Elidad C. Kho vs.

Court of Appeals, Summerville General Merchandising Company and Ang

Tiam Chay (G.R. No. 115758, March 19, 2002, 379 SCRA 410)
FACTS:
Petitioners allegations are that they are doing business under the name and style of KEC Cosmetics
Laboratory, registered owner of Chin Chun Su and oval facial cream container/case, and alleges that she
also has patent rights on Chin Chun Su and Device and Chin Chun Su Medicated Cream after purchasing
the same from Quintin Cheng, the registered owner thereof in the supplemental register of the Philippine
Patent Office and that Summerville advertised and sold petitioners cream products under the brand name
Chin Chun Su, in similar containers that petitioner uses, thereby misleading the public, and resulting in the
decline in the petitioners business sales and income; and, that the respondents should be enjoined from
allegedly
infringing
on
the
copyrights
and
patents
of
the
petitioner.
The respondents, on the other hand, alleged as their defense that (1) Summerville is the exclusive and
authorized importer, re-packer and distributor of Chin Chun Su products manufactured by Shun Yi factory
of Taiwan, (2) that the said Taiwanese manufacturing company authorized Summerville to register its trade
name Chin Chun Cu Medicated Cream with the Philippine Patent office and Other appropriate
governmental agencies; (3) that KEC Cosmetics Laboratory of the petitioner obtained the copyrights
through misrepresentation and falsification; and, (4) that the authority of Quintin Cheng, assignee of the
patent registration certificate, to distribute and market Chin Chun Su products in the Philippines had
already
terminated
by
the
said
Taiwanese
manufacturing
company.
ISSUE:
Whether

or

not

Kho

has

the

sole

right

using

the

package

of

Chin

Chun

Su

products

RULING:
Petitioner has no right to support her claim for the exclusive use of the subject trade name and its
container. The name and container of a beauty cream product are proper subjects of a trademark in as
much as the same falls squarely within its definition. In order to be entitled to exclusively use the
same in the sale of the beauty cream product, the user must sufficiently prove that she
registered or used it before anybody else did. The petitioners copyright and patent
registration of the name and container would not guarantee her the right to exclusive use of
the same for the reason that they are not appropriate subjects of the said intellectual
rights. Consequently, a preliminary injunction order cannot be issued for the reason that the petitioner
has not proven that she has a clear right over the said name and container to the exclusion of others, not
having proven that she has registered a trademark thereto or used the same before anyone did.
NOTE:
Trademark, copyright, and patents are different intellectual property rights that cannot be interchanged
with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or
services (service mark) of an enterprise and shall include a stamped or marked container goods. In
relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise.
Meanwhile, the scope of copyright is confined to literary and artistic works which are original intellectual
creations in the literary and artistic domain protected from the moment of their creation. Patentable
inventions, on the other hand, refer to any technical solution of a problem in any field of human activity
which is new, involves an inventive step and is industrial applicable
409 SCRA 33 Intellectual Property Law Law on Patents Doctrine of Equivalents
Smith Kline is a US corporation licensed to do business in the Philippines. In 1981, a patent was issued to it
for its invention entitled Methods and Compositions for Producing Biphasic Parasiticide Activity Using
Methyl 5 Propylthio-2-Benzimidazole Carbamate. The invention is a means to fight off gastrointestinal
parasites from various cattles and pet animals.
Tryco Pharma is a local corporation engaged in the same business as Smith Kline.
Smith Kline sued Tryco Pharma because the latter was selling a veterinary product called Impregon which
contains a drug called Albendazole which fights off gastro-intestinal roundworms, lungworms, tapeworms
and fluke infestation in carabaos, cattle and goats.
Smith Kline is claiming that Albendazole is covered in their patent because it is substantially the same as
methyl 5 propylthio-2-benzimidazole carbamate covered by its patent since both of them are meant to
combat worm or parasite infestation in animals. And that Albendazole is actually patented under Smith
Kline in the US.
Tryco Pharma averred that nowhere in Smith Klines patent does it mention that Albendazole is present but
even if it were, the same is unpatentable.
Smith Kline thus invoked the doctrine of equivalents, which implies that the two substances substantially
do the same function in substantially the same way to achieve the same results, thereby making them
truly identical for in spite of the fact that the word Albendazole does not appear in Tryco Paharmas letters

of patent, it has ably shown by evidence its sameness with methyl 5 propylthio-2-benzimidazole
carbamate.
ISSUE: Whether or not there is patent infringement in this case
HELD: No. Smith Kline failed to prove that Albendazole is a compound inherent in the patented invention.
Nowhere in the patent is the word Albendazole found. When the language of its claims is clear and distinct,
the patentee is bound thereby and may not claim anything beyond them. Further, there was a separate
patent for Albendazole given by the US which implies that Albendazole is indeed separate and distinct
from the patented compound here.
A scrutiny of Smith Klines evidence fails to prove the substantial sameness of the patented compound and
Albendazole. While both compounds have the effect of neutralizing parasites in animals, identity of result
does not amount to infringement of patent unless Albendazole operates in substantially the same way or
by substantially the same means as the patented compound, even though it performs the same function
and achieves the same result. In other words, the principle or mode of operation must be the same or
substantially the same.
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee
having the burden to show that all three components of such equivalency test are met.

Ching v. Salinas, Sr. (G.R. No. 161295)

Facts:
P is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility
Model, described as Leaf Spring Eye Bushing for Automobile made up of plastic, which was issued by the
National Library Certificates of Copyright Registration and Deposit.
P requested the NBI for police/investigative assistance for the apprehension and prosecution of illegal
manufacturers, producers and/or distributors of the works. After due investigation, the NBI filed
applications for SWs against R alleging that the latter therein reproduced and distributed the said models
penalized under R.A. No. 8293. RTC granted the application and issued SWs for the seizure of the
aforecited articles.
R filed a motion to quash the search warrants averring that the works covered by the certificates issued by
the National Library are not artistic in nature; they are considered automotive spare parts and pertain to
technology. They aver that the models are not original, and as such are the proper subject of a patent, not
copyright.
RTC quashed the SW. Ps MR having been denied; he filed a petition for certiorari in the CA. The petition
was dismissed.
Issues:
(1) Whether or not Ps certificate of copyright registration over said utility models are valid; and
(2) Whether or not Ps utility models can be considered literary and artistic works subject to copyright
protection.
Ruling:
(1) The petition has no merit. To discharge his burden, the applicant may present the certificate of
registration covering the work or, in its absence, other evidence. A copyright certificate provides prima
facie evidence of originality which is one element of copyright validity. It constitutes prima facie evidence
of both validity and ownership and the validity of the facts stated in the certificate. The presumption of
validity to a certificate of copyright registration merely orders the burden of proof. The applicant should
not ordinarily be forced, in the first instance, to prove all the multiple facts that underline the validity of
the copyright unless the respondent, effectively challenging them, shifts the burden of doing so to the
applicant.
A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in
the record casts doubt on the question. In such a case, validity will not be presumed. No copyright granted
by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright
registration and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion.

(2) We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the
authors intellectual creation, regardless of whether it is a creation with utilitarian functions or incorporated
in a useful article produced on an industrial scale, is protected by copyright law. However, the law refers to
a work of applied art which is an artistic creation. It bears stressing that there is no copyright protection
for works of applied art or industrial design which have aesthetic or artistic features that cannot be
identified separately from the utilitarian aspects of the article. Functional components of useful articles, no
matter how artistically designed, have generally been denied copyright protection unless they are
separable from the useful article.
In this case, the petitioners models are not works of applied art, nor artistic works. They are utility models,
useful articles, albeit with no artistic design or value. Being plain automotive spare parts that must
conform to the original structural design of the components they seek to replace, the Leaf Spring Eye
Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that
must characterize authentic works of applied art. They are not even artistic creations with incidental
utilitarian functions or works incorporated in a useful article. In actuality, the personal properties described
in the search warrants are mechanical works, the principal function of which is utility sans any aesthetic
embellishment.
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 CA are AFFIRMED.
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES,
S.A., (now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs. FORTUNE TOBACCO
CORPORATION, Respondent.
Facts:
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States
of America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the
Philippine Patents Office (PPO), the registered owner of the trademark MARK VII for cigarettes.
Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered
owner of the trademark MARK TEN for cigarettes as evidenced by PPO Certificate of Registration No.
11147. And as can be seen in Trademark Certificate of Registration No. 19053, another subsidiary of Philip
Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark
LARK, which was originally registered in 1964 by Ligget and Myers Tobacco Company. On the other
hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and
sells cigarettes using the trademark MARK.
The legal dispute between the parties started when the herein petitioners, on the claim that an
infringement of their respective trademarks had been committed, filed, on August 18, 1982, a Complaint
for Infringement of Trademark and Damages against respondent Fortune Tobacco Corporation, docketed
as Civil Case No. 47374 of the RTC of Pasig.
Petitioners claimed that the respondent, without any previous consent from any of the petitioners,
manufactured and sold cigarettes bearing the identical and/or confusingly similar trademark MARK
Accordingly, they argued that respondents use of the trademark MARK in its cigarette products have
caused and is likely to cause confusion or mistake, or would deceive purchasers and the public in general
into buying these products under the impression and mistaken belief that they are buying petitioners
products.
RTC- ruled in favor of respondents; dismissed petitioners complaint
CA- ruled that petitioner has legal standing to sue but found that there was no infringement
Hence this petition
Issue: Whether or not the fact that Petitioner has a Certificate of Registration issued by the Philippine
Patents Office entitles them to protection in the PH?
Held: No. The Certificate of Registration is merely a prima facie evidence of validity of registration.
The registration of a trademark gives the registrant, such as petitioners, advantages denied nonregistrants or ordinary users, like respondent. But while petitioners enjoy the statutory presumptions
arising from such registration i.e., as to the validity of the registration, ownership and the exclusive right to
use the registered marks, they may not successfully sue on the basis alone of their respective certificates
of registration of trademarks. For, petitioners are still foreign corporations. As such, they ought, as a
condition to availment of the rights and privileges vis--vis their trademarks in this country, to show proof
that, on top of Philippine registration, their country grants substantially similar rights and privileges to
Filipino citizens pursuant to Section 21-A[20] of R.A. No. 166.

The registration of trademark cannot be deemed conclusive as to the actual use of such trademark in local
commerce. As it were, registration does not confer upon the registrant an absolute right to the registered
mark. The certificate of registration merely constitutes prima facie evidence that the registrant is the
owner of the registered mark. Evidence of non-usage of the mark rebuts the presumption of trademark
ownership, as what happened here when petitioners no less admitted not doing business in this country.
Registration in the Philippines of trademarks does not ipso facto convey an absolute right or exclusive
ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group
of Companies, Inc, trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive
ownership; registration is only an administrative confirmation of the existence of the right of ownership of
the mark, but does not perfect such right; actual use thereof is the perfecting ingredient.
True, the Philippines adherence to the Paris Convention effectively obligates the country to honor and
enforce its provisions as regards the protection of industrial property of foreign nationals in this country.
However, any protection accorded has to be made subject to the limitations of Philippine laws. Hence,
despite Article 2 of the Paris Convention which substantially provides that (1) nationals of membercountries shall have in this country rights specially provided by the Convention as are consistent with
Philippine laws, and enjoy the privileges that Philippine laws now grant or may hereafter grant to its
nationals, and (2) while no domicile requirement in the country where protection is claimed shall be
required of persons entitled to the benefits of the Union for the enjoyment of any industrial property rights,
foreign nationals must still observe and comply with the conditions imposed by Philippine law on its
nationals.
Considering that R.A. No. 166, as amended, specifically Sections 2and 2-A thereof, mandates actual use of
the marks and/or emblems in local commerce and trade before they may be registered and ownership
thereof acquired, the petitioners cannot, therefore, dispense with the element of actual use. Their being
nationals of member-countries of the Paris Union does not alter the legal situation.
CANON KABUSHIKI KAISHA vs. COURT OF APPEALS
G.R. No. 120900, July 20, 2000
FACTS:
On January 15, 1985, private respondent NSR Rubber Corporation filed an application for
registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and Technology Transfer
(BPTTT). Canon Kabushiki Kaisha filed a Verified Notice of Opposition alleging that it will be damaged by
the registration of the trademark CANON in the name of private respondent since they were using the
same trademark for their footwear line of products. The private respondent will also use the name Canon
for its footwear products.
Based on the records, the evidence presented by petitioner consisted of its certificates of
registration for the mark CANON in various countries covering goods belonging to class 2, paints, chemical
products, toner, and dye stuff. Petitioner also submitted in evidence its Philippine Trademark Registration
No. 39398, showing its ownership over the trademark CANON.
The BPTTT, on November 10, 1992, issued its decision dismissing the opposition of petitioner and
giving due course to NSR's application for the registration of the trademark CANON. Canon Kabushiki
Kaisha filed an appeal with the Court of Appeals that eventually affirmed the decision of the BPTTT.
ISSUE:
Is the use of trademark, CANON, by the private respondent affects the business of Canon Kabushiki
Kaisha who has an existing ownership of a trademark also known as CANON?
HELD:
The Supreme Court says that ordinarily, the ownership of a trademark or tradename is a property
right that the owner is entitled to protect as mandated by the Trademark Law. However, when a trademark
is used by a party for a product in which the other party does not deal, the use of the same trademark on
the latter's product cannot be validly objected to.
The BPTTT correctly ruled that since the certificate of registration of petitioner for the trademark
CANON covers class 2 (paints, chemical products, toner, dyestuff), private respondent can use the
trademark CANON for its goods classified as class 25 (sandals). Clearly, there is a world of difference
between the paints, chemical products, toner, and dyestuff of petitioner and the sandals of private
respondent.
BERRIS AGRICULTURAL CO., INC. vs. NORVY ABYADANG. G.R. No. 183404. October 13, 2010
FACTS:Abyadang filed a trademark application with the IPO for the mark "NS D-10 PLUS" for use in
connection with Fungicide. Berris Agricultural Co., Inc. filed an opposition against the trademark citing that
it is confusingly similar with their trademark, "D-10 80 WP" which is also used for Fungicide also with the
same active ingredient.

The IPO ruled in favor of Berries but on appeal with the CA, the CA ruled in favor of Abyadang.
ISSUE: Whether there is confusing similarity between the trademarks.
RULING:
Yes. The SC found that both products have the component D-10 as their ingredient and that it is the
dominant feature in both their marks. Applying the Dominancy Test, Abyadang's product is similar to
Berris' and that confusion may likely to occur especially that both in the same type of goods. Also using the
Holistic Test, it was more obvious that there is likelihood of confusion in their packaging and color schemes
of the marks. The SC states that buyers would think that Abyadang's product is an upgrade of Berris'.
G.R. No. 194307

November 20, 2013

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE

GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
Facts: Assailed in this Petition for Review on Certiorari 1 are the Court of Appeals (CA) Decision which
reversed and set aside the Intellectual Property Office (IPO) Director Generals Decision that allowed the
registration of various trademarks in favor of petitioner Birkenstock Orthopaedie GmbH & Co. KG.
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various
trademark registrations before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No.
(TASN) 4-1994-091508 for goods falling under Class 25 of the International Classification of Goods and; (b)
"BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods falling under
Class 25 of the Nice Classification; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF
ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994095043 for goods falling under Class 10 of the Nice Classification with filing date of September 5, 1994
(subject applications).5
However, registration proceedings of the subject applications were suspended in view of an existing
registration of the mark "BIRKENSTOCK AND DEVICEin the name of Shoe Town International and Industrial
Corporation,
the
predecessor-in-interest
of
respondent
Philippine
Shoe
Expo
Marketing
6
Corporation. Petitioner filed a petition for cancellation of Registration No. 56334 on the ground that it is
the lawful and rightful owner of the Birkenstock marks. During its pendency, however, respondent and/or
its predecessor-in-interest failed to file the required 10th Year Declaration of 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 academic. 10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject
applications in the IPO e-Gazette .In response, respondent filed three (3) separate verified notices of
oppositions claiming, inter alia, that: (a) it, together with its predecessor-in-interest, has been using
Birkenstock marks in the Philippines for more than 16 years through the mark "BIRKENSTOCK AND
DEVICE"; (b) the marks covered by the subject applications are identical to the one covered by Registration
No. 56334 and thus, petitioner has no right to the registration of such marks; (c) on November 15, 1991,
respondents predecessor-in-interest likewise obtained a Certificate of Copyright Registration No. 0-11193
for the word "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest failed to file the 10th
Yea r DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its
continued ownership and exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006010273 as a " re-application " of its old registration, Registration No. 56334. 13 On November 13, 2007, the
Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the aforesaid inter
partes cases.
The Ruling of the BLA
It ruled that the competing marks of the parties are confusingly similar since they contained the word
"BIRKENSTOCK" and are used on the same and related goods. It found respondent and its predecessor-ininterest as the prior user and adopter of "BIRKENSTOCK" in the Philippines, while on the other hand,
petitioner failed to present evidence of actual use in the trade and business in this country. It opined that
while Registration No. 56334 was cancelled, it does not follow that prior right over the mark was lost, as
proof of continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA
likewise opined that petitioners marks are not well -known in the Philippines and internationally and that
the various certificates of registration submitted by petitioners were all photocopies and, therefore, not
admissible as evidence.16
Aggrieved, petitioner appealed to the IPO Director General.

The Ruling of the IPO Director General-reversed and set aside the ruling of the BLA.He held that with the
cancellation of Registration No. 56334 for respondents failure to file the 10th Year DAU, 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 evidence presented proved that petitioner is the true and lawful owner and
prior user of "BIRKENSTOCK" marks and thus, entitled to the registration of the marks covered by the
subject applications.19 The IPO Director General further held that respondents copyright for the word
"BIRKENSTOCK" is of no moment since copyright and trademark are different forms of intellectual property
that cannot be interchanged.20
Ruling of the CA-reversed and set aside the 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 identical" with respondents mark. 22
Issues: The primordial issue raised for the Courts resolution is whether or not the subject marks should be
allowed registration in the name of petitioner.
Held:
Registration and ownership of "BIRKENSTOCK."
Republic Act No. (RA) 166, the governing law for Registration No. 56334, requires the filing of a DAU on
specified periods, to wit:
Section 12. Duration. Each certificate of registration shall remain in force for twenty years: Provided, That
registrations under the provisions of this Act shall be cancelled by the Director, unless within one year
following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of registration,
the registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is still in use
or showing that its non-use is due to special circumstance which excuse such non-use and is not due to
any intention to abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or
refusal thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results
in the automatic cancellation of registration of a trademark. In turn, such failure is tantamount to the
abandonment or withdrawal of any right or interest the registrant has over his trademark.36
Neither can it invoke Section 236 37 of the IP Code which pertains to intellectual property rights obtained
under previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or
interest over the said mark.
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 two (2) months prior to the application for registration. 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 ownership here due
to the owners failure to use the same in the Philippines for two (2) months prior to registration. 40
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership. If
the applicant is not the owner of the trademark, he has no right to apply for its registration. Registration
merely creates a prima facie presumption of the validity of the registration, of the registrants ownership of
the trademark, and of the exclusive right to the use thereof. Such presumption, just like the presumptive
regularity in the performance of official functions, is rebuttable and must give way to evidence to the
contrary.The presumption of ownership accorded to a registrant must then necessarily yield to superior
evidence of actual and real ownership of a trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang42 is instructive on this point:
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or
distributor of the goods made available to the purchasing public. x x x A certificate of registration of a
mark, once issued, constitutes prima facie evidence of the validity of the registration, of the registrants
ownership of the mark, and of the registrants exclusive right to use the same in connection with the goods
or services and those that are related thereto specified in the certificate. x x x In other words, the prima
facie presumption brought about by the registration of a mark may be challenged and overcome in an
appropriate action, x x x by evidence of prior use by another person, i.e. , it will controvert a claim of legal
appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a
creation of use and belongs to one who first used it in trade or commerce. 43 (Emphasis and underscoring
supplied)

In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK.It has
sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann
Birkenstock, a shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin
continuously engaged in the manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK"
until it became the entity now known as the petitioner. Petitioner also submitted various certificates of
registration of the mark "BIRKENSTOCK" in various countries and that it has used such mark in different
countries worldwide, including the Philippines.44
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark
BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very
remote that two persons did coin the same or identical marks. To come up with a highly distinct and
uncommon mark previously appropriated by another, for use in the same line of business, and without any
plausible explanation, is incredible. The field from which a person may select a trademark is practically
unlimited. As in all other cases of colorable 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 [petitioners] if there was no intent to take advantage of the goodwill
generated by the [petitioners] 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
Accordingly, the Decision dated December 22, 2009 of the IPO Director General is hereby REINSTATED.

Shangri-la International
No. 159938)
Facts:

Hotel

Management

v.

Developers

Group

of

Companies

(G.R.

R claims ownership SHANGRI-LA mark and S logo in the Philippines on the strength of its prior use
thereof within the country. It filed an application pursuant to Sections 2 and 4 of RA No. 166 as amended
and was issued corresponding certificate of registration and since then, started using the mark and logo in
its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels
and hotel-related transactions and has adopted the name Shangri-La as part of the corporate names of
all companies organized under its aegis. To centralize the operations of all Shangri-la hotels and the
ownership of the Shangri-La mark and S logo, the Kuok Group had incorporated several companies
that form part of the SLIHM and has caused the registration of, and in fact registered, the Shangri-La
mark and S logo in the patent offices in different countries around the world.
P filed an Inter Partes Case, praying for the cancellation of the registration of the mark and logo issued to R
on the ground that the same were illegally and fraudulently obtained and appropriated.
R filed a complaint for TMI & Damages alleging that it has, for the last 8 years, been the prior exclusive
user in the Philippines of the mark and logo in question and the registered owner thereof for its restaurant
and allied services.
P pointed the Paris Convention for the Protection of Industrial Property as affording security and protection
to SLIHMs exclusive right to said mark and logo claiming having used, since late 1975, the internationally
known and specially-designed Shangri-La mark and S logo for all the hotels in their hotel chain.
The trial court came out with its decision rendering judgment in favor for R. P appealed to the CA which
affirmed that of the lower courts decision and further denied their MR.
Issue:
Whether or not prior use of a mark is a requirement for registration.
Ruling:
Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to
December 31, 1997, hence, the law in force at the time of respondents application for registration of
trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law requires
that before a trademark can be registered, it must have been actually used in commerce and service for
not less than two months in the Philippines prior to the filing of an application for its registration.
While the present law on trademarks has dispensed with the requirement of prior actual use at the time of
registration, the law in force at the time of registration must be applied, and thereunder it was held that as

a condition precedent to registration of trademark, trade name or service mark, the same must have been
in actual use in the Philippines before the filing of the application for registration.
Here, respondents own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly
commissioned to create the mark and logo submitted his designs only in December 1982. This was twoand-a-half months after the filing of the respondents trademark application on October 18, 1982 with the
BPTTT. It was also only in December 1982 when the respondents restaurant was opened for business.
Respondent cannot now claim before the Court that the certificate of registration itself is proof that the
two-month prior use requirement was complied with, what with the fact that its very own witness testified
otherwise in the trial court. And because at the time (October 18, 1982) the respondent filed its
application for trademark registration of the Shangri-La mark and S logo, respondent was not
using these in the Philippines commercially, the registration is void.
Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the said
trade name and S logo in the Philippines. Hence, consistent with its finding that the bulk of the
petitioners evidence shows that the alleged use of the Shangri-La trade name was done abroad and not
in the Philippines, it is understandable for that court to rule in respondents. Unfortunately, however, what
the CA failed to perceive is that there is a crucial difference between the aforequoted Section 2
and Section 2-A of R.A. No. 166. For, while Section 2 provides for what is registrable, Section 2-A, on
the other hand, sets out how ownership is acquired. These are two distinct concepts.
Under Section 2, 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 2 months prior to the application for registration. Since
ownership of the trademark is required for registration, Section 2-A of the same law sets out to define
how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce
is also the test of ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the
actual use of a trademark must be within the Hence, under R.A. No. 166, as amended, one may be
an owner of a mark due to actual use thereof but not yet have the right to register such ownership here
due to failure to use it within the Philippines for two months.
While the petitioners may not have qualified under Section 2 of RA. No. 166 as a registrant neither
did respondent DGCI, since the latter also failed to fulfill the 2-month actual use requirement. What is
worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must not
have been already appropriated (i.e.,used) by someone else. At the time of respondent DGCIs
registration of the mark, the same was already being used by the petitioners, albeit abroad, of
which DGCIs president was fully aware.
However, while the Philippines was already a signatory to the Paris Convention, the IPC only took effect on
January 1, 1988, and in the absence of a retroactivity clause, R.A. No. 166 still applies. Consequently, the
petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity of
lack of two-month prior use, as well as bad faith in the respondents registration of the mark, it is
evident that the petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the
petitioners guilty of infringing a mark when they are actually the originator and creator thereof.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the CA and the RTC
are hereby SET ASIDE. Accordingly, the complaint for is ordered DISMISSED.
McDONALDS CORPORATION v. MACJOY FASTFOOD CORPORATION. G.R. No. 166115. February 2,
2007
514 SCRA 95 Mercantile Law Intellectual Property Law Law on Trademarks, Service Marks
and Trade Names Dominancy Test vs Holistic Test
Since 1987, MacJoy Devices had been operating in Cebu. MacJoy is a fast food restaurant which sells fried
chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks. In
1991, MacJoy filed its application for trademark before the Intellectual Property Office (IPO). McDonalds
opposed the application as it alleged that MacJoy closely resembles McDonalds corporate logo such that
when used on identical or related goods, the trademark applied for would confuse or deceive purchasers
into believing that the goods originate from the same source or origin that the use and adoption in bad
faith of the MacJoy and Device mark would falsely tend to suggest a connection or affiliation with
McDonalds restaurant services and food products, thus, constituting a fraud upon the general public and
further cause the dilution of the distinctiveness of McDonalds registered and internationally recognized
McDonaldS marks to its prejudice and irreparable damage.
The IPO ruled in favor of McDonalds. MacJoy appealed before the Court of Appeals and the latter ruled in
favor of MacJoy. The Court of Appeals, in ruling over the case, actually used the holistic test (which is a test

commonly used in infringement cases). The holistic test looks upon the visual comparisons between the
two trademarks. In this case, the Court of Appeals ruled that other than the letters M and C in the
words MacJoy and McDonalds, there are no real similarities between the two trademarks. MacJoy is
written in round script while McDonalds is written in thin gothic. MacJoy is accompanied by a picture of
a (cartoonish) chicken while McDonalds is accompanied by the arches M. The color schemes between
the two are also different. MacJoy is in deep pink while McDonalds is in gold color.
ISSUE: Whether or not MacJoy infringed upon the trademark of McDonalds.
HELD: Yes. The Supreme Court ruled that the proper test to be used is the dominancy test. The dominancy
test not only looks at the visual comparisons between two trademarks but also the aural impressions
created by the marks in the public mind as well as connotative comparisons, giving little weight to factors
like prices, quality, sales outlets and market segments. In the case at bar, the Supreme Court ruled that
McDonalds and MacJoy marks are confusingly similar with each other such that an ordinary purchaser
can conclude an association or relation between the marks. To begin with, both marks use the corporate
M design logo and the prefixes Mc and/or Mac as dominant features. The first letter M in both
marks puts emphasis on the prefixes Mc and/or Mac by the similar way in which they are depicted i.e.
in an arch-like, capitalized and stylized manner. For sure, it is the prefix Mc, an abbreviation of Mac,
which visually and aurally catches the attention of the consuming public. Verily, the word MACJOY
attracts attention the same way as did McDonalds, MacFries, McSpaghetti, McDo, Big Mac and
the rest of the MCDONALDS marks which all use the prefixes Mc and/or Mac. Besides and most
importantly, both trademarks are used in the sale of fastfood products.
Further, the owner of MacJoy provided little explanation why in all the available names for a restaurant he
chose the prefix Mac to be the dominant feature of the trademark. The prefix Mac and Macjoy has no
relation or similarity whatsoever to the name Scarlett Yu Carcel, which is the name of the niece of MacJoys
president whom he said was the basis of the trademark MacJoy. By reason of the MacJoys implausible and
insufficient explanation as to how and why out of the many choices of words it could have used for its
trade-name and/or trademark, it chose the word Macjoy, the only logical conclusion deducible therefrom
is that the MacJoy would want to ride high on the established reputation and goodwill of the McDonalds
marks, which, as applied to its restaurant business and food products, is undoubtedly beyond question.

MANUEL C. ESPIRITU, JR., AUDIE G.R. No. 170891

LLONA, FREIDA F. ESPIRITU,
CARLO F. ESPIRITU, RAFAEL F.
ESPIRITU, ROLANDO M. MIRABUNA,
HERMILYN A. MIRABUNA, KIM
ROLAND A. MIRABUNA, KAYE
ANN A. MIRABUNA, KEN RYAN A.
MIRABUNA, JUANITO P. DE
CASTRO, GERONIMA A. ALMONITE
and MANUEL C. DEE, who are the
officers and directors of BICOL GAS
REFILLING PLANT CORPORATION,
Petitioners, Present:
Carpio, J., Chairperson,
- versus - Leonardo-De Castro,
Brion,
Del Castillo, and
Abad, JJ.
PETRON CORPORATION and
CARMEN J. DOLOIRAS, doing
business under the name KRISTINA Promulgated:
PATRICIA ENTERPRISES,
Respondents. November 24, 2009
x ---------------------------------------------------------------------------------------- x

This case is about the offense or offenses that arise from the reloading of the liquefied petroleum gas
cylinder container of one brand with the liquefied petroleum gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in
cylinder tanks that carried its trademark Gasul. [1] Respondent Carmen J. Doloiras owned and operated

Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the whole of Sorsogon. [2] Jose
Nelson Doloiras (Jose) served as KPEs manager.
Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing
LPGs in Sorsogon but theirs carried the trademark Bicol Savers Gas.Petitioner Audie Llona managed Bicol
Gas.
In the course of trade and competition, any given distributor of LPGs at times acquired possession
of LPG cylinder tanks belonging to other distributors operating in the same area. According to Jose, KPEs
manager, in April 2001 Bicol Gas agreed with KPE for the swapping of captured cylinders since one
distributor could not refill captured cylinders with its own brand of LPG. He requested a swap but Audie
Llona of Bicol Gas replied that he first needed to ask the permission of the Bicol Gas owners. That
permission was given and they had a swap involving around 30 Gasul tanks held by Bicol Gas in exchange
for assorted tanks held by KPE.
KPEs Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard. He offered
to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to send those tanks to
Batangas. Later Bicol Gas told Jose that it had no more Gasul tanks left in its possession. Jose observed on
almost a daily basis, however, that Bicol Gas trucks which plied the streets of the province carried a load of
Gasul tanks. He noted that KPEs volume of sales dropped significantly from June to July 2001. Misal and
Leorena then admitted that the Gasul and Shellane tanks on their truck belonged to a customer who had
them filled up by Bicol Gas. Misal then mentioned that his manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint [3] for violations of Republic Act (R.A.) 623
(illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks)
and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The complaint charged the
following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several John and Jane Does,
described as the directors, officers, and stockholders of Bicol Gas. These directors, officers, and
stockholders were eventually identified during the preliminary investigation.
The provincial prosecutor ruled that there was probable cause only for violation of R.A. 623
(unlawfully filling up registered tanks) Dissatisfied, Petron and KPE filed a petition for review with the Office
of the Regional State Prosecutor; it ordered the filing of additional informations against the four employees
of Bicol Gas for unfair competition. It ruled, however, that no case for trademark infringement was
present. The Secretary of Justice denied the appeal of Petron and KPE and their motion for
reconsideration.Petron and KPE filed a special civil action for certiorari with the Court of Appeals. The Court
of Appeals reversed the Secretary of Justices ruling. It held that unfair competition does not necessarily
absorb trademark infringement. Consequently, the court ordered the filing of additional charges of
trademark infringement against the concerned Bicol Gas employees as well.
The Issues Presented
Whether or not the facts of the case warranted the filing of charges against the Bicol Gas people
for:
a) Filling up the LPG tanks registered to another manufacturer without
the latters consent in violation of R.A. 623, as amended;
b) Trademark infringement consisting in Bicol Gas use of a trademark
that is confusingly similar to Petrons registered Gasul trademark in violation of
section 155 also of R.A. 8293; and
c) Unfair competition consisting in passing off Bicol Gas-produced LPGs
for Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.
The Courts Rulings
First. The Court of Appeals held that under the facts of the case, there is probable cause that
petitioners Espiritu, et al. committed all three crimes: (a) illegally filling up an LPG tank registered to Petron
without the latters consent in violation of R.A. 623, as amended; (b) trademark infringement which consists
in Bicol Gas use of a trademark that is confusingly similar to Petrons registered Gasul trademark in
violation of Section 155 of R.A. 8293; and (c) unfair competition which consists in petitioners Espiritu, et al.
passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of Section 168.3 of R.A.
8293.
Here, the complaint adduced at the preliminary investigation shows that the one 50-kg Petron Gasul
LPG tank found on the Bicol Gas truck belonged to [a Bicol Gas] customer who had the same filled up by
BICOL GAS.[11] In other words, the customer had that one Gasul LPG tank brought to Bicol Gas for refilling
and the latter obliged.
R.A. 623, as amended,[12] punishes any person who, without the written consent of the
manufacturer or seller of gases contained in duly registered steel cylinders or tanks, fills the steel cylinder

or tank, for the purpose of sale, disposal or trafficking, other than the purpose for which the manufacturer
or seller registered the same. This was what happened in this case, assuming the allegations of KPEs
manager to be true. Bicol Gas employees filled up with their firms gas the tank registered to Petron and
bearing its mark without the latters written authority. Consequently, they may be prosecuted for that
offense.
But, as for the crime of trademark infringement, Section 155 of R.A. 8293 (in relation to Section
170[13]) provides that it is committed by any person who shall, without the consent of the owner of the
registered mark:
1. Use in commerce any reproduction, counterfeit, copy or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, 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 with which such use is likely to cause confusion, or to cause mistake, or to
deceive; or
2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant
feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive.
KPE and Petron have to show that the alleged infringer, the responsible officers and staff of Bicol
Gas, used Petrons Gasul trademark or a confusingly similar trademark on Bicol Gas tanks with intent to
deceive the public and defraud its competitor as to what it is selling. [14] Examples of this would be the acts
of an underground shoe manufacturer in Malabon producing Nike branded rubber shoes or the acts of a
local shirt company with no connection to La Coste, producing and selling shirts that bear the stitched
logos of an open-jawed alligator.
Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own tanks
Petrons Gasul trademark or a confusingly similar version of the same to deceive its customers and cheat
Petron. Indeed, in this case, the one tank bearing the mark of Petron Gasul found in a truck full of Bicol Gas
tanks was a genuine Petron Gasul tank, more of a captured cylinder belonging to competition. No proof has
been shown that Bicol Gas has gone into the business of distributing imitation Petron Gasul LPGs.
As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to Section
170) describes the acts constituting the offense as follows:
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 competition:
(a) Any person, who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
Essentially, what the law punishes is the act of giving ones goods the general appearance of the
goods of another, which would likely mislead the buyer into believing that such goods belong to the
latter. Examples of this would be the act of manufacturing or selling shirts bearing the logo of an alligator,
similar in design to the open-jawed alligator in La Coste shirts, except that the jaw of the alligator in the
former is closed, or the act of a producer or seller of tea bags with red tags showing the shadow of a black
dog when his competitor is producing or selling popular tea bags with red tags showing the shadow of a
black cat.
Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance of
the tanks of Petrons Gasul. As already stated, the truckfull of Bicol Gas tanks that the KPE manager
arrested on a road in Sorsogon just happened to have mixed up with them one authentic Gasul tank that
belonged to Petron.
The only point left is the question of the liability of the stockholders and members of the board of
directors of Bicol Gas with respect to the charge of unlawfully filling up a steel cylinder or tank that
belonged to Petron. The Court of Appeals ruled that they should be charged along with the Bicol Gas
employees who were pointed to as directly involved in overt acts constituting the offense.

The finding of the Court of Appeals that the employees could not have committed the crimes
without the consent, [abetment], permission, or participation of the owners of Bicol Gas [18] is a sweeping
speculation especially since, as demonstrated above, what was involved was just one Petron Gasul tank
found in a truck filled with Bicol Gas tanks. It would be unfair to charge all the stockholders involved, some
of whom were proved to be minors. The complaint even failed to allege who among the stockholders sat in
the board of directors of the company or served as its officers.
The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu, Jr.
as the registered owner.
WHEREFORE, the Court REVERSES and SETS ASIDE the Decision of the Court of Appeals.
Skechers, U.S.A. vs. Inter Pacific Industrial Trading Corporation, et.al. [GR No. 164321, March
23, 2011]
Post under case digests, Commercial Law at Friday, January 15, 2016 Posted by Schizophrenic Mind
FACTS: Petitioner Skechers USA has registered the trademark "Skechers" and the trademark "S" (with an
oval design) with the IPO. Pursuant to a search warrant, more than 6,000 pairs of shoes bearing the "S"
logo were seized. Respondents moved to quash the search warrant arguing that there was no confusing
similarity between petitioner's "Skechers" rubber shoes and its "Strong" rubber shoes. RTC applying the
Holistic Test ordered the quashing of the warrant which was affirmed by the CA. RTC noted the following
differences: 1) the mark "S" is not enclosed in an oval design; 2) the hang tags and labels bear the word
"Strong" for respondent and "Skechers USA" for petitioner; 3) Strong shoes are modestly priced compared
to Skechers shoes.
ISSUE: Whether or not respondents are guilty of Infringement
RULING: Yes. Applying the Dominancy Test, even if respondents did not use the oval design, the mere fact
that it used the same stylized "S" (same font and size of the lettering) the same being
the dominant feature of petitioner's trademark constitutes infringement. Applying the Holistic Test, the
dissimilarities between the shoes are too trifling and frivolous that it is indubitable that respondent's
products will cause confusion and mistakes in the eyes of the public. Respondent's shoes may not be an
exact replica of the petitioner's shoes, but the features and overall design are so similar and alike
that confusion is higly likely. Registeredtrademark owner may use its mark on the same or similar products,
in different segments of the market, and at different price levels depending on variations of the products
for specific segments of the market. The purchasing public might be mistaken in thinking that petitioner
had ventured into a lower market segment which scenario is plausible especially since both petitioner and
respondent manufacture rubber shoes.
TANDUAY DISTILLERS, INC.,
Petitioner,
- versus GINEBRA SAN MIGUEL, INC.

G.R. NO. 164324

AUGUST 14, 2009

The Case
Tanduay distillers, inc. (tanduay) filed this petition for review on certiorari [1] assailing the court of appeals.in
the assailed decision, the court of appeals (ca) affirmed the regional trial courts orders which respectively
granted ginebra san miguel, inc.s (san miguel) prayer for the issuance of a temporary restraining order
(tro) and writ of preliminary injunction. And, specifically, to cease and desist from manufacturing,
distributing, selling, offering for sale, advertising, or otherwise using in commerce the mark ginebra, and
manufacturing, producing, distributing, or otherwise dealing in gin products which have the general
appearance of, and which are confusingly similar with, san miguels marks, bottle design, and label for its
gin products[5]
THE FACTS
Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor
business since 1854. In 2002, Tanduay developed a new gin product distinguished by its sweet smell,
smooth taste, and affordable price. The brand name eventually chosen was Ginebra Kapitan with the
representation of a revolutionary Kapitan on horseback as the dominant feature of its label. Tanduay points
out that the label design of Ginebra Kapitan in terms of color scheme, size and arrangement of text, and
other label features were precisely selected to distinguish it from the leading gin brand in the Philippine
market, Ginebra San Miguel. Tanduay also states that the Ginebra Kapitan bottle uses a resealable twist
cap to distinguish it from Ginebra San Miguel and other local gin products with bottles which use the crown
cap or tansan.[6]After filing the trademark application for ginebra kapitan with the intellectual property
office (ipo) and after securing the approval of the permit to manufacture and sell, tanduay began selling
ginebra kapitan.
On 15 august 2003, san miguel filed a complaint for trademark infringement, unfair competition and
damages, with applications for issuance of tro and writ of preliminary injunction against tanduay before the
regional trial court of mandaluyong. The trial court granted san miguels application for the issuance of a
writ of preliminary injunction.[17] On 9 january 2004, the ca rendered a decision dismissing tanduays
petition and supplemental petition. On 28 january 2004, tanduay moved for reconsideration which was
denied in a resolution dated 2 july 2004.[21]Aggrieved by the decision dismissing the petition and

supplemental petition and by the resolution denying the motion for reconsideration, tanduay elevated the
case before this court.
THE RULING OF THE COURT OF APPEALS
In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the
determination of whether the TRO and the writ of preliminary injunction were issued by the trial court with
grave abuse of discretion amounting to lack of jurisdiction.[30]
To warrant the issuance of a tro, the ca ruled that the affidavits of san miguels witnesses and the fact that
the registered trademark ginebra san miguel exists are enough to make a finding that san miguel has a
clear and unmistakable right to prevent irreparable injury because gin drinkers confuse san miguel to be
the manufacturer of ginebra kapitan.[31]
The ca enumerated the requisites for an injunction: (1) there must be a right in esse or the existence of a
right to be protected and (2) the act against which the injunction is to be directed is a violation of such
right. The ca stated that the trademarks ginebra san miguel and ginebra kapitan are not identical, but it is
clear that the word ginebra is the dominant feature in both trademarks. There was a strong indication that
confusion was likely to occur. One would be led to conclude that both products are affiliated with san
miguel because the distinctive mark ginebra is identified with san miguel. It is the mark which draws the
attention of the buyer and leads him to conclude that the goods originated from the same manufacturer. [32]
The ca observed that the gin products of ginebra san miguel and ginebra kapitan possess the same
physical attributes with reference to their form, composition, texture, or quality. The ca upheld the trial
courts ruling that san miguel has sufficiently established its right to prior use and registration of the mark
ginebra as a dominant feature of its trademark. Ginebra has been identified with san miguels goods,
thereby, it acquired a right in such mark, and if another infringed the trademark, san miguel could invoke
its property right.[33]
The Issue
The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction
granted by the trial court as affirmed by the CA. For this reason, we shall deal only with the questioned writ
and not with the merits of the case pending before the trial court.
The Ruling of the Court
Clear and Unmistakable Right
Section 1, rule 58 of the rules of court defines a preliminary injunction as an order granted at any stage of
a proceeding prior to the judgment or final order, requiring a party or a court, agency, or a person to
refrain from a particular act or acts.
A preliminary injunction is a provisional remedy for the protection of substantive rights and interests. It is
not a cause of action in itself but merely an adjunct to the main case. Its objective is to prevent a
threatened or continuous irreparable injury to some of the parties before their claims can be thoroughly
investigated and advisedly adjudicated. It is resorted to only when there is a pressing need to avoid
injurious consequences which cannot be remedied under any standard compensation.Before an injunctive
writ is issued, it is essential that the following requisites are present: (1) the existence of a right to be
protected and (2) the acts against which the injunction is directed are violative of the right. The onus
probandi is on the movant to show that the invasion of the right sought to be protected is material and
substantial, that the right of the movant is clear and unmistakable, and that there is an urgent and
paramount necessity for the writ to prevent serious damage.[35]
The clear and unmistakable right to the exclusive use of the mark Ginebra was proven through the
continuous use of Ginebra in the manufacture, distribution, marketing and sale of gin products throughout
the Philippines since 1834. To the gin-drinking public, the word Ginebra does not simply indicate a kind of
beverage; it is now synonymous with San Miguels gin products. [36]
San Miguel contends that Ginebra can be appropriated as a trademark, and there was no error in the trial
courts provisional ruling based on the evidence on record. Assuming that Ginebra is a generic word which
is proscribed to be registered as a trademark under Section 123.1(h) [37] of Republic Act No. 8293 or the
Intellectual Property Code (IP Code),[38] it can still be appropriated and registered as a trademark under
Section 123.1(j)[39] in relation to Section 123.2[40] of the IP Code, considering that Ginebra is also a mark
which designates the kind of goods produced by San Miguel. [41] San Miguel alleges that although Ginebra,
the Spanish word for gin, may be a term originally incapable of exclusive appropriation, jurisprudence
dictates that the mark has become distinctive of San Miguels products due to its substantially exclusive
and continuous use as the dominant feature of San Miguels trademarks since 1834. Hence, San Miguel is
entitled to a finding that the mark is deemed to have acquired a secondary meaning. [42] San Miguel states
that Tanduay failed to present any evidence to disprove its claims; thus, there is no basis to set aside the
grant of the TRO and writ of preliminary injunction.[43]

Tanduay explains that the word Ginebra, which is disclaimed by San Miguel in all of its registered
trademarks, is an unregistrable component of the composite mark Ginebra San Miguel. Tanduay argues
that this disclaimer further means that San Miguel does not have an exclusive right to the generic word
Ginebra.[47] Tanduay states that the word Ginebra does not indicate the source of the product, but it is
merely descriptive of the name of the product itself and not the manufacturer thereof. [48]
Tanduay argues that before a court can issue a
Miguel must establish a clear and unmistakable
exclusive right to use the generic word Ginebra is
injunction issued by the trial courtwas based on
Ginebra San Miguel.[50]

writ of preliminary injunction, it is imperative that San

right that is entitled to protection. San Miguels alleged
far from clear and unmistakable. Tanduay claims that the
its premature conclusion that Ginebra Kapitan infringes

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,[51] we held:

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound
discretion of the trial court, this discretion must be exercised based upon the grounds and in
the manner provided by law. The exercise of discretion by the trial court in injunctive
matters is generally not interfered with save in cases of manifest abuse. And to determine
whether there was grave abuse of discretion, a scrutiny must be made of the bases, if any,
considered by the trial court in granting injunctive relief. Be it stressed that injunction is the
strong arm of equity which must be issued with great caution and deliberation, and only in
cases of great injury where there is no commensurate remedy in damages. [52]
We hold that the CA committed a reversible error. The issue in the main case is San Miguels right to
the exclusive use of the mark Ginebra. The two trademarks Ginebra San Miguel and Ginebra Kapitan
apparently differ when taken as a whole, but according to San Miguel, Tanduay appropriates the word
Ginebra which is a dominant feature of San Miguels mark.
It is not evident whether San Miguel has the right to prevent other business entities from using the word
Ginebra. It is not settled (1) whether Ginebra is indeed the dominant feature of the trademarks, (2)
whether it is a generic word that as a matter of law cannot be appropriated, or (3) whether it is merely a
descriptive word that may be appropriated based on the fact that it has acquired a secondary meaning.
This boils down to whether the word Ginebra is a generic mark that is incapable of appropriation by gin
manufacturers.
In Asia Brewery, Inc. v. Court of Appeals,[53] the Court ruled that pale pilsen are generic words, pale being
the actual name of the color and pilsen being the type of beer, a light bohemian beer, and hence incapable
of appropriation by any beer manufacturer.[54] Moreover, Section 123.1(h) of the IP Code states that a mark
cannot be registered if it consists exclusively of signs that are generic for the goods or services that they
seek to identify. In this case, a cloud of doubt exists over San Miguels exclusive right relating to the word
Ginebra. San Miguels claim to the exclusive use of the word Ginebra is clearly still in dispute because of
Tanduays claim that it has, as others have, also registered the word Ginebra for its gin products. This issue
can be resolved only after a full-blown trial.
We find that San Miguels right to injunctive relief has not been clearly and unmistakably demonstrated.
The right to the exclusive use of the word Ginebra has yet to be determined in the main case. The trial
courts grant of the writ of preliminary injunction in favor of San Miguel, despite the lack of a clear and
unmistakable right on its part, constitutes grave abuse of discretion amounting to lack of jurisdiction.
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 word ginebra without the benefit of a full-blown trial. In rivas v. Securities
and exchange commission,[60]we ruled that courts should avoid issuing a writ of preliminary injunction
which would in effect dispose of the main case without trial. The issuance of the writ of preliminary
injunction had the effect of granting the main prayer of the complaint such that there is practically nothing
left for the trial court to try except the plaintiffs claim for damages.
Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has
failed to prove the probability of 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 incapable of pecuniary estimation. At
most, San Miguel only claims that it has invested hundreds of millions over a period of 170 years to
establish goodwill and reputation now being enjoyed by the Ginebra San Miguel mark such that the full
extent of the damage cannot be measured with reasonable accuracy. Without the submission of proof that
the damage is irreparable and incapable of pecuniary estimation, San Miguels claim cannot be the basis
for a valid writ of preliminary injunction.
Wherefore, we grant the petition. The regional trial court of mandaluyong city, branch 214, is directed to
continue expeditiously with the trial to resolve the merits of the case.
______________

GREAT WHITE SHARK ENTERPRISES, INC. v. DANILO M. CARALDE, JR. . G.R. No. 192294 .
November 21, 2012
FACTS:
On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark application
seeking to register the mark "SHARK & LOGO" for his manufactured goods under Class 25, such as
slippers, shoes and sandals. Petitioner, a foreign corporation domiciled in Florida, USA, opposed the
application claiming to be the owner of the mark consisting of a representation of a shark in color. It
alleged that the mark pending registration is confusingly similar with theirs which is likely to confuse the
public.Caralde averred that the subject marks are distinctively different from one another and easily
distinguishable.
The BLA Director ruled in favor of petitioners citing that the shark logo was both a dominant feature and
are similar and that both trademarks belong to the same class. The Director General of the IPO affirmed
this decision. The CA, however, reversed the decision citing that there were no confusing similarity.
ISSUE: Whether there is confusing similarity between the trademarks.
RULING:No. A trademark device is 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 another.
Apart from its commercial utility, the benchmark of trademark registrability is distinctiveness. Thus, a
generic figure, as that of a shark in this case, if employed and designed in a distinctive manner, can be a
registrable trademark device, subject to the provisions of the IP Code.
Irrespective of the Holistic and Dominancy tests, the Court finds no confusing similarity between the
subject marks. While both marks use the shape of a shark, the Court noted distinct visual and aural
differences between them.
As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are evident
and significant, negating the possibility of confusion in the minds of the ordinary purchaser, especially
considering the distinct aural difference between the marks.
15. Case Digest:
G.R. No. 192294

November 21, 2012

GREAT WHITE SHARK ENTERPRISES, INC., Petitioner,

vs.
DANILO M. CARALDE, JR., Respondent.
TOPIC: Registrability, Dominancy Test
FACTS:
Caralde, respondent, filed before the Bureau of Legal Affairs (BLA) IPO a trademark application for SHARK
& LOGO for his manufactured goods consisting of slippers, shoes and sandals. This was opposed by the
petitioner, Great White Shark Enterprises, Inc. (Great White Shark), a foreign corporation domiciled in
Florida, USA and was issued a Certificate Registration for trademark application for clothing, headgear and
footwear, including socks, shoes and its components in the Philippines. Petitioner alleges among other
things that there is a confusing similarity between the two (2) marks which is likely to deceive or confuse
the purchasing public into believing that respondents goods are produced by or originated from the
petitioner, or are under its sponsorship, to the petitioners damage and prejudice; that since petitioner was
first in applying for registration of the mark, the same should be favoured with respondents mark to be
denied of its application.
BLA Director ruled in favour of petitioner. The BLA observed that prominent in both marks are the
illustration of a shark, that although there are some differences, dominant features are of such degree that
overall it creates an impression of striking similarity with one another.
IPO Director General on appeal by respondent, affirmed the decision by the BLA Director that there is
indeed confusing similarity between the two mark; that there is similarity between the two marks as to
content, word, sound and meaning barring respondents registration under Sec 123.1(d) of RA 8293 of the
IP Code.
The Court of Appeals, upon petition for review by respondent, reversed and set aside the decision by the
BLA Director and IPO Director General on its finding that there is in fact no confusing similarity between
the two marks; that respondents mark is more fanciful and colourful and contains several elements which
are easily distinguishable from that on the petitioner.
The case was then elevated to the Supreme Court by petitioner, hence this petition.
ISSUES:
1. WON the two (2) marks can be considered identical, applying Sec. 123.1(d) of the IP Code, which is
likely to deceive or cause confusion.
HELD:

No. The two marks are not identical and there is no confusing similarity likely to deceive or cause confusion
between them.
A trademark device is 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 another. Apart from
its commercial utility, the benchmark of trademark registrability is distinctiveness. (Thus, a generic
figure, as that of a shark in this case, if employed and designed in a distinctive manner, can be a
registrable trademark device, subject to the provisions of the IP Code.)In connection with the registrability
of trademarks, Section 123.1(d) of the IP Codeprovides, among others, a mark which cannot be
registered, to wit:
Section 123.Registrability.
123.1 A mark cannot be registered if it:
xxx (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:
(i)

The same goods or services, or

(ii)

Closely related goods or services, or

(iii)
If it nearly resembles such a mark as to be likely to
deceive or cause confusion;
The mark will therefore be registrable if it is distinct or if it does not nearly resembles another mark to
deceive or cause confusion.
The court used Dominancy Test (although Holistic or TotalityTestwas defined in the case, this was not
used in the analysis) for this purpose and confirmed that there is no confusing similarity between the
marks; that, further, there was a distinct visual and aural differences between them.
In Great White Shark's "GREG NORMAN LOGO," there is an outline of a shark
formed with the use of green, yellow, blue and red 16lines/strokes; The shark in
Caralde's "SHARK & LOGO" mark17 is illustrated in l et t er s outlined in the
form of a shark with the letter "S" forming the head, the letter "H" forming the
fins, the letters "A" and "R" forming the body, and the letter "K" forming the
tail. In addition, the latter mark includes several more elements such as the
word "SHARK" in a different font underneath the shark outline, layers of
waves, and a tree on the right side, and liberally used the color blue with
some parts in red, yellow, green and white. 18 The whole design is enclosed in
an elliptical shape with two linings.
The visual dissimilarities between the two (2) marks are evident and significant, negating the possibility of
confusion in the minds of the ordinary purchaser, especially considering the distinct aural difference
between the marks.
APPENDIX
1. Great White Shark (GWS) also alleged that its trademark is a world famous and well-known mark since
its mark registered in different countries, in order to better his position that Caralde just copied GWSs
mark to be able to ride on its goodwill. Both BLA Director and IPO Director General however found the
same without merit due to insufficiency of evidence. IPO Dir-Gen further noted that it failed to meet the
other criteria under Rule 102of the Rules and Regulations on Trademarks, Service Marks, Trade
Names and Marked or Stamped Containersto be considered as well-known. Finally, SC no longer ruled
on this matter (,being mooted,) since it already found that there was no confusing similarity between the
two marks.
2. The Dominancy Test focuses on the similarity of the dominant features of the competing trademarks
that might cause confusion, mistake, and deception in the mind of the ordinary purchaser, and gives more
consideration to the aural and visual impressions created by the marks on the buyers of goods, giving little
weight to factors like prices, quality, sales outlets, and market segments.
The Holistic or Totality Test considers the entirety of the marks as applied to the products, including the
labels and packaging, and focuses not only on the predominant words but also on the other features
appearing on both labels to determine whether one is confusingly similar to the other 14 as to mislead the
ordinary purchaser. The "ordinary purchaser" refers to one "accustomed to buy, and therefore to some
extent familiar with, the goods in question."15
3. Copy of the trademarks in the case

TORRES v. PEREZ
November 28, 2012
SUMMARY:Petitioner and respondents, previous business partners, had a misunderstanding and falling
out which led to the petitioner filing a complaint against respondents for violation of Unfair Competition.
RTC Makati and prosecutor found probable cause for the issuance of warrant of arrest. DOJ, however,
reversed the finding of existence of probable cause. Prosecutor moved to withdraw the information but RTC
Judge denied it. CA found the RTC judge committed grave abuse of discretion in denying the prosecutors
motion. The Court held that there was no probable cause and affirmed the assailed CA decisions.
DOCTRINE: The DOJ Secretary may file the information without conducting another PI or dismiss the
information filed by the prosecutor. The DOJ Secretary may review resolutions, via petition for review to the
Secretary of Justice, of his subordinates in criminal cases despite the information being filed in court.
CRIME:Unfair competition (violation of Section 168 in relation to Section 170) under RA 8293 (Intellectual
Property Code of the Philippines).
ACTION: Petition for review on certiorari under Rule 45
FACTS:

Imelda and Rodrigo Perez (Respondents, owner of RGP) and Shirley Torres (SCC) former business
partners, had a dispute over the brand Naturals since the undergarments of SCC were being passed
of as RGPs.
A search warrant for the crime was issued by the RTC Manila against the respondents. The search
warrant called for the seizure of the undergarments. The search warrant was implemented the same
day. However, it was quashed by the same court upon motion of the respondents. TC ruled that
respondents did not pass off Naturals as the brand of another manufacturer, they thought they own
SCC.
Petitioner filed a criminal complaint for unfair competition against respondents and Sunshine before the
City Prosecution Office of Makati City
Asst. City Prosecutor Saulog found probable cause to indict respondents for unfair competition. The
prosecutor said, however, that the partnership is still operational as the process of winding up the
business has not been completed. Thus, SCC remained owner of the Naturals brand, and petitioner
being a legitimate partner thereof had a right to file the complaint against the respondents.
The indictment was raffled to RTC Makati.

RTC

RTC Makati issued an Order finding probable cause for the issuance of a warrant of arrest against
respondents.
Respondents filed a petition for review of the prosecutors resolution before the DOJ, which issued its
own Resolution reversing the finding of existence of probable cause against them. DOJ found that SCC
had effectively wound up the partnership affairs. Thus, when the criminal complaint was filed, there
was no longer any competition, unfair or otherwise, involving the partnership.
DOJ ruled that even if SCC had not yet terminated its business, respondents had the right to use the
brand as they were already exclusive owners of SCC following the payment of petitioners share.
Petition for review was granted, and the city prosecutor of Makati was ordered to withdraw the
Information against respondents.
DOJ denied the MR filed by petitioner. Hence, she filed a petition for cettiorari before the CA. Petitioner
questioned the DOJ resolution, but later withdrew the same
Following the directive of the DOJ, the prosecutor filed before the RTC Makati a Motion to Dismiss and/or
Withdraw Information. RTC denied the motion in an Order. It maintained the correctness of its finding of
existence of probable cause in the case and ruled that the findings of the DOJ would be better
appreciated and evaluated in the course of the trial

Respondents moved for reconsideration but their motion was denied by the RTC. Aggrieved, they filed a
Petition for Certiorari (with Prayer for the Issuance of a TRO and thereafter a Preliminary Injunction)
before the CA.

CA:

Action: Petition for Cetiorari (by the respondents)

CA granted the petition. It found that the trial judge committed grave abuse of discretion amounting to
lack or excess of jurisdiction when he denied the prosecutors motion to dismiss for lack of probable
cause.
Sustained the position of respondents that the finding of probable cause for the filing of an information
is an executive function lodged with the prosecutor.
Trial judge did not make an independent assessment of the evidence on record in determining the
existence of probable cause for the offense of unfair competition, as opposed to the exhaustive study
made by the DOJ before arriving at its finding of lack of probable cause.
Ruled that in determining probable cause, the essential elements of the crime charged must be
considered, for their absence would mean that there is no criminal offense.
Affirmed the findings of the DOJ and the RTC Manila that respondents used the Naturals brand
because they believed that they were the owners of SCC, which owned the brand. Furthermore, the
partnership had been terminated; hence, the filing of the criminal complaint could no longer prosper.
Filing of the criminal complaint for unfair competition was nothing but an offshoot of the
misunderstanding and quarrel between petitioner and respondents (they refused to reimburse her for
some travel expenses, claiming it was a personal trip)
Petitioner moved for reconsideration but was denied.. She then filed Petiton for Review on Certiorari (1 st
GR)

Meanwhile, following the promulgation of the Decision of the CA, respondents filed an Urgent Motion to
Dismiss the criminal complaint for unfair competition before the RTC. The motion was duly opposed by
petitioner, arguing that the CA Decision had not yet attained finality in view of her pending petition
before this Court; thus, the motion was premature.

The RTC denied the motion to dismiss for lack of merit. However, upon MR filed by respondents, it
issued an Order (A) ordering the quashal of the Information against them. The trial court issued another
Order (B)denying petitioners MR.
CA issued a second Decision affirming the RTC Orders (A and B). The CA ruled that while its first
Decision was still under review before this Court, neither court had issued a restraining order or
injunction that would prevent the RTC from implementing the said Decision ordering the dismissal of
the information against respondents
Furthermore, the CA ruled that since petitioner had withdrawn her petition in questioning the DOJ
Resolution, the issue of whether there was probable cause had already been resolved with finality in
the negative. Thus, the trial court cannot be faulted for following the CA directive to dismiss the
Information against respondents.
Opting not to file a MR, petitioner again filed for a Petition for Review on Certiorari questioning the
second CA Decision. (2nd GR)

RULING:CA Decisions affirmed, fiding lack of probable cause for respondents alleged violation of the
crime. Information against respondents DISMISSED.
Whether there exists probable cause to indict respondents for unfair competition (violation of
Section 168 in relation to Section 170) under R.A. 8293 NONE

It is worth noting that Judge Untalan acted well within the exercise of his judicial discretion when he
denied the Motion to Dismiss and/or Withdraw Information filed by the prosecution. His finding that
there 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.
Yambot v. Armovit,: Mandate of judges to make a personal evaluation of records submitted in support
of criminal complaints filed before their respective salas.
While the resolution of the prosecutorial arm is persuasive, it is not binding on the court. It may
therefore grant or deny at its option a motion to dismiss or to withdraw the information
based on its own assessment of the records of the preliminary investigation submitted to
it, in the faithful exercise of judicial discretion and prerogative
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 issued the Order granting respondents motion for
reconsideration of his earlier ruling denying the Urgent Motion to Dismiss. The good judge yielded,
even though he was well aware that the CA Decision had not yet attained finality pending review by
this Court.
There was no probable cause to indict respondents, because the crime of unfair
competition was not committed.

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 criminal complaint for unfair competition against respondents cannot prosper, for the elements of
the crime were not present. The key elements of unfair competition are deception, passing off and
fraud upon the public. No deception can be imagined to have been foisted on the public through
different vendor codes,

NOTES:

Probable cause, for purposes of filing a criminal information, is described as such facts as are
sufficient to engender a well-founded belief that a crime has been committed and the respondent is
probably guilty thereof, and should be held for trial.

LEVI STRAUSS & CO., G.R. No. 138900

& LEVI STRAUSS (PHILS.),
INC., Present:
Petitioners,
PUNO,
Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
TINGA, and
CLINTON APPARELLE, INC., NAZARIO, JJ.
Respondent.
Promulgated:
September 20, 2005
FACTS:
Before us is a petition for review on certiorari [1] under Rule 45 of the 1997 Rules of Civil
Procedure filed by Levi Strauss & Co. (LS & Co.) and Levi Strauss (Philippines), Inc. (LSPI) assailing the
Court of Appeals Decision[2] and Resolution granting respondents prayer for a writ of preliminary
injunction in its Petition[4] and set aside the trial courts orders dated 15 May 1998 [5] and 4 June
1998[6] which respectively granted petitioners prayer for the issuance of a temporary restraining order
(TRO) and application for the issuance of a writ of preliminary injunction.
This case stemmed from the Complaint[7] for Trademark Infringement, Injunction and Damages filed by
petitioners LS & Co. and LSPI against respondent Clinton Apparelle, Inc. * (Clinton Aparelle) together with an
alternative defendant, Olympian Garments, Inc. (Olympian Garments), before the Regional Trial Court of
Quezon City, Branch 90.[8]
The Complaint alleged that LS & Co., a foreign corporation duly organized and existing under the laws of
the State of Delaware, and engaged in the apparel business. In the Philippines, it has a Certificate of
Registration No. 46619 in the Principal Register for use of said trademark on pants, shirts, blouses, skirts,
shorts, sweatshirts and jackets under Class 25.[9]
LS & Co. and LSPI further alleged that they discovered the presence in the local market of jeans under the
brand name Paddocks using a device which is substantially, if not exactly, similar to the Dockers and
Design trademark owned by and registered in the name of LS & Co., without its consent. Based on their
information and belief, they added, Clinton Apparelle manufactured and continues to manufacture such
Paddocks jeans and other apparel.
The following day, the trial court issued an Order[17] granting the TRO applied for, the pertinent portions of
which state:
Considering the absence of counsel/s for the defendant/s during the summary hearing
scheduled on May 5, 1998 and also during the re-scheduled summary hearing held on May
14, 1998 set for the purpose of determining whether or not a Temporary Restraining Order
shall be issued, this Court allowed the counsel for the plaintiffs to present on May 14, 1998
their arguments/evidences in support of their application. After hearing the arguments
presented by the counsel for the plaintiffs during the summary hearing, this Court is of the
considered and humble view that grave injustice and irreparable injury to the plaintiffs would
arise before the matter of whether or not the application for the issuance of a Writ of
Preliminary Injunction can be heard, and that, in the interest of justice, and in the meantime,
a Temporary Restraining Order be issued.

WHEREFORE, let this Temporary Restraining Order be issued restraining the defendants,
their officers, employees, agents, representatives, dealers, retailers or assigns from
committing the acts complained of in the verified Complaint, and specifically, for the
defendants, their officers, employees, agents, representatives, dealers and retailers or
assigns, to cease and desist from manufacturing, distributing, selling, offering for sale,
advertising or otherwise using denims, jeans or pants with the design complained of in the
verified Complaint as substantially, if not exactly similar, to plaintiffs Dockers and Design
trademark; until after the application/prayer for the issuance of a Writ of Preliminary
Injunction is heard/resolved, or until further orders from this Court.
The plaintiffs prayer for the issuance of a writ of preliminary injunction is GRANTED. Xxx for the
defendants, their officers, employees, agents, representatives, dealers and retailers or assigns or
persons acting in their behalf to cease and desist from manufacturing, distributing, selling, offering
for sale, advertising, or otherwise using, denims, jeans or pants with the design complained of in
the verified Complaint in this case, which is substantially, if not exactly, similar to plaintiffs
DOCKERS and DESIGN trademark or logo as covered by the Bureau of Patents, Trademarks and
Technology Transfer Certificate of Registration No. 46619, until after this case shall have been
decided on the merits and/or until further orders from this Court. [20]
On 2 October 1998, the trial court denied Clinton Apparelles Motion to Dismiss and Motion for
Reconsideration in an Omnibus Order which was denied.
Thus, Clinton Apparelle filed with the Court of Appeals a Petition[28] for certiorari, prohibition and
mandamus with prayer for the issuance of a temporary restraining order. The Court of Appeals held that
the trial court did not follow the procedure required by law for the issuance of a temporary restraining
order as Clinton Apparelle was not duly notified of the date of the summary hearing for its issuance. Thus,
the Court of Appeals ruled that the TRO had been improperly issued. [30]
Issues:
(1) disregarding the well-defined limits of the writ of certiorari that questions on the sufficiency of evidence
are not to be resolved in such a petition; (2) in holding that there was no confusion between the two
marks; (3) in ruling that the erosion of petitioners trademark is not protectable by injunction; (4) in
ignoring the procedure previously agreed on by the parties and which was adopted by the trial court; and
(5) in declaring that the preliminary injunction issued by the trial court will lead to the closure of
respondents business.
Held: There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary injunction by the trial court was proper and
whether the Court of Appeals erred in setting aside the orders of the trial court.
It is resorted to only when there is a pressing necessity to avoid injurious consequences, which cannot be
remedied under any standard compensation. The resolution of an application for a writ of preliminary
injunction rests upon the existence of an emergency or of a special recourse before the main case can be
heard in due course of proceedings.[36]
Under the cited provision, a clear and positive right especially calling for judicial protection must be shown.
Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to
protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a
cause of action. There must exist an actual right.[37] There must be a patent showing by the complaint that
there exists a right to be protected and that the acts against which the writ is to be directed are violative
of said right.[38]
While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of
the trial court, this discretion must be exercised based upon the grounds and in the manner provided by
law. The exercise of discretion by the trial court in injunctive matters is generally not interfered with save
in cases of manifest abuse.[40] And to determine whether there was abuse of discretion, a scrutiny must be
made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great caution and deliberation, and only in
cases of great injury where there is no commensurate remedy in damages. [41]
In the present case, we find that there was scant justification for the issuance of the writ of preliminary
injunction.
Petitioners anchor their legal right to Dockers and Design trademark on the Certificate of Registration
issued in their favor by the Bureau of Patents, Trademarks and Technology Transfer. * According to Section
138 of Republic Act No. 8293, [42] this Certificate of Registration is prima facie evidence of the validity of the
registration, the registrants ownership of the mark and of the exclusive right to use the same in connection
with the goods or services and those that are related thereto specified in the certificate. Section 147.1 of
said law likewise grants the owner of the registered mark the exclusive right to prevent all third parties not
having the owners consent from using in the course of trade identical or similar signs for goods or services
which are identical or similar to those in respect of which the trademark is registered if such use results in
a likelihood of confusion.

However, attention should be given to the fact that petitioners registered trademark consists of two
elements: (1) the word mark Dockers and (2) the wing-shaped design or logo. Notably, there is only one
registration for both features of the trademark giving the impression that the two should be considered as
a single unit. Clinton Apparelles trademark, on the other hand, uses the Paddocks word mark on top of a
logo which according to petitioners is a slavish imitation of the Dockers design. The two trademarks
apparently differ in their word marks (Dockers and Paddocks), but again according to petitioners, they
employ similar or identical logos. It could thus be said that respondent only appropriates petitioners logo
and not the word mark Dockers; it uses only a portion of the registered trademark and not the whole.
It is not evident whether the single registration of the trademark Dockers and Design confers on the owner
the right to prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use
without the owners consent of a portion of a trademark registered in its entirety constitutes material or
substantial invasion of the owners right.
It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or
central feature of petitioners trademarkthe feature that prevails or is retained in the minds of the publican
imitation of which creates the likelihood of deceiving the public and constitutes trademark infringement.
[43]
In sum, there are vital matters which have yet and may only be established through a full-blown trial.
Petitioners wish to impress upon the Court the urgent necessity for injunctive relief, urging that the erosion
or dilution of their trademark is protectable. They assert that a trademark owner does not have to wait
until the mark loses its distinctiveness to obtain injunctive relief, and that the mere use by an infringer of a
registered mark is already actionable even if he has not yet profited thereby or has damaged the
trademark owner.
Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or
services, regardless of the presence or absence of: (1) competition between the owner of the famous mark
and other parties; or (2) likelihood of confusion, mistake or deception. Subject to the principles of equity,
the owner of a famous mark is entitled to an injunction against another persons commercial use in
commerce of a mark or trade name, if such use begins after the mark has become famous and causes
dilution of the distinctive quality of the mark. This is intended to protect famous marks from subsequent
uses that blur distinctiveness of the mark or tarnish or disparage it. [44]
Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the
trademark sought to be protected is famous and distinctive; (2) the use by respondent of Paddocks and
Design began after the petitioners mark became famous; and (3) such subsequent use defames petitioners
mark. In the case at bar, petitioners have yet to establish whether Dockers and Design has acquired a
strong degree of distinctiveness and whether the other two elements are present for their cause to fall
within the ambit of the invoked protection. TheTrends MBL Survey Report which petitioners presented in a
bid to establish that there was confusing similarity between two marks is not sufficient proof of any dilution
that the trial court must enjoin.
The Court also finds that the trial courts order granting the writ did not adequately detail the reasons for
the grant, contrary to our ruling inUniversity of the Philippines v. Hon. Catungal Jr., [45] wherein we held that:
The trial court must state its own findings of fact and cite particular law to justify grant of
preliminary injunction. Utmost care in this regard is demanded. [46]
The trial court in granting the injunctive relief tersely ratiocinated that the plaintiffs appear to be
entitled to the relief prayed for and this Court is of the considered belief and humble view that, without
necessarily delving on the merits, the paramount interest of justice will be better served if
the status quo shall be maintained. Clearly, this statement falls short of the requirement laid down by the
above-quoted case. Similarly, in Developers Group of Companies, Inc. v. Court of Appeals,[47] we held that it
was not enough for the trial court, in its order granting the writ, to simply say that it appeared after
hearing that plaintiff is entitled to the relief prayed for.

In addition, we agree with the Court of Appeals in its holding that the damages the petitioners had suffered
or continue to suffer may be compensated in terms of monetary consideration. As held in Government
Service Insurance System v. Florendo:[48]
a writ of injunction should never have been issued when an action for damages would
adequately compensate the injuries caused. The very foundation of the jurisdiction to issue
the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary
estimation and the prevention of the multiplicity of suits, and where facts are not shown to
bring the case within these conditions, the relief of injunction should be refused. [49]
We also believe that the issued injunctive writ, if allowed, would dispose of the case on the merits as it
would effectively enjoin the use of the Paddocks device without proof that there is basis for such action.
The prevailing rule is that courts should avoid issuing a writ of preliminary injunction that would in effect
dispose of the main case without trial. [50] There would be a prejudgment of the main case and a reversal of

the rule on the burden of proof since it would assume the proposition which petitioners are inceptively
bound to prove.[51]
Then again, we believe the Court of Appeals overstepped its authority when it declared that the alleged
similarity as to the two logos is hardly confusing to the public. The only issue brought before the Court of
Appeals through respondents Petition under Rule 65 of the Rules of Court involved the grave abuse of
discretion allegedly committed by the trial court in granting the TRO and the writ of preliminary injunction.
The appellate court in making such a statement went beyond that issue and touched on the merits of the
infringement case, which remains to be decided by the trial court. In our view, it was premature for the
Court of Appeals to declare that there is no confusion between the two devices or logos. That matter
remains to be decided on by the trial court.
Conformably, the Court of Appeals was correct in setting aside the assailed orders of the trial court.
Yao vs. People
Facts:
NBI Agent RitcheOblanca applied for 2 search warrants with RTC Cavite against petitioners along with other
occupants of MASAGANA compound for allegedly violating the Intellectual Property rights of Petron and
Pilipinas Shell with attached affidavits stating the following:
1) NBI received a letter-complaint from Atty. BienvenidoSomera Jr. in behalf of Petron and Shell
requesting assistance in the investigation and if warranted, prosecution of the
persons/establishment in violation of their Intellectual Property rights.
2) Based on the letter-complaint, Oblanca and Agent Angelo Zarzoso were assigned on the case.
3) Prior to conducting investigations, Oblanca reviewed the trademark registrations issued to Petron
and Shell as well as other documents and evidence obtained when Petron and company employed
an investigative agency by Mr. BernabeAlajar.
4) MASAGANA Gas Corporation is not authorized to refill and sell and distribute Gasul and Shellane
products. Petitioners are the directors and stockholders of said corporation.
5) Oblanca and Alajar conducted test-buys on 2 occasions, Feb. 13, 2003 and Feb. 27, 2003. After
stating their intent to do business, were allowed inside the MASAGANA refilling plant, receipts were
issued and were assisted in choosing empty Gasul cylinders. In their presence, the empty cylinders
were refilled where Oblanca noticed that there was no valve seal placed on the cylinders.
Oblanca furnished copies of photographs of the delivery trucks in his application for the search warrant.
RTC issued 2 search warrants for the search and seizure of transaction records, the trucks used in the
delivery of illegally refilled cylinders, machinery and equipment being used or intended to be used in
illegally refilling the cylinders bearing the trademarks of Gasul and Shellane, and Gasul and Shellane
cylinders and any other items bearing their trademark.
Petitioners filed a Motion to Quash on the grounds that there is no probable cause, that Oblanca and Alajar
do not have the authority to apply for search warrant, allegedly committing perjury when they submitted
their sworn statements that they conducted test-buys, that the area was not specified as the place to be
searched must be indicated with particularity and that the search warrant was general in nature as the
items seized were being used in the conduct of lawful business. Petitioners also filed for a Motion for the
Return of the Motor Compressor and the LPG Refilling Machine as said items were being used in the
conduct of lawful business as third-party claimants.
RTC denied both motions holding that the search warrant issued was based on probable cause considering
the testimonies of Oblanca and Alajar, the documentary evidence presented that MASAGANA was in
violation of Petron and Shells intellectual property rights. It was also ruled that Oblanca and Alajar had
personal knowledge since they were the ones who conducted the search warrant, the search warrant was
not general in nature since the are described was solely being used by MASAGANA and the items to be
seized were sufficiently described with particularity as the same was limited to cylinders bearing the
trademarks of Gasul and Shellane. Denying the motion of MASAGANA for the Return of the equipment as
third party complainant cannot be considered since evidence show that the petitioners are the
stockholders of MASAGANA, conducting their business through the same judicial entity. RTC added that the
ownership of another person or entity of the seized items is not a ground to order its return, in seizures
pursuant to a warrant what is important is that the seized items were being used or intended to be used as
means of committing the offense complained of that by its very nature, the properties sought to be
returned in the instant case appear to be related to and intended for the illegal activity for which the
search warrants were applied for; and that the items seized are instruments of an offense.
RTC denied petitioners Motion for Reconsideration for lack of compelling cause on July 21, 2003.
Pettitioners field for certiorari with CA who affirmed the assailed decision and orders of RTC on Sept. 30,
2004, finding that grave abuse of discretion was no proven to exist. Thus the instant petition.
Issues:
1) W/N there was probable cause.
2) W/N Oblanca has the authority to apply for the search warrant.
3) W/N the requirement of giving particular description of the place to be searched was complied with.
4) W/N the search warrant was general in nature.
5) W/N the complaint was against MASAGANA [to not consider it as third party claimant whose rights
were violated as a result of the seizure].
Ruling:
I

As provided for by Art. III, Sec. 2 of the Constitution and Rule 126 of the Revised Rules on Criminal
Procedure regarding requisites of issuing search warrants. According to these provisions, a search warrant
can only be issued upon a finding of probable cause. The facts and circumstances referred to pertain to
facts and information personally known to the applicant and the witness he may present.
As provided by Sec. 155 of RA 8293, mere unauthorized use of a container bearing a registered trademark
in connection with the sale, distribution or advertising of goods or services which is likely to cause
confusion, mistake or deception among the buyers/consumers can be considered as trademark
infringement.
Oblanca in his sworn affidavits stated that in reviewing the trademark registrations issued by Philippine
Intellectual Property Office to Petron and Pilipinas Shell, he confirmed that MASAGANA is not authorized to
sell, use, refill or distribute Gasul and Shellane LPG cylinders.
Aside from the documentary evidence Oblanca submitted, both him and Alajar had personal knowledge,
stating in their affidavits that they used different names during the test-buys to avoid suspicion and
personally witnessed the refilling, of cylinders bearing the marks Gasul and Shellane inside the plant and
the deliveries of these refilled containers to some outlets using mini-trucks.
Such facts and circumstances establish a sufficient probable cause. As the term implies, probable cause
is concerned with probability, not absolute or even moral certainty. The standards of judgment are those of
a reasonably prudent man, not the exacting calibrations of a judge after a full blown trial. Using different
names do not negate the personal knowledge that Oblanca and Alajar have since it is the common practice
of officers of the law such as NBI agents during covert investigations to use another name to conceal their
true identities.
Oblanca having reviewed the trademark registrations issued to Petron ans Shell and Alajar, a private
investigator employed by both [Petron and Shell] to verify the reports that MASAGANA is involved in the
illegal refilling, selling and distribution of cylinders bearing their trade marks cannot be said incompetent
to testify on the trademarks infringed by the petitioners.
As provided by Section 5 of the Revised Rules on Criminal Procedure, the searching questions propounded
to the applicant and the witnesses depend largely on the discretion of the judge.
Reviewing the Transcript of Stenographic Notes of the preliminary examination, it was found that the
questions of Judge Sadang to be sufficiently probing, not at all superficial and perfunctory. The reviewing
court can overturn such findings only upon proof that the judge disregarded the facts before him or
ignored the clear dictates of reason.
II
Oblanca s authority to apply for the search warrant is clearly discussed in his affidavit. It can also be
presumed that Oblanca, as an NBI agent, is a public officer who had regularly performed his official duty.
He would not have initiated an investigation on MASAGANA without a proper complaint.
III
The long standing rule is that a description of the place to be searched is sufficient if the officer with the
warrant can, with reasonable effort, ascertain and identify the place intended and distinguish it from other
places in the community. Any designation or description known to the locality that points out the place to
the exclusion of all others, and on inquiry leads the officers unerringly to it, satisfies the constitutional
requirement.
IV
A search warrant may be said to particularly describe the things to be seized when the description therein
is as specific as the circumstances will ordinarily allow; or when the description expresses a conclusion of
fact not of law by which the warrant officer may be guided in making the search and seizure; or when the
things described are limited to those which bear direct relation to the offense for which the warrant is
being issued. The law does not require that the things to be seized must be described in precise and
minute details as to leave no room for doubt on the part of the searching authorities; otherwise it would be
virtually impossible for the applicants to obtain a search warrant as they would not know exactly what kind
of things they are looking for. Once described, however, the articles subject of the search and seizure need
not be so invariant as to require absolute concordance, in our view, between those seized and those
described in the warrant. Substantial similarity of those articles described as a class or specie would
suffice. The items to be seized under the search warrants in question were sufficiently described with
particularity. Additionally, since the described items are clearly limited only to those which bear direct
relation to the offense, i.e., violation of section 155 of Republic Act No. 8293, for which the warrant was
issued, the requirement of particularity of description is satisfied.
V
A fundamental principle of corporation law is that a corporation is a separate and distinct entity from its
stockholders, directors, or officers but when the notion of legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of
persons, or in the case of two corporations merge them into one. Petitioners are directors and officers of
MASAGANA, using the entity to violate the intellectual property right of Petron and Shell and so they should
be considered one and the same for liability purposes.
The motor compressor and the LPG refilling machine were the corpus delicti or the evidence of the
commission of the trademark infringement, thus RTC denying the return of said items was to prevent
MASAGANA/petitioners from using it again in trademark infringement.
Petitioner relying on Section 20 of AM No 02-1-06 SC is not tenable because it is not applicable in the
present case as it governs only searches and seizure in civil actions whereas this case is for criminal
violation of RA 8293.

RA 8293 Intellectual Property Code of the Philippines

Section 155.Remedies; Infringement. - Any person who shall, without the consent of the owner of the
registered mark:
155.1.Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or
the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
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 with which such use is likely to cause confusion, or to cause
mistake, or to deceive; or
155.2.Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof
and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the
sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes
place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using the infringing material. (Sec. 22, R.A.
No 166a)
Section 170.Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal
penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos
(P50,000) to Two hundred thousand pesos(P200,000), shall be imposed on any person who is found guilty
of committing any of the acts mentioned in Section 155, Section 168 and Subsection 169.1. (Arts. 188 and
189, Revised Penal Code)
Article III, Section 2 of the Constitution:
Section 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no
search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by
the judge after examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the persons or things to be seized.
(emphasis supplied).
Section 4 and 5 of Rule 126 of the Revised Rules on Criminal Procedure:
SEC. 4. Requisites for issuing search warrant. A search warrant shall not issue except upon probable
cause in connection with one specific offense to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized which may be anywhere in the Philippines.
SEC. 5. Examination of complainant; record.- The judge must, before issuing the warrant, personally
examine in the form of searching questions and answers, in writing under oath, the complainant and the
witnesses he may produce on facts personally known to them and attach to the record their sworn
statements, together with the affidavits submitted.
A.M. No. 02-1-06-SC - RULE ON SEARCH AND SEIZURE IN CIVIL ACTIONS FOR INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS
Section 20.Failure to file complaint. - The writ shall also. Upon motion of the expected adverse party, be
set aside and the seized documents and articles returned to the expected adverse party if no case is filed
with the appropriate court or authority within thirty-one (31) calendar days from the date of issuance of
the writ.
Probable cause for search warrant means such facts and circumstances which would lead a
reasonably discreet and prudent man to believe that an offense has been committed and that the objects
sought in connection with the offense are in the place to be searched.
> Probable cause is the existence of such facts and circumstances as would excite the belief in a
reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was
guilty of the crime for which he was prosecuted
> Based on the evidence that would be adduced by the parties
Doctrine of Piercing the Veil of Corporate Entity
Requires the court to see through the protective shroud which exempts its stockholders from liabilities that
they ordinarily would be subject to, or distinguishes a corporation from a seemingly separate one, were it
not for the existing corporate fiction (Lim vs CA, 323 SCRA 102)
Extent: The application of the doctrine to a particular case does not deny the corporation of legal
personality for any and all purposes, but only for the particular transaction or instance for which the
doctrine was applied (Koppel v. Yatco 77 Phil. 496)

Coffee Partners v. San Francisco Coffee & Roastery (G.R. No. 169504)
Facts:

P is a local corporation engaged in the business of establishing and maintaining coffee shops in the
country. It has a franchise agreement with Coffee Partners Ltd., a business entity organized and existing
under the laws of British Virgin Islands, for a non-exclusive right to operate coffee shops in the Philippines
using trademarks designed by CPL such as SAN FRANCISCO COFFEE.
R is a local corporation engaged in the wholesale and retail sale of coffee and a registrant of the business
name SAN FRANCISCO COFFEE & ROASTERY, INC. with the DTI and had since built a customer base that
included Figaro Company, Tagaytay Highlands, Fat Willys, and other coffee companies. R formed a joint
venture company with Boyd Coffee USA under the company name Boyd Coffee Company
Philippines, Inc. BCCPI engaged in the processing, roasting, and wholesale selling of coffee and later
embarked on a project study of setting up coffee carts in malls and other commercial establishments in
Metro Manila.
R discovered that P was about to open a coffee shop under the name SAN FRANCISCO COFFEE, thus,
sent a letter to P demanding that the latter stop using the said name. R also filed a complaint with the BLAIPO for TMI/UC.
BLA-IPO held that Ps trademark infringed on Rs trade name. It ruled that the right to the exclusive use of
a trade name with freedom from infringement by similarity is determined from priority of adoption. Since
R registered its business name with the DTI earlier than Ps registration of its trademark, then
respondent must be protected from infringement of its trade name. Also that, Ps use of the trademark
SAN FRANCISCO COFFEE will likely cause confusion because of the exact similarity in sound,
spelling, pronunciation, and commercial impression of the words SAN FRANCISCO which is the
dominant portion of Rs trade name and Ps trademark. On the issue of unfair competition, the BLA-IPO
absolved P from liability as it found no evidence of intent to defraud. Both parties moved for partial
reconsideration but were denied.
The parties appealed to the ODG-IPO which reversed the BLA-IPO decision, ruling that petitioners use of
the trademark SAN FRANCISCO COFFEE did not infringe on Rs trade name.
On appeal, the CA set aside the decision of the ODG-IPO and reinstated the decision of the BLA-IPO finding
infringement. The CA denied both MRs.
Issue:
Whether or not Ps use of the trademark SAN FRANCISCO COFFEE constitutes infringement of Rs trade
name SAN FRANCISCO COFFEE & ROASTERY, INC., even if the trade name is not registered with the IPO.
Ruling:
The petition has no merit.
Coming now to the main issue, in Prosource International, Inc. v. Horphag Research Management SA, this
Court laid down what constitutes infringement of an unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement
of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising
of any goods, business or services; or the infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in
connection with such goods, business, or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or
mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or
origin of such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof.
Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its
owner against the owner of an infringing trademark. All that is required is that the trade name is
previously used in trade or commerce in the Philippines.

Section 22 of Republic Act No. 166, as amended, required registration of a trade name as a condition for
the institution of an infringement suit, however, RA 8293, which took effect on 1 January 1998, has
dispensed with the registration requirement. Section 165.2 of RA 8293 categorically states that trade
names shall be protected, even prior to or without registration with the IPO, against any unlawful act
including any subsequent use of the trade name by a third party, whether as a trade name or a trademark
likely to mislead the public.
Applying either the dominancy test or the holistic test, petitioners SAN FRANCISCO COFFEE trademark is
a clear infringement of respondents SAN FRANCISCO COFFEE & ROASTERY, INC. trade name. The
descriptive words SAN FRANCISCO COFFEE are precisely the dominant features of respondents trade
name. Petitioner and respondent are engaged in the same business of selling coffee, whether wholesale or
retail. The likelihood of confusion is higher in cases where the business of one corporation is the same or
substantially the same as that of another corporation. In this case, the consuming public will likely be
confused as to the source of the coffee being sold at petitioners coffee shops.
Petitioners argument that San Francisco is just a proper name referring to the famous city in
California and that coffee is simply a generic term, is untenable. Respondent has acquired an exclusive
right to the use of the trade name SAN FRANCISCO COFFEE & ROASTERY, INC. since the registration of
the business name with the DTI in 1995. Thus, respondents use of its trade name from then on must be
free from any infringement by similarity. Of course, this does not mean that respondent has exclusive use
of the geographic word San Francisco or the generic word coffee. Geographic or generic words are not,
per se, subject to exclusive appropriation. It is only the combination of the words SAN FRANCISCO
COFFEE, which is respondents trade name in its coffee business, that is protected against
infringement on matters related to the coffee business to avoid confusing or deceiving the public.
WHEREFORE, we DENY the petition for review. We AFFIRM the CA Decision and Resolution.
Soceite Des Produits Nestle, S.A. Vs. Martin T. Dy, Jr., GR No. 172276, August 8, 2010
Post under case digests, Commercial Law at Friday, December 16, 2011 Posted by Schizophrenic Mind
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FACTS: Petitioner is a foreign corporation organized under the lawsof Switzerland and manufactures food
products and beverages. A Certificate of Registration was issued on April 7, 1969 by the BPTTT which as a
result Nestle owns the NAN trademark for its line of infant powdered milk (PRE-NAN, NAN-H.A., NAN-1,
and NAN-2). It is classified under Class-6, diactetic preparations for infant feeding. Nestle sells its NAN
products throughout the Philippines and invested substantial amount of resources for its marketing.
Respondent owns 5M Enterprises which imports Sunny Boy powdered milk from Australia, and repacks the
milk into plastic bags bearing the name NANNY, and is also classified as Class-6 full cream milk for
adults. Respondent sells the milk in parts of Mindanao.
In 1985, petitioner requested respondent to refrain from using NANNY and to stop infringing the NAN
trademark. Respondent did not act which forced Nestle to file in March 1, 1990 in the RTC of Dumaguete, a
complaint against respondent. The case was transferred to the RTC of Cebu (special court for intellectual
property rights). The RTC held that respondent was guilty of infringement. The trial court stated that if
determination of infringement shall only be limited on whether or not the mark used would likely cause
confusion, it would highly unlikely to happen in the instant case, as a comparison of the plaintiffs NAN and
defendants NANNY products are different. Thus the dominancy test cannot be used because the deceptive
tendency of the mark NANNY is not apparent from the essential features of the registered trademark NAN.
The RTC invoked however the case of Esso Standard Eastern vs. CA where the SC said that as to whether
trademark infringement exists depends upon for the most part upon whether or not the goods are so
related that the public may be, or is actually, deceived and misled that they came from the same maker or
manufacturer. For non-competing goods may be those which, though they are not in actual competition,
are so related to each other that it might reasonably be assumed that they originate from one
manufacturer, or from a common source. The trial court justified that goods may become related for
purposes of infringement when they belong to the same class, or have same descriptive properties; when
they possess the same physical attributes or essential characteristics with reference to their form,
composition, texture or quality. They also be related because they serve the same purpose or are sold in
grocery stores.
The RTC stated that considering that NANNY belongs to the same class as that of NAN because both are
food products, the defendants unregistered trade mark NANNY should be held an infringement to
plaintiffs registered trademark NAN because defendants use of NANNY would imply that it came from the
manufacturer of NAN.
The Court of Appeals reversed the TCs decision and found respondent not liable for infringement, stating
that the TCs application of the doctrine laid down by the SC in the Esso Standard case is misplaced as the
goods of the two contending parties bear similar marks or labels. In the instant case, two dissimilar marks
are involved. The CA stated that while it is true that both NAN and NANNY are milk products and that the
word NAN is contained in the word NANNY, there are more glaring dissimilarities in the entirety of their
trademarks as they appear in their respective labels and also in relation to the goods to which they

are attached. The discerning eye of the observer must focus not only on the predominant words but also
on the other features appearing in both labels. NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1
and NAN-2, are all infant preparations, while NANNY is a full cream milk for adults in [sic] all ages. NAN
milk products are sold in tin cans and hence, far expensive than the full cream milk NANNY sold in three (3)
plastic packs containing 80, 180 and 450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The
labels of NAN products are of the colours blue and white and have at the bottom portion an elliptical
shaped figure containing inside it a drawing of nestling birds, which is overlapped by the trade-name
"Nestle." On the other hand, the plastic packs NANNY have a drawing of milking cows lazing on a vast
green field, back-dropped with snow-capped mountains and using the predominant colours of blue and
green. The word NAN are all in large, formal and conservative-like block letters, while the word NANNY are
all in small and irregular style of letters with curved ends. With these material differences apparent in the
packaging of both milk products, NANNY full cream milk cannot possibly be an infringement of NAN infant
milk.
ISSUE: Whether or not respondent is liable for infringement
HELD Yes. In Prosource International, Inc. vs. Horphag Research Management SA, the SC laid down the
elements of infringement under R.A. No. 166, and 8293:
For Section 22 of R.A. No. 166, the following constitute the elements of TM infringement:
A TM actually used in commerce and registered in the principal register of the PPO
Used by another person in connection with the sale of goods or services or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business
TM is used for identical or similar goods
Such act is done without the consent of the TM registrant.
The elements of infringement under R.A. No. 8293 are:
The TM infringed is registered in the IPO, in trade name, the same need not be registered
The TM or Trade name is not reproduced, counterfeited, copied, or colorably imitated by the infringer
The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of
any goods; or the infringing mark or trade name is applied to labels, signs, prints, intended to be used
upon or in connection with such goods, business, or services;
The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or services themselves or as to the source or origin of such
goods or services or the identity of such business
Without the consent of the trademark or trade name owner or assignee
Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement,
and there are to types, confusion of goods which in the event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing the other. And the other is confusion
of business which though the goods of the parties are different, the defendants product is such as might
reasonably be assumed to originate with the plaintiff, and the public would then be deceived either into
that belief or into the belief that there is some connection between the plaintiff and defendant which, in
fact does not exist.
There are two tests to determine the likelihood of confusion: the dominancy test and holistic test. In light of
the facts of the present case, the Court holds that the dominancy test is applicable.
The test of dominancy is in fact explicitly incorporated into law in Section 155.1 of the IPC which defines
infringement as the colourable imitation of a registered mark...or a dominant feature thereof. While the
SC agrees with the CAs enumeration of differences between the respective trademarks, the SC does not
agree that the holistic test is not the one applicable in the case as it is contrary to
the elementary postulate of the law on trademarks and unfair competition that that confusing similarity is
to be determined on the basis of visual, aural, connotative comparisons and overall impressions
engendered by the marks in controversy as they are encountered in the realities of the marketplace. The
totality or holistic test only relies on visual comparison whereas the dominancy test relies also on the aural
and connotative comparisons and overall impressions between the two trademarks.
Applying such test in the present case the SC finds that NANNY is confusingly similar to NAN as it is the
prevalent feature of petitioners infant powdered milk (PRE-NAN, NAN-H.A.., NAN-1 and NAN-2). NANNY
contains the prevalent feature NAN, and the first three letters of NANNY are exactly the same as the letters
of NAN. The aural effect is confusingly similar.

The decision of the RTC is reinstated.

Dermaline, Inc. vs. Myra Pharmaceuticals, Inc., GR No. 190065, August 16, 2010
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Facts: Dermaline filed with the IPO an application to register the trademark Dermaline. Myra opposed
this alleging that the trademark resembles its trademark Dermalin and will cause confusion, mistake and
deception to the purchasing public. Dermalin was registered way back 1986 and was commercially used
since 1977. Myra claims that despite attempts of Dermaline to differentiate its mark, the dominant feature
is the term Dermaline to which the first 8 letters were identical to that of Dermalin. The pronunciation
for both is also identical. Further, both have 3 syllables each with identical sound and appearance.
Issue: W/N the IPO should allow the registration of the trademark Dermaline. NO
Held: As Myra correctly posits, it has the right under Section 147 of R.A. No. 8293 to prevent third parties
from using a trademark, or similar signs or containers for goods or services, without its consent, identical
or similar to its registered trademark, where such use would result in a likelihood of confusion. In
determining confusion, case lawhas developed two (2) tests, the Dominancy Test and the Holistic or
Totality Test.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that
might cause confusion or deception. Duplication or imitation is not even required; neither is it necessary
that the label of the applied mark for registration should suggest an effort to imitate. Relative to the
question on confusion of marks and trade names, jurisprudence noted two (2) types of confusion, viz:
(1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2) confusion of business (source
or origin confusion), where, although the goods of the parties are different, the product, the mark of which
registration is applied for by one party, is such as might reasonably be assumed to originate with the
registrant of an earlier product, and the public would then be deceived either into that belief or into the
belief that there is some connection between the two parties, though inexistent.
Using this test, the IPO declared that both confusion of goods and service and confusion of business or of
origin were apparent in both trademarks. While it is true that the two marks are presented differently, they
are almost spelled in the same way, except for Dermalines mark which ends with the letter "E," and they
are pronounced practically in the same manner in three (3) syllables, with the ending letter "E" in
Dermalines mark pronounced silently. Thus, when an ordinary purchaser, for example, hears an
advertisement of Dermalines applied trademark over the radio, chances are he will associate it with
Myras. When one applies for the registration of a trademark or label which is almost the same or that very
closely resembles one already used and registered by another, the application should be rejected and
dismissed outright, even without any opposition on the part of the owner and user of a
previously registered label or trademark.
Further, Dermalines stance that its product belongs to a separate and different classification from Myras
products with the registeredtrademark does not eradicate the possibility of mistake on the part of the
purchasing public to associate the former with the latter, especially considering that both classifications
pertain to treatments for the skin.

Victorio P. Diaz vs People of the Philippines and Levi Strauss [Phils.], Inc.
G.R. No. 180677 February 18, 2003
Facts:
Levi Strauss Philippines, Inc. (Levis Philippines) is a licensee of Levis. After receiving information that Diaz
was selling counterfeit LEVIS 501 jeans in his tailoring shops in Almanza and Talon, Las Pias City, Levis
Philippines hired a private investigation group to verify the information. Surveillance and the purchase of
jeans from the tailoring shops of Diaz established that the jeans bought from the tailoring shops of Diaz
were counterfeit or imitations of LEVIS 501. Armed with search warrants, NBI agents searched the tailoring
shops of Diaz and seized several fake LEVIS 501 jeans from them. Levis Philippines claimed that it did not
authorize the making and selling of the seized jeans; that each of the jeans were mere imitations of
genuine LEVIS 501 jeans by each of them bearing the registered trademarks, like the arcuate design, the
tab, and the leather patch; and that the seized jeans could be mistaken for original LEVIS 501 jeans due to
the placement of the arcuate, tab, and two-horse leather patch.
On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability. Diaz
stated that he did not manufacture Levis jeans, and that he used the label LS Jeans Tailoring in the jeans
that he made and sold; that the label LS Jeans Tailoring was registered with the Intellectual Property
Office; that his shops received clothes for sewing or repair; that his shops offered made-to-order jeans,
whose styles or designs were done in accordance with instructions of the customers; that since the time
his shops began operating in 1992, he had received no notice or warning regarding his operations; that the
jeans he produced were easily recognizable because the label LS Jeans Tailoring, and the names of the

customers were placed inside the pockets, and each of the jeans had an LSJT red tab; that LS stood for
Latest Style; and that the leather patch on his jeans had two buffaloes, not two horses.
Issue:
Whether there exists a likelihood of confusion between the trademarks of Levis and Diaz.
Held:
The Court held, through the application of the holistic test, that there was no likelihood of confusion
between the trademarks involved.Accordingly, the jeans trademarks of Levis Philippines and Diaz must be
considered as a whole in determining the likelihood of confusion between them. The maongpants or jeans
made and sold by Levis Philippines, which included LEVIS 501, were very popular in the Philippines. The
consuming public knew that the original LEVIS 501 jeans were under a foreign brand and quite expensive.
Such jeans could be purchased only in malls or boutiques as ready-to-wear items, and were not available in
tailoring shops like those of Diazs as well as not acquired on a made-to-order basis. Under the
circumstances, the consuming public could easily discern if the jeans were original or fake LEVIS 501, or
were manufactured by other brands of jeans.
Diaz used the trademark LS JEANS TAILORING for the jeans he produced and sold in his tailoring shops.
His trademark was visually and aurally different from the trademark LEVI STRAUSS & CO appearing on
the patch of original jeans under the trademark LEVIS 501. The word LS could not be confused as a
derivative from LEVI STRAUSS by virtue of the LS being connected to the word TAILORING, thereby
openly suggesting that the jeans bearing the trademark LS JEANS TAILORINGcame or were bought from
the tailoring shops of Diaz, not from the malls or boutiques selling original LEVIS 501 jeans to the
consuming public.
The prosecution also alleged that the accused copied the two horse design of the petitioner-private
complainant but the evidence will show that there was no such design in the seized jeans. Instead, what is
shown is buffalo design. Again, a horse and a buffalo are two different animals which an ordinary
customer can easily distinguish.
The prosecution further alleged that the red tab was copied by the accused. However, evidence will show
that the red tab used by the private complainant indicates the word LEVIS while that of the accused
indicates the letters LSJT which means LS JEANS TAILORING. Again, even an ordinary customer can
distinguish the word LEVIS from the letters LSJT.
In terms of classes of customers and channels of trade, the jeans products of the private complainant and
the accused cater to different classes of customers and flow through the different channels of trade. The
customers of the private complainant are mall goers belonging to class A and B market group while that
of the accused are those who belong to class D and E market who can only afford Php 300 for a pair of
made-to-order pants.

_________
G.R. No. 182147

December 15, 2010

ARNEL U. TY, MARIE ANTONETTE TY, JASON ONG, WILLY DY, and ALVIN TY, Petitioners,
vs.
NBI SUPERVISING AGENT MARVIN E. DE JEMIL, PETRON GASUL DEALERS ASSOCIATION, and
TOTALGAZ DEALERS ASSOCIATION, Respondents.
The Case
In this Petition for Review on Certiorari under Rule 45, petitioners seek the reversal of the Decision 1 dated
September 28, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 98054, which reversed and set aside
the Resolutions dated October 9, 2006 2 and December 14, 20063 of the Secretary of Justice, and reinstated
the November 7, 2005 Joint Resolution 4 of the Office of the Chief State Prosecutor. Petitioners assail also
the CA Resolution5 dated March 14, 2008, denying their motion for reconsideration.
The Facts
Petitioners are stockholders of Omni Gas Corporation Omni is in the business of trading and refilling of
Liquefied Petroleum Gas (LPG) cylinders .
Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc., and Totalgaz Dealers Association,
Inc., for the surveillance, investigation, and apprehension of persons or establishments in Pasig City that
are engaged in alleged illegal trading of petroleum products and underfilling of branded LPG cylinders in
violation of Batas Pambansa Blg. (BP) 33,8 as amended by Presidential Decree No. (PD) 1865.9
The NBIs test-buy yielded positive results for violations of BP 33, Section 2(a) in relation to Secs. 3(c) and
4, i.e., refilling branded LPG cylinders without authority; and Sec. 2(c) in relation to Sec. 4, i.e.,
underdelivery or underfilling of LPG cylinders. Thus, on April 28, 2004, Agent De Jemil filed an Application
for Search Warrant (With Request for Temporary Custody of the Seized Items) 14 before the Regional Trial

Court (RTC) in Pasig City, attaching, among others, his affidavit 15 and the affidavit of Edgardo C.
Kawada,16 an NBI confidential agent.
Subsequently, Agent De Jemil filed before the Department of Justice (DOJ) his Complaint-Affidavits against
petitioners for: (1) Violation of Section 2(a), in relation to Sections 3(c) and 4, of B.P. Blg. 33, as amended
by P.D. 1865;21 and (2) Violation of Section 2(c), in relation to Section 4, of B.P. Blg. 33, as amended by P.D.
1865,22docketed as I.S. Nos. 2004-616 and 2004-618, respectively.
The Ruling of the Office of the Chief State Prosecutor
in I.S. No. 2004-616 and I.S. No. 2004-618
On November 7, 2005, the 3rd Assistant City Prosecutor Leandro C. Catalo of Manila issued a Joint
Resolution, finding probable cause to charge petitioners with violations of pertinent sections of BP 33, as
amended, resolving as follows:
Assistant City Prosecutor Catalo found the existence of probable cause based on the evidence submitted
by Agent De Jemil establishing the fact that Omni is not an authorized refiller of Shellane, Petron
Gasul, Totalgaz and Superkalan Gaz LPG cylinders. On the underfilling of one LPG cylinder, the findings of
LPG Inspector Navio of the LPGIA were uncontroverted by petitioners.
Petitioners motion for reconsideration,28 was denied through a Resolution29 by the Office of the Chief State
Prosecutor issued on May 3, 2006.In time, petitioners appealed to the Office of the Secretary of Justice. 30
The Ruling of the DOJ Secretary
in I.S. No. 2004-616 and I.S. No. 2004-618
On October 9, 2006, the Office of the Secretary of Justice issued a Resolution 31 reversing and setting aside
the November 7, 2005 Joint Resolution of the Office of the Chief State Prosecutor.
The Office of the Secretary of Justice viewed, first, that the underfilling of one of the eight LPG cylinders
was an isolated incident. Second, on the alleged violation of refilling branded LPG cylinders sans written
authority, it found no sufficient basis to hold petitioners responsible for violation of Sec. 2 (c) of BP 33, as
amended, since there was no proof that the branded LPG cylinders seized from Omni belong to another
company or firm, holding that the simple fact that the LPG cylinders with markings or stamps of other
petroleum producers cannot by itself prove ownership by said firms or companies as the consumers who
take them to Omni fully owned them having purchased or acquired them beforehand.
The Ruling of the CA
The Office of the Solicitor General (OSG), in its Comment 36 on Agent De Jemils appeal, sought the
dismissal of the latters petition viewing that the determination by the Office of the Secretary of Justice of
probable cause is entitled to respect owing to the exercise of his prerogative to prosecute or not.
WHEREFORE, the instant petition is GRANTED. The Joint Resolution dated November 7, 2005 of the
Office of the Chief State Prosecutor finding probable cause against private respondents Arnel Ty, Marie
Antonette Ty, Jason Ong, Willy Dy, and Alvin Ty is hereby REINSTATED.
Citing Sec. 1 (1) and (3) of BP 33, as amended, which provide for the presumption of underfilling, the CA
held that the actual underfilling of an LPG cylinder falls under the prohibition of the law which does not
require for the underfilling to be substantial and deliberate.
Moreover, the CA found strong probable violation of "refilling of another companys or firms cylinders
without such companys or firms written authorization" under Sec. 3 (c) of BP 33, as amended. Petitioners
motion for reconsideration was rebuffed by the CA through the equally assailed March 14, 2008
Resolution.43
Thus, the instant petition.
The Issues
ii. whether or not under the circumstances there was probable cause to believe that petitioners
violated section 2(a) of batas pambansa blg. 33, as amended.
iii. whether or not under the circumstances there was probable cause to believe that petitioners
violated section 2(c) of batas pambansa blg. 33, as amended.
iv. whether or not petitioners can be held liable under batas pambansa blg. 33, as amended, for
being mere directors, not actually in charge of the management of the business affairs of the
corporation.44

x x x [T]he findings of the Justice Secretary may be reviewed through a petition for certiorari under Rule 65
based on the allegation that he acted with grave abuse of discretion. This remedy is available to the
aggrieved party.53 (Emphasis supplied.)
First Core Issue: Existence of Probable Cause for violation of Sec. 2 (a) of BP 33, amended
First. The test-buy conducted on April 15, 2004 by the NBI agents, as attested to by their respective
affidavits, tends to show that Omni illegally refilled the eight branded LPG cylinders for PhP 1,582. This is a
clear violation of Sec. 2 (a), in relation to Secs. 3 (c) and 4 of BP 33, as amended.
Second. The written certifications from Pilipinas Shell, Petron and Total show that Omni has no written
authority
to
refill
LPG
cylinders,
embossed,
marked
or
stamped Shellane, Petron
Gasul, Totalgaz and Superkalan Gaz. In fact, petitioners neither dispute this nor claim that Omni has
authority to refill these branded LPG cylinders.
Omnis unauthorized refilling of branded LPG cylinders, contrary to Sec. 2 (a) in relation to Sec. 3 (c) of BP
33, as amended. Said provisos provide:Sec. 2. Prohibited Acts.The following acts are prohibited and
penalized:
(a) Illegal trading in petroleum and/or petroleum products;
x x x Sec. 3. Definition of terms.For the purpose of this Act, the following terms shall be construed to
mean:
Illegal trading in petroleum and/or petroleum products
x x x (c) Refilling of liquefied petroleum gas cylinders without authority from said Bureau, or
refilling of another companys or firms cylinders without such companys or firms written
authorization; (Emphasis supplied.)
As petitioners strongly argue, even if the branded LPG cylinders were indeed owned by customers, such
fact does not authorize Omni to refill these branded LPG cylinders without written authorization from the
brand owners Pilipinas Shell, Petron and Total. In Yao, Sr. v. People,57 a case involving criminal infringement
of property rights under Sec. 155 of RA 8293, 58 in affirming the courts a quos determination of the
presence of probable cause, this Court held that from Sec. 155.1 59 of RA 8293 can be gleaned that "mere
unauthorized use of a container bearing a registered trademark in connection with the sale, distribution or
advertising of goods or services which is likely to cause confusion, mistake or deception among the
buyers/consumers can be considered as trademark infringement." 60 The Court affirmed the presence of
infringement involving the unauthorized sale of Gasul and Shellane LPG cylinders and the unauthorized
refilling of the same by Masagana Gas Corporation as duly attested to and witnessed by NBI agents who
conducted the surveillance and test-buys.
As aptly noted by the Court in Yao, Sr. v. People, only the duly authorized dealers and refillers
of Shellane, Petron Gasul and, by extension, Total may refill these branded LPG cylinders. Our laws sought
to deter the pernicious practices of unscrupulous businessmen.
Fourth. The issue of ownership of the seized branded LPG cylinders is irrelevant and hence need no
belaboring. BP 33, as amended, does not require ownership of the branded LPG cylinders as a
condition sine qua non for the commission of offenses involving petroleum and petroleum products. Verily,
the offense of refilling a branded LPG cylinder without the written consent of the brand owner constitutes
the offense regardless of the buyer or possessor of the branded LPG cylinder.
Fifth. The ownership of the seized branded LPG cylinders, allegedly owned by Omni customers as
petitioners adamantly profess, is of no consequence.The law does not require that the property to be
seized should be owned by the person against whom the search warrants is directed.
In fine, we also note that among those seized by the NBI are 16 LPG cylinders bearing the embossed brand
names of Shellane, Gasul and Totalgaz but were marked as Omnigas. Evidently, this pernicious practice of
tampering or changing the appearance of a branded LPG cylinder to look like another brand violates the
brand owners property rights as infringement under Sec. 155.1 of RA 8293. Moreover, tampering of LPG
cylinders is a mode of perpetrating the criminal offenses under BP 33, as amended, and clearly enunciated
under DOE Circular No. 2000-06-010 which provided penalties on a per cylinder basis for each violation.
Foregoing considered, in the backdrop of the quantum of evidence required to support a finding of
probable cause, we agree with the appellate court and the Office of the Chief State Prosecutor, which
conducted the preliminary investigation, that there exists probable cause for the violation of Sec. 2 (a) in
relation to Sec. 3 (c) of BP 33, as amended.
Probable violation of Sec. 2 (c) of BP 33, as amended

B.P. Blg. 33, as amended, criminalizes illegal trading, adulteration, underfilling, hoarding, and
overpricing of petroleum products. Under this general description of what constitutes criminal acts
involving petroleum products, the Circular merely lists the various modes by which the said criminal acts
may be perpetrated, namely: no price display board, no weighing scale, no tare weight or incorrect tare
weight markings, no authorized LPG seal, no trade name, unbranded LPG cylinders, no serial number,
no distinguishing color, no embossed identifying markings on cylinder, underfilling LPG
cylinders, tampering LPG cylinders, and unauthorized decanting of LPG cylinders. These specific acts
and omissions are obviously within the contemplation of the law, which seeks to curb the pernicious
practices of some petroleum merchants.69 (Emphasis supplied.)
Moreover, in denying the motion for reconsideration of the LPG Refillers Association of the Philippines, Inc.,
the Court upheld the basis of said DOE Circular No. 2000-06-010 on the imposition of penalties on a per
cylinder basis, thus:
Respondents position is untenable. The Circular is not confiscatory in providing penalties on a per cylinder
basis. Those penalties do not exceed the ceiling prescribed in Section 4 of B.P. Blg. 33, as amended, which
penalizes "any person who commits any act [t]herein prohibited." Thus, violation on a per cylinder basis
falls within the phrase "any act" as mandated in Section 4. To provide the same penalty for one who
violates a prohibited act in B.P. Blg. 33, as amended, regardless of the number of cylinders involved would
result in an indiscriminate, oppressive and impractical operation of B.P. Blg. 33, as amended. The equal
protection clause demands that "all persons subject to such legislation shall be treated alike, under like
circumstances and conditions, both in the privileges conferred and in the liabilities imposed."70
The Court made it clear that a violation, like underfilling, on a per cylinder basis falls within the phrase
of any actas mandated under Sec. 4 of BP 33, as amended. Ineluctably, the underfilling of one LPG
cylinder constitutes a clear violation of BP 33, as amended. The finding of underfilling by LPG Inspector
Navio of the LPGIA, as aptly noted by Manila Assistant City Prosecutor Catalo who conducted the
preliminary investigation, was indeed not controverted by petitioners.
WHEREFORE, premises considered, we PARTIALLY GRANT the instant petition. Accordingly, the assailed
September 28, 2007 Decision and March 14, 2008 Resolution of the Court of Appeals in CA-G.R. SP No.
98054 are AFFIRMED with MODIFICATION that petitioners Mari Antonette Ty, Jason Ong, Willy Dy and
Alvin Ty are excluded from the two Informations charging probable violations of Batas Pambansa Bilang 33,
as amended. The Joint Resolution dated November 7, 2005 of the Office of the Chief State Prosecutor is
modified accordingly.
SUPERIOR COMMERCIAL ENTERPRISES INC. vs. KUNNAN ENTERPRISES LTD. AND SPORTS
CONCEPT & DISTRIBUTOR, INC., G.R. No. 169974, April 20, 2010 FACTS: On October 1, 1982
KUNNAN appointed SUPERIOR as its exclusive distributor in the Philippines under a Distributorship
Agreement which states that: Kunnan intends to acquire ownership of the Kennex trademark registered by
Superior Commercial in the Philippines. Superior Commercial is desirous of being appointed as the sole
distributor of Kunnan products in the Philippines. SUPERIORs President and General Manager, misled
KUNNANs officers into believing that KUNNAN could not acquire trademark rights in the Philippines.
KUNNAN decided to assign its applications to register Pro Kennex as a trademark to SUPERIOR, on
condition that SUPERIOR acknowledged that KUNNAN was still the real owner of the mark and agreed to
return it to KUNNAN on request. On December 3, 1991, upon the termination of its distributorship
agreement with SUPERIOR, KUNNAN appointed SPORTS CONCEPT as its new distributor. Subsequently,
KUNNAN also caused the publication of a Notice and Warning in the Manila Bulletins January 29, 1993
issue, stating that (1) it is the owner of the disputed trademarks; (2) it terminated its Distributorship
Agreement with SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive distributor. This notice
prompted SUPERIOR to file its Complaint for Infringement of Trademark and Unfair Competition with
Preliminary Injunction against KUNNAN. Prior to and during the pendency of the infringement and unfair
competition case before the RTC, KUNNAN filed with the Bureau of Patents, Trademarks and Technology
Transfer separate Petitions for the Cancellation of Registration Trademarks well as Opposition to
Applications (Consolidated Petitions for Cancellation) involving the KENNEX and PRO KENNEX trademarks.
In essence, KUNNAN filed the Petition for Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks; as mere distributor and not as lawful
owner, it obtained the registrations and assignments of the disputed trademarks in violation of the terms
of the Distributorship Agreement and Sections 2- A and 17 of Republic Act No. 166, as amended. These
cases were resolved in favour of Kunnan by the BPTTT and the Court of Appeals. This decision became
final.
Issue: WON Superior, as a distributor, is the true and rightful owner of the trademarks.
Held: No. An exclusive distributor does not acquire any proprietary interest in the principals trademark
and cannot register it, unless the owner has assigned the right. Trademark infringement To establish
trademark infringement, the following elements must be proven: (1) the validity of plaintiffs mark; (2) the
plaintiffs ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged
infringer results in likelihood of confusion. Based on these elements, we find it immediately obvious that
the second element the plaintiffs ownership of the mark was what the Registration Cancellation Case
decided with finality. On this element depended the validity of the registrations that, on their own, only

gave rise to the presumption of, but was not conclusive on, the issue of ownership. In no uncertain terms,
the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere distributor and
could not have been the owner, and was thus an invalid registrant of the disputed trademarks. The right to
register a trademark is based on ownership, and therefore only the owner can register it. In finding that
Kunnan owned the marks, the court considered the distributorship agreement and the so-called
assignment agreement in their entirety; it confirmed that Superior had sought to be Kunnans exclusive
distributor. As enunciated in the case of Gabriel vs. Perez, 50 SCRA 406, a mere distributor of a product
bearing a trademark, even if permitted to use said trademark has no right to and cannot register the said
trademark. Unfair competition Unfair competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one person as the goods or business of
another with the end and probable effect of deceiving the public. The essential elements of unfair
competition are (1) confusing similarity in the general appearance of the goods; and (2) intent to deceive
the public and defraud a competitor. Jurisprudence also formulated the following true test of unfair
competition: whether the acts of the defendant have the intent of deceiving or are calculated to deceive
the ordinary buyer making his purchases under the ordinary conditions of the particular trade to which the
controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of
fraud; the intent to deceive, actual or probable must be shown before the right to recover can exist. In the
present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those ofSUPERIOR. In addition, there is no evidence of bad
faith or fraud imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to
adduce any evidence to show that KUNNAN by the above-cited acts intended to deceive the public as to
the identity of the goods sold or of the manufacturer of the goods sold.
ROBERTO CO vs. KENG HUAN JERRY YEUNG AND EMMA YEUNG G.R. No. 212705, 10
September 2014
FACTS:Ruivivar bought a bottle of Greenstone from Royal Chinese Drug Store in Binondo, Manila, owned by
Ling Na Lau. However, he doubted its authenticity because it had a different smell, and the heat it produce
d was not as strong as the original Greenstone he frequently used. He then informed his brother-in-law Yeu
ng, the owner of Greenstone Pharmaceutical. The latter went to Royal and found 7 bottles of counterfeit Gr
eenstone on display for sale. He was told by Pinky Lau the stores proprietor that the items came from
Co of KiaoAn Chinese Drug Store. According to Pinky, Co offered the products as Tienchi Fong Sap Oil Gree
nstone (Tienchi) which she eventually availed from him.
Sps. Yeung filed a civil complaint for trademark infringement and unfair competition before the RTC against
Ling Na Lau, her sister Pinky Lau, and Co for allegedly conspiring in the sale of counterfeit Greenstone prod
ucts to the public.
The RTC ruled in favor of Sps. Yeung. It found that the Sps. Yeung had proven by preponderance of evidenc
e that the Laus and Co committed unfair competition through their conspiracy to sell counterfeit Greenston
e products that resulted in confusion and deception not only to the ordinary purchaser, like Ruivivar, but al
so to the public. It, however, did not find the Laus and Co liable for trademark infringement as there was n
o showing that the trademark Greenstone was registered at the time the acts complained of occurred. C
A affirmed the RTC Decision.

ISSUE:Whether or not only suit for unfair competition will prosper considering the trademark was not regist
ered.
HELD:Yes, the defendants cannot be liable for trademark infringement. In the case at bar, the Court define
d unfair competition as the passing off (or palming off) or attempting to pass off upon the public of the goo
ds or business of one person as the goods or business of another with the end and probable effect of decei
ving the public. This takes place where the defendant gives his goods the general appearance of the goods
of his competitor with the intention of deceiving the public that the goods are those of his competitor.
Here, it has been established that Co conspired with the Laus in the sale/distribution of counterfeit Greenst
one products to the public, which were even packaged in bottles identical to that of the original, thereby gi
ving rise to the presumption of fraudulent intent.
Although liable for unfair competition, the Court deems it apt to clarify that Co was properly exculpated fro
m the charge of trademark infringement considering that the registration of the trademark Greenstone
essential as it is in a trademark infringement case was not proven to have existed during the time the act
s complained of were committed. In this relation, the distinctions between suits for trademark infringement
and unfair competition prove useful: (a) the former is the unauthorized use of a trademark, whereas the lat
ter is the passing off of ones goods as those of another; (b) fraudulent intent is unnecessary in the former,
while it is essential in the latter; and (c) in the former, prior registration of the trademark is a pre-requisite
to the action, while it is not necessary in the latter.

G.R. No. 190706

July 21, 2014

SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG GRAND TOWER

CORPORATION) and SHANG PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS,
INC.), Petitioners,
vs.
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
Assailed in this petition for review on certiorari 1 is the Decision2 dated December 18, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the Decision 3 dated September 3,
2008 of the Intellectual Property Office (IPO) Director-General. The CA: (a) affirmed the denial of the
application for registration of the mark "ST. FRANCIS TOWERS" filed by petitioners Shang Properties Realty
Corporation and Shang Properties, Inc. (petitioners); ( b) found petitioners to have committed unfair
competition for using the marks "THE ST. 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 and severally pay respondent St. Francis Square Development
Corporation (respondent) a fine in the amount of P200,000.00.
The Facts
Respondent a domestic corporation engaged in the real estate business and the developer of the St.
Francis Square Commercial Center, built sometime in 1992, located at Ortigas Center, Mandaluyong City,
Metro Manila (Ortigas Center)4 filed separate complaints against petitioners before the IPO - Bureau of
Legal Affairs (BLA), namely: (a) an intellectual property violation case for unfair competition, false or
fraudulent declaration, and damages arising from petitioners use and filing of applications for the
registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE," docketed
as IPV Case No. 10-2005-00030 (IPV Case); and (b) an inter partes case opposing the petitioners
application for registration of the mark "THE ST. FRANCIS TOWERS" for use relative to the latters business,
particularly the construction of permanent buildings or structures for residential and office purposes,
docketed as Inter PartesCase No. 14-2006-00098 (St. Francis Towers IP Case); and (c) an inter partes case
opposing the petitioners application for registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE,"
docketed as IPC No. 14-2007-00218 (St. Francis Shangri-La IP Case). 5
In its complaints, respondent alleged that it has used the mark "ST. 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 mixed-use realty project plan
thatincludes the St. Francis Towers. Respondent added that as a result of its continuous use of the mark
"ST. FRANCIS" in its real estate business,it has gained substantial goodwill with the public that consumers
and traders closely identify the said mark with its property development projects. Accordingly, respondent
claimed that petitioners could not have the mark "THE ST. FRANCIS TOWERS" registered in their names,
and that petitioners use of the marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE" in their own real estate development projects constitutes unfair competition as well as false or
fraudulent declaration.6
Petitioners denied committing unfair competition and false or fraudulent declaration, maintaining that they
could register the mark "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" under their
names. They contended that respondent is barred from claiming ownership and exclusive use ofthe mark
"ST. FRANCIS" because the same is geographically descriptive ofthe goods or services for which it is
intended to be used.7 This is because respondents as well as petitioners real estate development projects
are locatedalong the streets bearing the name "St. Francis," particularly, St. FrancisAvenue and St. Francis
Street (now known as Bank Drive),8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision 9 in the IPV Case, and found that petitioners
committed acts of unfair competition against 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, however, refused to
award damages in the latters favor, considering that there was no evidence presented to substantiate the
amount of damages it suffered due to the formers acts. The BLA found that "ST. FRANCIS," being a name
of a Catholic saint, may be considered as an arbitrary mark capable of registration when used in real
estate development projects as the name has no direct connection or significance when used in
association with real estate. The BLA neither deemed "ST. FRANCIS" as a geographically descriptive mark,
opiningthat there is no specific lifestyle, aura, quality or characteristic that the real estate projects possess
except for the fact that they are located along St. Francis Avenueand St. Francis Street (now known as
Bank Drive), Ortigas Center. In this light, the BLA found that while respondents use of the mark "ST.
FRANCIS" has not attained exclusivity considering that there are other real estate development projects
bearing the name "St. Francis" in other areas,10 it must nevertheless be pointed out that respondent has

been known to be the only real estate firm to transact business using such name within the Ortigas Center
vicinity. Accordingly, the BLA considered respondent to have gained goodwill and reputation for its mark,
which therefore entitles it to protection against the use by other persons, at least, to those doing business
within the Ortigas Center.11
Meanwhile, on March 28, 2007, the BLA rendered a Decision 12 in the St. Francis Towers IP Case, denying
petitioners application for registration of the mark "THE ST. FRANCIS TOWERS." Excluding the word
"TOWERS" in view of petitioners disclaimer thereof, the BLA ruled that petitioners cannot register the
mark "THE ST. FRANCIS" since it is confusingly similar to respondents"ST. FRANCIS" marks which are
registered with the Department of Trade and Industry(DTI). It held that respondent had a better right over
the use of the mark "ST. FRANCIS" because of the latters appropriation and continuous usage thereof for a
long period of time.13 A little over a year after, or on March 31, 2008, the BLA then rendered a Decision 14 in
the St. Francis Shangri-La IP Case, allowing petitioners application for registration of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." It found that respondent cannot preclude petitioners from using the mark
"ST. FRANCIS" as the records show that the formers use thereof had not been attended with exclusivity.
More importantly, it found that petitioners had adequately appended the word "Shangri-La" to its
composite mark to distinguish it from that of respondent, in which case, the former had removed any
likelihood of confusion that may arise from the contemporaneous use by both parties of the mark "ST.
FRANCIS."
Both parties appealed the decision in the IPV Case, while petitioners appealed the decision in the St.
Francis Towers IP Case. Due to the identity of the parties and issues involved, the IPO Director-General
ordered the consolidation of the separate appeals. 15 Records are, however, bereft of any showing that the
decision in the St. Francis Shangri-La IP Casewas appealed by either party and, thus, is deemed to have
lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr. affirmedthe
rulings of the BLA that: (a) petitioners cannot register the mark "THEST. FRANCIS TOWERS"; and (b)
petitioners are not guilty of unfair competition in its use of the mark "THE ST. FRANCIS SHANGRI-LA
PLACE." However, the IPO DirectorGeneral reversed the BLAs findingthat petitioners committed unfair
competition through their use of the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge. He
foundthat respondent could not be entitled to the exclusive use of the mark "ST. FRANCIS," even at least to
the locality where it conducts its business, because it is a geographically descriptive mark, considering
that it was petitioners as well as respondents intention to use the mark "ST. FRANCIS"in order to identify,
or at least associate, their real estate development projects/businesses with the place or location where
they are situated/conducted, particularly, St. Francis Avenue and St. Francis Street (now known as Bank
Drive), Ortigas Center. He further opined that respondents registration of the name "ST. FRANCIS" with the
DTI is irrelevant since what should be controlling are the trademark registrations with the IPO itself. 17 Also,
the IPO Director-General held that since the parties are both engaged in the real estate business, it would
be "hard to imagine that a prospective buyer will be enticed to buy, rent or purchase [petitioners] goods
or servicesbelieving that this is owned by [respondent] simply because of the name ST. FRANCIS. The
prospective buyer would necessarily discuss things with the representatives of [petitioners] and would
readily know that this does not belong to [respondent]."18
Disagreeing solely with the IPO Director-Generals ruling on the issue of unfair competition (the bone of
contention in the IPV Case), respondent elevated the sameto the CA.
In contrast, records do not show that either party appealed the IPO Director-Generals ruling on the issue
ofthe registrability of the mark "THE ST. FRANCIS TOWERS" (the bone of contention in the St. Francis
Towers IP Case). As such, said pronouncement isalso deemed to have lapsed into finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found petitioners guilty of unfair competition not only
withrespect to their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." Accordingly, itordered petitioners to cease and desist from using "ST. FRANCIS" singly
or as part of a composite mark, as well as to jointly and severally pay respondent a fine in the amount
of P200,000.00.
The CA did not adhere to the IPO Director-Generals finding that the mark "ST. FRANCIS" is geographically
descriptive, and ruled that respondent which has exclusively and continuously used the mark "ST.
FRANCIS" for more than a decade, and,hence, gained substantial goodwill and reputation thereby is very
muchentitled to be protected against the indiscriminate 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 assumption

that "ST. FRANCIS" was indeed a geographically descriptive mark, adequateprotection must still begiven to
respondent pursuant to the Doctrine of Secondary Meaning. 20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into finality, the sole issue thus left for the
Courts resolution is whether or not petitioners are guilty of unfair competition in using the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE."
The Courts Ruling
The petition is meritorious.
Section 168 of Republic Act No. 8293, 21 otherwise known as the "Intellectual Property Code of the
Philippines" (IP Code), provides for the rules and regulations on unfair competition.
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 public the goods he manufacturesor deals in, his business
or services from those of others, whether or not a registered mark is employed, has a property right in the
goodwill of the said goods, business or services so identified, which will be protected inthe same manner
as other property rights."
Section 168.2proceeds to the core of the provision, describing forthwith who may
subject to an action of unfair competition that is, "[a]ny person who shall employ
means contrary to good faith by which he shall pass off the goods manufactured
deals, or his business, or services for those of the one having established such
commit any acts calculated to produce said result x x x."

be found guilty of and

deception or any other
by him or in which he
goodwill, or who shall

Without limiting its generality, Section 168.3goes on to specify examples of acts which are considered as
constitutive of unfair competition, viz.:
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 competition:
(a) Any person who is selling his goods and gives them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor ofsuch goods or any agent of any vendor engaged in
selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce
the false belief that such person is offering the service of another who has identified such services
in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall commit any
other act contrary to good faith of a nature calculated to discredit the goods, business or services of
another.
Finally, Section 168.4 dwells on a matter of procedure by stating that the "[t]he remedies provided by
Sections 156,22 157,23 and 16124 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is wellsupplemented by jurisprudential
pronouncements. In the recent case of Republic Gas Corporation v. Petron Corporation, 25 the Court has
echoed the classic definition of the term which is "the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one 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 defendant,
by imitative devices on the general appearance of the goods, misleads prospective purchasers into buying
his merchandise under the impression that they are buying that of his competitors. [In other words], the
defendant gives his goods the general appearance of the goods of his competitor with the intention of
deceiving the publicthat the goods are those of his competitor." 26 The "true test" of unfair competition has
thus been "whether the acts of the defendant have the intent of deceiving or are calculated to deceive the
ordinary buyer making his purchases under the ordinary conditions of theparticular trade to which the

controversy relates." Based on the foregoing, it is therefore essential to prove the existence of fraud, or the
intent to deceive, actual or probable, 27 determined through a judicious scrutiny of the factual
circumstances attendant to a particular case.28
Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair competition. The
CAscontrary conclusion was faultily premised on its impression that respondenthad the right to the
exclusive use of the mark "ST. FRANCIS," for which the latter had purportedly established considerable
goodwill. What the CA appears to have disregarded or been mistaken in its disquisition, however, is the
geographicallydescriptive nature of the mark "ST. FRANCIS" which thus bars its exclusive appropriability,
unless a secondary meaning is acquired. As deftly explained in the U.S. case of Great Southern Bank v.
First Southern Bank:29 "[d]escriptive geographical terms are inthe public domain in the sense that every
seller should have the right to inform customers of the geographical origin of his goods. A geographically
descriptive term is any noun or adjective that designates geographical location and would tend to be
regarded by buyers as descriptive of the geographic location of origin of the goods or services. A
geographically descriptive term can indicate any geographic location on earth, such as continents, nations,
regions, states, cities, streets and addresses, areas of cities, rivers, and any other location referred to by a
recognized name. In order to determine whether or not the geographic term in question is descriptively
used, the following question is relevant: (1) Is the mark the name of the place or region from which the
goods actually come? If the answer is yes, then the geographic term is probably used in a descriptive
sense, and secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc., 31 it was held that secondary
meaningis established when a descriptive mark no longer causes the public to associate the goods with a
particular place, but to associate the goods with a particular source.In other words, it is not enough that a
geographically-descriptive mark partakes of the name of a place known generally to the public to be
denied registration as it is also necessary to show that the public would make a goods/place association
that is, to believe that the goods for which the mark is sought to be registered originatein that
place.1wphi1 To hold sucha belief, it is necessary, of course, that the purchasers perceive the mark as a
place name, from which the question of obscurity or remoteness then comes to the fore. 32 The more a
geographical area is obscure and remote, it becomes less likely that the public shall have a goods/place
association with such area 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 may ordinarily be presumed from the fact that the applicants own goods come from the
geographical place named in the mark. 33
Under Section 123.234 of the IP Code, specific requirements have to be met in order to conclude that a
geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary meaning must
have arisen as a result of substantial commercial use of a mark in the Philippines; (b) such use must result
in the distinctiveness of the mark insofar as the goods or theproducts are concerned; and (c) proof of
substantially exclusive and continuous commercial use in the Philippines for five (5) years beforethe date
on which the claim of distinctiveness is made. Unless secondary meaning has been established, a
geographically-descriptive mark, dueto its general public domain classification, is perceptibly disqualified
from trademark registration. Section 123.1(j) of the IP Code states this rule as follows:
SEC. 123. Registrability.
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof indications that may serve in trade to designate the kind, quality,
quantity, intended purpose, value, geographical origin, time or production of the goods or rendering of the
services, or other characteristics of the goods or services; (Emphasis supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA that petitioners committed unfair competition
due to the mistaken notion that petitioner had established goodwill for the mark "ST. FRANCIS" precisely
because said circumstance, by and of itself, does not equateto fraud under the parameters of Section 168
of the IP Code as above-cited. In fact, the records are bereft of any showing thatpetitioners gave their
goods/services the general appearance that it was respondent which was offering the same to the public.
Neither did petitioners employ any means to induce the public towards a false belief that it was offering
respondents goods/services. Nor did petitioners make any false statement or commit acts tending to
discredit the goods/services offered by respondent. Accordingly, the element of fraud which is the core of
unfair competition had not been established.
Besides, respondent was not able toprove its compliance with the requirements stated in Section 123.2 of
the IP Code to be able to conclude that it acquired a secondary meaning and, thereby, an exclusive right

 to the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly pointed out, geographicallydescriptive of the location in which its realty developments have been built, i.e., St. Francis Avenue and St.
Francis Street (now known as "Bank Drive"). Verily, records would reveal that while it is true that
respondent had been using the mark "ST. FRANCIS" since 1992, its use thereof has been merely confined
to its realty projects within the Ortigas Center, as specifically mentioned.As its use of the mark is clearly
limited to a certain locality, it cannot be said thatthere was substantial commercial use of the same
recognizedall throughout the country. Neither is there any showing of a mental recognition in buyers and
potential buyers minds that products connected with the mark "ST. FRANCIS" are associated with the
same source35 that is, the enterprise of respondent. Thus, absent any showing that there exists a clear
goods/service-association 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.
In fact, even on the assumption that secondary meaning had been acquired, said finding only accords
respondents protectional qualification under Section 168.1 of the IP Code as above quoted. Again, this
does not automatically trigger the concurrence of the fraud element required under 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 unfair competition without this element. In this respect, considering too the notoriety of
the Shangri-La brand in the real estate industry which dilutes petitioners' propensity to merely ride on
respondent's goodwill, the more reasonable conclusion is that the former's use of the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" was meant only to identify, or at least
associate, their real estate project/s with its geographical location. As aptly observed by the IPO
DirectorGeneral:36
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.

SECOND DIVISION [G.R. No. 119280. August 10, 2006.] UNILEVER PHILIPPINES (PRC), INC.,
petitioner, vs. THE HONORABLE COURT OF APPEALS and PROCTER AND GAMBLE PHILIPPINES,
INC., respondents.

In this petition for review under Rule 45 of the Rules of Court, petitioner assails the February 24, 1995
decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 35242 entitled "Unilever Philippines (PRC), Inc. v.
Honorable Fernando V. Gorospe, Jr. and Procter and Gamble Philippines, Inc. (P&GP)" which affirmed the
issuance by the court a quo of a writ of preliminary injunction against it. The writ enjoined petitioner from
using and airing, until further orders of the court, certain television commercials for its laundry products
claimed to be identical or similar to its "double tug" or "tac-tac" key visual. 2 Petitioner alleges that the
writ of preliminary injunction was issued by the trial court (and affirmed by the CA) without any evidence of
private respondent's clear and unmistakable right to the writ. Petitioner further contends that the
preliminary injunction issued against it already disposed of the main case without trial, thus denying
petitioner of any opportunity to present evidence on its behalf. AcHEaS The antecedents show that on
August 24, 1994, private respondent Procter and Gamble Phils., Inc. filed a complaint for injunction with
damages and a prayer for temporary restraining order and/or writ of preliminary injunction against
petitioner Unilever, alleging that: 1.5. As early as 1982, a P&G subsidiary in Italy used a key visual in the
advertisement of its laundry detergent and bleaching products. This key visual known as the "double-tug"
or "tactac" demonstration shows the fabric being held by both hands and stretched sideways. 1.6. The
"tac-tac" was conceptualized for P&G by the advertising agency Milano and Gray of Italy in 1982. The "tactac" was used in the same year in an advertisement entitled "All aperto" to demonstrate the effect on

fabrics of one of P&GP's products, a liquid bleach called "Ace." xxx xxx xxx 1.7. Since then, P&G has used
the "tac-tac" key visual in the advertisement of its products. In fact, in 1986, in Italy, the "tac-tac" key
visual was used in the television commercial for "Ace" entitled "Kite." 1.8. P&G has used the same
distinctive "tac-tac" key visual to local consumers in the Philippines. HCATEa xxx xxx xxx 1 1.10.
Substantially and materially imitating the aforesaid "tac-tac" key visual of P&GP and in blatant disregard of
P&GP's intellectual property rights, Unilever on 24 July 1993 started airing a 60 second television
commercial "TVC" of its "Breeze Powerwhite" laundry product called "Porky." The said TVC included a
stretching visual presentation and sound effects almost [identical] or substantially similar to P&GP's "tactac" key visual. xxx xxx xxx 1.14. On July 15, 1994, P&GP aired in the Philippines, the same "Kite"
television advertisement it used in Italy in 1986, merely dubbing the Italian language with Filipino for the
same produce "Ace" bleaching liquid which P&GP now markets in the Philippines. 1.15. On August 1, 1994,
Unilever filed a Complaint with the Advertising Board of the Philippines to prevent P&GP from airing the
"Kite" television advertisement. 3 On August 26, 1994, Judge Gorospe issued an order granting a
temporary restraining order and setting it for hearing on September 2, 1994 for Unilever to show cause
why the writ of preliminary injunction should not issue. During the hearing on September 2, 1994, P&GP
received Unilever's answer with opposition to preliminary injunction. P&GP filed its reply to Unilever's
opposition to a preliminary injunction on September 6, 1994. HDTcEI During the hearing on September 9,
1994, Judge Gorospe ordered petitioner to submit a surrejoinder. P&GP received Unilever's rejoinder to
reply on September 13, 1994. The following day, on September 14, 1994, P&GP filed its sur-reply to
Unilever's rejoinder. On September 19, 1994, P&GP received a copy of the order dated September 16, 1994
ordering the issuance of a writ of preliminary injunction and fixing a bond of P100,000. On the same date,
P&GP filed the required bond issued by Prudential Guarantee and Assurance, Inc. On September 21, 1994,
petitioner appealed to the CA assigning the following errors allegedly committed by the court a quo, to wit:
PUBLIC RESPONDENT HAD ACTED WITHOUT OR IN EXCESS OF JURISDICTION AND WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE WRIT OF PRELIMINARY INJUNCTION IN
VIOLATION OF THE RULES ON EVIDENCE AND PROCEDURE, PARTICULARLY OF SEC. 3 (a), RULE 58 OF THE
REVISED RULES OF COURT AND OF THE PREVAILING JURISPRUDENCE. PUBLIC RESPONDENT IN ISSUING
THE VOID ORDER DATED SEPTEMBER 16, 1994, HAD, IN EFFECT, ALREADY PREJUDGED THE MERITS OF THE
MAIN CASE. PUBLIC RESPONDENT HAD ISSUED THE VOID ORDER ACCORDING RELIEF TO A NONPARTY IN
CIVIL CASE NO. 94-2434 WITHOUT JURISDICTION. THEDcS PUBLIC RESPONDENT IN ISSUING THE VOID
ORDER HAD DEPRIVED PETITIONER OF SUBSTANTIVE AND PROCEDURAL DUE PROCESS; PUBLIC
RESPONDENT HAD FORECLOSED PETITIONER'S RIGHT AND THE OPPORTUNITY TO CROSS-EXAMINE
PROCTER'S WITNESSES ABAD AND HERBOSA. 4 2 On February 24, 1995, the CA rendered its decision
finding that Judge Gorospe did not act with grave abuse of discretion in issuing the disputed order. The
petition for certiorari was thus dismissed for lack of merit. After a careful perusal of the records, we agree
with the CA and affirm its decision in toto: ECcaDT Petitioner does not deny that the questioned TV
advertisements are substantially similar to P&GP's "double tug" or "tac-tac" key visual. However, it submits
that P&GP is not entitled to the relief demanded, which is to enjoin petitioner from airing said TV
advertisements, for the reason that petitioner has Certificates of Copyright Registration for which
advertisements while P&GP has none with respect to its "double-tug" or "tac-tac" key visual. In other
words, it is petitioner's contention that P&GP is not entitled to any protection because it has not registered
with the National Library the very TV commercials which it claims have been infringed by petitioner. We
disagree. Section 2 of PD 49 stipulates that the copyright for a work or intellectual creation subsists from
the moment of its creation. Accordingly, the creator acquires copyright for his work right upon its creation .
. . Contrary to petitioner's contention, the intellectual creator's exercise and enjoyment of copyright for his
work and the protection given by law to him is not contingent or dependent on any formality or
registration. Therefore, taking the material allegations of paragraphs 1.3 to 1.5 of P&GP's verified
Complaint in the context of PD 49, it cannot be seriously doubted that at least, for purposes of determining
whether preliminary injunction should issue during the pendency of the case, P&GP is entitled to the
injunctive relief prayed for in its Complaint. aDHScI The second ground is likewise not well-taken. As
adverted to earlier, the provisional remedy of preliminary injunction will not issue unless it is shown in the
verified complaint that plaintiff is probably entitled to the relief demanded, which consists in whole or in
part in restraining the commission or continuance of the acts complained of. In view of such requirement,
the court has to make a tentative determination if the right sought to be protected exists and whether the
act against which the writ is to be directed is violative of such right. Certainly, the court's determination as
to the propriety of issuing the writ cannot be taken as a prejudgment of the merits of the case because it is
tentative in nature and the writ may be dissolved during or after the trial if the court finds that plaintiff was
not entitled to it. . . xxx xxx xxx Obviously, the determination made by the court a quo was only for
purposes of preliminary injunction, without passing upon the merits of the case, which cannot be done
until after a fullblown hearing is conducted. The third ground is patently unmeritorious. As alleged in the
Complaint P&GP is a subsidiary of Procter and Gamble Company (P&G) for which the "double tug" or "tactac" key visual was conceptualized or created. In that capacity, P&GP used the said TV advertisement in
the Philippines to promote its products. As such subsidiary, P&GP is definitely within the protective mantle
of the statute (Sec. 6, PD 49). 3 Finally, We find the procedure adopted by the court a quo to be in order. . .
The record clearly shows that respondent Judge followed the (procedure provided for in Section 5, Rule 58,
as amended by BP 224, and Paragraph A(8) of the Interim Rules). In fact, the court a quo set the incident
for hearing on September 2, 1994, at which date petitioner was ordered to show cause why the writ should
not be issued. Petitioner filed an Opposition to the application for preliminary injunction. The same incident

was again set for hearing on September 9, 1994, during which the parties made some manifestations in
support of their respective positions. Subsequent to such hearing petitioner filed a Reply to P&GP's
Rejoinder to its Opposition. Under the foregoing circumstances, it is absurd to even suggest that petitioner
was not given its day in court in the matter of the issuance of the preliminary injunctive relief. SHIETa xxx
xxx xxx There was of course extreme urgency for the court a quo to act on plaintiff's application for
preliminary injunction. The airing of TV commercials is necessarily of limited duration only. Without such
temporary relief, any permanent injunction against the infringing TV advertisements of which P&GP may
possibly succeed in getting after the main case is finally adjudicated could be illusory if by then such
advertisements are no longer used or aired by petitioner. It is therefore not difficult to perceive the
possible irreparable damage which P&GP may suffer if respondent Judge did not act promptly on its
application for preliminary injunction. 5 Preliminary injunction is a provisional remedy intended to provide
protection to parties for the preservation of their rights or interests during the pendency of the principal
action. 6 Thus, Section 1, Rule 58 of the Rules of Court provides: TaHDAS Section 1. Preliminary injunction
defined; classes. A preliminary injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court, agency or a person to refrain from a
particular act or acts. It may also require the performance of a particular act or acts, in which case it shall
be known as a preliminary mandatory injunction. Injunction is resorted to only when there is a pressing
necessity to avoid injurious consequences which cannot be remedied under any standard compensation. 7
As correctly ruled by the CA, there was an extreme urgency to grant the preliminary injunction prayed for
by P&GP considering that TV commercials are aired for a limited period of time only. In fact, this Court
takes note of the fact that the TV commercial in issue the Kite TV advertisement is no longer aired
today, more than 10 years after the injunction was granted on September 16, 1994. The sole objective of a
writ of preliminary injunction is to preserve the status quo until the merits of the case can be heard fully. 8
A writ of preliminary injunction is generally based solely on initial and incomplete evidence. 9 Thus, it was
impossible for the court a quo to fully dispose of the case, as claimed by petitioner, without all the
evidence needed for the full resolution of the same. To date, the main case still has to be resolved by the
trial court. DISaEA 4 The issuance of a preliminary injunction rests entirely on the discretion of the court
and is generally not interfered with except in cases of manifest abuse. 10 There was no such abuse in the
case at bar, especially because petitioner was given all the opportunity to oppose the application for
injunction. The fact was, it failed to convince the court why the injunction should not be issued. Thus, in
Santos v. Court of Appeals, 11 we held that no grave abuse of discretion can be attributed to a judge or
body issuing a writ of preliminary injunction where a party has not been deprived of its day in court as it
was heard and it exhaustively presented all its arguments and defenses. WHEREFORE, the petition is
hereby DENIED. Costs against petitioner. SO ORDERED. Puno, Sandoval-Gutierrez and Azcuna, JJ., concur.
Garcia, J., took no part. 5 THIRD DIVISION [G.R. No. 166337. March 7, 2005.] BAYANIHAN MUSIC
PHILIPPINES, INC., petitioner, vs. BMG RECORDS (PILIPINAS) AND JOSE MARI CHAN, ET AL., respondent.
Gentlemen: Quoted hereunder, for your information, is a resolution of the Third Division of this Court dated
March 7, 2005. ASIDTa Subject of this petition for review on certiorari is the Decision dated December 14,
2004 1 of the Court of Appeals in CA-G.R. SP No. 69626, upholding the Order dated August 24, 2001 of the
Regional Trial Court at Quezon City, Branch 90, which found no merit in petitioner's application for the
issuance of a writ of preliminary injunction, along with the Order dated January 10, 2002, which denied
petitioner's motion for reconsideration. On July 16, 1973, private respondent Jose Mari Chan (Chan)
entered into a contract with petitioner Bayanihan Music Philippines, Inc. (Bayanihan), whereunder the
former assigned to the latter all his rights, interests and participation over his musical composition "Can
We Just Stop and Talk A While". On March 11, 1976, the parties entered into a similar contract over Chan's
other musical composition entitled "Afraid For Love To Fade". On the strength of the abovementioned
contracts, Bayanihan applied for and was granted by the National Library a Certificate of Copyright
Registration for each of the two musical compositions, thus: November 19, 1973, for the song "Can We Just
Stop and Talk A While" and on May 21, 1980, for the song "Afraid for Love To Fade." SaIHDA Apparently,
without the knowledge and consent of petitioner Bayanihan, Chan authorized his co-respondent BMG
Records (Pilipinas) [BMG] to record and distribute the aforementioned musical compositions in a then
recently released album of singer Lea Salonga. In separate letters both dated December 7, 1999, petitioner
Bayanihan informed respondents Chan and BMG of its existing copyrights over the subject musical
compositions and the alleged violation of such right by the two. Demands were made on both to settle the
matter with Bayanihan. However no settlement was reached by the parties. Hence, on August 8, 2000,
Bayanihan filed with the Regional Trial Court at Quezon City a complaint against Chan and BMG for
violation of Section 216 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, with a prayer for the issuance of Temporary Restraining Order (TRO) and/or writ of preliminary
injunction, enjoining respondent BMG from further recording and distributing the subject musical
compositions in whatever form of musical products, and Chan from further granting any authority to record
and distribute the same musical compositions. In its answer, BMG contended, among others, that: (1) the
acts of recording and publication sought to be enjoined had already been consummated, thereby rendering
moot Bayanihan's 6 prayer for TRO and/or preliminary injunction; and (2) there is no clear showing that
petitioner Bayanihan would be greatly damaged by the refusal of the prayed for TRO and/or preliminary
injunction. BMG also pleaded a cross-claim against its co-respondent Chan for violation of his warranty that
his musical compositions are free from claims of third persons, and a counterclaim for damages against
petitioner Bayanihan. Chan, for his part, filed his own answer to the complaint, thereunder alleging that:
(1) it was never his intention to divest himself of all his rights and interest over the musical compositions in

question; (2) the contracts he entered into with Bayanihan are mere music publication agreements giving
Bayanihan, as assignee, the power to administer his copyright over his two songs and to act as the
exclusive publisher thereof; (3) he was not cognizant of the application made by and the subsequent grant
of copyrights to Bayanihan; and (4) Bayanihan was remissed in its obligations under the contracts because
it failed to effectively advertise his musical compositions for almost twenty (20) years, hence, he caused
the rescission of said contracts in 1997. Chan also included in his answer a counterclaim for damages
against Bayanihan. DHEaTS After hearing the parties, the lower court came out with an order denying
Bayanihan's prayer for TRO, saying, thus: After carefully considering the arguments and evaluating the
evidence presented by counsels, this Court finds that the plaintiff has not been able to show its entitlement
to the relief of TRO as prayed for in its verified complaint (see Section 4, Rule 58 of the 1997 Rules of Civil
Procedure, as amended), hence, this Court is of the considered and humble view that the ends of justice
shall be served better if the aforecited application is denied. IN VIEW OF THE FOREGOING, the aforecited
application or prayer for the issuance of a TRO is denied. SO ORDERED. Thereafter, the same court, in its
subsequent Order dated August 24, 2001, 2 likewise denied Bayanihan's prayer for a writ of preliminary
injunction, to wit: After carefully going over the pleadings and the pertinent portions of the records insofar
as they are pertinent to the issue under consideration, this Court finds that the plaintiff has not been able
to show its entitlement to the relief of preliminary injunction as prayed for in its verified complaint (see
Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as amended), hence, this Court is of the considered
and humble view that the ends of justice shall be served better if the aforecited application is denied. (see
also Order dated July 16, 2001). IN VIEW OF THE FOREGOING, the application or prayer for the issuance of
a writ of preliminary injunction is denied. SO ORDERED. 7 Its motion for a reconsideration of the same
order having been likewise denied by the trial court in its next Order of January 10, 2002, 3 petitioner
Bayanihan then went to the Court of Appeals on a petition for certiorari, thereat docketed as CA-G.R. SP
No. 69626, imputing grave abuse of discretion on the part of the trial court in issuing the Orders of August
24, 2001 and January 10, 2001, denying its prayers for a writ of preliminary injunction and motion for
reconsideration, respectively. In the herein assailed Decision dated December 14, 2004, the Court of
Appeals upheld the challenged orders of the trial court and accordingly dismissed Bayanihan petition, thus:
WHEREFORE, finding neither flaw of jurisdiction nor taint of grave abuse of discretion in the issuance of the
assailed Orders of the respondent court dated August 24, 2001 and January 10, 2002, the instant petition
is DISMISSED. No costs. SO ORDERED. 4 Hence, Bayanihan's present recourse. It is petitioner's submission
that the appellate court committed reversible error when it dismissed its petition for certiorari and upheld
the trial court's denial of its application for a writ of preliminary injunction. Petitioner insists that as
assignee of the copyrights over the musical compositions in question, it has a clear legal right to a writ of
preliminary injunction; that respondents BMG and Chan violated its copyrights over the same musical
compositions; that despite knowledge by respondent BMG of petitioner's copyrights over the said musical
compositions, BMG continues to record and distribute the same, to petitioner's great and irreparable injury.
DaTEIc We DENY. We have constantly reminded courts that there is no power, the exercise of which is more
delicate and requires greater caution, deliberation and sound discretion, or which is more dangerous in a
doubtful case, than the issuance of an injunction. A court should, as much as possible, avoid issuing the
writ which would effectively dispose of the main case without trial. Here, nothing is more evident than the
trial court's abiding awareness of the extremely difficult balancing act it had to perform in dealing with
petitioner's prayer for injunctive reliefs. Conscious, as evidently it is, of the fact that there is manifest
abuse of discretion in the issuance of an injunctive writ if the following requisites provided for by law are
not present: (1) there must be a right in esse or the existence of a right to be protected; and (2) the act
against which the injunction is to be directed is a violation of such right, 5 the trial court threaded the
correct path in denying petitioner's prayer therefor. For, such a writ should only be granted if a party is
clearly entitled thereto. 6 Of course, while a clear showing of the right to an injunctive writ is necessary
albeit its existence need not be conclusively established, 7 as the evidence required therefor need not be
conclusive or complete, still, for an applicant, like petitioner Bayanihan, to be entitled to the writ, he is
required to show that he has the ostensible right to the final, relief prayed for in its 8 complaint. 8 Here,
the trial court did not find ample justifications for the issuance of the writ prayed for by petitioner.
Unquestionably, respondent Chan, being undeniably the composer and author of the lyrics of the two (2)
songs, is protected by the mere fact alone that he is the creator thereof, conformably with Republic Act No.
8293, otherwise known as the Intellectual Property Code, Section 172.2 of which reads: 172.2. Works are
protected by the sole fact of their creation, irrespective of their mode or form of expression, as well as of
their content, quality and purpose. IEAaST An examination of petitioner's verified complaint in light of the
two (2) contracts sued upon and the evidence it adduced during the hearing on the application for
preliminary injunction, yields not the existence of the requisite right protectable by the provisional relief
but rather a lingering doubt on whether there is or there is no such right. The two contracts between
petitioner and Chan relative to the musical compositions subject of the suit contain the following identical
stipulations: 7. It is also hereby agreed to by the parties herein that in the event the PUBLISHER [petitioner
herein] fails to use in any manner whatsoever within two (2) years any of the compositions covered by this
contract, then such composition may be released in favor of the WRITER and excluded from this contract
and the PUBLISHER shall execute the necessary release in writing in favor of the WRITER upon request of
the WRITER; xxx xxx xxx 9. This contract may be renewed for a period of two-and-one-half (2 1/2) years at
the option of the PUBLISHER. Renewal may be made by the PUBLISHER by advising the WRITER of such
renewal in writing at least five (5) days before the expiration of this contract. 9 It would thus appear that
the two (2) contracts expired on October 1, 1975 and March 11, 1978, respectively, there being neither an

allegation, much less proof, that petitioner Bayanihan ever made use of the compositions within the twoyear period agreed upon by the parties. Anent the copyrights obtained by petitioner on the basis of the
selfsame two (2) contracts, suffice it to say that such purported copyrights are not presumed to subsist in
accordance with Section 218[a] and [b], of the Intellectual Property Code, 10 because respondent Chan
had put in issue the existence thereof. It is noted that Chan revoked and terminated said contracts, along
with others, on July 30, 1997, or almost two years before petitioner Bayanihan wrote its sort of
complaint/demand letter dated December 7, 1999 regarding the recent "use/recording of the songs 'Can
We Just Stop and Talk A While' and 'Afraid for Love to Fade,"' or almost three (3) years before petitioner
filed its complaint on August 8, 2000, therein praying, inter alia, for injunctive relief. By then, it would
appear that petitioner had no more right that is protectable by injunction. AIDcTE 9 Lastly, petitioner's
insinuation that the trial court indulged in generalizations and was rather skimpy in dishing out its reasons
for denying its prayer for provisional injunctive relief, the same deserves scant consideration. For sure, the
manner by which the trial court crafted its challenged orders is quite understandable, lest it be subjected
to a plausible suspicion of having prejudged the merits of the main case. IcEaST WHEREFORE, petition is
hereby DENIED. SO ORDERED. Very truly yours, (SGD.) LUCITA ABJELINA SORIANO Clerk of Court 10 THIRD
DIVISION [G.R. Nos. 175769-70. January 19, 2009.] ABS-CBN BROADCASTING CORPORATION, petitioner, vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F.
ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, respondents. DECISION YNARES-SANTIAGO, J p:
This petition for review on certiorari 1 assails the July 12, 2006 Decision 2 of the Court of Appeals in CAG.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the Director-General of
the Intellectual Property Office (IPO) in Appeal No. 10-2004- 0002. Also assailed is the December 11, 2006
Resolution 3 denying the motion for reconsideration. TaISEH Petitioner ABS-CBN Broadcasting Corporation
(ABS-CBN) is licensed under the laws of the Republic of the Philippines to engage in television and radio
broadcasting. 4 It broadcasts television programs by wireless means to Metro Manila and nearby provinces,
and by satellite to provincial stations 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 either produced by ABS-CBN
or purchased from or licensed by other producers. 2009jur ABS-CBN also owns regional television stations
which pattern their programming in accordance with perceived demands of the region. Thus, television
programs shown in Metro Manila and nearby provinces are not necessarily shown in other provinces.
cDIHES Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting
System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers all over the
Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul B. de
Mesa, and Aloysius M. Colayco, are members of PMSI's Board of Directors. PMSI was granted a legislative
franchise under Republic Act No. 8630 5 on May 7, 1998 and was given a Provisional Authority by the
National Telecommunications Commission (NTC) on February 1, 2000 to install, operate and maintain a
nationwide DTH satellite service. When it 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 Channel 9, and IBC
Channel 13, together with other paid premium program channels. CTSHDI However, on April 25, 2001, 6
ABS-CBN demanded for PMSI to cease and desist from rebroadcasting Channels 2 and 23. On April 27,
2001, 7 PMSI replied that the rebroadcasting 11 was in accordance with the authority granted it by NTC
and its obligation under NTC Memorandum Circular No. 4-08-88, 8 Section 6.2 of which requires all cable
television system operators operating in a community within Grade "A" or "B" contours to carry the
television signals of the authorized television broadcast stations. 9 HDAaIc Thereafter, negotiations ensued
between the parties in an effort to reach a settlement; however, the negotiations were terminated on April
4, 2002 by ABS-CBN allegedly due to PMSI's inability to ensure the prevention of illegal retransmission and
further rebroadcast of its signals, as well as the adverse effect of the rebroadcasts on the business
operations of its regional television stations. 10 2009jur On May 13, 2002, ABS-CBN filed with the IPO a
complaint for "Violation of Laws Involving Property Rights, with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction", which was docketed as IPV No. 10-2002-0004. It
alleged that PMSI's unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights
and copyright. EACIcH On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN's
application for a temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of
Channels 2 and 23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed
as CA-G.R. SP No. 71597. STaCIA Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is
subject to the mustcarry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated
December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows: This refers to
your letter dated December 16, 2002 requesting for regulatory guidance from this Commission in
connection with the application and coverage of NTC Memorandum Circular No. 4-08-88, particularly
Section 6 thereof, on mandatory carriage of television broadcast signals, to the direct-to-home (DTH) pay
television services of Philippine Multi-Media System, Inc. (PMSI). IcESaA Preliminarily, both DTH pay
television and cable television services are broadcast services, the only difference being the medium of
delivering such services (i.e., the former by satellite and the latter by cable). Both can carry broadcast
signals to the remote areas, thus enriching the lives of the residents thereof through the dissemination of
social, economic, educational information and cultural programs. ITSacC The DTH pay television services of
PMSI is equipped to provide nationwide DTH satellite services. Concededly, PMSI's DTH pay television
services covers very much wider areas in terms of carriage of broadcast signals, including areas not
reachable by cable television services thereby providing a better medium of dissemination of information
to the public. In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,

particularly section 6 thereof, on mandatory carriage of television broadcast signals, DTH pay television
services should be deemed covered by such NTC Memorandum Circular. ACaTIc 12 For your guidance.
(Emphasis added) 11 On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a
letter dated July 24, 2003 from the NTC enjoining strict and immediate compliance with the mustcarry rule
under Memorandum Circular No. 04-08-88, to wit: Dear Mr. Abellada: Last July 22, 2003, the National
Telecommunications Commission (NTC) received a letter dated July 17, 2003 from President/COO Rene Q.
Bello of the International Broadcasting Corporation (IBC-Channel 13) complaining that your company,
Dream Broadcasting System, Inc., has cutoff, without any notice or explanation whatsoever, to air the
programs of IBC-13, a free-to-air television, to the detriment of the public. IHCESD We were told that, until
now, this has been going on. Please be advised that as a direct broadcast satellite operator, operating a
direct-to-home (DTH) broadcasting system, with a provisional authority (PA) from the NTC, your company,
along with cable television operators, are mandated to strictly comply with the existing policy of NTC on
mandatory carriage of television broadcast signals as provided under Memorandum Circular No. 04-08-88,
also known as the Revised Rules and Regulations Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum Circular, requires all cable
television system operators, operating in a community within the Grade "A" or "B" contours to "mustcarry" the television signals of the authorized television broadcast stations, one of which is IBC-13. Said
directive equally applies to your company as the circular was issued to give consumers and the public a
wider access to more sources of news, information, entertainment and other programs/contents. This
Commission, as the governing agency vested by laws with the jurisdiction, supervision and control over all
public services, which includes direct broadcast satellite operators, and taking into consideration the
paramount interest of the public in general, hereby directs you to immediately restore the signal of IBC-13
in your network programs, pursuant to existing circulars and regulations of the Commission. CcSTHI For
strict compliance. (Emphasis added) 12 Meanwhile, on October 10, 2003, the NTC issued Memorandum
Circular No. 10-10-2003, entitled "Implementing Rules and Regulations Governing Community
Antenna/Cable Television (CATV) and Direct Broadcast Satellite (DBS) Services to Promote Competition in
the Sector". Article 6, Section 8 thereof states: ADTCaI As a general rule, the reception, distribution and/or
transmission by any CATV/DBS operator of any television signals without any agreement with or
authorization from program/content providers are prohibited. 13 On whether Memorandum Circular No. 1010-2003 amended Memorandum Circular No. 04-08- 88, the NTC explained to PMSI in a letter dated
November 3, 2003 that: To address your query on whether or not the provisions of MC 10-10-2003 would
have the effect of amending the provisions of MC 4-08-88 on mandatory carriage of television signals, the
answer is in the negative. ATEHDc xxx xxx xxx The Commission maintains that, MC 4-08-88 remains valid,
subsisting and enforceable. Please be advised, therefore, that as duly licensed direct-to-home satellite
television service provider authorized by this Commission, your company continues to be bound by the
guidelines provided for under MC 04-08-88, specifically your obligation under its mandatory carriage
provisions, in addition to your obligations under MC 10-10-2003. (Emphasis added) ETDaIC Please be
guided accordingly. 13 On December 22, 2003, the BLA rendered a decision 14 finding that PMSI infringed
the broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and desist from
rebroadcasting Channels 2 and 23. On February 6, 2004, PMSI filed an appeal with the Office of the
Director-General of the IPO which was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it
also filed with the Court of Appeals a "Motion to Withdraw Petition; Alternatively, Memorandum of the
Petition for Certiorari " in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17,
2005. CITaSA On December 20, 2004, the Director-General of the IPO rendered a decision 15 in favor of
PMSI, the dispositive portion of which states: WHEREFORE, premises considered, the instant appeal is
hereby GRANTED. Accordingly, Decision No. 2003-01 dated 22 December 2003 of the Director of Bureau of
Legal Affairs is hereby REVERSED and SET ASIDE. cDTHIE Let a copy of this Decision be furnished the
Director of the Bureau of Legal Affairs for appropriate action, and the records be returned to her for proper
disposition. The Documentation, Information and Technology Transfer Bureau is also given a copy for
library and reference purposes. SO ORDERED. 16 Thus, ABS-CBN filed a petition for review with prayer for
issuance of a temporary restraining order and writ of preliminary injunction with the Court of Appeals,
which was docketed as CAG.R. SP No. 88092. 14 On July 18, 2005, the Court of Appeals issued a temporary
restraining order. Thereafter, ABSCBN filed a petition for contempt against PMSI for continuing to
rebroadcast Channels 2 and 23 despite the restraining order. The case was docketed as CA- G.R. SP No.
90762. AacSTE On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos.
88092 and 90762. In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings
of the Director-General of the IPO and dismissed both petitions filed by ABS-CBN. 17 ABS-CBN's motion for
reconsideration was denied, hence, this petition. ABS-CBN contends that PMSI's unauthorized
rebroadcasting of Channels 2 and 23 is an infringement of its broadcasting rights and copyright under the
Intellectual Property Code (IP Code); 18 that Memorandum Circular No. 04-08-88 excludes DTH satellite
television operators; that the Court of Appeals' interpretation of the must-carry rule violates Section 9 of
Article III 19 of the Constitution because it allows the taking of property for public use without payment of
just compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as CAG.R. SP No. 90762 without requiring respondents to file comment. IcHSCT Respondents, on the other hand,
argue that PMSI's rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 04-0888; that the must-carry rule under the Memorandum Circular is a valid exercise of police power; and that
the Court of Appeals correctly dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power
of contempt. After a careful review of the facts and records of this case, we affirm the findings of the

DirectorGeneral of the IPO and the Court of Appeals. aETADI 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 part: Chapter XIV
BROADCASTING ORGANIZATIONS Sec. 211. Scope of Right. Subject to the provisions of Section 212,
broadcasting organizations shall enjoy the exclusive right to carry out, authorize or prevent any of the
following acts: AcIaST 211.1. The rebroadcasting of their broadcasts; xxx xxx xxx 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 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). 20 15 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 representations thereof; such transmission by satellite is
also 'broadcasting' where the means for decrypting are provided to the public by the broadcasting
organization or with its consent". EAcCHI On the other hand, rebroadcasting as defined in Article 3 (g) of
the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of the Philippines is a
signatory, 21 is "the simultaneous broadcasting by one broadcasting organization of the broadcast of
another broadcasting organization". cSTHAC The Director-General of the IPO correctly found that PMSI is
not engaged in rebroadcasting and thus cannot be considered to have infringed ABS-CBN's broadcasting
rights and copyright, thus: That the Appellant's [herein respondent PMSI] subscribers are able to view
Appellee's [herein petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter is
broadcasting the same is undisputed. The question however is, would the Appellant in doing so be
considered engaged in broadcasting. Section 202.7 of the IP Code states that broadcasting means "the
transmission by wireless means for the public reception of sounds or of images or of representations
thereof; such transmission by satellite is also 'broadcasting' where the means for decrypting are provided
to the public by the broadcasting organization or with its consent." ETDAaC Section 202.7 of the IP Code,
thus, provides two instances wherein there is broadcasting, to wit: THIASE 1. The transmission by wireless
means for the public reception of sounds or of images or of representations thereof; and 2. The
transmission by satellite for the public reception of sounds or of images or of representations thereof
where the means for decrypting are provided to the public by the broadcasting organization or with its
consent. It is under the second category that Appellant's DTH satellite television service must be examined
since it is satellite-based. The elements of such category are as follows: HIETAc 1. There is transmission of
sounds or images or of representations thereof; 2. The transmission is through satellite; 3. The
transmission is for public reception; and 4. The means for decrypting are provided to the public by the
broadcasting organization or with its consent. DEacIT 16 It is only the presence of all the above elements
can a determination that the DTH is broadcasting and consequently, rebroadcasting Appellee's signals in
violation of Sections 211 and 177 of the IP Code, may be arrived at. Accordingly, this Office is of the view
that the transmission contemplated under Section 202.7 of the IP Code presupposes that the origin of the
signals is the broadcaster. Hence, a program that is broadcasted is attributed to the broadcaster. In the
same manner, the rebroadcasted program is attributed to the rebroadcaster. DCcIaE In the case at hand,
Appellant is not the origin nor does it claim to be the origin of the programs broadcasted by the Appellee.
Appellant did not make and transmit on its own but merely carried the existing signals of the Appellee.
When Appellant's subscribers view Appellee's programs in Channels 2 and 23, they know that the origin
thereof was the Appellee. Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster
transmits, the signals are scattered or dispersed in the air. Anybody may pick-up these signals. There is no
restriction as to its 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, and in case of television signals, a television
set, and to tune-in to the right channel/frequency. The definition of broadcasting, wherein it is required that
the transmission is wireless, all the more supports this discussion. Apparently, the undiscriminating
dispersal of signals in the air is possible only through wireless means. The use of wire in transmitting
signals, such as cable television, limits the recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not enough that one wants to be connected and possesses
the equipment. The service provider, such as cable television companies may choose its subscribers.
TcDIaA The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters
and other equipment employed by the broadcaster. While the broadcaster may use a less powerful
transmitter to limit its coverage, this is merely a business strategy or decision and not an inherent
limitation when transmission is through cable. Accordingly, the nature of broadcasting is to scatter the
signals in its widest area of coverage as possible. On this score, it may be said that making public means
that accessibility is undiscriminating as long as it [is] within the range of the transmitter and equipment of
the broadcaster. That the medium through which the Appellant carries the Appellee's signal, that 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 via its DTH satellite television service cannot be considered within the
purview of broadcasting. . . . xxx xxx xxx This Office also finds no evidence on record showing that the
Appellant has provided decrypting means to the public indiscriminately. Considering the nature of this
case, which is punitive in fact, the burden of proving the existence of the elements constituting the acts
punishable rests on the shoulder of the complainant. aEACcS 17 Accordingly, this Office finds that there is
no rebroadcasting on the part of the Appellant of the Appellee's programs on Channels 2 and 23, as
defined under the Rome Convention. 22 Under the Rome Convention, rebroadcasting is "the simultaneous
broadcasting by one broadcasting organization of the broadcast of another broadcasting organization." The
Working Paper 23 prepared by the Secretariat of the Standing Committee on Copyright and Related Rights

defines broadcasting organizations as "entities that take the financial and editorial responsibility for the
selection and arrangement of, and investment in, the transmitted content". 24 Evidently, PMSI would not
qualify as a broadcasting organization because it does not have the aforementioned responsibilities
imposed upon broadcasting organizations, such as ABSCBN. EADCHS ABS-CBN creates and transmits its
own signals; PMSI merely carries such 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 23. Likewise, it does not
pass itself off as the origin or author of such programs. Insofar as Channels 2 and 23 are concerned, PMSI
merely retransmits the same in accordance with Memorandum Circular 04-08-88. With regard to its
premium channels, it buys the channels from content 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 be
said that it is engaged in rebroadcasting Channels 2 and 23. The Director-General of the IPO and the Court
of Appeals also correctly found that PMSI's services are similar to a cable television system because the
services it renders fall under cable "retransmission", as described in the Working Paper, to wit: cDIHES (G)
Cable Retransmission 47. When a radio or television program is being broadcast, it can be retransmitted to
new audiences by means of cable or wire. In the early days of cable television, it was mainly used to
improve signal reception, particularly in so-called "shadow zones", or to distribute the signals in large
buildings or building complexes. With improvements in technology, cable operators now often receive
signals from satellites before retransmitting them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast overthe-air or delayed
(deferred transmission) on the basis of a fixation or a reproduction of a fixation. Furthermore, they might
be unaltered or altered, for example through replacement of commercials, etc. In general, however, the
term "retransmission" seems to be reserved for such transmissions which are both simultaneous and
unaltered. aEACcS 49. The Rome Convention does not grant rights against unauthorized cable
retransmission. Without such a right, cable operators can retransmit both domestic and foreign over the air
broadcasts simultaneously to their subscribers without permission from the broadcasting organizations or
other rightholders and without obligation to pay remuneration. 25 (Emphasis added) 18 Thus, while the
Rome Convention gives broadcasting organizations the right to authorize or prohibit the rebroadcasting of
its broadcast, however, this protection does not extend to cable retransmission. The retransmission of ABSCBN's signals by PMSI which functions essentially as a cable television does not therefore constitute
rebroadcasting in violation of the former's intellectual property rights under the IP Code. ISAcHD It must be
emphasized that the law on copyright is not absolute. The IP Code provides that: Sec. 184. Limitations on
Copyright. 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute
infringement of copyright: xxx xxx xxx (h) The use made of a work by or under the direction or control of
the Government, by the National Library or by educational, scientific or professional institutions where
such use is in the public interest and is compatible with fair use; EHTCAa The carriage of ABS-CBN's signals
by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under the direction and control of
the government through the NTC which is vested with exclusive jurisdiction to supervise, regulate and
control telecommunications and broadcast services/facilities in the Philippines. 26 The imposition of the
must-carry rule is within the NTC's power to promulgate rules and regulations, as public safety and interest
may require, to encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in these activities
whenever the Commission finds it reasonably feasible. 27 As correctly observed by the Director-General of
the IPO: IHCacT Accordingly, the "Must-Carry Rule" under NTC Circular No. 4-08-88 falls under the foregoing
category of limitations on copyright. This Office agrees with the Appellant [herein respondent PMSI] that
the "Must-Carry Rule" is in consonance with the principles and objectives underlying Executive Order No.
436, 28 to wit: The Filipino people must be given wider access to more sources of news, information,
education, sports event and entertainment programs other than those provided for by mass media and
afforded television programs to attain a well informed, well-versed and culturally refined citizenry and
enhance their socio-economic growth: TEcADS WHEREAS, cable television (CATV) systems could support or
supplement the services provided by television broadcast facilities, local and overseas, as the national
information highway to the countryside. 29 The Court of Appeals likewise correctly observed that: [T]he
very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a few
networks would have unfettered power 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 19 only those with
whom they agreed contrary to the state policy that the (franchise) grantee like the petitioner, private
respondent and other TV station owners, shall provide at all times sound and balanced programming and
assist in the functions of public information and education. AEHTIC This is for the first time that we have a
structure that works to accomplish explicit state policy goals. 30 Indeed, intellectual property protection is
merely a means towards the end of making society benefit from the creation of its men and women of
talent and genius. This is the essence of intellectual property laws, and it explains why certain products of
ingenuity that are concealed from the public are outside the pale of protection afforded by the law. It also
explains why the author or the creator enjoys no more rights than are consistent with public welfare. 31
HADTEC Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the
legislative franchises granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in
the Constitution, specifically Sections 9, 32 17, 33 and 24 34 of Article II on the Declaration of Principles
and State Policies. 35 TcIaHC ABS-CBN was granted a legislative franchise under Republic Act No. 7966,
Section 1 of which authorizes it "to construct, operate and maintain, for commercial purposes and in the
public interest, television and radio broadcasting in and throughout the Philippines . . . ." Section 4 thereof

mandates that it "shall provide adequate public service time to enable the government, through the said
broadcasting stations, to reach the population on important public issues; provide at all times sound and
balanced programming; promote public participation such as in community programming; assist in the
functions of public information and education . . . ." PMSI was likewise granted a legislative franchise under
Republic Act No. 8630, Section 4 of which similarly states that it "shall provide adequate public service
time to enable the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public information and
education . . . ." Section 5, paragraph 2 of the same law provides that "the radio spectrum is a finite
resource that is a 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 process". TDcAIH In Telecom. & Broadcast
Attys. of the Phils., Inc. v. COMELEC, 36 the Court held that a franchise is a mere privilege which may be
reasonably burdened with some form of public service. Thus: All broadcasting, whether by radio or by
television stations, is licensed by the government. Airwave frequencies have to be allocated as there are
more individuals who want to broadcast than there are frequencies to assign. A franchise is thus a privilege
subject, among other things, to amendment by Congress in accordance with the constitutional provision
that "any such franchise or right granted . . . shall be subject to amendment, alteration or repeal by the
Congress when the common good so requires". ECAaTS 20 xxx xxx xxx Indeed, provisions for COMELEC
Time have been made by amendment of the franchises of radio and television broadcast stations and, until
the present case was brought, such provisions had not been thought of as taking property without just
compensation. Art. XII, 11 of the Constitution authorizes the amendment of franchises for "the common
good". What better measure can be conceived for the common good than one for free air time for the
benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully
informed of the issues in an election? "[I]t is the right of the viewers and listeners, not the right of the
broadcasters, which is paramount". HaEcAC Nor indeed can there be any constitutional objection to the
requirement that broadcast stations give free air time. Even in the United States, there are responsible
scholars who believe that government controls on broadcast media can constitutionally be instituted to
ensure diversity of views and attention to public affairs to further the system of free expression. For this
purpose, broadcast stations may be required to give free air time to candidates in an election. Thus,
Professor Cass R. Sunstein of the University of Chicago Law School, in urging reforms in regulations
affecting the broadcast industry, writes: TAHcCI xxx xxx xxx In truth, radio and television broadcasting
companies, which are given franchises, do not own the airwaves and frequencies through which they
transmit broadcast signals and images. They are merely given the temporary privilege of using them.
Since a franchise is a mere privilege, the exercise of the privilege may reasonably be burdened with the
performance by the grantee of some form of public service. . . . 37 There is likewise no merit to ABS-CBN's
claim that PMSI's carriage of its signals is for a commercial purpose; that its being the country's top
broadcasting company, the availability of its signals allegedly enhances PMSI's attractiveness to potential
customers; 38 or that the unauthorized carriage of its signals by PMSI has created competition between its
Metro Manila and regional stations. SITCEA ABS-CBN presented no substantial evidence to prove that PMSI
carried its signals for profit; or that such carriage adversely affected the business operations of its regional
stations. Except for the testimonies of its witnesses, 39 no studies, statistical data or information have
been submitted in evidence. Administrative charges cannot be based on mere speculation or conjecture.
The complainant has the burden of proving by substantial evidence the allegations in the complaint. 40
Mere allegation is not evidence, and is not equivalent to proof. 41 EHcaAI Anyone in the country who owns
a television set and antenna can receive ABS-CBN's signals for free. Other broadcasting organizations with
free-to-air signals such as GMA-7, RPN-9, ABC- 5, and IBC-13 can likewise be accessed for free. No payment
is required to view the said channels 42 because these broadcasting networks do not generate revenue
from subscription 21 from their viewers but from airtime revenue from contracts with commercial
advertisers and producers, as well as from direct sales. In contrast, cable and DTH television earn revenues
from viewer subscription. In the case of PMSI, it offers its customers premium paid 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 "Free TV and Cable TV". 43 It does not advertise itself as a local channel carrier
because these local channels can be viewed with or without DTH television. CDTHSI Relevantly, PMSI's
carriage of Channels 2 and 23 is material in arriving at the ratings and audience share of ABS-CBN and its
programs. These ratings help commercial advertisers and producers decide whether to buy airtime from
the network. Thus, the must-carry rule is actually advantageous to the broadcasting networks because it
provides them with increased viewership which attracts commercial advertisers and producers. On the
other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television providers such
as PMSI. PMSI uses none of ABS-CBN's resources or equipment and carries the signals and shoulders the
costs without any recourse of charging. 44 Moreover, such carriage of signals takes up channel space
which can otherwise be utilized for other premium paid channels. aSDHCT There is no merit to ABS-CBN's
argument that PMSI's carriage of Channels 2 and 23 resulted in competition between its Metro Manila and
regional stations. ABS-CBN is free to decide to pattern its regional programming in accordance with
perceived demands of the region; however, it cannot impose this kind of programming on the regional
viewers who are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBN's responsibilities is to 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
regional stations undermines public interest and deprives the viewers of their right to access to

information. Indeed, television is a business; however, the welfare of the people must not be sacrificed in
the pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs available
is paramount. 45 The Director-General correctly observed, thus: DHEcCT The "Must-Carry Rule" favors both
broadcasting organizations and the public. It prevents cable television companies from excluding
broadcasting organization especially in those places not reached by signal. Also, the rule prevents cable
television companies from depriving viewers in far-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 television companies.
The latter carries the television signals and shoulders the costs without any recourse of charging. On the
other hand, the signals that are carried by cable television companies are dispersed and scattered by the
television stations and anybody with a television set is free to pick them up. HCDAac With its enormous
resources and vaunted technological capabilities, Appellee's [herein petitioner ABS-CBN] broadcast signals
can reach almost every corner of the archipelago. That in spite of such capacity, it chooses to maintain
regional stations, is a business decision. That 22 the "Must-Carry Rule" adversely affects the profitability of
maintaining such regional 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. As discussed above, Appellant's
DTH satellite television services is of limited subscription. There was not even a showing on part of the
Appellee the number of Appellant's subscribers in one region as compared to non-subscribing television
owners. In any event, if this Office is to engage in conjecture, such competition between the regional
stations and the Metro Manila station will benefit the public as such competition will most likely result in
the production of better television programs." 46 All told, we find that the Court of Appeals correctly
upheld the decision of the IPO DirectorGeneral that PMSI did not infringe on ABS-CBN's intellectual
property rights under the IP Code. The findings of facts of administrative bodies charged with their specific
field of expertise, are afforded great weight by the courts, and in the absence of substantial showing that
such findings are made from an erroneous estimation of the evidence presented, they are conclusive, and
in the interest of stability of the governmental structure, should not be disturbed. 47 Moreover, the factual
findings of the Court of Appeals are conclusive on the parties and are not reviewable by the Supreme
Court. They carry even more weight when the Court of Appeals affirms the factual findings of a lower factfinding body, 48 as in the instant case. There is likewise no merit to ABS-CBN's contention that the
Memorandum Circular excludes from its coverage DTH television services such as those provided by PMSI.
Section 6.2 of the Memorandum Circular requires all cable television system operators operating in a
community within Grade "A" or "B" contours to carry the television signals of the authorized television
broadcast stations. 49 The rationale behind its issuance can be found in the whereas clauses which state:
EaCSTc Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their
ability to offer additional programming and to carry much improved broadcast signals in the remote areas,
thereby enriching the lives of the rest of the population through the dissemination of social, economic,
educational information and cultural programs; TIHDAa Whereas, the national government supports the
promotes the orderly growth of the Cable Television industry within the framework of a regulated fee
enterprise, which is a hallmark of a democratic society; Whereas, public interest so requires that
monopolies in commercial mass media shall be regulated or prohibited, hence, to achieve the same, the
cable TV industry is made part of the broadcast media; Whereas, pursuant to Act 3846 as amended and
Executive Order 205 granting the National Telecommunications Commission the authority to set down rules
and regulations in order to protect the public and promote the general welfare, the National
Telecommunications Commission hereby promulgates the following rules and regulations on Cable
Television Systems; SaIEcA 23 The policy of the Memorandum Circular is to carry improved signals in
remote areas for the good of the general public and to promote dissemination of information. In line with
this policy, it is clear that DTH television should be deemed covered by the Memorandum Circular.
Notwithstanding the different technologies employed, both DTH and cable television have the ability to
carry improved signals and promote dissemination of information because they operate and function in the
same way. ICDSca In its December 20, 2002 letter, 50 the NTC explained that both DTH and cable
television services are of a similar nature, the only difference being the medium of delivering such
services. They can carry broadcast signals to the remote areas and possess the capability to enrich the
lives of the residents thereof through the dissemination of social, economic, educational information and
cultural programs. Consequently, while the Memorandum Circular refers to cable television, it should be
understood as to include DTH television which provides essentially the same services. In Eastern
Telecommunications Philippines, Inc. v. International Communication Corporation, 51 we held: The NTC,
being the government agency entrusted with the regulation of activities coming under its special and
technical forte, and possessing the necessary rule-making power to implement its objectives, is in the best
position to interpret its own rules, regulations and guidelines. The Court has consistently yielded and
accorded great respect to the interpretation by administrative agencie s of their own rules unless there

is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly
conflicting with the letter and spirit of the law. 52 SEcADa With regard to the issue of the
constitutionality of the must-carry rule, the Court finds that its resolution is not necessary in the
disposition of the instant case. One of the essential requisites for a successful judicial inquiry into
constitutional questions is that the resolution of the constitutional question must be necessary in
deciding the case. 53 In Spouses Mirasol v. Court of Appeals, 54 we held: As a rule, the courts will
not resolve the constitutionality of a law, if the controversy can be settled on other grounds. The
policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of

the political departments are valid, absent a clear and unmistakable showing to the contrary. To
doubt is to sustain. This presumption is based on the doctrine of separation of powers. This
means t

the measure had first been carefully studied by the legislative and executive departments and found to be in
accord with the Constitution before it was finally enacted and approved. 55 caIETS The instant case was
instituted for violation of the IP Code and infringement of ABS-CBN's broadcasting rights and copyright,
which can be resolved without going into the constitutionality of Memorandum Circular No. 04-08-88. As
held by the Court of Appeals, the only relevance of the circular in this case is whether or not compliance
therewith should be considered manifestation of lack of intent to commit infringement, and if it is, whether
such lack of intent is a valid defense against the complaint of petitioner. 56 24 The records show that
petitioner assailed the constitutionality of Memorandum Circular No. 04- 08-88 by way of a collateral attack
before the Court of Appeals. In Philippine National Bank v. Palma, 57 we ruled that for reasons of public
policy, the constitutionality of a law cannot be collaterally attacked. A law is deemed valid unless declared

null and void by a competent court; more so when the issue has not been duly pleaded in the trial court. 58 As a
general rule, the question of constitutionality must be raised at the earliest opportunity so that if not raised in the
pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial court, it will not be considered
on appeal. 59 In Philippine Veterans Bank v. Court of Appeals, 60 we held: We decline to rule on the issue of
constitutionality as all the requisites for the exercise of judicial review are not present herein. Specifically, the
question of constitutionality will not be passed upon by the Court unless, at the first opportunity, it is properly
raised and presented in an appropriate case, adequately argued, and is necessary to a determination of the case,
particularly where the issue of constitutionality is the very lis mota presented. . . . 61 EHSIcT Finally, we find
that the dismissal of the petition for contempt filed by ABS-CBN is in order. Indirect contempt may either be
initiated (1) motu proprio by the court by issuing an order or any other formal charge requiring the respondent
to show cause why he should not be punished for contempt or (2) by the filing of a verified petition,
complying with the requirements for filing initiatory pleadings. 62 ABS-CBN filed a verified petition before
the Court of Appeals, which was docketed CA G.R. SP No. 90762, for PMSI's alleged disobedience to the
Resolution and Temporary Restraining Order, both dated July 18, 2005, issued in CA-G.R. SP No. 88092.
However, after the cases were consolidated, the Court of Appeals did not require PMSI to comment on the
petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and ordered the dismissal of both
petitions. acEHSI ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt
without having ordered respondents to comment on the same. Consequently, it would have us reinstate
CA-G.R. No. 90762 and order respondents to show cause why they should not be held in contempt. It bears
stressing that the proceedings for punishment of indirect contempt are criminal in nature. The modes of
procedure and rules of evidence adopted in contempt proceedings are similar in nature to those used in
criminal prosecutions. 63 While it may be argued that the Court of Appeals should have ordered
respondents to comment, the issue has been rendered moot in light of our ruling on the merits. To order
respondents to comment and have the Court of Appeals conduct a hearing on the contempt charge when
the main case has already been disposed of in favor of PMSI would be circuitous. Where the issues have
become moot, there is no justiciable controversy, thereby rendering the resolution of the same of no
practical use or value. 64 aTcSID 25 WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the
Court of Appeals in CA-G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of
the Intellectual Property Office and dismissing the petitions filed by ABS-CBN Broadcasting Corporation,
and the December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED. 2009jur SO
ORDERED. Austria-Martinez, Chico-Nazario, Nachura and Leonardo-de Castro, * JJ., concur. 2009jur 26
ABS-CBN vs. PMSI, G.R. No. 175769-70 (19 Jan 2009)
Post under case digests, Political Law at Wednesday, January 25, 2012 Posted by Schizophrenic Mind
Facts: ABS-CBN is engaged in television and radio broadcasting through wireless and satellite means while
Philippine Multi-Media Systems Inc. (PMSI for brevity), the operator of Dream Broadcasting
System provides direct-to-home (DTH) television via satellite to its subscribers all over the Philippines.
PMSI was granted legislative franchise under RA 8630 to install, operate and maintain a nationwide
DTH satellite service and is obligated under by NTC Memorandum Circular No. 4-08-88, Section 6.2 of
which requires all cable television system operators operating in a community within Grade A or B
contours to carry the television signals of the authorized television broadcast stations (must-carry rule).
ABS-CBN filed a complaint with Intellectual Property Office (IPO) for violation of laws involving property
rights. It alleged that PMSIs unauthorized rebroadcasting of Channels 2 and 23 infringed on its
broadcasting rights and copyright and that the NTC circular only covers cable television system operators
and not DTH satellitetelevision operators. Moreover, NTC Circular 4-08-88 violates Sec. 9 of Art. III of the
Constitution because it allows the taking of property for public use without payment of just compensation.
PMSI argued that its rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 0408-88; that the must-carry rule under the Memorandum Circular is a valid exercise of police power.

IPO and Court of Appeals ruled in favor of PMSI.

Issues:
(1) w/n PMSI infringed on ABS-CBNs broadcasting rights and copyright
(2) w/n PMSI is covered by the NTC Circular (must-carry rule)
(3) Whether NTC Circular 4-08-88 violates Sec. 9 of Art. III of the Constitution because it allows the taking
of property for public use without payment of just compensation or it is a valid exercise of police power.
Held:
(1) NO. PMSI does not infringe on ABS-CBNs broadcasting rights under the IP Code as PMSI is not engaged
in rebroadcasting of Channels 2 and 23. Rebroadcasting, which is prohibited by the IP Code, is the
simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting
organization. ABS-CBN creates and transmits its own signals; PMSI merely carries such 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 23. Likewise, it does not pass itself off as the origin or author of such programs.
Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with
NTC Memorandum Circular 04-08-88.
(2) YES. DTH satellite tv operators is covered under the NTCCircular which requires all cable television
system operators to carry the television signals of the authorized television broadcast stations. The
Director-General of the IPO and the Court of Appeals correctly found that PMSIs services are similar to a
cable television system because the services it renders fall under cable retransmission. Thus, PMSI, being
a DTH Satellite TV operator is covered by the NTC Circular.
(3) The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular No. 04-0888 is under the direction and control of the government though the NTC which is vested with exclusive
jurisdiction to supervise, regulate and control telecommunications and broadcast services/facilities in the
Philippines. The imposition of the must-carry rule is within the NTCs power to promulgate rules and
regulations, as public safety and interest may require, to encourage a larger and more effective use of
communications, radio and television broadcasting facilities, and tomaintain effective competition among
private entities.