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2009 CASES However, ABS-CBN demanded for PMSI to cease and desist from

rebroadcasting Channels 2 and 23. PMSI replied that the rebroadcasting


ABS-CBN BROADCASTING CORPORATION, Petitioners, vs. was in accordance with the authority granted it by NTC and its obligation
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS
under NTC Memorandum Circular No. 4-08-88, Section 6.2 of which
CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND
ALOYSIUS M. COLAYCO, Respondents. requires all cable television system operators operating in a community
within Grade “A” or “B” contours to carry the television signals of the
G.R. No. 175769-70 January 19, 2009 authorized television broadcast stations.

FACTS: Petitioner then filed a complaint against respondent to IPO for “Violation of
Laws Involving Property Rights, with Prayer for the Issuance of a
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under
Temporary Restraining Order and/or Writ of Preliminary Injunction,”
the laws of the Republic of the Philippines to engage in television and
docketed as IPV No. 10-2002-0004. It alleged that PMSI’s unauthorized
radio broadcasting. It broadcasts television programs by wireless means to
rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights
Metro Manila and nearby provinces, and by satellite to provincial stations
and copyright.
through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra
High Frequency (UHF). The programs aired over Channels 2 and 23 are The Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN’s application
either produced by ABS-CBN or purchased from or licensed by other for a temporary restraining order, thus PMSI suspended its retransmission
producers. ABS-CBN also owns regional television stations which pattern of Channels 2 and 23 but filed a manifestation with the BLA that they are
their programming in accordance with perceived demands of the region. subject to the must-carry rule under Memorandum Circular No. 04-08-88.
Thus, television programs shown in Metro Manila and nearby provinces are
not necessarily shown in other provinces. NTC then after sent a letter enjoining PMSI strict and immediate
compliance with the must-carry rule under Memorandum Circular No. 04-
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of 08-88, thus another Manifestation with the BLA was filed in reference to
Dream Broadcasting System. It delivers digital direct-to-home (DTH) the said letter.
television via satellite to its subscribers all over the Philippines.
BLA however rendered a decision finding that PMSI infringed the
PMSI was granted a legislative franchise under Republic Act No. 86305 on broadcasting rights and copyright of ABS-CBN and ordering it to
May 7, 1998 and was given a Provisional Authority by the National permanently cease and desist from rebroadcasting Channels 2 and 23.
Telecommunications Commission (NTC) on February 1, 2000 to install, PMSI appealed said decision with the Office of the Director-General of the
operate and maintain a nationwide DTH satellite service. When it IPO, granting said petition and reversed BLA’s ruling
commenced operations, it offered as part of its program line-up ABS-CBN
Channels 2 and 23, NBN, Channel 4, ABC Channel 5, GMA Channel 7, RPN Petitioner filed a petition for review with prayer for issuance of a
Channel 9, and IBC Channel 13, together with other paid premium temporary restraining order and writ of preliminary injunction with the
program channels. Court of Appeals that issued a temporary restraining order. Thereafter,
ABS-CBN filed a petition for contempt against PMSI for continuing to
rebroadcast Channels 2 and 23 despite the restraining order.
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In the assailed Decision dated July 12, 2006, the Court of Appeals xxxx
sustained the findings of the Director-General of the IPO and dismissed
both petitions filed by ABS-CBN. Neither is PMSI guilty of infringement of ABS-CBN’s copyright under
Section 177 of the IP Code which states that copyright or economic rights
ABS-CBN’s motion for reconsideration was denied, hence, this petition. shall consist of the exclusive right to carry out, authorize or prevent the
public performance of the work (Section 177.6), and other communication
to the public of the work (Section 177.7).

ISSUE: Section 202.7 of the IP Code defines broadcasting as “the transmission by


wireless means for the public reception of sounds or of images or of
WON PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an
representations thereof; such transmission by satellite is also
infringement of its broadcasting rights and copyright under the Intellectual
‘broadcasting’ where the means for decrypting are provided to the public
Property Code (IP Code)
by the broadcasting organization or with its consent.”
WON Court of Appeals’ interpretation of the must-carry rule violates
On the other hand, rebroadcasting as defined in Article 3(g) of the
Section 9 of Article III of the Constitution because it allows the taking of
International Convention for the Protection of Performers, Producers of
property for public use without payment of just compensation
Phonograms and Broadcasting Organizations, otherwise known as the
1961 Rome Convention, of which the Republic of the Philippines is a
signatory, is “the simultaneous broadcasting by one broadcasting
RULING: organization of the broadcast of another broadcasting organization.”

The court affirms the findings of the Director-General of the IPO and the The Director-General of the IPO correctly found that PMSI is not engaged in
Court of Appeals. rebroadcasting and thus cannot be considered to have infringed ABS-
CBN’s broadcasting rights and copyright.
There is no merit in ABS-CBN’s contention that PMSI violated its
broadcaster’s rights under Section 211 of the IP Code which provides in Section 202.7 of the IP Code, thus, provides two instances wherein
part: there is broadcasting, to wit:

Chapter XIV 1. The transmission by wireless means for the public reception of
BROADCASTING ORGANIZATIONS sounds or of images or of representations thereof; and

Sec. 211. Scope of Right. - Subject to the provisions of Section 212, 2. The transmission by satellite for the public reception of sounds
broadcasting organizations shall enjoy the exclusive right to carry out, or of images or of representations thereof where the means for
authorize or prevent any of the following acts: decrypting are provided to the public by the broadcasting
organization or with its consent.
211.1. The rebroadcasting of their broadcasts;

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It is under the second category that Appellant’s DTH satellite television and in case of television signals, a television set, and to tune-in to the
service must be examined since it is satellite-based. The elements of such right channel/frequency. The definition of broadcasting, wherein it is
category are as follows: required that the transmission is wireless, all the more supports this
discussion. Apparently, the undiscriminating dispersal of signals in the air
1. There is transmission of sounds or images or of representations is possible only through wireless means. The use of wire in transmitting
thereof; signals, such as cable television, limits the recipients to those who are
connected. Unlike wireless transmissions, in wire-based transmissions, it is
2. The transmission is through satellite;
not enough that one wants to be connected and possesses the equipment.
3. The transmission is for public reception; and The service provider, such as cable television companies may choose its
subscribers.
4. The means for decrypting are provided to the public by the
broadcasting organization or with its consent. The only limitation to such dispersal of signals in the air is the technical
capacity of the transmitters and other equipment employed by the
It is only the presence of all the above elements can a determination that broadcaster. While the broadcaster may use a less powerful transmitter to
the DTH is broadcasting and consequently, rebroadcasting Appellee’s limit its coverage, this is merely a business strategy or decision and not an
signals in violation of Sections 211 and 177 of the IP Code, may be arrived inherent limitation when transmission is through cable.
at.
Accordingly, the nature of broadcasting is to scatter the signals in its
Accordingly, this Office is of the view that the transmission contemplated widest area of coverage as possible. On this score, it may be said that
under Section 202.7 of the IP Code presupposes that the origin of the making public means that accessibility is undiscriminating as long as it [is]
signals is the broadcaster. Hence, a program that is broadcasted is within the range of the transmitter and equipment of the broadcaster. That
attributed to the broadcaster. In the same manner, the rebroadcasted the medium through which the Appellant carries the Appellee’s signal, that
program is attributed to the rebroadcaster. is via satellite, does not diminish the fact that it operates and functions as
a cable television. It remains that the Appellant’s transmission of signals
In the case at hand, Appellant is not the origin nor does it claim to via its DTH satellite television service cannot be considered within the
be the origin of the programs broadcasted by the Appellee. purview of broadcasting. x x x
Appellant did not make and transmit on its own but merely
carried the existing signals of the Appellee. When Appellant’s xxxx
subscribers view Appellee’s programs in Channels 2 and 23, they
know that the origin thereof was the Appellee. This Office also finds no evidence on record showing that the Appellant
has provided decrypting means to the public indiscriminately. Considering
Aptly, it is imperative to discern the nature of broadcasting. When a the nature of this case, which is punitive in fact, the burden of proving the
broadcaster transmits, the signals are scattered or dispersed in the air. existence of the elements constituting the acts punishable rests on the
Anybody may pick-up these signals. There is no restriction as to its shoulder of the complainant.
number, type or class of recipients. To receive the signals, one is not
required to subscribe or to pay any fee. One only has to have a receiver,
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Accordingly, this Office finds that there is no rebroadcasting on the part of (h) The use made of a work by or under the direction or control of the
the Appellant of the Appellee’s programs on Channels 2 and 23, as defined Government, by the National Library or by educational, scientific or
under the Rome Convention.22 professional institutions where such use is in the public interest and is
compatible with fair use;
Under the Rome Convention, rebroadcasting is “the simultaneous
broadcasting by one broadcasting organization of the broadcast of another The carriage of ABS-CBN’s signals by virtue of the must-carry rule in
broadcasting organization.” The Working Paper prepared by the Memorandum Circular No. 04-08-88 is under the direction and control of
Secretariat of the Standing Committee on Copyright and Related Rights the government though the NTC which is vested with exclusive jurisdiction
defines broadcasting organizations as “entities that take the financial and to supervise, regulate and control telecommunications and broadcast
editorial responsibility for the selection and arrangement of, and services/facilities in the Philippines.26 The imposition of the must-carry
investment in, the transmitted content.” Evidently, PMSI would not qualify rule is within the NTC’s power to promulgate rules and regulations, as
as a broadcasting organization because it does not have the public safety and interest may require, to encourage a larger and more
aforementioned responsibilities imposed upon broadcasting organizations, effective use of communications, radio and television broadcasting
such as ABS-CBN. facilities, and to maintain effective competition among private entities in
these activities whenever the Commission finds it reasonably feasible. As
ABS-CBN creates and transmits its own signals; PMSI merely carries such correctly observed by the Director-General of the IPO:
signals which the viewers receive in its unaltered form. PMSI does not
produce, select, or determine the programs to be shown in Channels 2 and Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-88 falls
23. Likewise, it does not pass itself off as the origin or author of such under the foregoing category of limitations on copyright. This Office
programs. Insofar as Channels 2 and 23 are concerned, PMSI merely agrees with the Appellant [herein respondent PMSI] that the “Must-Carry
retransmits the same in accordance with Memorandum Circular 04-08-88. Rule” is in consonance with the principles and objectives underlying
With regard to its premium channels, it buys the channels from content Executive Order No. 436,28 to wit:
providers and transmits on an as-is basis to its viewers. Clearly, PMSI does
not perform the functions of a broadcasting organization; thus, it cannot The Filipino people must be given wider access to more sources of news,
be said that it is engaged in rebroadcasting Channels 2 and 23. information, education, sports event and entertainment programs other
than those provided for by mass media and afforded television programs
It must be emphasized that the law on copyright is not absolute. The IP to attain a well informed, well-versed and culturally refined citizenry and
Code provides that: enhance their socio-economic growth:

Sec. 184. Limitations on Copyright. - WHEREAS, cable television (CATV) systems could support or supplement
the services provided by television broadcast facilities, local and overseas,
184.1. Notwithstanding the provisions of Chapter V, the following acts as the national information highway to the countryside.29
shall not constitute infringement of copyright:
The Court of Appeals likewise correctly observed that:
xxxx

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[T]he very intent and spirit of the NTC Circular will prevent a situation community programming; assist in the functions of public information and
whereby station owners and a few networks would have unfettered power education x x x.”
to make time available only to the highest bidders, to communicate only
their own views on public issues, people, and to permit on the air only PMSI was likewise granted a legislative franchise under Republic Act No.
those with whom they agreed – contrary to the state policy that the 8630, Section 4 of which similarly states that it “shall provide adequate
(franchise) grantee like the petitioner, private respondent and other TV public service time to enable the government, through the said
station owners, shall provide at all times sound and balanced broadcasting stations, to reach the population on important public issues;
programming and assist in the functions of public information and provide at all times sound and balanced programming; promote public
education. participation such as in community programming; assist in the functions of
public information and education x x x.” Section 5, paragraph 2 of the
This is for the first time that we have a structure that works to accomplish same law provides that “the radio spectrum is a finite resource that is a
explicit state policy goals. part of the national patrimony and the use thereof is a privilege conferred
upon the grantee by the State and may be withdrawn anytime, after due
Indeed, intellectual property protection is merely a means process.”
towards the end of making society benefit from the creation of its
men and women of talent and genius. This is the essence of Anyone in the country who owns a television set and antenna can receive
intellectual property laws, and it explains why certain products of ABS-CBN’s signals for free. Other broadcasting organizations with free-to-
ingenuity that are concealed from the public are outside the pale air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be
of protection afforded by the law. It also explains why the author accessed for free. No payment is required to view the said
or the creator enjoys no more rights than are consistent with channels42 because these broadcasting networks do not generate
public welfare. revenue from subscription from their viewers but from airtime revenue
from contracts with commercial advertisers and producers, as well as from
Further, as correctly observed by the Court of Appeals, the must-carry rule direct sales.
as well as the legislative franchises granted to both ABS-CBN and PMSI are
in consonance with state policies enshrined in the Constitution, specifically In contrast, cable and DTH television earn revenues from viewer
Sections 9,32 17,33 and 2434 of Article II on the Declaration of Principles subscription. In the case of PMSI, it offers its customers premium paid
and State Policies.35 channels from content providers like Star Movies, Star World, Jack TV, and
AXN, among others, thus allowing its customers to go beyond the limits of
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, “Free TV and Cable TV.” It does not advertise itself as a local channel
Section 1 of which authorizes it “to construct, operate and maintain, for carrier because these local channels can be viewed with or without DTH
commercial purposes and in the public interest, television and radio television.
broadcasting in and throughout the Philippines x x x.” Section 4 thereof
mandates that it “shall provide adequate public service time to enable the Relevantly, PMSI’s carriage of Channels 2 and 23 is material in arriving at
government, through the said broadcasting stations, to reach the the ratings and audience share of ABS-CBN and its programs. These
population on important public issues; provide at all times sound and ratings help commercial advertisers and producers decide whether to buy
balanced programming; promote public participation such as in airtime from the network. Thus, the must-carry rule is actually
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advantageous to the broadcasting networks because it provides them with the signals that are carried by cable television companies are dispersed
increased viewership which attracts commercial advertisers and and scattered by the television stations and anybody with a television set
producers. is free to pick them up.

On the other hand, the carriage of free-to-air signals imposes a burden to With its enormous resources and vaunted technological capabilities,
cable and DTH television providers such as PMSI. PMSI uses none of ABS- Appellee’s [herein petitioner ABS-CBN] broadcast signals can reach almost
CBN’s resources or equipment and carries the signals and shoulders the every corner of the archipelago. That in spite of such capacity, it chooses
costs without any recourse of charging. Moreover, such carriage of signals to maintain regional stations, is a business decision. That the “Must-Carry
takes up channel space which can otherwise be utilized for other premium Rule” adversely affects the profitability of maintaining such regional
paid channels. stations since there will be competition between them and its Metro Manila
station is speculative and an attempt to extrapolate the effects of the rule.
There is no merit to ABS-CBN’s argument that PMSI’s carriage of Channels As discussed above, Appellant’s DTH satellite television services is of
2 and 23 resulted in competition between its Metro Manila and regional limited subscription. There was not even a showing on part of the Appellee
stations. ABS-CBN is free to decide to pattern its regional programming in the number of Appellant’s subscribers in one region as compared to non-
accordance with perceived demands of the region; however, it cannot subscribing television owners. In any event, if this Office is to engage in
impose this kind of programming on the regional viewers who are also conjecture, such competition between the regional stations and the Metro
entitled to the free-to-air channels. It must be emphasized that, as a Manila station will benefit the public as such competition will most likely
national broadcasting organization, one of ABS-CBN’s responsibilities is to result in the production of better television programs.”46
scatter its signals to the widest area of coverage as possible. That it
should limit its signal reach for the sole purpose of gaining profit for its All told, we find that the Court of Appeals correctly upheld the decision of
regional stations undermines public interest and deprives the viewers of the IPO Director-General that PMSI did not infringe on ABS-CBN’s
their right to access to information. intellectual property rights under the IP Code. The findings of facts of
administrative bodies charged with their specific field of expertise, are
Indeed, television is a business; however, the welfare of the people must afforded great weight by the courts, and in the absence of substantial
not be sacrificed in the pursuit of profit. The right of the viewers and showing that such findings are made from an erroneous estimation of the
listeners to the most diverse choice of programs available is evidence presented, they are conclusive, and in the interest of stability of
paramount. The Director-General correctly observed, thus: the governmental structure, should not be disturbed.

The “Must-Carry Rule” favors both broadcasting organizations and the Moreover, the factual findings of the Court of Appeals are conclusive on
public. It prevents cable television companies from excluding broadcasting the parties and are not reviewable by the Supreme Court. They carry even
organization especially in those places not reached by signal. Also, the more weight when the Court of Appeals affirms the factual findings of a
rule prevents cable television companies from depriving viewers in far- lower fact-finding body, as in the instant case.
flung areas the enjoyment of programs available to city viewers. In fact,
this Office finds the rule more burdensome on the part of the cable There is likewise no merit to ABS-CBN’s contention that the Memorandum
television companies. The latter carries the television signals and Circular excludes from its coverage DTH television services such as those
shoulders the costs without any recourse of charging. On the other hand, provided by PMSI. Section 6.2 of the Memorandum Circular requires all
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cable television system operators operating in a community within Grade The records show that petitioner assailed the constitutionality of
“A” or “B” contours to carry the television signals of the authorized Memorandum Circular No. 04-08-88 by way of a collateral attack before
television broadcast stations. the Court of Appeals.

The policy of the Memorandum Circular is to carry improved signals in As a general rule, the question of constitutionality must be raised at the
remote areas for the good of the general public and to promote earliest opportunity so that if not raised in the pleadings, ordinarily it may
dissemination of information. In line with this policy, it is clear that DTH not be raised in the trial, and if not raised in the trial court, it will not be
television should be deemed covered by the Memorandum Circular. considered on appeal.
Notwithstanding the different technologies employed, both DTH and cable
television have the ability to carry improved signals and promote ROMA DRUG AND ROMEO RODRIGUEZ (PROPRIETOR) VS RTC OF
dissemination of information because they operate and function in the GUAGUA, BFAD, GLAXO SMITH KLINE (PHILS.) – APRIL 16,2009
same way.

In its December 20, 2002 letter, the NTC explained that both DTH and
FACTS: On August 2000, NBI and BFAD conducted a raid on Roma Drug, a
cable television services are of a similar nature, the only difference being
duly registered drug store located at Guagua, Pampanga. They seized
the medium of delivering such services. They can carry broadcast signals
several imported medicines. It appears that Roma Drug is one of six drug
to the remote areas and possess the capability to enrich the lives of the
stores which were raided upon the request of SmithKline Beecham
residents thereof through the dissemination of social, economic,
Research Limited (SmithKline), a duly registered corporation which is the
educational information and cultural programs. Consequently, while the
local distributor of pharmaceutical products manufactured by its parent
Memorandum Circular refers to cable television, it should be understood
London-based corporation. The local SmithKline has since merged with
as to include DTH television which provides essentially the same services.
Glaxo Wellcome Phil. Inc to form Glaxo SmithKline, private respondent in
With regard to the issue of the constitutionality of the must-carry rule, the this case. The seized medicines, which were manufactured by SmithKline,
Court finds that its resolution is not necessary in the disposition of the were imported directly from abroad and not purchased through the local
instant case. One of the essential requisites for a successful judicial inquiry SmithKline, the authorized Philippine distributor of these products.
into constitutional questions is that the resolution of the constitutional
question must be necessary in deciding the case. The NBI filed a complaint against Rodriguez for violation of Sec.4 of
Republic Act No. 8203, also known as the Special Law on Counterfeit
The instant case was instituted for violation of the IP Code and Drugs (SLCD). The section prohibits the sale of counterfeit drugs, which
infringement of ABS-CBN’s broadcasting rights and copyright, which can under Section 3(b)(3), includes "an unregistered imported drug product."
be resolved without going into the constitutionality of Memorandum
Circular No. 04-08-88. As held by the Court of Appeals, the only relevance In this case, there is no doubt that the subject seized drugs are identical in
of the circular in this case is whether or not compliance therewith should content with their Philippine-registered counterparts. There is no claim
be considered manifestation of lack of intent to commit infringement, and that they were adulterated in any way or mislabeled at least. Their
if it is, whether such lack of intent is a valid defense against the complaint classification as "counterfeit" is based solely on the fact that they were
of petitioner.
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imported from abroad and not purchased from the Philippine-registered said market: Provided, That, with regard to drugs and medicines, the
owner of the patent or trademark of the drugs. limitation on patent rights shall apply after a drug or medicine
has been introduced in the Philippines or anywhere else in the
During preliminary investigation, Rodriguez challenged the world by the patent owner, or by any party authorized to use the
constitutionality of the SLCD. However, the Assistant Provincial Prosecutor invention: Provided,
skirted the challenge and issued a Resolution dated 17 August 2001
recommending that Rodriguez be charged with violation of Section 4(a) of further, That the right to import the drugs and medicines
the SLCD. contemplated in this section shall be available to any government
agency or any private third party;
Hence, the present Petition for Prohibition requesting the RTC-Guagua to
desist from further prosecuting Rodriguez, and that Sections 3(b)(3), 4 and The drugs and medicines are deemed introduced when they have been
5 of the SLCD be declared unconstitutional. On 15 October 2001, the sold or offered for sale anywhere else in the world. Where a statute of later
Court issued a temporary restraining order enjoining the RTC from date, such as Rep. Act No. 9502, clearly reveals an intention on the part of
proceeding with the trial against Rodriguez, and the BFAD, the NBI and the legislature to abrogate a prior act on the subject that intention must
Glaxo Smithkline from prosecuting the petitioners. be given effect.9 When a subsequent enactment covering a field of
operation coterminus with a prior statute cannot by any reasonable
ISSUE: Is the SLCD constitutional. Can petitioner be held liable under RA construction be given effect while the prior law remains in operative
8203. existence because of irreconcilable conflict between the two acts, the
latest legislative expression prevails and the prior law yields to the extent
HELD: The court decided in favor of petitioner. The constitutional aspect of the conflict.10 Irreconcilable inconsistency between two laws embracing
of this petition has been mooted with the passage in 2008 of Republic Act the same subject may exist when the later law nullifies the reason or
No. 9502, also known as the "Universally Accessible Cheaper and Quality purpose of the earlier act, so that the latter loses all meaning and function.
Medicines Act of 2008". Section 7 of RA 9502 amends Section 72 of the IP For the reasons above-stated, the prosecution of petitioner is no longer
Code in that the later law unequivocally grants third persons the right to warranted and the quested writ of prohibition should accordingly be
import drugs or medicines whose patent were registered in the Philippines issued.
by the owner of the product:
WHEREFORE, the petition is GRANTED in part. A writ of prohibition is
Sec. 72. Limitations of Patent Rights. – The owner of a patent has no right hereby ISSUED commanding respondents from prosecuting petitioner
to prevent third parties from performing, without his authorization, the Romeo Rodriguez for violation of Section 4 or Rep. Act No. 8203. The
acts referred to in Section 71 hereof in the following circumstances: Temporary Restraining Order dated 15 October 2001 is hereby made
PERMANENT.
"72.1. Using a patented product which has been put on the market in the
Philippines by the owner of the product, or with his express consent, Compania general tobacco vs. sevandal
insofar as such use is performed after that product has been so put on the

8
infringement of trademark be dismissed against respondent Gabriel Ripoll
FACTS: Jr. for insufficiency of evidence.
Petitioner Compania General de Tabacos de Filipinas, also known as Petitioners moved reconsideration of the above resolution, but their
"Tabacalera," is a foreign corporation organized and existing under the motion was denied.
laws of Spain. It is the owner of 24 trademarks registered with the Bureau In response, private respondents filed an Opposition to Complainants’
of Patents, Trademarks and Technology Transfer (BPTTT) of the Motion to Issue Cease and Desist Order, with Motion to Dismiss Complaint.
Department of Trade and Industry (DTI). Tabacalera authorized petitioner private respondents anchored their motion to dismiss on the ground of
La Flor de la Isabela, Inc. to manufacture and sell cigars and cigarettes forum shopping due to petitioners’ filing of prior cases of infringement and
using the Tabacalera trademarks. unfair competition with the DOJ.
Respondent Gabriel Ripoll, Jr. was an employee of petitioners for 28 years
and was the General Manager before he retired. In the same year, Ripoll Issue: whether or not there was similarity in the general appearance of
organized Tabaqueria de Filipinas, Inc. (Tabaqueria), a domestic the products of the parties and whether or not the consumers would be
corporation also engaged in the manufacture of tobacco products like misled by the same.
cigars.4 Ripoll is the managing director of Tabaqueria.
On October 1, 1993, petitioners filed a Letter-Complaint with the Securities Held: the Office of Legal Affairs of the DTI ruled that there was no
and Exchange Commission praying for the cancellation of the corporate similarity in the general appearance of the products of the parties and that
name of Tabaqueria on the ground that “Tabaqueria, being engaged in the consumers would not be misled. In the same order, the DTI partially
same business as Tabacalera, cannot be allowed to continue using granted petitioners’ prayer for the issuance of a writ of preliminary
"tabaqueria" which will confuse and deceive the public into believing that injunction. The order determined if there is similarity in general
Tabaqueria is operated and managed by, and part of, Tabacalera and that appearance between Tabacalera products and Respondents’ products,
its business is approved, sponsored by, and affiliated with, Tabacalera.” such that it will likely mislead, confuse or deceive the usual purchasers of
Thereafter, petitioners also filed with the Department of Justice (DOJ)-Task cigars into buying Respondents’ products thinking that what they are
Force on Anti-Intellectual Property Piracy a criminal complaint against buying are the Tabacalera products they intended to buy. The order held
Ripoll for Infringement of Trademark and Unfair Competition for violation that The competing products should be viewed in their totality. But certain
of Articles 188 and 189 of the Revised Penal Code. On February 8, 1994, features, have to be excluded first.
petitioners filed with the DTI a Complaint for unfair competition. The supreme court upheld such order of the DTI and cited the case of asia
Petitioners alleged in the Complaint that Tabaqueria deliberately sought to brewery vs. CA in determining and distinguishing between similarities of
adopt/simulate the Tabacalera trademarks to confuse the public into fact and similarities of law. "Protection against imitation should be
believing that the Tabaqueria cigars are the same or are somehow properly confined to non-functional features. Even if purely functional
connected with the Tabacalera products. elements are slavishly copied, the resemblance will not support an action
Tabaqueria and Ripoll opposed the issuance of injunctive relief pending for unfair competition, and the first user cannot claim secondary meaning
investigation on the ground that petitioners’ allegation of unfair protection. Nor can the first user predicate his claim in reliance of any
competition is unproved and unsubstantiated. such unpatented functional feature, even at large expenditure of money."
Meanwhile, on September 1, 1994, the DOJ issued a Resolution Thus, the order held that the two products were different as to the logo
recommending that the complaint for unfair competition and/or engraved on the top/back of the cover box; as to the brand product; as to
9
markings on the edge of the original box; as to the “seal of guaranty”; as horseback as the dominant feature of its label. It began selling “Ginebra
to predominant colors; and as to the corporate name and other Kapitan” in 2003.
distinctions.
In 2003, San Miguel filed a complaint for trademark infringement,
Thus, there is no unfair competition because as a general rule, an ordinary unfair competition and damages, with applications for issuance of TRO and
buyer does not exercise as much prudence in buying an article for which writ of preliminary injunction against Tanduay before the Regional Trial
he pays a few centavos as he does in purchasing a more valuable thing. Court. San Miguel alleges that it has registered the trademark “Ginebra
Expensive and valuable items are normally bought after deliberate, San Miguel” and that it has been continuously using “GINEBRA,” as a
comparative and analytical investigation. But mass products, low priced dominant feature in its product since 1834. It claims among others that
articles as in wide use, and the matters of everyday purchase requiring the close similarity between “Ginebra San Miguel” and “Ginebra Kapitan”
may give rise to confusion of goods since San Miguel and Tanduay are
frequent replacement are bought by the causal consumer without great
competitors in the business of manufacturing and selling liquors.
care.
Certainly, not everybody buys cigars. Very few people buy cigars for they The RTC in its orders dated September 23, 2003 and October 17,
are expensive, have health implications, and its smoke annoys non- 2003 granted San Miguel’s prayer for issuance of a temporary restraining
smokers. It is really not the "sari-sari" store variety. OLA takes judicial order (TRO) and writ of preliminary injunction against Tanduay. Thus,
notice that even big department stores and malls do not ordinarily sell Tanduay filed a petition for certiorari before the Court of Appeals assailing
the injunction order filed by RTC. The CA dismissed the petition. Hence,
cigars. The usual purchasers of cigars are older people not necessarily an
Tanduay elevated the case to the Supreme Court.
elder or professional, besides those cigar aficionados and cigar lovers, who
are able and willing to pay and are capable of discerning the products they Tanduay asserts that not one of the requisites for the valid
buy. Definitely the "impulse buyers" (those who make a very quick issuance of a preliminary injunction is present in this case because: 1) San
decision (e.g., 6 seconds) to buy a certain product) are not the usual Miguel’s alleged exclusive right to use the generic word “Ginebra”
purchasers of cigars. (Spanish term for gin) is far from clear and unmistakable. 2) The CA, in
upholding the issuance of the writ of preliminary injunction, has prejudged
"The ordinary purchasers must be thought of as having, and credited with,
the merits of the case since nothing is left to be decided by the trial court
at least a modicum of intelligence to be able to see the obvious except the amount of damages to be awarded to San Miguel. 3) The
differences between the two trademarks in question." supposed damages that San Miguel will suffer as a result of Tanduay’s
Therefore, the Supreme Court upheld the decision of the DTI and infringement or unfair competition cannot be considered irreparable
dismissed the petition for certiorari in the case at bar. because the damages are susceptible of mathematical computation as Sec
156.1 of the IP Code can be the basis of the mathematical computation.
TANDUAY DISTILLERS, INC., vs. GINEBRA SAN MIGUEL, INC.,
G.R. NO. 164324, AUGUST 14, 2009 ISSUE:
CARPIO, J.
FACTS: Whether or not San Miguel is entitled to the writ of preliminary
injunction granted by the trial court as affirmed by the CA (SC shall deal
In 2002, Tanduay, who has been engaged in the liquor business only with the questioned writ and not with the merits of the case pending
since 1854 developed a new gin. The brand name eventually chosen was before the trial court)
“Ginebra Kapitan” with the representation of a revolutionary Kapitan on
HELD:

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NO. Wen Ming Chen aka. Domingo Tan Vs. Atty. F.D. Nicolas Pichay AC No.
7910, Septemeber 18, 2009
Clear and Unmistakable Right
Facts:
In this case, a cloud of doubt exists over San Miguel’s exclusive
right relating to the word “Ginebra.” San Miguel’s claim to the exclusive
Complainant Wen Ming Chen filed a complaint against Atty Pichay before
use of the word “Ginebra” is clearly still in dispute because of Tanduay’s
claim that it has, as others have, also registered the word “Ginebra” for its the IBP for violation of (1) Rule 1.01 of the Code of Professional
gin products. This issue can be resolved only after a full-blown trial. Responsibility for alleging extorting money from complainant; (2) gross
misconduct amounting to gross inexcusable ignorance of the law when he
Prejudging the Merits of the Case file complaints for damages before the DOJ; (3) violation of Rule 10.3 of
the Code of Responsibility when Atty. Pichay filed a Motion before the
We believe that the issued writ of preliminary injunction, if allowed,
disposes of the case on the merits as it effectively enjoins the use of the Regional Trial Court of Manila seeking inclusion of complainant’s name in
word “Ginebra” without the benefit of a full-blown trial. In Rivas v. the hold departure list of the Bureau of Immigration.
Securities and Exchange Commission, we ruled that courts should avoid
issuing a writ of preliminary injunction which would in effect dispose of the It all started when six warrants was issued against the complainant upon
main case without trial. The issuance of the writ of preliminary injunction the application of the NBI based on the investigation previously conducted
had the effect of granting the main prayer of the complaint such that there on alleged rampant selling of counterfeit Gucci and Louis Vuitton items. As
is practically nothing left for the trial court to try except the plaintiff’s the complainant’s house was searched, thousands of counterfeit Gucci and
claim for damages. LV items were seized and confiscated.

Irreparable Injury On the other hand, respondent is the Legal Counsel of American System
International (ASSI), an intellectual property incorporated under the
Based on the affidavits and market survey report submitted during Philippine Law. One of their clients is Guccio Gucci S.P.A. and Louis
the injunction hearings, San Miguel has failed to prove the probability of Vuitton.
irreparable injury which it will stand to suffer if the sale of “Ginebra
Kapitan” is not enjoined. San Miguel has not presented proof of damages After February 6, 2006, the date of implementation of the search warrants
incapable of pecuniary estimation. At most, San Miguel only claims that it
and seizure, respondent receive a call from Atty. Yap Chief of the NBI
has invested hundreds of millions over a period of 170 years to establish
goodwill and reputation now being enjoyed by the “Ginebra San Miguel” Intellectual Property Rights Division, informing him that certain David Uy a
mark such that the full extent of the damage cannot be measured with good friend of the complainant to set a meeting in Diamond Hotel as
reasonable accuracy. Without the submission of proof that the damage is requested by the latter to propose a settlement regarding the seized
irreparable and incapable of pecuniary estimation, San Miguel’s claim items.
cannot be the basis for a valid writ of preliminary injunction.
David Uy asked how much damages would Gucci and LV would require but
WHEREFORE: SC sets aside the Court of Appeals rulings affirming the RTC respondent only replied that he was only authorize to receive proposal and
orders (TRO & writ of preliminary injunction). The Regional Trial Court is not to suggest provisions for settlements. The damage would range from
directed to continue expeditiously with the trial to resolve the merits of the 500,000 to 1Million depending on the quantity of the counterfeits items.
case.
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As there is no settlement reached, respondent now filed two complaints respondent Carmen Dolorias owned and operated Kristina Patricia
before the DOJ upon the instructions of Gucci and LV. Also in good faith to Enterprises, the exclusive distributor of Gasul LPG in the whole Sorsogon.
protect his clients’ interest, he filed a motion before the RTC of Manila for
the inclusion of complainant’s name in the hold departure order list. On the hand, petitioner Bicol Gas Refining Plant Corporation (Bicol Gas)
was also in the business of selling and distributing LPG in Sorsogon but
Issue: Whether or not complainant’s case filed before the IBP will disbar theirs carried the trademark “Bicol Savers Gas”.
the respondent
In the course of trade and competition, the two distributors acquiring LPG
Held: cylinder tanks belonging to one another and they call it “captured
cylinder”. What KPE is doing is that they swap the cylinder tanks with Bicol
The court found merit in the petition. Gas involving 30 tanks of Gasul with the permission of the Bicol Gas
owners. While doing the transaction, KPE’s Manager noticed that Bicol Gas
The court find it hard to believe that respondent, a counsel of ASSI could
still has a number of Gasul tanks in its yard. But the latter refused because
unilaterally decide to desist from filing a criminal case against the
those tanks will be sent to Batangas.
complainant without the consultation or prior approval of his clients Gucci
and LV. Further, there is no proof that clearly shows that such extortion However, during the day to day delivery of Bicol Gas in the town of
really took place. Sorsogon, KPE’s Manager noticed that the truck carrying mostly Bicol
Savers LPG tanks has one unsealed 50-kg Gasul and one 50-kg Shellane
The court further held that even assuming that the case filed were civil
tank. When Jose (KPE’s Manager) inquired the driver said that it was empty
actions for damages, the same does no merit respondent’s disbarment.
but when checked it was not.
The complaint filed against Atty. Pichay is dismissed.
As a result, Petron and KPE filed a complaint for violation of RA 623
MANUEL C. ESPIRITU, JR., AUDIE LLONA, FREIDA F. ESPIRITU,
(illegally filing up registered cylinder tanks) , section 155 (infringement of
CARLO F. ESPIRITU, RAFAEL F. ESPIRITU, ROLANDO M. MIRABUNA,
HERMILYN A. MIRABUNA, KIM ROLAND A. MIRABUNA, KAYE ANN A. trademarks) and section 169.1 (unfair competition) of the Intellectual
MIRABUNA, KEN RYAN A. MIRABUNA, JUANITO P. DE CASTRO, Property Code
GERONIMA A. ALMONITE and MANUEL C. DEE, who are the officers
and directors of BICOL GAS REFILLING Issues: Whether or not the facts of the case warranted the filing of charges
PLANT CORPORATION, Petitioners, versus PETRON CORPORATION against the Bicol Gas people for:
and CARMEN J. DOLOIRAS, doing business under the name
“KRISTINA PATRICIA ENTERPRISES,” Respondents, 2009 Nov 24, a) Filing up the LPG tanks registered to another manufacturer without
2nd Division, G.R. No. 170891 the latter’s consent in violation of RA 623 as amended

b) Trademark infringement consisting in Bicol Gas use of trademark


Facts: that is confusingly similar to Petron’s registered “Gasul” trademark
in violation of Section 155 of RA 8293
Respondent Petron Corporation sold and distributed liquefied petroleum
gas (LPG) in cylinder tanks that carried its trademark “GASUL” and
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c) Unfair competition consisting in passing off Bicol Gas- produced through whose act, default or omission of the crime, they will be
LPGs fro Petron – produced Gasul LPG in violation of Section 168.3 held answerable for the crime but respondents failed to show that
of RA 8293 Bicol Gas officers and stockholders participated in the crime.

PROSOURCE INTERNATIONAL, INC vs. HORPHAG RESEARCH


MANAGEMENT SA
Held:
Facts:
a) The complaint adduced at the preliminary investigation shows that
one 50 kg Petron Gasul LPG found on the Bicol Gas truck belonged Horphag Research Management SA is a corporation duly organized and
to a (Bicol Gas) customer who had the same filled up by Bicol Gas. existing under the laws of Switzerland and the owner of trademark
RA 623 as amended punishes any person who without the written PYCNOGENOL, a food supplement sold and distributed by Zuellig Pharma
consent of the manufacturer or seller of gases contained in duly Corporation. Horphag discovered that petitioner Prosource International,
registered steel cylinder tanks, fills the steel cylinder or tanks for Inc. was also distributing a similar food supplement using the mark PCO-
the purpose of sale, disposal or trafficking, other than the purpose GENOLS since 1996. This prompted respondent to demand that petitioner
for which the manufacturer or seller registered the same. cease and desist from using the aforesaid mark. Prosource international
Consequently, they may be prosecuted for that purpose. discontinued the use of, and withdrew from the market, the products
under the name PCO-GENOLS as of June 19, 2000. It, likewise, changed its
b) But as for the crime of trademark infringement, section 155 of RA mark from PCO-GENOLS to PCO-PLUS. Horphag filed a Complaint for
8293 provides its enumeration. However, KPE and Petron failed to Infringement of Trademark with Prayer for Preliminary Injunction against
prove that Bicol Gas painted on its own tanks Petron’s Gasul Prosource, praying that the latter cease and desist from using the brand
trademark or confusingly similar version to deceive its customers PCO-GENOLS for being confusingly similar with respondent’s trademark
and cheat Petron. PYCNOGENOL. RTC decided in favor of Horphag, which was affirmed by the
Court of Appeals.
c) As for the charge of unfair competition under section 168.3 of RA
8293, there is no showing that Bicol has been giving its LPG tanks
the general appearance of the tanks of Petron’s Gasul. As already
stated, the truck full of Bicol Gas tank that the KPE manager Issue: was Horphag’s trademark PYCNOGENOL infringed by Prosource
arrested on a road in Sorsogon just have mixed up with the one PCO-GENEOLS?
authentic Gasul tanks that belong to Petron.
Held:

In determining similarity and likelihood of confusion, jurisprudence


Lastly, Bicol Gas is a Corporation. It is an entity separate and has developed two tests: the Dominancy Test and the Holistic or Totality
distinct from persons of its officer, directors and stockholders. It Test. The Dominancy Test focuses on the similarity of the prevalent
has been held however, that corporate officers and employees features of the competing trademarks that might cause confusion and
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deception, thus constituting infringement. In contrast, the Holistic Test Facts:
entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing Agents of the NBi conducted a test-buy operation in the premises of
similarity. The discerning eye of the observer must focus not only on the Batistis and thereby confirmed that he was actively engaged in the
predominant words but also on the other features appearing on both manufacture, sale and distribution of counterfeit Fundador brandy
labels in order that the observer may draw his conclusion whether one is products. Upon application of the NBI agents based on the positive results
of the test-buy, Judge Antonio M. Eugenio, Jr. of the Manila RTC issued a
confusingly similar to the other.
Search Warrant, authorizing the search of the premises of Batistis. The
search yielded counterfeit boxes, bottles and caps of Fundador. Juno
The trial and appellate courts applied the Dominancy Test in Batistis was charged for infringement of trademark and unfair competition.
determining whether there was a confusing similarity between the marks The RTC found JUNO BATISTIS Guilty Beyond Reasonable Doubt of the
PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, crime of Violation of Section 155 of the Intellectual Property Code
and the CA affirmed, that: and hereby sentences him to suffer the penalty of imprisonment of TWO
(2) YEARS and to pay a fine of FIFTY THOUSAND (P50,000.00) PESOS. This
Court likewise finds accused JUNO BATISTIS Guilty Beyond Reasonable
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same Doubt of the crime of Violation of Section 168 of the IP Code, and to
suffix “GENOL” which on evidence, appears to be merely descriptive and suffer the penalty of imprisonment of TWO (2) YEARS and to pay a fine of
furnish no indication of the origin of the article and hence, open for FIFTY THOUSAND (Php50,000.00) PESOS.
trademark registration by the plaintiff thru combination with another word
or phrase such as PYCNOGENOL, Exhibits “A” to “A-3.” Furthermore, Batistis appealed to the CA, which affirmed his conviction for infringement
although the letters “Y” between P and C, “N” between O and C and “S” of trademark, but acquitted him of unfair competition.
after L are missing in the [petitioner’s] mark PCO-GENOLS, nevertheless,
when the two words are pronounced, the sound effects are confusingly Batistis further appealed to the SC contending that the basis of his
conviction in the RTC is the self-serving affidavits and testimonies of the
similar not to mention that they are both described by their manufacturers
policemen who raided his premises.
as a food supplement and thus, identified as such by their public
consumers. And although there were dissimilarities in the trademark due
Issue:Whether or not the penalty given to Batistis was proper?
to the type of letters used as well as the size, color and design employed
on their individual packages/bottles, still the close relationship of the Held:
competing products’ name in sounds as they were pronounced, clearly
indicates that purchasers could be misled into believing that they are the The Supreme Court ruled that the straight penalty the CA imposed was
same and/or originates from a common source and manufacturer. contrary to the Indeterminate Sentence Law, whose Section 1 requires
that the penalty of imprisonment should be an indeterminate sentence.
Supreme Court further ruled that there is no sufficient ground to The need for specifying the minimum and maximum periods of the
depart from the ruling if the RTC and CA. Petition denied. indeterminate sentence is to prevent the unnecessary and excessive
deprivation of liberty and to enhance the economic usefulness of the
accused, since he may be exempted from serving the entire sentence,
JUNO BATISTIS vs. People of the Philippines depending upon his behavior and his physical, mental, and moral record.

14
The requirement of imposing an indeterminate sentence in all criminal
offenses whether punishable by the Revised Penal Code or by special laws,
with definite minimum and maximum terms, as the Court deems proper
within the legal range of the penalty specified by the law must, therefore,
be deemed mandatory.In this case, the large number of Fundador articles
confiscated from Batistis’ house (namely, 241 empty bottles of Fundador,
163 Fundador boxes, a half sack full of Fundador plastic caps, and two
filled bottles of Fundador Brandy) clearly demonstrated that Batistis had
been committing a grave economic offense over a period of time, thereby
deserving for him the indeterminate, rather than the straight and lower,
penalty. SC modified the penalty to imprisonment ranging from two years,
as minimum, to three years, as maximum, and a fine of P50,000.00.

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