hence, the Co%rt of Appeals correctly dismissed the petition. W)EREF!RE, in view of all the foregoing, the petition for review on certiorari filed by petitioner is D")("D. 6@" )1I"5/"R *9, *,,* D"C(A(1) A)D 6@" "/RUAR. 3K, *,,K R"A1!U6(1) 1 6@" C1UR6 1 A&&"A!A () CAB:.R. A& )1. 4<44, W@(C@ D(A5(AA"D 6@" &"6(6(1) 1R C"R6(1RAR( (!"D /. &"6(6(1)"R AR" A (R5"D. &! !R$ERE$. Da#ide, Jr., '.J., 5' airman6, "anganiban, 'arpio and %zcuna, JJ., concur. G.R. No. L-1-761 +a'uary 28, 1961

ARCE &!N& AN$ C!M"AN#, Petitioner, vs. &ELEC%A AL., Respondents.

I&C*I% C!M"AN#, INC., E%

=BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB= G.R. No. L-17981 +a'uary 28, 1961 I&C*I% C!M"AN#,

ARCE &!N& AN$ C!M"AN#, Plaintiff.+ppellee, vs. &ELEC%A INC., !efendant.+ppellant.

5an%el 1. Chan and Ramon A. "reHeta for plaintiffBappellee. ". Ioltaire :arcia for defendantBappellant. BBQ A*%I&%A ANGEL!, J.3
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1n A%g%st K3, 3+88, Aelecta /isc%it Company, (nc., hereinafter referred to as respondent, filed with the &hilippine &atent 1ffice a petition for the registration of the word >A"!"C6A> as tradeBmark to be %se in its bakery prod%cts alleging that it is in act%al %se thereof for not less than two months before said date and that >no other persons, partnership, corporation or association ... has the right to %se said tradeBmark in the &hilippines, either in the identical form or in any s%ch near resemblance thereto, as might be calc%lated to deceive.> (ts petition was referred to an e=aminer for st%dy who fo%nd that the tradeBmark so%ght to be registered resembles the word >A"!"C6A> %sed by the Acre and Aons and Company, hereinafter referred to as petitioner, in its milk and ice cream prod%cts so that its %se by respondent will ca%se conf%sion as to the origin of their respective goods. Conse$%ently, he recommended that the application be ref%sed. @owever, %pon reconsideration, the &atent 1ffice ordered the p%blication of the application for p%rposes of opposition.
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(n d%e time, petitioner filed its opposition thereto on several gro%nds, among which are; '3- that the mark >A"!"C6A> had been contin%o%sly %sed by petitioner in the man%fact%re and sale of its prod%cts, incl%ding cakes, bakery prod%cts, milk and ice cream from the time of its organi7ation and even prior thereto by its predecessorBinBinterest, Ramon ArceC '*- that the mark >A"!"C6A> has already become identified with name of the petitioner and its b%sinessC 'K- that petitioner had warned respondent not to %se said mark beca%se it was already being %sed by the former, b%t that the latter ignored said warningC '<- that respondent is %sing the word >A"!"C6A> as a tradeBmark as bakery prod%cts in %nfair competition with the prod%cts of petitioner th%s res%lting in conf%sion in tradeC '8- that the mark to which the application of respondent refers has striking resemblance, both in appearance and meaning, to petitioner0s mark as to be mistaken therefor by the p%blic and ca%se respondent0s goods to be sold as petitioner0sC and '4- that act%ally a complaint has been filed by the petitioner against respondent for %nfair competition in the Co%rt of irst (nstance of 5anila asking for damages and for the iss%ance of a writ of in?%nction against respondent en?oining the latter for contin%ing with the %se of said mark.
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1n Aeptember *9, 3+89, the Co%rt of irst (nstance of 5anila rendered decision in the %nfair competition case perpet%ally en?oining respondent from %sing the name >A"!"C6A> as a tradeBmark on the goods man%fact%red andNor sold by it and ordering it to pay petitioner by way of damages all the profits it may have reali7ed by the %se of said name, pl%s the s%m of &8,,,,.,, as attorney0s fee and costs of s%it. rom this decision, respondent bro%ght the matter on appeal to the Co%rt of Appeals wherein the case was docketed as CAB:.R. )o. *<,3GBR.
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(nasm%ch as the iss%es of the facts in the case of %nfair competition are s%bstantially identical with those raised before the &atent 1ffice, the parties at the hearing thereof, agreed to s%bmit the evidence they introd%ced before the Co%rt of irst (nstance of 5anila to said office, and on the strength thereof, the Director of &atents, on December G, 3+89, rendered decision dismissing petitioner0s opposition and stating that the registration of the tradeBmark >A"!"C6A> in favor of

applicant Aelecta /isc%its Company, (nc. will not ca%se conf%sion or mistake nor will deceive the p%rchasers as to the ca%se damage to petitioner. @ence, petitioner interposed the present petition for review.
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1n Aeptember G, 3+4,, this Co%rt iss%ed a resol%tion of the following tenor; (n :.R. )o. !B3<G43 'Arce Aons and Company vs. Aelecta /isc%its Company, (nc., et al.-, considering that the iss%e raised and evidence presented in this appeal are the same as those involved and presented in Civil Case )o. K*+,G, entitled Arce Aons and Company vs. Aelecta /isc%it Company, (nc. of the Co%rt of irst (nstance of 5anila, presently pending appeal in the Co%rt of Appeals, docketed as CAB:.R. )o. *<,3GBR, the Co%rt resolved to re$%ire the parties, or their co%nsel, to inform this Co%rt why the appeal pending before the Co%rt of Appeals sho%ld not be forwarded to this Co%rt in order that the two cases may be consolidated and ?ointly decided, to avoid any conflicting decision, p%rs%ant to the provisions of section 3G, paragraph 8, of the 2%diciary Act of 3+<9 'Rep%blic Act )o. *+4-. And having both petitioner and respondent manifested in writing that they do not register any ob?ection that the case they s%bmitted on appeal to the Co%rt of Appeals be certified to this Co%rt so that it may be consolidated with the present case, the two cases are now before %s for consolidated decision.
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6he case for petitioner is narrated in the decision of the co%rt a 4uo as follows; . >(n 3+KK, Ramon Arce, predecessor in interest of the plaintiff, started a milk b%siness in )ovaliches, Ri7al, %sing the name 0A"!"C6A0 as a tradeBname as well as a tradeBmark. @e beg%n selling and distrib%ting his prod%cts to different residences, resta%rants and offices, in bottles on the caps of which were inscribed the words 0A"!"C6A R"A@ 5(!J.0 As his b%siness prospered, he tho%ght of e=panding and, in facts, he e=panded his b%siness by establishing a store at )os. G33BG3K !epanto Atreet. While there, he began to cater, in addition to milk, ice cream, sandwiches and other food prod%cts. As his catering and ice cream b%siness prospered in a big way, he placed a sign signboard in his establishment with the name 0A"!"C6A0 inscribed thereon. 6his signboard was place right in front of the said store. or the sake of efficiency, the )ovaliches place was made the paste%ri7ing plant and its prod%cts were distrib%ted thro%gh the !epanto store. Apecial containers made of tin cans with the words 0A"!"C6A0 written on their covers and 0embossed or blown0 on the bottles themselves were %sed. Aimilarly, e=cl%sive bottles for milk prod%cts were ordered from :et7 /rothers with the word 0A"!"C6A 0blown on them. 6he sandwiches which were sold and distrib%ted were wrapped in carton bo=es with covers bearing the name 0A"!"C6A.0 6o the ordinary cars being %sed for the delivery of his prod%cts to serve o%tside orders were added to a fleet of five '8- delivery tr%cks with the word 0A"!"C6A 0 prominently painted on them. Aales were made directly at the !epanto store or by means of deliveries to specified addresses, resta%rants and offices inside 5anila and its s%b%rbs and sometimes to c%stomers in the provinces. As time passed, new prod%cts were prod%ced for sale, which as cheese 'cottage cheese- with special containers especially ordered from the &hilippine "d%cation Company with the 0A"!"C6A 0 written on their covers.
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6he war that broke o%t on December 9, 3+<3, did not stop Ramon Arce from contin%ing with his b%siness. After a brief interr%ption of abo%t a mo%th, that is, d%ring the end of 2an%ary, 3+<*, and early ebr%ary, 3+<*, he res%med his b%siness %sing the same tradeBname and tradeBmark, b%t this time, on a large scale. @e entered the resta%rant b%siness. Dairy prod%cts ice cream, milk, sandwiches contin%ed to be sold and distrib%ted by him. @owever, Ramon Arce was again forced to discontin%e the b%siness on 1ctober, 3+<<, beca%se time was beginning to be precario%s. American planes started to bomb 5anila and one of his sons, "%lalio Arce, who was managing the b%siness, was sei7ed by the 2apanese. !iberation came and immediately thereafter. Ramon Arce once more res%med his b%siness, even more actively, by adding another store located at the corner of !epanto and A7carraga Atreets. Contin%ing to %se the name 0Aelecta,0 he added bakery prod%cts to his line of b%siness. With a firewood type of oven, abo%t oneBhalf the si7e of the co%rtroom, he made his own bread, cookies, pastries and assorted bakery prod%cts. (ncidentally, Arce0s bakery was transferred to /alintawak, O%e7on City B another e=pansion of his b%siness B where the bakery prod%cts are now being baked thr% the %se of firewood, electric and gas oven. 6hese bakery prod%cts, like his other prod%cts, are

being sold the store itself and Nor delivered to people ordering them in 5anila and even /ag%io. !ike the other prod%cts, special carton bo=es in different si7es, according to the bakery prod%cts, with the name 0Aelecta0 on top of the covers are provided for these bakery prod%cts. or the cakes, special bo=es and labels reading 0Aelecta Cakes for all occasions0 are made. or the milk prod%cts, special bottle caps and bottles with the colored words 0O%ality Always Aelecta resh 5ilk, 1ne &int0 inscribed and blown on the sides of the bottles B an innovation from the old bottles and caps %sed formerly. Aimilar, special bo=es with the name 0Aelecta 0are provided for fried chicken sold to c%stomers.
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/%siness being already well established, Ramon Arce decided to retire, so that his children can go on with the b%siness. or this p%rpose, he transferred and leased to them all his rights, interest and participations in the b%siness, incl%ding the %se of the name of 0Aelecta,0 sometime in the year 3+8,, at a monthly rental of &3,,,,,.,,, later red%ced to &4,8,,.,,. @e f%rther wrote the /%rea% of Commerce letter dated ebr%ary 3,, 3+8,, re$%esting cancellation of the b%siness name 0Aelecta Resta%rant0 to give way to the registration of the same 0Aelecta0 and asked that the same be registered in the name of Arce Aons & Company, a coBpartnership entered into by and among his children on ebr%ary 3,, 3+8,. Aaid coBpartnership was organi7ed, so its articles of coBpartnership state, 0cond%ct a first class resta%rant b%sinessC to engage in the man%fact%re and sale of ice cream, milk, cakes and other dairy and bakery prod%ctsC and to carry on s%ch other legitimate b%siness as may prod%ce profit0C Arce Aons & Company has th%s contin%ed the l%crative b%siness of their predecessor in interest. (t is now, and has always been, engaged in the resta%rant b%siness, the sale of milk, and the prod%ction and sale of cakes, dairy prod%cts and bakery prod%cts. Arce Aons & Company are now making bakery prod%cts like bread rolls, pan de navaro, pan de sal, and other types, of cookies and bisc%it of the ro%nd, hard and other types, providing thereof special bo=es with the same >Aelecta0.
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&%rs%ing the policy of e=pansion adopted by their predecessor, Arce Aons & Company established another store the now famo%s 0Aelecta Dewey /o%levard0, with seven 'G- delivery tr%cks with the 0Aelecta 0 conspic%o%sly painted on them, to serve, deliver, and cater to c%stomers in and o%tside of 5anila.> . 6he case for respondent on the other hand, is e=pressed as follows; Defendant was organi7ed and registered as a corporation %nder the name and style of Aelecta /isc%it Company, (nc. on 5arch *, 3+88 '"=hibit *BAC p. K, April 3G, 3+89- b%t started operation as a bisc%it factory on 2%ne *, 3+88 't.s.n. p.K, id-. 6he name 0Aelecta0 was chosen by the organi7ers of defendant who are Chinese citi7ens as a translation of the Chinese word 0Ching A%an0 which means 0mapili0 in 6agalog, and Aelected0 in "nglish 't.s.n. p, id.-. 6here%pon, the Articles of (ncorporation of Aelecta /isc%it Company, (nc. were registered with the Aec%rities and "=change Commission 't.s.n. &.8. id.-, and at the same time registered as a b%siness name with the /%rea% of Commerce which iss%ed certificate of registration )o. 888+< '"=hibit KC "=hibit KBA-. 6he same name Aelecta /isc%it Company, (nc. was also s%bse$%ently registered with the /%rea% of (nternal Reven%e which iss%ed Registration Certificate )o. K8G4< '"=hibit <, t.s.n., p. id.-. (n$%iries were also made with the &atent 1ffice of 0Aelecta0C after an official of the &atent referred to inde= cards information was f%rnished to the effect that defendant co%ld register the name 0Aelecta0 with the /%rea% of &atents 't.s.n. ,p.G, id-. Accordingly, the corresponding petition for registration of tradeBmark was filed '"=hs. 8,8BA, "=hibit 8B /-. Defendant act%ally operated its b%siness factory on 2%ne *,, 3+88, while the petition for registration of tradeBmark 0Aelecta0 was filed with the &hilippine &atent 1ffice only on Aeptember 3, 3+88, for the &hilippine &atent 1ffice informed the defendant that the name sho%ld first be %sed before registration 't.s.n. p.9 ,id.-. 6he factory of defendant is located at 6%a7on Aven%e, )orthern @ills, 5alabon, Ri7al, showing plainly on its wall facing the streets the name 0A"!"C6A /(ACU(6 C15&A)., ()C.0 '"=hs. 4, 4Ba 4B/, t.s.n., p. +, id.-. (t is significant to note that "%lalio Arce, 5anaging &artner of the plaintiff resided and resides near the defendant0s factory, only aro%nd 38, meters away C in fact, Arce %se to pass in front of the factory of defendant while still %nder constr%ction and %p to the present time 't.s.n., pp. +, 3,, id.-. )either "%lalio Arce nor any other person in representation of the plaintiff complained to the defendant abo%t the %se of the name 0Aelecta /isc%it0 %ntil of the present complaint.
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6here are other factories %sing 0Aelecta as tradeBmark for bisc%it 't.s.n., p. 3*C "=hs. G, GBA,GB/C "=hibit 9, 9BA, 9B/C "=hibits "=hibit +, +BA, +B/-C defendant in fact %ses different kinds of tradeBmark '"=hibit 3,, 3,BA, to 3,BW, t.s.n., p. 3G-.
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6he bisc%its, cookies, and crackers man%fact%red and sold by defendant are wrapped in cellophane po%ches and place inside tin can '"=h. 33C t.s.n. p. 3+-C the prod%cts of defendant are sold thro%gh the length and breadth of the &hilippines thro%gh agents with more than one h%ndred 4,, stores as c%stomers b%ying on credit 't.s.n.- pp. 3+, *,, "=h. 3*C t.s.n., p. 3,, 2%ne *,, 3+89-. Defendant employs more than one h%ndred '3,,- laborers and employees presently altho%gh it started with aro%nd seventy 'G,- employees and laborers 't.s.n. p. *<-C its present capitali7ation f%lly paid is 6wo @%ndred 6hirty o%r 6ho%sand &esos '&*K<,,,,.,,.-additional capitali7ation0s were d%ly a%thori7ed by the Aec%rities and "=change Commission '"=hs. 3K, 3KBA- there was no complaint whatsoever from plaintiff saw defendant0s b%siness growing bigger and bigger and flo%rishing 't.s.n., p. *3-C when plaintiff filed its complaint.
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Defendant advertises its prod%cts thro%gh radio broadcast and spot anno%ncement '"=hs. 3<, 3<BA to 3<B!C incl%sive "=hs. 38, 38BA, 38B/, 38BCC "=h. 34, 34BA, 34B/ to 34B", incl%siveC "=hs. 3G, 3GB/ to 3GB!, incl%sive-C the broadcasts scripts anno%nced therein thro%gh the radio clearly show, among others, that Aelecta /isc%it are man%fact%red by Aelecta Company, (nc. at 6%a7on Aven%e, )orthern @ills, 5alabon, Ri7al, with 6elephone F)o. *B3KB*G '"=hs. *KBA *KB/, *KBD, *KB", *KB -.
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/esides the signboard, 0Aelecta /isc%it Company, (nc.0 on the b%ilding itself, defendant has installed signboard along the highways to indicate the location of the factory of defendant '"=hs. 39, 39BA-C delivery tr%cks defendant are plainly carrying signboards Aelecta /isc%it Company, (nc., 6%a7on Aven%e, )orthern @ills 5alabon, Ri7al, 6elephone )o. *B3KB*G '"=hs. 3+, 3+BA, 3+B/, 3+BC 3+BD,3+B ",3+B -. Defendant is %sing modern machineries in its bisc%it factory '"=hs. *,, *,BA, *,B/, 3+BC, *,B D, *,B"-. 6he defendant sells its prod%cts tho%gho%t *,BC, *,BD,*,B"-. 6he defendant sells its prod%ct thro%gho%t the &hilippines, incl%ding !%7on , Iisayas, 5indanaoC its c%stomers co%nt, among others, 4,, stores b%ying on creditC its stores b%ying on cash n%mber aro%nd 8, 't.s.n.-, p. 3,-. Aales in 5anila and s%b%rbs are minimal, '"=h. 3*-. Defendant is a wholesaler and not a retailer of bisc%its, cookies and crackers. 6his is the nat%re of the operation of the b%siness of the defendant.> At the o%tset one cannot b%t note that in the two cases appealed before %s which involve the same parties and the same iss%es of fact and law, the Co%rt a 4uo and the Director of &atents have rendered contradictory decisions. While the former is of the opinion that the word 0A"!"C6A0 has been %sed by the petitioner, or its predecessorBinBinterest, as a tradeBmark in the sale and distrib%tion of its dairy and bakery prod%cts as early as 3+KK to the e=tent that it has ac$%ired a proprietary connotation so that to allow respondent to %se it now as a tradeBmark in its b%siness wo%ld be an %s%rpation of petitioner0s goodwill and an infringement of its property right, the Director of &atents entertained a contrary opinion. @e believes that the word as %sed by the petitioner f%nctions only to point to the place of b%siness or location of its resta%rant while the same word as %sed by respondent points to the origin of the prod%cts its man%fact%res and sells and he predicates this distinction %pon the fact that while the goods of petitioner are only served within its resta%rant or sold only on special orders in the City of 5anila, respondent0s goods are readyBmade and are for sale thro%gho%t the length and breadth of the co%ntry. @e is of the opinion that the %se of said tradeBmark by respondent has not res%lted in conf%sion in trade contrary to the finding of the co%rt a 4uo. Which of this opinions is correct is the iss%e now for determination.
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(t appears that Ramon Arce, predecessorBinBinterest of petitioner, started his milk b%siness as early as 3+KK. @e sold his milk prod%cts in bottles covered with caps on which the words 0A"!"C6A R"A@ 5(!J0 were inscribed. "=panding his b%siness, he established a store at !epanto Atreet, City of 5anila, where he sold, in addition to his prod%cts, ice cream, sandwiches and other food prod%cts, placing right in front of his establishment a signboard with the name 0A"!"C6A0 inscribed thereon. Apecial containers made of tin cans with the word 0A"!"C6A0 written on their covers were %sed for his prod%cts. /ottle with the same word embossed on their sides were %sed for his milk prod%cts. 6he sandwiches he sold and distrib%ted were wrapped in carton bo=es with covers bearing the same name. @e %sed several cars and tr%cks for delivery p%rposes on the sides of which were written the same

word. As new prod%cts were prod%ced for sale, the same were placed in containers with the same name written on their covers. After the war, he added to his b%siness s%ch items as cakes, bread, cookies, pastries, and assorted bakery prod%cts. 6hen his b%siness was ac$%ired by petitioner, a coB partnership organi7ed by his sons, the p%rposes of which are >to cond%ct a first class resta%rant b%sinessC to engage in the man%fact%re and sale of ice cream, milk, cakes and other prod%ctsC and to carry on s%ch other legitimate b%siness as may prod%ce profit.>
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6he foregoing %nmistakably show that petitioner, thro%gh its predecessorBinBinterest, had made %se of the word >A"!"C6A> not only as a tradeBname indicative of the location of the resta%rant where it man%fact%res and sells its prod%cts, b%t as tradeBmark is %sed. 6his is not only in accordance with its general acceptation b%t with o%r law on the matter. > 6radeBmark0 or tradeBname0, distinction being highly technical, is sign, device, or mark by which articles prod%ced are dealt in by partic%lar person or organi7ation are disting%ished or disting%ishable from those prod%ced or dealt in by other.> 'Ch%rch of :od v. 6omlinson Ch%rch of :od, *<G AW *d, 4K,4<->
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A 0tradeBmark0 is a distinctive mark of a%thenticity thro%gh which the merchandise of a partic%lar prod%cer or man%fact%rer may be disting%ished from that of others, and its sole f%nction is to designate distinctively the origin of the prod%cts to which it is attached.> 'Reynolds & Reynolds Co. v. )ordic, et. al., 33< *d, *G9- >
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6he term 0tradeBmark0 incl%des any word, name, symbol, emblem, sign or device or any combination thereof adopted and %sed by a man%fact%rer or merchant to identify his goods and disting%ish them from those man%fact%red, sold or dealt in by others.> 'Aection K9, Rep%blic Act )o. 344-. Ierily, the word 0A"!"C6A0 has been chosen by petitioner and has been inscribed on all its prod%cts to serve not only as a sign or symbol that may indicate that they are man%fact%red and sold by it b%t as a mark of a%thenticity that may disting%ish them from the prod%cts man%fact%red and sold by other merchants or b%sinessmen. 6he Director of &atents, therefore, erred in holding that petitioner made %se of that word merely as a tradeBname and not as a tradeBmark within the meaning of the law. 1
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6he word 0A"!"C6A0, it is tr%e, may be an ordinary or common word in the sense that may be %sed or employed by any one in promoting his b%siness or enterprise, b%t once adopted or coined in connection with one0s b%siness as an emblem, sign or device to characteri7e its prod%cts, or as a badge of a%thenticity, it may ac$%ire a secondary meaning as to be e=cl%sively associated with its prod%cts and b%siness.2 (n this sense, its %sed by another may lead to conf%sion in trade and ca%se damage to its b%siness. And this is the sit%ation of petitioner when it %sed the word 0A"!"C6A0 as a tradeBmark. (n this sense, the law gives its protection and g%arantees its %sed to the e=cl%sion of all others a ':. & C. 5erriam Co. v. Aaalfield, 3+9 . K4+, KGK-. And it is also in the sense that the law post%lates that >6he ownership or possession of a tradeBmark, . . . shall be recogni7ed and protected in the same manner and to the same e=tent, as are other property rights known to the law,> thereby giving to any person entitled to the e=cl%sive %se of s%ch tradeBmark the right to recover damages in a civil action from any person who may have sold goods of similar kind bearing s%ch tradeBmark 'Aections *BA and *K, Rep%blic Act )o. 344, as amended-.
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6he term 0A"!"C6A0 may be placed at par with the words >Ang 6ibay> which this Co%rt has considered not merely as a descriptive term within the meaning of the 6radeBmark !aw b%t as a fancif%l or coined phrase, or a tradeBmark. (n that case, this Co%rt fo%nd that respondent has constantly %sed the term >Ang 6ibay> , both as a tradeBmark and a tradeBname, in the man%fact%re and sale of slippers, shoes and indoor baseballs for twentyBtwo years before petitioner registered it as a tradeBname for pants and shirts so that it has performed d%ring that period the f%nction of a tradeBmark to point distinctively, or by its own meaning or by association, to the origin or ownership of the wares to which it applies. And holding that respondent was entitled to protection in the %se of that tradeBmark, this Co%rt made the following comment;

6he f%nction of a tradeBmark is to point distinctively, either by its own meaning or by association, to the origin or ownership of the wares to which it is applied. 0Ang 6ibay0 as %sed by the respondent to designate his wares, had e=actly performed that f%nction for twentyBtwo years before the petitioner adopted it as a tradeBmark in her own b%siness. 0Ang 6ibay0 shoes and slippers are, by association, known thro%gho%t the &hilippines as prod%cts of the 0Ang 6ibay> factory owned and operated by the respondent. "ven if 0Ang6ibay0, therefore, were not capable of e=cl%sive appropriation as a tradeB mark, the application of the doctrine of secondary meaning co%ld nevertheless be f%lly s%stained beca%se, in any event, by respondent0s long and e=cl%sive appropriation with reference to an article on the market, beca%se geographically or otherwise descriptive, might nevertheless have been %sed so long and e=cl%sively by one prod%cer with reference to his article that, in that trade and to that branch of the p%rchasing p%blic, the word or phrase has come to mean that article was his prod%ct.> 'Ang v. 6eodoro, supra.-. 6he rationale in the Ang 6ibay case applies on all fo%rs to the case of petitioner.
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/%t respondent claims that it adopted the tradeBmark 0A"!"C6A0 in good faith and not precisely to engage in %nfair competition with petitioner. (t tried to establish that respondent was organi7ed as a corporation %nder the name of Aelecta /isc%it Company, (nc. on 5arch *, 3+88 and started operations as a bisc%it factory on 2%ne *,, 3+88C that the name 0A"!"C6A0 was chosen by the organi7ers of respondent who are Chinese citi7ens as a translation of the Chinese word >Ching A%an> which means >mapili> in 6agalog, and >Aelected> in "nglishC that , there%pon, it registered its articles of incorporation with the Aec%rities and "=change Commission and the name 0A"!"C6A0 as a b%siness name with the /%rea% of Commerce which iss%ed to it Certificate of Registration )o. 888+<C and that it also registered the same tradeBname with the /%rea% of (nternal Reven%e and took steps to obtain a patent from the &atent 1ffice by filing with it as application for the registration of said tradeB name.
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6he s%ggestion that the name 0A"!"C6A0 was chosen by the organi7ers of respondent merely as a translation from a Chinese word >Ching A%an> meaning >mapili> in the dialect is betrayed by the very manner of its selection, for if the only p%rpose is to make an "nglish translation of that word and not to compete with the b%siness of petitioner, why chose the word 0A"!"C6A0, a Apanish word, and not >Aelected>, the "nglish e$%ivalent thereof, as was done by other wellBknown enterprisesD (n the words of petitioner0s co%nsel, >Why with all the words in the "nglish dictionary and all the words in the Apanish dictionary and all the phrases that co%ld be coined, sho%ld defendantBappellant 'respondentchoose 0A"!"C6A0 if its p%rpose was not and is not to fool the people and to damage plaintiffB appelleeD> (n this respect, we find appropriate the following comment of the trial co%rt; "vent%ally, like the plaintiff, one is tempted to ask as to why with the richness in words of the "nglish lang%age and with the affl%ence of the Apanish vocab%lary or, for that matter, of o%r own dialects, sho%ld the defendant choose the controverted word >Aelecta>, which has already ac$%ired a secondary meaning by virt%e of plaintiff0s prior and contin%ed %se of the same as a tradeBmark or tradeBname of its prod%ctsD 6he e=planation given by Ay @ap, manager of the defendant, that the word 0Aelecta0 was chosen for its bakery prod%cts by the organi7ers of said company from the Chinese word 0Ching A%an0 meaning 0mapili0, which in "nglish translation , is to say the least, very weak and %ntenable. Ay @ap himself admitted that he had known "%lalio Arce, the person managing plaintiff0s b%siness, since 3+8<C that since he began to reside at 3,th Aven%e, :race &ark, he had known the Aelecta Resta%rant on A7carraga Atreet and Dewey /lvd. and that he even had occasion to eat in one of the resta%rants of the plaintiff. All of these circ%mstances tend to conspire in ind%cing one to do%bt defendant0s motive for %sing the same word >Aelecta> for its bakery prod%cts. 6o allow the defendant here to %se the word >Aelecta> in spite of the fact that this word has already been adopted and e=ploited by Ramon Arce and by his family thr% the organi7ation of Arce Aons and Company, for the maintenance of its goodwill, for which said plaintiff and its predecessor have spent time, effort and fort%ne, is to permit b%siness pirates and b%ccaneers to appropriate for themselves and to their profit and advantage the trade names and trade marks of well established merchants with all their attendant good will and commercial benefit. Certainly, this cannot be allowed, and it becomes the d%ty of the co%rt to protect the legitimate owners of said tradeBnames and tradeBmarks, for %nder the law, the same constit%te one kind of property right entitled to the necessary legal protection.

1ther points raised by respondent to show that the trial co%rt erred in holding that the adoption by it of the word 0A"!"C6A0 is tantamo%nt to %nfair competition are; '3- that its prod%cts are bisc%its, crackers, and cookies, wrapped in cellophane packages, place in tin containers, and that its prod%cts may last a year with o%t spoilage, while the ice cream, milk, cakes and other bakery prod%cts which petitioner man%fact%res last only for two or three daysC '*- that the sale and distrib%tion of petitioner0s prod%cts are on retail basis, limited to the City of 5anila and s%b%rbs, and its place of b%siness is locali7ed at A7carraga, corner of !epanto Atreet and at Dewey /lvd., 5anila, while that of respondent is on a wholesale basis, e=tending thro%gho%t the length and breadth of the &hilippinesC 'K- that petitioner0s signboard on its place of b%siness reads 0A"!"C6A0 and on its delivery tr%cks >Aelecta, O%ality Always, Resta%rant and Caterer, A7carraga, Dewey /lvd., /alintawak and 6elephone n%mber,> in contrast with respondent0s signboard on its factory which reads >Aelecta /isc%it Company, (nc.,> and on its delivery tr%cks >Aelecta /isc%it Company, (nc., 6%ason Aven%e, 5alabon, Ri7al, 6elephone )o. *B3KB*GC '<- that the b%siness name of petitioner is different from the b%siness name of respondentC '8- that petitioner has only a capital investment of &*8,,,,.,, whereas respondent has a f%lly paidB%p stock in the amo%nt of &*K<,,,,.,, o%t of the &8,,,,,,.,, a%thori7ed capital, '4that the %se of the name 0A"!"C6A0 by respondent cannot lead to conf%sion in the b%siness operation of the parties.
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We have read caref%lly the reasons advanced in s%pport of the points raised by co%nsel in an effort to make inroads into the findings of the co%rta 4uo on %nfair competition, b%t we believe them to be s%bstantial and %ntenable. 6hey appear to be well answered and ref%ted by co%nsel for petitioner in his brief, which ref%tation we do not need to repeat here. A%ffice it to state that we agree with the a%thorities and reasons advanced therein which incidentally constit%te the best s%pport of the decision of the co%rt a 4uo.
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With regard to the claim that petitioner failed to present s%fficient evidence on the contract of lease of the b%siness from its predecessorBinBinterest, we find that %nder the circ%mstances secondary evidence is admissible.
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(n view of the foregoing, we hold that the Director of &atents committed an error in dismissing the opposition of petitioner and in holding that the registration of the tradeBmark 0A"!"C6A0 in favor of respondent will not ca%se damage to petitioner, and conse$%ently, we hereby reverse his decision.
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Consistently with this finding, we hereby affirm the decision of the co%rt a 4uo rendered in :.R. )o. !B 3G+93. )o costs.
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Paras, C."., 'en*#on, abrador, Reyes, ".'. . 'arrera, =utierre# !avid, Paredes and !i#on., ""., conc%r. Padilla, and Concepcion, ""., took no part.

G.R. No. 91332 July 17, 1993 PHILIP -!RRIS, INC., ENS!N = HEDGES 8CANADA9, INC., AND 4A RI<UES !4 TA AC REUNIES, S.A.,petitioners vs. THE C!URT !4 APPEALS AND 4!RTUNE T! ACC! C!RP!RATI!N, respondents. 7uasha, Asperilla, Ancheta, Pe2a < Nolasco 9a& Office for petitioners. 6eresita Gandionco*Oledan for private respondent.

-EL!, J.:

n the petition /efore us, petitioners Philip 3orris, nc., .enson and 'edges "Canada#, nc., and Ea/ri=ues of +a/ac Reunies, S.*., are ascri/ing whi$sical eCercise of the facult! conferred upon $agistrates /! Section 6, Rule :5 of the Revised Rules of Court when respondent Court of *ppeals lifted the writ of preli$inar! in>unction it earlier had issued against Eortune +o/acco Corporation, herein private respondent, fro$ $anufacturing and selling &3*R7& cigarettes in the local $ar%et. .an%ing on the thesis that petitioners6 respective s!$/ols &3*R7 M &, &3*R7 +)N&, and &(*R7&, also for cigarettes, $ust /e protected against unauthoriDed appropriation, petitioners twice solicited the ancillar! writ in the course the $ain suit for infringe$ent /ut the court of origin was unpersuaded. .efore we proceed to the generative facts of the case at /ar, it $ust /e e$phasiDed that resolution of the issue on the propriet! of lifting the writ of preli$inar! in>unction should not /e construed as a pre>udg$ent of the suit /elow. *ware of the fact that the discussion we are a/out to enter into involves a $ere interlocutor! order, a discourse on the aspect infringe$ent $ust thus /e avoided. @ith these caveat, we shall now shift our attention to the events which spawned the controvers!. *s averred in the initial pleading, Philip 3orris, ncorporated is a corporation organiDed under the laws of the State of Mirginia, -nited States of *$erica, and does /usiness at 111 Par% *venue, New Gor%, New Gor%, -nited States of *$erica. +he two other plaintiff foreign corporations, which are wholl!-owned su/sidiaries of Philip 3orris, nc., are si$ilarl! not doing /usiness in the Philippines /ut are suing on an isolated transaction. *s registered owners &3*R7 M &, &3*R7 +)N&, and &(*R7& per certificates of registration issued /! the Philippine Patent ,ffice on *pril 46, 128<, 3a! 45, 1264, and 3arch 4:, 1264, plaintiffs-petitioners asserted that defendant Eortune +o/acco Corporation has no right to $anufacture and sell cigarettes /earing the allegedl! identical or confusingl! si$ilar trade$ar% &3*R7& in contravention of Section 44 of the +rade$ar% (aw, and should, therefore, /e precluded during the pendenc! of the case fro$ perfor$ing the acts co$plained of via a preli$inar! in>unction "p. 8:, Court of *ppeals .ollo in *C-B.R. SP No. 1<1<4#. Eor its part, Eortune +o/acco Corporation ad$itted petitioners6 certificates of registration with the Philippine Patent ,ffice su/>ect to the affir$ative and special defense on $is>oinder of part! plaintiffs. Private respondent alleged further that it has /een authoriDed /! the .ureau of nternal Revenue to $anufacture and sell cigarettes /earing the trade$ar% &3*R7&, and that &3*R7& is a co$$on word which cannot /e eCclusivel! appropriated "p.1:5, Court of *ppeals .ollo in *.C.-B.R. SP No. 1<1<4#. ,n 3arch 45, 125<, petitioners6 pra!er for preli$inar! in>unction was denied /! the Presiding 9udge of .ranch 166 of the Regional +rial Court of the National Capital 9udicial Region stationed at Pasig, pre$ised upon the following propositions0 Plaintiffs ad$it in paragraph 4 of the co$plaint that &. . . the! are not doing /usiness in the Philippines and are suing on an isolated transaction . . .&. +his si$pl! $eans that the! are not engaged in the sale, $anufacture, i$portation, eCporKtLation and advertise$ent of their cigarette products in the Philippines. @ith this ad$ission, defendant as%s0 &. . . how could defendant6s &3*R7& cigarettes cause the for$er &irrepara/le da$age& within the territorial li$its of the Philippines?& Plaintiffs $aintain that since their trade$ar%s are entitled to protection /! treat! o/ligation under *rticle 4 of the Paris Convention of which the Philippines is a $e$/er and ratified /! Resolution No. 62 of the Senate of the Philippines and as such, have the force and effect of law under Section 14, *rticle TM of our Constitution and since this is an action for a violation or infringe$ent of a trade$ar% or trade na$e /! defendant, such $ere allegation is sufficient even in the a/sence of proof to support it. +o the $ind of the Court, precisel!, this is the issue in the $ain case to deter$ine whether or not there has /een an invasion of plaintiffs6 right of propert! to such trade$ar% or trade na$e. +his clai$ of plaintiffs is disputed /!

defendant in paragraphs 6 and 8 of the *nswer; hence, this cannot /e $ade a /asis for the issuance of a writ of preli$inar! in>unction. +here is no dispute that the Eirst Plaintiff is the registered owner of trade$arK%L &3*R7 M & with Certificate of Registration No. 1584<, dated *pril 46,128< while the Second Plaintiff is li%ewise the registered owner of trade$ar% &3*R7 +)N& under Certificate of Registration No. 11148, dated 3a! 45, 126< and the +hird Plaintiff is a registrant of trade$ar% &(*R7& as shown /! Certificate of Registration No. 112:< dated 3arch 4<, 1264, in addition to a pending application for registration of trade$ar% &3*R7 M & filed on Nove$/er 41, 1251 under *pplication Serial No. 4<44<, all in the Philippine Patent ,ffice. n sa$e the $anner, defendant has a pending application for registration of the trade$ar% &(*R7& cigarettes with the Philippine Patent ,ffice under *pplication Serial No. 44115. Defendant contends that since plaintiffs are &not doing /usiness in the Philippines& coupled the fact that the Director of Patents has not denied their pending application for registration of its trade$ar% &3*R7&, the grant of a writ of preli$inar! in>unction is pre$ature. Plaintiffs contend that this act"s# of defendant is /ut a su/terfuge to give se$/lance of good faith intended to deceive the pu/lic and patroniDers into /u!ing the products and create the i$pression that defendant6s goods are identical with or co$e fro$ the sa$e source as plaintiffs6 products or that the defendant is a licensee of plaintiffs when in truth and in fact the for$er is not. .ut the fact re$ains that with its pending application, defendant has e$/ar%ed in the $anufacturing, selling, distri/uting and advertising of &3*R7& cigarettes. +he =uestion of good faith or /ad faith on the part of defendant are $atters which are evidentiar! in character which have to /e proven during the hearing on the $erits; hence, until and unless the Director of Patents has denied defendant6s application, the Court is of the opinion and so holds that issuance a writ of preli$inar! in>unction would not lie. +here is no =uestion that defendant has /een authoriDed /! the .ureau of nternal Revenue to $anufacture cigarettes /earing the trade$ar% &3*R7& "(etter of Ru/en .. *ncheta, *cting Co$$issioner addressed to Eortune +o/acco Corporation dated *pril <, 1251, $ar%ed as *nneC &*&, defendant6s &,PP,S + ,N, etc.& dated Septe$/er 44, 1254#. 'owever, this authorit! is =ualified . . . that the said /rands have /een accepted and registered /! the Patent ,ffice not later than siC "6# $onths after !ou have /een $anufacturing the cigarettes and placed the sa$e in the $ar%et.& 'owever, this grant &. . . does not give !ou protection against an! person or entit! whose rights $a! /e pre>udiced /! infringe$ent or unfair co$petition in relation to !our indicated trade$ar%sJ/rands&. *s aforestated, the registration of defendant6s application is still pending in the Philippine Patent ,ffice. t has /een repeatedl! held in this >urisdiction as well as in the -nited States that the right or title of the applicant for in>unction re$ed! $ust /e clear and free fro$ dou/t. .ecause of the disastrous and painful effects of an in>unction, Courts should /e eCtre$el! careful, cautious and consciona/le in the eCercise of its discretion consistent with >ustice, e=uit! and fair pla!. +here is no power the eCercise of which is $ore delicate which re=uires greater caution, deli/eration, and sound discretion, or "which is# $ore dangerous in a dou/tful case than the issuing of an in>unction; it is the strong ar$ of e=uit! that never ought to /e eCtended unless to cases of great in>ur!, where courts of law cannot afford an ade=uate or co$$ensurate re$ed! in da$ages. +he right

$ust /e clear, the in>ur! i$pending or threatened, so as to /e averted onl! /! the protecting preventive process of in>unction. ".onaparte v. Ca$den, etc. N. Co., < E. Cas. No. 1, 618, .aldw. 41:, 418.# Courts of e=uit! constantl! decline to la! down an! rule which in>unction shall /e granted or withheld. +here is wisdo$ in this course, for it is i$possi/le to foresee all eCigencies of societ! which $a! re=uire their aid to protect rights and restrain wrongs. "3erced 3. Bo v. Eree$ont, 8 Bal. <18, <41; 65 *$. Dec. 464.# t is the strong ar$ of the court; and to render its operation /egin and useful, it $ust /e eCercised with great discretion, and when necessar! re=uires it. "*ttorne!-Beneral v. -tica nc. Co., P. 9ohn Ch. "N.G.# <81.# 'aving ta%en a panora$ic view of the positionKsL of /oth parties as viewed fro$ their pleadings, the picture reduced to its $ini$u$ siDe would /e this0 *t the crossroads are the two "4# contending parties, plaintiffs vigorousl! asserting the rights granted /! law, treat! and >urisprudence to restrain defendant in its activities of $anufacturing, selling, distri/uting and advertising its &3*R7& cigarettes and now co$es defendant who countered and refused to /e restrained clai$ing that it has /een authoriDed te$poraril! /! the .ureau of nternal Revenue under certain conditions to do so as aforestated coupled /! its pending application for registration of trade$ar% &3*R7& in the Philippine Patent ,ffice. +his circu$stance in itself has created a dispute /etween the parties which to the $ind of the Court does not warrant the issuance of a writ of preli$inar! in>unction. t is well-settled principle that courts of e=uit! will refuse an application for the in>unctive re$ed! where the principle of law on which the right to preli$inar! in>unction rests is disputed and will ad$it of dou/t, without a decision of the court of law esta/lishing such principle although satisfied as to what is a correct conclusion of law upon the facts. +he fact, however, that there is no such dispute or conflict does not in itself constitute a >ustifia/le ground for the court to refuse an application for the in>unctive relief. "'ac%ensac% $pr. Co$$n. v. New 9erse! 3idland P. Co., 44 N.9. )g. 24.# 'ence, the status :uo eCisting /etween the parties prior to the filing of this case should /e $aintained. Eor after all, an in>unction, without reference to the parties, should /e violent, vicious nor even vindictive. "pp. <<5-<41, .ollo in B.R. No. 21<<4.# n the process of den!ing petitioners6 su/se=uent $otion for reconsideration of the order den!ing issuance of the re=uested writ, the court of origin too% cogniDance of the certification eCecuted on 9anuar! <1, 1254 /! the Philippine Patent ,ffice attesting to the fact that private respondent6s application for registration is still pending appropriate action. *part fro$ this co$$unication, what pro$pted the trial court >udge to entertain the idea of pre$aturit! and unti$eliness of petitioners6 application for a writ of preli$inar! in>unction was the letter fro$ the .ureau of nternal Revenue date Ee/ruar! 4, 1254 which reads0 3RS. +)R)S +* B*ND ,NBC, ,()D*N (egal Counsel Eortune +o/acco Corporation

3ada$0 n connection with !our letter dated 9anuar! 4:, 1254, reiterating !our =uer! as to whether !our la/el approval auto$aticall! eCpires or /eco$es null and void after siC "6# $onths if the /rand is not accepted and /! the patent office, please /e infor$ed that no provision in the +aC Code or revenue regulation that re=uires an applicant to co$pl! with the afore$entioned condition order that his la/el approved will re$ain valid and eCisting. .ased on the docu$ent !ou presented, it shows that registration of this particular la/el still pending resolution /! the Patent ,ffice. +hese /eing so , !ou $a! therefore continue with the production said /rand of cigarette until this ,ffice is officiall! notified that the =uestion of ownership of &3*R7& /rand is finall! resolved. Mer! trul! !ours, +),D, R, D. P*R)[ , Chief, 3anufa ctured +o/acc o +aC Division +*NP6:<1D45<1*-6 "p. <45, .ollo.# t appears fro$ the testi$on! of *tt!. )nri=ue 3adarang, Chief of the +rade$ar% Division of the then Philippine Patent ,ffice that Eortune6s application for its trade$ar% is still pending /efore said office "p. <11, .ollo#. Petitioners thereafter cited supervening events which supposedl! transpired since 3arch 45, 125<, when the trial court first declined issuing a writ of preli$inar! in>unction, that could alter the results of the case in that Eortune6s application had /een re>ected, na!, /arred /! the Philippine Patent ,ffice, and that the application had /een forfeited /! a/andon$ent, /ut the trial court nonetheless denied the second $otion for issuance of the in>unctive writ on *pril 44, 1258, thus0 Eor all the proliCit! of their pleadings and testi$onial evidence, the plaintiffs-$ovants have fallen far short of the legal re=uisites that would >ustif! the grant of the writ of preli$inar! in>unction pra!ed for. Eor one, the! did not even /other to esta/lish /! co$petent evidence that the products supposedl! affected adversel! /! defendant6s trade$ar% now su/>ect of an application for registration with the Philippine Patents ,ffice, are in actual use in the Philippines. Eor another, the! concentrated their fire

on the alleged a/andon$ent and forfeiture /! defendant of said application for registration. +he Court cannot help /ut ta%e note of the fact that in their co$plaint plaintiffs included a pra!er for issuance preli$inar! in>unction. +he petition was dul! heard, and thereafter $atter was assiduousl! discussed lengthil! and resolved against plaintiffs in a 1:-page ,rder issued /! the undersigned6s predecessor on 3arch 45, 125<. Plaintiffs6 $otion for reconsideration was denied in another well-argued 5 page ,rder issued on *pril :, 1254,, and the $atter was $ade to rest. 'owever, on the strength of supposed changes in the $aterial facts of this case, plaintiffs ca$e up with the present $otion citing therein the said changes which are0 that defendant6s application had /een re>ected and /arred /! the Philippine Patents ,ffice, and that said application has /een dee$ed a/andoned and forfeited. .ut defendant has refiled the sa$e. Plaintiffs6 argu$ents in support of the present $otion appear to /e a $ere rehash of their stand in the first a/ove-$entioned petition which has alread! /een ruled upon adversel! against the$. Branting that the alleged changes in the $aterial facts are sufficient grounds for a $otion see%ing a favora/le grant of what has alread! /een denied, this $otion >ust the sa$e cannot prosper. n the first place there is no proof whatsoever that an! of plaintiffs6 products which the! see% to protect fro$ an! adverse effect of the trade$ar% applied for /! defendant, is in actual use and availa/le for co$$ercial purposes an!where in the Philippines. Secondl! as shown /! plaintiffs6 own evidence furnished /! no less than the chief of +rade$ar%s Division of the Philippine Patent ,ffice, *tt!. )nri=ue 3adarang, the a/andon$ent of an application is of no $o$ent, for the sa$e can alwa!s /e refiled. 'e said there is no specific provision in the rules prohi/iting such refiling "+SN, Nove$/er 41, 1256, pp. 61 I 64, Raviera#. n fact, according to 3adarang, the refiled application of defendant is now pending /efore the Patents ,ffice. 'ence, it appears that the $otion has no leg to stand on. "pp. <:1<:1, .ollo in B. R. No. 21<<4.# Confronted with this re/uff, petitioners filed a previous petition for certiorari /efore the Court, doc%eted as B.R. No. 85141, /ut the petition was referred to the Court of *ppeals. +he Court of *ppeals initiall! issued a resolution which set aside the court of origin6s order dated *pril 44, 1258, and granted the issuance of a writ of preli$inar! in>unction en>oining Eortune, its agents, e$plo!ees, and representatives, fro$ $anufacturing, selling, and advertising &3*R7& cigarettes. +he late 9ustice Cacdac, spea%ing for the Eirst Division of the Court of *ppeals in C*B.R. SP No. 1<1<4, re$ar%ed0 +here is no dispute that petitioners are the registered owners of the trade$ar%s for cigarettes &3*R7 M &, &3*R7 +)N&, and &(*R7&."*nneCes ., C and D, petition#. *s found and reiterated /! the Philippine Patent ,ffice in two "4# official co$$unications dated *pril 6, 125< and 9anuar! 44, 1254, the trade$ar% &3*R7& is &confusingl! si$ilar& to the trade$ar%s of petitioners, hence registration was /arred under Sec. 4 "d# of Rep. *ct. No. 166, as a$ended "pp. 116, 1<2, SC* rollo#. n a third official co$$unication dated *pril 5, 1256, the trade$ar% application of private respondent for the &3*R7& under Serial No. 44115 filed on Ee/ruar! 1<, 1251 which was declared a/andoned as of Ee/ruar! 16, 1256, is now dee$ed forfeited, there /eing

no revival $ade pursuant to Rule 25 of the Revised Rules of Practitioners in +rade$ar% Cases.& "p. 118, C* rollo#. +he foregoing docu$ents or co$$unications $entioned /! petitioners as &the changes in $aterial facts which occurred after 3arch 45, 125<&, are not also =uestioned /! respondents. Pitted against the petitioners6 docu$entar! evidence, respondents pointed to "1# the letter dated 9anuar! <1, 1282 "p. 1<8, C* rollo# of Conrado P. DiaD, then *cting Co$$issioner of nternal Revenue, te$poraril! granting the re=uest of private respondent for a per$it to $anufacture two "4# new /rands of cigarettes one of which is /rand &3*R7& filter-t!pe /lend, and "4# the certification dated Septe$/er 46, 1256 of Cesar B. Sandico, Director of Patents "p. 1<5, C* rollo# issued upon the written re=uest of private respondents6 counsel dated Septe$/er 18, 1256 attesting that the records of his office would show that the &trade$ar% 3*R7& for cigarettes is now the su/>ect of a pending application under Serial No. :2584 filed on Septe$/er 16, 1256. Private respondent6s docu$entar! evidence provides the reasons neutraliDing or wea%ening their pro/ative values. +he penulti$ate paragraph of Co$$issioner DiaD6 letter of authorit! reads0 Please /e infor$ed further that the authorit! herein granted does not give !ou protection against an! person or entit! whose rights $a! /e pre>udiced /! infringe$ent or unfair co$petition in relation to !our a/ove-na$ed /randsJtrade$ar%. while Director Sandico6s certification contained si$ilar conditions as follows0 +his Certification, however, does not give protection as against an! person or entit! whose right $a! /e pre>udiced /! infringe$ent or unfair co$petition in relation to the aforesaid trade$ar% nor the right to register if contrar! to the provisions of the +rade$ar% (aw, Rep. *ct No. 166 as a$ended and the Revised Rules of Practice in +rade$ar% Cases. +he te$porar! per$it to $anufacture under the trade$ar% &3*R7& for cigarettes and the acceptance of the second application filed /! private respondent in the height of their dispute in the $ain case were evidentl! $ade su/>ect to the outco$e of the said $ain case or Civil Case No. 48<84 of the respondent Court. +hus, the Court has not $issed to note the a/sence of a $ention in the Sandico letter of Septe$/er 46, 1256 of an! reference to the pendenc! of the instant action filed on *ugust 15, 1254. @e /elieve and hold that petitioners have shown a pri#a facie case for the issuance of the writ of prohi/itor! in>unction for the purposes stated in their co$plaint and su/se=uent $otions for the issuance of the prohi/itor! writ. ".ua!an Cattle Co. vs. Fuintillan, 14: SCR* 486# +he re=uisites for the granting of preli$inar! in>unction are the eCistence of the right protected and the facts against which the in>unction is to /e directed as violative of said right. ".ua!an Cattle Co. vs. Fuintillan, supra; ,rtigas I Co. vs. RuiD, 145 SCR* <46#. t is a writ fra$ed according to the circu$stances of the case co$$anding an act which the Court regards as essential to >ustice and restraining an act it dee$s contrar! to e=uit! and good conscience "Rosauro vs. Cuneta, 1:1 SCR* :81#. f it is not issued, the defendant $a!, /efore final >udg$ent, do or continue the doing of the act which the plaintiff as%s the court to restrain, and thus

$a%e ineffectual the final >udg$ent rendered afterwards granting the relief sought /! the plaintiff "Calo vs. Roldan, 86 Phil. 44:#. Benerall!, its grant or denial rests upon the sound discretion of the Court eCcept on a clear case of a/use ".elish nvest$ent I Einance Co. vs. State 'ouse, 1:1 SCR* 6<6#. Petitioners6 right of eCclusivit! to their registered trade$ar%s /eing clear and /e!ond =uestion, the respondent court6s denial of the prohi/itive writ constituted eCcess of >urisdiction and grave a/use discretion. f the lower court does not grant preli$inar! in>unction, the appellate court $a! grant the sa$e. "Service Specialists, nc. vs. Sheriff of 3anila, 14: SCR* 1<2#. "pp. 16:-168, .ollo in B.R. No. 21<<4.# *fter private respondent Eortune6s $otion for reconsideration was re>ected, a $otion to dissolve the disputed writ of preli$inar! in>unction with offer to post a counter/ond was su/$itted which was favora/l! acted upon /! the Court of *ppeals, pre$ised on the filing of a sufficient counter/ond to answer for whatever per-uicio petitioners $a! suffer as a result thereof, to wit0 +he private respondent see%s to dissolve the preli$inar! in>unction previousl! granted /! this Court with an offer to file a counter/ond. t was pointed out in its supple$ental $otion that lots of wor%ers e$plo!ed will /e laid off as a conse=uence of the in>unction and that the govern$ent will stand to lose the a$ount of specific taCes /eing paid /! the private respondent. +he specific taCes /eing paid is the su$ total of P141,141, 42:.25 fro$ 9anuar! to 9ul! 1252. +he petitioners argued in their co$$ent that the da$ages caused /! the infringe$ent of their trade$ar% as well as the goodwill it generates are incapa/le of pecuniar! esti$ation and $onetar! evaluation and not even the counter/ond could ade=uatel! co$pensate for the da$ages it will incur as a result of the dissolution of the /ond. n addition, the petitioner further argued that doing /usiness in the Philippines is not relevant as the in>unction pertains to an infringe$ent of a trade$ar% right. *fter a thorough re-eCa$ination of the issues involved and the argu$ents advanced /! /oth parties in the offer to file a counter/ond and the opposition thereto, @) /elieve that there are sound and cogent reasons for -S to grant the dissolution of the writ of preli$inar! in>unction /! the offer of the private respondent to put up a counter/ond to answer for whatever da$ages the petitioner $a! suffer as a conse=uence of the dissolution of the preli$inar! in>unction. +he petitioner will not /e pre>udiced nor stand to suffer irrepara/l! as a conse=uence of the lifting of the preli$inar! in>unction considering that the! are not actuall! engaged in the $anufacture of the cigarettes with the trade$ar% in =uestion and the filing of the counter/ond will a$pl! answer for such da$ages. @hile the rule is that an offer of a counter/ond does not operate to dissolve an in>unction previousl! granted, nevertheless, it is e=uall! true that an in>unction could /e dissolved onl! upon good and valid grounds su/>ect to the sound discretion of the court. *s @) have $aintained the view that there are sound and good reasons to lift the preli$inar! in>unction, the $otion to file a counter/ond is granted. "pp. :<:4, .ollo in B.R. No. 21<<4.# Petitioners, in turn, filed their own $otion for re-eCa$ination geared towards rei$position of the writ of preli$inar! in>unction /ut to no avail "p. ::, .ollo in B.R. No. 21<<4#.

'ence, the instant petition casting three aspersions that respondent court gravel! a/used its discretion tanta$ount to eCcess of >urisdiction when0 . . . . it re=uired, contrar! to law and >urisprudence, that in order that petitioners $a! suffer irrepara/le in>ur! due to the lifting of the in>unction, petitioners should /e using actuall! their registered trade$ar%s in co$$erce in the Philippines; . . . . it lifted the in>unction in violation of section 6 of Rule :5 of the Rules of Court; and . . . . after having found that the trial court had co$$itted grave a/use of discretion and eCceeded its >urisdiction for having refused to issue the writ of in>unction to restrain private respondent6s acts that are contrar! to e=uit! and good conscience, it $ade a co$plete a/out face for legall! insufficient grounds and authoriDed the private respondent to continue perfor$ing the ver! sa$e acts that it had considered contrar! to e=uit! and good conscience, there/! ignoring not onl! the $andates of the +rade$ar% (aw, the international co$$it$ents of the Philippines, the >udicial ad$ission of private respondent that it will have no $ore right to use the trade$ar% &3*R7& after the Director of Patents shall have re>ected the application to register it, and the ad$onitions of the Supre$e Court. "pp. 44-4:, Petition; pp. 4:-46, .ollo.# +o sustain a successful prosecution of their suit for infringe$ent, petitioners, as foreign corporations not engaged in local co$$erce, rel! on section 41-* of the +rade$ar% (aw reading as follows0 Sec. 41-*. *n! foreign corporation or >uristic person to which a $ar% or trade-na$e has /een registered or assigned under this act $a! /ring an action hereunder for infringe$ent, for unfair co$petition, or false designation of origin and false description, whether or not it has /een licensed to do /usiness in the Philippines under *ct Nu$/ered Eourteen hundred and fift!-nine, as a$ended, otherwise %nown as the Corporation (aw, at the ti$e it /rings co$plaint0 Provided, +hat the countr! of which the said foreign corporation or >uristic person is a citiDen or in which it is do$iciled, /! treat!, convention or law, grants a si$ilar privilege to corporate or >uristic persons of the Philippines. "*s inserted /! Sec. 8 of Repu/lic *ct No. 6<5.# to drive ho$e the point that the! are not precluded fro$ initiating a cause of action in the Philippines on account of the principal perception that another entit! is pirating their s!$/ol without an! lawful authorit! to do so. 9udging fro$ a perusal of the afore=uoted Section 41-*, the conclusion reached /! petitioners is certainl! correct for the proposition in support thereof is e$/edded in the Philippine legal >urisprudence. ndeed, it was stressed in General Gar#ents Corporation vs. Director of Patents "41 SCR* :1 K1281L# /! then 9ustice "later Chief 9ustice# 3a%alintal that0 Parentheticall!, it $a! /e stated that the ruling in the 3entholatu$ case was su/se=uentl! derogated when Congress, purposel! to &counteract the effects& of said case, enacted Repu/lic *ct No. 6<5, inserting Section 41-* in the +rade$ar% (aw, which allows a foreign corporation or >uristic person to /ring an action in Philippine courts for infringe$ent of a $ar% or tradena$e, for unfair co$petition, or false designation of origin and false description, &whether or not it has /een licensed to do /usiness in the Philippines under *ct Nu$/ered Eourteen hundred and fift!-nine, as a$ended, otherwise %nown as the Corporation (aw, at the ti$e it /rings co$plaint.&

Petitioner argues that Section 41-* $ilitates against respondent6s capacit! to $aintain a suit for cancellation, since it re=uires, /efore a foreign corporation $a! /ring an action, that its trade$ar% or tradena$e has /een registered under the +rade$ar% (aw. +he argu$ent $isses the essential point in the said provision, which is that the foreign corporation is allowed thereunder to sue &whether or not it has /een licensed to do /usiness in the Philippines& pursuant to the Corporation (aw "precisel! to counteract the effects of the decision in the 3entholatu$ case#. "at p. :8.# 'owever, on 3a!, 41, 1254, Section 41-*, the provision under consideration, was =ualified /! this Court in 9a Che#ise 9acoste S.A. vs. $ernandez "142 SCR* <8< K1254L#, to the effect that a foreign corporation not doing /usiness in the Philippines $a! have the right to sue /efore Philippine Courts, /ut eCisting ad>ective aCio$s re=uire that =ualif!ing circu$stances necessar! for the assertion of such right should first /e affir$ativel! pleaded "4 *g/a!ani Co$$ercial (aws of the Philippines, 1221 )d., p. :25; 4 +artin, Philippine Co$$ercial (aws, Rev. )d., 1256, p. <51#. ndeed, it is not sufficient for a foreign corporation suing under Section 41-* to si$pl! allege its alien origin. Rather, it $ust additionall! allege its personalit! to sue. Relative to this condition precedent, it $a! /e o/served that petitioners were not re$iss in averring their personalit! to lodge a co$plaint for infringe$ent "p. 8:,.ollo in *C-B.R. SP No. 1<1<4# especiall! so when the! asserted that the $ain action for infringe$ent is anchored on an isolated transaction "p. 8:, .ollo in *C-B.R. SP No. 1<1<4; *tlantic 3utual ns. Co. vs. Ce/u Stevedoring Co., nc., 18 SCR* 11<8 "1266#, 1 Regalado, Re$edial (aw Co$pendiu$, Eifth Rev. )d., 1255, p. 11<#. *nother point which petitioners considered to /e of significant interest, and which the! desire to i$press upon us is the protection the! en>o! under the Paris Convention of 126: to which the Philippines is a signator!. Get, insofar as this discourse is concerned, there is no necessit! to treat the $atter with an eCtensive response /ecause adherence of the Philippines to the 126: international covenant due to pact sunt servanda had /een ac%nowledged in 9a Che#ise "supra at page <21#. Biven these confluence of eCisting laws a$idst the cases involving trade$ar%s, there can /e no disagree$ent to the guiding principle in co$$ercial law that foreign corporations not engaged in /usiness in the Philippines $a! $aintain a cause of action for infringe$ent pri$aril! /ecause of Section 41-* of the +rade$ar% (aw when the legal standing to sue is alleged, which petitioners have done in the case at hand. n assailing the >ustification arrived at /! respondent court when it recalled the writ of preli$inar! in>unction, petitioners are of the i$pression that actual use of their trade$ar%s in Philippine co$$ercial dealings is not an indispensa/le ele$ent under *rticle 4 of the Paris Convention in that0 "4# . . . . no condition as to the possession of a do$icile or esta/lish$ent in the countr! where protection is clai$ed $a! /e re=uired of persons entitled to the /enefits of the -nion for the en>o!$ent of an! industrial propert! of an! industrial propert! rights. "p. 45, Petition; p. 42, .ollo in B.R. No. 21<<4.# Get petitioners6 perception along this line is nonetheless resolved /! Sections 4 and 4-* of the +rade$ar% (aw which spea% loudl!, a/out necessit! of actual co$$ercial use of the trade$ar% in the local foru$0 Sec. 4. @hat are re istrable. A +rade$ar%s, tradena$es and service $ar%s owned /! persons, corporations, partnerships or associations do$iciled in the Philippines and /! persons, corporations, partnerships or associations do$iciled in an! foreign

countr! $a! /e registered in accordance with the provisions of this *ct; Provided, 6hat said trade#ar)s, tradena#es, or service #ar)s are actuall( in use in co##erce and services not less than two $onths in the Philippines /efore the ti$e the applications for registration are filed; *nd provided, further, +hat the countr! of which the applicant for registration is a citiDen grants /! law su/stantiall! si$ilar privileges to citiDens of the Philippines, and such fact is officiall! certified, with a certified true cop! of the foreign law translated into the )nglish language, /! the govern$ent of the foreign countr! to the Bovern$ent of the Repu/lic of the Philippines. "*s a$ended /! R.*. No. 56:#. Sec. 4-*. ,wnership of trade$ar%s, tradena$es and service $ar%s; how ac=uired. A *n!one who lawfull! produces or deals in $erchandise of an! %ind or who engages in an! lawful /usiness, or who renders an! lawful service in co$$erce, b( actual use thereof in #anufacture or trade, in business,and in the service rendered, $a! appropriate to his eCclusive use a trade$ar%, a tradena$e, or a service $ar% not so appropriated /! another, to distinguish his $erchandise, /usiness or service fro$ the $erchandise, /usiness or service of others. +he ownership or possession of a trade$ar%, tradena$e, service $ar%, heretofore or hereafter appropriated, as in this section provided, shall /e recogniDed and protected in the sa$e $anner and to the sa$e eCtent as are other propert! rights %nown to the law. "*s a$ended /! R.*. No. 6<5#. "7a/ushi 7aisha setan vs. nter$ediate *ppellate Court, 41< SCR* :5< K1221L, at pp. :52-:21; e$phasis supplied.# Eollowing universal ac=uiescence and co$it!, our $unicipal law on trade$ar%s regarding the re=uire$ent of actual use in the Philippines $ust su/ordinate an international agree$ent inas$uch as the apparent clash is /eing decided /! a $unicipal tri/unal "3ortensen vs. Peters, Breat .ritain, 'igh Court of 9udiciar! of Scotland, 1216, 5 Sessions 2<; Paras, nternational (aw and @orld ,rganiDation, 1281 )d., p. 41#. @ithal, the fact that international law has /een $ade part of the law of the land does not /! an! $eans i$pl! the pri$ac! of international law over national law in the $unicipal sphere. -nder the doctrine of incorporation as applied in $ost countries, rules of international law are given a standing e=ual, not superior, to national legislative enact$ents "Salonga and Gap, Pu/lic nternational (aw, Eourth ed., 1284, p. 16#. +he afore=uoted /asic provisions of our +rade$ar% (aw, according to 9ustice ButierreD, 9r., in ;abushi ;aisha !setan vs. !nter#ediate Appellate Court "41< SCR* :5< K1221L#, have /een construed in this $anner0 * funda$ental principle of Philippine +rade$ar% (aw is that actual use in co$$erce in the Philippines is a pre-re=uisite to the ac=uisition of ownership over a trade$ar% or a tradena$e. CCC CCC CCC +hese provisions have /een interpreted in Sterlin Products !nternational, !nc. v. $arbenfabri)en "a(er Actien esellschaft "48 SCR* 1414 K1262L# in this wa!0 * rule widel! accepted and fir$l! entrenched /ecause it has co$e down through the !ears is that actual use in co$$erce or /usiness is a prere=uisite to the ac=uisition of the right of ownership over a trade$ar%. CCC CCC CCC

. . . *doption alone of a trade$ar% would not give eCclusive right thereto. Such right grows out of their actual use. *doption is not use. ,ne $a! $a%e advertise$ents, issue circulars, give out price lists on certain goods; /ut these alone would not give eCclusive right of use. Eor trade$ar% is a creation of use. +he underl!ing reason for all these is that purchasers have co$e to understand the $ar% as indicating the origin of the wares. Elowing fro$ this is the trader6s right to protection in the trade he has /uilt up and the goodwill he has accu$ulated fro$ use of the trade$ar%. . . . n fact, a prior registrant cannot clai$ eCclusive use of the trade$ar% unless it uses it in co$$erce. @e ruleKdL in Pa asa !ndustrial Corporation v. Court of Appeals "115 SCR* :46 K1254L#0 <. 6he 6rade#ar) la& is ver( clear. !t re:uires actual co##ercial use of the #ar) prior to its re istration. +here is no dispute that respondent corporation was the first registrant, !et it failed to full! su/stantiate its clai$ that it used in trade or /usiness in the Philippines the su/>ect $ar%; it did not present proof to invest it with eCclusive, continuous adoption of the trade$ar% which should consist a$ong others, of considera/le sales since its first use. +he invoices ")Chi/its 8, 8-a, and 5-/# su/$itted /! respondent which were dated wa! /ac% in 12:8 show that the Dippers sent to the Philippines were to /e used as &sa$ples& and &of no co$$ercial value&. +he evidence for respondent $ust /e clear, definite and free fro$ inconsistencies. "S! Ching v. Baw (ui, 44 SCR* 145-142# &Sa$ples& are not for sale and therefore, the fact of eCporting the$ to the Philippines cannot /e considered to /e e=uivalent to the &use& conte$plated /! the law. Respondent did not eCpect inco$e fro$ such &sa$ples&. +here were no receipts to esta/lish sale, and no proof were presented to show that the! were su/se=uentl! sold in the Philippines. "Pagasa ndustrial Corp. v. Court of *ppeals, 115 SCR* :46 K1254L; )$phasis Supplied# +he records show that the petitioner has never conducted an! /usiness in the Philippines. t has never pro$oted its tradena$e or trade$ar% in the Philippines. t is un%nown to Eilipino eCcept the ver! few who $a! have noticed it while travelling a/road. t has never paid a single centavo of taC to the Philippine govern$ent. -nder the law, it has no right to the re$ed! it see%s. "at pp. :52-:21.# n other words, petitioners $a! have the capacit! to sue for infringe$ent irrespective of lac% of /usiness activit! in the Philippines on account of Section 41-* of the +rade$ar% (aw /ut the =uestion whether the! have an eCclusive right over their s!$/ol as to >ustif! issuance of the controversial writ will depend on actual use of their trade$ar%s in the Philippines in line with Sections 4 and 4-* of the sa$e law. t is thus incongruous for petitioners to clai$ that when a foreign corporation not licensed to do /usiness in Philippines files a co$plaint for infringe$ent, the entit! need not /e actuall! using its trade$ar% in co$$erce in the Philippines. Such a foreign corporation $a! have the personalit! to file a suit for infringe$ent /ut it $a! not necessaril! /e entitled to protection due to a/sence of actual use of the e$/le$ in the local $ar%et. Boing /ac% to the first assigned error, we can not help /ut notice the $anner the ascription was fra$ed which carries with it the i$plied /ut unwarranted assu$ption of the eCistence of petitioners6 right to relief. t $ust /e e$phasiDed that this aspect of eCclusive do$inion to the trade$ar%s, together with the corollar! allegation of irrepara/le in>ur!, has !et to /e esta/lished /! petitioners /!

the re=uisite =uantu$ of evidence in civil cases. t cannot /e denied that our reluctance to issue a writ of preli$inar! in>unction is due to >udicial deference to the lower courts, involved as there is $ere interlocutor! order "Millarosa vs. +eodoro, Sr., 111 Phil. 4: K12:6L#. n point of ad>ective law, the petition has its roots on a re$edial $easure which is /ut ancillar! to the $ain action for infringe$ent still pending factual deter$ination /efore the court of origin. t is virtuall! needless to stress the o/vious realit! that critical facts in an infringe$ent case are not /efore us $ore so when even 9ustice Eeliciano6s opinion o/serves that &the evidence is scant!& and that petitioners &have !et to su/$it copies or photographs of their registered $ar%s as used in cigarettes& while private respondent has not, for its part, &su/$itted the actual la/els or pac%aging $aterials used in selling its &3ar%& cigarettes.& Petitioners therefore, $a! not /e per$itted to presu$e a given state of facts on their so called right to the trade$ar%s which could /e su/>ected to irrepara/le in>ur! and in the process, suggest the fact of infringe$ent. Such a plo! would practicall! place the cart ahead of the horse. +o our $ind, what appears to /e the insur$ounta/le /arrier to petitioners6 portra!al of whi$sical eCercise of discretion /! the Court of *ppeals is the well-ta%en re$ar% of said court that0 +he petitionerKsL will not /e pre>udiced nor stand to suffer irrepara/l! as a conse=uence of the lifting of the preli$inar! in>unction considering that the! are not actuall! engaged in the $anufacture of the cigarettes with the trade$ar% in =uestion and the filing of the counter/ond will a$pl! answer for such da$ages. "p. :4. .ollo in B.R. No. 21<<4.# 3ore telling are the allegations of petitioners in their co$plaint "p. <12, .ollo B.R. No. 21<<4# as well as in the ver! petition filed with this Court "p. 4, .ollo in B.R. No. 21<<4# indicating that the! are not doing /usiness in the Philippines, for these fran% representations are inconsistent and incongruent with an! pretense of a right which can /reached "*rticle 14<1, New Civil Code; Section 4, Rule 142; Section <, Rule :5, Revised Rules of Court#. ndeed, to /e entitled to an in>unctive writ, petitioner $ust show that there eCists a right to /e protected and that the facts against which in>unction is directed are violative of said right "Searth Co$$odities Corporation vs. Court of *ppeals, 418 SCR* 644 K1224L#. t $a! /e added in this connection that al/eit petitioners are holders of certificate of registration in the Philippines of their s!$/ols as ad$itted /! private respondent, the fact of eCclusive ownership cannot /e $ade to rest solel! on these docu$ents since do$inion over trade$ar%s is not ac=uired /! the $ere fact of registration alone and does not perfect a trade$ar% right "-nno Co$$ercial )nterprises, nc. vs. Beneral 3illing Corporation, 141 SCR* 514 K125<L#. )ven if we disregard the candid state$ents of petitioners anent the a/sence of /usiness activit! here and rel! on the re$aining state$ents of the co$plaint /elow, still, when these aver$ents are >uCtaposed with the denials and propositions of the answer su/$itted /! private respondent, the supposed right of petitioners to the s!$/ol have there/! /een controverted. +his is not to sa!, however, that the $anner the co$plaint was traversed /! the answer is sufficient to tilt the scales of >ustice in favor of private respondent. Ear fro$ it. @hat we are si$pl! conve!ing is another /asic tenet in re$edial law that /efore in>unctive relief $a! properl! issue, co$plainant6s right or title $ust /e undisputed and de$onstrated on the strength of one6s own title to such a degree as to un=uestiona/l! eCclude dar% clouds of dou/t, rather than on the wea%ness of the adversar!6s evidence, inas$uch as the possi/ilit! of irrepara/le da$age, without prior proof of transgression of an actual eCisting right, is no ground for in>unction /eing $ere da#nu# abs:ue in-uria "+alisa!-Sila! 3illing Co., nc. vs. CE of Negros ,ccidental, 44 SCR* :88 K1281L; Erancisco, Rules of Court, Second ed., 125:, p. 44:; < 3artin, Rules of Court, 1256 ed., p. 54#. ,n the econo$ic repercussion of this case, we are eCtre$el! /othered /! the thought of having to participate in throwing into the streets Eilipino wor%ers engaged in the $anufacture and sale of private respondent6s &3*R7& cigarettes who $ight /e retrenched and forced to >oin the ran%s of the

$an! une$plo!ed and unproductive as a result of the issuance of a si$ple writ of preli$inar! in>unction and this, during the pendenc! of the case /efore the trial court, not to $ention the di$inution of taC revenues represented to /e close to a =uarter $illion pesos annuall!. ,n the other hand, if the status =uo is $aintained, there will /e no da$age that would /e suffered /! petitioners inas$uch as the! are not doing /usiness in the Philippines. @ith reference to the second and third issues raised /! petitioners on the lifting of the writ of preli$inar! in>unction, it cannot /e gainsaid that respondent court acted well within its prerogatives under Section 6, Rule :5 of the Revised Rules of Court0 Sec. 6. Grounds for ob-ection to, or for #otion of dissolution of in-unction. A +he in>unction $a! /e refused or, if granted e= parte, $a! /e dissolved, upon the insufficienc! of the co$plaint as shown /! the co$plaint itself, with or without notice to the adverse part!. t $a! also /e refused or dissolved on other grounds upon affidavits on the part of the defendants which $a! /e opposed /! the plaintiff also /! affidavits. t $a! further /e refused or, if granted, $a! /e dissolved, if it appears after hearing that although the plaintiff is entitled to the in>unction, the issuance or continuance thereof, as the case $a! /e, would cause great da$age to the defendant while the plaintiff can /e full! co$pensated for such da$ages as he $a! suffer, and the defendant files a /ond in an a$ount fiCed /! the >udge conditioned that he will pa! all da$ages which the plaintiff $a! suffer /! the refusal or the dissolution of the in>unction. f it appears that the eCtent of the preli$inar! in>unction granted is too great, it $ust /e $odified. -nder the foregoing rule, in>unction $a! /e refused, or, if granted, $a! /e dissolved, on the following instances0 "1# !f there is insufficienc( of the co#plaint as sho&n b( the alle ations therein. Refusal or dissolution $a! /e granted in this case with or without notice to the adverse part!. "4# f it appears after hearing that although the plaintiff is entitled to the in>unction, the issuance or continuance thereof would cause great da$age to the defendant, while the plaintiff can /e full! co$pensated for such da$ages as he $a! suffer. +he defendant, in this case, $ust file a /ond in an a$ount fiCed /! the >udge conditioned that he will pa! all da$ages which plaintiff $a! suffer /! the refusal or the dissolution of the in>unction. "<# ,n the other grounds upon affidavits on the part of the defendant which $a! /e opposed /! the plaintiff also affidavits. 3odification of the in>unction $a! also /e ordered /! the court if it appears that the eCtent of the preli$inar! in>unction granted is too great. "< 3artin, Rules of Court, 1256 ed., p. 22; Erancisco,supra, at p. 465.# n view of the eCplicit representation of petitioners in the co$plaint that the! are not engaged in /usiness in the Philippines, it inevita/l! follows that no conceiva/le da$age can /e suffered /! the$ not to $ention the fore$ost consideration heretofore discussed on the a/sence of their &right& to /e protected. *t an! rate, and assu$ing in ratia ar u#enti that respondent court erroneousl! lifted the writ it previousl! issued, the sa$e $a! /e cured /! appeal and not in the for$ of a petition for certiorari "Clar% vs. Philippine Read! 3iC Concrete Co., 55 Phil. 461 K12:1L#. Meril!, and $indful of the rule that a writ of preli$inar! in>unction is an interlocutor! order which is alwa!s under the

control of the court /efore final >udg$ent, petitioners6 criticis$ $ust fall flat on the ground, so to spea%, $ore so when eCtinction of the previousl! issued writ can even /e $ade without previous notice to the adverse part! and without a hearing "Calu!a vs. Ra$os, 82 Phil. 641 K1284L; < 3oran, Rules of Court, 1281 ed., p. 51#. @')R)E,R), the petition is here/! D S3 SS)D and the Resolutions of the Court of *ppeals dated Septe$/er 14, 1252 and Nove$/er 42, 1252 are here/! *EE R3)D. S, ,RD)R)D. "idin, %., concurs. Davide, %r., concurs in the result. .o#ero, %. too) no part.

S)>"("+) !>'#'o#&

4ELICIAN!, J./ dissenting0 find $!self una/le to >oin in the opinion prepared /! $! distinguished /rother, 3elo, %. t see$s to $e that the issues involved in this case are rather $ore co$pleC than what has /een assu$ed to /e the case /! the $a>orit! opinion. Eor this and related reasons, there is set out /elow a state$ent of the relevant facts "as see the$# that is $ore eCtensive than what is ordinaril! found in dissenting opinions. Petitioner Philip 3orris, nc. is a corporation organiDed and eCisting under the law of Mirginia, -.S.*. Petitioners .enson I 'edges "Canada#, nc. and Ea/ri=ues de +a/ac Reunies, S.*., /oth wholl! owned su/sidiaries of Philip 3orris, nc., are organiDed and eCisting under the law of Canada and SwitDerland, respectivel!. Philip 3orris, nc. is registered owner of the trade$ar% &3*R7 M & for cigarettes. ts ownership thereof is evidenced /! Philippine Patent ,ffice +rade$ar% Certificate of Registration No. 1584<, dated 46 *pril 128<. +he state$ent attached to the Certificate of Registration states that the trade$ar% &3*R7 M & had /een registered in the -nited States Patent ,ffice, on the Principal Register, under Certificate of Registration No. 555,2<1 issued on 8 *pril 1281. +he state$ent also re=uested that the trade$ar% /e registered in the Philippine Patent ,ffice on the Principal Register in accordance with Section <8 of R.*. No. 166, as a$ended. .enson I 'edges "Canada#, nc. is the registered owner of the trade$ar% &3*R7 +)N& also for cigarettes, as evidenced /! Philippine Patent ,ffice +rade$ar% Certificate of Registration No. 11148, dated 45 3a! 1264, on the Principal Register. +his +rade$ar% Certificate of Registration was

originall! issued in the na$e of Canadian +a/acofina (td. and later assigned to .enson I 'edges "Canada#, nc. Petitioners alleged that the na$e Canadian +a/acofina (td. was later changed to .enson I 'edges "Canada# (td. +his trade$ar% Certificate of Registration was renewed on 45 3a! 1254. +he state$ent attached thereto stated that the &date of first use of the trade#ar) 6+A.; 6EN6 in trade in or &ith the Philippines is April /D, /IOE, & and that trade#ar) had &been in actual use in co##erce over the Philippines continuousl( for t&o #onths. & Ea/ri=ues de +a/ac Reunies, S.*. is registered owner of the trade$ar% &(*R7& also for cigarettes, as evidenced /! Philippine Patent ,ffice +rade$ar% Certificate of Registration No. 112:<, dated 4: 3arch 1264. +his +rade$ar% Certificate of Registration was originall! issued in the na$e of (igget and 3!res +o/acco Co$pan! was later assigned to Ea/ri=ues de +a/ac Reunies, S.*. Petitioners alleged that the na$e of (iggett and 3!res +o/acco Co$pan! was changed later to Ea/ri=ues de +a/ac Reunies, S.*. +he state$ent attached to this Certificate of Registration states that the trade$ar% &(*R7& was first used /! (igget and 3!res +o/acco Co$pan! on <1 3a! 1241, and first used b( it 'in co##erce in or &ith the Philippines on $ebruar( O, /IOE' and has been continuousl( used b( it 'in trade in or &ith the Philippines since $ebruar( O, /IOE .' So$eti$e /efore 18 ,cto/er 1251, private respondent Eortune +o/acco Corporation "&Eortune&# co$$enced $anufacturing and selling in the Philippines cigarettes under the /randna$e &3*R7.& Eortune also filed on 1< Ee/ruar! 1251 with the Philippine Patent ,ffice an application for registration of &3*R7& as a trade$ar% for cigarettes. .! a letter dated 18 ,cto/er 1251, petitioner through their law!ers wrote to Eortune stating that the $anufacturing, selling and advertising of &3*R7& cigarettes /! Eortune constituted an &infringe$ent or an act of unfair co$petition with& petitioners6 &well-%nown international trade$ar%s used on cigarettes and to/acco products which were registered worldwide and with the Philippine Patent ,ffice.& Petitioners listed their Philippine Certificates of Registration for the trade$ar%s &3*R7 M ,& &3*R7 +)N,& and &(*R7.& Petitioners then as%ed Eortune &to cease and desist fro$ further $anufacturing; selling or advertising 63*R76 cigarettes,& otherwise appropriate court actions would /e filed without further notice. ,n 15 *ugust 1254, petitioners co$$enced action /efore the Court of Eirst nstance of Pasig, 3etro 3anila "Civil Case No. 48<84#. n their co$plaint, petitioners alleged that the! were not doing /usiness in the Philippines /ut had nonetheless the right and the capacit! to /ring the instant suit; that the! were owners of Philippine Patent ,ffice +rade$ar% Certificates of Registration which were in full force and effect, covering &3*R7 M ,& &3*R7 +)N,& and &(*R7,& all for cigarettes "eCcept the last which also covered chewing and s$o%ing to/acco#; that the! had registered those trade$ar%s in their respective countries of origin and in other countries the world and that /! virtue of their &long and eCtensive use KhadL gained international fa$e and acceptance;& that the! had their respective real and effective industrial or co$$ercial esta/lish$ents in the -nited States, Canada and SwitDerland, which countries were, li%e the Philippines, $e$/ers of the Convention of Paris for the Protection of ndustrial Propert!; that under that Convention each $e$/er-countr! underta%es to prohi/it the use of a trade$ar% which constitutes a reproduction, i$itation or translation of a $ar% alread! /elonging to a person entitled to the /enefits of the Convention and use for identical or si$ilar goods; that petitioner Ea/ri=ues de +a/ac Reunies, S.*. had long /een using trade$ar% &(*R7& throughout the world, including the Philippines where its products /earing the trade$ar% &(*R7& had /een sold in the dut!-free $ar%et, and advertised and $ar%etted in the Philippines at least since 1264 and have continued to /e so to present; that Eortune had without previous consent, authorit! or license fro$ petitioners, with %nowledge of the popularit! of petitioners6 $ar%s and their Philippine registrations, $anufactured, advertised and sold cigarettes /earing the identical or confusingl! si$ilar trade$ar% &3*R7& which unauthoriDed use constituted an act of infringe$ent under Section 44 of R.*. No. 166, as a$ended; that there/! the pu/lic and the patroniDers of

petitioners6 products were /eing deceived into /u!ing Eortune6s cigarettes under the i$pression and $ista%en /elief that Eortune6s cigarettes were identical with, or ca$e fro$ the sa$e source as, petitioners6 products or that Eortune was licensee of petitioners, which it was not; that the infringe$ent /! Eortune of petitioners6 trade$ar%s have inflicted da$ages upon petitioners; that the continued unauthoriDed and unlicensed $anufacture and sale /! Eortune of its infringing products during the litigation would wor% in>ustice and cause irrepara/le in>ur! to petitioners in violation of their propert! rights and $oreover tend to render the >udg$ent which the court $ight render ineffectual. Petitioners accordingl! as%ed for a writ of preli$inar! in>unction to restrain Eortune fro$ $anufacturing or selling &3*R7& cigarettes, and after trial, to $a%e such preli$inar! in>unction per$anent and to order Eortune6s infringing $aterials to /e destro!ed, and for da$ages. Eortune filed an ,pposition to petitioners6 pra!er for preli$inar! in>unction. ,n 45 3arch 125<, the trial court 1issued an ,rder den!ing petitioners6 $otion for preli$inar! in>unction. n rendering that order, the trial court, while noting that petitioners were holders of Philippine Certificates of +rade$ar% Registration, relied heavil! on three "<# factors0 Eirstl!, that petitioners were foreign corporations not doing /usiness in the Philippines; Secondl!, that Eortune6s application for a registration as trade$ar% of the word &3*R7& for cigarettes was then pending /efore the Philippine Patent ,ffice; and +hirdl!, that Eortune was the &onl! part! authoriDed& /! the .ureau of nternal Revenue "&. R&# to $anufacture cigarettes /earing the $ar% &3*R7& in the Philippines. n respect of the first point, the trial court was o/viousl! heavil! influenced /! Eortune6s argu$ent that /ecause petitioners were not doing /usiness in the Philippines, which $eant that &the! KwereL not engaged in the sale, $anufacture, i$portation, eCportation and advertise$ent of their cigarette products in the Philippines,& Eortune6s $anufacture and sale of its &3*R7& cigarettes could not /e said to /e causing petitioners &irrepara/le da$age& within the Philippines. n respect to the second point, the trial >udge felt that /ecause the Director of Patents had not, at that point, denied Eortune6s pending application for registration of its trade$ar% &3*R7,& the grant of a preli$inar! in>unction was pre$ature. @ith regard to the third point, the >udge noted a letter dated <1 9anuar! 1282 2 of the then *cting Co$$issioner of nternal Revenue 3r. Conrado P. DiaD, te$poraril! granting the re=uest of Eortune for a per$it to $anufacture two "4# new /rands of cigarettes, one of which was &3*R7.& +he trial >udge also noted that the . R letter contained the following paragraph0
Please /e infor$ed further that this authorit! herein granted does not give !ou protection against an! person or entit! whose rights $a! /e pre>udiced /! infringe$ent or unfair co$petition in relation to !our a/ove na$ed /randsJtrade$ar%s. 3

+he trial >udge, however, apparentl! gave no weight at all to this caveat. Petitioners sought, on 1: *pril 125<, reconsideration of 9udge Re!es6 ,rder den!ing preli$inar! in>unction. *fter Eortune had filed an ,pposition to petitioners6 3otion for Reconsideration, and petitioners had filed their Repl! and Eortune a Re>oinder, and after an offer of eChi/its /! the parties respectivel!, 9udge Re!es issued on : *pril 1254 another ,rder den!ing the 3otion for Reconsideration. n his second order, the trial >udge laid great stress on the fact that Eortune6s

application for registration of its trade$ar% &3*R7& for cigarettes re$ained su/sisting. ,n the /asis, 9udge Re!es denied petitioners6 $otion for reconsideration. 3ore than two "4# !ears later, petitioners filed a &Second 3otion for ssuance of Preli$inar! n>unction& dated 1 Septe$/er 1256. n their Second 3otion, petitioners invited attention to Paper No. <, dated 6 *pril 125<, relating to Eortune6s application for registration of its /randna$e &3*R7.& +his Paper No. < reproduced a letter to Eortune6s counsel /! .ienvenido *. Palisoc, Senior +rade$ar% )Ca$iner, and @ilfredo +. 9ara$illo, +rade$ar% )Ca$iner, stating that0 +his application Kfor registration of &3ar%&L has /een eCa$ined. Caption $ar% of the application $ust tall! with the drawing on file. Sub-ect #ar) is confusin l( si#ilar &ith the follo&in #ar)s on file0 a. &3ar%& with Reg. No. SR-46:2 for cigarettes. /. &+ar) V!!' with Reg. No. 1584< for cigarettes. c. &+ar) 6en' with Reg. No. 11148 for cigarettes. d. &9ar)' with Reg. No. 112:< for cigarettes. >ence, re istration is barred under Sec. C 4d5 of .ep. Act No. /OO as a#ended. Su/>ect $ar% has no trade$ar% significance and can not serve its purpose as to indicate the source and origin of goods. Eurther$ore, the word '+ar)' is eneric and therefore incapable of e=clusive appropriation.
3a%ati, 3etro 3anila, *pril 6, 125<. / ")$phasis supplied#

Petitioners also invited attention to a certification dated 5 *ugust 1256 issued /! 3r. (uis 3. Daca, 9r., *ssistant Director, Philippine Patent ,ffice, to the effect that Eortune6s application for the $ar% &3*R7& for cigarettes was declared a/andoned as of 16 Ee/ruar! 1256 and was now dee$ed forfeited. n addition, petitioners eCplained in so$e detail how Eortune6s use of its $ar% &3*R7& was &destructive of Kpetitioners6L propert! right to KtheirL registered trade$ar%s.& 5 Eurther, petitioners assailed Eortune6s argu$ent that issuance of preli$inar! in>unction would cause &loss of revenue and taCes to the Bovern$ent& and that $ore da$ages would /e sustained /! Eortune than /! petitioners since the petitioners do not $ar%et their cigarettes in the Philippines. *fter Eortune had filed an ,pposition to petitioners6 Second 3otion, the trial court, this ti$e presided over /! 9udge Nicolas Baling, issued an ,rder dated 44 *pril 1258 den!ing once $ore the $otion for issuance of a writ of preli$inar! in>unction. n this order, 9udge Baling relied on two "4# points0 firstl!, according to the trial >udge, petitioners had not shown that the products the! sought to protect fro$ Eortune6s &3*R7& cigarettes were &in actual use and availa/le for co$$ercial purposes an!where in the Philippines;& and secondl!, it appeared that while Eortune6s original application had /een a/andoned, it could /e refiled and was in fact re-filed. +hus, 9udge Baling in effect reiterated 9udge Re!es6s position that until the Director of Patents had definitel! acted upon Eortune6s

application for registration of &3*R7,& petitioners6 pra!er for preli$inar! in>unction could not /e granted. Petitioners then filed a Petition for Review with the Supre$e Court, which Petition was doc%eted as B.R. No. 85141. +he Court ordered respondents to file their Co$$ents on the Petition and on <1 Septe$/er 1258, the Court referred the Petition to the Court of *ppeals. n due course of ti$e, the Court of *ppeals, through Cacdac, 9r., %., 7 rendered a decision on : 3a! 1252 setting aside the 44 *pril 1258 order of the trial court and ordering issuance of a writ of preli$inar! in>unction upon filing of a /ond /! petitioners in the su$ of P411,111.11 to /e approved /! the appellate court, &en>oining the private respondents, its agents, e$plo!ees and representatives fro$ $anufacturing, selling andJor advertising &3*R7& cigarettes until further orders.& +he Court of *ppeals said in pertinent part0
+here is no dispute that petitioners are the re istered o&ners of the trade#ar)s for ci arettes '+A.; V!!,' '+A.; 6EN,' and '9A.;'. "*nneCes ., C and D, Petition#. As found and reiterated b( the Philippine Patent Office in two "4# official co$$unications dated *pril 6, 125< and 9anuar! 44, 1254, the trade#ar) '+A.;' is 'confusin l( si#ilar' to the trade#ar)s of petitioners, hence, re istration &as barred under Sec. C4d5 of .ep. Act No. /OO, as a#ended "pp. 116, 1<2 SC* rollo#. n a third official co$$unication dated *pril 5, 1256, the trade$ar% application of private respondent for the $ar% &3*R7& under Serial No. 44115 filed on Ee/ruar! 1<, 1251 which was declared a/andoned as of Ee/ruar! 16, 1256, is now dee$ed forfeited, there /eing no revival $ade pursuant to Rule 25 of the Revised Rules of Practitioners in +rade$ar% Cases.6 "p. 118, C* rollo#. +he foregoing docu$ents or co$$unications $entioned /! petitioners as &the changes in $aterial facts which occurred after 3arch 45, 125<&, are not also =uestioned /! respondents. 7 ")$phasis supplied#

+he Court of *ppeals also noted the . R letter of <1 9anuar! 1282 te$poraril! granting Eortune6s re=uest for a per$it to $anufacture two "4# new /rands of cigarettes, including one /randed &3*R7,& and the caveat "earlier noted# 0 that the . R6s authoriDation would not give Eortune an! protection against an! person or entit! whose rights $a! /e pre>udiced /! infringe$ent or unfair co$petition on the part of Eortune. +he Court of *ppeals also referred to the certificate dated 46 Septe$/er 1256 of 3r. Cesar B. Sandico, then Director of Patents, issued upon re=uest of Eortune6s counsel stating that there was a pendin application for re istration of the trade#ar) '+A.;' for cigarettes under Serial No. :2584, filed on 16 Septe$/er 1256, noting at the sa$e ti$e, that Director Sandico6s certification contained the following caveat or =ualification0 +his certification, however, does not give protection as a ainst an( person or entit( &hose ri ht #a( be pre-udiced b( infrin e#ent or unfair co#petition in relation to the aforesaid trade$ar% nor the ri ht to re ister as contrar( to the provisions of the 6rade#ar) 9a&, Repu/lic *ct No. 166 as a$ended and the Revised Rules of Practice in +rade$ar% Cases. ")$phasis supplied# +he Court of *ppeals then went on to sa! that0 K@eL /elieve and hold that petitioners have sho&n a pri#a facie case for the issuance of the &rit of prohibitor( in-unction for the purposes stated in their co$plaint and su/se=uent $otions for the issuance of the prohi/itor! writ. ".ua!an Cattle Co. v. Fuintillan, 14: SCR* 486#.
+he re:uisites for the granting of preli$inar! in>unction are the e=istence of the ri ht protected and the facts a ainst &hich the in-unction is to be directed as violative of said

ri ht. ".ua!an Cattle Co. v. Fuintillan, supra; ,rtigas I Co. vs. RuiD, 145 SCR* <46#. t is a writ fra$ed according to the circu$stances of the case co$$anding an act which the Court regards as essential to >ustice and restraining an act it dee$s contrar! to e=uit! and good conscience "Rosauro vs. Cuneta, 1:1 SCR* :81#. !f it is not issued, the defendant #a(, before final -ud #ent, do or continue the doin of the act &hich the plaintiff as)s the court to restrain, and thus #a)e ineffectual the final -ud #ent rendered after&ards rantin the relief sou ht b( the plaintiff "Calo vs. Roldan, 86 Phil. 44:#. Benerall!, its grant or denial rests upon the sound discretion of the Court eCcept on a clear case of a/use ".elish nvest$ent I Einance Co. vs. State$ent 'ouse, 1:1 SCR* 6<6#. PetitionersJ ri ht of e=clusivit( to their re istered trade#ar)s bein clear and be(ond :uestion, the respondent courtJs denial of the prohibitive &rit constituted e=cess of -urisdiction and rave abuse of discretion. f the lower court does not grant preli$inar! in>unction, the appellate court $a! grant the sa$e "Service Specialists, nc. v. Sheriff of 3anila. 14: SCR* 1<2#. 9 ")$phasis supplied#

Eortune $oved for reconsideration of the Decision of the Court of *ppeals insisting that petitioners $ust first prove their &clear, un$ista%a/le and un=uestioned right to the writ, coupled with the possi/le da$ages it would suffer;& that petitioners had not suffered an! &great and irrepara/le in>ur! to spea% of& /ecause &petitioners have never done /usiness in this countr! in the past nor in the future;& that, on the other hand, Eortune had /een authoriDed /! the . R to $anufacture &3*R7& cigarettes, &there/! generating $uch needed funds for the Bovern$ent;& that Eortune6s application for registration of its /randna$e &3*R7& with the Philippine Patent ,ffice &still pending& and not &finall! re>ected& /! the Director of Patents. ,n 14 9ul! 1252, the Court of *ppeals issued a 3inute Resolution stating that the issues and argu$ents in Eortune6s $otion for reconsideration had /een &full! discussed& in the Decision sought to /e reconsidered, that no new argu$ents were raised, and accordingl! denied the 3otion for Reconsideration. Eortune then filed a &3otion to Dissolve @rit of Preli$inar! n>unction with ,ffer to Eile Counter/ond& date 4: 9ul! 1252, where it reiterated the /asic argu$ents it previousl! $ade. * &Supple$ental 3otion to (ift @rit of Preli$inar! n>unction with ,ffer of Counter/ond& dated 18 *ugust 1252 was neCt filed /! Eortune. n this &Supple$ental 3otion,& Eortune averred that it had paid to the . R for 1255 the a$ount of P151,241,188.<5 for specific taCes; while for 9anuar! to 9ul! 1252, it had paid the a$ount of P141,141,8<:.45. Eortune also referred to its e$plo!ees assigned to the $anufacture of &3*R7& cigarettes who were apparentl! apprehensive that their services would eventuall! /e ter$inated and that the! would >oin the ran%s of the une$plo!ed. Petitioners filed an ,pposition to the &3otion to Dissolve& and a Co$$ent on the &Supple$ental 3otion& of Eortune. ,n 14 Septe$/er 1252, the Court of *ppeals once $ore through Cacdac, 9r., %. issued a Resolution lifting the preli$inar! in>unction it had earlier granted upon the filing of counter/ond /! private respondent in the a$ount of P411,111.11 to answer for an! da$ages petitioners $a! suffer as a conse=uence of such lifting. n its Resolution, the Court of *ppeals referred to the &lots of wor%ers e$plo!ed KwhoL will /e laid off as a conse=uence of the in>unction& and that Bovern$ent &will stand to lose the a$ount of specific taCes /eing paid /!& Eortune. t when went on to sa!0 *fter a thorough re-eCa$ination of the issues involved and the argu$ents advanced /! /oth parties in the offer to file a counter/ond and the opposition thereto, @) /elieve that there are sound and cogent reasons for -s to grant the dissolution of the writ of preli$inar! in>unction /! the offer of the private respondent to put up a counter/ond to answer for whatever da$ages the petitioner $a! suffer as a conse=uence of the dissolution of the preli$inar! in>unction.

+he petitioner &ill not be pre-udiced nor stand to suffer irreparabl( as a conse=uence of the lifting of the preli$inar! in>unction considerin that the( are not actuall( en a ed in the #anufacture of the ci arettes &ith the trade#ar)s in :uestion and the filing of the counterbond &ill a#pl( ans&er for such da#a es .
@hile the rule is that an offer of a counter/ond does not operate to dissolve an in>unction previousl! granted, nevertheless, it is e=uall! true that an in>unction could /e dissolved onl! upon good and valid grounds su/>ect to the sound discretion of the court. *s @) have $aintained the view that there are sound and good reasons to lift the preli$inar! in>unction the $otion to file a counter/ond is granted. 10 ")$phasis supplied#

Petitioners filed a 3otion for Reconsideration, without success. n the instant Petition, petitioners $a%e the following /asic su/$issions0 1. that the Court of *ppeals gravel! a/used its discretion a$ounting to eCcess of >urisdiction when it re=uired, contrar! to law and >urisprudence that in order that petitioners $a! suffer irrepara/le in>ur! due to the lifting of the in>unction, petitioners should /e using actuall! their registered trade$ar%s in co$$erce in the Philippines; 4. that the Court of *ppeals gravel! a/used its discretion a$ounting to eCcess of >urisdiction when it lifted the in>unction in violation of Section 6 of Rule :5 of the rules of Court;
<. that the Court of *ppeals gravel! a/used its discretion a$ounting to eCcess of >urisdiction when, after having found that the trial court had co$$itted grave a/use of discretion and eCceeded its >urisdiction for having refused to issue the writ of in>unction to restrain respondent6s acts that are contrar! to e=uit! and good conscience, it $ade a co$plete a/out face for legall! insufficient grounds and authoriDed private respondent to continue perfor$ing the ver! sa$e acts that it had considered contrar! to e=uit! and good conscience, there/! ignoring not onl! the $andates of the trade$ar% law, the international co$$it$ents of the Philippines, the >udicial ad$ission of private respondent that it will have no $ore right to use the trade$ar% &3*R7& after the Director of Patents shall have re>ected the application to register it, and the ad$onitions of the Supre$e Court.11

+he Court re=uired private respondent to file a co$$ent. +he co$$ent reiterated the /asic argu$ents $ade /! private respondent /efore the Court of *ppeals0 a. the petitioners are not suffering an! irrepara/le da$age /! the lifting of the preli$inar! in>unction /! the Court of appeals. @hatever da#a es the( #i ht suffer are 'based purel( on speculation, since /! >udicial ad$ission, petitioners are not doin business in the Philippines. Private respondent stressed that petitioners 'are not #anufacturin , i#portin or sellin '+A.; 6EN,' '+A.; V!!' or '9A.;' in this countr(,' notwithstanding &false allegation& that petitioners have /een &using& the said trade$ar%s &in co$$erce and trade& in the Philippines since 126< up to the present. /. that &hatever da#a e petitioners #a( be sufferin is ne li ible &hen co#pared to the ta=es that &ould have to be fore one b( the Govern#ent considering that private respondent &paid an annual specific taC of P441 3illion onl! on the $anufacture and sale of &3*R7 cigarettes.& Private respondent clai$s that, in contrast, petitioners

which are foreign corporations &/ased in three different countries& have not contri/uted an!thing to Bovern$ent taC revenues. c. that the Court of *ppeals lifted the writ of preli$inar! in>unction it had earlier issued upon the su/$ission of a counter /ond in dou/le the a$ount of the /ond su/$itted /! petitioners, under Section 6, Rule :5 of the Rules of Court, &hich act &as &ithin the sound discretion of the Court of Appeals . Private respondent also stresses that the right of petitioners to the in>unction was still /eing litigated /efore the trial court. Refor$ulating the issues raised /! the petitioners here, we thin% the principal issues $a! /e reduced to the following0 firstl!, is there a clear legal right to the relief as%ed /! petitioners in the for$ of a preli$inar! in>unction to restrain private respondent fro$ $anufacturing, selling and distri/uting cigarettes under the trade$ar% &3*R7&? +he second =uestion is0 are private respondent6s acts co$plained of /! petitioners causing irrepara/le in>ur! to petitioners6 rights in the pre$ises? +hese two "4# /asic issues are o/viousl! related and need to /e addressed together.

+he first point that needs to /e stressed is that petitioners have Philippine Certificates of Registration for their trade$ar%s &3*R7 +)N&, &3*R7 M ,& and &(*R7& in the Principal Register. -pon the other hand, private respondent6s trade$ar% &3*R7& is not registered in the Principal Register in the ,ffice of the Director of Patents; private respondents is si$pl! an applicant for registration of a $ar%, the status of which application $a! /e noted later. t is i$portant to stress the legal effects of registration of a trade$ar% in the Principal Register in the ,ffice of the Director of Patents. Section 41 of R.*. No. 166, as a$ended, sets out the principal legal effects of such registration0 Sec. 41. Certificate of re istration pri#a facie evidence of validit( . A * certificate of registration, of a $ar% or a trade na$e shall /e pri$a facie evidence of the validit! of the registration, the registrant6s ownership of the $ar% or trade na$e, and of the registrant6s eCclusive right to use the sa$e in connection with the goods, /usiness or services specified in the certificate, su/>ect to an! conditions and li$itations stated therein. ")$phasis supplied# n 9orenzana v. +aca ba, 12 the Court distinguished /etween the effects of registration in the Principal Register and registration in the Supple$ental Register in the following $anner0 "1# .e istration in the Principal .e ister ives rise to a presu#ption of the validit( of the re istration, the re istrantJs o&nership of the #ar), and his ri ht to the e=clusive use thereof. +here is no such presu$ption in registrations in the Supple$ental Register. "4# .e istration in the Principal .e ister is li#ited to the actual o&ner of the trade#ar) "-nno Co$$ercial )nterprises v. Ben. 3illing Corp., 141 SCR* 514 K125<L# and proceedings therein pass on the issue of ownership, which $a! /e contested through opposition or interference proceedings, or after registration, in a petition for cancellation.

.e istration in the Principal .e ister is constructive notice of the re istrantJs clai#s of o&nership, while registration in the Supple$ental Register is $erel! proof of actual use of the trade$ar% and notice that the registrant has used or appropriated it. "(e Che$ise (acoste, S.*. v. EernandeD, 142 SCR* <8< K1254L0 &Registration in the Supple$ental Register . . . serves as notice that the registrant is using or has appropriated the trade$ar%.&# t is not su/>ect to opposition although it $a! /e cancelled after its issuance. Corollarill!, re istration in the Principal .e ister is a basis for an action for infrin e#ent , while registration in the Supple$ental Register is not. "<# n application for registration in the Principal Register, pu/lication of the application is necessar!. +his is not so in applications for registration in the Supple$ental Register. Certificates of registration under /oth Registers are also different fro$ each other.
"4# Proof of re istration in the Principal .e ister $a! /e filed with the .ureau of Custo$s to e=clude forei n oods bearin infrin in #ar)s while it does not hold true for registrations in the Supple$ental Register. 13")$phasis supplied#

@hen ta%en with the co$panion presu$ption of regularit! of perfor$ance of official dut!, it will /e seen that issuance of a Certificate of Registration of a trade$ar% in the Principal Register also gives rise to the presu$ption that all re=uire$ents of Philippine law necessar! for a valid registration 4includin prior use in co##erce in the Philippines for at least t&o PAQ #onths5 were co$plied with and satisfied. n contrast, private respondent filed an application for registration of its $ar% &3*R7& for cigarettes with the Director of Patents soon after it co$$enced $anufacturing and selling cigarettes trade$ar% with &3*R7.& +his application was a/andoned or &forfeited&, 1/ for failure of private respondent to file a necessar! Paper with the Director of Patent. t also appears, however, that private respondent later re-filed or reinstated its application for registration of &3*R7& 15 and that, so far as the record here /efore us is concerned, this application re#ains #erel( an application and has not been ranted and a Certificate of Registration in the Principal Register issued. 17 @hile final action does not appear as !et to have /een ta%en /! the Director of Patents on private respondent6s application, there was at least a preli#inar( deter#ination of the trade#ar) e=a#iners that the trade#ar) '+A.;' &as 'confusin l( si#ilar' &ith petitionersJ #ar)s '+A.; V!!,' '+A.; 6EN' and '9A.; & and that accordin l(, re istration &as barred under Section 4 "d# of R.*. No. 166, as a$ended. 17 n the trial court, /oth 9udge Re!es and 9udge Baling too% the position that until the Director of Patents shall have finall! acted on private respondent6s application for registration of &3*R7,& petitioners cannot /e granted the relief of preli$inar! in>unction. t is respectfull! su/$itted that this position is /oth erroneous and unfortunate. n reliance upon that position, private respondent has %ept its application for registration alive and pending. +he Director of Patents in turn $a! well have refrained fro$ ta%ing final action on that application, even in the a/sence of a restraining order fro$ the courts, out of deference to the courts. +he pendenc! of the application /efore the Director of Patents is not in itself a reason for den!ing preli$inar! in>unction. ,ur courts have >urisdiction and authorit! to deter$ine whether or not &3*R7& is an infringe$ent on petitioners6 registered trade$ar%s. -nder our case law, the issuance of a Certificate of Registration of a trade$ar% in the Principal Register /! the Director of Patents would not prevent a court fro$ ruling on whether or not the trade$ar% so granted registration is confusingl! si$ilar with a previousl! registered trade$ar%, where such issue is essential for resolution of a case properl! /efore the court. * fortiori, a $ere application for registration cannot /e a sufficient reason for den!ing in>unctive relief, whether preli$inar! or definitive. n the case at /ar, petitioners6 suit for in>unction and for da$ages for

infringe$ent, and their application for a preli$inar! in>unction against private respondent, cannot /e resolved without resolving the issue of clai$ed confusing si$ilarit!. n the case at /ar, the evidence of record is scant!. Petitioners have not su/$itted actual copies or photographs of their registered $ar%s as used in cigarettes. Private respondent has not, for its part, su/$itted the actual la/els or pac%aging $aterial used in selling its &3*R7& cigarettes. Petitioners have appended to their Petition a photocop! of an advertise$ent of &3*R7& cigarettes. Private respondent has not included in the record a cop! of its application for registration of &3*R7& for cigarettes, which would include a facsi$ile of the trade$ar% /eing applied for. t should /e noted that &3*R7& and &(*R7,& when read or pronounced orall!, constitute ide# sonansin stri%ing degree. Eurther, &3*R7& has ta%en over the do$inant word in &3*R7 M & and &3*R7 +)N.& +hese circu$stances, coupled with private respondent6s failure to eCplain how or wh! it chose, out of all the words in the )nglish language, the word &$ar%& to refer to its cigarettes, lead $e to the su/$ission that there is a pri#a facie/asis for holding, as the Patent ,ffice has held and as the Court of *ppeals did hold originall!, that private respondent6s &3*R7& infringes upon petitioners6 registered trade$ar%s.

+here is thus no =uestion as to the legal rights of petitioners as holders of trade$ar%s registered in the Philippines. Private respondent, however, resists and assails petitioners6 effort to enforce their legal rights /! heavil! underscoring the fact that petitioners are not registered to do /usiness in the Philippines and are not in fact doing /usiness in the Philippines. t is thus necessar! to deter$ine what conse=uences, if an!, flow fro$ this circu$stance so far as enforce$ent of petitioners6 rights as holders of registered Philippine trade$ar%s is concerned. t should /e stressed at the outset that circu$stance has no legal i$pact upon the right of petitioners to own and register their trade$ar%s in the Philippines. Section 4 of R.*. No. 166 as a$ended eCpressl! recogniDes as registra/le, under this statute, $ar%s which are owned /! corporations do$iciled in an! foreign countr!0 Sec. 4. @hat are re istrable. A +rade$ar%s, trade na$es and service $ar%s o&ned b( persons, corporations, partnerships or associations do$iciled in the Philippines and /! persons, corporations, partnerships or associations do#iciled in an( forei n countr( $a! /e registered in accordance with the provisions of this *ct; Provided, +hat said trade $ar%s, trade na$es or service $ar%s are actuall! in use in co$$erce and services not less than two $onths in the Philippines /efore the ti$e the applications for registration are filed0 *nd provided further, 6hat the countr( of &hich the applicant for re istration is a citizen rants b( la& substantiall( si#ilar privile es to citizens of the Philippines , and such fact is officiall! certified, with a certified true cop! of the foreign law translated into the )nglish language, /! the govern$ent of the foreign countr! to the Bovern$ent of the Repu/lic of the Philippines. ")$phasis suppplied# t is also entirel! clear that foreign corporations and corporations do$iciled in a foreign countr! are not disa/led fro$ /ringing suit in Philippine courts to protect their rights as holders of trade$ar%s registered in the Philippines. -nder Section 41-* of R.*. No. 166, as a$ended, an! foreign corporation which is a holder of a trade$ar% registered under Philippine law $a! /ring an action for infringe$ent of such $ar% or for unfair co$petition or false designation of origin and false description '&hether or not it has been licensed to do business in the Philippines under the PCorporation 9a&Q at the ti#e it brin s co#plaint , su/>ect to the proviso that0

. . . that the countr! of which the said foreign corporation or >uristic person is a citiDen or in which it is do$iciled b( treat(, convention or la&, rants si#ilar privile e to corporate or -uristic persons of the Philippines . ")$phasis supplied# +he rule thus e$/odied in Section 41-* of R.*. No. 166 as a$ended is also set out in *rticle 4 of the Paris Convention for the Protection of ndustrial Propert! "&Paris Convention&#, to which the Philippines, the -nited States, Canada and SwitDerland are all parties. 10 *rticle 4 of the Paris Convention provides in relevant part0 *rticle 4 "1# Nationals of an! countr! of the -nion shall, as regards the protection of industrial propert!, en>o! in all the other countries of the -nion the advantages that their respective laws now grant, or $a! hereafter grant, to nationals; all without pre>udice to the rights speciall! provided for /! this Convention. Conse=uentl!, the! shall have the sa$e protection as the latter, and the sa$e legal re$ed! against an! infringe$ent of their rights, provided that the conditions and for$alities i$posed upon national are co$plied with. "4# 'owever, no re=uire$ent as to do$icile or esta/lish$ent in the countr! where protection is clai$ed $a! /e i$posed upon nationals of countries of the -nion for the en>o!$ent of an! industrial propert! rights. CCC CCC CCC ")$phasis supplied# *rticle 4, paragraph 1 of the Paris Convention e$/odies the principle of &national treat$ent& or &assi$ilation with nationals,& one of the /asic rules of the Convention. 19 -nder *rticle 4, paragraph 1 of the Paris Convention, nationals of Canada, SwitDerland and the -nited States who are all countries of the Paris -nion are entitled to en>o! in the Philippines, also a countr! of the -nion, the advantages and protections which Philippine law grants to Philippine nationals. *rticle 4 paragraph 4 of the Paris Convention restrains the Philippines fro$ i$posing a re=uire$ent of local incorporation or esta/lish$ent of a local do$icile as a pre-re=uisite for granting to foreign nationals the protection which nationals of the Philippines are entitled to under Philippine law in respect of their industrial propert! rights. t should /e noted that *rticle 4, paragraph 4 also constitutes proof of co$pliance with the re=uire$ent of reciprocit! /etween, on the one hand, the Philippines and, on the other hand, Canada, SwitDerland and the -nited States re=uired under Section 41-* of R.*. No. 166 as a$ended. +he net effect of the statutor! and treat! provisions a/ove referred to is that a corporate national of a $e$/er countr! of the Paris -nion is entitled to /ring in Philippine courts an action for infringe$ent of trade$ar%s, or for unfair co$petition, without necessit! for o/taining registration or a license to do /usiness in the Philippines. *rticle 4 as =uoted a/ove is in effect with respect to all four "4# countries. Such has /een the rule in our >urisdiction even /efore the enact$ent of R.*. No. 166 and /efore the Philippines /eca$e a part! to the Paris Convention. n @estern E:uip#ent and Supplies Co#pan(, et al. v. .e(es, etc., et al.,20 petitioner @estern )lectrical Co$pan!, a -.S. $anufacturer of electrical and telephone e=uip$ent and supplies not doin business in the Philippines, co$$enced action in a Philippine court to protect its corporate na$e fro$ unauthoriDed use thereof /! certain Philippine residents. +he Philippine residents sought to organiDe a Philippine corporation to /e %nown as &@estern )lectrical Co$pan!& for the purpose of $anufacturing and selling electrical and telephone

e=uip$ent in the Philippines. +he local residents resisted the suit /! contending, inter alia, that the petitioner @estern )lectrical Co$pan! had never transacted /usiness in the Philippines and that registration of private respondent6s articles of incorporation could not in an! wa! in>ure petitioner. +he Supre$e Court, in re>ecting this argu$ent, stated that0
. . . a forei n corporation &hich has never done business in the Philippines A /ut is widel! and favora/l! %nown in the Philippines through the use therein of its products /earing its corporate na$e and tradena$e hasa le al ri ht to #aintain an action in the PPhilippinesQ. +he purpose of such a suit is to protect its reputation, corporate na$e and ood&ill which has /een established throu h the natural develop#ent of its trade for a lon period of !ears in the doing of which it does not see% to enforce an! legal or contract rights arising fro$ or closing out of an! /usiness which it has transacted in the Philippines. . . . 21 ")$phasis supplied#

Si$ilarl!, in Asari ?o)o v. ;ee "oc, 22 a 9apanese corporation, also not en a ed in an( business in the Philippines, successfull! opposed an application for registration of its trade$ar% &Race .rand& on shirts and undershirts /! a local /usiness$an, even thou h the %apanese co#pan( had not previousl( re istered its o&n #ar) '.ace "rand' in the Philippines. *gain, in General Gar#ents Corporation v. Director of Patents and Puritan Sports&ear Corporation, 23 Puritan Sportswear Corporation, an entit! organiDed in Penns!lvania -.S.*. and not doing /usiness in the Philippines, filed a petition for cancellation of the $ar% &Puritan& which was registered in the na$e of petitioner Beneral Bar$ents Corporation for assorted $en6s wear, undershirts, /riefs, shirts, sweaters and >ac%ets. Puritan Sportswear alleged ownership and prior use of the trade$ar% &Puritan& in the Philippines. Petitioner Beneral Bar$ents, on the other hand, contended that Puritan Sportswear, bein a forei n corporation not licensed to do, and not doin , business in the Philippines, could not $aintain an action for cancellation of a trade$ar%. +he Court, in upholding the Director of Patents6 cancellation of the registration of the $ar% &Puritan& in the na$e of Beneral Bar$ents, said0
. . . .such #ar) should not have been re istered in the first place 4and conse:uentl( #a( be cancelled if so re:uired5 if it consists of or co#prises a #ar) or tradena$e &hich so rese#bles a #ar) or tradena$e . . . . previousl( used in the Philippines b( another and not a/andoned, as to be li)el(, when applied to or used in connection with goods, /usiness or services of the applicant, to cause confusion or #ista)e or to deceive purchasers. 2/ ")$phasis supplied#

n Converse .ubber Corporation v. ,niversal .ubber Products, !nc ., 25 petitioner Converse Ru//er Corporation was an *$erican $anufacturer of ru//er shoes, not doin business on its o&n in the Philippines and not licensed to do business in the Philippines , opposed the application for registration of the trade$ar% &-niversal Converse and Device& to /e used also in ru//er shoes and ru//er slippers /! private respondent -niversal Ru//er Products, nc. "&-niversal&#. n reversing the Director of Patents and holding that -niversal6s application $ust /e re>ected, the Supre$e Court said0
+he sales of 14 to 41 pairs a $onth of petitioner6s ru//er shoes cannot /e considered insignificant, considering that the! appear to /e of high eCpensive =ualit!, which not too $an! /as%et/all pla!ers can afford to /u!. An( sale #ade b( a le iti#ate trader fro# his store is a co##ercial act establishin trade#ar) ri hts since such sales are #ade in due course of business to the eneral public, not onl! to li$ited individuals. t is a $atter of pu/lic %nowledge that all /rands of goods filter into the $ar%et, indiscri$inatel! sold /! >o//ers, dealers and $erchants not necessaril! with the %nowledge or consent of the $anufacturer. Such actual sale of oods in the local #ar)et establishes trade#ar) use

&hich serves as the basis for an( action ai#ed at trade#ar) pre*e#ption . t is a corollar! logical deduction that &hile Converse .ubber Corporation is not licensed to do business in the countr( and is not actuall( doin business here, it does not #ean that its oods are not bein sold here or that it has not earned a reputation or ood&ill as re ards its products. +he Director of Patents was, therefore, re$iss in ruling that the proofs sales presented &was $ade /! a single witness who had never dealt with nor had never %nown opposer PpetitionerV . . . without ,pposer having a direct or indirect hand in the transaction to /e the /asis of trade$ar% pre-eCe$ption. 27 ")$phasis supplied#

+hree "<# other cases $a! /e noted. +he first is 9a Che#ise 9acoste, S.A. v. $ernandez 27 (a Che$ise (acoste, S.*. although a forei n corporation not en a ed in and not licensed to do business in the Philippines, was accorded protection for its trade$ar%s &(acoste&, &Che$ise (acoste,& and &Crocodile Device& for clothing and sporting apparel. +he Court recogniDed that those $ar%s were &world fa$ous trade$ar%s which the Philippines, as a part! to the Paris -nion, is /ound to protect.& Si$ilarl!, in Del +onte Corporation, et al. v. Court of Appeals, et al., 20 petitioner Del 3onte Corporation was a co$pan! organiDed under the laws of the -nited States and not en a ed in business in the Philippines. .ecause /oth the Philippines and the -nited States are signatories to the Convention of Paris, which grants to nationals of the parties the rights and advantages which their own nationals en>o! for the repression of acts of infringe$ent and unfair co$petition, the Court, having found that private respondent6s la/el was an infringe$ent of Del 3onte6s trade$ar%, held Del 3onte entitled to recover da$ages. n Pu#a Sportschuhfabri)en .udolf Dassler, ;.G. v. !nter#ediate appellate Court, et al , 29 petitioner Pu$a was a foreign corporation eCisting under the laws of the Eederal Repu/lic of Ber$an! not re istered to do business and not doin business in the Philippines , filed a co$plaint for infringe$ent of trade$ar% and for issuance of a writ of preli$inar! in>unction against a local $anufacturing co$pan!. Reversing the Court of *ppeals, this Court held that Pu$a had legal capacit! to /ring the suit in the Philippines under Section 41-* of R.*. No. 166 as a$ended and under the provisions of the Paris Convention to which /oth the Philippines and the Eederal Repu/lic of Ber$an! are parties. +he Court also noted that &Pu$a& is an internationall! %nown /randna$e. +he relevanc! of the doctrines set out in the cases a/ove cited are conceded /! $! distinguished /rother 3elo, %. in the $a>orit! opinion. +he $a>orit! opinion, however, goes on to sa!0 n other words, petitioners $a! have the capacit! to sue for infringe$ent irrespective of lac% of /usiness activit! in the Philippines on account of Section 41-* of the +rade$ar% (aw /ut the =uestion of whether the! have an eCclusive right over their s!$/ols as to >ustif! issuance of the controversial writ will depend on actual use of their trade$ar%s in the Philippines in line with Sections 4 and 4-* of the sa$e law. !t is thus incon ruous for petitioners to clai# that &hen a forei n corporation not licensed to do business in the Philippines files a co#plaint for infrin e#ent, the entit( need not be actuall( usin its trade#ar) in co##erce in the Philippines. Such a forei n corporation #a( have the personalit( to file a suit for infrin e#ent but it #a( not necessaril( be entitled to protection due to absence of actual use of the e#ble# in the local #ar)et. @ith great respect, certain essential =ualifications $ust /e $ade respecting the a/ove paragraph. Eirstl!, of the petitioners6 three "<# $ar%s here involved, two "4# of the$ A i.e., &3*R7 +)N& and &(*R7& A were registered in the Philippines on the /asis of actual use in the Philippines, precisel! in accordance with the re=uire$ents of Section 4-* and Section : "*# of R.*. No. 166 as a$ended. +he pre-registration use in co$$erce and trade in the Philippines for at least two "4# $onths as re=uired /! the statute, is eCplicitl! stated in the Certificates of Registration. +he ver! fact that the appropriate Philippine Bovern$ent office issued the Certificates of Registration necessaril! gave

rise to the presu$ption that such pre-registration use had in fact /een shown to the satisfaction of the Philippine Patent ,ffice "now the .ureau of Patents, +rade$ar% and +echnolog! +ransfer K&.P+++&L#. t is i$portant to note that respondent Eortune has not purported to attac% the validit! of the trade$ar%s &3ar% +en& and &(ar%& /! pretending that no pre-registration use in co$$erce in the Philippines had /een shown. 30 +he third $ar% of petitioners A &3*R7 M & A was registered in the Philippines on the /asis of Section <8 of R.*. No. 166 as a$ended, i.e., on the /asis of registration in the countr! of origin and under the Paris Convention. n such registration, /! the eCpress provisions of Section <8 "/# of R.*. No. 166 as a$ended, prior "pre-registration# use in co$$erce in the Philippines need not /e alleged. @hether the Philippine trade$ar% was /ased on actual use in the Philippines "under Section 4-*# or on registration in a foreign countr! of origin "under Section <8#, the statute appears to re=uire that trade$ar%s "at least trade$ar%s not shown to /e internationall! &well-%nown&# $ust continue to /e used in trade and co$$erce in the Philippines. t is, however, essential to point out that such continued use, as a re=uire$ent for the continued right to the eCclusive use of the registered trade$ar%, is presu$ed so long as the Certificate of Registration re$ains outstanding and so long as the registered trade$ar% owner co$plies with the re=uire$ents of Section 14 of R.*. No. 166 as a$ended of filing affidavits with the .P+++ on the :th, 11th and 1:th anniversaries of the date of issuance of the Certificate of Registration, showing that the trade$ar% is still in use or showing that its non-use is not due to an! intention to a/andon the sa$e. n the case at /ar, again, respondent Eortune has not eCplicitl! pretended that the petitioners6 trade$ar%s have /een a/andoned /! nonuse in trade and co$$erce in the Philippines although it appears to insinuate such non-use and a/andon$ent /! stressing that petitioners are not doing /usiness in the Philippines. +hat petitioners are not doing /usiness and are not licensed to do /usiness in the Philippines, does not /! an! $eans $ean either that petitioners have not co$plied with the re=uire$ents of Section 14 of R.*. No. 166 relating to affidavits of continued use, or that petitioners6 trade$ar%s are not in fact used in trade and co$$erce in the Philippines. n the Converse case, as earlier noted, the Court held that the circu#stance that the forei n o&ner of a Philippine trade#ar) is not licensed to do business and is not doin business in the Philippines, does not #ean that petitionerJs oods 4that is, oods bearin petitionerJs trade#ar)5 are not sold in the Philippines. $or ci arettes bearin petitionersJ trade#ar)s #a( in fact be i#ported into and be available for sale in the Philippines throu h the acts of i#porters or distributors . Petitioners have stated that their &3ar% M ,& &3ar% +en& and &(ar%& cigarettes are in fact /rought into the countr! and availa/le for sale here in, e.g., dut!-free shops, though not i$ported into or sold in the Philippines b( petitioners the#selves. +here is no legal re=uire$ent that the foreign registrant itself $anufacture and sell its products here. *ll the statute re=uires is the use in trade and co$$erce in the Philippines, and that can /e carried out b( third part( #anufacturers operatin under license ranted b( the forei n re istrant or /! the i#portation and distribution of finished products b( independent i#porters or traders . +he &use& of the trade$ar% in such instances /! the independent third parties constitutes use of the foreign registrant6s trade$ar%s to the /enefit of the foreign registrant. 31

@e turn to petitioners6 clai$ that the! are suffering irrepara/le da$age /! reason of the $anufacture and sale of cigarettes under the trade$ar% &3*R7.& 'ere again, a /asic argu$ent of private respondent was that petitioners had not shown an! da$ages /ecause the! are not doing /usiness in the Philippines. respectfull! $aintain that this argu$ent is specious and without $erit.

+hat petitioners are not doing /usiness and are not licensed to do /usiness in the Philippines, does notnecessaril! $ean that petitioners are not in a position to sustain, and do not in fact sustain, da$age through trade$ar% infringe$ent on the part of a local enterprise. 32 Such trade$ar% infringe$ent /! a local co$pan! $a!, for one thing, affect the volu$e of i$portation into the Philippines of cigarettes /earing petitioners6 trade$ar%s /! independent or third part! traders. +he da$age which the petitioners clai$ the! are sustaining /! reason of the acts of private respondents, are not li$ited to i$pact upon the volu$e of actual i$ports into the Philippines of petitioners6 cigarettes. Petitioners urge that private respondent6s use of its confusingl! si$ilar trade$ar% &3*R7& is invasive and destructive of petitioners propert! right in their registered trade$ar%s /ecause. a# Plaintiffs6 undenia/le right to the eCclusive use of their registered trade$ar%s is effectivel! effaced /! defendant6s use of a confusingl! si$ilar trade$ar%; /# Plaintiffs would lose cont