Anda di halaman 1dari 80

FIRST DIVISION (c) The use and registration of the applied for mark by [petitioner] will

mislead the public as to the origin, nature, quality, and characteristic of the
March 22, 2017 goods on which it is affixed;

G.R. No. 186088 (d) [Petitioner's] application for registration is tantamount to fraud as it
seeks to register and obtain legal protection for an identical or confusingly
similar mark that clearly infringes upon the established rights of the
WILTON DY and/or PHILITES ELECTRONIC & LIGHTING
PRODUCTS, Petitioner [respondent] over its registered and internationally well-known mark.
vs
KONINKLIJKE PHILIPS ELECTRONICS, N.V., Respondent (e) The registration of the trademark PHILITES & LETTER P DEVICE in
the name of the [petitioner] will violate the proprietary rights and interests,
business reputation and goodwill of the [respondent] over its trademark,
DECISION
considering that the distinctiveness of the trademark PHILIPS will be
diluted.
SERENO, CJ.:
(t) The registration of the applied for mark will not only prejudice the
This Petition for Review on Certiorari1 filed by petitioner Wilton Dy Opposer, but will also cause [petitioner] to unfairly profit commercially
and/or Philites Electronic & Lighting Products ("PHILITES") assails the from the goodwill, fame and notoriety of Opposer's trademark and
Decision2 and Resolution3 of the Court of Appeals (CA) in CA-G.R. SP reputation.
No. 103350. The appellate court reversed and set aside the Decision4 of the
IPP Office of the Director General (IPP-DG), which affirmed the Decision5
(g) [Petitioner's] registration and use of the applied for mark in connection
of the Intellectual Property Philippines Bureau of Legal Affairs (IPP-BLA)
upholding petitioner's trademark application. with goods under Class 11 will weaken the unique and distinctive
significance of mark PHILIPS and will tarnish, degrade or dilute the
distinctive quality of Opposer's trademark and will result in the gradual
THE ANTECEDENT FACTS attenuation or whittling away of the value of Opposer's trademark, in
violation of Opposer's proprietary rights.6
On 12 April 2000, petitioner PHILITES filed a trademark application
(Application Serial Number 4-2000-002937) covering its fluorescent bulb,
incandescent light, starter and ballast. After publication, respondent
Koninklijke Philips Electronics, N .V. ("PHILIPS") filed a Verified Notice
of Opposition on 17 March 2006, alleging the following:
On 8 August 2006, petitioner filed a Verified Answer, stating that its
PHILITES & LETTER P DEVICE trademark and respondent's PHILIPS
(a) The approval of Application Serial No. 4-2000-002937 is contrary to the
have vast dissimilarities in terms of spelling, sound and meaning.7
following provisions of Republic Act No. [RAJ 8293 or the Intellectual
Property Code of the Philippines (IP Code): Sections 123.l(d), (i) and (iii),
123.l(e), 147, and 168. At the conclusion of the hearing, on 9 November 2006, IPP-BLA Director
Estrellita Beltran-Abelardo rendered a Decision8 denying the Opposition
filed by respondent PHILIPS. The dispositive portion of the Decision reads:
(b) The approval of Application Serial No. 4-2000-002937 will cause grave
and irreparable damage and injury to oppose.
WHEREFORE, premises considered the OPPOSITION filed by Moreover, by mere pronouncing the two marks, the phonetic sounds
Koninklijke Philips Electronics, N.V. is hereby DENIED. Accordingly, produced when each mark is uttered are not the same. The last syllable of
Application Serial no. 4-2000-002937 filed by Respondent-Applicant, respondent's mark is uttered in a long vowel sound, while the last vowel of
Wilton Dy and/or Philites Electronic & Lighting Products on 12 April 2000 the opposer's mark is not.
for the mark "PHILITES & LETTER P DEVICE" used on fluorescent bulb,
incandescent light starter, ballast under class 11, is as it is, hereby x x x. This Bureau believes that opposer has no monopoly over the color or
GRANTED. diameter or shape of a light bulb or packaging shape unless registrations
were secured to protect the same. The images of the packages are
Let the filewrapper of "PHILITES & LETTER P DEVICE," subject matter reproduced below for reference.
of this case together with this Decision be forwarded to the Bureau of
Trademarks (BOT) for appropriate action.

SO ORDERED.

In upholding petitioner's trademark application, the IPP-BLA stated that


assuming respondent's mark was well-known in the Philippines, there
should have been prior determination of whether or not the mark under
application for registration was "identical with, or confusingly similar to, or
constitutes a translation of such well-known mark in order that the owner of
the well-known mark can prevent its registration."9 From the evidence
presented, the IPP-BLA concluded that the PHILIPS and PHILITES marks
were so unlike, both visually and aurally. It held that no confusion was
likely to occur, despite their contemporaneous use, based on the following
observations:

The Philips shield mark has four stars in different sizes located at the north
east and south west portions inside a circle within the shield. There are three
wavy lines dissecting the middle of the circle. None of these appear in the
respondent's mark.
x x x. For one, respondent adopts a yellow to light yellow dominant color
[Respondent] declares that the word Philips is the surname of the brothers while the oppose uses an orange yellow hue. The mark "Philites" is printed
who founded the Philips company engaged in manufacturing and selling in yellow with light blue background as compared to the "Philips" mark
lighting products. [Petitioner] on the other hand has testified that the word typed in white against a black background.
Philites is coined from the word 'Philippines' and 'lights,' hence 'Philites.'
This Bureau finds that there is no dictionary meaning to the [petitioner's] It is fundamental in trademark jurisprudence that color alone, unless
mark. It is a coined and arbitrary word capable of appropriation as a displayed in an arbitrary design docs not function as a trademark.
trademark. x x x
Secondly, there appears to be other advertising slogans that appear in
respondent's package such as the words, "new", "prolong lite life", "E-coat
finished" and "with additional 35% more than ordinary". These phrases are remedy of filing a case for trademark infringement and/or unfair
absent in opposer's package. These phrases can be considered in the nature competition.16
of descriptive terms that can be appropriated by anyone.10
Upon intermediate appellate review, the CA rendered a Decision 17 on 7
Upon appeal, the IPP-DG rendered a Decision11 on 16 April 2008, October 2008. The dispositive portion herein reads:
affirming the ruling of the IPP-BLA as follows:
WHEREFORE, premises considered, the Petition for Review is
WHEREFORE, premises considered, that instant appeal is hereby GRANTED. The Decision dated 16 April 2008 of the Director General of
DISMISSED for lack of merit. Accordingly, Decision No. 2006-125 of the the Intellectual Property Office in Appeal No. 14-06-28; IPC No. 14-2006-
Director of the Bureau of Legal Affairs dated 09 November 2006, is hereby 00034 is REVERSED and SET ASIDE. The application for trademark
AFFIRMED. registration (Application Serial Number 4-2000-002937) of respondent
Wilton Dy and/or Philites Electronic & Lighting Products is DISMISSED.
Let a copy of this Decision as well as the trademark application and records Costs against respondent.
be furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of SO ORDERED.
Trademarks, the Administrative, Pinancial and Human Resources
Development Services Bureau, and the library of the Documentation, In so ruling, the CA reasoned that the "drawing of the trademark submitted
Information and Technology Transfer Bureau be furnished a copy of this by [petitioner] has a different appearance from that of [petitioner's] actual
Decision for information, guidance and records purposes. wrapper or packaging that contain the light bulbs, which We find
confusingly similar with that of [respondent's] registered trademark and
SO ORDERED. packaging."18 Moreover, it found to be "self-serving [petitioner's]
asseveration that the mark 'PHILITES' is a coined or arbitrary mark from
In so ruling, the IPP-DG noted that "[t]he dominant feature of the the words 'Philippines' and 'lights.' Of all the marks that [petitioner] could
[respondent's] trademark is 'PHILIPS' while that of the [petitioner's] possibly think of for his light bulbs, it is odd that [petitioner] chose a mark
trademark is 'PHILITES.' While the first syllables of the marks are identical with the letters 'PHILI,' which are the same prevalent or dominant five
- 'PHI' - the second syllables are not. The differences in the last syllable letters found in [respondent's] trademark 'PHILIPS' for the same products,
accounted for the variance of the trademarks visually and aurally."12 light bulbs."19 Hence, the appellate court concluded that petitioner had
Moreover, there were "glaring differences and dissimilarities in the design intended to ride on the long-established reputation and goodwill of
and general appearance of the Philips shield emblem mark and the letter 'P' respondent's trademark.20
of Philites mark."13 Thus, "even if the [petitioner's] products bearing the
trademark PHILIPS are placed side by side with other brands, the purchaser On 25 October 2008, petitioner filed a Motion for Reconsideration, which
would not be confused to pick up the [petitioner's] product if this is his was denied in a Resolution21 issued by the CA on 18 December 2008.
choice or preference, unless the resemblance in the appearance of the
trademarks is so glaring which [it] is not in this case."14 Hence, this petition.

As regards the issue of petitioner submitting a trademark drawing different Respondent filed its Comment22 on 23 June 2009, and petitioner filed its
from that used in the packaging, the IPP-DG noted that this case involved Reply23 on 10 November 2009.
an opposition to the registration of a mark, while labels and packaging were
technically not a part thereof.15 At best, respondent supposedly had the
THE ISSUES (d) Is identical with a registered mark belonging to a different proprietor or
a mark with an earlier filing or priority date, in respect of:
From the foregoing, we reduce the issues to the following:
(i) The same goods or services, or
1. Whether or not respondent's mark is a registered and well-known mark in
the Philippines; and (ii) Closely related goods or services, or

2. Whether or not the mark applied for by petitioner is identical or (iii) If it nearly resembles such a mark as to be likely to deceive or cause
confusingly similar with that of respondent. confusion;

OUR RULING (e) Is identical with, or confusingly similar to, or constitutes a translation of
a mark whid1 is considered by the competent authority of the Philippines to
The Petition is bereft of merit. be well-known internationally and in the Philippines, whether or not it is
registered here, as being already the mark of a person other than the
applicant for registration, and used for identical or similar goods or services:
A trademark is "any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a manufacturer or Provided, That in determining whether a mark is well-known, account shall
merchant on his goods to identify and distinguish them from those be taken of the knowledge of the relevant sector of the public, rather than of
the public at large, including knowledge in the Philipines which has been
manufactured, sold, or dealt by othcrs."24 It is "intellectual property
obtained as a result of the promotion of the mark.28
deserving protection by law,"25 and "susceptible to registration if it is
crafted fancifully or arbitrarily and is capable of identifying and
distinguishing the goods of one manufacturer or seller from those of Respondent's mark is a registered and well-known mark in the
another."26 Philippines

Section 122 of the Intellectual Property Code of the Philippines (IPC) There is no question that respondent's mark PHILIPS is already a registered
provides that rights to a mark shall be acquired through registration validly and well-known mark in the Philippines.
done in accordance with the provisions of this law.27 Corollary to that rule,
Section 123 provides which marks cannot be registered. As we have said in Fredco Manufacturing Corporation v. Harvard
University,29 "[i]ndeed, Section 123.l(e) of R.A. No. 8293 now
Respondent opposes petitioner's application on the ground that PHILITES' categorically states that 'a mark which is considered by the competent
registration will mislead the public over an identical or confusingly similar authority of the Philippines to be well-known internationally and in the
mark of PHILIPS, which is registered and internationally well-known mark. Philippines, whether or not it is registered here,' cannot be registered by
Specifically, respondent invokes the following provisions of Section 123: another in the Ph iii ppines. "30

Section 123. Registrability. - 123 .1. A mark cannot be registered if it: Rule l00(a) of the Rules and Regulations on Trademarks, Service Marks,
Tradenames and Marked or Stamped Containers defines "competent
xxx authority" in the following manner:
(c) "Competent authority" for purposes of determining whether a mark is On one hand, the dominancy test focuses on "the similarity of the prevalent
well-known, means the Court, the Director General, the Director of the or dominant features of the competing trademarks that might cause
Bureau of Legal Affairs, or any administrative agency or office vested with confusion, mistake, and deception in the mind of the purchasing public.
quasi-judicial or judicial jurisdiction to hear and adjudicate any action to Duplication or imitation is not necessary; neither is it required that the mark
enforce the rights to a mark. sought to be registered suggests an effort to imitate. Given more
consideration are the aural and visual impressions created by the marks on
We thus affirm the following findings of the CA, inasmuch as the trademark the buyers of goods, giving little weight to factors like prices, quality, sales
of PHILIPS is a registered and well-known mark, as held in the Supreme outlets, and market segments. "35
Court Decision in Philips Export B. V, v. CA:31
On the other hand, the holistic or totality test necessitates a "consideration
Petitioner (PHILIPS) is the registered owner in the Philippines of the of the entirety of the marks as applied to the products, including the labels
"PHILIPS" and "PHILIPS SHIELD EMBLEM" trademarks, as shown by and packaging, in determining confusing similarity. The discerning eye of
Certificates of Registration Nos. 42271 and 42270. The Philippine the observer must focus not only on the predominant words, but also on the
trademark registrations of petitioner's "PHILIPS" and "PHILIPS SHIELD other features appearing on both labels so that the observer may draw
EMBLEM" are also evidenced by Certificates of Registration Nos. R- 1651, conclusion on whether one is confusingly similar to the other."361âwphi1
R-29134, R-1674, and R-28981. The said registered trademarks "PHILIPS"
and "PHILIPS SHIELD EMBLEM" cover classes 7, 8, 9, 10, 11, 14, and Applying the dominancy test to this case requires us to look only at the
16. The assailed Decision itself states that "(T)he Appellant's trademark is mark submitted by petitioner in its application, while we give importance to
already registered and in use in the Philippines". It also appears that the aural and visual impressions the mark is likely to create in the minds of
worldwide, petitioner has thousands of trademark registrations x x x in the buyers. We agree with the findings of the CA that the mark "PHILITES"
various countries. As found by the High Court in Philips Export B.V. vs bears an uncanny resemblance or confusing similarity with respondent's
Court of Appeals, PHILIPS is a trademark or trade name which was mark "PHILIPS," to wit:
registered as far back as 1922, and has acquired the status of a well-known
mark in the Philippines and internationally as well.32 Applying the dominancy test in the instant case, it shows the uncanny
resemblance or confusing similarity between the trademark applied for by
Petitioner seeks to register a mark respondent with that of petitioner's registered trademark. An examination of
nearly resembling that of respondent, the trademarks shows that their dominant or prevalent feature is the five-
which may likely to deceive or cause letter "PHILI", "PHILIPS" for petitioner, and "PHILITES" for respondent.
confusion among consumers. The marks are confusingly similar with each other such that an ordinary
purchaser can conclude an association or relation between the marks. The
Despite respondent's diversification to numerous and varied industries,33 consuming public does not have the luxury of time to ruminate the phonetic
the records show that both parties are engaged in the same line of business: sounds of the trademarks, to find out which one has a short or long vowel
selling identical or similar goods such as fluorescent bulbs, incandescent sound. At bottom, the letters "PHILI'' visually catch the attention of the
lights, starters and ballasts. consuming public and the use of respondent's trademark will likely deceive
or cause confusion. Most importantly, both trademarks are used in the sale
of the same goods, which are light bulbs.37
In determining similarity and likelihood of confusion, jurisprudence has
developed two tests: the dominancy test, and the holistic or totality test.34
The confusing similarity becomes even more prominent when we examine
the entirety of the marks used by petitioner and respondent, including the
way the products are packaged. In using the holistic test, we find that there
is a confusing similarity between the registered marks PHILIPS and
PHILITES, and note that the mark petitioner seeks to register is vastly
different from that which it actually uses in the packaging of its products.
We quote with approval the findings of the CA as follows:

Applying the holistic test, entails a consideration of the entirety of the


marks as applied to the products, including the labels and packaging, in
determining confusing similarity. A comparison between petitioner's
registered trademark "PHILIPS'' as used in the wrapper or packaging of its
light bulbs and that of respondent's applied for trademark "PHILITES" as
depicted in the container or actual wrapper/packaging of the latter's light
bulbs will readily show that there is a strong similitude and likeness
between the two trademarks that will likely cause deception or confusion to
the purchasing public. The fact that the parties' wrapper or packaging
reflects negligible differences considering the use of a slightly different font
and hue of the yellow is of no moment because taken in their entirety,
respondent's trademark "PHILITES" will likely cause confusion or
deception to the ordinary purchaser with a modicum of intelligence.38

WHEREFORE, in view of the foregoing, the Petition for Review on


Certiorari is hereby DENIED. The 7 October 2008 Decision and 18
December 2008 Resolution of the Court of Appeals in CA-G.R. SP No.
103350 are hereby AFFIRMED.

SO ORDERED.
February 1, 2017 x x x toilet waters; revitalizing waters, perfumes, deodorants and body
deodorants, anti-perspiration toiletries; men and women perfume products
G.R. No. 188996 for face care and body care; face, eye, lips, nail, hand make-up products and
make-up removal products, towels impregnated with cosmetic lotions;
tanning and instant tanning sunproducts, sunprotection products, (not for
SERI SOMBOONSAKDIKUL, Petitioner
medical use), after-suncosmetic products; cosmetic products; slimming
vs.
cosmetic aids; toiletries; lotions, shampoos and hair care products; shave
ORLANE S.A., Respondent
and after shave products, shaving and hair removing products; essential oils;
toothpastes; toiletry, cosmetic and shaving kits for travel, filled or fitted
DECISION vanity-cases[.]8

JARDELEZA, J.: Respondent adds that by promotion, worldwide registration, widespread and
high standard use, the mark had acquired distinction, goodwill, superior
Assailed in this petition is the Decision1 of the Court of Appeals (CA) in quality image and reputation and was now well-known.9 Imputing bad faith
CA-G.R. SP No. 105229 dated July 14, 2009 which affirmed the decision of on the petitioner, respondent claimed that LOLANE' s first usage was only
the Director General of the Intellectual Property Office (IPO) denying the on August 19, 2003.10
application for the mark "LOLANE."
In his answer,11 petitioner denied that the LOLANE mark was confusingly
Facts similar to the mark ORLANE. He averred that he was the lawful owner of
the mark LOLANE which he has used for various personal care products
On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed sold worldwide. He alleged that the first worldwide use of the mark was in
an application for registration2 of the mark LOLANE with the IPO for Vietnam on July 4, 1995. Petitioner also alleged that he had continuously
goods3 classified under Class 3 (personal care products) of the International marketed and advertised Class 3 products bearing LOLANE mark in the
Classification of Goods and Services for the Purposes of the Registration of Philippines and in different parts of the world and that as a result, the public
Marks (International Classification of Goods).4 Orlane S.A. (respondent) had come to associate the mark with him as provider of quality personal
filed an opposition to petitioner's application, on the ground that the mark care products.12
LOLANE was similar to ORLANE in presentation, general appearance and
pronunciation, and thus would amount to an infringement of its mark.5 Petitioner maintained that the marks were distinct and not confusingly
Respondent alleged that: (1) it was the rightful owner of the ORLANE mark similar either under the dominancy test or the holistic test. The mark
which was first used in 1948; (2) the mark was earlier registered in the ORLANE was in plain block upper case letters while the mark LOLANE
Philippines on July 26, 1967 under Registration No. 129961 for the was printed in stylized word with the second letter L and the letter A co-
following goods:6 joined. Furthermore, the similarity in one syllable would not automatically
result in confusion even if used in the same class of goods since his
x x x perfumes, toilet water, face powders, lotions, essential oils, cosmetics, products always appear with Thai characters while those of ORLANE
lotions for the hair, dentrifices, eyebrow pencils, make-up creams, always had the name Paris on it. The two marks are also pronounced
cosmetics & toilet preparations under Registration No. 12996.7 differently. Also, even if the two marks contained the word LANE it would
not make them confusingly similar since the IPO had previously allowed
and (3) on September 5, 2003, it filed another application for use of the the co-existence of trademarks containing the syllable "joy" or "book" and
trademark on its additional products: that he also had existing registrations and pending applications for
registration in other countries.13
The Bureau of Legal Affairs (BLA) rejected petitioner's application in a also involved products under Class 3.24 While petitioner admitted that
Decision14 dated February 27, 2007, finding that respondent's application foreign judgments are not judicial precedents, he argued that the IPO failed
was filed, and its mark registered, much earlier.15 The BLA ruled that there to recognize relevant foreign judgments, i.e., the Australian Registrar of
was likelihood of confusion based on the following observations: (1) Trademarks and the IPO of Singapore which ruled that there was no
ORLANE and LOLANE both consisted of six letters with the same last four confusing similarity between the marks LOLANE and ORLANE.25 Lastly,
letters - LANE; (2) both were used as label for similar products; (3) both the Director General should have deferred to the findings of the Trademark
marks were in two syllables and that there was only a slight difference in Examiner who made a substantive examination of the application for
the first syllable; and (4) both marks had the same last syllable so that if trademark registration, and who is an expert in the field and is in the best
these marks were read aloud, a sound of strong similarity would be position to determine whether there already exists a registered mark or mark
produced and such would likely deceive or cause confusion to the public as for registration. Since petitioner's application for registration of the mark
to the two trademarks.16 LOLANE proceeded to allowance and publication without any adverse
citation of a prior confusingly similar mark, this meant that the Trademark
Petitioner filed a motion for reconsideration but this was denied by the Examiner was of the view that LO LANE was not confusingly similar to
Director of the BLA on May 7, 2007.17 The BLA ruled that the law did not ORLANE.26
require the marks to be so identical as to produce actual error or mistake as
the likelihood of confusion was enough. The BLA also found that the The CA Ruling
dominant feature in both marks was the word LANE; and that the marks
had a strong visual and aural resemblance that could cause confusion to the The CA denied the petition and held that there exists colorable imitation of
buying public. This resemblance was amplified by the relatedness of the respondent's mark by LOLANE.27
goods.18
The CA accorded due respect to the Decision of the Director General and
On appeal, the Director General of the IPO affirmed the Decision of the ruled that there was substantial evidence to support the IPO's findings of
BLA Director. Despite the difference in the first syllable, there was a strong fact. Applying the dominancy test, the CA ruled that LOLANE' s mark is
visual and aural resemblance since the marks had the same last four letters, confusingly or deceptively similar to ORLANE. There are predominantly
i.e., LANE, and such word is pronounced in this jurisdiction as in striking similarities in the two marks including LANE, with only a slight
"pedestrian lane."19 Also, the mark ORLANE is a fanciful mark invented difference in the first letters, thus the two marks would likely cause
by the owner for the sole purpose of functioning as a trademark and is confusion to the eyes of the public. The similarity is highlighted when the
highly distinctive. Thus, the fact that two or more entities would two marks are pronounced considering that both are one word consisting of
accidentally adopt an identical or similar fanciful mark was too good to be two syllables. The CA ruled that when pronounced, the two marks produce
true especially when they dealt with the same goods or services.20 The similar sounds.28 The CA did not heed petitioner's contention that since the
Director General also noted that foreign judgments invoked by petitioner for mark ORLANE is of French origin, the same is pronounced as "ORLAN."
the grant of its application are not judicial precedents.21 Filipinos would invariably pronounce it as "OR-LEYN."29 The CA also
noted that the trademark ORLANE is a fanciful name and petitioner was not
Thus, petitioner filed a petition for review22 before the CA arguing that able to explain why he chose the word LOLANE as trademark for his
there is no confusing similarity between the two marks. Petitioner personal care products. Thus, the only logical conclusion is that he would
maintained that LANE is not the dominant feature of the mark and that the want to benefit from the established reputation and goodwill of the
dominancy test did not apply since the trademarks are only plain word ORLANE mark.30
marks and the dominancy test presupposes that the marks involved are
composite marks.23 Petitioner pointed out that the IPO had previously
allowed the mark GIN LANE under Registration No. 4-2004-006914 which
The CA rejected petitioner's assertion that his products' cheaper price and buyer would be more likely to remember and use one part of a mark as
low-income market eliminates the likelihood of confusion. Low-income indicating the origin of the goods.42 Thus, that part which will likely make
groups, and even those who usually purchased ORLANE products despite the most impression on the ordinary viewer will be treated as the dominant
the higher cost, may be led to believe that LOLANE products are low-end portion of conflicting marks and given greater weight in the comparison.43
personal care products also marketed by respondent.31
Petitioner argues that both LOLANE and ORLANE are plain word marks
The CA upheld the applicability of the dominancy test in this case. which are devoid of features that will likely make the most impression on
According to the CA, the dominancy test is already recognized and the ordinary viewer. If at all, the very word marks themselves, LOLANE
incorporated in Section 155.1 of Republic Act No. 8293 (RA 8293), and ORLANE are each to be regarded as dominant features.44 Moreover,
otherwise known as the Intellectual Property Code of the Philippines.32 the suffix LANE is a weak mark, being "in common use by many other
Citing McDonald's Corporation v. MacJoy Fastfood Corporation,33 the sellers in the market. "45 Thus, LANE is also used in the marks
CA ruled that the dominancy test is also preferred over the holistic test. This SHELLANE and GIN LANE, the latter covering goods under Class 3.
is because the latter relies only on the visual comparison between two Moreover, the two marks are aurally different since respondent's products
trademarks, whereas the dominancy test relies not only on the visual, but originate from France and is read as "OR-LAN" and not "OR-LEYN."46
also on their aural and connotative comparisons, and their overall
impressions created.34 Nonetheless, the CA stated that there is nothing in Petitioner also claims that the CA completely disregarded the holistic test,
this jurisdiction dictating that the dominancy test is applicable for composite thus ignoring the dissimilarity of context between LOLANE and ORLANE.
marks.35 Assuming that the two marks produce similar sounds when pronounced, the
differences in marks in their entirety as they appear in their respective
The CA was not swayed by the alleged favorable judgment by the IPO in product labels should still be the controlling factor in determining confusing
the GIN LANE application, ruling that in trademark cases, jurisprudential similarity.47
precedents should be applied only to a case if they are specifically in
point.36 It also did not consider the ruling of the IPOs in Australia, South Besides, there has been no explicit declaration abandoning the holistic
Africa, Thailand and Singapore which found no confusing similarity test.48 Thus, petitioner urges us to go beyond the similarities in spelling and
between the marks LOLANE and ORLANE, stating that foreign judgments instead consider how the marks appear in their respective labels, the
do not constitute judicial precedent in this jurisdiction.37 dissimilarities in the size and shape of the containers, their color, words
appearing thereon and the general appearance,49 hence: (1) the
Finally, the CA did not give merit to petitioner's contention that the Director commonality of the marks ORLANE and LOLANE starts from and ends
General should have deferred to the findings of the Trademark Examiner. with the four-letter similarity-LANE and nothing else;50 (2) ORLANE uses
According to the CA, the proceedings before the Trademark Examiner are "safe" or conventional colors while LOLANE uses loud or psychedelic
ex-parte,38 and his findings are merely prima facie. Whatever his decision colors and designs with Thai characters;51 and (3) ORLANE uses the term
may be is still subject to review and/or appeal.39 "Paris," indicating the source of origin of its products.52

The Petition40 Petitioner likewise claims that consumers will be more careful in their
choice because the goods in question are directly related to personal hygiene
Petitioner maintains that the CA erred in its interpretation of the dominancy and have direct effects on their well-being, health and safety.53 Moreover,
test, when it ruled that the dominant feature of the contending marks is the with the huge price difference between ORLANE and LOLANE products,
suffix "LANE."41 The CA failed to consider that in determining the relevant purchasers are less likely to be confused.54
dominant portion of a mark, significant weight must be given to whether the
Finally, petitioner notes that respondent has neither validly proven nor excess or lack of jurisdiction.63 Moreover, when there is a showing that the
presented sufficient evidence that the mark ORLANE is in actual findings or conclusions, drawn from the same pieces of evidence, were
commercial use in the Philippines. Respondent failed to allege in any of its arrived at arbitrarily or in disregard of the evidence on record, they may be
pleadings submitted to the IPO's BLA and the IPO Director General the reviewed by the courts.64 Such is the case here.
names of local outlets that products bearing the mark ORLANE are being
marketed or sold to the general consuming public.55 There is no colorable imitation between the marks LOLANE and ORLANE
which would lead to any likelihood of confusion to the ordinary purchasers.
Respondent's Comment56
A trademark is defined under Section 121.1 of RA 8293 as any visible sign
Respondent reiterates the decisions of the CA and the IPO.57 It maintains capable of distinguishing the goods. It is susceptible to registration if it is
that ORLANE is entitled to protection under RA 8293 since it is registered crafted fancifully or arbitrarily and is capable of identifying and
with the IPO with proof of actual use.58 Respondent posits that it has distinguishing the goods of one manufacturer or seller from those of
established in the world59 and in the Philippines an image and reputation another.65 Thus, the mark must be distinctive.66 The registrability of a
for manufacturing and selling quality beauty products. Its products have trademark is governed by Section 123 of RA 8293. Section 123.1 provides:
been sold in the market for 61 years and have been used in the Philippines
since 1972.60 Thus, to allow petitioner's application would unduly Section 123. Registrability. -
prejudice respondent's right over its registered trademark.61 Lastly,
respondent argues that decisions of administrative agencies such as the IPO 123 .1. A mark cannot be registered if it:
shall not be disturbed by the courts, absent any showing that the former
have acted without or in excess of their jurisdiction, or with grave abuse of
discretion.62 xxx

Issue d. Is identical with a registered mark belonging to a different proprietor or a


mark with an earlier filing or priority date, in respect of:
We resolve the issue of whether there is confusing similarity between
ORLANE and LOLANE which would bar the registration of LOLANE i. The same goods or services, or
before the IPO.
ii. Closely related goods or services, or
Our Ruling
iii. If it nearly resembles such a mark as to be likely to deceive or cause
We find that the CA erred when it affirmed the Decision of the IPO. confusion;

While it is an established rule in administrative law that the courts of justice e. Is identical with, or confusingly similar to, or constitutes a translation of a
should respect the findings of fact of administrative agencies, the courts mark which is considered by the competent authority of the Philippines to
may not be bound by such findings of fact when there is absolutely no be well-known internationally and in the Philippines, whether or not it is
evidence in support thereof or such evidence is clearly, manifestly and registered here, as being already the mark of a person other than the
patently insubstantial; and when there is a clear showing that the applicant for registration, and used for identical or similar goods or services:
administrative agency acted arbitrarily or with grave abuse of discretion or Provided, That in determining whether a mark is well-known, account shall
in a capricious and whimsical manner, such that its action may amount to an be taken of the knowledge of the relevant sector of the public, rather than of
the public at large, including knowledge in the Philippines which has been or confuse persons in the ordinary course of purchasing the genuine article."
obtained as a result of the promotion of the mark; (Citations omitted.)69

xxx We had the same view in Emerald Garment Manufacturing Corporation v.


Court of Appeals,70 where we stated:
In Mighty Corporation v. E. & J Gallo Winery,67 we laid down the
Proceeding to the task at hand, the essential element of infringement is
requirements for a finding of likelihood of confusion, thus: colorable imitation. This term has been defined as "such a close or
ingenious imitation as to be calculated to deceive ordinary purchasers, or
such resemblance of the infringing mark to the original as to deceive an
There are two types of confusion in trademark infringement. The first is
ordinary purchaser giving such attention as a purchaser usually gives, and to
"confusion of goods" when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which cause him to purchase the one supposing it to be the other."
case defendant's goods are then bought as the plaintiffs and its poor quality
reflects badly on the plaintiffs reputation. The other is "confusion of Colorable imitation does not mean such similitude as amounts to identity.
business" wherein the goods of the parties are different but the defendant's Nor does it require that all the details be literally copied. x x x (Citation
product can reasonably (though mistakenly) be assumed to originate from omitted, emphasis supplied.)71
the plaintiff, thus deceiving the public into believing that there is some
connection between the plaintiff and defendant which, in fact, does not In determining colorable imitation, we have used either the dominancy test
exist. or the holistic or totality test. The dominancy test considers the similarity of
the prevalent or dominant features of the competing trademarks that might
In determining the likelihood of confusion, the Court must consider: [a] cause confusion, mistake, and deception in the mind of the purchasing
the resemblance between the trademarks; [b] the similarity of the goods public. More consideration is given on the aural and visual impressions
to which the trademarks are attached; [c] the likely effect on the created by the marks on the buyers of goods, giving little weight to factors
purchaser and [d] the registrant's express or implied consent and other like process, quality, sales outlets, and market segments.72 On the other
fair and equitable considerations. (Citations omitted, emphasis hand, the holistic test considers the entirety of the marks as applied to the
supplied.)68 products, including the labels and packaging, in determining confusing
similarity. The focus is not only on the predominant words but also on the
While Mighty Corporation enumerates four requirements, the most essential other features appearing on the labels.73
requirement, to our mind, for the determination of likelihood of confusion is
the existence of resemblance between the trademarks, i.e., colorable The CA's use of the dominancy test is in accord with our more recent ruling
imitation. Absent any finding of its existence, there can be no likelihood of in UFC Philippines, Inc. (now merged with Nutria-Asia, Inc. as the
confusion. Thus we held: surviving entity) v. Barrio Fiesta Manufacturing Corporation.74 In UFC
Philippines, Inc., we relied on our declarations in McDonald's Corporation
v. L.C. Big Mak Burger, Inc.,75 Co Tiong Sa v. Director of Patents,76 and
Whether a trademark causes confusion and is likely to deceive the public
Societe Des Produits Nestle, S.A. v. Court of Appeals77 that the dominancy
hinges on "colorable imitation" which has been defined as "such similarity
test is more in line with the basic rule in trademarks that confusing
in form, content, words, sound, meaning, special arrangement or general
similarity is determined by the aural, visual and connotative and overall
appearance of the trademark or trade name in their overall presentation or in
their essential and substantive and distinctive parts as would likely mislead impressions created by the marks. Thus, based on the dominancy test, we
ruled that there is no confusing similarity between "PAPA BOY &
DEVICE" mark, and "PAPA KETSARAP" and "PAPA BANANA ORLANE is in plain block upper case letters while the mark LOLANE was
CATSUP." rendered in stylized word with the second letter L and the letter A co-
joined.81
While there are no set rules as what constitutes a dominant feature with
respect to trademarks applied for registration, usually, what are taken into Second, as to the aural aspect of the marks, LOLANE and ORLANE do not
account are signs, color, design, peculiar shape or name, or some special, sound alike. Etepha v. Director of Patents, et al.82 finds application in this
easily remembered earmarks of the brand that readily attracts and catches case. In Etepha, we ruled that there is no confusing similarity between
the attention of the ordinary consumer.78 In UFC Philippines, Inc., what we PERTUSSIN and ATUSSIN. The Court considered among other factors the
considered as the dominant feature of the mark is the first word/figure that aural differences between the two marks as follows:
catches the eyes or that part which appears prominently to the eyes and
ears.79 5. As we take up Pertussin and Atussin once again, we cannot escape notice
of the fact that the two words do not sound alike-when pronounced. There is
However, while we agree with the CA's use of the dominancy test, we not much phonetic similarity between the two. The Solicitor General well-
arrive at a different conclusion. Based on the distinct visual and aural observed that in Pertussin the pronunciation of tbe prefix "Per", whether
differences between LOLANE and ORLANE, we find that there is no correct or incorrect, includes a combination of three letters
confusing similarity between the two marks.
P, e and r; whereas, in Atussin the whole starts with the single letter A
The suffix LANE is not the dominant feature of petitioner's mark. Neither added to suffix "tussin".1âwphi1 Appeals to the ear are dissimilar. And this,
can it be considered as the dominant feature of ORLANE which would because in a word combination, the part that comes first is the most
make the two marks confusingly similar. pronounced. An expositor of the applicable rule here is the decision in the
Syrocol-Cheracol controversy. There, the ruling is that trademark Syrocol (a
cough medicine preparation) is not confusedly similar to trademark
Cheracol (also a cough medicine preparation). Reason: the two words "do
not look or sound enough alike to justify a holding of trademark
infringement", and the "only similarity is in the last syllable, and that is not
uncommon in names given drug compounds". (Citation omitted, emphasis
supplied.)83

Similar to Etepha, appeals to the ear in pronouncing ORLANE and


LOLANE are dissimilar. The first syllables of each mark, i.e., OR and LO
do not sound alike, while the proper pronunciation of the last syllable
LANE-"LEYN" for LOLANE and "LAN" for ORLANE, being of French
origin, also differ. We take exception to the generalizing statement of the
First, an examination of the appearance of the marks would show that there Director General, which was affirmed by the CA, that Filipinos would
are noticeable differences in the way they are written or printed as shown invariably pronounce ORLANE as "ORLEYN." This is another finding of
below:80 fact which has no basis, and thus, justifies our reversal of the decisions of
the IPO Director General and the CA. While there is possible aural
As correctly argued by petitioner in his answer before the BLA, there are similarity when certain sectors of the market would pronounce ORLANE as
visual differences between LOLANE and ORLANE since the mark "ORLEYN," it is not also impossible that some would also be aware of the
proper pronunciation--especially since, as respondent claims, its trademark SO ORDERED.
ORLANE has been sold in the market for more than 60 years and in the
Philippines, for more than 40 years.84

Respondent failed to show proof that the suffix LANE has registered in the
mind of consumers that such suffix is exclusively or even predominantly
associated with ORLANE products. Notably and as correctly argued by
petitioner, the IPO previously allowed the registration of the mark GIN
LANE for goods also falling under Class 3, i.e., perfume, cologne, skin care
preparations, hair care preparations and toiletries.85

We are mindful that in the earlier cases of Mighty Corporation and


Emerald, despite a finding that there is no colorable imitation, we still
discussed the nature of the goods using the trademark and whether the
goods are identical, similar, competing or related. We need not belabor a
similar discussion here considering that the essential element in determining
likelihood of confusion, i.e., colorable imitation by LO LANE of the mark
ORLANE, is absent in this case. Resemblance between the marks is a
separate requirement from, and must not be confused with, the requirement
of a similarity of the goods to which the trademarks are attached. In Great
White Shark Enterprises, Inc v. Caralde, Jr.,86 after we ruled that there was
no confusing similarity between Great White Shark's "GREG NORMAN
LOGO" and Caralde's "SHARK & LOGO" mark due to the visual and aural
dissimilarities between the two marks, we deemed it unnecessary to resolve
whether Great White Shark's mark has gained recognition as a well-known
mark.

Finding that LOLANE is not a colorable imitation of ORLANE due to


distinct visual and aural differences using the dominancy test, we no longer
find it necessary to discuss the contentions of the petitioner as to the
appearance of the marks together with the packaging, nature of the goods
represented by the marks and the price difference, as well as the
applicability of foreign judgments. We rule that the mark LOLANE is
entitled to registration.

WHEREFORE, the petition is GRANTED. The Decision of the Court of


Appeals dated July 14, 2009 is REVERSED and SET ASIDE. Petitioner's
application of the mark LOLANE for goods classified under Class 3 of the
International Classification of Goods is GRANTED.
G.R. No. 194307 November 20, 2013 AND DEVICE" under Registration No. 56334 dated October 21, 1993
(Registration No. 56334) in the name of Shoe Town International and
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly Industrial Corporation, the predecessor-in-interest of respondent Philippine
BIRKENSTOCK ORTHOPAEDIE GMBH), Petitioner, Shoe Expo Marketing Corporation.6 In this regard, on May 27, 1997
vs. petitioner filed a petition for cancellation of Registration No. 56334 on the
PHILIPPINE SHOE EXPO MARKETING CORPORATION, ground that it is the lawful and rightful owner of the Birkenstock marks
Respondent. (Cancellation Case).7 During its pendency, however, respondent and/or its
predecessor-in-interest failed to file the required 10th Year Declaration of
DECISION Actual Use (10th Year DAU) for Registration No. 56334 on or before
October 21, 2004,8 thereby resulting in the cancellation of such mark.9
Accordingly, the cancellation case was dismissed for being moot and
PERLAS-BERNABE, J.: academic.10

Assailed in this Petition for Review on Certiorari1 are the Court of Appeals The aforesaid cancellation of Registration No. 56334 paved the way for the
(CA) Decision2 dated June 25, 2010 and Resolution3 dated October 27, publication of the subject applications in the IPO e-Gazette on February 2,
2010 in CA-G.R. SP No. 112278 which reversed and set aside the 2007.11 In response, respondent filed three (3) separate verified notices of
Intellectual Property Office (IPO) Director General’s Decision4 dated oppositions to the subject applications docketed as Inter Partes Case Nos.
December 22, 2009 that allowed the registration of various trademarks in 14-2007-00108, 14-2007-00115, and 14-2007-00116,12 claiming, inter alia,
favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG. that: (a) it, together with its predecessor-in-interest, has been using
Birkenstock marks in the Philippines for more than 16 years through the
The Facts mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the
subject applications are identical to the one covered by Registration No.
Petitioner, a corporation duly organized and existing under the laws of 56334 and thus, petitioner has no right to the registration of such marks; (c)
Germany, applied for various trademark registrations before the IPO, on November 15, 1991, respondent’s predecessor-in-interest likewise
namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. obtained a Certificate of Copyright Registration No. 0-11193 for the word
(TASN) 4-1994-091508 for goods falling under Class 25 of the "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest
International Classification of Goods and Services (Nice Classification) failed to file the 10th Yea r DAU, it continued the use of "BIRKENSTOCK
with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF - AND DEVICE" in lawful commerce; and (e) to record its continued
RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND ownership and exclusive right to use the "BIRKENSTOCK" marks, it has
REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under filed TASN 4-2006-010273 as a " re-application " of its old registration,
TASN 4-1994-091509 for goods falling under Class 25 of the Nice Registration No. 56334.13 On November 13, 2007, the Bureau of Legal
Classification with filing date of March 11, 1994; and (c) "BIRKENSTOCK Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the
BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND aforesaid inter partes cases (Consolidated Opposition Cases).14
COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND
SUNBEAM" under TASN 4-1994-095043 for goods falling under Class 10 The Ruling of the BLA
of the Nice Classification with filing date of September 5, 1994 (subject
applications).5 In its Decision15 dated May 28, 2008, the BLA of the IPO sustained
respondent’s opposition, thus, ordering the rejection of the subject
However, registration proceedings of the subject applications were applications. It ruled that the competing marks of the parties are confusingly
suspended in view of an existing registration of the mark "BIRKENSTOCK similar since they contained the word "BIRKENSTOCK" and are used on
the same and related goods. It found respondent and its predecessor-in- failure to file the 10th Year DAU for Registration No. 56334 "did not
interest as the prior user and adopter of "BIRKENSTOCK" in the deprive petitioner of its ownership of the ‘BIRKENSTOCK’ mark since it
Philippines, while on the other hand, petitioner failed to present evidence of has submitted substantial evidence showing its continued use, promotion
actual use in the trade and business in this country. It opined that while and advertisement thereof up to the present."23 It opined that when
Registration No. 56334 was cancelled, it does not follow that prior right respondent’s predecessor-in-interest adopted and started its actual use of
over the mark was lost, as proof of continuous and uninterrupted use in "BIRKENSTOCK," there is neither an existing registration nor a pending
trade and business in the Philippines was presented. The BLA likewise application for the same and thus, it cannot be said that it acted in bad faith
opined that petitioner’s marks are not well -known in the Philippines and in adopting and starting the use of such mark.24 Finally, the CA agreed
internationally and that the various certificates of registration submitted by with respondent that petitioner’s documentary evidence, being mere
petitioners were all photocopies and, therefore, not admissible as photocopies, were submitted in violation of Section 8.1 of Office Order No.
evidence.16 79, Series of 2005 (Rules on Inter Partes Proceedings).

Aggrieved, petitioner appealed to the IPO Director General. Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20,
2010, which was, however, denied in a Resolution26 dated October 27,
The Ruling of the IPO Director General 2010. Hence, this petition.27

In his Decision17 dated December 22, 2009, the IPO Director General Issues Before the Court
reversed and set aside the ruling of the BLA, thus allowing the registration
of the subject applications. He held that with the cancellation of The primordial issue raised for the Court’s resolution is whether or not the
Registration No. 56334 for respondent’s failure to file the 10th Year DAU, subject marks should be allowed registration in the name of petitioner.
there is no more reason to reject the subject applications on the ground of
prior registration by another proprietor.18 More importantly, he found that The Court’s Ruling
the evidence presented proved that petitioner is the true and lawful owner
and prior user of "BIRKENSTOCK" marks and thus, entitled to the The petition is meritorious.
registration of the marks covered by the subject applications.19 The IPO
Director General further held that respondent’s copyright for the word
"BIRKENSTOCK" is of no moment since copyright and trademark are A. Admissibility of Petitioner’s Documentary Evidence.
different forms of intellectual property that cannot be interchanged.20
In its Comment28 dated April 29, 2011, respondent asserts that the
Finding the IPO Director General’s reversal of the BLA unacceptable, documentary evidence submitted by petitioner in the Consolidated
respondent filed a petition for review with the CA. Opposition Cases, which are mere photocopies, are violative of Section 8.1
of the Rules on Inter Partes Proceedings, which requires certified true
copies of documents and evidence presented by parties in lieu of
Ruling of the CA originals.29 As such, they should be deemed inadmissible.

In its Decision21 dated June 25, 2010, the CA reversed and set aside the
The Court is not convinced.
ruling of the IPO Director General and reinstated that of the BLA. It
disallowed the registration of the subject applications on the ground that the
marks covered by such applications "are confusingly similar, if not outright It is well-settled that "the rules of procedure are mere tools aimed at
identical" with respondent’s mark.22 It equally held that respondent’s facilitating the attainment of justice, rather than its frustration. A strict and
rigid application of the rules must always be eschewed when it would Republic Act No. (RA) 166,34 the governing law for Registration No.
subvert the primary objective of the rules, that is, to enhance fair trials and 56334, requires the filing of a DAU on specified periods,35 to wit:
expedite justice. Technicalities should never be used to defeat the
substantive rights of the other party. Every party-litigant must be afforded Section 12. Duration. – Each certificate of registration shall remain in force
the amplest opportunity for the proper and just determination of his cause, for twenty years: Provided, That registrations under the provisions of this
free from the constraints of technicalities."30 "Indeed, the primordial policy Act shall be cancelled by the Director, unless within one year following the
is a faithful observance of [procedural rules], and their relaxation or fifth, tenth and fifteenth anniversaries of the date of issue of the certificate
suspension should only be for persuasive reasons and only in meritorious of registration, the registrant shall file in the Patent Office an affidavit
cases, to relieve a litigant of an injustice not commensurate with the degree showing that the mark or trade-name is still in use or showing that its non-
of his thoughtlessness in not complying with the procedure prescribed."31 use is due to special circumstance which excuse such non-use and is not due
This is especially true with quasi-judicial and administrative bodies, such as to any intention to abandon the same, and pay the required fee.
the IPO, which are not bound by technical rules of procedure.32 On this
score, Section 5 of the Rules on Inter Partes Proceedings provides:
The Director shall notify the registrant who files the above- prescribed
affidavits of his acceptance or refusal thereof and, if a refusal, the reasons
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter therefor. (Emphasis and underscoring supplied)
Partes cases. – The rules of procedure herein contained primarily apply in
the conduct of hearing of Inter Partes cases. The Rules of Court may be
The aforementioned provision clearly reveals that failure to file the DAU
applied suppletorily. The Bureau shall not be bound by strict technical rules
within the requisite period results in the automatic cancellation of
of procedure and evidence but may adopt, in the absence of any applicable registration of a trademark. In turn, such failure is tantamount to the
rule herein, such mode of proceedings which is consistent with the abandonment or withdrawal of any right or interest the registrant has over
requirements of fair play and conducive to the just, speedy and inexpensive
his trademark.36
disposition of cases, and which will give the Bureau the greatest possibility
to focus on the contentious issues before it. (Emphasis and underscoring
supplied) In this case, respondent admitted that it failed to file the 10th Year DAU for
Registration No. 56334 within the requisite period, or on or before October
21, 2004. As a consequence, it was deemed to have abandoned or
In the case at bar, while petitioner submitted mere photocopies as
withdrawn any right or interest over the mark "BIRKENSTOCK." Neither
documentary evidence in the Consolidated Opposition Cases, it should be
can it invoke Section 23637 of the IP Code which pertains to intellectual
noted that the IPO had already obtained the originals of such documentary
property rights obtained under previous intellectual property laws, e.g., RA
evidence in the related Cancellation Case earlier filed before it. Under this 166, precisely because it already lost any right or interest over the said
circumstance and the merits of the instant case as will be subsequently mark.
discussed, the Court holds that the IPO Director General’s relaxation of
procedure was a valid exercise of his discretion in the interest of substantial
justice.33 Besides, petitioner has duly established its true and lawful ownership of the
mark "BIRKENSTOCK."
Having settled the foregoing procedural matter, the Court now proceeds to
resolve the substantive issues. Under Section 238 of RA 166, which is also the law governing the subject
applications, in order to register a trademark, one must be the owner thereof
and must have actually used the mark in commerce in the Philippines for
B. Registration and ownership of "BIRKENSTOCK."
two (2) months prior to the application for registration. Section 2-A39 of the
same law sets out to define how one goes about acquiring ownership
thereof. Under the same section, it is clear that actual use in commerce is prior use by another person, i.e. , it will controvert a claim of legal
also the test of ownership but the provision went further by saying that the appropriation or of ownership based on registration by a subsequent user.
mark must not have been so appropriated by another. Significantly, to be an This is because a trademark is a creation of use and belongs to one who first
owner, Section 2-A does not require that the actual use of a trademark must used it in trade or commerce.43 (Emphasis and underscoring supplied)
be within the Philippines. Thus, under RA 166, one may be an owner of a
mark due to its actual use but may not yet have the right to register such In the instant case, petitioner was able to establish that it is the owner of the
ownership here due to the owner’s failure to use the same in the Philippines mark "BIRKENSTOCK." It submitted evidence relating to the origin and
for two (2) months prior to registration.40 history of "BIRKENSTOCK" and its use in commerce long before
respondent was able to register the same here in the Philippines. It has
It must be emphasized that registration of a trademark, by itself, is not a sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in
mode of acquiring ownership.1âwphi1 If the applicant is not the owner of 1774 by its inventor, Johann Birkenstock, a shoemaker, on his line of
the trademark, he has no right to apply for its registration. Registration quality footwear and thereafter, numerous generations of his kin
merely creates a prima facie presumption of the validity of the registration, continuously engaged in the manufacture and sale of shoes and sandals
of the registrant’s ownership of the trademark, and of the exclusive right to bearing the mark "BIRKENSTOCK" until it became the entity now known
the use thereof. Such presumption, just like the presumptive regularity in as the petitioner. Petitioner also submitted various certificates of registration
the performance of official functions, is rebuttable and must give way to of the mark "BIRKENSTOCK" in various countries and that it has used
evidence to the contrary.41 such mark in different countries worldwide, including the Philippines.44

Clearly, it is not the application or registration of a trademark that vests On the other hand, aside from Registration No. 56334 which had been
ownership thereof, but it is the ownership of a trademark that confers the cancelled, respondent only presented copies of sales invoices and
right to register the same. A trademark is an industrial property over which advertisements, which are not conclusive evidence of its claim of ownership
its owner is entitled to property rights which cannot be appropriated by of the mark "BIRKENSTOCK" as these merely show the transactions made
unscrupulous entities that, in one way or another, happen to register such by respondent involving the same.45
trademark ahead of its true and lawful owner. The presumption of
ownership accorded to a registrant must then necessarily yield to superior In view of the foregoing circumstances, the Court finds the petitioner to be
evidence of actual and real ownership of a trademark. the true and lawful owner of the mark "BIRKENSTOCK" and entitled to its
registration, and that respondent was in bad faith in having it registered in
The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 its name. In this regard, the Court quotes with approval the words of the
is instructive on this point: IPO Director General, viz.:

The ownership of a trademark is acquired by its registration and its actual The facts and evidence fail to show that [respondent] was in good faith in
use by the manufacturer or distributor of the goods made available to the using and in registering the mark BIRKENSTOCK. BIRKENSTOCK,
purchasing public. x x x A certificate of registration of a mark, once issued, obviously of German origin, is a highly distinct and arbitrary mark. It is
constitutes prima facie evidence of the validity of the registration, of the very remote that two persons did coin the same or identical marks. To come
registrant’s ownership of the mark, and of the registrant’s exclusive right to up with a highly distinct and uncommon mark previously appropriated by
use the same in connection with the goods or services and those that are another, for use in the same line of business, and without any plausible
related thereto specified in the certificate. x x x In other words, the prima explanation, is incredible. The field from which a person may select a
facie presumption brought about by the registration of a mark may be trademark is practically unlimited. As in all other cases of colorable
challenged and overcome in an appropriate action, x x x by evidence of imitations, the unanswered riddle is why, of the millions of terms and
combinations of letters and designs available, [respondent] had to come up
with a mark identical or so closely similar to the [petitioner’s] if there was
no intent to take advantage of the goodwill generated by the [petitioner’s]
mark. Being on the same line of business, it is highly probable that the
[respondent] knew of the existence of BIRKENSTOCK and its use by the
[petitioner], before [respondent] appropriated the same mark and had it
registered in its name.46

WHEREFORE, the petition is GRANTED. The Decision dated June 25,


2010 and Resolution dated October 27, 2010 of the Court of Appeals in CA-
G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the
Decision dated December 22, 2009 of the IPO Director General is hereby
REINSTATED.

SO ORDERED.
G.R. No. 185917 June 1, 2011 goods under Class 25. The application matured into a registration and a
Certificate of Registration was issued on 12 December 1988, with a 20-year
FREDCO MANUFACTURING CORPORATION Petitioner, term subject to renewal at the end of the term. The registration was later
vs. assigned to Romeo Chuateco, a member of the family that owned New
PRESIDENT AND FELLOWS OF HARVARD COLLEGE York Garments.
(HARVARD UNIVERSITY), Respondents.
Fredco alleged that it was formed and registered with the Securities and
DECISION Exchange Commission on 9 November 1995 and had since then handled the
manufacture, promotion and marketing of "Harvard" clothing articles.
Fredco alleged that at the time of issuance of Registration No. 56561 to
CARPIO, J.:
Harvard University, New York Garments had already registered the mark
"Harvard" for goods under Class 25. Fredco alleged that the registration was
The Case cancelled on 30 July 1998 when New York Garments inadvertently failed to
file an affidavit of use/non-use on the fifth anniversary of the registration
Before the Court is a petition for review1 assailing the 24 October 2008 but the right to the mark "Harvard" remained with its predecessor New
Decision2 and 8 January 2009 Resolution3 of the Court of Appeals in CA- York Garments and now with Fredco.
G.R. SP No. 103394.
Harvard University, on the other hand, alleged that it is the lawful owner of
The Antecedent Facts the name and mark "Harvard" in numerous countries worldwide, including
the Philippines. Among the countries where Harvard University has
On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), registered its name and mark "Harvard" are:
a corporation organized and existing under the laws of the Philippines, filed
a Petition for Cancellation of Registration No. 56561 before the Bureau of
Legal Affairs of the Intellectual Property Office (IPO) against respondents 1. Argentina 26. South Korea
President and Fellows of Harvard College (Harvard University), a 2. Benelux4 27. Malaysia
corporation organized and existing under the laws of Massachusetts, United
States of America. The case was docketed as Inter Partes Case No. 14-2005- 3. Brazil 28. Mexico
00094.
4. Canada 29. New Zealand
Fredco alleged that Registration No. 56561 was issued to Harvard
5. Chile 30. Norway
University on 25 November 1993 for the mark "Harvard Veritas Shield
Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and 6. China P.R. 31. Peru
flying discs under Classes 16, 18, 21, 25 and 28 of the Nice International
Classification of Goods and Services. Fredco alleged that the mark 7. Colombia 32. Philippines
"Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and slacks was first
used in the Philippines on 2 January 1982 by New York Garments 8. Costa Rica 33. Poland
Manufacturing & Export Co., Inc. (New York Garments), a domestic
corporation and Fredco’s predecessor-in-interest. On 24 January 1985, New 9. Cyprus 34. Portugal
York Garments filed for trademark registration of the mark "Harvard" for 10. Czech Republic 35. Russia
11. Denmark 36. South Africa Harvard University alleged that in March 2002, it discovered, through its
international trademark watch program, Fredco’s website www.harvard-
12. Ecuador 37. Switzerland usa.com. The website advertises and promotes the brand name "Harvard
Jeans USA" without Harvard University’s consent. The website’s main page
13. Egypt 38. Singapore shows an oblong logo bearing the mark "Harvard Jeans USA®,"
"Established 1936," and "Cambridge, Massachusetts." On 20 April 2004,
14. Finland 39. Slovak Republic Harvard University filed an administrative complaint against Fredco before
the IPO for trademark infringement and/or unfair competition with
15. France 40. Spain
damages.lawphi1
16. Great Britain 41. Sweden
Harvard University alleged that its valid and existing certificates of
17. Germany 42. Taiwan trademark registration in the Philippines are:
18. Greece 43. Thailand
1. Trademark Registration No. 56561 issued on 25 November 1993
19. Hong Kong 44. Turkey for "Harvard Veritas Shield Design" for goods and services in
Classes 16, 18, 21, 25 and 28 (decals, tote bags, serving trays,
20. India 45. United Arab Emirates sweatshirts, t-shirts, hats and flying discs) of the Nice International
Classification of Goods and Services;
21. Indonesia 46. Uruguay

22. Ireland 47. United States of America 2. Trademark Registration No. 57526 issued on 24 March 1994 for
"Harvard Veritas Shield Symbol" for services in Class 41;
23. Israel 48. Venezuela Trademark Registration No. 56539 issued on 25 November 1998
for "Harvard" for services in Class 41; and
24. Italy 49. Zimbabwe
3. Trademark Registration No. 66677 issued on 8 December 1998
25. Japan 50. European Community5
for "Harvard Graphics" for goods in Class 9. Harvard University
further alleged that it filed the requisite affidavits of use for the
The name and mark "Harvard" was adopted in 1639 as the name of Harvard mark "Harvard Veritas Shield Symbol" with the IPO.
College6 of Cambridge, Massachusetts, U.S.A. The name and mark
"Harvard" was allegedly used in commerce as early as 1872. Harvard Further, on 7 May 2003 Harvard University filed Trademark Application
University is over 350 years old and is a highly regarded institution of No. 4-2003-04090 for "Harvard Medical International & Shield Design" for
higher learning in the United States and throughout the world. Harvard services in Classes 41 and 44. In 1989, Harvard University established the
University promotes, uses, and advertises its name "Harvard" through Harvard Trademark Licensing Program, operated by the Office for
various publications, services, and products in foreign countries, including Technology and Trademark Licensing, to oversee and manage the
the Philippines. Harvard University further alleged that the name and the worldwide licensing of the "Harvard" name and trademarks for various
mark have been rated as one of the most famous brands in the world, valued goods and services. Harvard University stated that it never authorized or
between US $750,000,000 and US $1,000,000,000. licensed any person to use its name and mark "Harvard" in connection with
any goods or services in the Philippines.
In a Decision7 dated 22 December 2006, Director Estrellita Beltran- The dispositive portion of the decision of the Office of the Director General,
Abelardo of the Bureau of Legal Affairs, IPO cancelled Harvard IPO reads:
University’s registration of the mark "Harvard" under Class 25, as follows:
WHEREFORE, premises considered, the instant appeal is GRANTED. The
WHEREFORE, premises considered, the Petition for Cancellation is hereby appealed decision is hereby REVERSED and SET ASIDE. Let a copy of
GRANTED. Consequently, Trademark Registration Number 56561 for the this Decision as well as the trademark application and records be furnished
trademark "HARVARD VE RI TAS ‘SHIELD’ SYMBOL" issued on and returned to the Director of Bureau of Legal Affairs for appropriate
November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD action. Further, let also the Directors of the Bureau of Trademarks and the
COLLEGE (HARVARD UNIVERSITY) should be CANCELLED only Administrative, Financial and Human Resources Development Services
with respect to goods falling under Class 25. On the other hand, considering Bureau, and the library of the Documentation, Information and Technology
that the goods of Respondent-Registrant falling under Classes 16, 18, 21 Transfer Bureau be furnished a copy of this Decision for information,
and 28 are not confusingly similar with the Petitioner’s goods, the guidance, and records purposes.
Respondent-Registrant has acquired vested right over the same and
therefore, should not be cancelled. SO ORDERED.10

Let the filewrapper of the Trademark Registration No. 56561 issued on Fredco filed a petition for review before the Court of Appeals assailing the
November 25, 1993 for the trademark "HARVARD VE RI TAS ‘SHIELD’ decision of the Director General.
SYMBOL", subject matter of this case together with a copy of this Decision
be forwarded to the Bureau of Trademarks (BOT) for appropriate action.
The Decision of the Court of Appeals

SO ORDERED.8
In its assailed decision, the Court of Appeals affirmed the decision of the
Office of the Director General of the IPO.
Harvard University filed an appeal before the Office of the Director General
of the IPO. In a Decision9 dated 21 April 2008, the Office of the Director
The Court of Appeals adopted the findings of the Office of the Director
General, IPO reversed the decision of the Bureau of Legal Affairs, IPO.
General and ruled that the latter correctly set aside the cancellation by the
Director of the Bureau of Legal Affairs of Harvard University’s trademark
The Director General ruled that more than the use of the trademark in the registration under Class 25. The Court of Appeals ruled that Harvard
Philippines, the applicant must be the owner of the mark sought to be University was able to substantiate that it appropriated and used the marks
registered. The Director General ruled that the right to register a trademark "Harvard" and "Harvard Veritas Shield Symbol" in Class 25 way ahead of
is based on ownership and when the applicant is not the owner, he has no Fredco and its predecessor New York Garments. The Court of Appeals also
right to register the mark. The Director General noted that the mark covered ruled that the records failed to disclose any explanation for Fredco’s use of
by Harvard University’s Registration No. 56561 is not only the word the name and mark "Harvard" and the words "USA," "Established 1936,"
"Harvard" but also the logo, emblem or symbol of Harvard University. The and "Cambridge, Massachusetts" within an oblong device, "US Legend"
Director General ruled that Fredco failed to explain how its predecessor and "Europe’s No. 1 Brand." Citing Shangri-La International Hotel
New York Garments came up with the mark "Harvard." In addition, there Management, Ltd. v. Developers Group of Companies, Inc.,11 the Court of
was no evidence that Fredco or New York Garments was licensed or Appeals ruled:
authorized by Harvard University to use its name in commerce or for any
other use. One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he
would be coming to court with unclean hands. Priority is of no avail to the marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods
bad faith plaintiff. Good faith is required in order to ensure that a second in the United States since 1953. Further, there is no dispute that Harvard
user may not merely take advantage of the goodwill established by the true University has registered the name and mark "Harvard" in at least 50
owner.12 countries.

The dispositive portion of the decision of the Court of Appeals reads: On the other hand, Fredco’s predecessor-in-interest, New York Garments,
started using the mark "Harvard" in the Philippines only in 1982. New York
WHEREFORE, premises considered, the petition for review is DENIED. Garments filed an application with the Philippine Patent Office in 1985 to
The Decision dated April 21, 2008 of the Director General of the IPO in register the mark "Harvard," which application was approved in 1988.
Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby Fredco insists that the date of actual use in the Philippines should prevail on
AFFIRMED. the issue of who has the better right to register the marks.

SO ORDERED.13 Under Section 2 of Republic Act No. 166,14 as amended (R.A. No. 166),
before a trademark can be registered, it must have been actually used in
commerce for not less than two months in the Philippines prior to the filing
Fredco filed a motion for reconsideration.
of an application for its registration. While Harvard University had actual
prior use of its marks abroad for a long time, it did not have actual prior use
In its Resolution promulgated on 8 January 2009, the Court of Appeals in the Philippines of the mark "Harvard Veritas Shield Symbol" before its
denied the motion for lack of merit. application for registration of the mark "Harvard" with the then Philippine
Patents Office. However, Harvard University’s registration of the name
Hence, this petition before the Court. "Harvard" is based on home registration which is allowed under Section 37
of R.A. No. 166.15 As pointed out by Harvard University in its Comment:
The Issue
Although Section 2 of the Trademark law (R.A. 166) requires for the
The issue in this case is whether the Court of Appeals committed a registration of trademark that the applicant thereof must prove that the same
reversible error in affirming the decision of the Office of the Director has been actually in use in commerce or services for not less than two (2)
General of the IPO. months in the Philippines before the application for registration is filed,
where the trademark sought to be registered has already been registered in a
The Ruling of this Court foreign country that is a member of the Paris Convention, the requirement
of proof of use in the commerce in the Philippines for the said period is not
necessary. An applicant for registration based on home certificate of
The petition has no merit.
registration need not even have used the mark or trade name in this
country.16
There is no dispute that the mark "Harvard" used by Fredco is the same as
the mark "Harvard" in the "Harvard Veritas Shield Symbol" of Harvard
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco
University. It is also not disputed that Harvard University was named
alleged that Harvard University’s registration "is based on ‘home
Harvard College in 1639 and that then, as now, Harvard University is
registration’ for the mark ‘Harvard Veritas Shield’ for Class 25." 17
located in Cambridge, Massachusetts, U.S.A. It is also unrefuted that
Harvard University has been using the mark "Harvard" in commerce since
1872. It is also established that Harvard University has been using the
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. (b) x x x (emphasis supplied)
8293),18 "[m]arks registered under Republic Act No. 166 shall remain in
force but shall be deemed to have been granted under this Act x x x," Fredco’s use of the mark "Harvard," coupled with its claimed origin in
which does not require actual prior use of the mark in the Philippines. Since Cambridge, Massachusetts, obviously suggests a false connection with
the mark "Harvard Veritas Shield Symbol" is now deemed granted under Harvard University. On this ground alone, Fredco’s registration of the mark
R.A. No. 8293, any alleged defect arising from the absence of actual prior "Harvard" should have been disallowed.
use in the Philippines has been cured by Section 239.2. 19 In addition,
Fredco’s registration was already cancelled on 30 July 1998 when it failed Indisputably, Fredco does not have any affiliation or connection with
to file the required affidavit of use/non-use for the fifth anniversary of the Harvard University, or even with Cambridge, Massachusetts. Fredco or its
mark’s registration. Hence, at the time of Fredco’s filing of the Petition for
predecessor New York Garments was not established in 1936, or in the
Cancellation before the Bureau of Legal Affairs of the IPO, Fredco was no
U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no
longer the registrant or presumptive owner of the mark "Harvard."
explanation to the Court of Appeals or to the IPO why it used the mark
"Harvard" on its oblong logo with the words "Cambridge, Massachusetts,"
There are two compelling reasons why Fredco’s petition must fail. "Established in 1936," and "USA." Fredco now claims before this Court that
it used these words "to evoke a ‘lifestyle’ or suggest a ‘desirable aura’ of
First, Fredco’s registration of the mark "Harvard" and its identification of petitioner’s clothing lines." Fredco’s belated justification merely confirms
origin as "Cambridge, Massachusetts" falsely suggest that Fredco or its that it sought to connect or associate its products with Harvard University,
goods are connected with Harvard University, which uses the same mark riding on the prestige and popularity of Harvard University, and thus
"Harvard" and is also located in Cambridge, Massachusetts. This can easily appropriating part of Harvard University’s goodwill without the latter’s
be gleaned from the following oblong logo of Fredco that it attaches to its consent.
clothing line:
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham
Fredco’s registration of the mark "Harvard" should not have been allowed Act,20 the trademark law of the United States. These provisions are intended
because Section 4(a) of R.A. No. 166 prohibits the registration of a mark to protect the right of publicity of famous individuals and institutions from
"which may disparage or falsely suggest a connection with persons, living commercial exploitation of their goodwill by others.21 What Fredco has
or dead, institutions, beliefs x x x." Section 4(a) of R.A. No. 166 provides: done in using the mark "Harvard" and the words "Cambridge,
Massachusetts," "USA" to evoke a "desirable aura" to its products is
Section 4. Registration of trade-marks, trade-names and service- marks on precisely to exploit commercially the goodwill of Harvard University
the principal register. ‒ There is hereby established a register of trade-mark, without the latter’s consent. This is a clear violation of Section 4(a) of R.A.
trade-names and service-marks which shall be known as the principal No. 166. Under Section 17(c)22 of R.A. No. 166, such violation is a ground
register. The owner of a trade-mark, a trade-name or service-mark used to for cancellation of Fredco’s registration of the mark "Harvard" because the
distinguish his goods, business or services from the goods, business or registration was obtained in violation of Section 4 of R.A. No. 166.
services of others shall have the right to register the same on the principal
register, unless it: Second, the Philippines and the United States of America are both
signatories to the Paris Convention for the Protection of Industrial Property
(a) Consists of or comprises immoral, deceptive or scandalous manner, or (Paris Convention). The Philippines became a signatory to the Paris
matter which may disparage or falsely suggest a connection with persons, Convention on 27 September 1965. Articles 6bis and 8 of the Paris
living or dead, institutions, beliefs, or national symbols, or bring them into Convention state:
contempt or disrepute;
ARTICLE 6bis Trade-names of persons described in the first paragraph of this section
shall be protected without the obligation of filing or registration
(i) The countries of the Union undertake either administratively if their whether or not they form parts of marks.24
legislation so permits, or at the request of an interested party, to refuse or to
cancel the registration and to prohibit the use of a trademark which x x x x (Emphasis supplied)
constitutes a reproduction, imitation or translation, liable to create confusion
or a mark considered by the competent authority of the country as being Thus, under Philippine law, a trade name of a national of a State that is a
already the mark of a person entitled to the benefits of the present party to the Paris Convention, whether or not the trade name forms part of a
Convention and used for identical or similar goods. These provisions trademark, is protected "without the obligation of filing or registration."
shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to "Harvard" is the trade name of the world famous Harvard University, and it
create confusion therewith.
is also a trademark of Harvard University. Under Article 8 of the Paris
Convention, as well as Section 37 of R.A. No. 166, Harvard University is
ARTICLE 8 entitled to protection in the Philippines of its trade name "Harvard" even
without registration of such trade name in the Philippines. This means that
A trade name shall be protected in all the countries of the Union without no educational entity in the Philippines can use the trade name "Harvard"
the obligation of filing or registration, whether or not it forms part of a without the consent of Harvard University. Likewise, no entity in the
trademark. (Emphasis supplied) Philippines can claim, expressly or impliedly through the use of the name
and mark "Harvard," that its products or services are authorized, approved,
Thus, this Court has ruled that the Philippines is obligated to assure or licensed by, or sourced from, Harvard University without the latter’s
nationals of countries of the Paris Convention that they are afforded an consent.
effective protection against violation of their intellectual property rights in
the Philippines in the same way that their own countries are obligated to Article 6bis of the Paris Convention has been administratively implemented
accord similar protection to Philippine nationals.23 in the Philippines through two directives of the then Ministry (now
Department) of Trade, which directives were upheld by this Court in several
Article 8 of the Paris Convention has been incorporated in Section 37 of cases.25 On 20 November 1980, then Minister of Trade Secretary Luis
R.A. No. 166, as follows: Villafuerte issued a Memorandum directing the Director of Patents to reject,
pursuant to the Paris Convention, all pending applications for Philippine
registration of signature and other world-famous trademarks by applicants
Section 37. Rights of foreign registrants. — Persons who are nationals of,
other than their original owners.26 The Memorandum states:
domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to any international
convention or treaty relating to marks or trade-names, or the repression of Pursuant to the Paris Convention for the Protection of Industrial Property to
unfair competition to which the Philippines may be a party, shall be entitled which the Philippines is a signatory, you are hereby directed to reject all
to the benefits and subject to the provisions of this Act to the extent and pending applications for Philippine registration of signature and other
under the conditions essential to give effect to any such convention and world-famous trademarks by applicants other than its original owners or
treaties so long as the Philippines shall continue to be a party thereto, except users.
as provided in the following paragraphs of this section.
The conflicting claims over internationally known trademarks involve such
xxxx name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin,
Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph (c) that the trademark is duly registered in the
Lauren, Geoffrey Beene, Lanvin and Ted Lapidus. industrial property office(s) of another country or
countries, taking into consideration the dates of such
It is further directed that, in cases where warranted, Philippine registrants of registration;
such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the (d) that the trademark has been long established and
trademarks’ foreign or local owners or original users. obtained goodwill and general international consumer
recognition as belonging to one owner or source;
You are also required to submit to the undersigned a progress report on the
matter. (e) that the trademark actually belongs to a party claiming
ownership and has the right to registration under the
For immediate compliance.27 provisions of the aforestated PARIS CONVENTION.

In a Memorandum dated 25 October 1983, then Minister of Trade and 2. The word trademark, as used in this MEMORANDUM,
Industry Roberto Ongpin affirmed the earlier Memorandum of Minister shall include tradenames, service marks, logos, signs, emblems,
Villafuerte. Minister Ongpin directed the Director of Patents to implement insignia or other similar devices used for identification and
measures necessary to comply with the Philippines’ obligations under the recognition by consumers.
Paris Convention, thus:
3. The Philippine Patent Office shall refuse all applications for, or
1. Whether the trademark under consideration is well-known in the cancel the registration of, trademarks which constitute a
Philippines or is a mark already belonging to a person entitled to reproduction, translation or imitation of a trademark owned by a
the benefits of the CONVENTION, this should be established, person, natural or corporate, who is a citizen of a country signatory
pursuant to Philippine Patent Office procedures in inter partes and to the PARIS CONVENTION FOR THE PROTECTION OF
ex parte cases, according to any of the following criteria or any INDUSTRIAL PROPERTY.
combination thereof:
x x x x28 (Emphasis supplied)
(a) a declaration by the Minister of Trade and Industry
that the trademark being considered is already well- In Mirpuri, the Court ruled that the essential requirement under Article 6bis
known in the Philippines such that permission for its use of the Paris Convention is that the trademark to be protected must be "well-
by other than its original owner will constitute a known" in the country where protection is sought.29 The Court declared that
reproduction, imitation, translation or other infringement; the power to determine whether a trademark is well-known lies in the
competent authority of the country of registration or use. 30 The Court then
(b) that the trademark is used in commerce stated that the competent authority would either be the registering authority
internationally, supported by proof that goods bearing the if it has the power to decide this, or the courts of the country in question if
trademark are sold on an international scale, the issue comes before the courts.31
advertisements, the establishment of factories, sales
offices, distributorships, and the like, in different To be protected under the two directives of the Ministry of Trade, an
countries, including volume or other measure of internationally well-known mark need not be registered or used in the
international trade and commerce; Philippines.32 All that is required is that the mark is well-known
internationally and in the Philippines for identical or similar goods, whether Rule 102. Criteria for determining whether a mark is well-known. In
or not the mark is registered or used in the Philippines. The Court ruled in determining whether a mark is well-known, the following criteria or any
Sehwani, Incorporated v. In-N-Out Burger, Inc.:33 combination thereof may be taken into account:

The fact that respondent’s marks are neither registered nor used in the (a) the duration, extent and geographical area of any use of the
Philippines is of no moment. The scope of protection initially afforded by mark, in particular, the duration, extent and geographical area of
Article 6bis of the Paris Convention has been expanded in the 1999 Joint any promotion of the mark, including advertising or publicity and
Recommendation Concerning Provisions on the Protection of Well-Known the presentation, at fairs or exhibitions, of the goods and/or
Marks, wherein the World Intellectual Property Organization (WIPO) services to which the mark applies;
General Assembly and the Paris Union agreed to a nonbinding
recommendation that a well-known mark should be protected in a (b) the market share, in the Philippines and in other countries, of
country even if the mark is neither registered nor used in that country. the goods and/or services to which the mark applies;
Part I, Article 2(3) thereof provides:
(c) the degree of the inherent or acquired distinction of the mark;
(3) [Factors Which Shall Not Be Required] (a) A Member State shall not
require, as a condition for determining whether a mark is a well-known
(d) the quality-image or reputation acquired by the mark;
mark:
(e) the extent to which the mark has been registered in the world;
(i) that the mark has been used in, or that the mark has been
registered or that an application for registration of the mark has
been filed in or in respect of, the Member State: (f) the exclusivity of registration attained by the mark in the world;

(ii) that the mark is well known in, or that the mark has been (g) the extent to which the mark has been used in the world;
registered or that an application for registration of the mark has
been filed in or in respect of, any jurisdiction other than the (h) the exclusivity of use attained by the mark in the world;
Member State; or
(i) the commercial value attributed to the mark in the world;
(iii) that the mark is well known by the public at large in the
Member State.34 (Italics in the original decision; boldface supplied) (j) the record of successful protection of the rights in the mark;

Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states that "a (k) the outcome of litigations dealing with the issue of whether the
mark which is considered by the competent authority of the Philippines to mark is a well-known mark; and
be well-known internationally and in the Philippines, whether or not it
is registered here," cannot be registered by another in the Philippines. (l) the presence or absence of identical or similar marks validly
Section 123.1(e) does not require that the well-known mark be used in registered for or used on identical or similar goods or services and
commerce in the Philippines but only that it be well-known in the owned by persons other than the person claiming that his mark is a
Philippines. Moreover, Rule 102 of the Rules and Regulations on well-known mark. (Emphasis supplied)
Trademarks, Service Marks, Trade Names and Marked or Stamped
Containers, which implement R.A. No. 8293, provides:
Since "any combination" of the foregoing criteria is sufficient to determine is located primarily in Cambridge, Massachusetts and was named after John
that a mark is well-known, it is clearly not necessary that the mark be used Harvard, a puritan minister who left to the college his books and half of his
in commerce in the Philippines. Thus, while under the territoriality principle estate.
a mark must be used in commerce in the Philippines to be entitled to
protection, internationally well-known marks are the exceptions to this rule. The mark "Harvard College" was first used in commerce in the United
States in 1638 for educational services, specifically, providing courses of
In the assailed Decision of the Office of the Director General dated 21 April instruction and training at the university level (Class 41). Its application for
2008, the Director General found that: registration with the United States Patent and Trademark Office was filed
on September 20, 2000 and it was registered on October 16, 2001. The
Traced to its roots or origin, HARVARD is not an ordinary word. It refers marks "Harvard" and "Harvard Ve ri tas ‘Shield’ Symbol" were first used in
to no other than Harvard University, a recognized and respected institution commerce in the the United States on December 31, 1953 for athletic
of higher learning located in Cambridge, Massachusetts, U.S.A. Initially uniforms, boxer shorts, briefs, caps, coats, leather coats, sports coats, gym
referred to simply as "the new college," the institution was named "Harvard shorts, infant jackets, leather jackets, night shirts, shirts, socks, sweat pants,
College" on 13 March 1639, after its first principal donor, a young sweatshirts, sweaters and underwear (Class 25). The applications for
clergyman named John Harvard. A graduate of Emmanuel College, registration with the USPTO were filed on September 9, 1996, the mark
Cambridge in England, John Harvard bequeathed about four hundred books "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri
in his will to form the basis of the college library collection, along with half tas ‘Shield’ Symbol" was registered on September 30, 1997.36
his personal wealth worth several hundred pounds. The earliest known
official reference to Harvard as a "university" rather than "college" occurred We also note that in a Decision37 dated 18 December 2008 involving a
in the new Massachusetts Constitution of 1780. separate case between Harvard University and Streetward International,
Inc.,38 the Bureau of Legal Affairs of the IPO ruled that the mark "Harvard"
Records also show that the first use of the name HARVARD was in 1638 is a "well-known mark." This Decision, which cites among others the
for educational services, policy courses of instructions and training at the numerous trademark registrations of Harvard University in various
university level. It has a Charter. Its first commercial use of the name or countries, has become final and executory.
mark HARVARD for Class 25 was on 31 December 1953 covered by
UPTON Reg. No. 2,119,339 and 2,101,295. Assuming in arguendo, that the There is no question then, and this Court so declares, that "Harvard" is a
Appellate may have used the mark HARVARD in the Philippines ahead of well-known name and mark not only in the United States but also
the Appellant, it still cannot be denied that the Appellant’s use thereof was internationally, including the Philippines. The mark "Harvard" is rated as
decades, even centuries, ahead of the Appellee’s. More importantly, the one of the most famous marks in the world. It has been registered in at least
name HARVARD was the name of a person whose deeds were considered 50 countries. It has been used and promoted extensively in numerous
to be a cornerstone of the university. The Appellant’s logos, emblems or publications worldwide. It has established a considerable goodwill
symbols are owned by Harvard University. The name HARVARD and the worldwide since the founding of Harvard University more than 350 years
logos, emblems or symbols are endemic and cannot be separated from the ago. It is easily recognizable as the trade name and mark of Harvard
institution.35 University of Cambridge, Massachusetts, U.S.A., internationally known as
one of the leading educational institutions in the world. As such, even
Finally, in its assailed Decision, the Court of Appeals ruled: before Harvard University applied for registration of the mark "Harvard" in
the Philippines, the mark was already protected under Article 6bis and
Article 8 of the Paris Convention. Again, even without applying the Paris
Records show that Harvard University is the oldest and one of the foremost
Convention, Harvard University can invoke Section 4(a) of R.A. No. 166
educational institutions in the United States, it being established in 1636. It
which prohibits the registration of a mark "which may disparage or falsely
suggest a connection with persons, living or dead, institutions, beliefs x x
x."

WHEREFORE, we DENY the petition. We AFFIRM the 24 October


2008 Decision and 8 January 2009 Resolution of the Court of Appeals in
CA-G.R. SP No. 103394.
G.R. No. 154491 November 14, 2008 Pepsi's yard on July 2, 2001 at 4 p.m. and saw empty Coke bottles inside
Pepsi shells or cases.2
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant,
petitioner, Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga
vs. City, after taking the joint deposition of the witnesses, issued Search
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. Warrant No. 2001-013 to seize 2,500 Litro and 3,000 eight and 12 ounces
GALICIA, a.k.a. "DANNY GALICIA", respondents. empty Coke bottles at Pepsi's Naga yard for violation of Section 168.3 (c) of
the IP Code.4 The local police seized and brought to the MTC's custody
DECISION 2,464 Litro and 4,036 eight and 12 ounces empty Coke bottles, 205 Pepsi
shells for Litro, and 168 Pepsi shells for smaller (eight and 12 ounces)
empty Coke bottles, and later filed with the Office of the City Prosecutor of
BRION, J.:
Naga a complaint against two Pepsi officers for violation of Section 168.3
(c) in relation to Section 170 of the IP Code. 5 The named respondents, also
Is the hoarding of a competitor's product containers punishable as unfair the respondents in this petition, were Pepsi regional sales manager Danilo
competition under the Intellectual Property Code (IP Code, Republic Act E. Galicia (Galicia) and its Naga general manager Quintin J. Gomez, Jr.
No. 8293) that would entitle the aggrieved party to a search warrant against (Gomez).
the hoarder? This is the issue we grapple with in this petition for review on
certiorari involving two rival multinational softdrink giants; petitioner
Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi Cola Products In their counter-affidavits, Galicia and Gomez claimed that the bottles came
Phils., Inc. (Pepsi), represented by the respondents, of hoarding empty Coke from various Pepsi retailers and wholesalers who included them in their
return to make up for shortages of empty Pepsi bottles; they had no way of
bottles in bad faith to discredit its business and to sabotage its operation in
ascertaining beforehand the return of empty Coke bottles as they simply
Bicolandia.
received what had been delivered; the presence of the bottles in their yard
was not intentional nor deliberate; Ponce and Regaspi's statements are
BACKGROUND hearsay as they had no personal knowledge of the alleged crime; there is no
mention in the IP Code of the crime of possession of empty bottles; and that
The facts, as culled from the records, are summarized below. the ambiguity of the law, which has a penal nature, must be construed
strictly against the State and liberally in their favor. Pepsi security guards
On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi for Eduardo E. Miral and Rene Acebuche executed a joint affidavit stating that
hoarding Coke empty bottles in Pepsi's yard in Concepcion Grande, Naga per their logbook, Lirio did not visit or enter the plant premises in the
City, an act allegedly penalized as unfair competition under the IP Code. afternoon of July 2, 2001.
Coca-Cola claimed that the bottles must be confiscated to preclude their
illegal use, destruction or concealment by the respondents. 1 In support of the The respondents also filed motions for the return of their shells and to quash
application, Coca-Cola submitted the sworn statements of three witnesses: the search warrant. They contended that no probable cause existed to justify
Naga plant representative Arnel John Ponce said he was informed that one the issuance of the search warrant; the facts charged do not constitute an
of their plant security guards had gained access into the Pepsi compound offense; and their Naga plant was in urgent need of the shells.
and had seen empty Coke bottles; acting plant security officer Ylano A.
Regaspi said he investigated reports that Pepsi was hoarding large Coca-Cola opposed the motions as the shells were part of the evidence of
quantities of Coke bottles by requesting their security guard to enter the the crime, arguing that Pepsi used the shells in hoarding the bottles. It
Pepsi plant and he was informed by the security guard that Pepsi hoarded insisted that the issuance of warrant was based on probable cause for unfair
several Coke bottles; security guard Edwin Lirio stated that he entered
competition under the IP Code, and that the respondents violated R.A. 623, Accordingly, as prayed for, Search Warrant No. 2001-02 issued by
the law regulating the use of stamped or marked bottles, boxes, and other the Honorable Judge Julian C. Ocampo III on July 2, 2001 is
similar containers. ANNULLED and SET ASIDE. The Orders issued by the Pairing
Judge of Br. 1, MTCC of Naga City dated September 19, 2001 and
THE MTC RULINGS November 14, 2001 are also declared VOID and SET ASIDE. The
City Prosecutor of Naga City and SPO1 Ernesto Paredes are
directed to return to the Petitioner the properties seized by virtue of
On September 19, 2001, the MTC issued the first assailed order 6 denying
the twin motions. It explained there was an exhaustive examination of the Search Warrant No. 2001-02. No costs.
applicant and its witnesses through searching questions and that the Pepsi
shells are prima facie evidence that the bottles were placed there by the SO ORDERED.9
respondents.
In a motion for reconsideration, which the RTC denied on July 12, 2002, the
In their motion for reconsideration, the respondents argued for the quashal petitioner stressed that the decision of the RTC was contradictory because it
of the warrant as the MTC did not conduct a probing and exhaustive absolved Judge Ocampo of grave abuse of discretion in issuing the search
examination; the applicant and its witnesses had no personal knowledge of warrant, but at the same time nullified the issued warrant. The MTC should
facts surrounding the hoarding; the court failed to order the return of the have dismissed the petition when it found out that Judge Ocampo did not
"borrowed" shells; there was no crime involved; the warrant was issued commit any grave abuse of discretion.
based on hearsay evidence; and the seizure of the shells was illegal because
they were not included in the warrant. Bypassing the Court of Appeals, the petitioner asks us through this petition
for review on certiorari under Rule 45 of the Rules of Court to reverse the
On November 14, 2001, the MTC denied the motion for reconsideration in decision of the RTC. Essentially, the petition raises questions against the
the second assailed order,7 explaining that the issue of whether there was RTC's nullification of the warrant when it found no grave abuse of
unfair competition can only be resolved during trial. discretion committed by the issuing judge.

The respondents responded by filing a petition for certiorari under Rule 65 THE PETITION and
of the Revised Rules of Court before the Regional Trial Court (RTC) of THE PARTIES' POSITIONS
Naga City on the ground that the subject search warrant was issued without
probable cause and that the empty shells were neither mentioned in the In its petition, the petitioner insists the RTC should have dismissed the
warrant nor the objects of the perceived crime. respondents' petition for certiorari because it found no grave abuse of
discretion by the MTC in issuing the search warrant. The petitioner further
THE RTC RULINGS argues that the IP Code was enacted into law to remedy various forms of
unfair competition accompanying globalization as well as to replace the
On May 8, 2002, the RTC voided the warrant for lack of probable cause and inutile provision of unfair competition under Article 189 of the Revised
Penal Code. Section 168.3(c) of the IP Code does not limit the scope of
the non-commission of the crime of unfair competition, even as it implied
protection on the particular acts enumerated as it expands the meaning of
that other laws may have been violated by the respondents. The RTC,
unfair competition to include "other acts contrary to good faith of a nature
though, found no grave abuse of discretion on the part of the issuing MTC
calculated to discredit the goods, business or services of another." The
judge.8 Thus,
inherent element of unfair competition is fraud or deceit, and that hoarding
of large quantities of a competitor's empty bottles is necessarily
characterized by bad faith. It claims that its Bicol bottling operation was We resolve to deny the petition for lack of merit.
prejudiced by the respondents' hoarding and destruction of its empty bottles.
We clarify at the outset that while we agree with the RTC decision, our
The petitioner also argues that the quashal of the search warrant was agreement is more in the result than in the reasons that supported it. The
improper because it complied with all the essential requisites of a valid decision is correct in nullifying the search warrant because it was issued on
warrant. The empty bottles were concealed in Pepsi shells to prevent an invalid substantive basis - the acts imputed on the respondents do not
discovery while they were systematically being destroyed to hamper the violate Section 168.3 (c) of the IP Code. For this reason, we deny the
petitioner's bottling operation and to undermine the capability of its bottling present petition.
operations in Bicol.
The issuance of a search warrant10 against a personal property11 is governed
The respondents counter-argue that although Judge Ocampo conducted his by Rule 126 of the Revised Rules of Court whose relevant sections state:
own examination, he gravely erred and abused his discretion when he
ignored the rule on the need of sufficient evidence to establish probable Section 4. Requisites for issuing search warrant. - A search
cause; satisfactory and convincing evidence is essential to hold them guilty warrant shall not issue except upon probable cause in connection
of unfair competition; the hoarding of empty Coke bottles did not cause with one specific offense to be determined personally by the judge
actual or probable deception and confusion on the part of the general public; after examination under oath or affirmation of the complainant and
the alleged criminal acts do not show conduct aimed at deceiving the public; the witnesses he may produce, and particularly describing the place
there was no attempt to use the empty bottles or pass them off as the to be searched and the things to be seized which may be anywhere
respondents' goods. in the Philippines.

The respondents also argue that the IP Code does not criminalize bottle Section 5. Examination of complainant; record. - The judge must,
hoarding, as the acts penalized must always involve fraud and deceit. The before issuing the warrant, personally examine in the form of
hoarding does not make them liable for unfair competition as there was no searching questions and answers, in writing and under oath,
deception or fraud on the end-users. the complainant and the witnesses he may produce on facts
personally known to them and attach to the record their sworn
THE ISSUE statements together with the affidavits submitted.

Based on the parties' positions, the basic issue submitted to us for resolution Section 6. Issuance and form of search warrant. - If the judge is
is whether the Naga MTC was correct in issuing Search Warrant No. 2001- satisfied of the existence of facts upon which the application is
01 for the seizure of the empty Coke bottles from Pepsi's yard for probable based or that there is probable cause to believe that they exist, he
violation of Section 168.3 (c) of the IP Code. This basic issue involves two shall issue the warrant, which must be substantially in the form
sub-issues, namely, the substantive issue of whether the application for prescribed by these Rules. [Emphasis supplied]
search warrant effectively charged an offense, i.e., a violation of Section
168.3 (c) of the IP Code; and the procedural issue of whether the MTC To paraphrase this rule, a search warrant may be issued only if there is
observed the procedures required by the Rules of Court in the issuance of probable cause in connection with a specific offense alleged in an
search warrants. application based on the personal knowledge of the applicant and his or her
witnesses. This is the substantive requirement in the issuance of a search
OUR RULING warrant. Procedurally, the determination of probable cause is a personal task
of the judge before whom the application for search warrant is filed, as he
has to examine under oath or affirmation the applicant and his or her a property right in the goodwill of the said goods, business or
witnesses in the form of "searching questions and answers" in writing and services so identified, which will be protected in the same manner
under oath. The warrant, if issued, must particularly describe the place to be as other property rights.
searched and the things to be seized.
168.2. Any person who shall employ deception or any other means
We paraphrase these requirements to stress that they have substantive and contrary to good faith by which he shall pass off the goods
procedural aspects. Apparently, the RTC recognized this dual nature of the manufactured by him or in which he deals, or his business, or
requirements and, hence, treated them separately; it approved of the way the services for those of the one having established such goodwill, or
MTC handled the procedural aspects of the issuance of the search warrant who shall commit any acts calculated to produce said result, shall
but found its action on the substantive aspect wanting. It therefore resolved be guilty of unfair competition, and shall be subject to an action
to nullify the warrant, without however expressly declaring that the MTC therefor.
gravely abused its discretion when it issued the warrant applied for. The
RTC's error, however, is in the form rather than the substance of the 168.3. In particular, and without in any way limiting the scope of
decision as the nullification of the issued warrant for the reason the RTC protection against unfair competition, the following shall be
gave was equivalent to the declaration that grave abuse of discretion was deemed guilty of unfair competition:
committed. In fact, we so rule as the discussions below will show.
(a) Any person, who is selling his goods and gives them
Jurisprudence teaches us that probable cause, as a condition for the issuance the general appearance of goods of another manufacturer
of a search warrant, is such reasons supported by facts and circumstances as or dealer, either as to the goods themselves or in the
will warrant a cautious man in the belief that his action and the means taken wrapping of the packages in which they are contained, or
in prosecuting it are legally just and proper. Probable cause requires facts the devices or words thereon, or in any other feature of
and circumstances that would lead a reasonably prudent man to believe that their appearance, which would be likely to influence
an offense has been committed and the objects sought in connection with purchasers to believe that the goods offered are those of a
that offense are in the place to be searched.12 Implicit in this statement is the manufacturer or dealer, other than the actual manufacturer
recognition that an underlying offense must, in the first place, exist. In other or dealer, or who otherwise clothes the goods with such
words, the acts alleged, taken together, must constitute an offense and that appearance as shall deceive the public and defraud
these acts are imputable to an offender in relation with whom a search another of his legitimate trade, or any subsequent vendor
warrant is applied for. of such goods or any agent of any vendor engaged in
selling such goods with a like purpose;
In the context of the present case, the question is whether the act charged -
alleged to be hoarding of empty Coke bottles - constitutes an offense under (b) Any person who by any artifice, or device, or who
Section 168.3 (c) of the IP Code. Section 168 in its entirety states: employs any other means calculated to induce the false
belief that such person is offering the services of another
SECTION 168. Unfair Competition, Rights, Regulation and who has identified such services in the mind of the public;
Remedies. - or

168.1. A person who has identified in the mind of the public the (c) Any person who shall make any false statement in the
goods he manufactures or deals in, his business or services from course of trade or who shall commit any other act
those of others, whether or not a registered mark is employed, has
contrary to good faith of a nature calculated to discredit From jurisprudence, unfair competition has been defined as the passing off
the goods, business or services of another. (or palming off) or attempting to pass off upon the public the goods or
business of one person as the goods or business of another with the end and
168.4. The remedies provided by Sections 156, 157 and 161 shall probable effect of deceiving the public. It formulated the "true test" of
apply mutatis mutandis. (Sec. 29,R.A. No. 166a) unfair competition: whether the acts of defendant are such as are calculated
to deceive the ordinary buyer making his purchases under the ordinary
conditions which prevail in the particular trade to which the controversy
The petitioner theorizes that the above section does not limit the scope of
protection on the particular acts enumerated as it expands the meaning of relates.13 One of the essential requisites in an action to restrain unfair
unfair competition to include "other acts contrary to good faith of a nature competition is proof of fraud; the intent to deceive must be shown before
the right to recover can exist.14 The advent of the IP Code has not
calculated to discredit the goods, business or services of another."
significantly changed these rulings as they are fully in accord with what
Allegedly, the respondents' hoarding of Coca Cola empty bottles is one such
Section 168 of the Code in its entirety provides. Deception, passing off and
act.
fraud upon the public are still the key elements that must be present for
unfair competition to exist.
We do not agree with the petitioner's expansive interpretation of Section
168.3 (c).
The act alleged to violate the petitioner's rights under Section 168.3 (c) is
hoarding which we gather to be the collection of the petitioner's empty
"Unfair competition," previously defined in Philippine jurisprudence in bottles so that they can be withdrawn from circulation and thus impede the
relation with R.A. No. 166 and Articles 188 and 189 of the Revised Penal circulation of the petitioner's bottled products. This, according to the
Code, is now covered by Section 168 of the IP Code as this Code has petitioner, is an act contrary to good faith - a conclusion that, if true, is
expressly repealed R.A. No. 165 and R.A. No. 166, and Articles 188 and indeed an unfair act on the part of the respondents. The critical question,
189 of the Revised Penal Code. however, is not the intrinsic unfairness of the act of hoarding; what is
critical for purposes of Section 168.3 (c) is to determine if the hoarding, as
Articles 168.1 and 168.2, as quoted above, provide the concept and general charged, "is of a nature calculated to discredit the goods, business or
rule on the definition of unfair competition. The law does not thereby cover services" of the petitioner.
every unfair act committed in the course of business; it covers only acts
characterized by "deception or any other means contrary to good faith" in We hold that it is not. Hoarding as defined by the petitioner is not even an
the passing off of goods and services as those of another who has act within the contemplation of the IP Code.
established goodwill in relation with these goods or services, or any other
act calculated to produce the same result.
The petitioner's cited basis is a provision of the IP Code, a set of rules that
refer to a very specific subject - intellectual property. Aside from the IP
What unfair competition is, is further particularized under Section 168.3 Code's actual substantive contents (which relate specifically to patents,
when it provides specifics of what unfair competition is "without in any way licensing, trademarks, trade names, service marks, copyrights, and the
limiting the scope of protection against unfair competition." Part of these protection and infringement of the intellectual properties that these
particulars is provided under Section 168.3(c) which provides the general protective measures embody), the coverage and intent of the Code is
"catch-all" phrase that the petitioner cites. Under this phrase, a person shall expressly reflected in its "Declaration of State Policy" which states:
be guilty of unfair competition "who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods, business or services
Section 2. Declaration of State Policy. - The State recognizes that
of another."
an effective intellectual and industrial property system is vital to
the development of domestic and creative activity, facilitates Code generally, but to the terms of Section 168 in particular. Under the
transfer of technology, attracts foreign investments, and ensures principle of "noscitur a sociis," when a particular word or phrase is
market access for our products. It shall protect and secure the ambiguous in itself or is equally susceptible of various meanings, its correct
exclusive rights of scientists, inventors, artists and other gifted construction may be made clear and specific by considering the company of
citizens to their intellectual property and creations, particularly words in which it is found or with which it is associated. 15
when beneficial to the people, for such periods as provided in this
Act. As basis for this interpretative analysis, we note that Section 168.1 speaks
of a person who has earned goodwill with respect to his goods and services
The use of intellectual property bears a social function. To this end, and who is entitled to protection under the Code, with or without a
the State shall promote the diffusion of knowledge and information registered mark. Section 168.2, as previously discussed, refers to the
for the promotion of national development and progress and the general definition of unfair competition. Section 168.3, on the other hand,
common good. refers to the specific instances of unfair competition, with Section 168.1
referring to the sale of goods given the appearance of the goods of another;
It is also the policy of the State to streamline administrative Section 168.2, to the inducement of belief that his or her goods or services
procedures of registering patents, trademarks and copyright, to are that of another who has earned goodwill; while the disputed Section
liberalize the registration on the transfer of technology, and to 168.3 being a "catch all" clause whose coverage the parties now dispute.
enhance the enforcement of intellectual property rights in the
Philippines. (n) Under all the above approaches, we conclude that the "hoarding" - as
defined and charged by the petitioner - does not fall within the coverage of
"Intellectual property rights" have furthermore been defined under Section 4 the IP Code and of Section 168 in particular. It does not relate to any patent,
of the Code to consist of: a) Copyright and Related Rights; b) Trademarks trademark, trade name or service mark that the respondents have invaded,
and Service Marks; c) Geographic Indications; d) IndustrialDesigns; e) intruded into or used without proper authority from the petitioner. Nor are
Patents; f) Layout-Designs (Topographies) of Integrated Circuits; and the respondents alleged to be fraudulently "passing off" their products or
g)Protection of Undisclosed Information. services as those of the petitioner. The respondents are not also alleged to be
undertaking any representation or misrepresentation that would confuse or
tend to confuse the goods of the petitioner with those of the respondents, or
Given the IP Code's specific focus, a first test that should be made when a
vice versa. What in fact the petitioner alleges is an act foreign to the Code,
question arises on whether a matter is covered by the Code is to ask if it
to the concepts it embodies and to the acts it regulates; as alleged, hoarding
refers to an intellectual property as defined in the Code. If it does not, then
coverage by the Code may be negated. inflicts unfairness by seeking to limit the opposition's sales by depriving it
of the bottles it can use for these sales.
A second test, if a disputed matter does not expressly refer to an intellectual
In this light, hoarding for purposes of destruction is closer to what another
property right as defined above, is whether it falls under the general "unfair
law - R.A. No. 623 - covers, to wit:
competition" concept and definition under Sections 168.1 and 168.2 of the
Code. The question then is whether there is "deception" or any other similar
act in "passing off" of goods or services to be those of another who enjoys SECTION 1. Persons engaged or licensed to engage in the
established goodwill. manufacture, bottling or selling of soda water, mineral or aerated
waters, cider, milk, cream, or other lawful beverages in bottles,
boxes, casks, kegs, or barrels, and other similar containers, with
Separately from these tests is the application of the principles of statutory
construction giving particular attention, not so much to the focus of the IP their names or the names of their principals or products, or other
marks of ownership stamped or marked thereon, may register with Viewed in this light, the lack of probable cause to support the disputed
the Philippine Patent Office a description of the names or are used search warrant at once becomes apparent.
by them, under the same conditions, rules, and regulations, made
applicable by law or regulation to the issuance of trademarks. Where, as in this case, the imputed acts do not violate the cited offense, the
ruling of this Court penned by Mr. Justice Bellosillo is particularly
SECTION 2. It shall be unlawful for any person, without the instructive:
written consent of the manufacturer, bottler or seller who has
successfully registered the marks of ownership in accordance with In the issuance of search warrants, the Rules of Court requires a
the provisions of the next preceding section, to fill such bottles, finding of probable cause in connection with one specific offense to
boxes, kegs, barrels, or other similar containers so marked or be determined personally by the judge after examination of the
stamped, for the purpose of sale, or to sell, dispose of, buy, or complainant and the witnesses he may produce, and particularly
traffic in, or wantonly destroy the same, whether filled or not, or describing the place to be searched and the things to be seized.
to use the same for drinking vessels or glasses or for any other Hence, since there is no crime to speak of, the search warrant
purpose than that registered by the manufacturer, bottler or does not even begin to fulfill these stringent requirements and
seller. Any violation of this section shall be punished by a fine or is therefore defective on its face. The nullity of the warrant
not more than one hundred pesos or imprisonment of not more than renders moot and academic the other issues raised in petitioners'
thirty days or both. Motion to Quash and Motion for Reconsideration. Since the
assailed search warrant is null and void, all property seized by
As its coverage is defined under Section 1, the Act appears to be a measure virtue thereof should be returned to petitioners in accordance with
that may overlap or be affected by the provisions of Part II of the IP Code established jurisprudence.16
on "The Law on Trademarks, Service Marks and Trade Names." What is
certain is that the IP Code has not expressly repealed this Act. The Act Based on the foregoing, we conclude that the RTC correctly ruled that the
appears, too, to have specific reference to a special type of registrants - the petitioner's search warrant should properly be quashed for the petitioner's
manufacturers, bottlers or sellers of soda water, mineral or aerated waters, failure to show that the acts imputed to the respondents do not violate the
cider, milk, cream, or other lawful beverages in bottles, boxes, casks, kegs, cited offense. There could not have been any probable cause to support the
or barrels, and other similar containers - who are given special protection issuance of a search warrant because no crime in the first place was
with respect to the containers they use. In this sense, it is in fact a law of effectively charged. This conclusion renders unnecessary any further
specific coverage and application, compared with the general terms and discussion on whether the search warrant application properly alleged that
application of the IP Code. Thus, under its Section 2, it speaks specifically the imputed act of holding Coke empties was in fact a "hoarding" in bad
of unlawful use of containers and even of the unlawfulness of their wanton faith aimed to prejudice the petitioner's operations, or whether the MTC
destruction - a matter that escapes the IP Code's generalities unless linked duly complied with the procedural requirements for the issuance of a search
with the concepts of "deception" and "passing off" as discussed above. warrant under Rule 126 of the Rules of Court.

Unfortunately, the Act is not the law in issue in the present case and one WHEREFORE, we hereby DENY the petition for lack of merit.
that the parties did not consider at all in the search warrant application. The Accordingly, we confirm that Search Warrant No. 2001-01, issued by the
petitioner in fact could not have cited it in its search warrant application Municipal Trial Court, Branch 1, Naga City, is NULL and VOID. Costs
since the "one specific offense" that the law allows and which the petitioner against the petitioner.
used was Section 168.3 (c). If it serves any purpose at all in our discussions,
it is to show that the underlying factual situation of the present case is in
SO ORDERED.
fact covered by another law, not by the IP Code that the petitioner cites.
G.R. No. 190706 July 21, 2014 application for registration of the mark "THE ST. FRANCIS TOWERS" for
use relative to the latter’s business, particularly the construction of
SHANG PROPERTIES REALTY CORPORATION (formerly THE permanent buildings or structures for residential and office purposes,
SHANG GRAND TOWER CORPORATION) and SHANG docketed as Inter PartesCase No. 14-2006-00098 (St. Francis Towers IP
PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS, Case); and (c) an inter partes case opposing the petitioners’ application for
INC.), Petitioners, registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE,"
vs. docketed as IPC No. 14-2007-00218 (St. Francis Shangri-La IP Case).5
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
In its complaints, respondent alleged that it has used the mark "ST.
DECISION FRANCIS" to identify its numerous property development projects located
at Ortigas Center, such as the aforementioned St. Francis Square
Commercial Center, a shopping mall called the "St. Francis Square," and a
PERLAS-BERNABE, J.:
mixed-use realty project plan thatincludes the St. Francis Towers.
Respondent added that as a result of its continuous use of the mark "ST.
Assailed in this petition for review on certiorari1 is the Decision2 dated FRANCIS" in its real estate business,it has gained substantial goodwill with
December 18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. the public that consumers and traders closely identify the said mark with its
105425 which affirmed with modification the Decision3 dated September 3, property development projects. Accordingly, respondent claimed that
2008 of the Intellectual Property Office (IPO) Director-General. The CA: petitioners could not have the mark "THE ST. FRANCIS TOWERS"
(a) affirmed the denial of the application for registration of the mark "ST. registered in their names, and that petitioners’ use of the marks "THE ST.
FRANCIS TOWERS" filed by petitioners Shang Properties Realty FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
Corporation and Shang Properties, Inc. (petitioners); ( b) found petitioners in their own real estate development projects constitutes unfair competition
to have committed unfair competition for using the marks "THE ST. as well as false or fraudulent declaration.6
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE";
(c) ordered petitioners to cease and desist from using "ST. FRANCIS"
singly or as part of a composite mark; and (d) ordered petitioners to jointly Petitioners denied committing unfair competition and false or fraudulent
declaration, maintaining that they could register the mark "THE ST.
and severally pay respondent St. Francis Square Development Corporation
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
(respondent) a fine in the amount of ₱200,000.00.
under their names. They contended that respondent is barred from claiming
ownership and exclusive use ofthe mark "ST. FRANCIS" because the same
The Facts is geographically descriptive ofthe goods or services for which it is intended
to be used.7 This is because respondent’s as well as petitioners’ real estate
Respondent – a domestic corporation engaged in the real estate business and development projects are locatedalong the streets bearing the name "St.
the developer of the St. Francis Square Commercial Center, built sometime Francis," particularly, St. FrancisAvenue and St. Francis Street (now known
in 1992, located at Ortigas Center, Mandaluyong City, Metro Manila as Bank Drive),8 both within the vicinity of the Ortigas Center.
(Ortigas Center)4 – filed separate complaints against petitioners before the
IPO - Bureau of Legal Affairs (BLA), namely: (a) an intellectual property The BLA Rulings
violation case for unfair competition, false or fraudulent declaration, and
damages arising from petitioners’ use and filing of applications for the
On December 19, 2006, the BLA rendered a Decision9 in the IPV Case, and
registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST.
found that petitioners committed acts of unfair competition against
FRANCIS SHANGRI-LA PLACE," docketed as IPV Case No. 10-2005-
00030 (IPV Case); and (b) an inter partes case opposing the petitioners’ respondent by its use of the mark "THE ST. FRANCIS TOWERS" but not
with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It, Both parties appealed the decision in the IPV Case, while petitioners
however, refused to award damages in the latter’s favor, considering that appealed the decision in the St. Francis Towers IP Case. Due to the identity
there was no evidence presented to substantiate the amount of damages it of the parties and issues involved, the IPO Director-General ordered the
suffered due to the former’s acts. The BLA found that "ST. FRANCIS," consolidation of the separate appeals.15 Records are, however, bereft of any
being a name of a Catholic saint, may be considered as an arbitrary mark showing that the decision in the St. Francis Shangri-La IP Casewas
capable of registration when used in real estate development projects as the appealed by either party and, thus, is deemed to have lapsed into finality.
name has no direct connection or significance when used in association with
real estate. The BLA neither deemed "ST. FRANCIS" as a geographically The IPO Director-General Ruling
descriptive mark, opiningthat there is no specific lifestyle, aura, quality or
characteristic that the real estate projects possess except for the fact that
In a Decision16 dated September 3, 2008, then IPO Director-General
they are located along St. Francis Avenueand St. Francis Street (now known
Adrian S. Cristobal, Jr. affirmedthe rulings of the BLA that: (a) petitioners
as Bank Drive), Ortigas Center. In this light, the BLA found that while
cannot register the mark "THEST. FRANCIS TOWERS"; and (b)
respondent’s use of the mark "ST. FRANCIS" has not attained exclusivity
petitioners are not guilty of unfair competition in its use of the mark "THE
considering that there are other real estate development projects bearing the ST. FRANCIS SHANGRI-LA PLACE." However, the IPO DirectorGeneral
name "St. Francis" in other areas,10 it must nevertheless be pointed out that reversed the BLA’s findingthat petitioners committed unfair competition
respondent has been known to be the only real estate firm to transact
through their use of the mark "THE ST. FRANCIS TOWERS," thus
business using such name within the Ortigas Center vicinity. Accordingly,
dismissing such charge. He foundthat respondent could not be entitled to the
the BLA considered respondent to have gained goodwill and reputation for
exclusive use of the mark "ST. FRANCIS," even at least to the locality
its mark, which therefore entitles it to protection against the use by other
where it conducts its business, because it is a geographically descriptive
persons, at least, to those doing business within the Ortigas Center.11 mark, considering that it was petitioners’ as well as respondent’s intention
to use the mark "ST. FRANCIS"in order to identify, or at least associate,
Meanwhile, on March 28, 2007, the BLA rendered a Decision12 in the St. their real estate development projects/businesses with the place or location
Francis Towers IP Case, denying petitioners’ application for registration of where they are situated/conducted, particularly, St. Francis Avenue and St.
the mark "THE ST. FRANCIS TOWERS." Excluding the word "TOWERS" Francis Street (now known as Bank Drive), Ortigas Center. He further
in view of petitioners’ disclaimer thereof, the BLA ruled that petitioners opined that respondent’s registration of the name "ST. FRANCIS" with the
cannot register the mark "THE ST. FRANCIS" since it is confusingly DTI is irrelevant since what should be controlling are the trademark
similar to respondent’s"ST. FRANCIS" marks which are registered with the registrations with the IPO itself.17 Also, the IPO Director-General held that
Department of Trade and Industry(DTI). It held that respondent had a better since the parties are both engaged in the real estate business, it would be
right over the use of the mark "ST. FRANCIS" because of the latter’s "hard to imagine that a prospective buyer will be enticed to buy, rent or
appropriation and continuous usage thereof for a long period of time.13 A purchase [petitioners’] goods or servicesbelieving that this is owned by
little over a year after, or on March 31, 2008, the BLA then rendered a [respondent] simply because of the name ‘ST. FRANCIS.’ The prospective
Decision14 in the St. Francis Shangri-La IP Case, allowing petitioners’ buyer would necessarily discuss things with the representatives of
application for registration of the mark "THE ST. FRANCIS SHANGRI-LA [petitioners] and would readily know that this does not belong to
PLACE." It found that respondent cannot preclude petitioners from using [respondent]."18
the mark "ST. FRANCIS" as the records show that the former’s use thereof
had not been attended with exclusivity. More importantly, it found that Disagreeing solely with the IPO Director-General’s ruling on the issue of
petitioners had adequately appended the word "Shangri-La" to its composite unfair competition (the bone of contention in the IPV Case), respondent
mark to distinguish it from that of respondent, in which case, the former had
elevated the sameto the CA.
removed any likelihood of confusion that may arise from the
contemporaneous use by both parties of the mark "ST. FRANCIS."
In contrast, records do not show that either party appealed the IPO Director- The petition is meritorious.
General’s ruling on the issue ofthe registrability of the mark "THE ST.
FRANCIS TOWERS" (the bone of contention in the St. Francis Towers IP Section 168 of Republic Act No. 8293,21 otherwise known as the
Case). As such, said pronouncement isalso deemed to have lapsed into "Intellectual Property Code of the Philippines" (IP Code), provides for the
finality. rules and regulations on unfair competition.

The CA Ruling To begin, Section 168.1 qualifies who is entitled to protection against unfair
competition. It states that "[a]person who has identified in the mind of the
In a Decision19 dated December 18, 2009, the CA found petitioners guilty public the goods he manufacturesor deals in, his business or services from
of unfair competition not only withrespect to their use of the mark "THE those of others, whether or not a registered mark is employed, has a
ST. FRANCIS TOWERS" but alsoof the mark "THE ST. FRANCIS property right in the goodwill of the said goods, business or services so
SHANGRI-LA PLACE." Accordingly, itordered petitioners to cease and identified, which will be protected inthe same manner as other property
desist from using "ST. FRANCIS" singly or as part of a composite mark, as rights."
well as to jointly and severally pay respondent a fine in the amount of
₱200,000.00. Section 168.2proceeds to the core of the provision, describing forthwith
who may be found guilty of and subject to an action of unfair competition –
The CA did not adhere to the IPO Director-General’s finding that the mark that is, "[a]ny person who shall employ deception or any other means
"ST. FRANCIS" is geographically descriptive, and ruled that respondent – contrary to good faith by which he shall pass off the goods manufactured by
which has exclusively and continuously used the mark "ST. FRANCIS" for him or in which he deals, or his business, or services for those of the one
more than a decade, and,hence, gained substantial goodwill and reputation having established such goodwill, or who shall commit any acts calculated
thereby – is very muchentitled to be protected against the indiscriminate to produce said result x x x."
usage by other companies of the trademark/name it has so painstakingly
tried to establish and maintain. Further, the CA stated that even on the Without limiting its generality, Section 168.3goes on to specify examples of
assumption that "ST. FRANCIS" was indeed a geographically descriptive acts which are considered as constitutive of unfair competition, viz.:
mark, adequateprotection must still begiven to respondent pursuant to the
Doctrine of Secondary Meaning.20
168.3. In particular, and without in any way limiting the scope of protection
against unfair competition, the following shall be deemed guilty of unfair
Dissatisfied, petitioners filed the present petition. competition:

The Issue Before the Court (a) Any person who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to
With the decisions in both Inter PartesCases having lapsed into finality, the the goods themselves or in the wrapping of the packages in which
sole issue thus left for the Court’s resolution is whether or not petitioners they are contained, or the devices or words thereon, or in any other
are guilty of unfair competition in using the marks "THE ST. FRANCIS feature of their appearance, which would be likely to influence
TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE." purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or
The Court’s Ruling dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate trade,
or any subsequent vendor ofsuch goods or any agent of any vendor Here, the Court finds the element of fraud to be wanting; hence, there can
engaged in selling such goods with a like purpose; be no unfair competition. The CA’scontrary conclusion was faultily
premised on its impression that respondenthad the right to the exclusive use
(b) Any person who by any artifice, or device, or who employs any of the mark "ST. FRANCIS," for which the latter had purportedly
other means calculated to induce the false belief that such person is established considerable goodwill. What the CA appears to have
offering the service of another who has identified such services in disregarded or been mistaken in its disquisition, however, is the
the mind of the public; or geographicallydescriptive nature of the mark "ST. FRANCIS" which thus
bars its exclusive appropriability, unless a secondary meaning is acquired.
(c) Any person who shall make any false statement in the course of As deftly explained in the U.S. case of Great Southern Bank v. First
Southern Bank:29 "[d]escriptive geographical terms are inthe ‘public
trade or who shall commit any other act contrary to good faith of a
domain’ in the sense that every seller should have the right to inform
nature calculated to discredit the goods, business or services of
customers of the geographical origin of his goods. A ‘geographically
another.
descriptive term’ is any noun or adjective that designates geographical
location and would tend to be regarded by buyers as descriptive of the
Finally, Section 168.4 dwells on a matter of procedure by stating that the geographic location of origin of the goods or services. A geographically
"[t]he remedies provided by Sections 156,22 157,23 and 16124 shall apply descriptive term can indicate any geographic location on earth, such as
mutatis mutandis." continents, nations, regions, states, cities, streets and addresses, areas of
cities, rivers, and any other location referred to by a recognized name. In
The statutory attribution of the unfair competition concept is order to determine whether or not the geographic term in question is
wellsupplemented by jurisprudential pronouncements. In the recent case of descriptively used, the following question is relevant: (1) Is the mark the
Republic Gas Corporation v. Petron Corporation,25 the Court has echoed name of the place or region from which the goods actually come? If the
the classic definition of the term which is "‘the passing off (or palming off) answer is yes, then the geographic term is probably used in a descriptive
or attempting to pass off upon the public of the goods or business of one sense, and secondary meaning is required for protection."30
person as the goods or business of another with the end and probable effect
of deceiving the public.’ Passing off (or palming off) takes place where the In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc.,31
defendant, by imitative devices on the general appearance of the goods, it was held that secondary meaningis established when a descriptive mark
misleads prospective purchasers into buying his merchandise under the no longer causes the public to associate the goods with a particular place,
impression that they are buying that of his competitors. [In other words], the but to associate the goods with a particular source.In other words, it is not
defendant gives his goods the general appearance of the goods of his enough that a geographically-descriptive mark partakes of the name of a
competitor with the intention of deceiving the publicthat the goods are those place known generally to the public to be denied registration as it is also
of his competitor."26 The "true test" of unfair competition has thus been necessary to show that the public would make a goods/place association –
"whether the acts of the defendant have the intent of deceiving or are that is, to believe that the goods for which the mark is sought to be
calculated to deceive the ordinary buyer making his purchases under the registered originatein that place.1âwphi1 To hold sucha belief, it is
ordinary conditions of theparticular trade to which the controversy relates." necessary, of course, that the purchasers perceive the mark as a place name,
Based on the foregoing, it is therefore essential to prove the existence of from which the question of obscurity or remoteness then comes to the
fraud, or the intent to deceive, actual or probable,27 determined through a fore.32 The more a geographical area is obscure and remote, it becomes less
judicious scrutiny of the factual circumstances attendant to a particular likely that the public shall have a goods/place association with such area
case.28 and thus, the mark may not be deemed as geographically descriptive.
However, where there is no genuine issue that the geographical significance
of a term is its primary significanceand where the geographical place is
neither obscure nor remote, a public association of the goods with the place the goods/services offered by respondent. Accordingly, the element of fraud
may ordinarily be presumed from the fact that the applicant’s own goods which is the core of unfair competition had not been established.
come from the geographical place named in the mark.33
Besides, respondent was not able toprove its compliance with the
Under Section 123.234 of the IP Code, specific requirements have to be met requirements stated in Section 123.2 of the IP Code to be able to conclude
in order to conclude that a geographically-descriptive mark has acquired that it acquired a secondary meaning – and, thereby, an exclusive right – to
secondary meaning, to wit: (a) the secondary meaning must have arisen as a the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly
result of substantial commercial use of a mark in the Philippines; (b) such pointed out, geographically-descriptive of the location in which its realty
use must result in the distinctiveness of the mark insofar as the goods or developments have been built, i.e., St. Francis Avenue and St. Francis Street
theproducts are concerned; and (c) proof of substantially exclusive and (now known as "Bank Drive"). Verily, records would reveal that while it is
continuous commercial use in the Philippines for five (5) years beforethe true that respondent had been using the mark "ST. FRANCIS" since 1992,
date on which the claim of distinctiveness is made. Unless secondary its use thereof has been merely confined to its realty projects within the
meaning has been established, a geographically-descriptive mark, dueto its Ortigas Center, as specifically mentioned.As its use of the mark is clearly
general public domain classification, is perceptibly disqualified from limited to a certain locality, it cannot be said thatthere was substantial
trademark registration. Section 123.1(j) of the IP Code states this rule as commercial use of the same recognizedall throughout the country. Neither is
follows: there any showing of a mental recognition in buyers’ and potential buyers’
minds that products connected with the mark "ST. FRANCIS" are
SEC. 123. Registrability. – associated with the same source35 – that is, the enterprise of respondent.
Thus, absent any showing that there exists a clear goods/service-association
123.1 A mark cannot be registered if it: between the realty projects located in the aforesaid area and herein
respondent as the developer thereof, the latter cannot besaid to have
acquired a secondary meaning as to its use of the "ST. FRANCIS" mark.
xxxx
In fact, even on the assumption that secondary meaning had been acquired,
(j) Consists exclusively of signs orof indications that may serve in trade to said finding only accords respondents protectional qualification under
designate the kind, quality, quantity, intended purpose, value, geographical Section 168.1 of the IP Code as above quoted. Again, this does not
origin, time or production of the goods or rendering of the services, or other automatically trigger the concurrence of the fraud element required under
characteristics of the goods or services; (Emphasis supplied) x x x x Section 168.2 of the IP Code, as exemplified by the acts mentioned in
Section 168.3 of the same. Ultimately, as earlier stated, there can be no
Cognizant of the foregoing, the Court disagrees with the CA that petitioners unfair competition without this element. In this respect, considering too the
committed unfair competition due to the mistaken notion that petitioner had notoriety of the Shangri-La brand in the real estate industry which dilutes
established goodwill for the mark "ST. FRANCIS" precisely because said petitioners' propensity to merely ride on respondent's goodwill, the more
circumstance, by and of itself, does not equateto fraud under the parameters reasonable conclusion is that the former's use of the marks "THE ST.
of Section 168 of the IP Code as above-cited. In fact, the records are bereft FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE"
of any showing thatpetitioners gave their goods/services the general was meant only to identify, or at least associate, their real estate project/s
appearance that it was respondent which was offering the same to the with its geographical location. As aptly observed by the IPO
public. Neither did petitioners employ any means to induce the public DirectorGeneral:36
towards a false belief that it was offering respondent’s goods/services. Nor
did petitioners make any false statement or commit acts tending to discredit In the case at hand, the parties are business competitors engaged in real
estate or property development, providing goods and services directly
connected thereto. The "goods" or "products" or "services" are real estate
and the goods and the services attached to it or directly related to it, like sale
or lease of condominium units, offices, and commercial spaces, such as
restaurants, and other businesses. For these kinds of goods or services there
can be no description of its geographical origin as precise and accurate as
that of the name of the place where they are situated. (Emphasis and
underscoring supplied)

Hence, for all the reasons above-discussed, the Court hereby grants the
instant petition, and, thus, exonerates petitioners from the charge of unfair
competition in the IPV Case. As the decisions in the Inter Partes Cases were
not appealed, the registrability issues resolved therein are hereby deemed to
have attained finality and, therefore, are now executory.

WHEREFORE, the petition is GRANTED. The Decision dated December


18, 2009 of the Court of Appeals in CA-G.R. SP No. 105425 is hereby
REVERSED and SET ASIDE. Accordingly, the Decision dated September
3, 2008 of the Intellectual Property Office-Director General is
REINSTATED.

SO ORDERED.
G.R. No. 188225 November 28, 2012 and they suggested that she form a partnership with their daughter Sunshine,
nicknamed Sasay.10
SHIRLEY F. TORRES, Petitioner,
vs. Petitioner and Sunshine formed Sasay’s Closet Co. (SCC), a partnership
IMELDA PEREZ and RODRIGO PEREZ, Respondents. registered with the Securities and Exchange Commission on 17 October
2002. SCC was engaged in the supply, trading, retailing of garments such as
x-----------------------x underwear, children’s wear, women’s and men’s wear, and other incidental
activities related thereto.11
G.R. No. 198728
For its products, SCC used the trademark "Naturals with Design," which it
filed with the Intellectual Property Office on 24 August 2005 and registered
SHIRLEY F. TORRES, Petitioner,
vs. on 26 February 2007.12 These products were primarily supplied to SM,13
IMELDA PEREZ and RODRIGO PEREZ, Respondents. which assigned to them the vendor code "190501" for purposes of
identification.14
DECISION
SCC used the facilities and equipment owned by RGP, as well as the latter’s
business address (No. 72 Victoria Subdivision, Barangay Dela Paz, Biñan,
SERENO, CJ.: Laguna), which was also the residential address of respondents.15

These are Petitions for Review on Certiorari under Rule 45 of the Rules of In August 2003, Sunshine pulled out of the partnership, because she was
Court. The petition docketed as G.R. No. 188225 assails the Decision1 of hired to work in an international school.16 Respondent Imelda took over
the Court of Appeals (CA) in CA-G.R. SP No. 103846 dated 11 March Sunshine’s responsibilities in the partnership.17
2009. The CA Decision nullified the Orders dated 12 February 20082 and
11 April 20083 of the Regional Trial Court (RTC) of Makati, Branch 149.
On 14 December 2005, petitioner sent an email to respondent Imelda asking
The RTC Orders had denied the Motion to Dismiss and/or Withdraw
to be reimbursed for expenses incurred in the former’s travel to China.18
Information filed against respondents for unfair competition (violation of
Respondent Imelda replied the following day, stating that the partnership
Section 168 in relation to Section 170)4 under Republic Act No. (R.A.)
8293 (Intellectual Property Code of the Philippines). could not reimburse petitioner, because the trip was personal and not
business-related.19 In the same email, respondent Imelda vented her
frustration over the fact that she, together with respondent Rodrigo, had
On the other hand, the petition docketed as G.R. No. 198728 assails the been doing all the work for SCC and incurring expenses that they did not
Decision5 in CA-G.R. SP No. 111903 dated 29 September 2011, which charge to the partnership.20 Respondent Imelda then informed petitioner of
affirmed the RTC Orders dated 29 July 20096 and 19 October 2009,7 this the former’s decision to dissolve the partnership.21 Despite the objections
time quashing the Information against respondents. of petitioner to the dissolution of SCC, various amounts were paid to her by
respondents from January to April 2006 representing her share in the
Respondents Imelda and Rodrigo are spouses who own RGP Footwear partnership assets.22
Manufacturing (RGP), which supplies ladies’ shoes to Shoe Mart (SM).8
They met petitioner when she sold them business-class plane tickets to the Meanwhile, on 27 March 2006, petitioner established Tezares Enterprise, a
United States in 2002.9 She was also interested in doing business with SM, sole proprietorship engaged in supplying and trading of clothing and
accessories except footwear.23 Also in March 2006, she discovered that
underwear products bearing the brand "Naturals" were being sold in SM against them. Contrary to the prosecutor’s finding, the DOJ found that SCC
with vendor code "180195."24 This code was registered to RGP,25 a fact had effectively wound up the latter’s partnership affairs on 24 April 2006
confirmed by test buys conducted by her lawyers on 13 and 14 May when petitioner was reimbursed for her trip to China. That was the last of
2006.26 the payments made to her to cover her share in the partnership affairs,
which started after respondent Imelda manifested her intention to cease
On 5 June 2006, a search warrant for unfair competition under Section 168 from the partnership business on 15 December 2005. Thus, when the
in relation to Section 170 of R.A. 8293 was issued by the RTC of Manila, criminal complaint for unfair competition was filed on 9 June 2006, there
Branch 24, against respondents at their address.27 The search warrant called was "no longer any competition, unfair or otherwise, involving the
for the seizure of women’s undergarments bearing the brand "Naturals," as partnership."33
well as equipment and papers having the vendor code "180195" or the
inscription "RGP." The search warrant was implemented on the same day. Furthermore, the DOJ ruled that even if SCC had not yet terminated its
However, it was quashed by the same court on 20 October 2006 upon business and therefore still existed, respondents had the right to use the
motion of respondents. The trial court ruled that respondents did not pass "Naturals" brand, as they were already the exclusive owners of SCC
off "Naturals" as the brand of another manufacturer. On the contrary, they following the completion of payments of petitioner’s share in the
used the brand in the honest belief that they owned SCC, the owner of the partnership affairs. Also, the establishment by petitioner of Tezares
brand. Enterprise – which directly competed with SCC in terms of products – and
its subsequent accreditation as supplier of intimate apparel for SM in April
On 9 June 2006, petitioner filed a criminal complaint for unfair competition 2006 were regarded by the DOJ as apparent indications that she no longer
against respondents and Sunshine before the City Prosecution Office of had any share in SCC. Thus, the petition for review was granted, and the
Makati City.28 Assistant City Prosecutor Imelda P. Saulog found probable city prosecutor of Makati was ordered to withdraw the Information against
cause to indict respondents for unfair competition.29 She ruled that they had respondents for unfair competition.
clearly passed off the "Naturals" brand as RGP’s even if the brand was
owned by SCC. According to the prosecutor, SCC was indeed dissolved The DOJ denied the motion for reconsideration filed by petitioner on 28
when respondent Imelda manifested her intention to cease from the March 2007.34 Hence, she filed a petition for certiorari before the CA,
partnership in an email sent to petitioner on 15 December 2005.30 The where it was docketed as CA-G.R. SP No. 98861. In her petition, she
prosecutor said, however, that it remained operational, since the process of questioned the DOJ Resolution, but later withdrew the same on 6 December
winding up its business had not been completed. Thus, SCC remained the 2007 for an unknown reason.35
owner of the "Naturals" brand, and petitioner – being a legitimate partner
thereof – had a right to file the complaint against respondents. The Following the directive of the DOJ, the prosecutor filed before the RTC of
prosecutor found no probable cause against Sunshine, as it was established Makati City, Branch 149, a Motion to Dismiss and/or Withdraw
that she had withdrawn from SCC as of August 2003. Information on 3 April 2007.36 The trial court denied the motion in an
Order37 dated 12 February 2008. It maintained the correctness of its finding
The indictment was raffled to RTC Makati City, Branch 149. On 23 of existence of probable cause in the case and ruled that the findings of the
October 2006, it issued an Order finding probable cause for the issuance of DOJ would be better appreciated and evaluated in the course of the trial.
a warrant of arrest against respondents.31
Respondents moved for reconsideration,38 but their motion was denied39
Respondents filed a petition for review of the prosecutor’s resolution before by the RTC. Aggrieved, they filed a Petition for Certiorari (with Prayer for
the Department of Justice (DOJ), which on 13 December 2006 issued its the Issuance of a Temporary Restraining Order and thereafter a Preliminary
own Resolution32 reversing the finding of existence of probable cause Injunction)40 before the CA. They argued that probable cause for the
issuance of a warrant of arrest is different from probable cause for holding a expenses incurred by petitioner in her trip to China and further escalated
person for trial. The first is the function of the judge, while the second is the when respondent Imelda decided to dissolve SCC.
prosecutor’s.41 Thus, respondents claimed that it was wrong for Presiding
Judge Cesar O. Untalan to deny the prosecutor’s motion to dismiss for lack Petitioner moved for reconsideration44 of the CA Decision, but the motion
of probable cause on the basis of the judge’s own finding that there was was denied on 1 June 2009.45 She then brought the matter before this Court
probable cause to issue a warrant of arrest against respondents. via a Petition for Review on Certiorari filed under Rule 45 of the Rules of
Furthermore, the Judge Untalan based his finding solely on the evidence Court and docketed as G.R. No. 188225.46 Without giving due course to
submitted by petitioner without evaluating the evidence of respondents. the petition, the Court required47 respondents to comment thereon. Upon
their compliance,48 petitioner was required49 to file a reply,50 which was
In the first assailed Decision in CA-G.R. SP No. 10384642 dated 11 March later received on 11 December 2009. On 19 May 2011, she filed her
2009, the CA granted the petition. It found that the trial judge committed Memorandum.51
grave abuse of discretion amounting to lack or excess of jurisdiction when
he denied the prosecutor’s motion to dismiss for lack of probable cause. The Meanwhile, following the promulgation of the Decision in CA-G.R. SP No.
CA sustained the position of respondents that the finding of probable cause 103846, respondents filed an Urgent Motion to Dismiss the criminal
for the filing of an information is an executive function lodged with the complaint for unfair competition before the RTC on 1 April 2009.52 The
prosecutor. It also found that the trial judge did not make an independent motion was duly opposed by petitioner, arguing that the CA Decision had
assessment of the evidence on record in determining the existence of not yet attained finality in view of her pending petition before this Court;
probable cause for the offense of unfair competition, as opposed to the thus, the motion was premature.53 The RTC denied the motion to dismiss
exhaustive study made by the DOJ before arriving at its finding of lack of for lack of merit.54 However, upon motion for reconsideration55 filed by
probable cause. respondents, it issued the Order dated 29 July 200956 ordering the quashal
of the Information against them. The trial court issued another Order on 19
The CA also ruled that in determining probable cause, the essential October 200957 denying petitioner’s Motion for Reconsideration.58
elements of the crime charged must be considered, for their absence would
mean that there is no criminal offense. In determining probable cause for Petitioner filed a Petition for Certiorari59 before the CA on the ground that
unfair competition, the question is "whether or not the offenders by the use the trial judge committed grave abuse of discretion amounting to lack or
of deceit or any other means contrary to good faith passes off the goods excess of jurisdiction when he quashed the Information against respondents
manufactured by him or in which he deals, or his business, or services for based on a CA Decision that was not yet final and executory, being the
those of the one having established such goodwill, or who shall commit any subject of a petition still pending before this Court.
acts calculated to produce said result."43 The CA affirmed the findings of
the DOJ and the RTC of Manila, Branch 24 that respondents used the On 29 September 2011, the CA issued the second assailed Decision in CA-
"Naturals" brand because they believed that they were the owners of SCC,
G.R. SP No. 111903 affirming the RTC Orders dated 29 July 2009 and 19
which owned the brand. Furthermore, the partnership had been terminated
October 2009. The appellate court ruled that while its Decision in CA-G.R.
as of April 2006; hence, the filing of the criminal complaint on 9 June 2006
SP No. 103846 was still under review before this Court, neithercourt had
could no longer prosper. Even if SCC had not yet terminated its business,
issued a restraining order or injunction that would prevent the RTC from
respondents, having bought petitioner out of SCC, were already its implementing the said Decision ordering the dismissal of the information
exclusive owners and, as such, had the right to use the "Naturals" brand. against respondents. Furthermore, the CA ruled that since petitioner had
withdrawn her petition in CA-G.R. SP No. 98861 questioning the DOJ
According to the CA, the filing of the criminal complaint for unfair Resolution, the issue of whether there was probable cause had "already been
competition was nothing but an offshoot of the misunderstanding and resolved with finality in the negative."60 Thus, the trial court cannot be
quarrel that arose when respondents initially refused to reimburse the
faulted for following the CA directive to dismiss the Information against Crespo v. Mogul instructs in a very clear manner that once a complaint or
respondents. information is filed in court, any disposition of the case as to its dismissal,
or the conviction or acquittal of the accused, rests on the sound discretion of
Opting not to file a motion for reconsideration,61 petitioner again comes the said court, as it is the best and sole judge of what to do with the case
before us on a Petition for Review on Certiorari questioning the Decision in before it. While the resolution of the prosecutorial arm is persuasive, it is
CA-G.R. SP No. 111903.62 In her petition docketed as G.R. No. 198728, not binding on the court. It may therefore grant or deny at its option a
she argues that Presiding Judge Cesar O. Untalan committed grave abuse of motion to dismiss or to withdraw the information based on its own
discretion amounting to lack or excess of jurisdiction when he dismissed the assessment of the records of the preliminary investigation submitted to it, in
criminal case against respondents for unfair competition based on CA the faithful exercise of judicial discretion and prerogative, and not out of
findings that were not yet final. The trial judge was fully aware that those subservience to the prosecutor.65 x x x. (Emphasis supplied)
findings were still subject to a pending petition before this Court.
Judge Untalan stood firm on this finding in his denial of the motion for
On 23 November 2011, the Court consolidated G.R. Nos. 198728 and reconsideration and even initially after the CA had made a ruling on the
188225.63 matter. He only performed a task he was called upon to do, and his
judgment on the matter – although erroneous – cannot be regarded as
capricious and whimsical. Thus, he did not commit grave abuse of
ISSUE
discretion amounting to lack or excess of jurisdiction.
Despite the extensive legal battle that petitioner and respondents have
waged heretofore, these petitions will be settled simply through a ruling on However, while we recognize that Judge Untalan did not commit grave
abuse of discretion, we take note of his apparent loss of steam when he
whether there exists probable cause to indict respondents for unfair
issued the Order dated 29 July 2009 granting respondents’ motion for
competition (violation of Section 168 in relation to Section 170) under R.A.
reconsideration of his earlier ruling denying the Urgent Motion to Dismiss.
8293.
The good judge yielded, even though he was well aware that the CA
Decision had not yet attained finality pending review by this Court.
OUR RULING
We now rule on the issue of probable cause.
No probable cause to indict respondents
Probable cause, for purposes of filing a criminal information, is described as
At the outset, it is worth noting that Judge Untalan acted well within the "such facts as are sufficient to engender a well-founded belief that a crime
exercise of his judicial discretion when he denied the Motion to Dismiss has been committed and the respondent is probably guilty thereof, and
and/or Withdraw Information filed by the prosecution. His finding that there should be held for trial."66
was probable cause to indict respondents for unfair competition, and that the
findings of the DOJ would be better appreciated in the course of a trial, was
based on his own evaluation of the evidence brought before him. It was an Thus, the determination of the existence of probable cause necessitates the
prior determination of whether a crime or an offense was committed in the
evaluation that was required of him as a judge.
first place. Here, we find that there was no probable cause to indict
respondents, because the crime of unfair competition was not committed.
Thus, in Yambot v. Armovit,64 this Court reiterated the mandate of judges
to make a personal evaluation of records submitted in support of criminal
complaints filed before their respective salas: In positing that respondents were guilty of unfair competition, petitioner
makes a lot of the fact that they used the vendor code of RGP in marketing
the "Naturals" products. She argues that they passed off the "Naturals" SO ORDERED.
products, which they marketed under RGP, as those of SCC; thus, they
allegedly prejudiced the rights of SCC as owner of the trademark. She also
claims that she has the personality to prosecute respondents for unfair
competition on behalf of SCC.1âwphi1

When Judge Untalan denied the Motion to Dismiss and/or Withdraw


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

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

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

Furthermore, even if we were to assume that the issue of protection of


intellectual property is paramount in this case, the criminal complaint for
unfair competition against respondents cannot prosper, for the elements of
the crime were not present. We have enunciated in CCBPI v. Gomez67 that
the key elements of unfair competition are "deception, passing off and fraud
upon the public."68 No deception can be imagined to have been foisted on
the public through different vendor codes, which are used by SM only for
the identification of suppliers’ products.

WHEREFORE, the Decisions dated 11 March 2009 in CA-G.R. SP No.


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

DISMISSED.
G.R. No. 195549 September 3, 2014 exactly similar design, same material and colors but was selling these
products at a lower price as [respondent’s] plastic-made automotive parts
WILLAWARE PRODUCTS CORPORATION, Petitioner, and to the same customers.
vs.
JESICHRIS MANUFACTURING CORPORATION, Respondent. [Respondent] alleged that it had originated the use of plastic in place of
rubber in the manufacture ofautomotive underchassis parts such as spring
DECISION eye bushing, stabilizer bushing, shock absorberbushing, center bearing
cushions, among others. [Petitioner’s] manufacture of the same automotive
parts with plastic materialwas taken from [respondent’s] idea of using
PERALTA, J.:
plastic for automotive parts. Also, [petitioner] deliberately copied
[respondent’s] products all of which acts constitute unfair competition, is
Before the Court is a Petition for Review on Certiorari under Rule 45 of the and are contrary to law, morals, good customs and public policy and have
Rules of Court seeking to set aside the Decision1 dated November 24, 2010 caused [respondent] damages in terms oflost and unrealizedprofits in the
and Resolution2 dated February 10, 2011 of the Court of Appeals (CA) in amount of TWO MILLION PESOS as of the date of [respondent’s]
CA-G.R. CV No. 86744. complaint.

The facts, as found by the Regional Trial Court (RTC), are as follows: Furthermore, [petitioner’s] tortuous conduct compelled [respondent] to
institute this action and thereby to incur expenses in the way of attorney’s
[Respondent] Jesichris Manufacturing Company ([respondent] for short) fees and other litigation expenses in the amount of FIVE HUNDRED
filed this present complaint for damages for unfair competition with prayer THOUSAND PESOS (₱500,000.00).
for permanent injunction to enjoin [petitioner] Willaware Products
Corporation ([petitioner] for short) from manufacturing and distributing In its Answer, [petitioner] denies all the allegations of the [respondent]
plastic-made automotive parts similar to those of [respondent]. except for the following facts: that it is engaged in the manufacture and
distribution of kitchenware items made of plastic and metal and that there’s
[Respondent] alleged that it is a duly registeredpartnership engaged in the physical proximity of [petitioner’s] office to [respondent]’s office, and that
manufacture and distribution of plastic and metal products, with principal someof [respondent’s] employees had transferred to [petitioner] and that
office at No. 100 Mithi Street, Sampalukan, Caloocan City. Since its over the years [petitioner] had developed familiarity with [respondent’s]
registration in 1992, [respondent] has been manufacturing in its Caloocan products, especially its plastic made automotive parts.
plant and distributing throughout the Philippines plastic-made automotive
parts. [Petitioner], on the other hand, which is engaged in the manufacture As its Affirmative Defenses, [petitioner] claims that there can be no unfair
and distribution of kitchenware items made of plastic and metal has its competition as the plastic-made automotive parts are mere reproductions of
office near that of [respondent]. [Respondent] further alleged that in view of original parts and their construction and composition merely conforms to
the physical proximity of [petitioner’s] office to [respondent’s] office, and the specificationsof the original parts of motor vehicles they intend to
in view of the fact that some of the [respondent’s] employeeshad transferred replace. Thus, [respondent] cannot claim that it "originated" the use of
to [petitioner], [petitioner] had developed familiarity with [respondent’s] plastic for these automotive parts. Even assuming for the sake of argument
products, especially its plastic-made automotive parts. that [respondent] indeed originated the use of these plastic automotive parts,
it still has no exclusive right to use, manufacture and sell these as it has no
That sometime in November 2000, [respondent] discovered that [petitioner] patent over these products. Furthermore, [respondent] is not the only
had been manufacturing and distributing the same automotive parts with
exclusive manufacturer of these plastic-made automotive parts as there are In a Decision dated November 24,2010, the CA affirmed with modification
other establishments which were already openly selling them to the public.3 the ruling of the RTC. Relevant portions of said decision read:

After trial on the merits, the RTC ruled in favor of respondent. It ruled that Despite the evidence showing thatWillaware took dishonest steps in
petitioner clearly invaded the rights or interest of respondent by deliberately advancing its business interest against Jesichris, however, the Court finds no
copying and performing acts amounting to unfair competition. The RTC basis for the award by the RTC of actual damages. One is entitled to actual
further opined that under the circumstances, in order for respondent’s damages as one has duly proven. The testimony of Quejada, who was
property rights to be preserved, petitioner’s acts of manufacturing similar engaged by Jesichris in 2001 to audit its business, only revealed that there
plastic-made automotive parts such as those of respondent’s and the selling was a discrepancy between the sales of Jesichris from 2001 to 2002. No
of the sameproducts to respondent’s customers, which it cultivated over the amount was mentioned. As for Exhibit "Q," which is a copy of the
years, will have to be enjoined. The dispositive portion of the decision comparative income statement of Jesichris for 1999-2002, it shows the
reads: decline of the sales in 2002 in comparison with those made in 2001 but it
does not disclose if this pertains to the subject automotive parts or to the
WHEREFORE, premises considered, the court finds the defendant liable to other products of Jesichris like plates.
plaintiff Two Million (₱2,000,000.00) Pesos, as actual damages, One
Hundred Thousand (₱100,000.00) Pesos as attorney’s fees and One In any event, it was clearly shown that there was unfair competition on the
Hundred Thousand (₱100,000.00) Pesos for exemplary damages. The court part of Willaware that prejudiced Jesichris. It is only proper that nominal
hereby permanently [enjoins] defendant from manufacturing the plastic- damages be awarded in the amount of Two Hundred Thousand Pesos
made automotive parts as those manufactured by plaintiffs. (₱200,000.00) in order to recognize and vindicate Jesichris’ rights. The
RTC’s award of attorney’s fees and exemplary damages is also maintained.
SO ORDERED.4
xxxx
Thus, petitioner appealed to the CA.
WHEREFORE, premises considered, the Decision dated April 15, 2003 of
On appeal, petitioner asserts that ifthere is no intellectual property the Regional Trial Court of Caloocan City, Branch 131, in Civil Case No.
protecting a good belonging to another,the copying thereof for production C-19771 is hereby MODIFIED. The award of Two Million Pesos
and selling does not add up to unfair competition as competition is (₱2,000,000.00) actual damages is deleted and in its place, Two Hundred
promoted by law to benefit consumers. Petitioner further contends that it did Thousand Pesos nominal damages is awarded.
not lure away respondent’s employees to get trade secrets. It points out that
the plastic spare parts sold by respondent are traded in the market and the SO ORDERED.5
copying of these can be done by simplybuying a sample for a mold to be
made. Dissatisfied, petitioner moved for reconsideration. However, the same was
denied for lack of merit by the CA in a Resolution dated February 10, 2011.
Conversely, respondent averred that copyright and patent registrations are
immaterial for an unfair competition case to prosper under Article 28 of the Hence, the present Petition for Review wherein petitioner raises the
Civil Code. It stresses that the characteristics of unfair competition are following issues for our resolution:
present in the instant case as the parties are trade rivals and petitioner’s acts
are contrary to good conscience for deliberately copying its products and
employing its former employees.
(1) Whether or not there is unfair competition under human With that settled, we now come to the issue of whether or not petitioner
relations when the parties are not competitors and there is actually committed acts amounting tounfair competition under Article 28 of the
no damage on the part of Jesichris? Civil Code.

(2) Consequently, if there is no unfair competition, should there be We find the petition bereft of merit.
moral damages and attorney’s fees?
Article 28 of the Civil Code provides that "unfair competition in
(3) Whether or not the addition of nominal damages is proper agricultural, commercial or industrial enterprises or in labor through the use
although no rights have been established? of force, intimidation, deceit, machination or any other unjust, oppressive or
high-handed method shall give rise to a right of action by the person who
(4) If ever the right of Jesichris refersto its copyright on automotive thereby suffers damage."
parts, should it be considered in the light of the said copyrights
were considered to be void by no less than this Honorable Court in From the foregoing, it is clear thatwhat is being sought to be prevented is
SC GR No. 161295? not competitionper sebut the use of unjust, oppressive or high- handed
methods which may deprive others of a fair chance to engage in business or
(5) If the right involved is "goodwill" then the issue is: whether or to earn a living. Plainly,what the law prohibits is unfair competition and not
not Jesichris has established "goodwill?"6 competition where the means usedare fair and legitimate.

In essence, the issue for our resolution is: whether or not petitioner In order to qualify the competition as "unfair," it must have two
committed acts amounting to unfair competition under Article 28 of the characteristics: (1) it must involve an injury to a competitor or trade rival,
Civil Code. and (2) it must involve acts which are characterized as "contrary to good
conscience," or "shocking to judicial sensibilities," or otherwise unlawful;
Prefatorily, we would like to stress that the instant case falls under Article in the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The
28 of the Civil Code on humanrelations, and not unfair competition under
public injury or interest is a minor factor; the essence of the matter appears
Republic Act No. 8293,7 as the present suit is a damage suit and the
to be a private wrong perpetrated by unconscionable means.9
products are not covered by patent registration. A fortiori, the existence of
patent registration is immaterial in the present case.
Here, both characteristics are present.
The concept of "unfair competition"under Article 28 is very much broader
than that covered by intellectual property laws. Under the present article, First, both parties are competitors or trade rivals, both being engaged in the
which follows the extended concept of "unfair competition" in American manufacture of plastic-made automotive parts. Second, the acts of the
jurisdictions, the term coverseven cases of discovery of trade secrets of a petitioner were clearly "contrary to good conscience" as petitioner admitted
competitor, bribery of his employees, misrepresentation of all kinds, having employed respondent’s formeremployees, deliberately copied
interference with the fulfillment of a competitor’s contracts, or any respondent’s products and even went to the extent of selling these products
malicious interference with the latter’s business.8 to respondent’s customers.10

To bolster this point, the CA correctly pointed out that petitioner’s hiring of
the former employees of respondent and petitioner’s act of copying the
subject plastic parts of respondent were tantamount to unfair competition, Jr., admitted that it was never engaged in the business of plastic-made
viz.: automotive parts until recently, year 2000:

The testimonies of the witnesses indicate that [petitioner] was in bad faith in Atty. Bautista: The business name of Willaware Product Corporation is
competing with the business of [respondent].1âwphi1 [Petitioner’s] acts can kitchenware, it is (sic) not? Manufacturer of kitchenware and distributor
be characterized as executed with mischievous subtle calculation. To ofkitchenware, is it not? Mr. Salinas: Yes, sir. Atty. Bautista: And you said
illustrate, in addition to the findings of the RTC, the Court observes that you have known the [respondent] Jesichris Manufacturing Co., you have
[petitioner] is engaged in the production of plastic kitchenware previous to known it to be manufacturing plastic automotive products, is it not? Mr.
its manufacturing of plasticautomotive spare parts, it engaged the services Salinas: Yes, sir. Atty. Bautista: In fact, you have been (sic) physically
of the then mold setter and maintenance operator of [respondent], De become familiar with these products, plastic automotive products of
Guzman, while he was employed by the latter. De Guzman was hired by Jesichris? Mr. Salinas: Yes, sir.
[petitioner] in order to adjust its machinery since quality plastic automotive
spare parts were not being made. It baffles the Court why [petitioner] cannot How [petitioner] was able to manufacture the same products, in terms of
rely onits own mold setter and maintenance operator to remedy its problem. color, size, shape and composition as those sold by Jesichris was due largely
[Petitioner’s] engagement of De Guzman indicates that it is banking on his to the sudden transfer ofJesichris’ employees to Willaware.
experience gained from working for [respondent].
Atty. Bautista: Since when have you been familiar with Jesichris
Another point we observe is that Yabut, who used to be a warehouse and Manufacturing Company?
delivery man of [respondent], was fired because he was blamed of spying in
favor of [petitioner]. Despite this accusation, he did not get angry. Later on,
Mr. Salinas: Since they transferred there (sic) our place.
he applied for and was hired by [petitioner] for the same position he
occupied with [respondent]. These sequence of events relating to his
employment by [petitioner] is suspect too like the situation with De Atty. Bautista: And that was in what year? Mr. Salinas: Maybe four (4)
Guzman.11 years. I don’t know the exact date.

Thus, it is evident that petitioner isengaged in unfair competition as shown Atty. Bautista: And some of the employees of Jesichris Manufacturing Co.
by his act of suddenly shifting his business from manufacturing kitchenware have transferred to your company, is it not?
to plastic-made automotive parts; his luring the employees of the respondent
to transfer to his employ and trying to discover the trade secrets of the Mr. Salinas: Yes, sir.
respondent.12
Atty. Bautista: How many, more or less?
Moreover, when a person starts an opposing place of business, not for the
sake of profit to himself, but regardless of loss and for the sole purpose of Mr. Salinas: More or less, three (3).
driving his competitor out of business so that later on he can take advantage
of the effects of his malevolent purpose, he is guilty of wanton wrong.13 As Atty. Bautista: And when, in what year or month did they transfer to you?
aptly observed by the courta quo, the testimony of petitioner’s witnesses
indicate that it acted in bad faith in competing with the business of
Mr. Salinas: First, November 1.
respondent, to wit: [Petitioner], thru its General Manager, William Salinas,

Atty. Bautista: Year 2000?


Mr. Salinas: Yes sir. And then the other maybe February, this year. And the A: Jun Molina called me, sir.
other one, just one month ago.
Q: And what happened after that?
That [petitioner] was clearly outto take [respondent] out of business was
buttressed by the testimony of [petitioner’s] witness, Joel Torres: A: At that time, he offered mea glass of wine and before I was able to drink
the wine, Mr. Salinas uttered something, sir.
Q: Are you familiar with the [petitioner], Willaware Product Corporation?
Q: And what were those words uttered by Mr. Salinas to you?
A: Yes, sir.
A: "O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?"
Q: Will you kindly inform this court where is the office of this Willaware
Product Corporation (sic)? Q: And what did you do after that, after hearing those words?

A: At Mithi Street, Caloocan City, sir. A: And he added these words, sir. "sabihin mo sa amo mo, dalawang taon
na lang pababagsakin ko na siya."
Q: And Mr. Witness, sometime second Saturday of January 2001, will you
kindly inform this court what unusual even (sic) transpired between you and Q: Alright, hearing those words, will you kindly tell this court whom did
Mr. Salinas on said date? you gather to be referred to as your "amo"?

A: There was, sir. A: Mr. Jessie Ching, sir.14

Q: What is that? In sum, petitioner is guilty of unfair competition under Article 28 of the
Civil Code.
A: Sir, I was walking at that time together with my wife going to the market
and then I passed by the place where they were having a drinking spree, sir. However, since the award of Two Million Pesos (₱2,000,000.00) in actual
damages had been deleted and in its place Two Hundred Thousand Pesos
Q: You mentioned they, who were they who were drinking at that time? (₱200,000.00) in nominal damages is awarded, the attorney's fees should
concomitantly be modified and lowered to Fifty Thousand Pesos
A: I know one Jun Molina, sir. (₱50,000.00).

Q: And who else was there? WHEREFORE, the instant petition is DENIED. The Decision dated
November 24, 2010 and Resolution dated February 10, 2011 of the Court of
A: William Salinas, sir. Appeals in CA-G.R. CV No. 86744 are hereby AFFIRMED with
MODIFICATION that the award of attorney's fees be lowered to Fifty
Thousand Pesos (₱50,000.00).
Q: And will you kindly inform us what happened when you spotted upon
them drinking?
SO ORDERED.
G.R. No. 188526 November 11, 2013 Agent Furing was assigned to the case and he executed an affidavit8 stating
that: he conducted his own investigation, and on November 9 and 10, 2005,
CENTURY CHINESE MEDICINE CO., MING SENG CHINESE he, together with Junayd Esmael (Esmael), were able to buy whitening
DRUGSTORE, XIANG JIAN CHINESE DRUG STORE, TEK SAN soaps bearing the trademark "TOP-GEL", "T.G." & "DEVICE OF A
CHINESE DRUG STORE, SIM SIM CHINESE DRUG STORE, BAN LEAF" with corresponding receipts from a list of drugstores which included
SHIONG TAY CHINESE DRUG STORE and/or WILCENDO TAN herein petitioners Century Chinese Medicine Co., Min Seng Chinese
MENDEZ, SHUANG YING CHINESE DRUGSTORE, and Drugstore, Xiang Jiang Chinese Drug Store, Tek San Chinese Drug Store,
BACLARAN CHINESE DRUG STORE, Petitioners, Sim Sim Chinese Drug Store, Ban Shiong Tay Drugstore, Shuang Ying
vs. Chinese Drugstore, and Baclaran Chinese Drug Store; while conducting the
PEOPLE OF THE PHILIPPINES and LING NA LAU, Respondents. investigation and test buys, he was able to confirm Ping's complaint to be
true as he personally saw commercial quantities of whitening soap bearing
the said trademarks being displayed and offered for sale at the said
DECISION
drugstores; he and Esmael took the purchased items to the NBI, and Ping, as
the authorized representative and expert of Worldwide Pharmacy in
PERALTA, J.: determining counterfeit and unauthorized reproductions of its products,
personally examined the purchased samples, and issued a Certification9
Before us is a petition for review on certiorari which seeks to reverse and dated November 18, 2005 wherein he confirmed that, indeed, the whitening
set aside the Decision1 dated March 31, 2009 of the Court of Appeals in soaps bearing the trademarks "TOP-GEL", "T.G." & "DEVICE OF A
CA-G.R. CV No. 88952 and the Resolution2 dated July 2, 2009, which LEAF" from the subject drugstores were counterfeit.
denied reconsideration thereof. The CA reversed the Order3 dated
September 25, 2006 of the Regional Trial Court (RTC), Branch 143, Makati Esmael also executed an affidavit10 corroborating Agent Furing's
City, quashing Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05- statement. Ping's affidavit11 stated that upon his personal examination of
023, 05-025, 05-042 and 05-043, and the Order4 dated March 7, 2007 the whitening soaps purchased from petitioners bearing the subject
denying reconsideration thereof. trademark, he found that the whitening soaps were different from the
genuine quality of their original whitening soaps with the trademarks "TOP-
The antecedent facts are as follows: GEL", "T.G." & "DEVICE OF A LEAF" and certified that they were all
counterfeit.
Respondent Ling Na Lau, doing business under the name and style
Worldwide Pharmacy,5 is the sole distributor and registered trademark On November 21, 2005, Agent Furing applied for the issuance of search
owner of TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap warrants before the Regional Trial Court (RTC), Branch 143, Makati City,
as shown by Certificate of Registration 4-2000-009881 issued to her by the against petitioners and other establishments for violations of Sections 168
Intellectual Property Office (IPO) for a period of ten years from August 24, and 155, both in relation to Section 170 of Republic Act (RA) No. 8293,
2003.6 On November 7, 2005, her representative, Ping Na Lau, (Ping) otherwise known as the Intellectual Property Code of the Philippines.
wrote a letter7 addressed to National Bureau of Investigation (NBI) Director Section 168, in relation to Section 170, penalizes unfair competition; while
Reynaldo Wycoco, through Atty. Jose Justo Yap and Agent Joseph G. Section 155, in relation to Section 170, punishes trademark infringement.
Furing (Agent Furing), requesting assistance for an investigation on several
drugstores which were selling counterfeit whitening papaya soaps bearing On November 23, 2005, after conducting searching questions upon Agent
the general appearance of their products. Furing and his witnesses, the RTC granted the applications and issued
Search Warrants Nos. 05-030, 05-033, and 05-038 for unfair competition
and Search Warrants Nos. 05-022, 05-023, 05-025, 05-042 and 05-043 for use on papaya whitening soap as registered under Registration No.
trademark infringement against petitioners. 4-2000-009881 issued on August 24, 2003.

On December 5, 2005, Agent Furing filed his Consolidated Return of 2. Respondents acknowledge the appointment by Zenna Chemical
Search Warrants.12 Industry Co., Ltd. of Complainant as the exclusive Philippine
distributor of its products under the tradename and trademark TOP
On December 8, 2005, petitioners collectively filed their Motion to GEL MCA & MCA DEVICE (A SQUARE DEVICE
Quash13 the Search Warrants contending that their issuances violated the CONSISTING OF A STYLIZED REPRESENTATION OF A
rule against forum shopping; that Benjamin Yu (Yu) is the sole owner and LETTER "M" ISSUED " OVER THE LETTER "CA") as
distributor of the product known as "TOP-GEL"; and there was a prejudicial registered under Registration No. 4-1996-109957 issued on
question posed in Civil Case No. 05-54747 entitled Zenna Chemical November 17, 2000, as well as the assignment by Zenna Chemical
Industry v. Ling Na Lau, et al., pending in Branch 93 of the RTC of Quezon Industry Co., Ltd. to Complainant of said mark for use on papaya
City, which is a case filed by Yu against respondent for damages due to whitening soap.
infringement of trademark/tradename, unfair competition with prayer for the
immediate issuance of a temporary restraining order and/or preliminary 3. Respondents admit having used the tradename and trademark
prohibitory injunction. aforesaid but after having realized that Complainant is the
legitimate assignee of TOP GEL MCA & MCA DEVICE and the
On January 9, 2006, respondent filed her Comment/Opposition14 thereto registered owner of TOP GEL T.G. & DEVICE OF A LEAF, now
arguing the non-existence of forum shopping; that Yu is not a party- undertake to voluntarily cease and desist from using the aforesaid
respondent in these cases and the pendency of the civil case filed by him is tradename and trademark and further undertake not to
immaterial and irrelevant; and that Yu cannot be considered the sole owner manufacture, sell, distribute, and otherwise compete with
and distributor of "TOP GEL T.G. & DEVICE OF A LEAF." The motion Complainant, now and at anytime in the future, any papaya
was then submitted for resolution in an Order dated January 30, 2006. whitening soap using or bearing a mark or name identical or
During the pendency of the case, respondent, on April 20, 2006, filed a confusingly similar to, or constituting a colorable imitation of, the
Submission15 in relation to the Motion to Quash attaching an Order16 tradename and trademark TOP GEL MCA & MCA DEVICE
dated March 21, 2006 of the IPO in IPV Case No. 10-2005-00001 filed by and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and
respondent against Yu, doing business under the name and style of MCA described above.
Manufacturing and Heidi S. Cua, proprietor of South Ocean Chinese Drug
Stores for trademark infringement and/or unfair competition and damages 4. Respondents further undertake to withdraw and/or dismiss their
with prayer for preliminary injunction. The Order approved therein the counterclaim and petition to cancel and/or revoke Registration No.
parties' Joint Motion To Approve Compromise Agreement filed on March 4-2000-009881 issued to Complainant. Respondents also further
8, 2006. We quote in its entirety the Order as follows: undertake to pull out within 45 days from approval of the
Compromise Agreement all their products bearing a mark or name
The Compromise Agreement between the herein complainant and identical or confusingly similar to, or constituting a colorable
respondents provides as follows: imitation of, the tradename and trademark TOP GEL MCA &
MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF,
from the market nationwide.
1. Respondents acknowledge the exclusive right of Complainant
over the trademark TOP GEL T.G. & DEVICE OF A LEAF for
5. Respondents finally agree and undertake to pay Complainant In quashing the search warrants, the RTC applied the Rules on Search and
liquidated damages in the amount of FIVE HUNDRED Seizure for Civil Action in Infringement of Intellectual Property Rights.20
THOUSAND (Php500,000.00) PESOS for every breach or It found the existence of a prejudicial question which was pending before
violation of any of the foregoing undertakings which complainant Branch 93 of RTC Quezon City, docketed as Civil Case No. 05-54747, on
may enforce by securing a writ of execution from this Office, the determination as to who between respondent and Yu is the rightful
under this case. holder of the intellectual property right over the trademark TOP GEL T.G.
& DEVICE OF A LEAF; and there was also a case for trademark
6. Complainant, on the other hand, agrees to waive all her claim for infringement and/or unfair competition filed by respondent against Yu
damages against Respondents as alleged in her complaint filed in before the IPO which was pending at the time of the application for the
the Intellectual Property Office only. search warrants. It is clear, therefore, that at the time of the filing of the
application for the search warrants, there is yet no determination of the
alleged right of respondent over the subject trademark/tradename. Also, the
7. The Parties hereby agree to submit this Compromise Agreement
RTC found that petitioners relied heavily on Yu's representation that he is
for Approval of this Office and pray for issuance of a decision on
the basis thereof. the sole owner/distributor of the Top Gel whitening soap, as the latter even
presented Registration No. 4-1996-109957 from the IPO for a term of 20
years from November 17, 2000 covering the same product. There too was
Finding the Compromise Agreement to have been duly executed and signed the notarized certification from Zenna Chemical Industry of Taiwan, owner
by the parties and/or their representatives/counsels and the terms and of Top Gel MCA, with the caveat that the sale, production or representation
conditions thereof to be in conformity with the law, morals, good customs, of any imitated products under its trademark and tradename shall be dealt
public order and public policy, the same is hereby APPROVED. with appropriate legal action.
Accordingly, the above-entitled case is DISMISSED as all issues raised
concerning herein parties have been rendered MOOT AND ACADEMIC.
The RTC further said that in the determination of probable cause, the court
must necessarily resolve whether or not an offense exists to justify the
SO ORDERED.17 issuance of a search warrant or the quashal of the one already issued. In this
case, respondent failed to prove the existence of probable cause, which
On September 25, 2006, the RTC issued its Order18 sustaining the Motion warranted the quashal of the questioned search warrants.
to Quash the Search Warrants, the dispositive portion of which reads as
follows: On November 13, 2006, respondent filed an Urgent Motion to Hold in
Abeyance the Release of Seized Evidence.21
WHEREFORE, finding that the issuance of the questioned search warrants
were not supported by probable cause, the Motion to Quash is GRANTED. Respondent filed a motion for reconsideration, which the RTC denied in its
Search warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05- Order22 dated March 7, 2007.
042, 05-043 are ordered lifted and recalled.
Respondent then filed her appeal with the CA. After respondent filed her
The NBI Officers who effected the search warrants are hereby ordered to appellant's brief and petitioners their appellee's brief, the case was submitted
return the seized items to herein respondents within ten (10) days from for decision.
receipt of this Order.
On March 31, 2009, the CA rendered its assailed Decision, the dispositive
So Ordered.19 portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby ON THE ARGUMENT WHICH WAS BROUGHT UP FOR THE
rendered by us GRANTING the appeal filed in this case and SETTING FIRST TIME IN RESPONDENT LING NA LAU'S
ASIDE the Order dated March 7, 2007 issued by Branch 143 of the APPELLANT'S BRIEF.25
Regional Trial Court of the National Capital Judicial Region stationed in
Makati City in the case involving Search Warrants Nos. 05-030, 05-033, 05- Petitioners contend that the products seized from their respective stores
038, 05-022, 05-023, 05-025, 05-042, 05-043.23 cannot be the subject of the search warrants and seizure as those Top Gel
products are not fruits of any crime, infringed product nor intended to be
In reversing the RTC's quashal of the search warrants, the CA found that the used in any crime; that they are legitimate distributors who are authorized to
search warrants were applied for and issued for violations of Sections 155 sell the same, since those genuine top gel products bore the original
and 168, in relation to Section 170, of the Intellectual Property Code and trademark/tradename of TOP GEL MCA, owned and distributed by Yu.
that the applications for the search warrants were in anticipation of criminal Petitioners also claim that despite the RTC's order to release the seized TOP
actions which are to be instituted against petitioners; thus, Rule 126 of the GEL products, not one had been returned; that one or two samples from
Rules of Criminal Procedure was applicable. It also ruled that the basis for each petitioner’s' drugstore would have sufficed in case there is a need to
the applications for issuance of the search warrants on grounds of present them in a criminal prosecution, and that confiscation of thousands of
trademarks infringement and unfair competition was the trademark TOP these products was an overkill.
GEL T.G. & DEVICE OF A LEAF; that respondent was the registered
owner of the said trademark, which gave her the right to enforce and protect Petitioners also argue that the issue that the RTC erred in applying the rules
her intellectual property rights over it by seeking assistance from the NBI. on search and seizure in anticipation of a civil action was never raised in the
RTC.
The CA did not agree with the RTC that there existed a prejudicial question,
since Civil Case No. 05-54747 was already dismissed on June 10, 2005, i.e., The issue for resolution is whether or not the CA erred in reversing the
long before the search warrants subject of this appeal were applied for; and RTC's quashal of the assailed search warrants.
that Yu's motion for reconsideration was denied on September 15, 2005
with no appeal having been filed thereon as evidenced by the Certificate of We find no merit in the petition.
Finality issued by the said court.
The applications for the issuance of the assailed search warrants were for
Petitioners' motion for reconsideration was denied by the CA in a
violations of Sections 155 and 168, both in relation to Section 170 of
Resolution dated July 2, 2009. Hence, this petition filed by petitioners Republic Act (RA) No. 8293, otherwise known as the Intellectual Property
raising the issue that: Code of the Philippines. Section 155, in relation to Section 170, punishes
trademark infringement; while Section 168, in relation to Section 170,
(A) THE COURT OF APPEALS ERRED AND GRAVELY penalizes unfair competition, to wit:
ABUSED ITS DISCRETION IN REVERSING THE FINDINGS
OF THE REGIONAL TRIAL COURT AND HELD THAT THE Sec 155. Remedies; Infringement. – Any person who shall, without the
LATTER APPLIED THE RULES ON SEARCH AND SEIZURE consent of the owner of the registered mark:
IN CIVIL ACTIONS FOR INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS.24
155.1 Use in commerce any reproduction, counterfeit, copy or colorable
imitation of a registered mark or the same container or a dominant feature
(B) THE COURT OF APPEALS ERRED AND GRAVELY thereof in connection with the sale, offering for sale, distribution,
ABUSED ITS DISCRETION WHEN IT BASED ITS RULING advertising of any goods or services including other preparatory steps
necessary to carry out the sale of any goods or services on or in connection the search warrants were not applied based thereon, but in anticipation of
with which such use is likely to cause confusion, or to cause mistake, or to criminal actions for violation of intellectual property rights under RA 8293.
deceive; or It was established that respondent had asked the NBI for assistance to
conduct investigation and search warrant implementation for possible
While apprehension of several drugstore owners selling imitation or counterfeit
TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap. Also, in
his affidavit to support his application for the issuance of the search
Sec. 168. Unfair Competition, Rights, Regulation and Remedies. –
warrants, NBI Agent Furing stated that "the items to be seized will be used
as relevant evidence in the criminal actions that are likely to be instituted."
xxxx Hence, Rule 126 of the Rules of Criminal Procedure applies.

168.3. In particular, and without in any way limiting the scope of protection Rule 126 of the Revised Rules of Court, which governs the issuance of the
against unfair competition, the following shall be deemed guilty of unfair assailed Search Warrants, provides, to wit:
competition:
SEC. 3. Personal property to be seized. - A search warrant may be issued for
(a) Any person, who is selling his goods and gives them the general the search and seizure of personal property:
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their (a) Subject of the offense;
appearance, which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer, other than the actual (b) Stolen or embezzled and other proceeds or fruits of the offense;
manufacturer or dealer, or who otherwise clothes the goods with such or
appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor (c) Used or intended to be used as the means of committing an
engaged in selling such goods with a like purpose; offense.

And SEC. 4. Requisites for issuing search warrant. - A search warrant shall not
issue except upon probable cause in connection with one specific offense to
SEC. 170. Penalties. - Independent of the civil and administrative sanctions be determined personally by the judge after examination under oath or
imposed by law, a criminal penalty of imprisonment from two (2) years to affirmation of the complainant and the witnesses he may produce, and
five (5) years and a fine ranging from Fifty thousand pesos (₱50,000.00) to particularly describing the place to be searched and the things to be seized
Two hundred thousand pesos (₱200,000.00) shall be imposed on any person which may be anywhere in the Philippines.
who is found guilty of committing any of the acts mentioned in Section 155
[Infringement], Section 168 [Unfair Competition] and Subsection 169.1 SEC. 5. Examination of complainant; record. - The judge must, before
[False Designation of Origin and False Description or Representation]. issuing the warrant, personally examine in the form of searching questions
and answers, in writing and under oath, the complainant and the witnesses
Thus, we agree with the CA that A.M. No. 02-1-06-SC, which provides for he may produce on facts personally known to them and attach to the record
the Rules on the Issuance of the Search and Seizure in Civil Actions for their sworn statements together with the affidavits submitted.
Infringement of Intellectual Property Rights, is not applicable in this case as
A core requisite before a warrant shall validly issue is the existence of a 2003, and no other. While petitioners claim that the product they are
probable cause, meaning "the existence of such facts and circumstances distributing was owned by Yu with the trademark TOP GEL MCA and
which would lead a reasonably discreet and prudent man to believe that an MCA DEVISE under Certificate of Registration 4-1996-109957, it was
offense has been committed and that the objects sought in connection with different from the trademark TOP GEL T.G. and DEVICE OF A LEAF
the offense are in the place to be searched."26 And when the law speaks of subject of the application. We agree with the CA's finding in this wise:
facts, the reference is to facts, data or information personally known to the
applicant and the witnesses he may present. Absent the element of personal x x x It bears stressing that the basis for the applications for issuances of the
knowledge by the applicant or his witnesses of the facts upon which the search warrants on grounds of trademark infringement and unfair
issuance of a search warrant may be justified, the warrant is deemed not competition is the trademark TOP GEL T.G. & DEVICE OF A LEAF.
based on probable cause and is a nullity, its issuance being, in legal Private complainant-appellant was issued a Certificate of Registration No.
contemplation, arbitrary.27 The determination of probable cause does not 4-2000-009881 of said trademark on August 24, 2003 by the Intellectual
call for the application of rules and standards of proof that a judgment of Property Office, and is thus considered the lawful holder of the said
conviction requires after trial on the merits.28 As implied by the words trademark. Being the registrant and the holder of the same, private
themselves, "probable cause" is concerned with probability, not absolute or complainant-appellant had the authority to enforce and protect her
even moral certainty. The prosecution need not present at this stage proof intellectual property rights over it. This prompted her to request for
beyond reasonable doubt. The standards of judgment are those of a assistance from the agents of the NBI, who thereafter conducted a series of
reasonably prudent man,29 not the exacting calibrations of a judge after a investigation, test buys and inspection regarding the alleged trademark
full-blown trial.30 infringement by herein respondents-appellees. Subsequently, Ping Na Lau,
private complainant-appellant’s representative, issued a certification with
The RTC quashed the search warrants, saying that (1) there exists a the finding that the examined goods were counterfeit. This prompted the
prejudicial question pending before Branch 93 of the RTC of Quezon City, NBI agents to apply for the issuances of search warrants against the
docketed as Civil Case No. 05-54747, i.e., the determination as to who respondents-appellees. Said applications for the search warrants were
between respondent and Yu is the rightful holder of the intellectual property granted after by Judge Laguilles after examining under oath the applicant
right over the trademark TOP GEL T.G. & DEVICE OF A LEAF; and there Agent Furing of the NBI and his witnesses Ping Na Lau and Junayd R.
was also a case for trademark infringement and/or unfair competition filed Ismael.
by respondent against Yu pending before the IPO, docketed as IPV Case
No. 10-2005-00001; and (2) Yu's representation that he is the sole Based on the foregoing, it is clear that the requisites for the issuance of the
distributor of the Top Gel whitening soap, as the latter even presented search warrants had been complied with and that there is probable cause to
Registration No. 4-1996-109957 issued by the IPO to Zenna Chemical believe that an offense had been committed and that the objects sought in
Industry as the registered owner of the trademark TOP GEL MCA & connection with the offense were in the places to be searched. The offense
DEVICE MCA for a term of 20 years from November 17, 2000 covering pertains to the alleged violations committed by respondents-appellees upon
the same product. the intellectual property rights of herein private complainant-appellant, as
holder of the trademark TOP GEL T.G. & DEVICE OF A LEAF under
We do not agree. We affirm the CA's reversal of the RTC Order quashing Certificate of Registration No. 4-2000-009881, issued on August 24, 2003
the search warrants. by the Intellectual Property Office.31

The affidavits of NBI Agent Furing and his witnesses, Esmael and Ling, Notably, at the time the applications for the issuance of the search warrants
clearly showed that they are seeking protection for the trademark "TOP were filed on November 21, 2005, as the CA correctly found, Civil Case
GEL T.G. and DEVICE OF A LEAF" registered to respondent under No. Q-05-54747, which the RTC found to be where a prejudicial question
Certificate of Registration 4-2000-009881 issued by the IPO on August 24, was raised, was already dismissed on June 10, 2005,32 because of the
pendency of a case involving the same issues and parties before the IPO. from Yu, are, therefore, notified of such injunction and were enjoined from
Yu's motion for reconsideration was denied in an Order33 dated September selling the same.
15, 2005. In fact, a Certificate of Finality34 was issued by the RTC on
January 4, 2007. Notwithstanding, at the time of the application of the search warrants on
November 21, 2005, and while the injunction was in effect, petitioners were
Moreover, the IPO case for trademark infringement and unfair competition still selling the alleged counterfeit products bearing the trademark TOP
and damages with prayer for preliminary injunction filed by respondent GEL T.G. & DEVICE OF A LEAF. There exists a probable cause for
against Yu and Heidi Cua, docketed as IPV Case No. 10-2005-00001, violation of respondent's intellectual property rights, which entitles her as
would not also be a basis for quashing the warrants.1avvphi1 In fact, prior the registered owner of the trademark TOP GEL and DEVICE OF A LEAF
to the applications for the issuance of the assailed search warrants on to be protected by the issuance of the search warrants.
November 21, 2005, the IPO had issued an Order35 dated October 20, 2005
granting a writ of preliminary injunction against Yu and Cua, the dispositive More importantly, during the pendency of petitioners' motion to quash in
portion of which reads: the RTC, respondent submitted the Order dated March 8, 2006 of the IPO in
IPV Case No. 10-2005-00001, where the writ of preliminary injunction was
WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION is hereby earlier issued, approving the compromise agreement entered into by
issued against Respondent, Benjamin Yu, doing business under the name respondent with Yu and Cua where it was stated, among others, that:
and style of MCA Manufacturing and Heidi S. Cua, Proprietor of South
Ocean Chinese Drug Store, and their agents, representatives, dealers and 1. Respondents acknowledge the exclusive right of Complainant
distributors and all persons acting in their behalf, to cease and desist using over the trademark TOP GEL T.G. & DEVICE OF A LEAF for
the trademark "TOP GEL T.G. & DEVICE OF A LEAF" or any colorable use on papaya whitening soap as registered under Registration No.
imitation thereof on Papaya whitening soaps they manufacture, sell, and/or 4-2000-009881 issued on August 24, 2003.
offer for sale, and otherwise, from packing their Papaya Whitening Soaps in
boxes with the same general appearance as those of complainant's boxes
2. Respondents acknowledge the appointment by Zenna Chemical
within a period of NINETY (90) DAYS, effective upon the receipt of Industry Co., Ltd. of Complainant as the exclusive Philippine
respondent of the copy of the COMPLIANCE filed with this Office by the
distributor of its products under the tradename and trademark TOP
Complainant stating that it has posted a CASH BOND in the amount of
GEL MCA & MCA DEVICE (A SQUARE DEVICE
ONE HUNDRED THOUSAND PESOS (Php100,000.00) together with the
CONSISTING OF A STYLIZED REPRESENTATION OF A
corresponding Official Receipt Number and date thereof. Consequently,
LETTER "M" OVER THE LETTER "CA") as registered under
complainant is directed to inform this Office of actual date of receipt by Registration No 4-1996-109957 issued on November 17, 2000, as
Respondent of the aforementioned COMPLIANCE.36 well as the assignment by Zenna Chemical Industry Co., Ltd. to
Complainant of said mark for use on papaya whitening soap.
To inform the public of the issuance of the writ of preliminary injunction,
respondent's counsel had the dispositive portion of the Order published in
3. Respondents admit having used the tradename and trademark
The Philippine Star newspaper on October 30, 2005.37 Thus, it was clearly aforesaid, but after having realized that Complainant is the
stated that Yu, doing business under the name and style of MCA legitimate assignee of TOP GEL MCA & MCA DEVICE and the
Manufacturing, his agents, representatives, dealers and distributors and all
registered owner of TOP GEL T.G. & DEVICE OF A LEAF, now
persons acting in his behalf, were to cease and desist from using the
undertake to voluntarily cease and desist from using the aforesaid
trademark "TOP GEL & DEVICE OF A LEAF" or any colorable imitation
tradename and trademark, and further undertake not to
thereof on Papaya Whitening soaps they manufacture, sell and/or offer for
manufacture, sell and distribute and otherwise compete with
sale. Petitioners, who admitted having derived their TOP GEL products
complainant, now and at anytime in the future, any papaya have been utilized by respondents to deceive the public into believing that
whitening soap using or bearing a mark or name identical or the Crown brand playing cards are the same as those manufactured by
confusingly similar to, or constituting a colorable imitation of the Summerville. We then said that assuming that the Crown playing cards
tradename and trademark TOP GEL MCA & MCA DEVICE could be considered subject of the offense, a sample or two are more than
and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and enough to retain should there have been a need to examine them along with
described above.38 the plastic container/case; and that there was no need to hold the hundreds
of articles seized. We said so in the context that since what was in dispute
Hence, it appears that there is no more controversy as to who is the rightful was the design of the Royal plastic cases/containers of playing cards and not
holder of the trademark TOP GEL T.G. & DEVICE OF A LEAF. the playing card per se, a small number of Crown brand playing cards
Therefore, respondent, as owner of such registered trademark has the right would suffice to examine them with the Royal plastic cases/containers. And
to the issuance of the search warrants. the return of the playing cards would better serve the purposes of justice and
expediency. However, in this case, the object of the violation of
respondent's intellectual property right is the alleged counterfeit TOP GEL
Anent petitioners' claim that one or two samples of the Top Gel products
from each of them, instead of confiscating thousands of the products, would T.G. & DEVICE OF A LEAF papaya whitening soap being sold by
have sufficed for the purpose of an anticipated criminal action, citing our petitioners, so there is a need to confiscate all these articles to protect
respondent's right as the registered owner of such trademark.
ruling in Summerville General Merchandising Co. v. Court of Appeals,39 is
not meritorious.
Petitioners next contend that the CA's ruling on the applicability of Rule
We do not agree. 126 of the Rules of Court that the search warrants were issued in
anticipation of a criminal action was only based on respondent's claim
which was only brought for the first time in her appellant's brief.
The factual milieu of the two cases are different. In Summerville, the object
of the violation of Summerville's intellectual property rights, as assignee of
We are not persuaded.
Royal playing cards and Royal brand playing cards case, was limited to the
design of Summerville's Royal plastic container case which encased and
wrapped the Crown brand playing cards. In the application for the search We find worth quoting respondent's argument addressing this issue in its
warrant which the RTC subsequently issued, one of the items to be seized Comment, thus:
were the Crown brand playing cards using the copyright plastic and Joker of
Royal brand. Thus, numerous boxes containing Crown playing cards were In the assailed Decision, the Court of Appeals found that the Rule correctly
seized and upon the RTC's instruction were turned over to Summerville, applicable to the subject search warrants was Rule 126 of the Rules of
subject to the condition that the key to the said warehouse be turned over to Court. Petitioners fault the appellate court for ruling that the Regional Trial
the court sheriff. Respondents moved for the quashal of the search warrant Court incorrectly applied the Rules on Search and Seizure in Civil Actions
and for the return of the seized properties. The RTC partially granted the for Infringement of Intellectual Property Rights on the basis of an argument
motion by ordering the release of the seized Crown brand playing cards and that private respondent brought up for the first time in her Appellant's Brief.
the printing machines; thus, only the Royal plastic container cases of the
playing cards were left in the custody of Summerville. The CA sustained A cursory perusal of the Appellant's Brief shows that the following
the RTC order. On petition with us, we affirmed the CA. We found therein issues/errors were raised, that: (1) the Honorable Trial Court erred in
that the Crown brand playing cards are not the subject of the offense as they holding that the "Rules on Search and Seizure for Infringement of
are genuine and the Crown trademark was registered to therein respondents’ Intellectual Property Rights" apply to the search warrants at bar; (2) x x x.
names; that it was the design of the plastic container/case that is alleged to
It must be remembered that there was no trial on the merits to speak of in equal protection of the law." Clearly, the application of the search warrants
the trial court, and the matter of the application of the wrong set of Rules for violation of unfair competition and infringement is in the nature of a
only arose in the Order dated 25th September 2006 which sustained the civil action.41
Motion to Quash. A thorough examination of the Appellee's Brief filed by
petitioners (respondents-appellees in the Court of Appeals) reveals, WHEREFORE, the petition for review is DENIED. The Decision dated
however, that petitioners NEVER assailed the first issue/error on the ground March 31, 2009 and the Resolution dated July 2, 2009 of the Court of
that the same was raised for the first time on appeal. It is only now, after the Appeals, in CA-G.R. CV No. 88952, are hereby AFFIRMED.
appellate court rendered a Decision and Resolution unfavorable to them,
that petitioners questioned the alleged procedural error. Petitioners should SO ORDERED.
now be considered in estoppel to question the same.40

Indeed, perusing the appellee's (herein petitioners) brief filed with the CA,
the matter of the non-applicability of the rules on search and seizure in civil
action for infringement of intellectual property rights was never objected as
being raised for the first time. On the contrary, petitioners had squarely
faced respondent's argument in this wise:

Appellant (herein respondent) contends that the rule (SC Adm. Memo 1-06,
No. 02-1-06, Rule on Search and Seizure in Civil Actions for Infringement
of Intellectual Property Rights) does [not] apply to the search warrants in
the [case] at bar, for the reason that the search warrants themselves reveal
that the same were applied for and issued for violations of "Section 155 in
relation to Section 170 of RA 8293" and violations of "Section 168 in
relation to Section 170 of RA 8293," and that a perusal of the records would
show that there is no mention of a civil action or anticipation thereof, upon
which the search warrants are applied for.

Appellees (herein petitioners) cannot agree with the contention of the


appellant.1âwphi1 Complainant NBI Agent Joseph G. Furing, who applied
for the search warrants, violated the very rule on search and seizure for
infringement of Intellectual Property Rights. The search warrants applied
for by the complainants cannot be considered a criminal action. There was
no criminal case yet to speak of when complainants applied for issuance of
the search warrants. There is distinction here because the search applied for
is civil in nature and no criminal case had been filed. The complaint is an
afterthought after the respondents-appellees filed their Motion to Quash
Search Warrant before the Regional Trial Court of Manila, Branch 24. The
grounds enumerated in the rule must be complied with in order to protect
the constitutional mandate that "no person shall be deprived of life liberty or
property without due process of law nor shall any person be denied the
G.R. No. 161295 June 29, 2005 penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293.
The applications sought the seizure of the following:
JESSIE G. CHING, petitioner,
vs. a.) Undetermined quantity of Leaf spring eye bushing for
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., automobile that are made up of plastic polypropylene;
JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS, ALONTO
SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT b.) Undetermined quantity of Leaf spring eye bushing for
(Board of Directors and Officers of WILAWARE PRODUCT automobile that are made up of polyvinyl chloride plastic;
CORPORATION), respondents.
c.) Undetermined quantity of Vehicle bearing cushion that is made
DECISION up of polyvinyl chloride plastic;

CALLEJO, SR., J.: d.) Undetermined quantity of Dies and jigs, patterns and flasks
used in the manufacture/fabrication of items a to d;
This petition for review on certiorari assails the Decision1 and Resolution2
of the Court of Appeals (CA) in CA-G.R. SP No. 70411 affirming the e.) Evidences of sale which include delivery receipts, invoices and
January 3, 2002 and February 14, 2002 Orders3 of the Regional Trial Court official receipts.6
(RTC) of Manila, Branch 1, which quashed and set aside Search Warrant
Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.
The RTC granted the application and issued Search Warrant Nos. 01-2401
and 01-2402 for the seizure of the aforecited articles.7 In the inventory
Jessie G. Ching is the owner and general manager of Jeshicris submitted by the NBI agent, it appears that the following articles/items were
Manufacturing Co., the maker and manufacturer of a Utility Model, seized based on the search warrants:
described as "Leaf Spring Eye Bushing for Automobile" made up of plastic.
Leaf Spring eye bushing
On September 4, 2001, Ching and Joseph Yu were issued by the National
Library Certificates of Copyright Registration and Deposit of the said work a) Plastic Polypropylene
described therein as "Leaf Spring Eye Bushing for Automobile." 4
- C190 27 }
On September 20, 2001, Ching requested the National Bureau of
Investigation (NBI) for police/investigative assistance for the apprehension
and prosecution of illegal manufacturers, producers and/or distributors of - C240 rear 40 }
the works.5
- C240 front 41 } BAG 1
After due investigation, the NBI filed applications for search warrants in the
RTC of Manila against William Salinas, Sr. and the officers and members b) Polyvinyl Chloride Plastic
of the Board of Directors of Wilaware Product Corporation. It was alleged
that the respondents therein reproduced and distributed the said models - C190 13 }
c) Vehicle bearing cushion are not original, and as such are the proper subject of a patent, not
copyright.10
- center bearing cushion 11 }
In opposing the motion, the petitioner averred that the court which issued
Budder for C190 mold 8 } the search warrants was not the proper forum in which to articulate the issue
of the validity of the copyrights issued to him. Citing the ruling of the Court
Diesel Mold in Malaloan v. Court of Appeals,11 the petitioner stated that a search warrant
is merely a judicial process designed by the Rules of Court in anticipation
of a criminal case. Until his copyright was nullified in a proper proceeding,
a) Mold for spring eye bushing rear 1 set he enjoys rights of a registered owner/holder thereof.

b) Mold for spring eye bushing front 1 set On January 3, 2002, the trial court issued an Order 12 granting the motion,
and quashed the search warrant on its finding that there was no probable
c) Mold for spring eye bushing for C190 1 set cause for its issuance. The court ruled that the work covered by the
certificates issued to the petitioner pertained to solutions to technical
d) Mold for C240 rear 1 piece of the set problems, not literary and artistic as provided in Article 172 of the
Intellectual Property Code.
e) Mold for spring eye bushing for L300 2 sets
His motion for reconsideration of the order having been denied by the trial
f) Mold for leaf spring eye bushing C190 with metal 1 set court’s Order of February 14, 2002, the petitioner filed a petition for
certiorari in the CA, contending that the RTC had no jurisdiction to delve
into and resolve the validity of the copyright certificates issued to him by
g) Mold for vehicle bearing cushion 1 set8
the National Library. He insisted that his works are covered by Sections
172.1 and 172.2 of the Intellectual Property Code. The petitioner averred
The respondents filed a motion to quash the search warrants on the that the copyright certificates are prima facie evidence of its validity, citing
following grounds: the ruling of the United States Court of Appeals in Wildlife Express
Corporation v. Carol Wright Sales, Inc.13 The petitioner asserted that the
2. The copyright registrations were issued in violation of the Intellectual respondents failed to adduce evidence to support their motion to quash the
Property Code on the ground that: search warrants. The petitioner noted that respondent William Salinas, Jr.
was not being honest, as he was able to secure a similar copyright
a) the subject matter of the registrations are not artistic or literary; registration of a similar product from the National Library on January 14,
2002.
b) the subject matter of the registrations are spare parts of
automobiles meaning – there (sic) are original parts that they are On September 26, 2003, the CA rendered judgment dismissing the petition
designed to replace. Hence, they are not original.9 on its finding that the RTC did not commit any grave abuse of its discretion
in issuing the assailed order, to wit:
The respondents averred that the works covered by the certificates issued by
the National Library are not artistic in nature; they are considered It is settled that preliminarily, there must be a finding that a specific offense
automotive spare parts and pertain to technology. They aver that the models must have been committed to justify the issuance of a search warrant. In a
number of cases decided by the Supreme Court, the same is explicitly automatically attaches to a work by the sole fact of its creation, irrespective
provided, thus: of its mode or form of expression, as well as of its content, quality or
purpose.15 The law gives a non-inclusive definition of "work" as referring to
"The probable cause must be in connection with one specific offense, and original intellectual creations in the literary and artistic domain protected
the judge must, before issuing the warrant, personally examine in the form from the moment of their creation; and includes original ornamental designs
of searching questions and answers, in writing and under oath, the or models for articles of manufacture, whether or not registrable as an
complainant and any witness he may produce, on facts personally known to industrial design and other works of applied art under Section 172.1(h) of
them and attach to the record their sworn statements together with any R.A. No. 8293.lawphil.net
affidavit submitted.
As such, the petitioner insists, notwithstanding the classification of the
"In the determination of probable cause, the court must necessarily resolve works as either literary and/or artistic, the said law, likewise, encompasses
whether or not an offense exists to justify the issuance or quashal of the works which may have a bearing on the utility aspect to which the
search warrant." petitioner’s utility designs were classified. Moreover, according to the
petitioner, what the Copyright Law protects is the author’s intellectual
creation, regardless of whether it is one with utilitarian functions or
In the instant case, the petitioner is praying for the reinstatement of the
incorporated in a useful article produced on an industrial scale.
search warrants issued, but subsequently quashed, for the offense of
Violation of Class Designation of Copyrightable Works under Section 177.1
in relation to Section 177.3 of Republic Act 8293, when the objects subject The petitioner also maintains that the law does not provide that the intended
of the same, are patently not copyrightable. use or use in industry of an article eligible for patent bars or invalidates its
registration under the Law on Copyright. The test of protection for the
aesthetic is not beauty and utility, but art for the copyright and invention of
It is worthy to state that the works protected under the Law on Copyright
original and ornamental design for design patents. 16 In like manner, the fact
are: literary or artistic works (Sec. 172) and derivative works (Sec. 173).
that his utility designs or models for articles of manufacture have been
The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither
classification. Accordingly, if, in the first place, the item subject of the expressed in the field of automotive parts, or based on something already in
the public domain does not automatically remove them from the protection
petition is not entitled to be protected by the law on copyright, how can
of the Law on Copyright.17
there be any violation?14

The petitioner’s motion for reconsideration of the said decision suffered the The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293
same fate. The petitioner forthwith filed the present petition for review on which gives the same presumption to an affidavit executed by an author
who claims copyright ownership of his work.
certiorari, contending that the revocation of his copyright certificates
should be raised in a direct action and not in a search warrant proceeding.
The petitioner adds that a finding of probable cause to justify the issuance of
The petitioner posits that even assuming ex argumenti that the trial court a search warrant means merely a reasonable suspicion of the commission of
may resolve the validity of his copyright in a proceeding to quash a search the offense. It is not equivalent to absolute certainty or a finding of actual
and positive cause.18 He assists that the determination of probable cause
warrant for allegedly infringing items, the RTC committed a grave abuse of
does not concern the issue of whether or not the alleged work is
its discretion when it declared that his works are not copyrightable in the
copyrightable. He maintains that to justify a finding of probable cause in the
first place. He claims that R.A. No. 8293, otherwise known as the
issuance of a search warrant, it is enough that there exists a reasonable
Intellectual Property Code of the Philippines, which took effect on January
1, 1998, provides in no uncertain terms that copyright protection suspicion of the commission of the offense.
The petitioner contends that he has in his favor the benefit of the determined personally by the judge after examination under oath or
presumption that his copyright is valid; hence, the burden of overturning affirmation of the complainant and the witnesses he may produce, and,
this presumption is on the alleged infringers, the respondents herein. But particularly, describing the place to be searched and the things to be seized.
this burden cannot be carried in a hearing on a proceeding to quash the
search warrants, as the issue therein is whether there was probable cause for In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the
the issuance of the search warrant. The petitioner concludes that the issue of Court held that in the determination of probable cause, the court must
probable cause should be resolved without invalidating his copyright. necessarily resolve whether or not an offense exists to justify the issuance of
a search warrant or the quashal of one already issued by the court. Indeed,
In their comment on the petition, the respondents aver that the work of the probable cause is deemed to exist only where facts and circumstances exist
petitioner is essentially a technical solution to the problem of wear and tear which could lead a reasonably cautious and prudent man to believe that an
in automobiles, the substitution of materials, i.e., from rubber to plastic offense has been committed or is being committed. Besides, in Section 3,
matter of polyvinyl chloride, an oil resistant soft texture plastic material Rule 126 of the Rules of Criminal Procedure, a search warrant may be
strong enough to endure pressure brought about by the vibration of the issued for the search and seizure of personal property (a) subject of the
counter bearing and thus brings bushings. Such work, the respondents offense; (b) stolen or embezzled and other proceeds or fruits of the offense;
assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. or (c) used or intended to be used as the means of committing an offense.
The respondents posit that a technical solution in any field of human
activity which is novel may be the subject of a patent, and not of a The RTC is mandated under the Constitution and Rules of Criminal
copyright. They insist that the certificates issued by the National Library are Procedure to determine probable cause. The court cannot abdicate its
only certifications that, at a point in time, a certain work was deposited in constitutional obligation by refusing to determine whether an offense has
the said office. Furthermore, the registration of copyrights does not provide been committed.20 The absence of probable cause will cause the outright
for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the nullification of the search warrant.21
respondents aver that no copyright is said to exist if a party categorically
questions its existence and legality. Moreover, under Section 2, Rule 7 of
For the RTC to determine whether the crime for infringement under R.A.
the Implementing Rules of R.A. No. 8293, the registration and deposit of
No. 8293 as alleged in an application is committed, the petitioner-applicant
work is not conclusive as to copyright outlay or the time of copyright or the was burdened to prove that (a) respondents Jessie Ching and Joseph Yu
right of the copyright owner. The respondents maintain that a copyright
were the owners of copyrighted material; and (b) the copyrighted material
exists only when the work is covered by the protection of R.A. No. 8293.
was being copied and distributed by the respondents. Thus, the ownership
of a valid copyright is essential.22
The petition has no merit.
Ownership of copyrighted material is shown by proof of originality and
The RTC had jurisdiction to delve into and resolve the issue whether the copyrightability. By originality is meant that the material was not copied,
petitioner’s utility models are copyrightable and, if so, whether he is the and evidences at least minimal creativity; that it was independently created
owner of a copyright over the said models. It bears stressing that upon the by the author and that it possesses at least same minimal degree of
filing of the application for search warrant, the RTC was duty-bound to creativity.23 Copying is shown by proof of access to copyrighted material
determine whether probable cause existed, in accordance with Section 4, and substantial similarity between the two works.24 The applicant must thus
Rule 126 of the Rules of Criminal Procedure: demonstrate the existence and the validity of his copyright because in the
absence of copyright protection, even original creation may be freely
SEC. 4. Requisite for issuing search warrant. – A search warrant shall not copied.25
issue but upon probable cause in connection with one specific offense to be
By requesting the NBI to investigate and, if feasible, file an application for a To discharge his burden of probable cause for the issuance of a search
search warrant for infringement under R.A. No. 8293 against the warrant for violation of R.A. No. 8293, the petitioner-applicant submitted to
respondents, the petitioner thereby authorized the RTC (in resolving the the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204
application), to delve into and determine the validity of the copyright which dated September 3, 2001 and September 4, 2001, respectively, issued by the
he claimed he had over the utility models. The petitioner cannot seek relief National Library covering work identified as Leaf Spring Eye Bushing for
from the RTC based on his claim that he was the copyright owner over the Automobile and Vehicle Bearing Cushion both classified under Section
utility models and, at the same time, repudiate the court’s jurisdiction to 172.1(h) of R.A. No. 8293, to wit:
ascertain the validity of his claim without running afoul to the doctrine of
estoppel. SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works,
hereinafter referred to as "works," are original intellectual creations in the
To discharge his burden, the applicant may present the certificate of literary and artistic domain protected from the moment of their creation and
registration covering the work or, in its absence, other evidence. 26 A shall include in particular:
copyright certificate provides prima facie evidence of originality which is
one element of copyright validity. It constitutes prima facie evidence of ...
both validity and ownership27 and the validity of the facts stated in the
certificate.28 The presumption of validity to a certificate of copyright
(h) Original ornamental designs or models for articles of manufacture,
registration merely orders the burden of proof. The applicant should not
whether or not registrable as an industrial design, and other works of
ordinarily be forced, in the first instance, to prove all the multiple facts that
applied art.
underline the validity of the copyright unless the respondent, effectively
challenging them, shifts the burden of doing so to the applicant. 29 Indeed,
Section 218.2 of R.A. No. 8293 provides: Related to the provision is Section 171.10, which provides that a "work of
applied art" is an artistic creation with utilitarian functions or incorporated
in a useful article, whether made by hand or produced on an industrial scale.
218.2. In an action under this Chapter:
But, as gleaned from the specifications appended to the application for a
(a) Copyright shall be presumed to subsist in the work or other
copyright certificate filed by the petitioner, the said Leaf Spring Eye
subject matter to which the action relates if the defendant does not
Bushing for Automobile is merely a utility model described as comprising a
put in issue the question whether copyright subsists in the work or
generally cylindrical body having a co-axial bore that is centrally located
other subject matter; and and provided with a perpendicular flange on one of its ends and a
cylindrical metal jacket surrounding the peripheral walls of said body, with
(b) Where the subsistence of the copyright is established, the the bushing made of plastic that is either polyvinyl chloride or
plaintiff shall be presumed to be the owner of the copyright if he polypropylene.31 Likewise, the Vehicle Bearing Cushion is illustrated as a
claims to be the owner of the copyright and the defendant does not bearing cushion comprising a generally semi-circular body having a central
put in issue the question of his ownership. hole to secure a conventional bearing and a plurality of ridges provided
therefore, with said cushion bearing being made of the same plastic
A certificate of registration creates no rebuttable presumption of copyright materials.32 Plainly, these are not literary or artistic works. They are not
validity where other evidence in the record casts doubt on the question. In intellectual creations in the literary and artistic domain, or works of applied
such a case, validity will not be presumed.30 art. They are certainly not ornamental designs or one having decorative
quality or value.
It bears stressing that the focus of copyright is the usefulness of the artistic upon subjecting them to so much or intermittent pressure would eventually
design, and not its marketability. The central inquiry is whether the article is wore (sic) out that would cause the wobbling of the leaf spring.
a work of art.33 Works for applied art include all original pictorials,
graphics, and sculptural works that are intended to be or have been The primary object of this utility model, therefore, is to provide a leaf-
embodied in useful article regardless of factors such as mass production, spring eye bushing for automobile that is made up of plastic.
commercial exploitation, and the potential availability of design patent
protection.34
Another object of this utility model is to provide a leaf-spring eye bushing
for automobiles made of polyvinyl chloride, an oil resistant soft texture
As gleaned from the description of the models and their objectives, these plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf
articles are useful articles which are defined as one having an intrinsic spring, yet strong enough to endure pressure brought about by the up and
utilitarian function that is not merely to portray the appearance of the article down movement of said leaf spring.
or to convey information. Indeed, while works of applied art, original
intellectual, literary and artistic works are copyrightable, useful articles and Yet, an object of this utility model is to provide a leaf-spring eye bushing
works of industrial design are not.35 A useful article may be copyrightable for automobiles that has a much longer life span than the rubber bushings.
only if and only to the extent that such design incorporates pictorial,
graphic, or sculptural features that can be identified separately from, and are
capable of existing independently of the utilitarian aspects of the article. Still an object of this utility model is to provide a leaf-spring eye bushing
for automobiles that has a very simple construction and can be made using
simple and ordinary molding equipment.
We agree with the contention of the petitioner (citing Section 171.10 of
R.A. No. 8293), that the author’s intellectual creation, regardless of whether
it is a creation with utilitarian functions or incorporated in a useful article A further object of this utility model is to provide a leaf-spring eye bushing
produced on an industrial scale, is protected by copyright law. However, the for automobile that is supplied with a metal jacket to reinforce the plastic
law refers to a "work of applied art which is an artistic creation." It bears eye bushing when in engaged with the steel material of the leaf spring.
stressing that there is no copyright protection for works of applied art or
industrial design which have aesthetic or artistic features that cannot be These and other objects and advantages will come to view and be
identified separately from the utilitarian aspects of the article. 36 Functional understood upon a reading of the detailed description when taken in
components of useful articles, no matter how artistically designed, have conjunction with the accompanying drawings.
generally been denied copyright protection unless they are separable from
the useful article.37 Figure 1 is an exploded perspective of a leaf-spring eye bushing according
to the present utility model;
In this case, the petitioner’s models are not works of applied art, nor artistic
works. They are utility models, useful articles, albeit with no artistic design Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
or value. Thus, the petitioner described the utility model as follows:
Figure 3 is a longitudinal sectional view of another embodiment of this
LEAF SPRING EYE BUSHING FOR AUTOMOBILE utility model;

Known bushings inserted to leaf-spring eye to hold leaf-springs of Figure 4 is a perspective view of a third embodiment; and
automobile are made of hard rubber. These rubber bushings after a time,
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like reference subjecting them to so much or intermittent pressure would eventually be
numerals designated same parts throughout, there is shown a utility model worn out that would cause the wobbling of the center bearing.
for a leaf-spring eye bushing for automobile generally designated as
reference numeral 10. The primary object of this utility model therefore is to provide a vehicle-
bearing cushion that is made up of plastic.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11
having a co-axial bore 12 centrally provided thereof. Another object of this utility model is to provide a vehicle bearing cushion
made of polyvinyl chloride, an oil resistant soft texture plastic material
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with which causes cushion to the propeller’s center bearing, yet strong enough to
a perpendicular flange 13 on one of its ends and a cylindrical metal jacket endure pressure brought about by the vibration of the center bearing.
14 surrounding the peripheral walls 15 of said body 11. When said leaf-
spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring Yet, an object of this utility model is to provide a vehicle-bearing cushion
eye (not shown), which is also made of steel or cast steel. In effect, the that has a much longer life span than rubber bushings.
bushing 10 will not be directly in contact with steel, but rather the metal
jacket, making the life of the bushing 10 longer than those without the metal
Still an object of this utility model is to provide a vehicle bearing cushion
jacket.
that has a very simple construction and can be made using simple and
ordinary molding equipment.
In Figure 2, the bushing 10 as shown is made of plastic, preferably
polyvinyl chloride, an oil resistant soft texture plastic or a hard
These and other objects and advantages will come to view and be
polypropylene plastic, both are capable to endure the pressure applied
understood upon a reading of the detailed description when taken in
thereto, and, in effect, would lengthen the life and replacement therefor.
conjunction with the accompanying drawings.

Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of Figure 1 is a perspective view of the present utility model for a vehicle-
said bushing 10 is insertably provided with a steel tube 17 to reinforce the
bearing cushion; and
inner portion thereof. This steel tube 17 accommodates or engages with the
leaf-spring bolt (not shown) connecting the leaf spring and the automobile’s
chassis. Figure 2 is a sectional view thereof.

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 Referring now to the several views of the drawing, wherein like reference
is elongated and cylindrical as to its construction. Said another embodiment numeral designate same parts throughout, there is shown a utility model for
is also made of polypropylene or polyvinyl chloride plastic material. The a vehicle-bearing cushion generally designated as reference numeral 10.
steel tube 17 and metal jacket 14 may also be applied to this embodiment as
an option thereof.38 Said bearing cushion 10 comprises of a generally semi-circular body 11,
having central hole 12 to house a conventional bearing (not shown). As
VEHICLE BEARING CUSHION shown in Figure 1, said body 11 is provided with a plurality of ridges 13
which serves reinforcing means thereof.
Known bearing cushions inserted to bearing housings for vehicle propeller
shafts are made of hard rubber. These rubber bushings after a time, upon The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture
oil and chemical resistant plastic material which is strong, durable and
capable of enduring severe pressure from the center bearing brought about deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion.
by the rotating movement of the propeller shaft of the vehicle. 39 Indeed, in Joaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.), Incorporated
v. Shoemart, Incorporated,48 the Court ruled that:
A utility model is a technical solution to a problem in any field of human
activity which is new and industrially applicable. It may be, or may relate Copyright, in the strict sense of the term, is purely a statutory right. It is a
to, a product, or process, or an improvement of any of the aforesaid.40 new or independent right granted by the statute, and not simply a pre-
Essentially, a utility model refers to an invention in the mechanical field. existing right regulated by it. Being a statutory grant, the rights are only
This is the reason why its object is sometimes described as a device or such as the statute confers, and may be obtained and enjoyed only with
useful object.41 A utility model varies from an invention, for which a patent respect to the subjects and by the persons, and on terms and conditions
for invention is, likewise, available, on at least three aspects: first, the specified in the statute. Accordingly, it can cover only the works falling
requisite of "inventive step"42 in a patent for invention is not required; within the statutory enumeration or description.
second, the maximum term of protection is only seven years 43 compared to
a patent which is twenty years,44 both reckoned from the date of the That the works of the petitioner may be the proper subject of a patent does
application; and third, the provisions on utility model dispense with its not entitle him to the issuance of a search warrant for violation of copyright
substantive examination45 and prefer for a less complicated system. laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated
v. Shoemart, Incorporated,50 the Court ruled that "these copyright and
Being plain automotive spare parts that must conform to the original patent rights are completely distinct and separate from one another, and the
structural design of the components they seek to replace, the Leaf Spring protection afforded by one cannot be used interchangeably to cover items or
Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack works that exclusively pertain to the others." The Court expounded further,
the decorative quality or value that must characterize authentic works of thus:
applied art. They are not even artistic creations with incidental utilitarian
functions or works incorporated in a useful article. In actuality, the personal Trademark, copyright and patents are different intellectual property rights
properties described in the search warrants are mechanical works, the that cannot be interchanged with one another. A trademark is any visible
principal function of which is utility sans any aesthetic embellishment. sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing goods. In relation thereto, a trade name means the name or designation
Cushion as included in the catch-all phrase "other literary, scholarly, identifying or distinguishing an enterprise. Meanwhile, the scope of a
scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. copyright is confined to literary and artistic works which are original
Applying the principle of ejusdem generis which states that "where a statute intellectual creations in the literary and artistic domain protected from the
describes things of a particular class or kind accompanied by words of a moment of their creation. Patentable inventions, on the other hand, refer to
generic character, the generic word will usually be limited to things of a any technical solution of a problem in any field of human activity which is
similar nature with those particularly enumerated, unless there be something new, involves an inventive step and is industrially applicable.
in the context of the state which would repel such inference," 46 the Leaf
Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, The petitioner cannot find solace in the ruling of the United States Supreme
being not of the same kind and nature as the works enumerated in Section Court in Mazer v. Stein51 to buttress his petition. In that case, the artifacts
172 of R.A. No. 8293. involved in that case were statuettes of dancing male and female figures
made of semi-vitreous china. The controversy therein centered on the fact
No copyright granted by law can be said to arise in favor of the petitioner that although copyrighted as "works of art," the statuettes were intended for
despite the issuance of the certificates of copyright registration and the use and used as bases for table lamps, with electric wiring, sockets and
lampshades attached. The issue raised was whether the statuettes were SO ORDERED.
copyright protected in the United States, considering that the copyright
applicant intended primarily to use them as lamp bases to be made and sold
in quantity, and carried such intentions into effect. At that time, the
Copyright Office interpreted the 1909 Copyright Act to cover works of
artistic craftsmanship insofar as their form, but not the utilitarian aspects,
were concerned. After reviewing the history and intent of the US Congress
on its copyright legislation and the interpretation of the copyright office, the
US Supreme Court declared that the statuettes were held copyrightable
works of art or models or designs for works of art. The High Court ruled
that:

"Works of art (Class G) – (a) – In General. This class includes works of


artistic craftsmanship, in so far as their form but not their mechanical or
utilitarian aspects are concerned, such as artistic jewelry, enamels,
glassware, and tapestries, as well as all works belonging to the fine arts,
such as paintings, drawings and sculpture. …"

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


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

The High Court went on to state that "[t]he dichotomy of protection for the
aesthetic is not beauty and utility but art for the copyright and the invention
of original and ornamental design for design patents." Significantly, the
copyright office promulgated a rule to implement Mazer to wit:

… [I]f "the sole intrinsic function of an article is its utility, the fact that the
work is unique and attractively shaped will not qualify it as a work of art."

In this case, the bushing and cushion are not works of art. They are, as the
petitioner himself admitted, utility models which may be the subject of a
patent.

IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby


DENIED for lack of merit. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search
Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are
ANNULLED AND SET ASIDE. Costs against the petitioner.
G.R. No. 148222 August 15, 2003 Sometime in 1985, Pearl and Dean negotiated with defendant-appellant
Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM
PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, City North Edsa. Since SM City North Edsa was under construction at that
vs. time, SMI offered as an alternative, SM Makati and SM Cubao, to which
SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General
INCORPORATED, Respondents. Manager, Rodolfo Vergara, submitted for signature the contracts covering
SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
DECISION Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano
inquiring about the other contract and reminding him that their agreement
CORONA, J.: for installation of light boxes was not only for its SM Makati branch, but
also for SM Cubao. SMI did not bother to reply.
In the instant petition for review on certiorari under Rule 45 of the Rules of
Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 Instead, in a letter dated January 14, 1986, SMI’s house counsel informed
decision1 of the Court of Appeals reversing the October 31, 1996 decision2 Pearl and Dean that it was rescinding the contract for SM Makati due to
of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92- non-performance of the terms thereof. In his reply dated February 17, 1986,
516 which declared private respondents Shoemart Inc. (SMI) and North Vergara protested the unilateral action of SMI, saying it was without basis.
Edsa Marketing Inc. (NEMI) liable for infringement of trademark and In the same letter, he pushed for the signing of the contract for SM Cubao.
copyright, and unfair competition.
Two years later, Metro Industrial Services, the company formerly
FACTUAL ANTECEDENTS contracted by Pearl and Dean to fabricate its display units, offered to
construct light boxes for Shoemart’s chain of stores. SMI approved the
The May 22, 2001 decision of the Court of Appeals3 contained a summary proposal and ten (10) light boxes were subsequently fabricated by Metro
of this dispute: Industrial for SMI. After its contract with Metro Industrial was terminated,
SMI engaged the services of EYD Rainbow Advertising Corporation to
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in make the light boxes. Some 300 units were fabricated in 1991. These were
the manufacture of advertising display units simply referred to as light delivered on a staggered basis and installed at SM Megamall and SM City.
boxes. These units utilize specially printed posters sandwiched between
plastic sheets and illuminated with back lights. Pearl and Dean was able to Sometime in 1989, Pearl and Dean, received reports that exact copies of its
secure a Certificate of Copyright Registration dated January 20, 1981 over light boxes were installed at SM City and in the fastfood section of SM
these illuminated display units. The advertising light boxes were marketed Cubao. Upon investigation, Pearl and Dean found out that aside from the
under the trademark "Poster Ads". The application for registration of the two (2) reported SM branches, light boxes similar to those it manufactures
trademark was filed with the Bureau of Patents, Trademarks and were also installed in two (2) other SM stores. It further discovered that
Technology Transfer on June 20, 1983, but was approved only on defendant-appellant North Edsa Marketing Inc. (NEMI), through its
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, marketing arm, Prime Spots Marketing Services, was set up primarily to sell
Pearl and Dean employed the services of Metro Industrial Services to advertising space in lighted display units located in SMI’s different
manufacture its advertising displays. branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December Wherefore, defendants SMI and NEMI are found jointly and severally liable
11, 1991 to both SMI and NEMI enjoining them to cease using the subject for infringement of copyright under Section 2 of PD 49, as amended, and
light boxes and to remove the same from SMI’s establishments. It also infringement of trademark under Section 22 of RA No. 166, as amended,
demanded the discontinued use of the trademark "Poster Ads," and the and are hereby penalized under Section 28 of PD 49, as amended, and
payment to Pearl and Dean of compensatory damages in the amount of Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are
Twenty Million Pesos (P20,000,000.00). hereby directed:

Upon receipt of the demand letter, SMI suspended the leasing of two (1) to pay plaintiff the following damages:
hundred twenty-four (224) light boxes and NEMI took down its
advertisements for "Poster Ads" from the lighted display units in SMI’s (a) actual damages - ₱16,600,000.00,
stores. Claiming that both SMI and NEMI failed to meet all its demands, representing profits
Pearl and Dean filed this instant case for infringement of trademark and derived by defendants
copyright, unfair competition and damages. as a result of infringe-
ment of plaintiff’s copyright
In denying the charges hurled against it, SMI maintained that it from 1991 to 1992
independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl (b) moral damages - ₱1,000.000.00
and Dean’s copyright. SMI noted that the registration of the mark "Poster
Ads" was only for stationeries such as letterheads, envelopes, and the like. (c) exemplary damages - ₱1,000,000.00
Besides, according to SMI, the word "Poster Ads" is a generic term which
cannot be appropriated as a trademark, and, as such, registration of such
mark is invalid. It also stressed that Pearl and Dean is not entitled to the (d) attorney’s fees - ₱1,000,000.00
reliefs prayed for in its complaint since its advertising display units
contained no copyright notice, in violation of Section 27 of P.D. 49. SMI plus
alleged that Pearl and Dean had no cause of action against it and that the
suit was purely intended to malign SMI’s good name. On this basis, SMI, (e) costs of suit;
aside from praying for the dismissal of the case, also counterclaimed for
moral, actual and exemplary damages and for the cancellation of Pearl and (2) to deliver, under oath, for impounding in the National Library,
Dean’s Certification of Copyright Registration No. PD-R-2558 dated all light boxes of SMI which were fabricated by Metro Industrial
January 20, 1981 and Certificate of Trademark Registration No. 4165 dated Services and EYD Rainbow Advertising Corporation;
September 12, 1988.
(3) to deliver, under oath, to the National Library, all filler-posters
NEMI, for its part, denied having manufactured, installed or used any using the trademark "Poster Ads", for destruction; and
advertising display units, nor having engaged in the business of advertising.
It repleaded SMI’s averments, admissions and denials and prayed for
(4) to permanently refrain from infringing the copyright on
similar reliefs and counterclaims as SMI."
plaintiff’s light boxes and its trademark "Poster Ads".
The RTC of Makati City decided in favor of P & D:
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4 drawings. In this case it was held that protection of the drawing does not
extend to the unauthorized duplication of the object drawn because
On appeal, however, the Court of Appeals reversed the trial court: copyright extends only to the description or expression of the object and not
to the object itself. It does not prevent one from using the drawings to
construct the object portrayed in the drawing.
Since the light boxes cannot, by any stretch of the imagination, be
considered as either prints, pictorial illustrations, advertising copies, labels,
tags or box wraps, to be properly classified as a copyrightable class "O" In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and
work, we have to agree with SMI when it posited that what was copyrighted Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no
were the technical drawings only, and not the light boxes themselves, thus: copyright infringement when one who, without being authorized, uses a
copyrighted architectural plan to construct a structure. This is because the
copyright does not extend to the structures themselves.
42. When a drawing is technical and depicts a utilitarian object, a copyright
over the drawings like plaintiff-appellant’s will not extend to the actual
object. It has so been held under jurisprudence, of which the leading case is In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright
Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a over the technical drawings of the latter’s advertising display units.
copyright protection for a book entitled "Selden’s Condensed Ledger or
Bookkeeping Simplified" which purported to explain a new system of xxx xxx xxx
bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for The Supreme Court trenchantly held in Faberge, Incorporated vs.
use in connection with the system explained in the work. These forms Intermediate Appellate Court that the protective mantle of the Trademark
showed the entire operation of a day or a week or a month on a single page, Law extends only to the goods used by the first user as specified in the
or on two pages following each other. The defendant Baker then produced certificate of registration, following the clear mandate conveyed by Section
forms which were similar to the forms illustrated in Selden’s copyrighted 20 of Republic Act 166, as amended, otherwise known as the Trademark
books. The Court held that exclusivity to the actual forms is not extended by Law, which reads:
a copyright. The reason was that "to grant a monopoly in the underlying art
when no examination of its novelty has ever been made would be a surprise
SEC. 20. Certification of registration prima facie evidence of validity.- A
and a fraud upon the public; that is the province of letters patent, not of
certificate of registration of a mark or trade-name shall be prima facie
copyright." And that is precisely the point. No doubt aware that its alleged
evidence of the validity of the registration, the registrant’s ownership of the
original design would never pass the rigorous examination of a patent mark or trade-name, and of the registrant’s exclusive right to use the same
application, plaintiff-appellant fought to foist a fraudulent monopoly on the in connection with the goods, business or services specified in the
public by conveniently resorting to a copyright registration which merely
certificate, subject to any conditions and limitations stated therein."
employs a recordal system without the benefit of an in-depth examination of
(underscoring supplied)
novelty.
The records show that on June 20, 1983, Pearl and Dean applied for the
The principle in Baker vs. Selden was likewise applied in Muller vs. registration of the trademark "Poster Ads" with the Bureau of Patents,
Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this
Trademarks, and Technology Transfer. Said trademark was recorded in the
case, Muller had obtained a copyright over an unpublished drawing entitled
Principal Register on September 12, 1988 under Registration No. 41165
"Bridge Approach – the drawing showed a novel bridge approach to unsnarl
covering the following products: stationeries such as letterheads, envelopes
traffic congestion". The defendant constructed a bridge approach which was
and calling cards and newsletters.
alleged to be an infringement of the new design illustrated in plaintiff’s
With this as factual backdrop, we see no legal basis to the finding of There being no finding of either copyright or trademark infringement on the
liability on the part of the defendants-appellants for their use of the words part of SMI and NEMI, the monetary award granted by the lower court to
"Poster Ads", in the advertising display units in suit. Jurisprudence has Pearl and Dean has no leg to stand on.
interpreted Section 20 of the Trademark Law as "an implicit permission to a
manufacturer to venture into the production of goods and allow that xxx xxx xxx
producer to appropriate the brand name of the senior registrant on goods
other than those stated in the certificate of registration." The Supreme Court
WHEREFORE, premises considered, the assailed decision is REVERSED
further emphasized the restrictive meaning of Section 20 when it stated, and SET ASIDE, and another is rendered DISMISSING the complaint and
through Justice Conrado V. Sanchez, that: counterclaims in the above-entitled case for lack of merit.5

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


Dissatisfied with the above decision, petitioner P & D filed the instant
goods not specified therein, then a situation may arise whereby an applicant
petition assigning the following errors for the Court’s consideration:
may be tempted to register a trademark on any and all goods which his mind
may conceive even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not contemplated A. THE HONORABLE COURT OF APPEALS ERRED IN
by our Trademark Law. RULING THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;
While we do not discount the striking similarity between Pearl and Dean’s
registered trademark and defendants-appellants’ "Poster Ads" design, as B. THE HONORABLE COURT OF APPEALS ERRED IN
well as the parallel use by which said words were used in the parties’ RULING THAT NO INFRINGEMENT OF PEARL & DEAN’S
respective advertising copies, we cannot find defendants-appellants liable TRADEMARK "POSTER ADS" WAS COMMITTED BY
for infringement of trademark. "Poster Ads" was registered by Pearl and RESPONDENTS SM AND NEMI;
Dean for specific use in its stationeries, in contrast to defendants-appellants
who used the same words in their advertising display units. Why Pearl and C. THE HONORABLE COURT OF APPEALS ERRED IN
Dean limited the use of its trademark to stationeries is simply beyond us. DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE
But, having already done so, it must stand by the consequence of the THE LATTER’S FINDING, NOT DISPUTED BY THE
registration which it had caused. HONORABLE COURT OF APPEALS, THAT SM WAS
GUILTY OF BAD FAITH IN ITS NEGOTIATION OF
xxx xxx xxx ADVERTISING CONTRACTS WITH PEARL & DEAN.

We are constrained to adopt the view of defendants-appellants that the D. THE HONORABLE COURT OF APPEALS ERRED IN NOT
words "Poster Ads" are a simple contraction of the generic term poster HOLDING RESPONDENTS SM AND NEMI LIABLE TO
advertising. In the absence of any convincing proof that "Poster Ads" has PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY
acquired a secondary meaning in this jurisdiction, we find that Pearl and DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6
Dean’s exclusive right to the use of "Poster Ads" is limited to what is
written in its certificate of registration, namely, stationeries. ISSUES

Defendants-appellants cannot thus be held liable for infringement of the In resolving this very interesting case, we are challenged once again to put
trademark "Poster Ads". into proper perspective four main concerns of intellectual property law —
patents, copyrights, trademarks and unfair competition arising from xxx xxx xxx
infringement of any of the first three. We shall focus then on the following
issues: (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box
wraps;
(1) if the engineering or technical drawings of an advertising
display unit (light box) are granted copyright protection (copyright xxx xxx xxx
certificate of registration) by the National Library, is the light box
depicted in such engineering drawings ipso facto also protected by Although petitioner’s copyright certificate was entitled "Advertising
such copyright?
Display Units" (which depicted the box-type electrical devices), its claim of
copyright infringement cannot be sustained.
(2) or should the light box be registered separately and protected
by a patent issued by the Bureau of Patents Trademarks and Copyright, in the strict sense of the term, is purely a statutory right. Being a
Technology Transfer (now Intellectual Property Office) — in mere statutory grant, the rights are limited to what the statute confers. It
addition to the copyright of the engineering drawings?
may be obtained and enjoyed only with respect to the subjects and by the
persons, and on terms and conditions specified in the statute.7 Accordingly,
(3) can the owner of a registered trademark legally prevent others it can cover only the works falling within the statutory enumeration or
from using such trademark if it is a mere abbreviation of a term description.8
descriptive of his goods, services or business?
P & D secured its copyright under the classification class "O" work. This
ON THE ISSUE OF COPYRIGHT INFRINGEMENT being so, petitioner’s copyright protection extended only to the technical
drawings and not to the light box itself because the latter was not at all in
Petitioner P & D’s complaint was that SMI infringed on its copyright over the category of "prints, pictorial illustrations, advertising copies, labels, tags
the light boxes when SMI had the units manufactured by Metro and EYD and box wraps." Stated otherwise, even as we find that P & D indeed owned
Rainbow Advertising for its own account. Obviously, petitioner’s position a valid copyright, the same could have referred only to the technical
was premised on its belief that its copyright over the engineering drawings drawings within the category of "pictorial illustrations." It could not have
extended ipso facto to the light boxes depicted or illustrated in said possibly stretched out to include the underlying light box. The strict
drawings. In ruling that there was no copyright infringement, the Court of application9 of the law’s enumeration in Section 2 prevents us from giving
Appeals held that the copyright was limited to the drawings alone and not to petitioner even a little leeway, that is, even if its copyright certificate was
the light box itself. We agree with the appellate court. entitled "Advertising Display Units." What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic
First, petitioner’s application for a copyright certificate — as well as piece which could be copyrighted under the copyright law. And no less
Copyright Certificate No. PD-R2588 issued by the National Library on clearly, neither could the lack of statutory authority to make the light box
January 20, 1981 — clearly stated that it was for a class "O" work under copyrightable be remedied by the simplistic act of entitling the copyright
Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the certificate issued by the National Library as "Advertising Display Units."
statute then prevailing. Said Section 2 expressly enumerated the works
subject to copyright: In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to
the public without license from P & D, then no doubt they would have been
SEC. 2. The rights granted by this Decree shall, from the moment of guilty of copyright infringement. But this was not the case. SMI’s and
creation, subsist with respect to any of the following works: NEMI’s acts complained of by P & D were to have units similar or identical
to the light box illustrated in the technical drawings manufactured by Metro we held that "there can be no infringement of a patent until a patent has
and EYD Rainbow Advertising, for leasing out to different advertisers. Was been issued, since whatever right one has to the invention covered by the
this an infringement of petitioner’s copyright over the technical drawings? patent arises alone from the grant of patent. x x x (A)n inventor has no
We do not think so. common law right to a monopoly of his invention. He has the right to make
use of and vend his invention, but if he voluntarily discloses it, such as by
During the trial, the president of P & D himself admitted that the light box offering it for sale, the world is free to copy and use it with impunity. A
was neither a literary not an artistic work but an "engineering or marketing patent, however, gives the inventor the right to exclude all others. As a
invention."10 Obviously, there appeared to be some confusion regarding patentee, he has the exclusive right of making, selling or using the
what ought or ought not to be the proper subjects of copyrights, patents and invention.13 On the assumption that petitioner’s advertising units were
trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled patentable inventions, petitioner revealed them fully to the public by
that these three legal rights are completely distinct and separate from one submitting the engineering drawings thereof to the National Library.
another, and the protection afforded by one cannot be used interchangeably
to cover items or works that exclusively pertain to the others: To be able to effectively and legally preclude others from copying and
profiting from the invention, a patent is a primordial requirement. No
Trademark, copyright and patents are different intellectual property rights patent, no protection. The ultimate goal of a patent system is to bring new
that cannot be interchanged with one another. A trademark is any visible designs and technologies into the public domain through disclosure.14
sign capable of distinguishing the goods (trademark) or services (service Ideas, once disclosed to the public without the protection of a valid patent,
mark) of an enterprise and shall include a stamped or marked container of are subject to appropriation without significant restraint.15
goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a On one side of the coin is the public which will benefit from new ideas; on
copyright is confined to literary and artistic works which are original the other are the inventors who must be protected. As held in Bauer & Cie
intellectual creations in the literary and artistic domain protected from the vs. O’Donnel,16 "The act secured to the inventor the exclusive right to
moment of their creation. Patentable inventions, on the other hand, refer to make use, and vend the thing patented, and consequently to prevent others
any technical solution of a problem in any field of human activity which is from exercising like privileges without the consent of the patentee. It was
new, involves an inventive step and is industrially applicable. passed for the purpose of encouraging useful invention and promoting new
and useful inventions by the protection and stimulation given to inventive
ON THE ISSUE OF PATENT INFRINGEMENT genius, and was intended to secure to the public, after the lapse of the
exclusive privileges granted the benefit of such inventions and
This brings us to the next point: if, despite its manufacture and commercial improvements."
use of the light boxes without license from petitioner, private respondents
cannot be held legally liable for infringement of P & D’s copyright over its The law attempts to strike an ideal balance between the two interests:
technical drawings of the said light boxes, should they be liable instead for
infringement of patent? We do not think so either. "(The p)atent system thus embodies a carefully crafted bargain for
encouraging the creation and disclosure of new useful and non-obvious
For some reason or another, petitioner never secured a patent for the light advances in technology and design, in return for the exclusive right to
boxes. It therefore acquired no patent rights which could have protected its practice the invention for a number of years. The inventor may keep his
invention, if in fact it really was. And because it had no patent, petitioner invention secret and reap its fruits indefinitely. In consideration of its
could not legally prevent anyone from manufacturing or commercially using disclosure and the consequent benefit to the community, the patent is
the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 granted. An exclusive enjoyment is guaranteed him for 17 years, but upon
the expiration of that period, the knowledge of the invention inures to the would be protected for 50 years. This situation could not have been the
people, who are thus enabled to practice it and profit by its use."17 intention of the law.

The patent law has a three-fold purpose: "first, patent law seeks to foster In the oft-cited case of Baker vs. Selden21 , the United States Supreme
and reward invention; second, it promotes disclosures of inventions to Court held that only the expression of an idea is protected by copyright, not
stimulate further innovation and to permit the public to practice the the idea itself. In that case, the plaintiff held the copyright of a book which
invention once the patent expires; third, the stringent requirements for expounded on a new accounting system he had developed. The publication
patent protection seek to ensure that ideas in the public domain remain there illustrated blank forms of ledgers utilized in such a system. The defendant
for the free use of the public."18 reproduced forms similar to those illustrated in the plaintiff’s copyrighted
book. The US Supreme Court ruled that:
It is only after an exhaustive examination by the patent office that a patent is
issued. Such an in-depth investigation is required because "in rewarding a "There is no doubt that a work on the subject of book-keeping, though only
useful invention, the rights and welfare of the community must be fairly explanatory of well known systems, may be the subject of a copyright; but,
dealt with and effectively guarded. To that end, the prerequisites to then, it is claimed only as a book. x x x. But there is a clear distinction
obtaining a patent are strictly observed and when a patent is issued, the between the books, as such, and the art, which it is, intended to illustrate.
limitations on its exercise are equally strictly enforced. To begin with, a The mere statement of the proposition is so evident that it requires hardly
genuine invention or discovery must be demonstrated lest in the constant any argument to support it. The same distinction may be predicated of every
demand for new appliances, the heavy hand of tribute be laid on each slight other art as well as that of bookkeeping. A treatise on the composition and
technological advance in art."19 use of medicines, be they old or new; on the construction and use of
ploughs or watches or churns; or on the mixture and application of colors
There is no such scrutiny in the case of copyrights nor any notice published for painting or dyeing; or on the mode of drawing lines to produce the effect
before its grant to the effect that a person is claiming the creation of a work. of perspective, would be the subject of copyright; but no one would contend
The law confers the copyright from the moment of creation20 and the that the copyright of the treatise would give the exclusive right to the art or
copyright certificate is issued upon registration with the National Library of manufacture described therein. The copyright of the book, if not pirated
a sworn ex-parte claim of creation. from other works, would be valid without regard to the novelty or want of
novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to
Therefore, not having gone through the arduous examination for patents, the
petitioner cannot exclude others from the manufacture, sale or commercial the author of the book an exclusive property in the art described
use of the light boxes on the sole basis of its copyright certificate over the therein, when no examination of its novelty has ever been officially
technical drawings. made, would be a surprise and a fraud upon the public. That is the
province of letters patent, not of copyright. The claim to an invention of
discovery of an art or manufacture must be subjected to the
Stated otherwise, what petitioner seeks is exclusivity without any examination of the Patent Office before an exclusive right therein can
opportunity for the patent office (IPO) to scrutinize the light box’s be obtained; and a patent from the government can only secure it.
eligibility as a patentable invention. The irony here is that, had petitioner
secured a patent instead, its exclusivity would have been for 17 years only.
The difference between the two things, letters patent and copyright, may be
But through the simplified procedure of copyright-registration with the
illustrated by reference to the subjects just enumerated. Take the case of
National Library — without undergoing the rigor of defending the
medicines. Certain mixtures are found to be of great value in the healing art.
patentability of its invention before the IPO and the public — the petitioner
If the discoverer writes and publishes a book on the subject (as regular
physicians generally do), he gains no exclusive right to the manufacture
and sale of the medicine; he gives that to the public. If he desires to ON THE ISSUE OF TRADEMARK INFRINGEMENT
acquire such exclusive right, he must obtain a patent for the mixture as
a new art, manufacture or composition of matter. He may copyright his This issue concerns the use by respondents of the mark "Poster Ads" which
book, if he pleases; but that only secures to him the exclusive right of petitioner’s president said was a contraction of "poster advertising." P & D
printing and publishing his book. So of all other inventions or was able to secure a trademark certificate for it, but one where the goods
discoveries. specified were "stationeries such as letterheads, envelopes, calling cards and
newsletters."22 Petitioner admitted it did not commercially engage in or
The copyright of a book on perspective, no matter how many drawings and market these goods. On the contrary, it dealt in electrically operated backlit
illustrations it may contain, gives no exclusive right to the modes of advertising units and the sale of advertising spaces thereon, which, however,
drawing described, though they may never have been known or used before. were not at all specified in the trademark certificate.
By publishing the book without getting a patent for the art, the latter is
given to the public. Under the circumstances, the Court of Appeals correctly cited Faberge Inc.
vs. Intermediate Appellate Court,23 where we, invoking Section 20 of the
xxx old Trademark Law, ruled that "the certificate of registration issued by the
Director of Patents can confer (upon petitioner) the exclusive right to use its
Now, whilst no one has a right to print or publish his book, or any material own symbol only to those goods specified in the certificate, subject to any
part thereof, as a book intended to convey instruction in the art, any person conditions and limitations specified in the certificate x x x. One who has
may practice and use the art itself which he has described and illustrated adopted and used a trademark on his goods does not prevent the adoption
therein. The use of the art is a totally different thing from a publication and use of the same trademark by others for products which are of a
of the book explaining it. The copyright of a book on bookkeeping cannot different description."24 Faberge, Inc. was correct and was in fact recently
secure the exclusive right to make, sell and use account books prepared reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25
upon the plan set forth in such book. Whether the art might or might not
have been patented, is a question, which is not before us. It was not Assuming arguendo that "Poster Ads" could validly qualify as a trademark,
patented, and is open and free to the use of the public. And, of course, in the failure of P & D to secure a trademark registration for specific use on
using the art, the ruled lines and headings of accounts must necessarily be the light boxes meant that there could not have been any trademark
used as incident to it. infringement since registration was an essential element thereof.1âwphi1

The plausibility of the claim put forward by the complainant in this case ON THE ISSUE OF UNFAIR COMPETITION
arises from a confusion of ideas produced by the peculiar nature of the art
described in the books, which have been made the subject of copyright. In If at all, the cause of action should have been for unfair competition, a
describing the art, the illustrations and diagrams employed happened to situation which was possible even if P & D had no registration.26 However,
correspond more closely than usual with the actual work performed by the while the petitioner’s complaint in the RTC also cited unfair competition,
operator who uses the art. x x x The description of the art in a book, the trial court did not find private respondents liable therefor. Petitioner did
though entitled to the benefit of copyright, lays no foundation for an not appeal this particular point; hence, it cannot now revive its claim of
exclusive claim to the art itself. The object of the one is explanation; the unfair competition.
object of the other is use. The former may be secured by copyright. The
latter can only be secured, if it can be secured at all, by letters patent." But even disregarding procedural issues, we nevertheless cannot hold
(underscoring supplied)
respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on SO ORDERED.
copyrights although it is applicable to disputes over the use of trademarks.
Even a name or phrase incapable of appropriation as a trademark or
tradename may, by long and exclusive use by a business (such that the name
or phrase becomes associated with the business or product in the mind of
the purchasing public), be entitled to protection against unfair
competition.27 In this case, there was no evidence that P & D’s use of
"Poster Ads" was distinctive or well-known. As noted by the Court of
Appeals, petitioner’s expert witnesses himself had testified that " ‘Poster
Ads’ was too generic a name. So it was difficult to identify it with any
company, honestly speaking."28 This crucial admission by its own expert
witness that "Poster Ads" could not be associated with P & D showed that,
in the mind of the public, the goods and services carrying the trademark
"Poster Ads" could not be distinguished from the goods and services of
other entities.

This fact also prevented the application of the doctrine of secondary


meaning. "Poster Ads" was generic and incapable of being used as a
trademark because it was used in the field of poster advertising, the very
business engaged in by petitioner. "Secondary meaning" means that a word
or phrase originally incapable of exclusive appropriation with reference to
an article in the market (because it is geographically or otherwise
descriptive) might nevertheless have been used for so long and so
exclusively by one producer with reference to his article that, in the trade
and to that branch of the purchasing public, the word or phrase has come to
mean that the article was his property.29 The admission by petitioner’s own
expert witness that he himself could not associate "Poster Ads" with
petitioner P & D because it was "too generic" definitely precluded the
application of this exception.

Having discussed the most important and critical issues, we see no need to
belabor the rest.

All told, the Court finds no reversible error committed by the Court of
Appeals when it reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the


Court of Appeals dated May 22, 2001 is AFFIRMED in toto.