Intellectual Property Law
SECOND DIVISION
[G.R. No. 115758. March 19, 2002]
ELIDAD C. KHO, doing business under the name and style of KEC
COSMETICS LABORATORY, petitioner, vs. HON. COURT OF
APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
Decision[1] dated May 24, 1993 of the Court of Appeals setting aside and
declaring as null and void the Orders[2] dated February 10, 1992 and
March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City
granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint
for injunction and damages with a prayer for the issuance of a writ of
preliminary injunction, docketed as Civil Case No. Q-91-10926, against
the respondents Summerville General Merchandising and Company
(Summerville, for brevity) and Ang Tiam Chay.
The petitioners complaint alleges that petitioner, doing business
under the name and style of KEC Cosmetics Laboratory, is the registered
owner of the copyrights Chin Chun Su and Oval Facial Cream
Container/Case, as shown by Certificates of Copyright Registration No.
0-1358 and No. 0-3678; that she also has patent rights on Chin Chun Su
& Device and Chin Chun Su for medicated cream after purchasing the
same from Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent Office on February 7,
1980 under Registration Certificate No. 4529; that respondent
Summerville advertised and sold 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 Summerville is the exclusive and authorized importer, re-packer
and distributor of Chin Chun Su products manufactured by Shun Yi
Factory of Taiwan; that the said Taiwanese manufacturing company
authorized Summerville to register its trade name Chin Chun Su
Medicated Cream with the Philippine Patent Office and other
appropriate governmental agencies; that KEC Cosmetics Laboratory of
the petitioner obtained the copyrights through misrepresentation and
falsification; and, that the authority of Quintin Cheng, assignee of the
patent registration certificate, to distribute and market Chin Chun
Su products in the Philippines had already been terminated by the said
Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction,
the trial court granted the same in an Order dated February 10, 1992,
the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business
under the style of KEC Cosmetic Laboratory, for preliminary injunction,
is hereby granted. Consequentially, plaintiff is required to file with the
Court a bond executed to defendants in the amount of five hundred
thousand pesos (P500,000.00) to the effect that plaintiff will pay to
Page 1 of 46
defendants all damages which defendants may sustain by reason of the
injunction if the Court should finally decide that plaintiff is not entitled
thereto.
SO ORDERED.[3]
The respondents moved for reconsideration but their motion for
reconsideration was denied by the trial court in an Order dated March
19, 1992.[4]
On April 24, 1992, the respondents filed a petition
for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
27803, praying for the nullification of the said writ of preliminary
injunction issued by the trial court. After the respondents filed their
reply and almost a month after petitioner submitted her comment, or
on August 14 1992, the latter moved to dismiss the petition for violation
of Supreme Court Circular No. 28-91, a circular prohibiting forum
shopping. According to the petitioner, the respondents did not state the
docket number of the civil case in the caption of their petition and, more
significantly, they did not include therein a certificate of non-forum
shopping. The respondents opposed the petition and submitted to the
appellate court a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-
G.R. SP No. 27803 ruling in favor of the respondents, the dispositive
portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of
respondent court dated February 10, 1992 and March 19, 1992 granting
the writ of preliminary injunction and denying petitioners motion for
reconsideration are hereby set aside and declared null and void.
Respondent court is directed to forthwith proceed with the trial of Civil
Case No. Q-91-10926 and resolve the issue raised by the parties on the
merits.
SO ORDERED.[5]
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname Chin Chun Su by KEC
with the supplemental register of the Bureau of Patents, Trademarks
and Technology Transfer cannot be equated with registration in the
principal register, which is duly protected by the Trademark Law.
xxx xxx xxx
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373,
393:
Registration in the Supplemental Register, therefore, serves as notice
that the registrant is using or has appropriated the trademark. By the
very fact that the trademark cannot as yet be on guard and there are
certain defects, some obstacles which the use must still overcome
before he can claim legal ownership of the mark or ask the courts to
vindicate his claims of an exclusive right to the use of the same. It would
be deceptive for a party with nothing more than a registration in the
Supplemental Register to posture before courts of justice as if the
registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent
office action on application Serial No. 30954 that registrants is
presumed to be the owner of the mark until after the registration is
declared cancelled is, therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs counter to the
precept embodied in Rule 124 of the Revised Rules of Practice before
the Philippine Patent Office in Trademark Cases but considering all the
The Law on Copyright
facts ventilated before us in the four interrelated petitions involving the
petitioner and the respondent, it is devoid of factual basis. As even in
cases where presumption and precept may factually be reconciled, we
have held that the presumption is rebuttable, not conclusive, (People v.
Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be
declared an unfair competitor even if his competing trademark is
registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La
Yebana Co. v. chua Seco & Co., 14 Phil 534).[6]
The petitioner filed a motion for reconsideration. This she
followed with several motions to declare respondents in contempt of
court for publishing advertisements notifying the public of the
promulgation of the assailed decision of the appellate court and stating
that genuine Chin Chun Su products could be obtained only from
Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioners
complaint for final injunction and damages. On October 22, 1993, the
trial court rendered a Decision[7] barring the petitioner from using the
trademark Chin Chun Su and upholding the right of the respondents to
use the same, but recognizing the copyright of the petitioner over the
oval shaped container of her beauty cream. The trial court did not award
damages and costs to any of the parties but to their respective counsels
were awarded Seventy-Five Thousand Pesos (P75,000.00) each as
attorneys fees. The petitioner duly appealed the said decision to the
Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a
Resolution[8] denying the petitioners motions for reconsideration and
for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of
errors:
I
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING TO
RULE ON PETITIONERS MOTION TO DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO
PROMPTLY RESOLVE PETITIONERS MOTION FOR
RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONERS MOTION
FOR RECONSIDERATION, THE HONORABLE COURT OF
APPEALS DENIED PETITIONERS RIGHT TO SEEK TIMELY
APPELLATE RELIEF AND VIOLATED PETITIONERS RIGHT
TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING TO
CITE THE PRIVATE RESPONDENTS IN CONTEMPT.[9]
The petitioner faults the appellate court for not dismissing the
petition on the ground of violation of Supreme Court Circular No. 28-91.
Also, the petitioner contends that the appellate court violated Section
Intellectual Property Law
6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it
failed to rule on her motion for reconsideration within ninety (90) days
from the time it is submitted for resolution. The appellate court ruled
only after the lapse of three hundred fifty-four (354) days, or on June 3,
1994. In delaying the resolution thereof, the appellate court denied the
petitioners right to seek the timely appellate relief. Finally, petitioner
describes as arbitrary the denial of her motions for contempt of court
against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil
Procedure, one of the grounds for the issuance of a writ of preliminary
injunction is a proof that the applicant is entitled to the relief demanded,
and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, either for
a limited period or perpetually. Thus, a preliminary injunction order may
be granted only when the application for the issuance of the same
shows facts entitling the applicant to the relief demanded.[10] This is the
reason why we have ruled that it must be shown that the invasion of the
right sought to be protected is material and substantial, that the right of
complainant is clear and unmistakable, and, that there is an urgent and
paramount necessity for the writ to prevent serious damage.[11]
In the case at bar, the petitioner applied for the issuance of a
preliminary injunctive order on the ground that she is entitled to the use
of the trademark on Chin Chun Su and its container based on her
copyright and patent over the same. We first find it appropriate to rule
on whether the copyright and patent over the name and container of a
beauty cream product would entitle the registrant to the use and
ownership over the same to the exclusion of others.
Trademark, copyright and patents are different intellectual
property rights that cannot be interchanged with one another. A
trademark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include
a stamped or marked container of goods.[12] In relation thereto, a trade
name means the name or designation identifying or distinguishing an
enterprise.[13] Meanwhile, the scope of a copyright is confined to literary
and artistic works which are original intellectual creations in the literary
and artistic domain protected from the moment of their
creation.[14]Patentable inventions, on the other hand, refer to any
technical solution of a problem in any field of human activity which is
new, involves an inventive step and is industrially applicable.[15]
Petitioner has no right to support her claim for the exclusive use
of the subject trade name and its container. The name and container of
a beauty cream product are proper subjects of a trademark inasmuch as
the same falls squarely within its definition. In order to be entitled to
exclusively use the same in the sale of the beauty cream product, the
user must sufficiently prove that she registered or used it before
anybody else did. The petitioners copyright and patent registration of
the name and container would not guarantee her the right to the
exclusive use of the same for the reason that they are not appropriate
subjects of the said intellectual rights. Consequently, a preliminary
injunction order cannot be issued for the 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.
Page 2 of 46
We cannot likewise overlook the decision of the trial court in the
case for final injunction and damages. The dispositive portion of said
decision held that the petitioner does not have trademark rights on the
name and container of the beauty cream product. The said decision on
the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that
the same has been appealed in the Court of Appeals. This is supported
by our ruling in La Vista Association, Inc. v. Court of Appeals[16], to wit:
Considering that preliminary injunction is a provisional remedy which
may be granted at any time after the commencement of the action and
before judgment when it is established that the plaintiff is entitled to the
relief demanded and only when his complaint shows facts entitling such
reliefs xxx and it appearing that the trial court had already granted the
issuance of a final injunction in favor of petitioner in its decision rendered
after trial on the merits xxx the Court resolved to Dismiss the instant
petition having been rendered moot and academic. An injunction issued
by the trial court after it has already made a clear pronouncement as to
the plaintiffs right thereto, that is, after the same issue has been decided
on the merits, the trial court having appreciated the evidence presented,
is proper, notwithstanding the fact that the decision rendered is not yet
final xxx. Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the
decision rendered on the merit of the main case for injunction. The
merit of the main case having been already determined in favor of the
applicant, the preliminary determination of its non-existence ceases to
have any force and effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction
renders any question on the preliminary injunctive order moot and
academic despite the fact that the decision granting a final injunction is
pending appeal. Conversely, a decision denying the applicant-plaintiffs
right to a final injunction, although appealed, renders moot and
academic any objection to the prior dissolution of a writ of preliminary
injunction.
The petitioner argues that the appellate court erred in not
dismissing the petition for certiorari for non-compliance with the rule
on forum shopping. We disagree. First, the petitioner improperly raised
the technical objection of non-compliance with Supreme Court Circular
No. 28-91 by filing a motion to dismiss the petition for certiorari filed in
the appellate court. This is prohibited by Section 6, Rule 66 of the
Revised Rules of Civil Procedure which provides that (I)n petitions
for certiorari before the Supreme Court and the Court of Appeals, the
provisions of Section 2, Rule 56, shall be observed. Before giving due
course thereto, the court may require the respondents to file their
comment to, and not a motion to dismiss, the petition xxx (italics
supplied). Secondly, the issue was raised one month after petitioner had
filed her answer/comment and after private respondent had replied
thereto. Under Section 1, Rule 16 of the Revised Rules of Civil Procedure,
a motion to dismiss shall be filed within the time for but before filing the
answer to the complaint or pleading asserting a claim. She therefore
could no longer submit a motion to dismiss nor raise defenses and
objections not included in the answer/comment she had earlier
tendered. Thirdly, substantial justice and equity require this Court not
to revive a dissolved writ of injunction in favor of a party without any
legal right thereto merely on a technical infirmity. The granting of an
The Law on Copyright
injunctive writ based on a technical ground rather than compliance with
the requisites for the issuance of the same is contrary to the primary
objective of legal procedure which is to serve as a means to dispense
justice to the deserving party.
The petitioner likewise contends that the appellate court unduly
delayed the resolution of her motion for reconsideration. But we find
that petitioner contributed to this delay when she filed successive
contentious motions in the same proceeding, the last of which was on
October 27, 1993, necessitating counter-manifestations from private
respondents with the last one being filed on November 9, 1993.
Nonetheless, it is well-settled that non-observance of the period for
deciding cases or their incidents does not render such judgments
ineffective or void.[17] With respect to the purported damages she
suffered due to the alleged delay in resolving her motion for
reconsideration, we find that the said issue has likewise been rendered
moot and academic by our ruling that she has no right over the
trademark and, consequently, to the issuance of a writ of preliminary
injunction.
Finally, we rule that the Court of Appeals correctly denied the
petitioners several motions for contempt of court. There is nothing
contemptuous about the advertisements complained of which, as
regards the proceedings in CA-G.R. SP No. 27803 merely announced in
plain and straightforward language the promulgation of the assailed
Decision of the appellate court. Moreover, pursuant to Section 4 of Rule
39 of the Revised Rules of Civil Procedure, the said decision nullifying
the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and
Resolution of the Court of Appeals dated May 24, 1993 and June 3, 1994,
respectively, are hereby AFFIRMED. With costs against the petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena,
JJ., concur.
Intellectual Property Law
FIRST DIVISION
[G.R. No. 114508. November 19, 1999]
PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR OF
PATENTS and the BARBIZON CORPORATION, respondents.
DECISION
PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is
a multi-lateral treaty which the Philippines bound itself to honor and
enforce in this country. As to whether or not the treaty affords protection
to a foreign corporation against a Philippine applicant for the registration
of a similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of
petitioner Pribhdas J. Mirpuri, filed an application with the Bureau of
Patents for the registration of the trademark "Barbizon" for use in
brassieres and ladies undergarments. Escobar alleged that she had been
manufacturing and selling these products under the firm name "L & BM
Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized
and doing business under the laws of New York, U.S.A., opposed the
application. It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly similar to the
trademark BARBIZON which opposer owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON
and its business reputation and goodwill will suffer great and irreparable
injury.
That the respondent-applicant's use of the said mark BARBIZON which
resembles the trademark used and owned by opposer, constitutes an
unlawful appropriation of a mark previously used in the Philippines and not
abandoned and therefore a statutory violation of Section 4 (d) of Republic
Act No. 166, as amended."[1]
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After
filing of the pleadings, the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment
dismissing the opposition and giving due course to Escobar's application,
thus:
"WHEREFORE, the opposition should be, as it is hereby,
DISMISSED. Accordingly, Application Serial No. 19010 for the registration
of the trademark BARBIZON, of respondent Lolita R. Escobar, is given due
course.
IT IS SO ORDERED."[2]
Page 3 of 46
This decision became final and on September 11, 1974, Lolita
Escobar was issued a certificate of registration for the trademark
"Barbizon." The trademark was "for use in "brassieres and lady's
underwear garments like panties."[3]
Escobar later assigned all her rights and interest over the trademark
to petitioner Pribhdas J. Mirpuri who, under his firm name then, the
"Bonito Enterprises," was the sole and exclusive distributor of Escobar's
"Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents
the Affidavit of Use of the trademark required under Section 12 of Republic
Act (R.A.) No. 166, the Philippine Trademark Law. Due to this failure, the
Bureau of Patents cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled
trademark. Mirpuri filed his own application for registration of Escobar's
trademark. Escobar later assigned her application to herein petitioner and
this application was opposed by private respondent. The case was
docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word), sometime
in June 1933 and has then used it on various kinds of wearing apparel. On
August 14, 1934, Opposer obtained from the United States Patent Office a
more recent registration of the said mark under Certificate of Registration
No. 316,161.On March 1, 1949, Opposer obtained from the United States
Patent Office a more recent registration for the said trademark under
Certificate of Registration No. 507,214, a copy of which is herewith
attached as Annex `A.' Said Certificate of Registration covers the following
goods-- wearing apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark
BARBIZON and Bee design and used the said mark in various kinds of
wearing apparel. On March 15, 1977, Opposer secured from the United
States Patent Office a registration of the said mark under Certificate of
Registration No. 1,061,277, a copy of which is herein enclosed as Annex `B.'
The said Certificate of Registration covers the following goods: robes,
pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark
BARBIZON and a Representation of a Woman and thereafter used the said
trademark on various kinds of wearing apparel. Opposer obtained from the
United States Patent Office registration of the said mark on April 5, 1983
under Certificate of Registration No. 1,233,666 for the following
goods: wearing apparel: robes, pajamas, nightgowns and lingerie. A copy
of the said certificate of registration is herewith enclosed as Annex `C.'
(d) All the above registrations are subsisting and in force and Opposer has
not abandoned the use of the said trademarks. In fact, Opposer, through a
wholly-owned Philippine subsidiary, the Philippine Lingerie Corporation,
has been manufacturing the goods covered by said registrations and selling
them to various countries, thereby earning valuable foreign exchange for
the country. As a result of respondent-applicant's misappropriation of
Opposer's BARBIZON trademark, Philippine Lingerie Corporation is
prevented from selling its goods in the local market, to the damage and
prejudice of Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been used
in many countries, including the Philippines, for at least 40 years and has
enjoyed international reputation and good will for their quality. To protect
its registrations in countries where the goods covered by the registrations
The Law on Copyright
are being sold, Opposer has procured the registration of the trademark
BARBIZON in the following countries: Australia, Austria, Abu Dhabi,
Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia, Denmark,
Ecuador, France, West Germany, Greece, Guatemala, Hongkong,
Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New
Zealand, Norway, Sweden, Switzerland, Syria, El Salvador, South Africa,
Zambia, Egypt, and Iran, among others;
(f) To enhance its international reputation for quality goods and to further
promote goodwill over its name, marks and products, Opposer has
extensively advertised its products, trademarks and name in various
publications which are circulated in the United States and many countries
around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines
by one Lolita R. Escobar under Registration No. 21920, issued on
September 11, 1974, in violation of Article 189 (3) of the Revised Penal
Code and Section 4 (d) of the Trademark Law. Herein respondent applicant
acquired by assignment the `rights' to the said mark previously registered
by Lolita Escobar, hence respondent-applicant's title is vitiated by the same
fraud and criminal act. Besides, Certificate of Registration No. 21920 has
been cancelled for failure of either Lolita Escobar or herein respondent-
applicant, to seasonably file the statutory affidavit of use. By applying for a
re-registration of the mark BARBIZON subject of this opposition,
respondent-applicant seeks to perpetuate the fraud and criminal act
committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and
BARBIZON and Representation of a Woman trademarks qualify as well-
known trademarks entitled to protection under Article 6bis of the
Convention of Paris for the Protection of Industrial Property and further
amplified by the Memorandum of the Minister of Trade to the Honorable
Director of Patents dated October 25, 1983 [sic],[4] Executive Order No. 913
dated October 7, 1963 and the Memorandum of the Minister of Trade and
Industry to the Honorable Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to
Opposer's BARBIZON trademark and constitutes the dominant part of
Opposer's two other marks namely, BARBIZON and Bee design and
BARBIZON and a Representation of a Woman. The continued use by
respondent-applicant of Opposer's trademark BARBIZON on goods
belonging to Class 25 constitutes a clear case of commercial and criminal
piracy and if allowed registration will violate not only the Trademark Law
but also Article 189 of the Revised Penal Code and the commitment of the
Philippines to an international treaty."[5]
Replying to private respondent's opposition, petitioner raised the
defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the
business name "Barbizon International." Petitioner registered the name
with the Department of Trade and Industry (DTI) for which a certificate of
registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs
of the DTI a petition for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled
petitioner's certificate of registration, and declared private respondent the
owner and prior user of the business name "Barbizon International." Thus:
"WHEREFORE, the petition is hereby GRANTED and petitioner is declared
the owner and prior user of the business name "BARBIZON
Intellectual Property Law
INTERNATIONAL" under Certificate of Registration No. 87-09000 dated
March 10, 1987 and issued in the name of respondent, is [sic] hereby
ordered revoked and cancelled.x x x."[6]
Meanwhile, in IPC No. 2049, the evidence of both parties were
received by the Director of Patents. On June 18, 1992, the Director
rendered a decision declaring private respondent's opposition barred
by res judicata and giving due course to petitioner's application for
registration, to wit:
"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is
hereby DECLARED BARRED by res judicata and is hereby
DISMISSED. Accordingly, Application Serial No. 45011 for trademark
BARBIZON filed by Pribhdas J. Mirpuri is GIVEN DUE COURSE.
SO ORDERED."[7]
Private respondent questioned this decision before the Court of
Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of Appeals
reversed the Director of Patents finding that IPC No. 686 was not barred by
judgment in IPC No. 2049 and ordered that the case be remanded to the
Bureau of Patents for further proceedings, viz:
"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the
Director of Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and
the case is hereby remanded to the Bureau of Patents for further
proceedings, in accordance with this pronouncement. No costs."[8]
In a Resolution dated March 16, 1994, the Court of Appeals denied
reconsideration of its decision.[9] Hence, this recourse.
Before us, petitioner raises the following issues:
"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN
INTER PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C
HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE
DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE
PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT
BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR
REGISTRATION FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE
RIPENED TO CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16,
1992;
3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE MERITS'
REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO ADDUCE
EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE PARTIES TO A
CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT
PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN
THE MEANING OF 'JUDGMENT ON THE MERITS' AS ONE OF THE REQUISITES
TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME 'BARBIZON INTERNATIONAL' AND
WHICH DECISION IS STILL PENDING RECONSIDERATION NEVER OFFERED IN
EVIDENCE BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO.
2049 HAS THE RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS
OF THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF
DOMESTIC TRADE) BUT ON THE BASIS OF THE PARIS CONVENTION AND
THE TRADEMARK LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND
EXCLUSIVE JURISDICTION OF THE DIRECTOR OF PATENTS."[10]
Before ruling on the issues of the case, there is need for a brief
background on the function and historical development of trademarks and
trademark law.
Page 4 of 46
A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant to
identify his goods and distinguish them from those manufactured, sold or
dealt in by others."[11] This definition has been simplified in R.A. No. 8293,
the Intellectual Property Code of the Philippines, which defines a
"trademark" as "any visible sign capable of distinguishing goods."[12] In
Philippine jurisprudence, the function of a trademark is to point out
distinctly the origin or ownership of the goods to which it is affixed; to
secure to him, who has been instrumental in bringing into the market a
superior article of merchandise, the fruit of his industry and skill; to assure
the public that they are procuring the genuine article; to prevent fraud and
imposition; and to protect the manufacturer against substitution and sale
of an inferior and different article as his product.[13]
Modern authorities on trademark law view trademarks as
performing three distinct functions: (1) they indicate origin or ownership
of the articles to which they are attached; (2) they guarantee that those
articles come up to a certain standard of quality; and (3) they advertise the
articles they symbolize.[14]
Symbols have been used to identify the ownership or origin of
articles for several centuries.[15] As early as 5,000 B.C., markings on pottery
have been found by archaeologists. Cave drawings in southwestern Europe
show bison with symbols on their flanks.[16] Archaeological discoveries of
ancient Greek and Roman inscriptions on sculptural works, paintings,
vases, precious stones, glassworks, bricks, etc. reveal some features which
are thought to be marks or symbols. These marks were affixed by the
creator or maker of the article, or by public authorities as indicators for the
payment of tax, for disclosing state monopoly, or devices for the
settlement of accounts between an entrepreneur and his workmen.[17]
In the Middle Ages, the use of many kinds of marks on a variety of
goods was commonplace. Fifteenth century England saw the compulsory
use of identifying marks in certain trades. There were the baker's mark on
bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks on
paper, etc.[18] Every guild had its own mark and every master belonging to
it had a special mark of his own. The marks were not trademarks but police
marks compulsorily imposed by the sovereign to let the public know that
the goods were not "foreign" goods smuggled into an area where the guild
had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan.[19] For a similar reason, merchants also used
merchants' marks. Merchants dealt in goods acquired from many sources
and the marks enabled them to identify and reclaim their goods upon
recovery after shipwreck or piracy.[20]
With constant use, the mark acquired popularity and became
voluntarily adopted. It was not intended to create or continue monopoly
but to give the customer an index or guarantee of quality.[21] It was in the
late 18th century when the industrial revolution gave rise to mass
production and distribution of consumer goods that the mark became an
important instrumentality of trade and commerce.[22] By this time,
trademarks did not merely identify the goods; they also indicated the
goods to be of satisfactory quality, and thereby stimulated further
purchases by the consuming public.[23] Eventually, they came to symbolize
the goodwill and business reputation of the owner of the product and
became a property right protected by law.[24] The common law developed
the doctrine of trademarks and tradenames "to prevent a person from
The Law on Copyright
palming off his goods as another's, from getting another's business or
injuring his reputation by unfair means, and, from defrauding the
public."[25] Subsequently, England and the United States enacted national
legislation on trademarks as part of the law regulating unfair trade.[26] It
became the right of the trademark owner to exclude others from the use
of his mark, or of a confusingly similar mark where confusion resulted in
diversion of trade or financial injury. At the same time, the trademark
served as a warning against the imitation or faking of products to prevent
the imposition of fraud upon the public.[27]
Today, the trademark is not merely a symbol of origin and goodwill;
it is often the most effective agent for the actual creation and protection
of goodwill. It imprints upon the public mind an anonymous and
impersonal guaranty of satisfaction, creating a desire for further
satisfaction. In other words, the mark actually sells the goods.[28] The mark
has become the "silent salesman," the conduit through which direct
contact between the trademark owner and the consumer is assured. It has
invaded popular culture in ways never anticipated that it has become a
more convincing selling point than even the quality of the article to which
it refers.[29] In the last half century, the unparalleled growth of industry and
the rapid development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to
penetrate regions where the owner does not actually manufacture or sell
the product itself. Goodwill is no longer confined to the territory of actual
market penetration; it extends to zones where the marked article has been
fixed in the public mind through advertising.[30] Whether in the print,
broadcast or electronic communications medium, particularly on the
Internet,[31] advertising has paved the way for growth and expansion of the
product by creating and earning a reputation that crosses over borders,
virtually turning the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner
brings this action claiming that "Barbizon" products have been sold in the
Philippines since 1970. Petitioner developed this market by working long
hours and spending considerable sums of money on advertisements and
promotion of the trademark and its products. Now, almost thirty years
later, private respondent, a foreign corporation, "swaggers into the
country like a conquering hero," usurps the trademark and invades
petitioner's market.[32] Justice and fairness dictate that private respondent
be prevented from appropriating what is not its own.Legally, at the same
time, private respondent is barred from questioning petitioner's ownership
of the trademark because of res judicata.[33]
Literally, res judicata means a matter adjudged, a thing judicially
acted upon or decided; a thing or matter settled by
judgment.[34] In res judicata, the judgment in the first action is considered
conclusive as to every matter offered and received therein, as to any other
admissible matter which might have been offered for that purpose, and all
other matters that could have been adjudged therein.[35] Res judicata is an
absolute bar to a subsequent action for the same cause; and its requisites
are: (a) the former judgment or order must be final; (b) the judgment or
order must be one on the merits; (c) it must have been rendered by a court
having jurisdiction over the subject matter and parties; (d) there must be
between the first and second actions, identity of parties, of subject matter
and of causes of action.[36]
The Solicitor General, on behalf of respondent Director of Patents,
has joined cause with petitioner. Both claim that all the four elements
Intellectual Property Law
of res judicata have been complied with: that the judgment in IPC No. 686
was final and was rendered by the Director of Patents who had jurisdiction
over the subject matter and parties; that the judgment in IPC No. 686 was
on the merits; and that the lack of a hearing was immaterial because
substantial issues were raised by the parties and passed upon by the
Director of Patents.[37]
The decision in IPC No. 686 reads as follows:
"x x x.
Neither party took testimony nor adduced documentary evidence. They
submitted the case for decision based on the pleadings which, together
with the pertinent records, have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein
opposer would probably be damaged by the registration of the trademark
BARBIZON sought by the respondent-applicant on the ground that it so
resembles the trademark BARBIZON allegedly used and owned by the
former to be `likely to cause confusion, mistake or to deceive purchasers.'
On record, there can be no doubt that respondent-applicant's sought-to-
be-registered trademark BARBIZON is similar, in fact obviously identical, to
opposer's alleged trademark BARBIZON, in spelling and pronunciation. The
only appreciable but very negligible difference lies in their respective
appearances or manner of presentation. Respondent-applicant's
trademark is in bold letters (set against a black background), while that of
the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in
trade or commerce in the Philippines prior to the date of application for
the registration of the identical mark BARBIZON by the respondent-
applicant. However, the allegation of facts in opposer's verified notice of
opposition is devoid of such material information. In fact, a reading of the
text of said verified opposition reveals an apparent, if not deliberate,
omission of the date (or year) when opposer's alleged trademark
BARBIZON was first used in trade in the Philippines (see par. No. 1, p. 2,
Verified Notice of Opposition, Rec.). Thus, it cannot here and now be
ascertained whether opposer's alleged use of the trademark BARBIZON
could be prior to the use of the identical mark by the herein respondent-
applicant, since the opposer attempted neither to substantiate its claim of
use in local commerce with any proof or evidence. Instead, the opposer
submitted the case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended
application for registration that she first used the trademark BARBIZON for
brassiere (or 'brasseire') and ladies underwear garments and panties as
early as March 3, 1970. Be that as it may, there being no testimony taken
as to said date of first use, respondent-applicant will be limited to the filing
date, June 15, 1970, of her application as the date of first use (Rule 173,
Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case
of probable damage by the registration of the respondent-applicant's mark
BARBIZON.
WHEREFORE, the opposition should be, as it is hereby,
DISMISSED. Accordingly, Application Serial No. 19010, for the registration
of the trademark BARBIZON of respondent Lolita R. Escobar, is given due
course."[38]
The decision in IPC No. 686 was a judgment on the merits and it was
error for the Court of Appeals to rule that it was not. A judgment is on the
merits when it determines the rights and liabilities of the parties based on
Page 5 of 46
the disclosed facts, irrespective of formal, technical or dilatory
objections.[39] It is not necessary that a trial should have been conducted. If
the court's judgment is general, and not based on any technical defect or
objection, and the parties had a full legal opportunity to be heard on their
respective claims and contentions, it is on the merits although there was
no actual hearing or arguments on the facts of the case.[40] In the case at
bar, the Director of Patents did not dismiss private respondent's opposition
on a sheer technicality. Although no hearing was conducted, both parties
filed their respective pleadings and were given opportunity to present
evidence. They, however, waived their right to do so and submitted the
case for decision based on their pleadings. The lack of evidence did not
deter the Director of Patents from ruling on the case, particularly on the
issue of prior use, which goes into the very substance of the relief sought
by the parties. Since private respondent failed to prove prior use of its
trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the
Solicitor General allege that IPC No. 686 and IPC No. 2049 also comply with
the fourth requisite of res judicata, i.e., they involve the same parties and
the same subject matter, and have identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same
parties and the same subject matter. Petitioner herein is the assignee of
Escobar while private respondent is the same American corporation in the
first case. The subject matter of both cases is the trademark "Barbizon."
Private respondent counter-argues, however, that the two cases do not
have identical causes of action. New causes of action were allegedly
introduced in IPC No. 2049, such as the prior use and registration of the
trademark in the United States and other countries worldwide, prior use in
the Philippines, and the fraudulent registration of the mark in violation of
Article 189 of the Revised Penal Code. Private respondent also cited
protection of the trademark under the Convention of Paris for the
Protection of Industrial Property, specifically Article 6bis thereof, and the
implementation of Article 6bis by two Memoranda dated November 20,
1980 and October 25, 1983 of the Minister of Trade and Industry to the
Director of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property,
otherwise known as the Paris Convention, is a multilateral treaty that seeks
to protect industrial property consisting of patents, utility models,
industrial designs, trademarks, service marks, trade names and indications
of source or appellations of origin, and at the same time aims to repress
unfair competition.[41] The Convention is essentially a compact among
various countries which, as members of the Union, have pledged to accord
to citizens of the other member countries trademark and other
rights comparable to those accorded their own citizens by their domestic
laws for an effective protection against unfair competition.[42] In short,
foreign nationals are to be given the same treatment in each of the
member countries as that country makes available to its own
citizens.[43] Nationals of the various member nations are thus assured of a
certain minimum of international protection of their industrial property.[44]
The Convention was first signed by eleven countries in Paris on
March 20, 1883.[45] It underwent several revisions-- at Brussels in 1900, at
Washington in 1911, at The Hague in 1925, at London in 1934, at Lisbon in
1958,[46] and at Stockholm in 1967. Both the Philippines and the United
States of America, herein private respondent's country, are signatories to
the Convention. The United States acceded on May 30, 1887 while the
The Law on Copyright
Philippines, through its Senate, concurred on May 10, 1965.[47] The
Philippines' adhesion became effective on September 27, 1965,[48] and
from this date, the country obligated itself to honor and enforce the
provisions of the Convention.[49]
In the case at bar, private respondent anchors its cause of action on
the first paragraph of Article 6bis of the Paris Convention which reads as
follows:
"Article 6bis
(1) The countries of the Union undertake, either administratively if their
legislation so permits, or at the request of an interested party, to refuse
or to cancel the registration and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mark considered by the competent authority of the
country of registration or use to be well-known in that country as being
already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods. These provisions shall also apply
when the essential part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create confusion
therewith.
(2) A period of at least five years from the date of registration shall be
allowed for seeking the cancellation of such a mark. The countries of the
Union may provide for a period within which the prohibition of use must
be sought.
(3) No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks registered or used in bad faith."[50]
This Article governs protection of well-known trademarks. Under
the first paragraph, each country of the Union bound itself to undertake to
refuse or cancel the registration, and prohibit the use of a trademark which
is a reproduction, imitation or translation, or any essential part of which
trademark constitutes a reproduction, liable to create confusion, of a mark
considered by the competent authority of the country where protection is
sought, to be well-known in the country as being already the mark of a
person entitled to the benefits of the Convention, and used for identical or
similar goods.
Article 6bis was first introduced at The Hague in 1925 and amended
in Lisbon in 1952.[51] It is a self-executing provision and does not require
legislative enactment to give it effect in the member country.[52] It may be
applied directly by the tribunals and officials of each member country by
the mere publication or proclamation of the Convention, after its
ratification according to the public law of each state and the order for its
execution.[53]
The essential requirement under Article 6bis is that the trademark
to be protected must be "well-known" in the country where protection is
sought. The power to determine whether a trademark is well-known lies in
the "competent authority of the country of registration or use." This
competent authority would be either the registering authority if it has the
power to decide this, or the courts of the country in question if the issue
comes before a court.[54]
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis
Villafuerte of the Ministry of Trade issued a Memorandum to the Director
of Patents. The Minister ordered the Director that:
"Pursuant to the Paris Convention for the Protection of Industrial Property
to which the Philippines is a signatory, you are hereby directed to reject all
pending applications for Philippine registration of signature and other
Intellectual Property Law
world-famous trademarks by applicants other than its original owners or
users.
The conflicting claims over internationally known trademarks involve such
name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin,
Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph
Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants
of such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
You are also required to submit to the undersigned a progress report on
the matter.
For immediate compliance."[55]
Three years later, on October 25, 1983, then Minister Roberto
Ongpin issued another Memorandum to the Director of Patents, viz:
"Pursuant to Executive Order No. 913 dated 7 October 1983 which
strengthens the rule-making and adjudicatory powers of the Minister of
Trade and Industry and provides inter alia, that `such rule-making and
adjudicatory powers should be revitalized in order that the Minister of
Trade and Industry can x x x apply more swift and effective solutions and
remedies to old and new problems x x x such as infringement of
internationally-known tradenames and trademarks x x x' and in view of the
decision of the Intermediate Appellate Court in the case of LA CHEMISE
LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. SP NO. 13359 (17) June
1983][56] which affirms the validity of the MEMORANDUM of then Minister
Luis R. Villafuerte dated 20 November 1980 confirming our obligations
under the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY to which the Republic of the Philippines is a signatory, you are
hereby directed to implement measures necessary to effect compliance
with our obligations under said Convention in general, and, more
specifically, to honor our commitment under Section 6bis[57] thereof, as
follows:
1. Whether the trademark under consideration is well-known in the
Philippines or is a mark already belonging to a person entitled to the
benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex parte cases,
according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark
being considered is already well-known in the Philippines such that
permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by
proof that goods bearing the trademark are sold on an international scale,
advertisements, the establishment of factories, sales offices,
distributorships, and the like, in different countries, including volume or
other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s)
of another country or countries, taking into consideration the date of such
registration;
(d) that the trademark has long been established and obtained goodwill
and international consumer recognition as belonging to one owner or
source;
Page 6 of 46
(e) that the trademark actually belongs to a party claiming ownership and
has the right to registration under the provisions of the aforestated PARIS
CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include
tradenames, service marks, logos, signs, emblems, insignia or other similar
devices used for identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or
imitation of a trademark owned by a person, natural or corporate, who is
a citizen of a country signatory to the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in
cases already or hereafter filed against the registration of trademarks
entitled to protection of Section 6 bis of said PARIS CONVENTION as
outlined above, by remanding applications filed by one not entitled to such
protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other
world-famous trademarks filed by applicants other than their original
owners or users shall be rejected forthwith. Where such applicants have
already obtained registration contrary to the abovementioned PARIS
CONVENTION and/or Philippine Law, they shall be directed to surrender
their Certificates of Registration to the Philippine Patent Office for
immediate cancellation proceedings.
x x x."[58]
In the Villafuerte Memorandum, the Minister of Trade instructed
the Director of Patents to reject all pending applications for Philippine
registration of signature and other world-famous trademarks by applicants
other than their original owners or users. The Minister enumerated several
internationally-known trademarks and ordered the Director of Patents to
require Philippine registrants of such marks to surrender their certificates
of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did
not enumerate well-known trademarks but laid down guidelines for the
Director of Patents to observe in determining whether a trademark is
entitled to protection as a well-known mark in the Philippines under Article
6bis of the Paris Convention. This was to be established through Philippine
Patent Office procedures in inter partes and ex parte cases pursuant to the
criteria enumerated therein. The Philippine Patent Office was ordered to
refuse applications for, or cancel the registration of, trademarks which
constitute a reproduction, translation or imitation of a trademark owned
by a person who is a citizen of a member of the Union. All pending
applications for registration of world-famous trademarks by persons other
than their original owners were to be rejected forthwith. The Ongpin
Memorandum was issued pursuant to Executive Order No. 913 dated
October 7, 1983 of then President Marcos which strengthened the rule-
making and adjudicatory powers of the Minister of Trade and Industry for
the effective protection of consumers and the application of swift solutions
to problems in trade and industry.[59]
Both the Villafuerte and Ongpin Memoranda were sustained by the
Supreme Court in the 1984 landmark case of La Chemise Lacoste, S.A. v.
Fernandez.[60] This court ruled therein that under the provisions of Article
6bis of the Paris Convention, the Minister of Trade and Industry was the
"competent authority" to determine whether a trademark is well-known
in this country.[61]
The Law on Copyright
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15)
years after the adoption of the Paris Convention in 1965. In the case at bar,
the first inter partes case, IPC No. 686, was filed in 1970, before the
Villafuerte Memorandum but five (5) years after the effectivity of the Paris
Convention. Article 6bis was already in effect five years before the first
case was instituted. Private respondent, however, did not cite the
protection of Article 6bis, neither did it mention the Paris Convention at
all. It was only in 1981 when IPC No. 2049 was instituted that the Paris
Convention and the Villafuerte Memorandum, and, during the pendency
of the case, the 1983 Ongpin Memorandum were invoked by private
respondent.
The Solicitor General argues that the issue of whether the
protection of Article 6bis of the Convention and the two Memoranda is
barred by res judicata has already been answered in Wolverine Worldwide,
Inc. v. Court of Appeals.[62] In this case, petitioner Wolverine, a foreign
corporation, filed with the Philippine Patent Office a petition for
cancellation of the registration certificate of private respondent, a Filipino
citizen, for the trademark "Hush Puppies" and "Dog Device." Petitioner
alleged that it was the registrant of the internationally-known trademark
in the United States and other countries, and cited protection under the
Paris Convention and the Ongpin Memorandum. The petition was
dismissed by the Patent Office on the ground of res judicata. It was found
that in 1973 petitioner's predecessor-in-interest filed two petitions for
cancellation of the same trademark against respondent's predecessor-in-
interest.The Patent Office dismissed the petitions, ordered the cancellation
of registration of petitioner's trademark, and gave due course to
respondent's application for registration. This decision was sustained by
the Court of Appeals, which decision was not elevated to us and became
final and executory.[63]
Wolverine claimed that while its previous petitions were filed under
R.A. No. 166, the Trademark Law, its subsequent petition was based on a
new cause of action, i.e., the Ongpin Memorandum and E.O. No. 913 issued
in 1983, after finality of the previous decision. We held that the said
Memorandum and E.O. did not grant a new cause of action because it did
"not amend the Trademark Law," x x x "nor did it indicate a new policy with
respect to the registration in the Philippines of world-famous
trademarks."[64] This conclusion was based on the finding that Wolverine's
two previous petitions and subsequent petition dealt with the same issue
of ownership of the trademark.[65] In other words, since the first and
second cases involved the same issue of ownership, then the first case was
a bar to the second case.
In the instant case, the issue of ownership of the trademark
"Barbizon" was not raised in IPC No. 686. Private respondent's opposition
therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage
to private respondent's business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful
appropriation of a mark previously used in the Philippines which act is
penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several
issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its
products such as robes, pajamas, lingerie, nightgowns and slips;
Intellectual Property Law
(b) that the trademark "BARBIZON" was registered with the United States
Patent Office in 1934 and 1949; and that variations of the same trademark,
i.e., "BARBIZON" with Bee design and "BARBIZON" with the representation
of a woman were also registered with the U.S. Patent Office in 1961 and
1976;
(c) that these marks have been in use in the Philippines and in many
countries all over the world for over forty years. "Barbizon" products have
been advertised in international publications and the marks registered in
36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was
based on fraud; and this fraudulent registration was cancelled in 1979,
stripping Escobar of whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-
known mark under Article 6bis of the Paris Convention, Executive Order
No. 913, and the two Memoranda dated November 20, 1980 and October
25, 1983 of the Minister of Trade and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on
the same class of goods as the latter's amounts to a violation of the
Trademark Law and Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first
registration and use of the trademark in the United States and other
countries, and the international recognition and reputation of the
trademark established by extensive use and advertisement of private
respondent's products for over forty years here and abroad. These are
different from the issues of confusing similarity and damage in IPC No.
686. The issue of prior use may have been raised in IPC No. 686 but this
claim was limited to prior use in the Philippines only. Prior use in IPC No.
2049 stems from private respondent's claim as originator of the word and
symbol "Barbizon,"[66] as the first and registered user of the mark attached
to its products which have been sold and advertised worldwide for a
considerable number of years prior to petitioner's first application for
registration of her trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and necessarily gave private
respondent a new cause of action. Res judicata does not apply to rights,
claims or demands, although growing out of the same subject matter,
which constitute separate or distinct causes of action and were not put in
issue in the former action.[67]
Respondent corporation also introduced in the second case a fact
that did not exist at the time the first case was filed and terminated. The
cancellation of petitioner's certificate of registration for failure to file the
affidavit of use arose only after IPC No. 686. It did not and could not have
occurred in the first case, and this gave respondent another cause to
oppose the second application. Res judicata extends only to facts and
conditions as they existed at the time judgment was rendered and to the
legal rights and relations of the parties fixed by the facts so
determined.[68] When new facts or conditions intervene before the second
suit, furnishing a new basis for the claims and defenses of the parties, the
issues are no longer the same, and the former judgment cannot be pleaded
as a bar to the subsequent action.[69]
It is also noted that the oppositions in the first and second cases are
based on different laws. The opposition in IPC No. 686 was based on
specific provisions of the Trademark Law, i.e., Section 4 (d)[70] on confusing
similarity of trademarks and Section 8[71] on the requisite damage to file an
opposition to a petition for registration. The opposition in IPC No. 2049
Page 7 of 46
The Law on Copyright
invoked the Paris Convention, particularly Article 6bis thereof, E.O. No. 913 Circuits, and the Paris Convention (1967), as revised in Stockholm on July
and the two Memoranda of the Minister of Trade and Industry. This 14, 1967.[88]
opposition also invoked Article 189 of the Revised Penal Code which is a A major proportion of international trade depends on the
statute totally different from the Trademark Law.[72] Causes of action which protection of intellectual property rights.[89] Since the late 1970's, the
are distinct and independent from each other, although arising out of the unauthorized counterfeiting of industrial property and trademarked
same contract, transaction, or state of facts, may be sued on separately, products has had a considerable adverse impact on domestic and
recovery on one being no bar to subsequent actions on others.[73] The mere international trade revenues.[90] The TRIPs Agreement seeks to grant
fact that the same relief is sought in the subsequent action will not render adequate protection of intellectual property rights by creating a favorable
the judgment in the prior action operative as res judicata, such as where economic environment to encourage the inflow of foreign investments,
the two actions are based on different statutes.[74] Res judicata therefore and strengthening the multi-lateral trading system to bring about
does not apply to the instant case and respondent Court of Appeals did not economic, cultural and technological independence.[91] The Philippines and
err in so ruling. the United States of America have acceded to the WTO Agreement. This
Intellectual and industrial property rights cases are not simple Agreement has revolutionized international business and economic
property cases. Trademarks deal with the psychological function of relations among states, and has propelled the world towards trade
symbols and the effect of these symbols on the public at liberalization and economic globalization.[92] Protectionism and
large.[75] Trademarks play a significant role in communication, commerce isolationism belong to the past. Trade is no longer confined to a bilateral
and trade, and serve valuable and interrelated business functions, both system. There is now "a new era of global economic cooperation, reflecting
nationally and internationally. For this reason, all agreements concerning the widespread desire to operate in a fairer and more open multilateral
industrial property, like those on trademarks and tradenames, are trading system."[93] Conformably, the State must reaffirm its commitment
intimately connected with economic development.[76] Industrial property to the global community and take part in evolving a new international
encourages investments in new ideas and inventions and stimulates economic order at the dawn of the new millenium.
creative efforts for the satisfaction of human needs. They speed up IN VIEW WHEREOF, the petition is denied and the Decision and
transfer of technology and industrialization, and thereby bring about social Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are affirmed.
and economic progress.[77] These advantages have been acknowledged by SO ORDERED.
the Philippine government itself. The Intellectual Property Code of the Davide, Jr., C.J., (Chairman), Kapunan, Pardo, and Ynares-Santiago,
Philippines declares that "an effective intellectual and industrial property JJ., concur.
system is vital to the development of domestic and creative activity,
facilitates transfer of technology, it attracts foreign investments, and
ensures market access for our products."[78] The Intellectual Property Code
took effect on January 1, 1998 and by its express provision,[79] repealed the
Trademark Law,[80] the Patent Law,[81] Articles 188 and 189 of the Revised
Penal Code, the Decree on Intellectual Property,[82] and the Decree on
Compulsory Reprinting of Foreign Textbooks.[83] The Code was enacted to
strengthen the intellectual and industrial property system in the
Philippines as mandated by the country's accession to the Agreement
Establishing the World Trade Organization (WTO).[84]
The WTO is a common institutional framework for the conduct of
trade relations among its members in matters related to the multilateral
and plurilateral trade agreements annexed to the WTO Agreement.[85] The
WTO framework ensures a "single undertaking approach" to the
administration and operation of all agreements and arrangements
attached to the WTO Agreement. Among those annexed is the Agreement
on Trade-Related Aspects of Intellectual Property Rights or
TRIPs.[86] Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need to
promote effective and adequate protection of intellectual property rights,
and to ensure that measures and procedures to enforce intellectual
property rights do not themselves become barriers to legitimate trade." To
fulfill these objectives, the members have agreed to adhere to minimum
standards of protection set by several Conventions.[87] These Conventions
are: the Berne Convention for the Protection of Literary and Artistic Works
(1971), the Rome Convention or the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting
Organisations, the Treaty on Intellectual Property in Respect of Integrated
Intellectual Property Law
extends to a combination of penicillin such as ampicillin sodium and
beta-lactam antibiotic like sulbactam sodium.
7. Patent No. 21116 thus covers ampicillin sodium/sulbactam sodium
(hereafter Sulbactam Ampicillin). Ampicillin sodium is a specific example
of the broad beta-lactam antibiotic disclosed and claimed in the Patent.
Republic of the Philippines It is the compound which efficacy is being enhanced by co-administering
Supreme Court the same with sulbactam sodium. Sulbactam sodium, on the other
Manila hand, is a specific compound of the formula IA disclosed and claimed in
the Patent.
SECOND DIVISION
8. Pfizer is marketing Sulbactam Ampicillin under the brand name
PHIL PHARMAWEALTH, INC., Unasyn. Pfizer's Unasyn products, which come in oral and IV formulas,
Petitioner, are covered by Certificates of Product Registration (CPR) issued by the
- versus - Bureau of Food and Drugs (BFAD) under the name of complainants. The
PFIZER, INC. and PFIZER (PHIL.) INC., sole and exclusive distributor of Unasyn products in the Philippines is
Respondents. G.R. No. 167715 Zuellig Pharma Corporation, pursuant to a Distribution Services
Agreement it executed with Pfizer Phils. on January 23, 2001.
Present:
9. Sometime in January and February 2003, complainants came to know
CARPIO, J., Chairperson, that respondent [herein petitioner] submitted bids for the supply of
NACHURA, Sulbactam Ampicillin to several hospitals without the consent of
PERALTA, complainants and in violation of the complainants' intellectual property
ABAD, and rights. x x x
MENDOZA, JJ. xxxx
10. Complainants thus wrote the above hospitals and demanded that
Promulgated: the latter immediately cease and desist from accepting bids for the
supply [of] Sulbactam Ampicillin or awarding the same to entities other
November 17, 2010 than complainants. Complainants, in the same letters sent through
x--------------------------------------------------x undersigned counsel, also demanded that respondent immediately
withdraw its bids to supply Sulbactam Ampicillin.
DECISION 11. In gross and evident bad faith, respondent and the hospitals named
in paragraph 9 hereof, willfully ignored complainants' just, plain and
valid demands, refused to comply therewith and continued to infringe
PERALTA, J.: the Patent, all to the damage and prejudice of complainants. As
registered owner of the Patent, Pfizer is entitled to protection under
Section 76 of the IP Code.
Before the Court is a petition for review on certiorari seeking to annul
and set aside the Resolutions dated January 18, 2005[1] and April 11, x x x x[4]
2005[2] by the Court of Appeals (CA) in CA-G.R. SP No. 82734. Respondents prayed for permanent injunction, damages and the
forfeiture and impounding of the alleged infringing products. They also
The instant case arose from a Complaint[3] for patent infringement filed asked for the issuance of a temporary restraining order and a
against petitioner Phil Pharmawealth, Inc. by respondent companies, preliminary injunction that would prevent herein petitioner, its agents,
Pfizer, Inc. and Pfizer (Phil.), Inc., with the Bureau of Legal Affairs of the representatives and assigns, from importing, distributing, selling or
Intellectual Property Office (BLA-IPO). The Complaint alleged as follows: offering the subject product for sale to any entity in the Philippines.
xxxx In an Order[5] dated July 15, 2003 the BLA-IPO issued a preliminary
6. Pfizer is the registered owner of Philippine Letters Patent No. 21116 injunction which was effective for ninety days from petitioner's receipt
(the Patent) which was issued by this Honorable Office on July 16, 1987. of the said Order.
The patent is valid until July 16, 2004. The claims of this Patent are
directed to a method of increasing the effectiveness of a beta-lactam Prior to the expiration of the ninety-day period, respondents filed a
antibiotic in a mammalian subject, which comprises co-administering to Motion for Extension of Writ of Preliminary Injunction[6] which,
said subject a beta-lactam antibiotic effectiveness increasing amount of however, was denied by the BLA-IPO in an Order[7] dated October 15,
a compound of the formula IA. The scope of the claims of the Patent 2003.
Page 8 of 46
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Respondents filed a Motion for Reconsideration but the same was also
denied by the BLA-IPO in a Resolution[8] dated January 23, 2004.
Respondents then filed a special civil action for certiorari with the CA
assailing the October 15, 2003 and January 23, 2004 Resolutions of the
BLA-IPO. Respondents also prayed for the issuance of a preliminary
mandatory injunction for the reinstatement and extension of the writ
of preliminary injunction issued by the BLA-IPO.
While the case was pending before the CA, respondents filed a
Complaint[9] with the Regional Trial Court (RTC) of Makati City for
infringement and unfair competition with damages against herein
petitioner. In said case, respondents prayed for the issuance of a
temporary restraining order and preliminary injunction to prevent
herein petitioner from importing, distributing, selling or offering for sale
sulbactam ampicillin products to any entity in the
Philippines. Respondents asked the trial court that, after trial, judgment
be rendered awarding damages in their favor and making the injunction
permanent.
On August 24, 2004, the RTC of Makati City issued an Order[10] directing
the issuance of a temporary restraining order conditioned upon
respondents' filing of a bond.
In a subsequent Order[11] dated April 6, 2005, the same RTC directed
the issuance of a writ of preliminary injunction prohibiting and
restraining [petitioner], its agents, representatives and assigns from
importing, distributing or selling Sulbactam Ampicillin products to any
entity in the Philippines.
Meanwhile, on November 16, 2004, petitioner filed a Motion to
Dismiss[12] the petition filed with the CA on the ground of forum
shopping, contending that the case filed with the RTC has the same
objective as the petition filed with the CA, which is to obtain an
injunction prohibiting petitioner from importing, distributing and selling
Sulbactam Ampicillin products.
On January 18, 2005, the CA issued its questioned
Resolution[13] approving the bond posted by respondents pursuant to
the Resolution issued by the appellate court on March 23, 2004 which
directed the issuance of a temporary restraining order conditioned
upon the filing of a bond. On even date, the CA issued a temporary
restraining order[14] which prohibited petitioner from importing,
distributing, selling or offering for sale Sulbactam Ampicillin products to
any hospital or to any other entity in the Philippines, or from infringing
Pfizer Inc.'s Philippine Patent No. 21116 and impounding all the sales
invoices and other documents evidencing sales by [petitioner] of
Sulbactam Ampicillin products.
On February 7, 2005, petitioner again filed a Motion to Dismiss[15] the
case for being moot and academic, contending that respondents' patent
had already lapsed. In the same manner, petitioner also moved for the
reconsideration of the temporary restraining order issued by the CA on
Intellectual Property Law
the same basis that the patent right sought to be protected has been
extinguished due to the lapse of the patent license and on the ground
that the CA has no jurisdiction to review the order of the BLA-IPO as said
jurisdiction is vested by law in the Office of the Director General of the
IPO.
On April 11, 2005, the CA rendered its presently assailed Resolution
denying the Motion to Dismiss, dated November 16, 2004, and the
motion for reconsideration, as well as Motion to Dismiss, both dated
February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an action of patent
infringement when the patent allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the decisions of the Director
of Legal Affairs of the Intellectual Property Office?
c) Is there forum shopping when a party files two actions with two
seemingly different causes of action and yet pray for the same
relief?[16]
In the first issue raised, petitioner argues that respondents' exclusive
right to monopolize the subject matter of the patent exists only within
the term of the patent. Petitioner claims that since respondents' patent
expired on July 16, 2004, the latter no longer possess any right of
monopoly and, as such, there is no more basis for the issuance of a
restraining order or injunction against petitioner insofar as the disputed
patent is concerned.
The Court agrees.
Section 37 of Republic Act No. (RA) 165,[17] which was the governing
law at the time of the issuance of respondents' patent, provides:
Section 37. Rights of patentees. A patentee shall have the exclusive
right to make, use and sell the patented machine, article or product, and
to use the patented process for the purpose of industry or commerce,
throughout the territory of the Philippines for the term of the patent;
and such making, using, or selling by any person without the
authorization of the patentee constitutes infringement of the
patent.[18]
It is clear from the above-quoted provision of law that the exclusive right
of a patentee to make, use and sell a patented product, article or
process exists only during the term of the patent. In the instant case,
Philippine Letters Patent No. 21116, which was the basis of respondents
in filing their complaint with the BLA-IPO, was issued on July 16, 1987.
This fact was admitted by respondents themselves in their complaint.
They also admitted that the validity of the said patent is until July 16,
2004, which is in conformity with Section 21 of RA 165, providing that
Page 9 of 46
the term of a patent shall be seventeen (17) years from the date of
issuance thereof. Section 4, Rule 129 of the Rules of Court provides that
an admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof and that the
admission may be contradicted only by showing that it was made
through palpable mistake or that no such admission was made. In the
present case, there is no dispute as to respondents' admission that the
term of their patent expired on July 16, 2004. Neither is there evidence
to show that their admission was made through palpable mistake.
Hence, contrary to the pronouncement of the CA, there is no longer any
need to present evidence on the issue of expiration of respondents'
patent.
On the basis of the foregoing, the Court agrees with petitioner that after
July 16, 2004, respondents no longer possess the exclusive right to
make, use and sell the articles or products covered by Philippine Letters
Patent No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the requirements for
the issuance of a writ of preliminary injunction, viz:
(a) That the applicant is entitled to the relief demanded, and the whole
or part of such relief consists in restraining the commission or
continuance of the acts complained of, or in requiring the performance
of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or
acts complained of during the litigation would probably work injustice
to the applicant; or
(c) That a party, court, or agency or a person is doing, threatening, or
attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment
ineffectual.
In this connection, pertinent portions of Section 5, Rule 58 of the same
Rules provide that if the matter is of extreme urgency and the applicant
will suffer grave injustice and irreparable injury, a temporary restraining
order may be issued ex parte.
From the foregoing, it can be inferred that two requisites must exist to
warrant the issuance of an injunctive relief, namely: (1) the existence of
a clear and unmistakable right that must be protected; and (2) an urgent
and paramount necessity for the writ to prevent serious damage.[19]
In the instant case, it is clear that when the CA issued its January 18,
2005 Resolution approving the bond filed by respondents, the latter no
longer had a right that must be protected, considering that Philippine
Letters Patent No. 21116 which was issued to them already expired
on July 16, 2004. Hence, the issuance by the CA of a temporary
restraining order in favor of the respondents is not proper.
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In fact, the CA should have granted petitioner's motion to dismiss the
petition for certiorari filed before it as the only issue raised therein is
the propriety of extending the writ of preliminary injunction issued by
the BLA-IPO. Since the patent which was the basis for issuing the
injunction, was no longer valid, any issue as to the propriety of
extending the life of the injunction was already rendered moot and
academic.
As to the second issue raised, the Court, is not persuaded by petitioner's
argument that, pursuant to the doctrine of primary jurisdiction, the
Director General of the IPO and not the CA has jurisdiction to review the
questioned Orders of the Director of the BLA-IPO.
It is true that under Section 7(b) of RA 8293, otherwise known as
the Intellectual Property Code of the Philippines, which is the presently
prevailing law, the Director General of the IPO exercises exclusive
appellate jurisdiction over all decisions rendered by the Director of the
BLA-IPO. However, what is being questioned before the CA is not a
decision, but an interlocutory order of the BLA-IPO denying
respondents' motion to extend the life of the preliminary injunction
issued in their favor.
RA 8293 is silent with respect to any remedy available to litigants who
intend to question an interlocutory order issued by the BLA-IPO.
Moreover, Section 1(c), Rule 14 of the Rules and Regulations on
Administrative Complaints for Violation of Laws Involving Intellectual
Property Rights simply provides that interlocutory orders shall not be
appealable. The said Rules and Regulations do not prescribe a
procedure within the administrative machinery to be followed in
assailing orders issued by the BLA-IPO pending final resolution of a case
filed with them. Hence, in the absence of such a remedy, the provisions
of the Rules of Court shall apply in a suppletory manner, as provided
under Section 3, Rule 1 of the same Rules and Regulations. Hence, in the
present case, respondents correctly resorted to the filing of a special
civil action for certiorari with the CA to question the assailed Orders of
the BLA-IPO, as they cannot appeal therefrom and they have no other
plain, speedy and adequate remedy in the ordinary course of law. This
is consistent with Sections 1[20] and 4,[21] Rule 65 of the Rules of Court,
as amended.
In the first place, respondents' act of filing their complaint originally with
the BLA-IPO is already in consonance with the doctrine of primary
jurisdiction.
This Court has held that:
[i]n cases involving specialized disputes, the practice has been to refer
the same to an administrative agency of special competence in
observance of the doctrine of primary jurisdiction. The Court has
ratiocinated that it cannot or will not determine a controversy involving
a question which is within the jurisdiction of the administrative tribunal
prior to the resolution of that question by the administrative tribunal,
where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of
the administrative tribunal to determine technical and intricate matters
Intellectual Property Law
of fact, and a uniformity of ruling is essential to comply with the
premises of the regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in determining
whether it should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some aspect of
some question arising in the proceeding before the court. It applies
where the claim is originally cognizable in the courts and comes into
play whenever enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, has been placed within the
special competence of an administrative body; in such case, the judicial
process is suspended pending referral of such issues to the
administrative body for its view.[22]
Based on the foregoing, the Court finds that respondents' initial filing of
their complaint with the BLA-IPO, instead of the regular courts, is in
keeping with the doctrine of primary jurisdiction owing to the fact that
the determination of the basic issue of whether petitioner violated
respondents' patent rights requires the exercise by the IPO of sound
administrative discretion which is based on the agency's special
competence, knowledge and experience.
However, the propriety of extending the life of the writ of preliminary
injunction issued by the BLA-IPO in the exercise of its quasi-judicial
power is no longer a matter that falls within the jurisdiction of the said
administrative agency, particularly that of its Director General. The
resolution of this issue which was raised before the CA does not demand
the exercise by the IPO of sound administrative discretion requiring
special knowledge, experience and services in determining technical
and intricate matters of fact. It is settled that one of the exceptions to
the doctrine of primary jurisdiction is where the question involved is
purely legal and will ultimately have to be decided by the courts of
justice.[23] This is the case with respect to the issue raised in the
petition filed with the CA.
Moreover, as discussed earlier, RA 8293 and its implementing rules and
regulations do not provide for a procedural remedy to question
interlocutory orders issued by the BLA-IPO. In this regard, it bears to
reiterate that the judicial power of the courts, as provided for under the
Constitution, includes the authority of the courts to determine in an
appropriate action the validity of the acts of the political
departments.[24] Judicial power also includes the duty of the courts of
justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government.[25] Hence, the CA, and not the IPO Director General, has
jurisdiction to determine whether the BLA-IPO committed grave abuse
of discretion in denying respondents' motion to extend the effectivity
of the writ of preliminary injunction which the said office earlier issued.
Lastly, petitioner avers that respondents are guilty of forum shopping
for having filed separate actions before the IPO and the RTC praying for
the same relief.
The Court agrees.
Page 10 of 46
Forum shopping is defined as the act of a party against whom an adverse
judgment has been rendered in one forum, of seeking another (and
possibly favorable) opinion in another forum (other than by appeal or
the special civil action of certiorari), or the institution of two (2) or more
actions or proceedings grounded on the same cause on the supposition
that one or the other court would make a favorable disposition.[26]
The elements of forum shopping are: (a) identity of parties, or at least
such parties that represent the same interests in both actions; (b)
identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; (c) identity of the two preceding particulars,
such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under
consideration.[27]
There is no question as to the identity of parties in the complaints filed
with the IPO and the RTC.
Respondents argue that they cannot be held guilty of forum shopping
because their complaints are based on different causes of action as
shown by the fact that the said complaints are founded on violations of
different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the
act or omission by which a party violates a right of another. In the
instant case, respondents' cause of action in their complaint filed with
the IPO is the alleged act of petitioner in importing, distributing, selling
or offering for sale Sulbactam Ampicillin products, acts that are
supposedly violative of respondents' right to the exclusive sale of the
said products which are covered by the latter's patent. However, a
careful reading of the complaint filed with the RTC of Makati City would
show that respondents have the same cause of action as in their
complaint filed with the IPO. They claim that they have the exclusive
right to make, use and sell Sulbactam Ampicillin products and that
petitioner violated this right. Thus, it does not matter that the patents
upon which the complaints were based are different. The fact remains
that in both complaints the rights violated and the acts violative of such
rights are identical.
In fact, respondents seek substantially the same reliefs in their separate
complaints with the IPO and the RTC for the purpose of accomplishing
the same objective.
It is settled by this Court in several cases that the filing by a party of two
apparently different actions but with the same objective constitutes
forum shopping.[28] The Court discussed this species of forum shopping
as follows:
Very simply stated, the original complaint in the court a quo which gave
rise to the instant petition was filed by the buyer (herein private
respondent and his predecessors-in-interest) against the seller (herein
petitioners) to enforce the alleged perfected sale of real estate. On the
other hand, the complaint in the Second Case seeks to declare such
purported sale involving the same real property as unenforceable as
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against the Bank, which is the petitioner herein. In other words, in the
Second Case, the majority stockholders, in representation of the Bank,
are seeking to accomplish what the Bank itself failed to do in the original
case in the trial court. In brief, the objective or the relief being sought,
though worded differently, is the same, namely, to enable the petitioner
Bank to escape from the obligation to sell the property to
respondent.[29]
In Danville Maritime, Inc. v. Commission on Audit,[30] the Court ruled as
follows:
In the attempt to make the two actions appear to be different,
petitioner impleaded different respondents therein PNOC in the case
before the lower court and the COA in the case before this Court and
sought what seems to be different reliefs. Petitioner asks this Court to
set aside the questioned letter-directive of the COA dated October 10,
1988 and to direct said body to approve the Memorandum of
Agreement entered into by and between the PNOC and petitioner,
while in the complaint before the lower court petitioner seeks to enjoin
the PNOC from conducting a rebidding and from selling to other parties
the vessel T/T Andres Bonifacio, and for an extension of time for it to
comply with the paragraph 1 of the memorandum of agreement and
damages. One can see that although the relief prayed for in the two (2)
actions are ostensibly different, the ultimate objective in both actions is
the same, that is, the approval of the sale of vessel in favor of petitioner,
and to overturn the letter directive of the COA of October 10,
1988 disapproving the sale.[31]
In the instant case, the prayer of respondents in their complaint filed
with the IPO is as follows:
A. Immediately upon the filing of this action, issue an ex parte order (a)
temporarily restraining respondent, its agents, representatives and
assigns from importing, distributing, selling or offering for sale
Sulbactam Ampicillin products to the hospitals named in paragraph 9 of
this Complaint or to any other entity in the Philippines, or from
otherwise infringing Pfizer Inc.'s Philippine Patent No. 21116; and (b)
impounding all the sales invoices and other documents evidencing sales
by respondent of Sulbactam Ampicillin products.
B. After hearing, issue a writ of preliminary injunction enjoining
respondent, its agents, representatives and assigns from importing,
distributing, selling or offering for sale Sulbactam Ampicillin products to
the hospitals named in paragraph 9 of the Complaint or to any other
entity in the Philippines, or from otherwise infringing Pfizer Inc.'s
Philippine Patent No. 21116; and
C. After trial, render judgment:
(i) declaring that respondent has infringed Pfizer Inc.'s
Philippine Patent No. 21116 and that respondent has no right
whatsoever over complainant's patent;
Intellectual Property Law
(ii) ordering respondent to pay complainants the following amounts:
(a) at least P1,000,000.00 as actual damages;
(b) P700,000.00 as attorney's fees and litigation expenses;
(d) P1,000,000.00 as exemplary damages; and
(d) costs of this suit.
(iii) ordering the condemnation, seizure or forfeiture of respondent's
infringing goods or products, wherever they may be found, including
the materials and implements used in the commission of infringement,
to be disposed of in such manner as may be deemed appropriate by
this Honorable Office; and
(iv) making the injunction permanent.[32]
In an almost identical manner, respondents prayed for the following in
their complaint filed with the RTC:
(a) Immediately upon the filing of this action, issue an ex parte order:
(1) temporarily restraining Pharmawealth, its agents, representatives
and assigns from importing, distributing, selling or offering for sale
infringing sulbactam ampicillin products to various government and
private hospitals or to any other entity in the Philippines, or from
otherwise infringing Pfizer Inc.'s Philippine Patent No. 26810.
(2) impounding all the sales invoices and other documents evidencing
sales by pharmawealth of sulbactam ampicillin products; and
(3) disposing of the infringing goods outside the channels of commerce.
(b) After hearing, issue a writ of preliminary injunction:
(1) enjoining Pharmawealth, its agents, representatives and assigns
from importing, distributing, selling or offering for sale infringing
sulbactam ampicillin products to various government hospitals or to any
other entity in the Philippines, or from otherwise infringing Patent No.
26810;
(2) impounding all the sales invoices and other documents evidencing
sales by Pharmawealth of sulbactam ampicillin products; and
(3) disposing of the infringing goods outside the channels of commerce.
(c) After trial, render judgment:
(1) finding Pharmawealth to have infringed Patent No. 26810 and
declaring Pharmawealth to have no right whatsoever over plaintiff's
patent;
(2) ordering Pharmawealth to pay plaintiffs the following amounts:
(i) at least P3,000,000.00 as actual damages;
(ii) P500,000.00 as attorney's fees and P1,000,000.00 as litigation
expenses;
(iii) P3,000,000.00 as exemplary damages; and
Page 11 of 46
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(iv) costs of this suit. SO ORDERED.
(3) ordering the condemnation, seizure or forfeiture of Pharmawealth's
infringing goods or products, wherever they may be found, including the DIOSDADO M. PERALTA
materials and implements used in the commission of infringement, to Associate Justice
be disposed of in such manner as may be deemed appropriate by this
Honorable Court; and
(4) making the injunction permanent.[33]
It is clear from the foregoing that the ultimate objective which
respondents seek to achieve in their separate complaints filed with the
RTC and the IPO, is to ask for damages for the alleged violation of their
right to exclusively sell Sulbactam Ampicillin products and to
permanently prevent or prohibit petitioner from selling said products to
any entity. Owing to the substantial identity of parties, reliefs and issues
in the IPO and RTC cases, a decision in one case will necessarily amount
to res judicata in the other action.
It bears to reiterate that what is truly important to consider in
determining whether forum shopping exists or not is the vexation
caused the courts and parties-litigant by a party who asks different
courts and/or administrative agencies to rule on the same or related
causes and/or to grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered
by the different fora upon the same issue.[34]
Thus, the Court agrees with petitioner that respondents are indeed
guilty of forum shopping.
Jurisprudence holds that if the forum shopping is not considered willful
and deliberate, the subsequent case shall be dismissed without
prejudice, on the ground of either litis pendentia or res
judicata.[35] However, if the forum shopping is willful and deliberate,
both (or all, if there are more than two) actions shall be dismissed with
prejudice.[36] In the present case, the Court finds that respondents did
not deliberately violate the rule on non-forum shopping. Respondents
may not be totally blamed for erroneously believing that they can file
separate actions simply on the basis of different patents. Moreover, in
the suit filed with the RTC of Makati City, respondents were candid
enough to inform the trial court of the pendency of the complaint filed
with the BLA-IPO as well as the petition for certiorari filed with the CA.
On these bases, only Civil Case No. 04-754 should be dismissed on the FIRST DIVISION
ground of litis pendentia. [G.R. Nos. 160054-55. July 21, 2004]
MANOLO P. SAMSON, petitioner, vs. HON. REYNALDO B. DAWAY, in his
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions capacity as Presiding Judge, Regional Trial Court of Quezon
of the Court of Appeals, dated January 18, 2005 and April 11, 2005, in City, Branch 90, PEOPLE OF THE PHILIPPINES and
CA-G.R. No. 82734, are REVERSED and SET ASIDE. The petition CATERPILLAR, INC., respondents.
for certiorari filed with the Court of Appeals is DISMISSED for being DECISION
moot and academic. YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari is the March 26, 2003
Civil Case No. 04-754, filed with the Regional Trial Court of Makati City, Order[1] of the Regional Trial Court of Quezon City, Branch 90, which denied
Branch 138, is likewise DISMISSED on the ground of litis pendentia. petitioners (1) motion to quash the information; and (2) motion for
reconsideration of the August 9, 2002 Order denying his motion to suspend
Intellectual Property Law
the arraignment and other proceedings in Criminal Case Nos. Q-02-
108043-44. Petitioner also questioned its August 5, 2003 Order[2] which
denied his motion for reconsideration.
The undisputed facts show that on March 7, 2002, two informations
for unfair competition under Section 168.3 (a), in relation to Section 170,
of the Intellectual Property Code (Republic Act No. 8293), similarly worded
save for the dates and places of commission, were filed against petitioner
Manolo P. Samson, the registered owner of ITTI Shoes. The accusatory
portion of said informations read:
That on or about the first week of November 1999 and sometime prior or
subsequent thereto, in Quezon City, Philippines, and within the
jurisdiction of this Honorable Court, above-named accused,
owner/proprietor of ITTI Shoes/Mano Shoes Manufactuirng Corporation
located at Robinsons Galleria, EDSA corner Ortigas Avenue, Quezon City,
did then and there willfully, unlawfully and feloniously distribute, sell
and/or offer for sale CATERPILLAR products such as footwear, garments,
clothing, bags, accessories and paraphernalia which are closely identical
to and/or colorable imitations of the authentic Caterpillar products and
likewise using trademarks, symbols and/or designs as would cause
confusion, mistake or deception on the part of the buying public to the
damage and prejudice of CATERPILLAR, INC., the prior adopter, user and
owner of the following internationally: CATERPILLAR, CAT, CATERPILLAR &
DESIGN, CAT AND DESIGN, WALKING MACHINES and TRACK-TYPE
TRACTOR & DESIGN.
CONTRARY TO LAW.[3]
On April 19, 2002, petitioner filed a motion to suspend arraignment
and other proceedings in view of the existence of an alleged prejudicial
question involved in Civil Case No. Q-00-41446 for unfair competition
pending with the same branch; and also in view of the pendency of a
petition for review filed with the Secretary of Justice assailing the Chief
State Prosecutors resolution finding probable cause to charge petitioner
with unfair competition. In an Order dated August 9, 2002, the trial court
denied the motion to suspend arraignment and other proceedings.
On August 20, 2002, petitioner filed a twin motion to quash the
informations and motion for reconsideration of the order denying motion
to suspend, this time challenging the jurisdiction of the trial court over the
offense charged. He contended that since under Section 170 of R.A. No.
8293, the penalty5 of imprisonment for unfair competition does not exceed
six years, the offense is cognizable by the Municipal Trial Courts and not by
the Regional Trial Court, per R.A. No. 7691.
In its assailed March 26, 2003 Order, the trial court denied
petitioners twin motions.6 A motion for reconsideration thereof was
likewise denied on August 5, 2003.
Hence, the instant petition alleging that respondent Judge gravely
abused its discretion in issuing the assailed orders.
The issues posed for resolution are (1) Which court has jurisdiction
over criminal and civil cases for violation of intellectual property rights? (2)
Did the respondent Judge gravely abuse his discretion in refusing to
suspend the arraignment and other proceedings in Criminal Case Nos. Q-
02-108043-44 on the ground of (a) the existence of a prejudicial question;
and (b) the pendency of a petition for review with the Secretary of Justice
on the finding of probable cause for unfair competition?
Under Section 170 of R.A. No. 8293, which took effect on January 1,
1998, the criminal penalty for infringement of registered marks, unfair
Page 12 of 46
competition, false designation of origin and false description or
representation, is imprisonment from 2 to 5 years and a fine ranging from
Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two (2) years to
five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to
Two hundred thousand pesos (P200,000.00), shall be imposed on any
person who is found guilty of committing any of the acts mentioned in
Section 155 [Infringement], Section 168 [Unfair Competition] and Section
169.1 [False Designation of Origin and False Description or
Representation].
Corollarily, Section 163 of the same Code states that actions
(including criminal and civil) under Sections 150, 155, 164, 166, 167, 168
and 169 shall be brought before the proper courts with appropriate
jurisdiction under existing laws, thus
SEC. 163. Jurisdiction of Court. All actions under Sections 150, 155, 164
and 166 to 169 shall be brought before the proper courts with
appropriate jurisdiction under existing laws. (Emphasis supplied)
The existing law referred to in the foregoing provision is Section 27
of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over
cases for infringement of registered marks, unfair competition, false
designation of origin and false description or representation, is lodged with
the Court of First Instance (now Regional Trial Court)
SEC. 27. Jurisdiction of Court of First Instance. All actions under this
Chapter [V Infringement] and Chapters VI [Unfair Competition] and VII
[False Designation of Origin and False Description or Representation],
hereof shall be brought before the Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166 was
expressly repealed by R.A. No. 8293. The repealing clause of R.A. No. 8293,
reads
SEC. 239. Repeals. 239.1. All Acts and parts of Acts inconsistent herewith,
more particularly Republic Act No. 165, as amended; Republic Act No.
166, as amended; and Articles 188 and 189 of the Revised Penal Code;
Presidential Decree No. 49, including Presidential Decree No. 285, as
amended, are hereby repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A. No.
166 in its entirety, otherwise, it would not have used the phrases parts of
Acts and inconsistent herewith; and it would have simply stated Republic
Act No. 165, as amended; Republic Act No. 166, as amended; and Articles
188 and 189 of the Revised Penal Code; Presidential Decree No. 49,
including Presidential Decree No. 285, as amended are hereby repealed. It
would have removed all doubts that said specific laws had been rendered
without force and effect. The use of the phrases parts of Acts and
inconsistent herewith only means that the repeal pertains only to
provisions which are repugnant or not susceptible of harmonization with
R.A. No. 8293.7 Section 27 of R.A. No. 166, however, is consistent and in
harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to
vest jurisdiction over violations of intellectual property rights with the
Metropolitan Trial Courts, it would have expressly stated so under Section
163 thereof.
Moreover, the settled rule in statutory construction is that in case
of conflict between a general law and a special law, the latter must prevail.
Jurisdiction conferred by a special law to Regional Trial Courts must prevail
over that granted by a general law to Municipal Trial Courts.8
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In the case at bar, R.A. No. 8293 and R.A. No. 166 are special
laws9 conferring jurisdiction over violations of intellectual property rights
to the Regional Trial Court. They should therefore prevail over R.A. No.
7691, which is a general law.10 Hence, jurisdiction over the instant criminal
case for unfair competition is properly lodged with the Regional Trial Court
even if the penalty therefor is imprisonment of less than 6 years, or from 2
to 5 years and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases
involving violations of intellectual property rights under R.A. No. 8293, the
Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating
certain Regional Trial Courts as Intellectual Property Courts. On June 17,
2003, the Court further issued a Resolution consolidating jurisdiction to
hear and decide Intellectual Property Code and Securities and Exchange
Commission cases in specific Regional Trial Courts designated as Special
Commercial Courts.
The case of Mirpuri v. Court of Appeals,11 invoked by petitioner
finds no application in the present case. Nowhere in Mirpuri did we state
that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did
we make a categorical ruling therein that jurisdiction over cases for
violation of intellectual property rights is lodged with the Municipal Trial
Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A.
No. 8293 was merely a backgrounder to the enactment of the present
Intellectual Property Code and cannot thus be construed as a jurisdictional
pronouncement in cases for violation of intellectual property rights.
Anent the second issue, petitioner failed to substantiate his claim
that there was a prejudicial question. In his petition, he prayed for the
reversal of the March 26, 2003 order which sustained the denial of his
motion to suspend arraignment and other proceedings in Criminal Case
Nos. Q-02-108043-44. For unknown reasons, however, he made no
discussion in support of said prayer in his petition and reply to comment.
Neither did he attach a copy of the complaint in Civil Case No. Q-00-41446
nor quote the pertinent portion thereof to prove the existence of a
prejudicial question.
At any rate, there is no prejudicial question if the civil and the
criminal action can, according to law, proceed independently of each
other.12 Under Rule 111, Section 3 of the Revised Rules on Criminal
Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil
Code, the independent civil action may be brought by the offended party.
It shall proceed independently of the criminal action and shall require only
a preponderance of evidence.
In the case at bar, the common element in the acts constituting
unfair competition under Section 168 of R.A. No. 8293 is fraud.13 Pursuant
to Article 33 of the Civil Code, in cases of defamation, fraud, and physical
injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Hence, Civil Case No.
Q-00-41446, which as admitted14 by private respondent also relate to
unfair competition, is an independent civil action under Article 33 of the
Civil Code. As such, it will not operate as a prejudicial question that will
justify the suspension of the criminal cases at bar.
Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure
provides
SEC. 11. Suspension of arraignment. Upon motion by the proper party,
the arraignment shall be suspended in the following cases
xxxxxxxxx
Intellectual Property Law
(c) A petition for review of the resolution of the prosecutor is pending at
either the Department of Justice, or the Office of the President; Provided,
that the period of suspension shall not exceed sixty (60) days counted
from the filing of the petition with the reviewing office.
While the pendency of a petition for review is a ground for
suspension of the arraignment, the aforecited provision limits the
deferment of the arraignment to a period of 60 days reckoned from the
filing of the petition with the reviewing office. It follows, therefore, that
after the expiration of said period, the trial court is bound to arraign the
accused or to deny the motion to defer arraignment.
In the instant case, petitioner failed to establish that respondent
Judge abused his discretion in denying his motion to suspend. His pleadings
and annexes submitted before the Court do not show the date of filing of
the petition for review with the Secretary of Justice.15 Moreover, the Order
dated August 9, 2002 denying his motion to suspend was not appended to
the petition. He thus failed to discharge the burden of proving that he was
entitled to a suspension of his arraignment and that the questioned orders
are contrary to Section 11 (c), Rule 116 of the Revised Rules on Criminal
Procedure. Indeed, the age-old but familiar rule is that he who alleges must
prove his allegations.
In sum, the dismissal of the petition is proper considering that
petitioner has not established that the trial court committed grave abuse
of discretion. So also, his failure to attach documents relevant to his
allegations warrants the dismissal of the petition, pursuant to Section 3,
Rule 46 of the Rules of Civil Procedure, which states:
SEC. 3. Contents and filing of petition; effect of non-compliance with
requirements. The petition shall contain the full names and actual
addresses of all the petitioners and respondents, a concise statement of
the matters involved, the factual background of the case, and the grounds
relied upon for the relief prayed for.
It shall be filed in seven (7) clearly legible copies together with proof of
service thereof on the respondent with the original copy intended for the
court indicated as such by the petitioner, and shall be accompanied by a
clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the
record as are referred to therein, and other documents relevant or
pertinent thereto.
xxxxxxxxx
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the petition.
(Emphasis added)
WHEREFORE, in view of all the foregoing, the petition is DISMISSED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna,
JJ., concur.
Page 13 of 46
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 118295 May 2, 1997
WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members
of the Philippine Senate and as taxpayers; GREGORIO ANDOLANA and
JOKER ARROYO as members of the House of Representatives and as
taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both as
taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE
DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION,
INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT,
DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and
PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers
and as non-governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI,
HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI
GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA. MACAPAGAL-
ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEA, SANTANINA
RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE
WEBB, in their respective capacities as members of the Philippine Senate
who concurred in the ratification by the President of the Philippines of
the Agreement Establishing the World Trade Organization; SALVADOR
ENRIQUEZ, in his capacity as Secretary of Budget and Management;
CARIDAD VALDEHUESA, in her capacity as National Treasurer; RIZALINO
NAVARRO, in his capacity as Secretary of Trade and Industry; ROBERTO
SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE
OCAMPO, in his capacity as Secretary of Finance; ROBERTO ROMULO, in
his capacity as Secretary of Foreign Affairs; and TEOFISTO T. GUINGONA,
in his capacity as Executive Secretary, respondents.
PANGANIBAN, J.:
The emergence on January 1, 1995 of the World Trade Organization,
abetted by the membership thereto of the vast majority of countries has
revolutionized international business and economic relations amongst
states. It has irreversibly propelled the world towards trade liberalization
and economic globalization. Liberalization, globalization, deregulation and
privatization, the third-millennium buzz words, are ushering in a new
borderless world of business by sweeping away as mere historical relics the
heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative
restrictions, tax exemptions and currency controls. Finding market niches
and becoming the best in specific industries in a market-driven and export-
oriented global scenario are replacing age-old "beggar-thy-neighbor"
policies that unilaterally protect weak and inefficient domestic producers
of goods and services. In the words of Peter Drucker, the well-known
management guru, "Increased participation in the world economy has
become the key to domestic economic growth and prosperity."
Brief Historical Background
To hasten worldwide recovery from the devastation wrought by the
Second World War, plans for the establishment of three multilateral
The Law on Copyright
institutions inspired by that grand political body, the United Nations
were discussed at Dumbarton Oaks and Bretton Woods. The first was the
World Bank (WB) which was to address the rehabilitation and
reconstruction of war-ravaged and later developing countries; the second,
the International Monetary Fund (IMF) which was to deal with currency
problems; and the third, the International Trade Organization (ITO), which
was to foster order and predictability in world trade and to minimize
unilateral protectionist policies that invite challenge, even retaliation, from
other states. However, for a variety of reasons, including its non-
ratification by the United States, the ITO, unlike the IMF and WB, never
took off. What remained was only GATT the General Agreement on
Tariffs and Trade. GATT was a collection of treaties governing access to the
economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute
settlement.
After half a century and several dizzying rounds of negotiations, principally
the Kennedy Round, the Tokyo Round and the Uruguay Round, the world
finally gave birth to that administering body the World Trade
Organization with the signing of the "Final Act" in Marrakesh, Morocco
and the ratification of the WTO Agreement by its members. 1
Like many other developing countries, the Philippines joined WTO as a
founding member with the goal, as articulated by President Fidel V. Ramos
in two letters to the Senate (infra), of improving "Philippine access to
foreign markets, especially its major trading partners, through the
reduction of tariffs on its exports, particularly agricultural and industrial
products." The President also saw in the WTO the opening of "new
opportunities for the services sector . . . , (the reduction of) costs and
uncertainty associated with exporting . . . , and (the attraction of) more
investments into the country." Although the Chief Executive did not
expressly mention it in his letter, the Philippines and this is of special
interest to the legal profession will benefit from the WTO system of
dispute settlement by judicial adjudication through the independent WTO
settlement bodies called (1) Dispute Settlement Panels and (2) Appellate
Tribunal. Heretofore, trade disputes were settled mainly through
negotiations where solutions were arrived at frequently on the basis of
relative bargaining strengths, and where naturally, weak and
underdeveloped countries were at a disadvantage.
The Petition in Brief
Arguing mainly (1) that the WTO requires the Philippines "to place
nationals and products of member-countries on the same footing as
Filipinos and local products" and (2) that the WTO "intrudes, limits and/or
impairs" the constitutional powers of both Congress and the Supreme
Court, the instant petition before this Court assails the WTO Agreement for
violating the mandate of the 1987 Constitution to "develop a self-reliant
and independent national economy effectively controlled by Filipinos . . .
(to) give preference to qualified Filipinos (and to) promote the preferential
use of Filipino labor, domestic materials and locally produced goods."
Simply stated, does the Philippine Constitution prohibit Philippine
participation in worldwide trade liberalization and economic globalization?
Does it proscribe Philippine integration into a global economy that is
liberalized, deregulated and privatized? These are the main questions
raised in this petition for certiorari, prohibition andmandamus under Rule
65 of the Rules of Court praying (1) for the nullification, on constitutional
grounds, of the concurrence of the Philippine Senate in the ratification by
Intellectual Property Law
the President of the Philippines of the Agreement Establishing the World
Trade Organization (WTO Agreement, for brevity) and (2) for the
prohibition of its implementation and enforcement through the release
and utilization of public funds, the assignment of public officials and
employees, as well as the use of government properties and resources by
respondent-heads of various executive offices concerned therewith. This
concurrence is embodied in Senate Resolution No. 97, dated December 14,
1994.
The Facts
On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The
Department of Trade and Industry (Secretary Navarro, for brevity),
representing the Government of the Republic of the Philippines, signed in
Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay
Round of Multilateral Negotiations (Final Act, for brevity).
By signing the Final Act, 2 Secretary Navarro on behalf of the Republic of
the Philippines, agreed:
(a) to submit, as appropriate, the WTO Agreement
for the consideration of their respective
competent authorities, with a view to seeking
approval of the Agreement in accordance with
their procedures; and
(b) to adopt the Ministerial Declarations and
Decisions.
On August 12, 1994, the members of the Philippine Senate received a letter
dated August 11, 1994 from the President of the Philippines, 3 stating
among others that "the Uruguay Round Final Act is hereby submitted to
the Senate for its concurrence pursuant to Section 21, Article VII of the
Constitution."
On August 13, 1994, the members of the Philippine Senate received
another letter from the President of the Philippines 4 likewise dated August
11, 1994, which stated among others that "the Uruguay Round Final Act,
the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in
Financial Services are hereby submitted to the Senate for its concurrence
pursuant to Section 21, Article VII of the Constitution."
On December 9, 1994, the President of the Philippines certified the
necessity of the immediate adoption of P.S. 1083, a resolution entitled
"Concurring in the Ratification of the Agreement Establishing the World
Trade Organization." 5
On December 14, 1994, the Philippine Senate adopted Resolution No. 97
which "Resolved, as it is hereby resolved, that the Senate concur, as it
hereby concurs, in the ratification by the President of the Philippines of the
Agreement Establishing the World Trade Organization." 6 The text of the
WTO Agreement is written on pages 137 et seq. of Volume I of the 36-
volume Uruguay Round of Multilateral Trade Negotiations and includes
various agreements and associated legal instruments (identified in the said
Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as
Multilateral Trade Agreements, for brevity) as follows:
ANNEX 1
Annex 1A: Multilateral Agreement on Trade in
Goods
General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Page 14 of 46
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Phytosanitary Measures developed countries, notification procedures,
Agreement on Textiles and Clothing relationship of WTO with the International
Agreement on Technical Barriers to Trade Monetary Fund (IMF), and agreements on
Agreement on Trade-Related Investment technical barriers to trade and on dispute
Measures settlement.
Agreement on Implementation of Article VI of he The Understanding on Commitments in Financial
General Agreement on Tariffs and Trade Services dwell on, among other things, standstill or
1994 limitations and qualifications of commitments to
Agreement on Implementation of Article VII of the existing non-conforming measures, market access,
General on Tariffs and Trade 1994 national treatment, and definitions of non-resident
Agreement on Pre-Shipment Inspection supplier of financial services, commercial presence
Agreement on Rules of Origin and new financial service.
Agreement on Imports Licensing Procedures On December 29, 1994, the present petition was filed. After careful
Agreement on Subsidies and Coordinating deliberation on respondents' comment and petitioners' reply thereto, the
Measures Court resolved on December 12, 1995, to give due course to the petition,
Agreement on Safeguards and the parties thereafter filed their respective memoranda. The court also
Annex 1B: General Agreement on Trade in Services requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the
and Annexes United Nations stationed in Geneva, Switzerland, to submit a paper,
Annex 1C: Agreement on Trade-Related Aspects of hereafter referred to as "Bautista Paper," 9 for brevity, (1) providing a
Intellectual historical background of and (2) summarizing the said agreements.
Property Rights During the Oral Argument held on August 27, 1996, the Court directed:
ANNEX 2 (a) the petitioners to submit the (1) Senate
Understanding on Rules Committee Report on the matter in controversy
and Procedures Governing and (2) the transcript of proceedings/hearings in
the Settlement of Disputes the Senate; and
ANNEX 3 (b) the Solicitor General, as counsel for
Trade Policy Review respondents, to file (1) a list of Philippine treaties
Mechanism signed prior to the Philippine adherence to the
On December 16, 1994, the President of the Philippines signed 7 the WTO Agreement, which derogate from Philippine
Instrument of Ratification, declaring: sovereignty and (2) copies of the multi-volume
NOW THEREFORE, be it known that I, FIDEL V. WTO Agreement and other documents mentioned
RAMOS, President of the Republic of the in the Final Act, as soon as possible.
Philippines, after having seen and considered the After receipt of the foregoing documents, the Court said it would consider
aforementioned Agreement Establishing the the case submitted for resolution. In a Compliance dated September 16,
World Trade Organization and the agreements and 1996, the Solicitor General submitted a printed copy of the 36-
associated legal instruments included in Annexes volume Uruguay Round of Multilateral Trade Negotiations, and in another
one (1), two (2) and three (3) of that Agreement Compliance dated October 24, 1996, he listed the various "bilateral or
which are integral parts thereof, signed at multilateral treaties or international instruments involving derogation of
Marrakesh, Morocco on 15 April 1994, do hereby Philippine sovereignty." Petitioners, on the other hand, submitted their
ratify and confirm the same and every Article and Compliance dated January 28, 1997, on January 30, 1997.
Clause thereof. The Issues
To emphasize, the WTO Agreement ratified by the President of the In their Memorandum dated March 11, 1996, petitioners summarized the
Philippines is composed of the Agreement Proper and "the associated legal issues as follows:
instruments included in Annexes one (1), two (2) and three (3) of that A. Whether the petition presents a political
Agreement which are integral parts thereof." question or is otherwise not justiciable.
On the other hand, the Final Act signed by Secretary Navarro embodies not B. Whether the petitioner members of the Senate
only the WTO Agreement (and its integral annexes aforementioned) but who participated in the deliberations and voting
also (1) the Ministerial Declarations and Decisions and (2) the leading to the concurrence are estopped from
Understanding on Commitments in Financial Services. In his Memorandum impugning the validity of the Agreement
dated May 13, 1996, 8 the Solicitor General describes these two latter Establishing the World Trade Organization or of the
documents as follows: validity of the concurrence.
The Ministerial Decisions and Declarations are C. Whether the provisions of the Agreement
twenty-five declarations and decisions on a wide Establishing the World Trade Organization
range of matters, such as measures in favor of least contravene the provisions of Sec. 19, Article II, and
Intellectual Property Law
Secs. 10 and 12, Article XII, all of the 1987
Philippine Constitution.
D. Whether provisions of the Agreement
Establishing the World Trade Organization unduly
limit, restrict and impair Philippine sovereignty
specifically the legislative power which, under Sec.
2, Article VI, 1987 Philippine Constitution is "vested
in the Congress of the Philippines";
E. Whether provisions of the Agreement
Establishing the World Trade Organization
interfere with the exercise of judicial power.
F. Whether the respondent members of the Senate
acted in grave abuse of discretion amounting to
lack or excess of jurisdiction when they voted for
concurrence in the ratification of the
constitutionally-infirm Agreement Establishing the
World Trade Organization.
G. Whether the respondent members of the
Senate acted in grave abuse of discretion
amounting to lack or excess of jurisdiction when
they concurred only in the ratification of the
Agreement Establishing the World Trade
Organization, and not with the Presidential
submission which included the Final Act,
Ministerial Declaration and Decisions, and the
Understanding on Commitments in Financial
Services.
On the other hand, the Solicitor General as counsel for respondents
"synthesized the several issues raised by petitioners into the following": 10
1. Whether or not the provisions of the
"Agreement Establishing the World Trade
Organization and the Agreements and Associated
Legal Instruments included in Annexes one (1), two
(2) and three (3) of that agreement" cited by
petitioners directly contravene or undermine the
letter, spirit and intent of Section 19, Article II and
Sections 10 and 12, Article XII of the 1987
Constitution.
2. Whether or not certain provisions of the
Agreement unduly limit, restrict or impair the
exercise of legislative power by Congress.
3. Whether or not certain provisions of the
Agreement impair the exercise of judicial power by
this Honorable Court in promulgating the rules of
evidence.
4. Whether or not the concurrence of the Senate
"in the ratification by the President of the
Philippines of the Agreement establishing the
World Trade Organization" implied rejection of the
treaty embodied in the Final Act.
By raising and arguing only four issues against the seven presented by
petitioners, the Solicitor General has effectively ignored three, namely: (1)
whether the petition presents a political question or is otherwise not
justiciable; (2) whether petitioner-members of the Senate (Wigberto E.
Page 15 of 46
Taada and Anna Dominique Coseteng) are estopped from joining this suit;
and (3) whether the respondent-members of the Senate acted in grave
abuse of discretion when they voted for concurrence in the ratification of
the WTO Agreement. The foregoing notwithstanding, this Court resolved
to deal with these three issues thus:
(1) The "political question" issue being very fundamental and vital, and
being a matter that probes into the very jurisdiction of this Court to hear
and decide this case was deliberated upon by the Court and will thus be
ruled upon as the first issue;
(2) The matter of estoppel will not be taken up because this defense is
waivable and the respondents have effectively waived it by not pursuing it
in any of their pleadings; in any event, this issue, even if ruled in
respondents' favor, will not cause the petition's dismissal as there are
petitioners other than the two senators, who are not vulnerable to the
defense of estoppel; and
(3) The issue of alleged grave abuse of discretion on the part of the
respondent senators will be taken up as an integral part of the disposition
of the four issues raised by the Solicitor General.
During its deliberations on the case, the Court noted that the respondents
did not question the locus standi of petitioners. Hence, they are also
deemed to have waived the benefit of such issue. They probably realized
that grave constitutional issues, expenditures of public funds and serious
international commitments of the nation are involved here, and that
transcendental public interest requires that the substantive issues be met
head on and decided on the merits, rather than skirted or deflected by
procedural matters. 11
To recapitulate, the issues that will be ruled upon shortly are:
(1) DOES THE PETITION PRESENT A JUSTICIABLE
CONTROVERSY? OTHERWISE STATED, DOES THE
PETITION INVOLVE A POLITICAL QUESTION OVER
WHICH THIS COURT HAS NO JURISDICTION?
(2) DO THE PROVISIONS OF THE WTO AGREEMENT
AND ITS THREE ANNEXES CONTRAVENE SEC. 19,
ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF
THE PHILIPPINE CONSTITUTION?
(3) DO THE PROVISIONS OF SAID AGREEMENT AND
ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE
EXERCISE OF LEGISLATIVE POWER BY CONGRESS?
(4) DO SAID PROVISIONS UNDULY IMPAIR OR
INTERFERE WITH THE EXERCISE OF JUDICIAL
POWER BY THIS COURT IN PROMULGATING RULES
ON EVIDENCE?
(5) WAS THE CONCURRENCE OF THE SENATE IN
THE WTO AGREEMENT AND ITS ANNEXES
SUFFICIENT AND/OR VALID, CONSIDERING THAT IT
DID NOT INCLUDE THE FINAL ACT, MINISTERIAL
DECLARATIONS AND DECISIONS, AND THE
UNDERSTANDING ON COMMITMENTS IN
FINANCIAL SERVICES?
The First Issue: Does the Court
Have Jurisdiction Over the Controversy?
In seeking to nullify an act of the Philippine Senate on the ground that it
contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged
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to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute. "The question thus posed is
judicial rather than political. The duty (to adjudicate) remains to assure
that the supremacy of the Constitution is upheld." 12 Once a "controversy
as to the application or interpretation of a constitutional provision is raised
before this Court (as in the instant case), it becomes a legal issue which the
Court is bound by constitutional mandate to decide." 13
The jurisdiction of this Court to adjudicate the matters 14 raised in the
petition is clearly set out in the 1987 Constitution, 15 as follows:
Judicial power includes the duty of the courts of
justice to settle actual controversies involving
rights which are legally demandable and
enforceable, and to determine whether or not
there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the
government.
The foregoing text emphasizes the judicial department's duty and power
to strike down grave abuse of discretion on the part of any branch or
instrumentality of government including Congress. It is an innovation in our
political law. 16 As explained by former Chief Justice Roberto
Concepcion, 17 "the judiciary is the final arbiter on the question of whether
or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction or so capriciously as to constitute an
abuse of discretion amounting to excess of jurisdiction. This is not only a
judicial power but a duty to pass judgment on matters of this nature."
As this Court has repeatedly and firmly emphasized in many cases, 18 it will
not shirk, digress from or abandon its sacred duty and authority to uphold
the Constitution in matters that involve grave abuse of discretion brought
before it in appropriate cases, committed by any officer, agency,
instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other
plain, speedy or adequate remedy in the ordinary course of law, we have
no hesitation at all in holding that this petition should be given due course
and the vital questions raised therein ruled upon under Rule 65 of the Rules
of Court. Indeed, certiorari, prohibition andmandamus are appropriate
remedies to raise constitutional issues and to review and/or
prohibit/nullify, when proper, acts of legislative and executive officials. On
this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this
Court will not review the wisdom of the decision of the President and the
Senate in enlisting the country into the WTO, or pass upon the merits of
trade liberalization as a policy espoused by said international body. Neither
will it rule on the propriety of the government's economic policy of
reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and
other import/trade barriers. Rather, it will only exercise its constitutional
duty "to determine whether or not there had been a grave abuse of
discretion amounting to lack or excess of jurisdiction" on the part of the
Senate in ratifying the WTO Agreement and its three annexes.
Second Issue: The WTO Agreement
and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the "letter, spirit and intent" of the
Constitution mandating "economic nationalism" are violated by the so-
Intellectual Property Law The Law on Copyright
called "parity provisions" and "national treatment" clauses scattered in on Trade-Related (c) the exportation or sale
various parts not only of the WTO Agreement and its annexes but also in Investment Measures, Vol. for export specified in
the Ministerial Decisions and Declarations and in the Understanding on 27, Uruguay Round, Legal terms of particular
Commitments in Financial Services. Instruments, p. 22121, products, in terms of
Specifically, the "flagship" constitutional provisions referred to are Sec 19, emphasis supplied). volume or value of
Article II, and Secs. 10 and 12, Article XII, of the Constitution, which are The Annex referred to reads as follows: products, or in terms of a
worded as follows: ANNEX preparation of volume or
Article II Illustrative List value of its local
DECLARATION OF PRINCIPLES 1. TRIMS that are inconsistent with the obligation production. (Annex to the
AND STATE POLICIES of national treatment provided for in paragraph 4 Agreement on Trade-
xxx xxx xxx of Article III of GATT 1994 include those which are Related Investment
Sec. 19. The State shall develop a self-reliant and mandatory or enforceable under domestic law or Measures, Vol. 27,
independent national economy effectively under administrative rulings, or compliance with Uruguay Round Legal
controlled by Filipinos. which is necessary to obtain an advantage, and Documents, p. 22125,
xxx xxx xxx which require: emphasis supplied).
Article XII (a) the purchase or use by The paragraph 4 of Article III of GATT 1994 referred
NATIONAL ECONOMY AND PATRIMONY an enterprise of products to is quoted as follows:
xxx xxx xxx of domestic origin or from The products of the
Sec. 10. . . . The Congress shall enact measures that any domestic source, territory of any contracting
will encourage the formation and operation of whether specified in terms party imported into the
enterprises whose capital is wholly owned by of particular products, in territory of any other
Filipinos. terms of volume or value contracting party shall be
In the grant of rights, privileges, and concessions of products, or in terms of accorded treatment no less
covering the national economy and patrimony, the proportion of volume or favorable than that
State shall give preference to qualified Filipinos. value of its local accorded to like products
xxx xxx xxx production; or of national origin in
Sec. 12. The State shall promote the preferential (b) that an enterprise's respect of laws,
use of Filipino labor, domestic materials and locally purchases or use of regulations and
produced goods, and adopt measures that help imported products be requirements affecting
make them competitive. limited to an amount their internal sale, offering
Petitioners aver that these sacred constitutional principles are desecrated related to the volume or for sale, purchase,
by the following WTO provisions quoted in their memorandum: 19 value of local products that transportation,
a) In the area of investment measures related to it exports. distribution or use, the
trade in goods (TRIMS, for brevity): 2. TRIMS that are inconsistent with the obligations provisions of this
Article 2 of general elimination of quantitative restrictions paragraph shall not
National Treatment and Quantitative Restrictions. provided for in paragraph 1 of Article XI of GATT prevent the application of
1. Without prejudice to 1994 include those which are mandatory or differential internal
other rights and enforceable under domestic laws or under transportation charges
obligations under GATT administrative rulings, or compliance with which is which are based
1994, no Member shall necessary to obtain an advantage, and which exclusively on the
apply any TRIM that is restrict: economic operation of the
inconsistent with the (a) the importation by an means of transport and
provisions of Article II or enterprise of products not on the nationality of
Article XI of GATT 1994. used in or related to the the product." (Article III,
2. An illustrative list of local production that it GATT 1947, as amended by
TRIMS that are exports; the Protocol Modifying
inconsistent with the (b) the importation by an Part II, and Article XXVI of
obligations of general enterprise of products GATT, 14 September 1948,
elimination of quantitative used in or related to its 62 UMTS 82-84 in relation
restrictions provided for in local production by to paragraph 1(a) of the
paragraph I of Article XI of restricting its access to General Agreement on
GATT 1994 is contained in foreign exchange inflows Tariffs and Trade 1994,
the Annex to this attributable to the Vol. 1, Uruguay Round,
Agreement." (Agreement enterprise; or

Page 16 of 46
Intellectual Property Law
Legal Instruments p. 177,
emphasis supplied).
(b) In the area of trade related aspects of
intellectual property rights (TRIPS, for brevity):
Each Member shall accord
to the nationals of other
Members treatment no
less favourable than that it
accords to its own
nationals with regard to
the protection of
intellectual property. . .
(par. 1 Article 3,
Agreement on Trade-
Related Aspect of
Intellectual Property
rights, Vol. 31, Uruguay
Round, Legal Instruments,
p. 25432 (emphasis
supplied)
(c) In the area of the General Agreement on Trade
in Services:
National Treatment
1. In the sectors inscribed
in its schedule, and subject
to any conditions and
qualifications set out
therein, each Member
shall accord to services and
service suppliers of any
other Member, in respect
of all measures affecting
the supply of
services, treatment no less
favourable than it accords
to its own like services and
service suppliers.
2. A Member may meet
the requirement of
paragraph I by according to
services and service
suppliers of any other
Member, either formally
suppliers of any other
Member, either formally
identical treatment or
formally different
treatment to that it
accords to its own like
services and service
suppliers.
3. Formally identical or
formally different
treatment shall be
Page 17 of 46
considered to be less
favourable if it modifies
the conditions of
completion in favour of
services or service
suppliers of the Member
compared to like services
or service suppliers of any
other Member. (Article
XVII, General Agreement
on Trade in Services, Vol.
28, Uruguay Round Legal
Instruments, p. 22610
emphasis supplied).
It is petitioners' position that the foregoing "national treatment" and
"parity provisions" of the WTO Agreement "place nationals and products
of member countries on the same footing as Filipinos and local products,"
in contravention of the "Filipino First" policy of the Constitution. They
allegedly render meaningless the phrase "effectively controlled by
Filipinos." The constitutional conflict becomes more manifest when viewed
in the context of the clear duty imposed on the Philippines as a WTO
member to ensure the conformity of its laws, regulations and
administrative procedures with its obligations as provided in the annexed
agreements. 20 Petitioners further argue that these provisions contravene
constitutional limitations on the role exports play in national development
and negate the preferential treatment accorded to Filipino labor, domestic
materials and locally produced goods.
On the other hand, respondents through the Solicitor General counter (1)
that such Charter provisions are not self-executing and merely set out
general policies; (2) that these nationalistic portions of the Constitution
invoked by petitioners should not be read in isolation but should be related
to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof;
(3) that read properly, the cited WTO clauses do not conflict with
Constitution; and (4) that the WTO Agreement contains sufficient
provisions to protect developing countries like the Philippines from the
harshness of sudden trade liberalization.
We shall now discuss and rule on these arguments.
Declaration of Principles
Not Self-Executing
By its very title, Article II of the Constitution is a "declaration of principles
and state policies." The counterpart of this article in the 1935
Constitution 21 is called the "basic political creed of the nation" by Dean
Vicente Sinco. 22 These principles in Article II are not intended to be self-
executing principles ready for enforcement through the courts. 23 They are
used by the judiciary as aids or as guides in the exercise of its power of
judicial review, and by the legislature in its enactment of laws. As held in
the leading case of Kilosbayan, Incorporated vs. Morato, 24 the principles
and state policies enumerated in Article II and some sections of Article XII
are not "self-executing provisions, the disregard of which can give rise to a
cause of action in the courts. They do not embody judicially enforceable
constitutional rights but guidelines for legislation."
In the same light, we held in Basco vs. Pagcor 25 that broad constitutional
principles need legislative enactments to implement the, thus:
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On petitioners' allegation that P.D. 1869 violates
Sections 11 (Personal Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social
Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution,
suffice it to state also that these are merely
statements of principles and policies. As such, they
are basically not self-executing, meaning a law
should be passed by Congress to clearly define and
effectuate such principles.
In general, therefore, the
1935 provisions were not
intended to be self-
executing principles ready
for enforcement through
the courts. They were
rather directives
addressed to the executive
and to the legislature. If
the executive and the
legislature failed to heed
the directives of the
article, the available
remedy was not judicial
but political. The
electorate could express
their displeasure with the
failure of the executive and
the legislature through the
language of the ballot.
(Bernas, Vol. II, p. 2).
The reasons for denying a cause of action to an alleged infringement of
board constitutional principles are sourced from basic considerations of
due process and the lack of judicial authority to wade "into the uncharted
ocean of social and economic policy making." Mr. Justice Florentino P.
Feliciano in his concurring opinion inOposa vs. Factoran, Jr., 26 explained
these reasons as follows:
My suggestion is simply that petitioners must,
before the trial court, show a more specific legal
right a right cast in language of a significantly
lower order of generality than Article II (15) of the
Constitution that is or may be violated by the
actions, or failures to act, imputed to the public
respondent by petitioners so that the trial court
can validly render judgment grating all or part of
the relief prayed for. To my mind, the court should
be understood as simply saying that such a more
specific legal right or rights may well exist in our
corpus of law, considering the general policy
principles found in the Constitution and the
existence of the Philippine Environment Code, and
that the trial court should have given petitioners an
effective opportunity so to demonstrate, instead
of aborting the proceedings on a motion to dismiss.
Intellectual Property Law
It seems to me important that the legal right which
is an essential component of a cause of action be a
specific, operable legal right, rather than a
constitutional or statutory policy, for at least two
(2) reasons. One is that unless the legal right
claimed to have been violated or disregarded is
given specification in operational terms,
defendants may well be unable to defend
themselves intelligently and effectively; in other
words, there are due process dimensions to this
matter.
The second is a broader-gauge consideration
where a specific violation of law or applicable
regulation is not alleged or proved, petitioners can
be expected to fall back on the expanded
conception of judicial power in the second
paragraph of Section 1 of Article VIII of the
Constitution which reads:
Sec. 1. . . .
Judicial power includes the
duty of the courts of justice
to settle actual
controversies involving
rights which are legally
demandable and
enforceable, and to
determine whether or not
there has been a grave
abuse of discretion
amounting to lack or
excess of jurisdiction on
the part of any branch or
instrumentality of the
Government. (Emphasis
supplied)
When substantive standards as general as "the
right to a balanced and healthy ecology" and "the
right to health" are combined with remedial
standards as broad ranging as "a grave abuse of
discretion amounting to lack or excess of
jurisdiction," the result will be, it is respectfully
submitted, to propel courts into the uncharted
ocean of social and economic policy making. At
least in respect of the vast area of environmental
protection and management, our courts have no
claim to special technical competence and
experience and professional qualification. Where
no specific, operable norms and standards are
shown to exist, then the policy making
departments the legislative and executive
departments must be given a real and effective
opportunity to fashion and promulgate those
norms and standards, and to implement them
before the courts should intervene.
Page 18 of 46
Economic Nationalism Should Be Read with
Other Constitutional Mandates to Attain
Balanced Development of Economy
On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying
down general principles relating to the national economy and patrimony,
should be read and understood in relation to the other sections in said
article, especially Secs. 1 and 13 thereof which read:
Sec. 1. The goals of the national economy are a
more equitable distribution of opportunities,
income, and wealth; a sustained increase in the
amount of goods and services produced by the
nation for the benefit of the people; and an
expanding productivity as the key to raising the
quality of life for all especially the underprivileged.
The State shall promote industrialization and full
employment based on sound agricultural
development and agrarian reform, through
industries that make full and efficient use of
human and natural resources, and which are
competitive in both domestic and foreign markets.
However, the State shall protect Filipino
enterprises against unfair foreign competition and
trade practices.
In the pursuit of these goals, all sectors of the
economy and all regions of the country shall be
given optimum opportunity to develop. . . .
xxx xxx xxx
Sec. 13. The State shall pursue a trade policy that
serves the general welfare and utilizes all forms
and arrangements of exchange on the basis of
equality and reciprocity.
As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of
national economic development, as follows:
1. A more equitable distribution of opportunities, income and wealth;
2. A sustained increase in the amount of goods and services provided by
the nation for the benefit of the people; and
3. An expanding productivity as the key to raising the quality of life for all
especially the underprivileged.
With these goals in context, the Constitution then ordains the ideals of
economic nationalism (1) by expressing preference in favor of qualified
Filipinos "in the grant of rights, privileges and concessions covering the
national economy and patrimony" 27 and in the use of "Filipino labor,
domestic materials and locally-produced goods"; (2) by mandating the
State to "adopt measures that help make them competitive; 28 and (3) by
requiring the State to "develop a self-reliant and independent national
economy effectively controlled by Filipinos." 29 In similar language, the
Constitution takes into account the realities of the outside world as it
requires the pursuit of "a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality ad
reciprocity"; 30 and speaks of industries "which are competitive in both
domestic and foreign markets" as well as of the protection of "Filipino
enterprises against unfair foreign competition and trade practices."
It is true that in the recent case of Manila Prince Hotel vs. Government
Service Insurance System, et al., 31 this Court held that "Sec. 10, second
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par., Art. XII of the 1987 Constitution is a mandatory, positive command
which is complete in itself and which needs no further guidelines or
implementing laws or rule for its enforcement. From its very words the
provision does not require any legislation to put it in operation. It is per
se judicially enforceable." However, as the constitutional provision itself
states, it is enforceable only in regard to "the grants of rights, privileges
and concessions covering national economy and patrimony" and not to
every aspect of trade and commerce. It refers to exceptions rather than
the rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII
is self-executing or not. Rather, the issue is whether, as a rule, there are
enough balancing provisions in the Constitution to allow the Senate to
ratify the Philippine concurrence in the WTO Agreement. And we hold that
there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino
goods, services, labor and enterprises, at the same time, it recognizes the
need for business exchange with the rest of the world on the bases of
equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. 32 In other
words, the Constitution did not intend to pursue an isolationist policy. It
did not shut out foreign investments, goods and services in the
development of the Philippine economy. While the Constitution does not
encourage the unlimited entry of foreign goods, services and investments
into the country, it does not prohibit them either. In fact, it allows an
exchange on the basis of equality and reciprocity, frowning only on foreign
competition that is unfair.
WTO Recognizes Need to
Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some
built-in advantages to protect weak and developing economies, which
comprise the vast majority of its members. Unlike in the UN where major
states have permanent seats and veto powers in the Security Council, in
the WTO, decisions are made on the basis of sovereign equality, with each
member's vote equal in weight to that of any other. There is no WTO
equivalent of the UN Security Council.
WTO decides by consensus whenever possible,
otherwise, decisions of the Ministerial Conference
and the General Council shall be taken by the
majority of the votes cast, except in cases of
interpretation of the Agreement or waiver of the
obligation of a member which would require three
fourths vote. Amendments would require two
thirds vote in general. Amendments to MFN
provisions and the Amendments provision will
require assent of all members. Any member may
withdraw from the Agreement upon the expiration
of six months from the date of notice of
withdrawals. 33
Hence, poor countries can protect their common interests more effectively
through the WTO than through one-on-one negotiations with developed
countries. Within the WTO, developing countries can form powerful blocs
to push their economic agenda more decisively than outside the
Organization. This is not merely a matter of practical alliances but a
negotiating strategy rooted in law. Thus, the basic principles underlying the
WTO Agreement recognize the need of developing countries like the
Intellectual Property Law
Philippines to "share in the growth in international trade commensurate
with the needs of their economic development." These basic principles are
found in the preamble 34 of the WTO Agreement as follows:
The Parties to this Agreement,
Recognizing that their relations in the field of trade
and economic endeavour should be conducted
with a view to raising standards of living, ensuring
full employment and a large and steadily growing
volume of real income and effective demand, and
expanding the production of and trade in goods
and services, while allowing for the optimal use of
the world's resources in accordance with the
objective of sustainable development, seeking
both to protect and preserve the environment and
to enhance the means for doing so in a manner
consistent with their respective needs and concerns
at different levels of economic development,
Recognizing further that there is need for positive
efforts designed to ensure that developing
countries, and especially the least developed
among them, secure a share in the growth in
international trade commensurate with the needs
of their economic development,
Being desirous of contributing to these objectives
by entering into reciprocal and mutually
advantageous arrangements directed to the
substantial reduction of tariffs and other barriers
to trade and to the elimination of discriminatory
treatment in international trade relations,
Resolved, therefore, to develop an integrated,
more viable and durable multilateral trading
system encompassing the General Agreement on
Tariffs and Trade, the results of past trade
liberalization efforts, and all of the results of the
Uruguay Round of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to
further the objectives underlying this multilateral
trading system, . . . (emphasis supplied.)
Specific WTO Provisos
Protect Developing Countries
So too, the Solicitor General points out that pursuant to and consistent
with the foregoing basic principles, the WTO Agreement grants developing
countries a more lenient treatment, giving their domestic industries some
protection from the rush of foreign competition. Thus, with respect to
tariffs in general, preferential treatment is given to developing countries in
terms of the amount of tariff reduction and the period within which the
reduction is to be spread out. Specifically, GATT requires an average
tariff reduction rate of 36% for developed countries to be effected within
a period of six (6) years while developing countries including the
Philippines are required to effect an average tariff reduction of only 24%
within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to
reduce domestic support to agricultural products by 20% over six (6) years,
Page 19 of 46
as compared to only 13% for developing countries to be effected within ten
(10) years.
In regard to export subsidy for agricultural products, GATT requires
developed countries to reduce their budgetary outlays for export
subsidy by 36% and export volumes receiving export subsidy by 21% within
a period of six (6) years. For developing countries, however, the reduction
rate is only two-thirds of that prescribed for developed countries and a
longer period of ten (10) years within which to effect such reduction.
Moreover, GATT itself has provided built-in protection from unfair foreign
competition and trade practices including anti-dumping measures,
countervailing measures and safeguards against import surges. Where
local businesses are jeopardized by unfair foreign competition, the
Philippines can avail of these measures. There is hardly therefore any basis
for the statement that under the WTO, local industries and enterprises will
all be wiped out and that Filipinos will be deprived of control of the
economy. Quite the contrary, the weaker situations of developing nations
like the Philippines have been taken into account; thus, there would be no
basis to say that in joining the WTO, the respondents have gravely abused
their discretion. True, they have made a bold decision to steer the ship of
state into the yet uncharted sea of economic liberalization. But such
decision cannot be set aside on the ground of grave abuse of discretion,
simply because we disagree with it or simply because we believe only in
other economic policies. As earlier stated, the Court in taking jurisdiction
of this case will not pass upon the advantages and disadvantages of trade
liberalization as an economic policy. It will only perform its constitutional
duty of determining whether the Senate committed grave abuse of
discretion.
Constitution Does Not
Rule Out Foreign Competition
Furthermore, the constitutional policy of a "self-reliant and independent
national economy" 35 does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither "economic
seclusion" nor "mendicancy in the international community." As explained
by Constitutional Commissioner Bernardo Villegas, sponsor of this
constitutional policy:
Economic self-reliance is a primary objective of a
developing country that is keenly aware of
overdependence on external assistance for even its
most basic needs. It does not mean autarky or
economic seclusion; rather, it means avoiding
mendicancy in the international community.
Independence refers to the freedom from undue
foreign control of the national economy, especially
in such strategic industries as in the development
of natural resources and public utilities. 36
The WTO reliance on "most favored nation," "national treatment," and
"trade without discrimination" cannot be struck down as unconstitutional
as in fact they are rules of equality and reciprocity that apply to all WTO
members. Aside from envisioning a trade policy based on "equality and
reciprocity," 37 the fundamental law encourages industries that are
"competitive in both domestic and foreign markets," thereby
demonstrating a clear policy against a sheltered domestic trade
environment, but one in favor of the gradual development of robust
industries that can compete with the best in the foreign markets. Indeed,
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Filipino managers and Filipino enterprises have shown capability and
tenacity to compete internationally. And given a free trade environment,
Filipino entrepreneurs and managers in Hongkong have demonstrated the
Filipino capacity to grow and to prosper against the best offered under a
policy of laissez faire.
Constitution Favors Consumers,
Not Industries or Enterprises
The Constitution has not really shown any unbalanced bias in favor of any
business or enterprise, nor does it contain any specific pronouncement
that Filipino companies should be pampered with a total proscription of
foreign competition. On the other hand, respondents claim that
WTO/GATT aims to make available to the Filipino consumer the best goods
and services obtainable anywhere in the world at the most reasonable
prices. Consequently, the question boils down to whether WTO/GATT will
favor the general welfare of the public at large.
Will adherence to the WTO treaty bring this ideal (of favoring the general
welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos' general welfare
because it will as promised by its promoters expand the country's
exports and generate more employment?
Will it bring more prosperity, employment, purchasing power and quality
products at the most reasonable rates to the Filipino public?
The responses to these questions involve "judgment calls" by our policy
makers, for which they are answerable to our people during appropriate
electoral exercises. Such questions and the answers thereto are not subject
to judicial pronouncements based on grave abuse of discretion.
Constitution Designed to Meet
Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the
Constitution was drafted and ratified in 1987. That does not mean however
that the Charter is necessarily flawed in the sense that its framers might
not have anticipated the advent of a borderless world of business. By the
same token, the United Nations was not yet in existence when the 1935
Constitution became effective. Did that necessarily mean that the then
Constitution might not have contemplated a diminution of the
absoluteness of sovereignty when the Philippines signed the UN Charter,
thereby effectively surrendering part of its control over its foreign relations
to the decisions of various UN organs like the Security Council?
It is not difficult to answer this question. Constitutions are designed to
meet not only the vagaries of contemporary events. They should be
interpreted to cover even future and unknown circumstances. It is to the
credit of its drafters that a Constitution can withstand the assaults of bigots
and infidels but at the same time bend with the refreshing winds of change
necessitated by unfolding events. As one eminent political law writer and
respected jurist 38 explains:
The Constitution must be quintessential rather
than superficial, the root and not the blossom, the
base and frame-work only of the edifice that is yet
to rise. It is but the core of the dream that must
take shape, not in a twinkling by mandate of our
delegates, but slowly "in the crucible of Filipino
minds and hearts," where it will in time develop its
sinews and gradually gather its strength and finally
achieve its substance. In fine, the Constitution
Intellectual Property Law
cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention,
nor can it conjure by mere fiat an instant Utopia. It
must grow with the society it seeks to re-structure
and march apace with the progress of the race,
drawing from the vicissitudes of history the
dynamism and vitality that will keep it, far from
becoming a petrified rule, a pulsing, living law
attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that "(e)ach Member shall ensure the
conformity of its laws, regulations and administrative procedures with its
obligations as provided in the annexed Agreements." 39 Petitioners
maintain that this undertaking "unduly limits, restricts and impairs
Philippine sovereignty, specifically the legislative power which under Sec.
2, Article VI of the 1987 Philippine Constitution is vested in the Congress of
the Philippines. It is an assault on the sovereign powers of the Philippines
because this means that Congress could not pass legislation that will be
good for our national interest and general welfare if such legislation will
not conform with the WTO Agreement, which not only relates to the trade
in goods . . . but also to the flow of investments and money . . . as well as
to a whole slew of agreements on socio-cultural matters . . . 40
More specifically, petitioners claim that said WTO proviso derogates from
the power to tax, which is lodged in the Congress. 41 And while the
Constitution allows Congress to authorize the President to fix tariff rates,
import and export quotas, tonnage and wharfage dues, and other duties
or imposts, such authority is subject to "specified limits and . . . such
limitations and restrictions" as Congress may provide, 42 as in fact it did
under Sec. 401 of the Tariff and Customs Code.
Sovereignty Limited by
International Law and Treaties
This Court notes and appreciates the ferocity and passion by which
petitioners stressed their arguments on this issue. However, while
sovereignty has traditionally been deemed absolute and all-encompassing
on the domestic level, it is however subject to restrictions and limitations
voluntarily agreed to by the Philippines, expressly or impliedly, as a
member of the family of nations. Unquestionably, the Constitution did not
envision a hermit-type isolation of the country from the rest of the world.
In its Declaration of Principles and State Policies, the Constitution "adopts
the generally accepted principles of international law as part of the law of
the land, and adheres to the policy of peace, equality, justice, freedom,
cooperation and amity, with all nations." 43 By the doctrine of
incorporation, the country is bound by generally accepted principles of
international law, which are considered to be automatically part of our
own laws. 44 One of the oldest and most fundamental rules in international
law is pacta sunt servanda international agreements must be performed
in good faith. "A treaty engagement is not a mere moral obligation but
creates a legally binding obligation on the parties . . . A state which has
contracted valid international obligations is bound to make in its
legislations such modifications as may be necessary to ensure the
fulfillment of the obligations undertaken." 45
By their inherent nature, treaties really limit or restrict the absoluteness of
sovereignty. By their voluntary act, nations may surrender some aspects of
their state power in exchange for greater benefits granted by or derived
Page 20 of 46
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from a convention or pact. After all, states, like individuals, live with
coequals, and in pursuit of mutually covenanted objectives and benefits,
they also commonly agree to limit the exercise of their otherwise absolute
rights. Thus, treaties have been used to record agreements between States
concerning such widely diverse matters as, for example, the lease of naval
bases, the sale or cession of territory, the termination of war, the
regulation of conduct of hostilities, the formation of alliances, the
regulation of commercial relations, the settling of claims, the laying down
of rules governing conduct in peace and the establishment of international
organizations.46 The sovereignty of a state therefore cannot in fact and in
reality be considered absolute. Certain restrictions enter into the picture:
(1) limitations imposed by the very nature of membership in the family of
nations and (2) limitations imposed by treaty stipulations. As aptly put by
John F. Kennedy, "Today, no nation can build its destiny alone. The age of
self-sufficient nationalism is over. The age of interdependence is here." 47
UN Charter and Other Treaties
Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51
charter members, it consented to restrict its sovereign rights under the
"concept of sovereignty as auto-limitation." 47-A Under Article 2 of the UN
Charter, "(a)ll members shall give the United Nations every assistance in
any action it takes in accordance with the present Charter, and shall refrain
from giving assistance to any state against which the United Nations is
taking preventive or enforcement action." Such assistance includes
payment of its corresponding share not merely in administrative expenses
but also in expenditures for the peace-keeping operations of the
organization. In its advisory opinion of July 20, 1961, the International
Court of Justice held that money used by the United Nations Emergency
Force in the Middle East and in the Congo were "expenses of the United
Nations" under Article 17, paragraph 2, of the UN Charter. Hence, all its
members must bear their corresponding share in such expenses. In this
sense, the Philippine Congress is restricted in its power to appropriate. It is
compelled to appropriate funds whether it agrees with such peace-keeping
expenses or not. So too, under Article 105 of the said Charter, the UN and
its representatives enjoy diplomatic privileges and immunities, thereby
limiting again the exercise of sovereignty of members within their own
territory. Another example: although "sovereign equality" and "domestic
jurisdiction" of all members are set forth as underlying principles in the UN
Charter, such provisos are however subject to enforcement measures
decided by the Security Council for the maintenance of international peace
and security under Chapter VII of the Charter. A final example: under
Article 103, "(i)n the event of a conflict between the obligations of the
Members of the United Nations under the present Charter and their
obligations under any other international agreement, their obligation
under the present charter shall prevail," thus unquestionably denying the
Philippines as a member the sovereign power to make a choice as to
which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other
international pacts both bilateral and multilateral that involve
limitations on Philippine sovereignty. These are enumerated by the
Solicitor General in his Compliance dated October 24, 1996, as follows:
(a) Bilateral convention with the United States
regarding taxes on income, where the Philippines
agreed, among others, to exempt from tax, income
received in the Philippines by, among others, the
Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the
Overseas Private Investment Corporation of the
United States. Likewise, in said convention, wages,
salaries and similar remunerations paid by the
United States to its citizens for labor and personal
services performed by them as employees or
officials of the United States are exempt from
income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing,
among others, for the avoidance of double
taxation with respect to taxes on income.
(c) Bilateral convention with the Kingdom of
Sweden for the avoidance of double taxation.
(d) Bilateral convention with the French Republic
for the avoidance of double taxation.
(e) Bilateral air transport agreement with Korea
where the Philippines agreed to exempt from all
customs duties, inspection fees and other duties or
taxes aircrafts of South Korea and the regular
equipment, spare parts and supplies arriving with
said aircrafts.
(f) Bilateral air service agreement with Japan,
where the Philippines agreed to exempt from
customs duties, excise taxes, inspection fees and
other similar duties, taxes or charges fuel,
lubricating oils, spare parts, regular equipment,
stores on board Japanese aircrafts while on
Philippine soil.
(g) Bilateral air service agreement with Belgium
where the Philippines granted Belgian air carriers
the same privileges as those granted to Japanese
and Korean air carriers under separate air service
agreements.
(h) Bilateral notes with Israel for the abolition of
transit and visitor visas where the Philippines
exempted Israeli nationals from the requirement
of obtaining transit or visitor visas for a sojourn in
the Philippines not exceeding 59 days.
(i) Bilateral agreement with France exempting
French nationals from the requirement of
obtaining transit and visitor visa for a sojourn not
exceeding 59 days.
(j) Multilateral Convention on Special Missions,
where the Philippines agreed that premises of
Special Missions in the Philippines are inviolable
and its agents can not enter said premises without
consent of the Head of Mission concerned. Special
Missions are also exempted from customs duties,
taxes and related charges.
(k) Multilateral convention on the Law of Treaties.
In this convention, the Philippines agreed to be
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governed by the Vienna Convention on the Law of
Treaties.
(l) Declaration of the President of the Philippines
accepting compulsory jurisdiction of the
International Court of Justice. The International
Court of Justice has jurisdiction in all legal disputes
concerning the interpretation of a treaty, any
question of international law, the existence of any
fact which, if established, would constitute a
breach "of international obligation."
In the foregoing treaties, the Philippines has effectively agreed to limit the
exercise of its sovereign powers of taxation, eminent domain and police
power. The underlying consideration in this partial surrender of
sovereignty is the reciprocal commitment of the other contracting states
in granting the same privilege and immunities to the Philippines, its officials
and its citizens. The same reciprocity characterizes the Philippine
commitments under WTO-GATT.
International treaties, whether relating to nuclear
disarmament, human rights, the environment, the
law of the sea, or trade, constrain domestic
political sovereignty through the assumption of
external obligations. But unless anarchy in
international relations is preferred as an
alternative, in most cases we accept that the
benefits of the reciprocal obligations involved
outweigh the costs associated with any loss of
political sovereignty. (T)rade treaties that structure
relations by reference to durable, well-defined
substantive norms and objective dispute
resolution procedures reduce the risks of larger
countries exploiting raw economic power to bully
smaller countries, by subjecting power relations to
some form of legal ordering. In addition, smaller
countries typically stand to gain disproportionately
from trade liberalization. This is due to the simple
fact that liberalization will provide access to a
larger set of potential new trading relationship
than in case of the larger country gaining enhanced
success to the smaller country's market. 48
The point is that, as shown by the foregoing treaties, a portion of
sovereignty may be waived without violating the Constitution, based on
the rationale that the Philippines "adopts the generally accepted principles
of international law as part of the law of the land and adheres to the policy
of . . . cooperation and amity with all nations."
Fourth Issue: The WTO Agreement and Judicial Power
Petitioners aver that paragraph 1, Article 34 of the General Provisions and
Basic Principles of the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) 49 intrudes on the power of the Supreme Court to
promulgate rules concerning pleading, practice and procedures. 50
To understand the scope and meaning of Article 34, TRIPS, 51 it will be
fruitful to restate its full text as follows:
Article 34
Process Patents: Burden of Proof
Page 21 of 46
1. For the purposes of civil proceedings in respect
of the infringement of the rights of the owner
referred to in paragraph 1 (b) of Article 28, if the
subject matter of a patent is a process for obtaining
a product, the judicial authorities shall have the
authority to order the defendant to prove that the
process to obtain an identical product is different
from the patented process. Therefore, Members
shall provide, in at least one of the following
circumstances, that any identical product when
produced without the consent of the patent owner
shall, in the absence of proof to the contrary, be
deemed to have been obtained by the patented
process:
(a) if the product obtained
by the patented process is
new;
(b) if there is a substantial
likelihood that the
identical product was
made by the process and
the owner of the patent
has been unable through
reasonable efforts to
determine the process
actually used.
2. Any Member shall be free to provide that the
burden of proof indicated in paragraph 1 shall be
on the alleged infringer only if the condition
referred to in subparagraph (a) is fulfilled or only if
the condition referred to in subparagraph (b) is
fulfilled.
3. In the adduction of proof to the contrary, the
legitimate interests of defendants in protecting
their manufacturing and business secrets shall be
taken into account.
From the above, a WTO Member is required to provide a rule of disputable
(not the words "in the absence of proof to the contrary") presumption that
a product shown to be identical to one produced with the use of a patented
process shall be deemed to have been obtained by the (illegal) use of the
said patented process, (1) where such product obtained by the patented
product is new, or (2) where there is "substantial likelihood" that the
identical product was made with the use of the said patented process but
the owner of the patent could not determine the exact process used in
obtaining such identical product. Hence, the "burden of proof"
contemplated by Article 34 should actually be understood as the duty of
the alleged patent infringer to overthrow such presumption. Such burden,
properly understood, actually refers to the "burden of evidence" (burden
of going forward) placed on the producer of the identical (or fake) product
to show that his product was produced without the use of the patented
process.
The foregoing notwithstanding, the patent owner still has the "burden of
proof" since, regardless of the presumption provided under paragraph 1 of
Article 34, such owner still has to introduce evidence of the existence of
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the alleged identical product, the fact that it is "identical" to the genuine
one produced by the patented process and the fact of "newness" of the
genuine product or the fact of "substantial likelihood" that the identical
product was made by the patented process.
The foregoing should really present no problem in changing the rules of
evidence as the present law on the subject, Republic Act No. 165, as
amended, otherwise known as the Patent Law, provides a similar
presumption in cases of infringement of patented design or utility model,
thus:
Sec. 60. Infringement. Infringement of a design
patent or of a patent for utility model shall consist
in unauthorized copying of the patented design or
utility model for the purpose of trade or industry in
the article or product and in the making, using or
selling of the article or product copying the
patented design or utility model. Identity or
substantial identity with the patented design or
utility model shall constitute evidence of copying.
(emphasis supplied)
Moreover, it should be noted that the requirement of Article 34 to provide
a disputable presumption applies only if (1) the product obtained by the
patented process in NEW or (2) there is a substantial likelihood that the
identical product was made by the process and the process owner has not
been able through reasonable effort to determine the process used. Where
either of these two provisos does not obtain, members shall be free to
determine the appropriate method of implementing the provisions of
TRIPS within their own internal systems and processes.
By and large, the arguments adduced in connection with our disposition of
the third issue derogation of legislative power will apply to this fourth
issue also. Suffice it to say that the reciprocity clause more than justifies
such intrusion, if any actually exists. Besides, Article 34 does not contain an
unreasonable burden, consistent as it is with due process and the concept
of adversarial dispute settlement inherent in our judicial system.
So too, since the Philippine is a signatory to most international conventions
on patents, trademarks and copyrights, the adjustment in legislation and
rules of procedure will not be substantial. 52
Fifth Issue: Concurrence Only in the WTO Agreement and
Not in Other Documents Contained in the Final Act
Petitioners allege that the Senate concurrence in the WTO Agreement and
its annexes but not in the other documents referred to in the Final Act,
namely the Ministerial Declaration and Decisions and the Understanding
on Commitments in Financial Services is defective and insufficient and
thus constitutes abuse of discretion. They submit that such concurrence in
the WTO Agreement alone is flawed because it is in effect a rejection of
the Final Act, which in turn was the document signed by Secretary Navarro,
in representation of the Republic upon authority of the President. They
contend that the second letter of the President to the Senate 53 which
enumerated what constitutes the Final Act should have been the subject
of concurrence of the Senate.
"A final act, sometimes called protocol de cloture, is an instrument which
records the winding up of the proceedings of a diplomatic conference and
usually includes a reproduction of the texts of treaties, conventions,
recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference." 54 It is not the treaty itself. It
Intellectual Property Law
is rather a summary of the proceedings of a protracted conference which
may have taken place over several years. The text of the "Final Act
Embodying the Results of the Uruguay Round of Multilateral Trade
Negotiations" is contained in just one page 55 in Vol. I of the 36-
volume Uruguay Round of Multilateral Trade Negotiations. By signing said
Final Act, Secretary Navarro as representative of the Republic of the
Philippines undertook:
(a) to submit, as appropriate, the WTO Agreement
for the consideration of their respective
competent authorities with a view to seeking
approval of the Agreement in accordance with
their procedures; and
(b) to adopt the Ministerial Declarations and
Decisions.
The assailed Senate Resolution No. 97 expressed concurrence in exactly
what the Final Act required from its signatories, namely, concurrence of
the Senate in the WTO Agreement.
The Ministerial Declarations and Decisions were deemed adopted without
need for ratification. They were approved by the ministers by virtue of
Article XXV: 1 of GATT which provides that representatives of the members
can meet "to give effect to those provisions of this Agreement which
invoke joint action, and generally with a view to facilitating the operation
and furthering the objectives of this Agreement." 56
The Understanding on Commitments in Financial Services also approved in
Marrakesh does not apply to the Philippines. It applies only to those 27
Members which "have indicated in their respective schedules of
commitments on standstill, elimination of monopoly, expansion of
operation of existing financial service suppliers, temporary entry of
personnel, free transfer and processing of information, and national
treatment with respect to access to payment, clearing systems and
refinancing available in the normal course of business." 57
On the other hand, the WTO Agreement itself expresses what multilateral
agreements are deemed included as its integral parts, 58 as follows:
Article II
Scope of the WTO
1. The WTO shall provide the common institutional
frame-work for the conduct of trade relations
among its Members in matters to the agreements
and associated legal instruments included in the
Annexes to this Agreement.
2. The Agreements and associated legal
instruments included in Annexes 1, 2, and 3,
(hereinafter referred to as "Multilateral
Agreements") are integral parts of this Agreement,
binding on all Members.
3. The Agreements and associated legal
instruments included in Annex 4 (hereinafter
referred to as "Plurilateral Trade Agreements") are
also part of this Agreement for those Members
that have accepted them, and are binding on those
Members. The Plurilateral Trade Agreements do
not create either obligation or rights for Members
that have not accepted them.
Page 22 of 46
4. The General Agreement on Tariffs and Trade
1994 as specified in annex 1A (hereinafter referred
to as "GATT 1994") is legally distinct from the
General Agreement on Tariffs and Trade, dated 30
October 1947, annexed to the Final Act adopted at
the conclusion of the Second Session of the
Preparatory Committee of the United Nations
Conference on Trade and Employment, as
subsequently rectified, amended or modified
(hereinafter referred to as "GATT 1947").
It should be added that the Senate was well-aware of what it was
concurring in as shown by the members' deliberation on August 25, 1994.
After reading the letter of President Ramos dated August 11, 1994, 59 the
senators
of the Republic minutely dissected what the Senate was concurring in, as
follows: 60
THE CHAIRMAN: Yes. Now, the question of the
validity of the submission came up in the first day
hearing of this Committee yesterday. Was the
observation made by Senator Taada that what
was submitted to the Senate was not the
agreement on establishing the World Trade
Organization by the final act of the Uruguay Round
which is not the same as the agreement
establishing the World Trade Organization? And on
that basis, Senator Tolentino raised a point of
order which, however, he agreed to withdraw
upon understanding that his suggestion for an
alternative solution at that time was acceptable.
That suggestion was to treat the proceedings of the
Committee as being in the nature of briefings for
Senators until the question of the submission could
be clarified.
And so, Secretary Romulo, in effect, is the
President submitting a new . . . is he making a new
submission which improves on the clarity of the
first submission?
MR. ROMULO: Mr. Chairman, to make sure that it
is clear cut and there should be no
misunderstanding, it was his intention to clarify all
matters by giving this letter.
THE CHAIRMAN: Thank you.
Can this Committee hear from Senator Taada and
later on Senator Tolentino since they were the
ones that raised this question yesterday?
Senator Taada, please.
SEN. TAADA: Thank you, Mr. Chairman.
Based on what Secretary Romulo has read, it would
now clearly appear that what is being submitted to
the Senate for ratification is not the Final Act of the
Uruguay Round, but rather the Agreement on the
World Trade Organization as well as the Ministerial
Declarations and Decisions, and the Understanding
and Commitments in Financial Services.
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I am now satisfied with the wording of the new
submission of President Ramos.
SEN. TAADA. . . . of President Ramos, Mr.
Chairman.
THE CHAIRMAN. Thank you, Senator Taada. Can
we hear from Senator Tolentino? And after him
Senator Neptali Gonzales and Senator Lina.
SEN. TOLENTINO, Mr. Chairman, I have not seen
the new submission actually transmitted to us but I
saw the draft of his earlier, and I think it now
complies with the provisions of the Constitution,
and with the Final Act itself . The Constitution does
not require us to ratify the Final Act. It requires us
to ratify the Agreement which is now being
submitted. The Final Act itself specifies what is
going to be submitted to with the governments of
the participants.
In paragraph 2 of the Final Act, we read and I
quote:
By signing the present Final Act, the
representatives agree: (a) to submit as appropriate
the WTO Agreement for the consideration of the
respective competent authorities with a view to
seeking approval of the Agreement in accordance
with their procedures.
In other words, it is not the Final Act that was
agreed to be submitted to the governments for
ratification or acceptance as whatever their
constitutional procedures may provide but it is the
World Trade Organization Agreement. And if that
is the one that is being submitted now, I think it
satisfies both the Constitution and the Final Act
itself .
Thank you, Mr. Chairman.
THE CHAIRMAN. Thank you, Senator Tolentino,
May I call on Senator Gonzales.
SEN. GONZALES. Mr. Chairman, my views on this
matter are already a matter of record. And they
had been adequately reflected in the journal of
yesterday's session and I don't see any need for
repeating the same.
Now, I would consider the new submission as an act
ex abudante cautela.
THE CHAIRMAN. Thank you, Senator Gonzales.
Senator Lina, do you want to make any comment
on this?
SEN. LINA. Mr. President, I agree with the
observation just made by Senator Gonzales out of
the abundance of question. Then the new
submission is, I believe, stating the obvious and
therefore I have no further comment to make.
Epilogue
In praying for the nullification of the Philippine ratification of the WTO
Agreement, petitioners are invoking this Court's constitutionally imposed
Intellectual Property Law
duty "to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction" on the part of the
Senate in giving its concurrence therein via Senate Resolution No. 97.
Procedurally, a writ of certiorari grounded on grave abuse of discretion
may be issued by the Court under Rule 65 of the Rules of Court when it is
amply shown that petitioners have no other plain, speedy and adequate
remedy in the ordinary course of law.
By grave abuse of discretion is meant such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. 61 Mere abuse
of discretion is not enough. It must be grave abuse of discretion as when
the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and so gross as to
amount to an evasion of a positive duty or to a virtual refusal to perform
the duty enjoined or to act at all in contemplation of law. 62 Failure on the
part of the petitioner to show grave abuse of discretion will result in the
dismissal of the petition. 63
In rendering this Decision, this Court never forgets that the Senate, whose
act is under review, is one of two sovereign houses of Congress and is thus
entitled to great respect in its actions. It is itself a constitutional body
independent and coordinate, and thus its actions are presumed regular
and done in good faith. Unless convincing proof and persuasive arguments
are presented to overthrow such presumptions, this Court will resolve
every doubt in its favor. Using the foregoing well-accepted definition of
grave abuse of discretion and the presumption of regularity in the Senate's
processes, this Court cannot find any cogent reason to impute grave abuse
of discretion to the Senate's exercise of its power of concurrence in the
WTO Agreement granted it by Sec. 21 of Article VII of the Constitution. 64
It is true, as alleged by petitioners, that broad constitutional principles
require the State to develop an independent national economy effectively
controlled by Filipinos; and to protect and/or prefer Filipino labor,
products, domestic materials and locally produced goods. But it is equally
true that such principles while serving as judicial and legislative guides
are not in themselves sources of causes of action. Moreover, there are
other equally fundamental constitutional principles relied upon by the
Senate which mandate the pursuit of a "trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the basis
of equality and reciprocity" and the promotion of industries "which are
competitive in both domestic and foreign markets," thereby justifying its
acceptance of said treaty. So too, the alleged impairment of sovereignty in
the exercise of legislative and judicial powers is balanced by the adoption
of the generally accepted principles of international law as part of the law
of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and
overwhelmingly gave its consent to the WTO Agreement thereby making it
"a part of the law of the land" is a legitimate exercise of its sovereign duty
and power. We find no "patent and gross" arbitrariness or despotism "by
reason of passion or personal hostility" in such exercise. It is not impossible
to surmise that this Court, or at least some of its members, may even agree
with petitioners that it is more advantageous to the national interest to
strike down Senate Resolution No. 97. But that is not a legal reason to
attribute grave abuse of discretion to the Senate and to nullify its decision.
To do so would constitute grave abuse in the exercise of our own judicial
power and duty. Ineludably, what the Senate did was a valid exercise of its
Page 23 of 46
authority. As to whether such exercise was wise, beneficial or viable is
outside the realm of judicial inquiry and review. That is a matter between
the elected policy makers and the people. As to whether the nation should
join the worldwide march toward trade liberalization and economic
globalization is a matter that our people should determine in electing their
policy makers. After all, the WTO Agreement allows withdrawal of
membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends,
predicts an Asian Renaissance 65 where "the East will become the
dominant region of the world economically, politically and culturally in the
next century." He refers to the "free market" espoused by WTO as the
"catalyst" in this coming Asian ascendancy. There are at present about 31
countries including China, Russia and Saudi Arabia negotiating for
membership in the WTO. Notwithstanding objections against possible
limitations on national sovereignty, the WTO remains as the only viable
structure for multilateral trading and the veritable forum for the
development of international trade law. The alternative to WTO is
isolation, stagnation, if not economic self-destruction. Duly enriched with
original membership, keenly aware of the advantages and disadvantages
of globalization with its on-line experience, and endowed with a vision of
the future, the Philippines now straddles the crossroads of an international
strategy for economic prosperity and stability in the new millennium. Let
the people, through their duly authorized elected officers, make their free
choice.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno,
Kapunan, Mendoza, Francisco, Hermosisima, Jr. and Torres, Jr., JJ.,
concur.
Padilla and Vitug, JJ., concur in the result.
customers are in the restaurant for less than five minutes, and those
who eat there seldom remain longer than 10 or 15 minutes.
United States Supreme Court
TWENTIETH CENTURY MUSIC CORP. v. AIKEN, (1975)
No. 74-452
Argued: April 21, 1975 Decided: June 17, 1975
Petitioners' copyrighted songs were received on the radio in
respondent's food shop from a local broadcasting station, which was
licensed by the American Society of Composers, Authors and Publishers
to perform the songs, but respondent had no such license. Petitioners
then sued respondent for copyright infringement. The District Court
granted awards, but the Court of Appeals reversed. Held: Respondent
did not infringe upon petitioners' exclusive right, under the Copyright
Act, "[t]o perform the copyrighted work publicly for profit," since the
radio reception did not constitute a "performance" of the copyrighted
songs. Fortnightly Corp. v. United Artists, 392 U.S. 390 ; Teleprompter
Corp. v. CBS, 415 U.S. 394 . To hold that respondent "performed" the
copyrighted works would obviously result in a wholly unenforceable
The Law on Copyright
regime of copyright law, and would also be highly inequitable, since
(short of keeping his radio turned off) one in respondent's position
would be unable to protect himself from infringement liability. Such a
ruling, moreover, would authorize the sale of an untold number of
licenses for what is basically a single rendition of a copyrighted work,
thus conflicting with the balanced purpose of the Copyright Act of
assuring the composer an adequate return for the value of his
composition while at the same time protecting the public from
oppressive monopolies. Pp. 154-164.
500 F.2d 127, affirmed.
STEWART, J., delivered the opinion of the Court, in which BRENNAN,
WHITE, MARSHALL, POWELL, and REHNQUIST, JJ., joined. BLACKMUN,
J., filed an opinion concurring in the result, post, p. 164. BURGER, C. J.,
filed a dissenting opinion, in which DOUGLAS, J., joined, post, p. 167.
Simon H. Rifkind argued the cause for petitioners. [422 U.S. 151,
152] With him on the briefs were Herman Finkelstein, Jay H. Topkis,
and Bernard Korman.
Harold David Cohen argued the cause for respondent. With him on the
brief were Thomas N. Dowd and William S. D' Amico. *
[ Footnote * ] Irwin Karp filed a brief for the Authors League of America,
Inc., as amicus curiae urging reversal.
MR. JUSTICE STEWART delivered the opinion of the Court.
The question presented by this case is whether the reception of a radio
broadcast of a copyrighted musical composition can constitute
copyright infringement, when the copyright owner has licensed the
broadcaster to perform the composition publicly for profit.
I
The respondent George Aiken owns and operates a small fast-service
food shop in downtown Pittsburgh, Pa., known as "George Aiken's
Chicken." Some customers carry out the food they purchase, while
others remain and eat at counters or booths. Usually the "carry-out"
A radio with outlets to four speakers in the ceiling receives broadcasts
of music and other normal radio programing at the restaurant. Aiken
usually turns on the radio each morning at the start of business. Music,
news, entertainment, and commercial advertising broadcast by radio
stations are thus heard by Aiken, his employees, and his customers
during the hours that the establishment is open for business.
On March 11, 1972, broadcasts of two copyrighted musical
compositions were received on the radio from a [422 U.S. 151,
153] local station while several customers were in Aiken's
establishment. Petitioner Twentieth Century Music Corp. owns the
copyright on one of these songs, "The More I See You"; petitioner Mary
Bourne the copyright on the other, "Me and My Shadow." Petitioners
are members of the American Society of Composers, Authors and
Publishers (ASCAP), an association that licenses the performing rights of
its members to their copyrighted works. The station that broadcast the
petitioners' songs was licensed by ASCAP to broadcast them. 1 Aiken,
however, did not hold a license from ASCAP.
The petitioners sued Aiken in the United States District Court for the
Western District of Pennsylvania to recover for copyright infringement.
Their complaint alleged that the radio reception in Aiken's restaurant of
the licensed broadcasts infringed their exclusive rights to "perform"
Intellectual Property Law
their copyrighted works in public for profit. The District Judge agreed,
and granted statutory monetary awards for each infringement. 356 F.
Supp. 271. The United States Court of Appeals for the Third Circuit
reversed that judgment, 500 F.2d 127, holding that the petitioners'
claims against the respondent were foreclosed by this Court's decisions
in Fortnightly Corp. v. United Artists, 392 U.S. 390 , and Teleprompter
Corp. v. [422 U.S. 151, 154] CBS, 415 U.S. 394 . We granted
certiorari. 419 U.S. 1067 .
II
The Copyright Act of 1909, 35 Stat. 1075, as amended, 17 U.S.C. 1 et
seq., 2 gives to a copyright holder a monopoly limited to specified
"exclusive" rights in his copyrighted works. 3 As the Court explained in
Fortnightly Corp. v. United Artists, supra:
"The Copyright Act does not give a copyright [422 U.S. 151, 155] holder
control over all uses of his copyrighted work. Instead, 1 of the Act
enumerates several `rights' that are made `exclusive' to the holder of
the copyright. If a person, without authorization from the copyright
holder, puts a copyrighted work to a use within the scope of one of these
`exclusive rights,' he infringes the copyright. If he puts the work to a use
not enumerated in 1, he does not infringe." 392 U.S., at 393 -395.
Accordingly, if an unlicensed use of a copyrighted work does not conflict
with an "exclusive" right conferred by the statute, it is no infringement
of the holder's rights. No license is required by the Copyright Act, for
example, to sing a copyrighted lyric in the shower. 4 [422 U.S. 151,
156]
The limited scope of the copyright holder's statutory monopoly, like the
limited copyright duration required by the Constitution, 5 reflects a
balance of competing claims upon the public interest: Creative work is
to be encouraged and rewarded, but private motivation must ultimately
serve the cause of promoting broad public availability of literature,
music, and the other arts. 6 The immediate effect of our copyright law
is to secure a fair return for an "author's" creative labor. But the ultimate
aim is, by this incentive, to stimulate artistic creativity for the general
public good. "The sole interest of the United States and the primary
object in conferring the monopoly," this Court has said, "lie in the
general benefits derived by the public from the labors of authors." Fox
Film Corp. v. Doyal, 286 U.S. 123, 127 . See Kendall v. Winsor, 21 How.
322, 327-328; Grant v. Raymond, 6 Pet. 218, 241-242. When
technological change has rendered its literal terms ambiguous, the
Copyright Act must be construed in light of this basic purpose. 7 [422
U.S. 151, 157]
The precise statutory issue in the present case is whether Aiken
infringed upon the petitioners' exclusive right, under the Copyright Act
of 1909. 17 U.S.C. 1 (e), "[t]o perform the copyrighted work publicly for
profit." 8 We may assume that the radio reception of the musical
compositions in Aiken's restaurant occurred "publicly for profit." See
Herbert v. Shanley Co., 242 U.S. 591 . The dispositive question,
therefore, is whether this radio reception constituted a "performance"
of the copyrighted works.
When this statutory provision was enacted in 1909, its purpose was to
prohibit unauthorized performances of copyrighted musical
compositions in such public places as concert halls, theaters,
restaurants, and cabarets. See H. R. Rep. No. 2222, 60th Cong., 2d Sess.
(1909). An orchestra or individual instrumentalist or singer who
Page 24 of 46
performs a copyrighted musical composition in such a public place
without a license is thus clearly an infringer under the statute. The
entrepreneur who sponsors such a public performance for profit is also
an infringer - direct or contributory. See generally 1 & 2 M. Nimmer,
Copyright 102, 134 (1974). But it was never contemplated that the
members of the audience who heard the composition would themselves
also be simultaneously "performing," and thus also guilty of
infringement. This much is common ground.
With the advent of commercial radio, a broadcast musical composition
could be heard instantaneously by an enormous audience of distant and
separate persons operating their radio receiving sets to reconvert the
broadcast [422 U.S. 151, 158] to audible form. 9 Although Congress did
not revise the statutory language, copyright law was quick to adapt to
prevent the exploitation of protected works through the new electronic
technology. In short, it was soon established in the federal courts that
the broadcast of a copyrighted musical composition by a commercial
radio station was a public performance of that composition for profit -
and thus an infringement of the copyright if not licensed. In one of the
earliest cases so holding, the Court of Appeals for the Sixth Circuit said:
"While the fact that the radio was not developed at the time the
Copyright Act . . . was enacted may raise some question as to whether it
properly comes within the purview of the statute, it is not by that fact
alone excluded from the statute. In other words, the statute may be
applied to new situations not anticipated by Congress, if, fairly
construed, such situations come within its intent and meaning. . . . While
statutes should not be stretched to apply to new situations not fairly
within their scope, they should not be so narrowly construed as to
permit their evasion because of changing habits due to new inventions
and discoveries.
.....
"A performance, in our judgment, is no less public because the listeners
are unable to communicate with one another, or are not assembled
within an inclosure, or gathered together in some open stadium or park
or other public place. Nor can a performance, in our judgment, be
deemed private because each listener may enjoy it alone in the privacy
of [422 U.S. 151, 159] his home. Radio broadcasting is intended to, and
in fact does, reach a very much larger number of the public at the
moment of the rendition than any other medium of performance. The
artist is consciously addressing a great, though unseen and widely
scattered, audience, and is therefore participating in a public
performance." Jerome H. Remick & Co. v. American Automobile
Accessories Co., 5 F.2d 411, 411-412.
See also M. Witmark & Sons v. L. Bamberger & Co., 291 F. 776 (NJ);
Jerome H. Remick & Co. v. General Electric Co., 4 F.2d 160 (SDNY);
Jerome H. Remick & Co. v. General Electric Co., 16 F.2d 829 (SDNY);
Associated Music Publishers, Inc. v. Debs Memorial Radio Fund, 141 F.2d
852 (CA2). Cf. Chappell & Co., Ltd. v. Associated Radio Co. of Australia,
Ltd., 1925. Vict. L. R. 350; Messager v. British Broadcasting Co., Ltd.,
1927. 2 K. B. 543, rev'd on other grounds, 1928. 1 K. B. 660, aff'd, 1929.
A. C. 151. See generally Caldwell, The Broadcasting of Copyrighted
Works, 1 J. Air L. 584 (1930); Note, 75 U. Pa. L. Rev. 549 (1927); Note, 39
Harv. L. Rev. 269 (1925).
If, by analogy to a live performance in a concert hall or cabaret, a radio
station "performs" a musical composition when it broadcasts it, the
The Law on Copyright
same analogy would seem to require the conclusion that those who
listen to the broadcast through the use of radio receivers do not perform
the composition. And that is exactly what the early federal cases held.
"Certainly those who listen do not perform, and therefore do not
infringe." Jerome H. Remick & Co. v. General Electric Co., supra, at 829.
"One who manually or by human agency merely actuates electrical
instrumentalities, whereby inaudible elements that are omnipresent in
the air are made audible to persons who are within hearing, does not
`perform' [422 U.S. 151, 160] within the meaning of the Copyright
Law." Buck v. Debaum, 40 F.2d 734, 735 (SD Cal. 1929).
Such was the state of the law when this Court in 1931 decided Buck v.
Jewell-LaSalle Realty Co., 283 U.S. 191 . In that case the Court was called
upon to answer the following question certified by the Court of Appeals
for the Eighth Circuit: "Do the acts of a hotel proprietor, in making
available to his guests, through the instrumentality of a radio receiving
set and loud speakers installed in his hotel and under his control and for
the entertainment of his guests, the hearing of a copyrighted musical
composition, which has been broadcast from a radio transmitting
station, constitute a performance of such composition within the
meaning of 17 USC Sec. 1 (e)?" The Court answered the certified
question in the affirmative. In stating the facts of the case, however, the
Court's opinion made clear that the broadcaster of the musical
composition was not licensed to perform it, and at least twice in the
course of its opinion the Court indicated that the answer to the certified
question might have been different if the broadcast itself had been
authorized by the copyright holder. 10
We may assume for present purposes that the Jewell-LaSalle decision
retains authoritative force in a factual situation like that in which it
arose. 11 But, as the Court of Appeals in this case perceived, this Court
has in two[422 U.S. 151, 161] recent decisions explicitly disavowed the
view that the reception of an electronic broadcast can constitute a
performance, when the broadcaster himself is licensed to perform the
copyrighted material that he broadcasts. Fortnightly Corp. v. United
Artists, 392 U.S. 390 ; Teleprompter Corp. v. CBS, 415 U.S. 394 .
The language of the Court's opinion in the Fortnightly case could hardly
be more explicitly dispositive of the question now before us:
"The television broadcaster in one sense does less than the exhibitor of
a motion picture or stage play; he supplies his audience not with visible
images but only with electronic signals. The viewer conversely does
more than a member of a theater audience; he provides the equipment
to convert electronic signals into audible sound and visible images.
Despite these deviations from the conventional situation contemplated
by the framers of the Copyright Act, broadcasters have been judicially
treated as exhibitors, and viewers as members of a theater audience.
Broadcasters perform. Viewers do not perform. Thus, while both
broadcaster and viewer play crucial roles in the total television process,
a line is drawn between them. One is treated as active performer; the
other, as passive beneficiary." 392 U.S., at 398 -399 (footnotes omitted).
The Fortnightly and Teleprompter cases, to be sure, involved television,
not radio, and the copyrighted materials there in issue were literary and
dramatic works, not musical compositions. But, as the Court of Appeals
correctly observed: "[I]f Fortnightly, with its elaborate CATV plant and
Teleprompter with its even more sophisticated and extended
technological and programming facilities were not `performing,' then
Intellectual Property Law
logic dictates that no `performance' resulted when the
[respondent] [422 U.S. 151, 162] merely activated his restaurant
radio." 500 F.2d, at 137.
To hold in this case that the respondent Aiken "performed" the
petitioners' copyrighted works would thus require us to overrule two
very recent decisions of this Court. But such a holding would more than
offend the principles of stare decisis; it would result in a regime of
copyright law that would be both wholly unenforceable and highly
inequitable.
The practical unenforceability of a ruling that all of those in Aiken's
position are copyright infringers is self-evident. One has only to consider
the countless business establishments in this country with radio or
television sets on their premises - bars, beauty shops, cafeterias, car
washes, dentists' offices, and drive-ins - to realize the total futility of any
evenhanded effort on the part of copyright holders to license even a
substantial percentage of them. 12
And a ruling that a radio listener "performs" every broadcast that he
receives would be highly inequitable for two distinct reasons. First, a
person in Aiken's position would have no sure way of protecting himself
from liability for copyright infringement except by keeping his radio set
turned off. For even if he secured a license from ASCAP, he would have
no way of either foreseeing or controlling the broadcast of compositions
whose copyright was held by someone else. 13 Secondly, to hold
that [422 U.S. 151, 163] all in Aiken's position "performed" these
musical compositions would be to authorize the sale of an untold
number of licenses for what is basically a single public rendition of a
copyrighted work. The exaction of such multiple tribute would go far
beyond what is required for the economic protection of copyright
owners, 14 and would be wholly at odds with the balanced
congressional purpose behind 17 U.S.C. 1 (e):
"The main object to be desired in expanding copyright protection
accorded to music has been to give to the composer an adequate return
for the value of [422 U.S. 151, 164] his composition, and it has been a
serious and a difficult task to combine the protection of the composer
with the protection of the public, and to so frame an act that it would
accomplish the double purpose of securing to the composer an
adequate return for all use made of his composition and at the same
time prevent the formation of oppressive monopolies, which might be
founded upon the very rights granted to the composer for the purpose
of protecting his interests." H. R. Rep. No. 2222, 60th Cong., 2d Sess., 7
(1909).
For the reasons stated in this opinion, the judgment of the Court of
Appeals is affirmed.
It is so ordered.
Page 25 of 46
EN BANC
[G.R. No. 110318. August 28, 1996]
COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION,
PARAMOUNT PICTURES CORPORATION, TWENTIETH CENTURY FOX
FILM CORPORATION, UNITED ARTISTS CORPORATION, UNIVERSAL
CITY STUDIOS, INC., THE WALT DISNEY COMPANY, and WARNER
BROTHERS, INC., petitioners, vs. COURT OF APPEALS, SUNSHINE
HOME VIDEO, INC. and DANILO A. PELINDARIO, respondents.
DECISION
REGALADO, J.:
Before us is a petition for review on certiorari of the decision of the
Court of Appeals[1] promulgated on July 22, 1992 and its
resolution[2] of May 10, 1993 denying petitioners motion for
reconsideration, both of which sustained the order[3] of the Regional
Trial Court, Branch 133, Makati, Metro Manila, dated November 22,
1988 for the quashal of Search Warrant No. 87-053 earlier issued per its
own order[4] on September 5, 1988 for violation of Section 56 of
Presidential Decree No. 49, as amended, otherwise known as the Decree
on the Protection of Intellectual Property.
The material facts found by respondent appellate court are as follows:
Complainants thru counsel lodged a formal complaint with the National
Bureau of Investigation for violation of PD No. 49, as amended, and
sought its assistance in their anti-film piracy drive. Agents of the NBI and
private researchers made discreet surveillance on various video
establishments in Metro Manila including Sunshine Home Video Inc.
(Sunshine for brevity), owned and operated by Danilo A. Pelindario with
address at No. 6 Mayfair Center, Magallanes, Makati, Metro Manila.
On November 14, 1987, NBI Senior Agent Lauro C. Reyes applied for a
search warrant with the court a quo against Sunshine seeking the
seizure, among others, of pirated video tapes of copyrighted films all of
which were enumerated in a list attached to the application; and,
television sets, video cassettes and/or laser disc recordings equipment
and other machines and paraphernalia used or intended to be used in
the unlawful exhibition, showing, reproduction, sale, lease or
disposition of videograms tapes in the premises above described. In the
hearing of the application, NBI Senior Agent Lauro C. Reyes, upon
questions by the court a quo, reiterated in substance his averments in
his affidavit. His testimony was corroborated by another witness, Mr.
Rene C. Baltazar. Atty. Rico V. Domingos deposition was also taken. On
the basis of the affidavits and depositions of NBI Senior Agent Lauro C.
Reyes, Rene C. Baltazar and Atty. Rico V. Domingo, Search Warrant No
87-053 for violation of Section 56 of PD No. 49, as amended, was issued
by the court a quo.
The search warrant was served at about 1:45 p.m. on December 14,
1987 to Sunshine and/or their representatives. In the course of the
search of the premises indicated in the search warrant, the NBI Agents
found and seized various video tapes of duly copyrighted motion
pictures/films owned or exclusively distributed by private complainants,
and machines, equipment, television sets, paraphernalia, materials,
accessories all of which were included in the receipt for properties
accomplished by the raiding team. Copy of the receipt was furnished
and/or tendered to Mr. Danilo A. Pelindario, registered owner-
proprietor of Sunshine Home Video.
The Law on Copyright
On December 16, 1987, a Return of Search Warrant was filed with the
Court.
A Motion To Lift the Order of Search Warrant was filed but was later
denied for lack of merit (p. 280, Records).
A Motion for reconsideration of the Order of denial was filed. The
court a quo granted the said motion for reconsideration and justified it
in this manner:
It is undisputed that the master tapes of the copyrighted films from
which the pirated films were allegedly copies (sic), were never
presented in the proceedings for the issuance of the search warrants in
question. The orders of the Court granting the search warrants and
denying the urgent motion to lift order of search warrants were,
therefore, issued in error. Consequently, they must be set aside. (p. 13,
Appellants Brief)[5]
Petitioners thereafter appealed the order of the trial court granting
private respondents motion for reconsideration, thus lifting the search
warrant which it had therefore issued, to the Court of Appeals. As stated
at the outset, said appeal was dismissed and the motion for
reconsideration thereof was denied. Hence, this petition was brought to
this Court particularly challenging the validity of respondent courts
retroactive application of the ruling in 20th Century Fox Film
Corporation vs. Court of Appeals, et al.,[6] in dismissing petitioners
appeal and upholding the quashal of the search warrant by the trial
court.
I
Inceptively, we shall settle the procedural considerations on the matter
of and the challenge to petitioners legal standing in our courts, they
being foreign corporations not licensed to do business in the Philippines.
Private respondents aver that being foreign corporations, petitioners
should have such license to be able to maintain an action in Philippine
courts. In so challenging petitioners personality to sue, private
respondents point to the fact that petitioners are the copyright owners
or owners of exclusive rights of distribution in the Philippines of
copyrighted motion pictures or films, and also to the appointment of
Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of
doing business in the Philippines under Section 1(f) (1) and (2), Rule 1 of
the Rules of the Board of Investments. As foreign corporations doing
business in the Philippines, Section 133 of Batas Pambansa Blg. 68, or
the Corporation Code of the Philippines, denies them the right to
maintain a suit in Philippine courts in the absence of a license to do
business. Consequently, they have no right to ask for the issuance of a
search warrant.[7]
In refutation, petitioners flatly deny that they are doing business in the
Philippines,[8] and contend that private respondents have not adduced
evidence to prove that petitioners are doing such business here, as
would require them to be licensed by the Securities and Exchange
Commission, other than averments in the quoted portions of petitioners
Opposition to Urgent Motion to Lift Order of Search Warrant dated April
28, 1988 and Atty. Rico V. Domingos affidavit of December 14,
1987. Moreover, an exclusive right to distribute a product or the
ownership of such exclusive right does not conclusively prove the act of
doing business nor establish the presumption of doing business.[9]
The Corporation Code provides:
Intellectual Property Law
Sec. 133. Doing business without a license. No foreign corporation
transacting business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded against
before Philippine courts or administrative tribunals on any valid cause
of action recognized under Philippine laws.
The obtainment of a license prescribed by Section 125 of the
Corporation Code is not a condition precedent to the maintenance of
any kind of action in Philippine courts by a foreign
corporation. However, under the aforequoted provision, no foreign
corporation shall be permitted to transact business in the Philippines, as
this phrase is understood under the Corporation Code, unless it shall
have the license required by law, and until it complies with the law in
transacting business here, it shall not be permitted to maintain any suit
in local courts.[10] As thus interpreted, any foreign corporation not
doing business in the Philippines may maintain an action in our courts
upon any cause of action, provided that the subject matter and the
defendant are within the jurisdiction of the court. It is not the absence
of the prescribed license but doing business in the Philippines without
such license which debars the foreign corporation from access to our
courts. In other words, although a foreign corporation is without license
to transact business in the Philippines, it does not follow that it has no
capacity to bring an action. Such license is not necessary if it is not
engaged in business in the Philippines.[11]
Statutory provisions in many jurisdictions are determinative of what
constitutes doing business or transacting business within that forum, in
which case said provisions are controlling there. In others where no such
definition or qualification is laid down regarding acts or transactions
falling within its purview, the question rests primarily on facts and
intent. It is thus held that all the combined acts of a foreign corporation
in the State must be considered, and every circumstance is material
which indicates a purpose on the part of the corporation to engage in
some part of its regular business in the State.[12]
No general rule or governing principles can be laid down as to what
constitutes doing or engaging in or transacting business. Each case must
be judged in the light of its own peculiar environmental
circumstances.[13] The true tests, however, seem to be whether the
foreign corporation is continuing the body or substance of the business
or enterprise for which it was organized or whether it has substantially
retired from it and turned it over to another.[14]
As a general proposition upon which many authorities agree in principle,
subject to such modifications as may be necessary in view of the
particular issue or of the terms of the statute involved, it is recognized
that a foreign corporation is doing, transacting, engaging in, or carrying
on business in the State when, and ordinarily only when, it has entered
the State by its agents and is there engaged in carrying on and
transacting through them some substantial part of its ordinary or
customary business, usually continuous in the sense that it may be
distinguished from merely casual, sporadic, or occasional transactions
and isolated acts.[15]
The Corporation Code does not itself define or categorize what acts
constitute doing or transacting business in the
Philippines. Jurisprudence has, however, held that the term implies a
Page 26 of 46
continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the
exercise of some of the functions normally incident to or in progressive
prosecution of the purpose and subject of its organization.[16]
This traditional case law definition has evolved into a statutory
definition, having been adopted with some qualifications in various
pieces of legislation in our jurisdiction.
For instance, Republic Act No. 5455[17] provides:
SECTION 1. Definitions and scope of this Act. (1) x x x; and the phrase
doing business shall include soliciting orders, purchases, service
contracts, opening offices, whether called liaison offices or branches;
appointing representatives or distributors who are domiciled in the
Philippines or who in any calendar year stay in the Philippines for a
period or periods totalling one hundred eighty days or more;
participating in the management, supervision or control of any domestic
business firm, entity or corporation in the Philippines; and any other act
or acts that imply a continuity of commercial dealings or arrangements,
and contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in-
progressive prosecution of, commercial gain or of the purpose and
object of the business organization.
Presidential Decree No. 1789,[18] in Article 65 thereof, defines doing
business to include soliciting orders, purchases, service contracts,
opening offices, whether called liaison offices or branches; appointing
representatives or distributors who are domiciled in the Philippines or
who in any calendar year stay in the Philippines for a period or periods
totalling one hundred eighty days or more; participating in the
management, supervision or control of any domestic business firm,
entity or corporation in the Philippines, and any other act or acts that
imply a continuity of commercial dealings or arrangements and
contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and
object of the business organization.
The implementing rules and regulations of said presidential decree
conclude the enumeration of acts constituting doing business with a
catch-all definition, thus:
Sec. 1(g). Doing Business shall be any act or combination of acts
enumerated in Article 65 of the Code. In particular doing business
includes:
xxx xxx xxx
(10) Any other act or acts which imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions
normally incident to, or in the progressive prosecution of, commercial
gain or of the purpose and object of the business organization.
Finally, Republic Act No. 7042[19] embodies such concept in this wise:
SEC. 3. Definitions. As used in this Act:
xxx xxx xxx
(d) the phrase doing business shall include soliciting orders, service
contracts, opening offices, whether called liaison offices or branches;
appointing representatives or distributors domiciled in the Philippines
or who in any calendar year stay in the country for a period or periods
totalling one hundred eight(y) (180) days or more; participating in the
The Law on Copyright
management, supervision or control of any domestic business, firm,
entity or corporation in the Philippines; and any other act or acts that
imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and
object of the business organization: Provided, however, That the phrase
doing business shall not be deemed to include mere investment as a
shareholder by a foreign entity in domestic corporations duly registered
to do business, and/or the exercise of rights as such investors; nor
having a nominee director or officer to represent its interests in such
corporation; nor appointing a representative or distributor domiciled in
the Philippines which transacts business in its own name and for its own
account.
Based on Article 133 of the Corporation Code and gauged by such
statutory standards, petitioners are not barred from maintaining the
present action. There is no showing that, under our statutory or case
law, petitioners are doing, transacting, engaging in or carrying on
business in the Philippines as would require obtention of a license
before they can seek redress from our courts. No evidence has been
offered to show that petitioners have performed any of the enumerated
acts or any other specific act indicative of an intention to conduct or
transact business in the Philippines.
Accordingly, the certification issued by the Securities and Exchange
Commission[20] stating that its records do not show the registration of
petitioner film companies either as corporations or partnerships or that
they have been licensed to transact business in the Philippines, while
undeniably true, is of no consequence to petitioners right to bring action
in the Philippines. Verily, no record of such registration by petitioners
can be expected to be found for, as aforestated, said foreign film
corporations do not transact or do business in the Philippines and,
therefore, do not need to be licensed in order to take recourse to our
courts.
Although Section 1(g) of the Implementing Rules and Regulations of the
Omnibus Investments Code lists, among others
(1) Soliciting orders, purchases (sales) or service contracts. Concrete and
specific solicitations by a foreign firm, or by an agent of such foreign
firm, not acting independently of the foreign firm amounting to
negotiations or fixing of the terms and conditions of sales or service
contracts, regardless of where the contracts are actually reduced to
writing, shall constitute doing business even if the enterprise has no
office or fixed place of business in the Philippines. The arrangements
agreed upon as to manner, time and terms of delivery of the goods or
the transfer of title thereto is immaterial. A foreign firm which does
business through the middlemen acting in their own names, such as
indentors, commercial brokers or commission merchants, shall not be
deemed doing business in the Philippines. But such indentors,
commercial brokers or commission merchants shall be the ones deemed
to be doing business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an independent
status, i.e., it transacts business in its name and for its own account, and
not in the name or for the account of a principal. Thus, where a foreign
firm is represented in the Philippines by a person or local company
Intellectual Property Law
which does not act in its name but in the name of the foreign firm, the
latter is doing business in the Philippines.
as acts constitutive of doing business, the fact that petitioners are
admittedly copyright owners or owners of exclusive distribution rights
in the Philippines of motion pictures or films does not convert such
ownership into an indicium of doing business which would require them
to obtain a license before they can sue upon a cause of action in local
courts.
Neither is the appointment of Atty. Rico V. Domingo as attorney-in-fact
of petitioners, with express authority pursuant to a special power of
attorney, inter alia
To lay criminal complaints with the appropriate authorities and to
provide evidence in support of both civil and criminal proceedings
against any person or persons involved in the criminal infringement of
copyright, or concerning the unauthorized importation, duplication,
exhibition or distribution of any cinematographic work(s) films or video
cassettes of which x x x is the owner of copyright or the owner of
exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in
such cinematographic work(s), to initiate and prosecute on behalf of x x
x criminal or civil actions in the Philippines against any person or persons
unlawfully distributing, exhibiting, selling or offering for sale any films or
video cassettes of which x x x is the owner of copyright or the owner of
exclusive rights of distribution in the Philippines pursuant to any
agreement(s) between x x x and the respective owners of copyright in
such works.[21]
tantamount to doing business in the Philippines. We fail to see how
exercising ones legal and property rights and taking steps for the vigilant
protection of said rights, particularly the appointment of an attorney-in-
fact, can be deemed by and of themselves to be doing business here.
As a general rule, a foreign corporation will not be regarded as doing
business in the State simply because it enters into contracts with
residents of the State, where such contracts are consummated outside
the State.[22] In fact, a view is taken that a foreign corporation is not
doing business in the state merely because sales of its product are made
there or other business furthering its interests is transacted there by an
alleged agent, whether a corporation or a natural person, where such
activities are not under the direction and control of the foreign
corporation but are engaged in by the alleged agent as an independent
business.[23]
It is generally held that sales made to customers in the State by an
independent dealer who has purchased and obtained title from the
corporation to the products sold are not a doing of business by the
corporation.[24] Likewise, a foreign corporation which sells its products
to persons styled distributing agents in the State, for distribution by
them, is not doing business in the State so as to render it subject to
service of process therein, where the contract with these purchasers is
that they shall buy exclusively from the foreign corporation such goods
as it manufactures and shall sell them at trade prices established by
it.[25]
It has moreover been held that the act of a foreign corporation in
engaging an attorney to represent it in a Federal court sitting in a
particular State is not doing business within the scope of the minimum
contact test.[26] With much more reason should this doctrine apply to
Page 27 of 46
the mere retainer of Atty. Domingo for legal protection against
contingent acts of intellectual piracy.
In accordance with the rule that doing business imports only acts in
furtherance of the purposes for which a foreign corporation was
organized, it is held that the mere institution and prosecution or defense
of a suit, particularly if the transaction which is the basis of the suit took
place out of the State, do not amount to the doing of business in the
State. The institution of a suit or the removal thereof is neither the
making of a contract nor the doing of business within a constitutional
provision placing foreign corporations licensed to do business in the
State under the same regulations, limitations and liabilities with respect
to such acts as domestic corporations. Merely engaging in litigation has
been considered as not a sufficient minimum contact to warrant the
exercise of jurisdiction over a foreign corporation.[27]
As a consideration aside, we have perforce to comment on private
respondents basis for arguing that petitioners are barred from
maintaining suit in the Philippines. For allegedly being foreign
corporations doing business in the Philippines without a license, private
respondents repeatedly maintain in all their pleadings that petitioners
have thereby no legal personality to bring an action before Philippine
courts.[28]
Among the grounds for a motion to dismiss under the Rules of Court are
lack of legal capacity to sue[29] and that the complaint states no cause
of action.[30] Lack of legal capacity to sue means that the plaintiff is not
in the exercise of his civil rights, or does not have the necessary
qualification to appear in the case, or does not have the character or
representation he claims.[31] On the other hand, a case is dismissible
for lack of personality to sue upon proof that the plaintiff is not the real
party-in-interest, hence grounded on failure to state a cause of
action.[32]The term lack of capacity to sue should not be confused with
the term lack of personality to sue. While the former refers to a plaintiffs
general disability to sue, such as on account of minority, insanity,
incompetence, lack of juridical personality or any other general
disqualifications of a party, the latter refers to the fact that the plaintiff
is not the real party- in-interest.Correspondingly, the first can be a
ground for a motion to dismiss based on the ground of lack of legal
capacity to sue;[33] whereas the second can be used as a ground for a
motion to dismiss based on the fact that the complaint, on the face
thereof, evidently states no cause of action.[34]
Applying the above discussion to the instant petition, the ground
available for barring recourse to our courts by an unlicensed foreign
corporation doing or transacting business in the Philippines should
properly be lack of capacity to sue, not lack of personality to
sue. Certainly, a corporation whose legal rights have been violated is
undeniably such, if not the only, real party-in-interest to bring suit
thereon although, for failure to comply with the licensing requirement,
it is not capacitated to maintain any suit before our courts.
Lastly, on this point, we reiterate this Courts rejection of the common
procedural tactics of erring local companies which, when sued by
unlicensed foreign corporations not engaged in business in the
Philippines, invoke the latters supposed lack of capacity to sue. The
doctrine of lack of capacity to sue based on failure to first acquire a local
license is based on considerations of public policy. It was never intended
to favor nor insulate from suit unscrupulous establishments or nationals
The Law on Copyright
in case of breach of valid obligations or violations of legal rights of
unsuspecting foreign firms or entities simply because they are not
licensed to do business in the country.[35]
II
We now proceed to the main issue of the retroactive application to the
present controversy of the ruling in 20th Century Fox Film Corporation
vs. Court of Appeals, et al., promulgated on August 19, 1988,[36] that
for the determination of probable cause to support the issuance of a
search warrant in copyright infringement cases involving videograms,
the production of the master tape for comparison with the allegedly
pirated copies is necessary.
Petitioners assert that the issuance of a search warrant is addressed to
the discretion of the court subject to the determination of probable
cause in accordance with the procedure prescribed therefor under
Sections 3 and 4 of Rule 126. As of the time of the application for the
search warrant in question, the controlling criterion for the finding of
probable cause was that enunciated in Burgos vs. Chief of
Staff[37] stating that:
Probable cause for a search warrant is defined as such facts and
circumstances which would lead a reasonably discrete 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 sought to be
searched.
According to petitioners, after complying with what the law then
required, the lower court determined that there was probable cause for
the issuance of a search warrant, and which determination in fact led to
the issuance and service on December 14, 1987 of Search Warrant No.
87-053. It is further argued that any search warrant so issued in
accordance with all applicable legal requirements is valid, for the lower
court could not possibly have been expected to apply, as the basis for a
finding of probable cause for the issuance of a search warrant in
copyright infringement cases involving videograms, a pronouncement
which was not existent at the time of such determination, on December
14, 1987, that is, the doctrine in the 20th Century Fox case that was
promulgated only on August 19, 1988, or over eight months later.
Private respondents predictably argue in support of the ruling of the
Court of Appeals sustaining the quashal of the search warrant by the
lower court on the strength of that 20th Century Fox ruling which, they
claim, goes into the very essence of probable cause. At the time of the
issuance of the search warrant involved here, although the 20th Century
Fox case had not yet been decided, Section 2, Article III of the
Constitution and Section 3, Rule 126 of the 1985 Rules on Criminal
Procedure embodied the prevailing and governing law on the
matter. The ruling in 20th Century Fox was merely an application of the
law on probable cause. Hence, they posit that there was no law that was
retrospectively applied, since the law had been there all along. To
refrain from applying the 20th Century Fox ruling, which had
supervened as a doctrine promulgated at the time of the resolution of
private respondents motion for reconsideration seeking the quashal of
the search warrant for failure of the trial court to require presentation
of the master tapes prior to the issuance of the search warrant, would
have constituted grave abuse of discretion.[38]
Respondent court upheld the retroactive application of the 20th
Century Fox ruling by the trial court in resolving petitioners motion for
Intellectual Property Law
reconsideration in favor of the quashal of the search warrant, on this
renovated thesis:
And whether this doctrine should apply retroactively, it must be noted
that in the 20th Century Fox case, the lower court quashed the earlier
search warrant it issued. On certiorari, the Supreme Court affirmed the
quashal on the ground among others that the master tapes or
copyrighted films were not presented for comparison with the
purchased evidence of the video tapes to determine whether the latter
is an unauthorized reproduction of the former.
If the lower court in the Century Fox case did not quash the warrant, it
is Our view that the Supreme Court would have invalidated the warrant
just the same considering the very strict requirement set by the
Supreme Court for the determination of probable cause in copyright
infringement cases as enunciated in this 20th Century Fox case. This is
so because, as was stated by the Supreme Court in the said case, the
master tapes and the pirated tapes must be presented for comparison
to satisfy the requirement of probable cause. So it goes back to the very
existence of probable cause. x x x[39]
Mindful as we are of the ramifications of the doctrine of stare
decisis and the rudiments of fair play, it is our considered view that
the 20th Century Fox ruling cannot be retroactively applied to the
instant case to justify the quashal of Search Warrant No. 87-053. Herein
petitioners consistent position that the order of the lower court of
September 5, 1988 denying therein defendants motion to lift the order
of search warrant was properly issued, there having been satisfactory
compliance with the then prevailing standards under the law for
determination of probable cause, is indeed well taken. The lower court
could not possibly have expected more evidence from petitioners in
their application for a search warrant other than what the law and
jurisprudence, then existing and judicially accepted, required with
respect to the finding of probable cause.
Article 4 of the Civil Code provides that (l)aws shall have no retroactive
effect, unless the contrary is provided. Correlatively, Article 8 of the
same Code declares that (j)udicial decisions applying the laws or the
Constitution shall form part of the legal system of the Philippines.
Jurisprudence, in our system of government, cannot be considered as
an independent source of law; it cannot create law.[40] While it is true
that judicial decisions which apply or interpret the Constitution or the
laws are part of the legal system of the Philippines, still they are not
laws. Judicial decisions, though not laws, are nonetheless evidence of
what the laws mean, and it is for this reason that they are part of the
legal system of the Philippines.[41] Judicial decisions of the Supreme
Court assume the same authority as the statute itself.[42]
Interpreting the aforequoted correlated provisions of the Civil Code and
in light of the above disquisition, this Court emphatically declared in Co
vs. Court of Appeals, et al.[43] that the principle of prospectivity applies
not only to original amendatory statutes and administrative rulings and
circulars, but also, and properly so, to judicial decisions. Our holding in
the earlier case of People vs. Jubinal[44] echoes the rationale for this
judicial declaration, viz.:
Decisions of this Court, although in themselves not laws, are
nevertheless evidence of what the laws mean, and this is the reason why
under Article 8 of the New Civil Code, Judicial decisions applying or
interpreting the laws or the Constitution shall form part of the legal
Page 28 of 46
system. The interpretation upon a law by this Court constitutes, in a
way, a part of the law as of the date that the law was originally passed,
since this Courts construction merely establishes the contemporaneous
legislative intent that the law thus construed intends to effectuate. The
settled rule supported by numerous authorities is a restatement of the
legal maxim legis interpretation legis vim obtinet the interpretation
placed upon the written law by a competent court has the force of law. x
x x, but when a doctrine of this Court is overruled and a different view is
adopted, the new doctrine should be applied prospectively, and should
not apply to parties who had relied on the old doctrine and acted on the
faith thereof. x x x. (Stress supplied).
This was forcefully reiterated in Spouses Benzonan vs. Court of Appeals,
et al.,[45] where the Court expounded:
x x x. But while our decisions form part of the law of the land, they are
also subject to Article 4 of the Civil Code which provides that laws shall
have no retroactive effect unless the contrary is provided. This is
expressed in the familiar legal maximum lex prospicit, non respicit, the
law looks forward not backward. The rationale against retroactivity is
easy to perceive. The retroactive application of a law usually divests
rights that have already become vested or impairs the obligations of
contract and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565
[1961]). The same consideration underlies our rulings giving only
prospective effect to decisions enunciating new doctrines. x x x.
The reasoning behind Senarillos vs. Hermosisima[46] that judicial
interpretation of a statute constitutes part of the law as of the date it
was originally passed, since the Courts construction merely establishes
the contemporaneous legislative intent that the interpreted law carried
into effect, is all too familiar. Such judicial doctrine does not amount to
the passage of a new law but consists merely of a construction or
interpretation of a pre-existing one, and that is precisely the situation
obtaining in this case.
It is consequently clear that a judicial interpretation becomes a part of
the law as of the date that law was originally passed, subject only to the
qualification that when a doctrine of this Court is overruled and a
different view is adopted, and more so when there is a reversal thereof,
the new doctrine should be applied prospectively and should not apply
to parties who relied on the old doctrine and acted in good faith.[47] To
hold otherwise would be to deprive the law of its quality of fairness and
justice then, if there is no recognition of what had transpired prior to
such adjudication.[48]
There is merit in petitioners impassioned and well-founded
argumentation:
The case of 20th Century Fox Film Corporation vs. Court of Appeals, et
al., 164 SCRA 655 (August 19, 1988) (hereinafter 20th Century Fox) was
inexistent in December of 1987 when Search Warrant 87-053 was issued
by the lower court. Hence, it boggles the imagination how the lower
court could be expected to apply the formulation of 20th Century Fox in
finding probable cause when the formulation was yet non-existent.
xxx xxx xxx
In short, the lower court was convinced at that time after conducting
searching examination questions of the applicant and his witnesses that
an offense had been committed and that the objects sought in
connection with the offense (were) in the place sought to be searched
(Burgos v. Chief of Staff, et al., 133 SCRA 800). It is indisputable,
The Law on Copyright
therefore, that at the time of the application, or on December 14, 1987,
the lower court did not commit any error nor did it fail to comply with
any legal requirement for the valid issuance of search warrant.
x x x. (W)e believe that the lower court should be considered as having
followed the requirements of the law in issuing Search Warrant No. 87-
053. The search warrant is therefore valid and binding. It must be noted
that nowhere is it found in the allegations of the Respondents that the
lower court failed to apply the law as then interpreted in 1987. Hence,
we find it absurd that it is (sic) should be seen otherwise, because it is
simply impossible to have required the lower court to apply a
formulation which will only be defined six months later.
Furthermore, it is unjust and unfair to require compliance with legal
and/or doctrinal requirements which are inexistent at the time they
were supposed to have been complied with.
xxx xxx xxx
x x x. If the lower courts reversal will be sustained, what encouragement
can be given to courts and litigants to respect the law and rules if they
can expect with reasonable certainty that upon the passage of a new
rule, their conduct can still be open to question? This certainly breeds
instability in our system of dispensing justice. For Petitioners who took
special effort to redress their grievances and to protect their property
rights by resorting to the remedies provided by the law, it is most unfair
that fealty to the rules and procedures then obtaining would bear but
fruits of injustice.[49]
Withal, even the proposition that the prospectivity of judicial decisions
imports application thereof not only to future cases but also to cases
still ongoing or not yet final when the decision was promulgated, should
not be countenanced in the jural sphere on account of its inevitably
unsettling repercussions. More to the point, it is felt that the
reasonableness of the added requirement in 20th Century Fox calling
for the production of the master tapes of the copyrighted films for
determination of probable cause in copyright infringement cases needs
revisiting and clarification.
It will be recalled that the 20th Century Fox case arose from search
warrant proceedings in anticipation of the filing of a case for the
unauthorized sale or renting out of copyrighted films in videotape
format in violation of Presidential Decree No. 49. It revolved around the
meaning of probable cause within the context of the constitutional
provision against illegal searches and seizures, as applied to copyright
infringement cases involving videotapes.
Therein it was ruled that
The presentation of master tapes of the copyrighted films from which
the pirated films were allegedly copied, was necessary for the validity of
search warrants against those who have in their possession the pirated
films. The petitioners argument to the effect that the presentation of
the master tapes at the time of application may not be necessary as
these would be merely evidentiary in nature and not determinative of
whether or not a probable cause exists to justify the issuance of the
search warrants is not meritorious. The court cannot presume that
duplicate or copied tapes were necessarily reproduced from master
tapes that it owns.
The application for search warrants was directed against video tape
outlets which allegedly were engaged in the unauthorized sale and
Intellectual Property Law
renting out of copyrighted films belonging to the petitioner pursuant to
P.D. 49.
The essence of a copyright infringement is the similarity or at least
substantial similarity of the purported pirated works to the copyrighted
work. Hence, the applicant must present to the court the copyrighted
films to compare them with the purchased evidence of the video tapes
allegedly pirated to determine whether the latter is an unauthorized
reproduction of the former. This linkage of the copyrighted films to the
pirated films must be established to satisfy the requirements of
probable cause. Mere allegations as to the existence of the copyrighted
films cannot serve as basis for the issuance of a search warrant.
For a closer and more perspicuous appreciation of the factual
antecedents of 20th Century Fox, the pertinent portions of the decision
therein are quoted hereunder, to wit:
In the instant case, the lower court lifted the three questioned search
warrants against the private respondents on the ground that it acted on
the application for the issuance of the said search warrants and granted
it on the misrepresentations of applicant NBI and its witnesses that
infringement of copyright or a piracy of a particular film have been
committed. Thus the lower court stated in its questioned order dated
January 2, 1986:
According to the movant, all three witnesses during the proceedings in
the application for the three search warrants testified of their own
personal knowledge. Yet, Atty. Albino Reyes of the NBI stated that the
counsel or representative of the Twentieth Century Fox Corporation will
testify on the video cassettes that were pirated, so that he did not have
personal knowledge of the alleged piracy. The witness Bacani also said
that the video cassettes were pirated without stating the manner it was
pirated and that it was Atty. Domingo that has knowledge of that fact.
On the part of Atty. Domingo, he said that the re-taping of the allegedly
pirated tapes was from master tapes allegedly belonging to the
Twentieth Century Fox, because, according to him it is of his personal
knowledge.
At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty.
Albino Reyes testified that when the complaint for infringement was
brought to the NBI, the master tapes of the allegedly pirated tapes were
shown to him and he made comparisons of the tapes with those
purchased by their man Bacani. Why the master tapes or at least the
film reels of the allegedly pirated tapes were not shown to the Court
during the application gives some misgivings as to the truth of that bare
statement of the NBI agent on the witness stand.
Again as the application and search proceedings is a prelude to the filing
of criminal cases under P.D. 49, the copyright infringement law, and
although what is required for the issuance thereof is merely the
presence of probable cause, that probable cause must be satisfactory to
the Court, for it is a time-honored precept that proceedings to put a man
to task as an offender under our laws should be interpreted
in strictissimi juris against the government and liberally in favor of the
alleged offender.
xxx xxx xxx
This doctrine has never been overturned, and as a matter of fact it had
been enshrined in the Bill of Rights in our 1973 Constitution.
So that lacking in persuasive effect, the allegation that master tapes
were viewed by the NBI and were compared to the purchased and
Page 29 of 46
seized video tapes from the respondents establishments, it should be
dismissed as not supported by competent evidence and for that matter
the probable cause hovers in that grey debatable twilight zone between
black and white resolvable in favor of respondents herein.
But the glaring fact is that Cocoon, the first video tape mentioned in the
search warrant, was not even duly registered or copyrighted in the
Philippines. (Annex C of Opposition, p. 152, record.) So that lacking in
the requisite presentation to the Court of an alleged master tape for
purposes of comparison with the purchased evidence of the video tapes
allegedly pirated and those seized from respondents, there was no way
to determine whether there really was piracy, or copying of the film of
the complainant Twentieth Century Fox.
xxx xxx xxx
The lower court, therefore, lifted the three (3) questioned search
warrants in the absence of probable cause that the private respondents
violated P.D. 49. As found by the court, the NBI agents who acted as
witnesses did not have personal knowledge of the subject matter of
their testimony which was the alleged commission of the offense by the
private respondents. Only the petitioners counsel who was also a
witness during the application for the issuance of the search warrants
stated that he had personal knowledge that the confiscated tapes
owned by the private respondents were pirated tapes taken from
master tapes belonging to the petitioner. However, the lower court did
not give much credence to his testimony in view of the fact that the
master tapes of the allegedly pirated tapes were not shown to the court
during the application (Italics ours).
The italicized passages readily expose the reason why the trial court
therein required the presentation of the master tapes of the allegedly
pirated films in order to convince itself of the existence of probable
cause under the factual milieu peculiar to that case. In the case at bar,
respondent appellate court itself observed:
We feel that the rationale behind the aforequoted doctrine is that the
pirated copies as well as the master tapes, unlike the other types of
personal properties which may be seized, were available for
presentation to the court at the time of the application for a search
warrant to determine the existence of the linkage of the copyrighted
films with the pirated ones. Thus, there is no reason not to present them
(Italics supplied for emphasis).[50]
In fine, the supposed pronunciamento in said case regarding the
necessity for the presentation of the master tapes of the copyrighted
films for the validity of search warrants should at most be understood
to merely serve as a guidepost in determining the existence of probable
cause in copyright infringement cases where there is doubt as to the
true nexus between the master tape and the pirated copies. An
objective and careful reading of the decision in said case could lead to
no other conclusion than that said directive was hardly intended to be a
sweeping and inflexible requirement in all or similar copyright
infringement cases. Judicial dicta should always be construed within the
factual matrix of their parturition, otherwise a careless interpretation
thereof could unfairly fault the writer with the vice of overstatement
and the reader with the fallacy of undue generalization.
In the case at bar, NBI Senior Agent Lauro C. Reyes who filed the
application for search warrant with the lower court following a formal
complaint lodged by petitioners, judging from his affidavit[51] and his
The Law on Copyright
deposition,[52] did testify on matters within his personal knowledge
based on said complaint of petitioners as well as his own investigation
and surveillance of the private respondents video rental shop. Likewise,
Atty. Rico V. Domingo, in his capacity as attorney-in-fact, stated in his
affidavit[53] and further expounded in his deposition[54] that he
personally knew of the fact that private respondents had never been
authorized by his clients to reproduce, lease and possess for the purpose
of selling any of the copyrighted films.
Both testimonies of Agent Reyes and Atty. Domingo were corroborated
by Rene C. Baltazar, a private researcher retained by Motion Pictures
Association of America, Inc. (MPAA, Inc.), who was likewise presented
as a witness during the search warrant proceedings.[55] The records
clearly reflect that the testimonies of the abovenamed witnesses were
straightforward and stemmed from matters within their personal
knowledge. They displayed none of the ambivalence and uncertainty
that the witnesses in the 20th Century Fox case exhibited. This
categorical forthrightness in their statements, among others, was what
initially and correctly convinced the trial court to make a finding of the
existence of probable cause.
There is no originality in the argument of private respondents against
the validity of the search warrant, obviously borrowed
from 20th Century Fox, that petitioners witnesses NBI Agent Lauro C.
Reyes, Atty. Rico V. Domingo and Rene C. Baltazar did not have personal
knowledge of the subject matter of their respective testimonies and that
said witnesses claim that the video tapes were pirated, without stating
the manner by which these were pirated, is a conclusion of fact without
basis.[56] The difference, it must be pointed out, is that the records in
the present case reveal that (1) there is no allegation of
misrepresentation, much less a finding thereof by the lower court, on
the part of petitioners witnesses; (2) there is no denial on the part of
private respondents that the tapes seized were illegitimate copies of the
copyrighted ones nor have they shown that they were given any
authority by petitioners to copy, sell, lease, distribute or circulate, or at
least, to offer for sale, lease, distribution or circulation the said video
tapes; and (3) a discreet but extensive surveillance of the suspected area
was undertaken by petitioners witnesses sufficient to enable them to
execute trustworthy affidavits and depositions regarding matters
discovered in the course thereof and of which they have personal
knowledge.
It is evidently incorrect to suggest, as the ruling in 20th Century Fox may
appear to do, that in copyright infringement cases, the presentation of
master tapes of the copyrighted films is always necessary to meet the
requirement of probable cause and that, in the absence thereof, there
can be no finding of probable cause for the issuance of a search
warrant. It is true that such master tapes are object evidence, with the
merit that in this class of evidence the ascertainment of the
controverted fact is made through demonstrations involving the direct
use of the senses of the presiding magistrate.[57] Such auxiliary
procedure, however, does not rule out the use of testimonial or
documentary evidence, depositions, admissions or other classes of
evidence tending to prove the factum probandum,[58] especially where
the production in court of object evidence would result in delay,
inconvenience or expenses out of proportion to its evidentiary
value.[59]
Intellectual Property Law
Of course, as a general rule, constitutional and statutory provisions
relating to search warrants prohibit their issuance except on a showing
of probable cause, supported by oath or affirmation. These provisions
prevent the issuance of warrants on loose, vague, or doubtful bases of
fact, and emphasize the purpose to protect against all general
searches.[60] Indeed, Article III of our Constitution mandates in Sec. 2
thereof that no search warrant 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 things to be
seized; and Sec. 3 thereof provides that any evidence obtained in
violation of the preceding section shall be inadmissible for any purpose
in any proceeding.
These constitutional strictures are implemented by the following
provisions of Rule 126 of the Rules of Court:
Sec. 3. Requisites for issuing search warrant. A search warrant shall not
issue but upon probable cause in connection with one specific offense
to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the things to be
seized.
Sec. 4. Examination of complainant; record. The judge must, before
issuing the warrant, personally examine in the form of searching
questions and answers, in writing and under oath the complainant and
any witnesses he may produce on facts personally known to them and
attach to the record their sworn statements together with any affidavits
submitted.
Sec. 5. Issuance and form of search warrant. If the judge is thereupon
satisfied of the existence of facts upon which the application is based,
or that there is probable cause to believe that they exist, he must issue
the warrant, which must be substantially in the form prescribed by these
Rules.
The constitutional and statutory provisions of various jurisdictions
requiring a showing of probable cause before a search warrant can be
issued are mandatory and must be complied with, and such a showing
has been held to be an unqualified condition precedent to the issuance
of a warrant. A search warrant not based on probable cause is a nullity,
or is void, and the issuance thereof is, in legal contemplation,
arbitrary.[61] It behooves us, then, to review the concept of probable
cause, firstly, from representative holdings in the American jurisdiction
from which we patterned our doctrines on the matter.
Although the term probable cause has been said to have a well-defined
meaning in the law, the term is exceedingly difficult to define, in this
case, with any degree of precision; indeed, no definition of it which
would justify the issuance of a search warrant can be formulated which
would cover every state of facts which might arise, and no formula or
standard, or hard and fast rule, may be laid down which may be applied
to the facts of every situation.[62] As to what acts constitute probable
cause seem incapable of definition.[63] There is, of necessity, no exact
test.[64]
At best, the term probable cause has been understood to mean a
reasonable ground of suspicion, supported by circumstances sufficiently
strong in themselves to warrant a cautious man in the belief that the
person accused is guilty of the offense with which he is charged;[65] or
Page 30 of 46
the existence of such facts and circumstances as would excite an honest
belief in a reasonable mind acting on all the facts and circumstances
within the knowledge of the magistrate that the charge made by the
applicant for the warrant is true.[66]
Probable cause does not mean actual and positive cause, nor does it
import absolute certainty. The determination of the existence of
probable cause is not concerned with the question of whether the
offense charged has been or is being committed in fact, or whether the
accused is guilty or innocent, but only whether the affiant has
reasonable grounds for his belief.[67] The requirement is less than
certainty or proof, but more than suspicion or possibility.[68]
In Philippine jurisprudence, probable cause has been uniformly defined
as such facts and circumstances which would lead a reasonable, 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
sought to be searched.[69] It being the duty of the issuing officer to
issue, or refuse to issue, the warrant as soon as practicable after the
application therefor is filed,[70] the facts warranting the conclusion of
probable cause must be assessed at the time of such judicial
determination by necessarily using legal standards then set forth in law
and jurisprudence, and not those that have yet to be crafted thereafter.
As already stated, the definition of probable cause enunciated
in Burgos, Sr. vs. Chief of Staff, et al., supra, vis-a-vis the provisions of
Sections 3 and 4 of Rule 126, were the prevailing and controlling legal
standards, as they continue to be, by which a finding of probable cause
is tested. Since the proprietary of the issuance of a search warrant is to
be determined at the time of the application therefor, which in turn
must not be too remote in time from the occurrence of the offense
alleged to have been committed, the issuing judge, in determining the
existence of probable cause, can and should logically look to the
touchstones in the laws therefore enacted and the decisions already
promulgated at the time, and not to those which had not yet even been
conceived or formulated.
It is worth noting that neither the Constitution nor the Rules of Court
attempt to define probable cause, obviously for the purpose of leaving
such matter to the courts discretion within the particular facts of each
case. Although the Constitution prohibits the issuance of a search
warrant in the absence of probable cause, such constitutional inhibition
does not command the legislature to establish a definition or formula
for determining what shall constitute probable cause.[71] Thus,
Congress, despite its broad authority to fashion standards of
reasonableness for searches and seizures,[72] does not venture to make
such a definition or standard formulation of probable cause, nor
categorize what facts and circumstances make up the same, much less
limit the determination thereof to and within the circumscription of a
particular class of evidence, all in deference to judicial discretion and
probity.[73]
Accordingly, to restrict the exercise of discretion by a judge by adding a
particular requirement (the presentation of master tapes, as intimated
by 20th Century Fox) not provided nor implied in the law for a finding of
probable cause is beyond the realm of judicial competence or
statemanship. It serves no purpose but to stultify and constrict the
judicious exercise of a court's prerogatives and to denigrate the judicial
duty of determining the existence of probable cause to a mere
The Law on Copyright
ministerial or mechanical function. There is, to repeat, no law or rule
which requires that the existence of probable cause is or should be
determined solely by a specific kind of evidence. Surely, this could not
have been contemplated by the framers of the Constitution, and we do
not believe that the Court intended the statement in 20th Century
Fox regarding master tapes as the dictum for all seasons and reasons in
infringement cases.
Turning now to the case at bar, it can be gleaned from the records that
the lower court followed the prescribed procedure for the issuances of
a search warrant: (1) the examination under oath or affirmation of the
complainant and his witnesses, with them particularly describing the
place to be searched and the things to be seized; (2) an examination
personally conducted by the judge in the form of searching questions
and answers, in writing and under oath of the complainant and
witnesses on facts personally known to them; and, (3) the taking of
sworn statements, together with the affidavits submitted, which were
duly attached to the records.
Thereafter, the court a quo made the following factual findings leading
to the issuance of the search warrant now subject to this controversy:
In the instant case, the following facts have been established: (1)
copyrighted video tapes bearing titles enumerated in Search Warrant
No. 87-053 were being sold, leased, distributed or circulated, or offered
for sale, lease, distribution, or transferred or caused to be transferred
by defendants at their video outlets, without the written consent of the
private complainants or their assignee; (2) recovered or confiscated
from defendants' possession were video tapes containing copyrighted
motion picture films without the authority of the complainant; (3) the
video tapes originated from spurious or unauthorized persons; and (4)
said video tapes were exact reproductions of the films listed in the
search warrant whose copyrights or distribution rights were owned by
complainants.
The basis of these facts are the affidavits and depositions of NBI Senior
Agent Lauro C. Reyes, Atty. Rico V. Domingo, and Rene C.
Baltazar. Motion Pictures Association of America, Inc. (MPAA) thru their
counsel, Atty. Rico V. Domingo, filed a complaint with the National
Bureau of Investigation against certain video establishments one of
which is defendant, for violation of PD No. 49 as amended by PD No,
1988. Atty. Lauro C. Reyes led a team to conduct discreet surveillance
operations on said video establishments. Per information earlier
gathered by Atty. Domingo, defendants were engaged in the illegal sale,
rental, distribution, circulation or public exhibition of copyrighted films
of MPAA without its written authority or its members. Knowing that
defendant Sunshine Home Video and its proprietor, Mr. Danilo
Pelindario, were not authorized by MPAA to reproduce, lease, and
possess for the purpose of selling any of its copyrighted motion pictures,
he instructed his researcher, Mr. Rene Baltazar to rent two video
cassettes from said defendants on October 21, 1987. Rene C. Baltazar
proceeded to Sunshine Home Video and rented tapes containing Little
Shop of Horror. He was issued rental slip No. 26362 dated October 21,
1987 for P10.00 with a deposit of P100.00. Again, on December 11,
1987, he returned to Sunshine Home Video and rented Robocop with a
rental slip No. 25271 also for P10.00. On the basis of the complaint of
MPAA thru counsel, Atty. Lauro C. Reyes personally went to Sunshine
Home Video at No. 6 Mayfair Center, Magallanes Commercial Center,
Intellectual Property Law
Makati. His last visit was on December 7, 1987. There, he found the
video outlet renting, leasing, distributing video cassette tapes whose
titles were copyrighted and without the authority of MPAA.
Given these facts, a probable cause exists. x x x.[74]
The lower court subsequently executed a volte-face, despite its prior
detailed and substantiated findings, by stating in its order of November
22, 1988 denying petitioners motion for reconsideration and quashing
the search warrant that
x x x. The two (2) cases have a common factual milieu; both involve
alleged pirated copyrighted films of private complainants which were
found in the possession or control of the defendants. Hence, the
necessity of the presentation of the master tapes from which the pirated
films were allegedly copied is necessary in the instant case, to establish
the existence of probable cause.[75]
Being based solely on an unjustifiable and improper retroactive
application of the master tape requirement generated by 20th Century
Fox upon a factual situation completely different from that in the case
at bar, and without anything more, this later order clearly defies
elemental fair play and is a gross reversible error. In fact, this
observation of the Court in La ChemiseLacoste, S.A. vs. Fernandez, et
al., supra, may just as easily apply to the present case:
A review of the grounds invoked x x x in his motion to quash the search
warrants reveals the fact that they are not appropriate for quashing a
warrant. They are matters of defense which should be ventilated during
the trial on the merits of the case. x x x
As correctly pointed out by petitioners, a blind espousal of the requisite
of presentation of the master tapes in copyright infringement cases, as
the prime determinant of probable cause, is too exacting and
impracticable a requirement to be complied with in a search warrant
application which, it must not be overlooked, is only an ancillary
proceeding. Further, on realistic considerations, a strict application of
said requirement militates against the elements of secrecy and speed
which underlie covert investigative and surveillance operations in police
enforcement campaigns against all forms of criminality, considering that
the master tapes of a motion picture required to be presented before
the court consists of several reels contained in circular steel casings
which, because of their bulk, will definitely draw attention, unlike
diminutive objects like video tapes which can be easily
concealed.[76] With hundreds of titles being pirated, this onerous and
tedious imposition would be multiplied a hundredfold by judicial fiat,
discouraging and preventing legal recourses in foreign jurisdictions.
Given the present international awareness and furor over violations in
large scale of intellectual property rights, calling for transnational
sanctions, it bears calling to mind the Courts admonition also in La
Chemise Lacoste, supra, that
x x x. Judges all over the country are well advised to remember that
court processes should not be used as instruments to, unwittingly or
otherwise, aid counterfeiters and intellectual pirates, tie the hands of
the law as it seeks to protect the Filipino consuming public and frustrate
executive and administrative implementation of solemn commitments
pursuant to international conventions and treaties.
III
The amendment of Section 56 of Presidential Decree No. 49 by
Presidential Decree No. 1987,[77] which should here be publicized
Page 31 of 46
judicially, brought about the revision of its penalty structure and
enumerated additional acts considered violative of said decree on
intellectual property, namely, (1) directly or indirectly transferring or
causing to be transferred any sound recording or motion picture or
other audio-visual works so recorded with intent to sell, lease, publicly
exhibit or cause to be sold, leased or publicly exhibited, or to use or
cause to be used for profit such articles on which sounds, motion
pictures, or other audio-visual works are so transferred without the
written consent of the owner or his assignee; (2) selling, leasing,
distributing, circulating, publicly exhibiting, or offering for sale, lease,
distribution, or possessing for the purpose of sale, lease, distribution,
circulation or public exhibition any of the abovementioned articles,
without the written consent of the owner or his assignee; and, (3)
directly or indirectly offering or making available for a fee, rental, or any
other form of compensation any equipment, machinery, paraphernalia
or any material with the knowledge that such equipment, machinery,
paraphernalia or material will be used by another to reproduce, without
the consent of the owner, any phonograph record, disc, wire, tape, film
or other article on which sounds, motion pictures or other audio-visual
recordings may be transferred, and which provide distinct bases for
criminal prosecution, being crimes independently punishable under
Presidential Decree No. 49, as amended, aside from the act of infringing
or aiding or abetting such infringement under Section 29.
The trial courts finding that private respondents committed acts in
blatant transgression of Presidential Decree No. 49 all the more bolsters
its findings of probable cause, which determination can be reached even
in the absence of master tapes by the judge in the exercise of sound
discretion. The executive concern and resolve expressed in the
foregoing amendments to the decree for the protection of intellectual
property rights should be matched by corresponding judicial vigilance
and activism, instead of the apathy of submitting to technicalities in the
face of ample evidence of guilt.
The essence of intellectual piracy should be essayed in conceptual terms
in order to underscore its gravity by an appropriate understanding
thereof. Infringement of a copyright is a trespass on a private domain
owned and occupied by the owner of the copyright, and, therefore,
protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any
person, without the consent of the owner of the copyright, of anything
the sole right to do which is conferred by statute on the owner of the
copyright.[78]
A copy of a piracy is an infringement of the original, and it is no defense
that the pirate, in such cases, did not know what works he was indirectly
copying, or did not know whether or not he was infringing any copyright;
he at least knew that what he was copying was not his, and he copied at
his peril. In determining the question of infringement, the amount of
matter copied from the copyrighted work is an important
consideration. To constitute infringement, it is not necessary that the
whole or even a large portion of the work shall have been copied. If so
much is taken that the value of the original is sensibly diminished, or the
labors of the original author are substantially and to an injurious extent
appropriated by another, that is sufficient in point of law to constitute a
piracy.[79] The question of whether there has been an actionable
infringement of a literary, musical, or artistic work in motion pictures,
The Law on Copyright
radio or television being one of fact,[80] it should properly be
determined during the trial. That is the stage calling for conclusive or
preponderating evidence, and not the summary proceeding for the
issuance of a search warrant wherein both lower courts erroneously
require the master tapes.
In disregarding private respondents argument that Search Warrant No.
87-053 is a general warrant, the lower court observed that it was
worded in a manner that the enumerated seizable items bear direct
relation to the offense of violation of Sec. 56 of PD 49 as amended. It
authorized only the seizur(e) of articles used or intended to be used in
the unlawful sale, lease and other unconcerted acts in violation of PD 49
as amended. x x x.[81]
On this point, Bache and Co., (Phil.), Inc., et al. vs. Ruiz, et
al.,[82] instructs and enlightens:
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 (People vs. Rubio, 57 Phil. 384); 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 (idem.,
dissent of Abad Santos, J.,); or when the things described are limited to
those which bear direct relation to the offense for which the warrant is
being issued (Sec. 2, Rule 126, Revised Rules of Court). x x x. If the
articles desired to be seized have any direct relation to an offense
committed, the applicant must necessarily have some evidence, other
than those articles, to prove the said offense; and the articles subject of
search and seizure should come in handy
merely to strengthen such evidence. x x x.
On private respondents averment that the search warrant was made
applicable to more than one specific offense on the ground that there
are as many offenses of infringement as there are rights protected and,
therefore, to issue one search warrant for all the movie titles allegedly
pirated violates the rule that a search warrant must be issued only in
connection with one specific offense, the lower court said:
x x x. As the face of the search warrant itself indicates, it was issued for
violation of Section 56, PD 49 as amended only. The specifications
therein (in Annex A) merely refer to the titles of the copyrighted motion
pictures/films belonging to private complainants which defendants
were in control/possession for sale, lease, distribution or public
exhibition in contravention of Sec. 56, PD 49 as amended.[83]
That there were several counts of the offense of copyright infringement
and the search warrant uncovered several contraband items in the form
of pirated video tapes is not to be confused with the number of offenses
charged. The search warrant herein issued does not violate the one-
specific-offense rule.
It is pointless for private respondents to insist on compliance with the
registration and deposit requirements under Presidential Decree No. 49
as prerequisites for invoking the courts protective mantle in copyright
infringement cases. As explained by the court below:
Defendants-movants contend that PD 49 as amended covers only
producers who have complied with the requirements of deposit and
notice (in other words registration) under Sections 49 and 50
thereof. Absent such registration, as in this case, there was no right
created, hence, no infringement under PD 49 as amended. This is not
well-taken.
Intellectual Property Law
As correctly pointed out by private complainants-oppositors, the
Department of Justice has resolved this legal question as far back as
December 12, 1978 in its Opinion No. 191 of the then Secretary of
Justice Vicente Abad Santos which stated that Sections 26 and 50 do not
apply to cinematographic works and PD No. 49 had done away with the
registration and deposit of cinematographic works and that even
without prior registration and deposit of a work which may be entitled
to protection under the Decree, the creator can file action for
infringement of its rights. He cannot demand, however, payment of
damages arising from infringement. The same opinion stressed that the
requirements of registration and deposit are thus retained under the
Decree, not as conditions for the acquisition of copyright and other
rights, but as prerequisites to a suit for damages. The statutory
interpretation of the Executive Branch being correct, is entitled (to)
weight and respect.
xxx xxx xxx
Defendants-movants maintain that complainant and his witnesses led
the Court to believe that a crime existed when in fact there was
none.This is wrong. As earlier discussed, PD 49 as amended, does not
require registration and deposit for a creator to be able to file an action
for infringement of his rights. These conditions are merely pre-
requisites to an action for damages. So, as long as the proscribed acts
are shown to exist, an action for infringement may be initiated.[84]
Accordingly, the certifications[85] from the Copyright Section of the
National Library, presented as evidence by private respondents to show
non-registration of some of the films of petitioners, assume no
evidentiary weight or significance, whatsoever.
Furthermore, a closer review of Presidential Decree No. 49 reveals that
even with respect to works which are required under Section 26 thereof
to be registered and with copies to be deposited with the National
Library, such as books, including composite and cyclopedic works,
manuscripts, directories and gazetteers; and periodicals, including
pamphlets and newspapers; lectures, sermons, addresses, dissertations
prepared for oral delivery; and letters, the failure to comply with said
requirements does not deprive the copyright owner of the right to sue
for infringement. Such non-compliance merely limits the remedies
available to him and subjects him to the corresponding sanction.
The reason for this is expressed in Section 2 of the decree which prefaces
its enumeration of copyrightable works with the explicit statement that
the rights granted under this Decree shall, from the moment of creation,
subsist with respect to any of the following classes of works. This means
that under the present state of the law, the copyright for a work is
acquired by an intellectual creator from the moment of creation even in
the absence of registration and deposit. As has been authoritatively
clarified:
The registration and deposit of two complete copies or reproductions of
the work with the National Library within three weeks after the first
public dissemination or performance of the work, as provided for in
Section 26 (P.D. No. 49, as amended), is not for the purpose of securing
a copyright of the work, but rather to avoid the penalty for non-
compliance of the deposit of said two copies and in order to recover
damages in an infringement suit.[86]
One distressing observation. This case has been fought on the basis of,
and its resolution long delayed by resort to, technicalities to a virtually
Page 32 of 46
abusive extent by private respondents, without so much as an attempt
to adduce any credible evidence showing that they conduct their
business legitimately and fairly. The fact that private respondents could
not show proof of their authority or that there was consent from the
copyright owners for them to sell, lease, distribute or circulate
petitioners copyrighted films immeasurably bolsters the lower courts
initial finding of probable cause. That private respondents are licensed
by the Videogram Regulatory Board does not insulate them from
criminal and civil liability for their unlawful business practices. What is
more deplorable is that the reprehensible acts of some unscrupulous
characters have stigmatized the Philippines with an unsavory reputation
as a hub for intellectual piracy in this part of the globe, formerly in the
records of the General Agreement on Tariffs and Trade and, now, of the
World Trade Organization. Such acts must not be glossed over but
should be denounced and repressed lest the Philippines become an
international pariah in the global intellectual community.
WHEREFORE, the assailed judgment and resolution of respondent Court
of Appeals, and necessarily inclusive of the order of the lower court
dated November 22, 1988, are hereby REVERSED and SET ASIDE. The
order of the court a quo of September 5, 1988 upholding the validity of
Search Warrant No. 87-053 is hereby REINSTATED, and said court is
DIRECTED to take and expeditiously proceed with such appropriate
proceedings as may be called for in this case. Treble costs are further
assessed against private respondents.
SO ORDERED.
Narvasa, C.J., Padilla, Davide, Jr., Romero, Melo, Puno, Vitug, Kapunan,
Mendoza, Francisco, Hermosisima, Jr., Panganiban, and Torres, Jr.,
JJ., concur.
Bellosillo, J., no part in deliberations.
The Law on Copyright
JESSIE G. CHING, petitioner, vs. WILLIAM M. SALINAS, SR., WILLIAM
M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS,
ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT
(Board of Directors and Officers of WILAWARE PRODUCT
CORPORATION), respondents.
DECISION
CALLEJO, SR., J.:
This petition for review on certiorari assails the Decision[1] and
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 70411
affirming the January 3, 2002 and February 14, 2002 Orders[3] of the
Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set
aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of
petitioner Jessie G. Ching.
Jessie G. Ching is the owner and general manager of Jeshicris
Manufacturing Co., the maker and manufacturer of a Utility Model,
described as Leaf Spring Eye Bushing for Automobile made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National
Library Certificates of Copyright Registration and Deposit of the said
work described therein as Leaf Spring Eye Bushing for Automobile.[4]
On September 20, 2001, Ching requested the National Bureau of
Investigation (NBI) for police/investigative assistance for the
apprehension and prosecution of illegal manufacturers, producers
and/or distributors of the works.[5]
After due investigation, the NBI filed applications for search warrants in
the RTC of Manila against William Salinas, Sr. and the officers and
members of the Board of Directors of Wilaware Product Corporation. It
was alleged that the respondents therein reproduced and distributed
the said models penalized under Sections 177.1 and 177.3 of Republic
Act (R.A.) No. 8293. The applications sought the seizure of the following:
a.) Undetermined quantity of Leaf spring eye bushing for automobile
that are made up of plastic polypropylene;
b.) Undetermined quantity of Leaf spring eye bushing for automobile
that are made up of polyvinyl chloride plastic;
c.) Undetermined quantity of Vehicle bearing cushion that is made up of
polyvinyl chloride plastic;
d.) Undetermined quantity of Dies and jigs, patterns and flasks used in
the manufacture/fabrication of items a to d;
e.) Evidences of sale which include delivery receipts, invoices and official
receipts.[6]
The RTC granted the application and issued Search Warrant Nos. 01-
2401 and 01-2402 for the seizure of the aforecited articles.[7] In the
inventory submitted by the NBI agent, it appears that the following
articles/items were seized based on the search warrants:
Leaf Spring eye bushing
Intellectual Property Law
a) Plastic Polypropylene
- C190 27 }
- C240 rear 40 }
- C240 front 41 } BAG 1
b) Polyvinyl Chloride Plastic
- C190 13 }
c) Vehicle bearing cushion
- center bearing cushion 11 }
Budder for C190 mold 8 }
Diesel Mold
a) Mold for spring eye bushing rear 1 set
b) Mold for spring eye bushing front 1 set
c) Mold for spring eye bushing for C190 1 set
d) Mold for C240 rear 1 piece of the
set
e) Mold for spring eye bushing for L300 2 sets
f) Mold for leaf spring eye bushing C190
with metal 1 set
g) Mold for vehicle bearing cushion 1 set[8]
The respondents filed a motion to quash the search warrants on the
following grounds:
2. The copyright registrations were issued in violation of the Intellectual
Property Code on the ground that:
a) the subject matter of the registrations are not artistic or literary;
b) the subject matter of the registrations are spare parts of automobiles
meaning there (sic) are original parts that they are designed to replace.
Hence, they are not original.[9]
The respondents averred that the works covered by the certificates
issued by the National Library are not artistic in nature; they are
considered automotive spare parts and pertain to technology. They aver
that the models are not original, and as such are the proper subject of a
patent, not copyright.[10]
In opposing the motion, the petitioner averred that the court which
issued the search warrants was not the proper forum in which to
articulate the issue of the validity of the copyrights issued to him. Citing
the ruling of the Court in Malaloan v. Court of Appeals,[11] the
petitioner stated that a search warrant is merely a judicial process
designed by the Rules of Court in anticipation of a criminal case. Until
his copyright was nullified in a proper proceeding, he enjoys rights of a
registered owner/holder thereof.
On January 3, 2002, the trial court issued an Order[12] granting the
motion, and quashed the search warrant on its finding that there was
no probable cause for its issuance. The court ruled that the work
covered by the certificates issued to the petitioner pertained to
solutions to technical problems, not literary and artistic as provided in
Article 172 of the Intellectual Property Code.
His motion for reconsideration of the order having been denied by the
trial courts Order of February 14, 2002, the petitioner filed a petition
for certiorari in the CA, contending that the RTC had no jurisdiction to
delve into and resolve the validity of the copyright certificates issued to
him by the National Library. He insisted that his works are covered by
Sections 172.1 and 172.2 of the Intellectual Property Code. The
petitioner averred that the copyright certificates are prima
facie evidence of its validity, citing the ruling of the United States Court
Page 33 of 46
of Appeals in Wildlife Express Corporation v. Carol Wright Sales,
Inc.[13] The petitioner asserted that the respondents failed to adduce
evidence to support their motion to quash the search warrants. The
petitioner noted that respondent William Salinas, Jr. was not being
honest, as he was able to secure a similar copyright registration of a
similar product from the National Library on January 14, 2002.
On September 26, 2003, the CA rendered judgment dismissing the
petition on its finding that the RTC did not commit any grave abuse of
its discretion in issuing the assailed order, to wit:
It is settled that preliminarily, there must be a finding that a specific
offense must have been committed to justify the issuance of a search
warrant. In a number of cases decided by the Supreme Court, the same
is explicitly provided, thus:
The probable cause must be in connection with one specific offense, and
the judge must, before issuing the warrant, personally examine in the
form of searching questions and answers, in writing and under oath, the
complainant and any witness he may produce, on facts personally
known to them and attach to the record their sworn statements
together with any affidavit submitted.
In the determination of probable cause, the court must necessarily
resolve whether or not an offense exists to justify the issuance or
quashal of the search warrant.
In the instant case, the petitioner is praying for the reinstatement of the
search warrants issued, but subsequently quashed, for the offense
of Violation of Class Designation of Copyrightable Works under Section
177.1 in relation to Section 177.3 of Republic Act 8293, when the objects
subject of the same, are patently not copyrightable.
It is worthy to state that the works protected under the Law on
Copyright are: literary or artistic works (Sec. 172) and derivative works
(Sec. 173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall
on neither classification. Accordingly, if, in the first place, the item
subject of the petition is not entitled to be protected by the law on
copyright, how can there be any violation?[14]
The petitioners motion for reconsideration of the said decision suffered
the same fate. The petitioner forthwith filed the present petition for
review on certiorari, contending that the revocation of his copyright
certificates should be raised in a direct action and not in a search
warrant proceeding.
The petitioner posits that even assuming ex argumenti that the trial
court may resolve the validity of his copyright in a proceeding to quash
a search warrant for allegedly infringing items, the RTC committed a
grave abuse of its discretion when it declared that his works are not
copyrightable in the first place. He claims that R.A. No. 8293, otherwise
known as the Intellectual Property Code of the Philippines, which took
effect on January 1, 1998, provides in no uncertain terms that copyright
protection automatically attaches to a work by the sole fact of its
creation, irrespective of its mode or form of expression, as well as of its
content, quality or purpose.[15] The law gives a non-inclusive definition
of work as referring to original intellectual creations in the literary and
artistic domain protected from the moment of their creation; and
includes original ornamental designs or models for articles of
manufacture, whether or not registrable as an industrial design and
other works of applied art under Section 172.1(h) of R.A. No. 8293.
The Law on Copyright
As such, the petitioner insists, notwithstanding the classification of the
works as either literary and/or artistic, the said law, likewise,
encompasses works which may have a bearing on the utility aspect to
which the petitioners utility designs were classified. Moreover,
according to the petitioner, what the Copyright Law protects is the
authors intellectual creation, regardless of whether it is one with
utilitarian functions or incorporated in a useful article produced on an
industrial scale.
The petitioner also maintains that the law does not provide that the
intended use or use in industry of an article eligible for patent bars or
invalidates its registration under the Law on Copyright. The test of
protection for the aesthetic is not beauty and utility, but art for the
copyright and invention of original and ornamental design for design
patents.[16] In like manner, the fact that his utility designs or models for
articles of manufacture have been expressed in the field of automotive
parts, or based on something already in the public domain does not
automatically remove them from the protection of the Law on
Copyright.[17]
The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293
which gives the same presumption to an affidavit executed by an author
who claims copyright ownership of his work.
The petitioner adds that a finding of probable cause to justify the
issuance of a search warrant means merely a reasonable suspicion of
the commission of the offense. It is not equivalent to absolute certainty
or a finding of actual and positive cause.[18] He assists that the
determination of probable cause does not concern the issue of whether
or not the alleged work is copyrightable. He maintains that to justify a
finding of probable cause in the issuance of a search warrant, it is
enough that there exists a reasonable suspicion of the commission of
the offense.
The petitioner contends that he has in his favor the benefit of the
presumption that his copyright is valid; hence, the burden of
overturning this presumption is on the alleged infringers, the
respondents herein. But this burden cannot be carried in a hearing on a
proceeding to quash the search warrants, as the issue therein is whether
there was probable cause for the issuance of the search warrant. The
petitioner concludes that the issue of probable cause should be resolved
without invalidating his copyright.
In their comment on the petition, the respondents aver that the work of
the petitioner is essentially a technical solution to the problem of wear
and tear in automobiles, the substitution of materials, i.e., from rubber
to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic
material strong enough to endure pressure brought about by the
vibration of the counter bearing and thus brings bushings. Such work,
the respondents assert, is the subject of copyright under Section 172.1
of R.A. No. 8293. The respondents posit that a technical solution in any
field of human activity which is novel may be the subject of a patent,
and not of a copyright. They insist that the certificates issued by the
National Library are only certifications that, at a point in time, a certain
work was deposited in the said office. Furthermore, the registration of
copyrights does not provide for automatic protection. Citing Section
218.2(b) of R.A. No. 8293, the respondents aver that no copyright is said
to exist if a party categorically questions its existence and legality.
Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No.
Intellectual Property Law
8293, the registration and deposit of work is not conclusive as to
copyright outlay or the time of copyright or the right of the copyright
owner. The respondents maintain that a copyright exists only when the
work is covered by the protection of R.A. No. 8293.
The petition has no merit.
The RTC had jurisdiction to delve into and resolve the issue whether the
petitioners utility models are copyrightable and, if so, whether he is the
owner of a copyright over the said models. It bears stressing that upon
the filing of the application for search warrant, the RTC was duty-bound
to determine whether probable cause existed, in accordance with
Section 4, Rule 126 of the Rules of Criminal Procedure:
SEC. 4. Requisite for issuing search warrant. A search warrant shall not
issue but upon probable cause in connection with one specific offense
to be determined personally by the judge after examination under oath
or affirmation of the complainant and the witnesses he may produce,
and, particularly, describing the place to be searched and the things to
be seized.
In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br.
93,[19] the Court held that in the determination of probable cause, the
court must necessarily resolve whether or not an offense exists to justify
the issuance of a search warrant or the quashal of one already issued by
the court. Indeed, probable cause is deemed to exist only where facts
and circumstances exist which could lead a reasonably cautious and
prudent man to believe that an offense has been committed or is being
committed. Besides, in Section 3, Rule 126 of the Rules of Criminal
Procedure, a search warrant may be issued for the search and seizure of
personal property (a) subject of the offense; (b) stolen or embezzled and
other proceeds or fruits of the offense; or (c) used or intended to be
used as the means of committing an offense.
The RTC is mandated under the Constitution and Rules of Criminal
Procedure to determine probable cause. The court cannot abdicate its
constitutional obligation by refusing to determine whether an offense
has been committed.[20] The absence of probable cause will cause the
outright nullification of the search warrant.[21]
For the RTC to determine whether the crime for infringement under R.A.
No. 8293 as alleged in an application is committed, the petitioner-
applicant was burdened to prove that (a) respondents Jessie Ching and
Joseph Yu were the owners of copyrighted material; and (b) the
copyrighted material was being copied and distributed by the
respondents. Thus, the ownership of a valid copyright is essential.[22]
Ownership of copyrighted material is shown by proof of originality and
copyrightability. By originality is meant that the material was not copied,
and evidences at least minimal creativity; that it was independently
created by the author and that it possesses at least same minimal
degree of creativity.[23] Copying is shown by proof of access to
copyrighted material and substantial similarity between the two
works.[24] The applicant must thus demonstrate the existence and the
validity of his copyright because in the absence of copyright protection,
even original creation may be freely copied.[25]
By requesting the NBI to investigate and, if feasible, file an application
for a search warrant for infringement under R.A. No. 8293 against the
respondents, the petitioner thereby authorized the RTC (in resolving the
application), to delve into and determine the validity of the copyright
which he claimed he had over the utility models. The petitioner cannot
Page 34 of 46
seek relief from the RTC based on his claim that he was the copyright
owner over the utility models and, at the same time, repudiate the
courts jurisdiction to ascertain the validity of his claim without running
afoul to the doctrine of estoppel.
To discharge his burden, the applicant may present the certificate of
registration covering the work or, in its absence, other evidence.[26] A
copyright certificate provides prima facieevidence of originality which is
one element of copyright validity. It constitutes prima facie evidence of
both validity and ownership[27] and the validity of the facts stated in
the certificate.[28]The presumption of validity to a certificate of
copyright registration merely orders the burden of proof. The applicant
should not ordinarily be forced, in the first instance, to prove all the
multiple facts that underline the validity of the copyright unless the
respondent, effectively challenging them, shifts the burden of doing so
to the applicant.[29] Indeed, Section 218.2 of R.A. No. 8293 provides:
218.2. In an action under this Chapter:
(a) Copyright shall be presumed to subsist in the work or other subject
matter to which the action relates if the defendant does not put in issue
the question whether copyright subsists in the work or other subject
matter; and
(b) Where the subsistence of the copyright is established, the plaintiff
shall be presumed to be the owner of the copyright if he claims to be
the owner of the copyright and the defendant does not put in issue the
question of his ownership.
A certificate of registration creates no rebuttable presumption of
copyright validity where other evidence in the record casts doubt on the
question. In such a case, validity will not be presumed.[30]
To discharge his burden of probable cause for the issuance of a search
warrant for violation of R.A. No. 8293, the petitioner-applicant
submitted to the RTC Certificate of Copyright Registration Nos. 2001-
197 and 2001-204 dated September 3, 2001 and September 4, 2001,
respectively, issued by the National Library covering work identified as
Leaf Spring Eye Bushing for Automobile and Vehicle Bearing Cushion
both classified under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. 172.1. Literary and artistic works,
hereinafter referred to as works, are original intellectual creations in the
literary and artistic domain protected from the moment of their creation
and shall include in particular:
...
(h) Original ornamental designs or models for articles of manufacture,
whether or not registrable as an industrial design, and other works of
applied art.
Related to the provision is Section 171.10, which provides that a work
of applied art is an artistic creation with utilitarian functions or
incorporated in a useful article, whether made by hand or produced on
an industrial scale.
But, as gleaned from the specifications appended to the application for
a copyright certificate filed by the petitioner, the said Leaf Spring Eye
Bushing for Automobile is merely a utility model described as comprising
a generally cylindrical body having a co-axial bore that is centrally
located and provided with a perpendicular flange on one of its ends and
a cylindrical metal jacket surrounding the peripheral walls of said body,
with the bushing made of plastic that is either polyvinyl chloride or
polypropylene.[31] Likewise, the Vehicle Bearing Cushion is illustrated
The Law on Copyright
as a bearing cushion comprising a generally semi-circular body having a
central hole to secure a conventional bearing and a plurality of ridges
provided therefore, with said cushion bearing being made of the same
plastic materials.[32] Plainly, these are not literary or artistic works.
They are not intellectual creations in the literary and artistic domain, or
works of applied art. They are certainly not ornamental designs or one
having decorative quality or value.
It bears stressing that the focus of copyright is the usefulness of the
artistic design, and not its marketability. The central inquiry is whether
the article is a work of art.[33] Works for applied art include all original
pictorials, graphics, and sculptural works that are intended to be or have
been embodied in useful article regardless of factors such as mass
production, commercial exploitation, and the potential availability of
design patent protection.[34]
As gleaned from the description of the models and their objectives,
these articles are useful articles which are defined as one having an
intrinsic utilitarian function that is not merely to portray the appearance
of the article or to convey information. Indeed, while works of applied
art, original intellectual, literary and artistic works are copyrightable,
useful articles and works of industrial design are not.[35] A useful article
may be copyrightable only if and only to the extent that such design
incorporates pictorial, graphic, or sculptural features that can be
identified separately from, and are capable of existing independently of
the utilitarian aspects of the article.
We agree with the contention of the petitioner (citing Section 171.10 of
R.A. No. 8293), that the authors intellectual creation, regardless of
whether it is a creation with utilitarian functions or incorporated in a
useful article produced on an industrial scale, is protected by copyright
law. However, the law refers to a work of applied art which is an artistic
creation. It bears stressing that there is no copyright protection for
works of applied art or industrial design which have aesthetic or artistic
features that cannot be identified separately from the utilitarian aspects
of the article.[36] Functional components of useful articles, no matter
how artistically designed, have generally been denied copyright
protection unless they are separable from the useful article.[37]
In this case, the petitioners models are not works of applied art, nor
artistic works. They are utility models, useful articles, albeit with no
artistic design or value. Thus, the petitioner described the utility model
as follows:
LEAF SPRING EYE BUSHING FOR AUTOMOBILE
Known bushings inserted to leaf-spring eye to hold leaf-springs of
automobile are made of hard rubber. These rubber bushings after a
time, upon subjecting them to so much or intermittent pressure would
eventually wore (sic) out that would cause the wobbling of the leaf
spring.
The primary object of this utility model, therefore, is to provide a leaf-
spring eye bushing for automobile that is made up of plastic.
Another object of this utility model is to provide a leaf-spring eye
bushing for automobiles made of polyvinyl chloride, an oil resistant soft
texture plastic or polypropylene, a hard plastic, yet both causes cushion
to the leaf spring, yet strong enough to endure pressure brought about
by the up and down movement of said leaf spring.
Intellectual Property Law
Yet, an object of this utility model is to provide a leaf-spring eye bushing
for automobiles that has a much longer life span than the rubber
bushings.
Still an object of this utility model is to provide a leaf-spring eye bushing
for automobiles that has a very simple construction and can be made
using simple and ordinary molding equipment.
A further object of this utility model is to provide a leaf-spring eye
bushing for automobile that is supplied with a metal jacket to reinforce
the plastic eye bushing when in engaged with the steel material of the
leaf spring.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is an exploded perspective of a leaf-spring eye bushing
according to the present utility model;
Figure 2 is a sectional view taken along line 2-2 of Fig. 1;
Figure 3 is a longitudinal sectional view of another embodiment of this
utility model;
Figure 4 is a perspective view of a third embodiment; and
Figure 5 is a sectional view thereof.
Referring now to the several views of the drawings wherein like
reference numerals designated same parts throughout, there is shown
a utility model for a leaf-spring eye bushing for automobile generally
designated as reference numeral 10.
Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11
having a co-axial bore 12 centrally provided thereof.
As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided
with a perpendicular flange 13 on one of its ends and a cylindrical metal
jacket 14 surrounding the peripheral walls 15 of said body 11. When said
leaf-spring bushing 10 is installed, the metal jacket 14 acts with the leaf-
spring eye (not shown), which is also made of steel or cast steel. In
effect, the bushing 10 will not be directly in contact with steel, but rather
the metal jacket, making the life of the bushing 10 longer than those
without the metal jacket.
In Figure 2, the bushing 10 as shown is made of plastic, preferably
polyvinyl chloride, an oil resistant soft texture plastic or a hard
polypropylene plastic, both are capable to endure the pressure applied
thereto, and, in effect, would lengthen the life and replacement
therefor.
Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12
of said bushing 10 is insertably provided with a steel tube 17 to reinforce
the inner portion thereof. This steel tube 17 accommodates or engages
with the leaf-spring bolt (not shown) connecting the leaf spring and the
automobiles chassis.
Figures 4 and 5 show another embodiment wherein the leaf eye bushing
10 is elongated and cylindrical as to its construction. Said another
embodiment is also made of polypropylene or polyvinyl chloride plastic
material. The steel tube 17 and metal jacket 14 may also be applied to
this embodiment as an option thereof.[38]
VEHICLE BEARING CUSHION
Known bearing cushions inserted to bearing housings for vehicle
propeller shafts are made of hard rubber. These rubber bushings after a
time, upon subjecting them to so much or intermittent pressure would
Page 35 of 46
eventually be worn out that would cause the wobbling of the center
bearing.
The primary object of this utility model therefore is to provide a vehicle-
bearing cushion that is made up of plastic.
Another object of this utility model is to provide a vehicle bearing
cushion made of polyvinyl chloride, an oil resistant soft texture plastic
material which causes cushion to the propellers center bearing, yet
strong enough to endure pressure brought about by the vibration of the
center bearing.
Yet, an object of this utility model is to provide a vehicle-bearing cushion
that has a much longer life span than rubber bushings.
Still an object of this utility model is to provide a vehicle bearing cushion
that has a very simple construction and can be made using simple and
ordinary molding equipment.
These and other objects and advantages will come to view and be
understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.
Figure 1 is a perspective view of the present utility model for a vehicle-
bearing cushion; and
Figure 2 is a sectional view thereof.
Referring now to the several views of the drawing, wherein like
reference numeral designate same parts throughout, there is shown a
utility model for a vehicle-bearing cushion generally designated as
reference numeral 10.
Said bearing cushion 10 comprises of a generally semi-circular body 11,
having central hole 12 to house a conventional bearing (not shown). As
shown in Figure 1, said body 11 is provided with a plurality of ridges 13
which serves reinforcing means thereof.
The subject bearing cushion 10 is made of polyvinyl chloride, a soft
texture oil and chemical resistant plastic material which is strong,
durable and capable of enduring severe pressure from the center
bearing brought about by the rotating movement of the propeller shaft
of the vehicle.[39]
A utility model is a technical solution to a problem in any field of human
activity which is new and industrially applicable. It may be, or may relate
to, a product, or process, or an improvement of any of the
aforesaid.[40] Essentially, a utility model refers to an invention in the
mechanical field. This is the reason why its object is sometimes
described as a device or useful object.[41] A utility model varies from an
invention, for which a patent for invention is, likewise, available, on at
least three aspects: first, the requisite of inventive step[42] in a patent
for invention is not required; second, the maximum term of protection
is only seven years[43] compared to a patent which is twenty
years,[44] both reckoned from the date of the application; and third, the
provisions on utility model dispense with its substantive
examination[45] and prefer for a less complicated system.
Being plain automotive spare parts that must conform to the original
structural design of the components they seek to replace, the Leaf
Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental.
They lack the decorative quality or value that must characterize
authentic works of applied 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
The Law on Copyright
are mechanical works, the principal function of which is utility sansany
aesthetic embellishment.
Neither are we to regard the Leaf Spring Eye Bushing and Vehicle
Bearing Cushion as included in the catch-all phrase other literary,
scholarly, scientific and artistic works in Section 172.1(a) of R.A. No.
8293. Applying the principle of ejusdem generis which states that where
a statute describes things of a particular class or kind accompanied by
words of a generic character, the generic word will usually be limited to
things of a similar nature with those particularly enumerated, unless
there be something in the context of the state which would repel such
inference,[46] the Leaf Spring Eye Bushing and Vehicle Bearing Cushion
are not copyrightable, being not of the same kind and nature as the
works enumerated in Section 172 of R.A. No. 8293.
No copyright granted by law can be said to arise in favor of the petitioner
despite the issuance of the certificates of copyright registration and the
deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion.
Indeed, in Joaquin, Jr. v. Drilon[47] and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,[48] the Court ruled that:
Copyright, in the strict sense of the term, is purely a statutory right. It is
a new or independent right granted by the statute, and not simply a pre-
existing right regulated by it. Being a statutory grant, the rights are only
such as the statute confers, and may be obtained and enjoyed only with
respect to the subjects and by the persons, and on terms and conditions
specified in the statute. Accordingly, it can cover only the works falling
within the statutory enumeration or description.
That the works of the petitioner may be the proper subject of a patent
does not entitle him to the issuance of a search warrant for violation of
copyright laws. In Kho v. Court of Appeals[49] and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,[50] the Court ruled that these
copyright and patent rights are completely distinct and separate from
one another, and the protection afforded by one cannot be used
interchangeably to cover items or works that exclusively pertain to the
others. The Court expounded further, thus:
Trademark, copyright and patents are different intellectual property
rights that cannot be interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a stamped or marked
container of goods. In relation thereto, a trade name means the name
or designation identifying or distinguishing an enterprise. Meanwhile,
the scope of a copyright is confined to literary and artistic works which
are original intellectual creations in the literary and artistic domain
protected from the moment of their creation. Patentable inventions, on
the other hand, refer to any technical solution of a problem in any field
of human activity which is new, involves an inventive step and is
industrially applicable.
The petitioner cannot find solace in the ruling of the United States
Supreme Court in Mazer v. Stein[51] to buttress his petition. In that
case, the artifacts involved in that case were statuettes of dancing male
and female figures made of semi-vitreous china. The controversy
therein centered on the fact that although copyrighted as works of art,
the statuettes were intended for use and used as bases for table lamps,
with electric wiring, sockets and lampshades attached. The issue raised
was whether the statuettes were copyright protected in the United
States, considering that the copyright applicant intended primarily to
Intellectual Property Law The Law on Copyright
use them as lamp bases to be made and sold in quantity, and carried The defendant in his answer denied generally each and every allegation
such intentions into effect. At that time, the Copyright Office interpreted of the complaint and prayed the court to absolve him from the
the 1909 Copyright Act to cover works of artistic craftsmanship insofar complaint. After trial and the introduction of evidence by both parties,
as their form, but not the utilitarian aspects, were concerned. After the court on August 20, 1915, rendered judgment, absolving the
reviewing the history and intent of the US Congress on its copyright defendant from the complaint, but without making any special
legislation and the interpretation of the copyright office, the US pronouncement as to costs. The plaintiff moved for a new trial on the
Supreme Court declared that the statuettes were held copyrightable ground that the judgment was against the law and the weight of the
works of art or models or designs for works of art. The High Court ruled evidence. Said motion having been overruled, plaintiff excepted to the
that: order overruling it, and appealed the case to the Supreme Court upon a
Works of art (Class G) (a) In General. This class includes works of artistic bill of exceptions.
craftsmanship, in so far as their form but not their mechanical or The ground of the decision appealed from is that a comparison of the
utilitarian aspects are concerned, such as artistic jewelry, enamels, plaintiff's dictionary with that of the defendant does not show that the
glassware, and tapestries, as well as all works belonging to the fine arts, latter is an improper copy of the former, which has been published and
such as paintings, drawings and sculpture. offered for sale by the plaintiff for about twenty-five years or more. For
So we have a contemporaneous and long-continued construction of the this reason the court held that the plaintiff had no right of action and
statutes by the agency charged to administer them that would allow the that the remedy sought by him could not be granted.
registration of such a statuette as is in question here.[52] The appellant contends that court below erred in not declaring that the
The High Court went on to state that [t]he dichotomy of protection for defendant had reproduced the plaintiff's work and that the defendant
the aesthetic is not beauty and utility but art for the copyright and the had violated article 7 of the Law of January 10, 1879, on Intellectual
invention of original and ornamental design for design patents. SECOND DIVISION Property.
Significantly, the copyright office promulgated a rule to implement [G.R. No. 161295. June 29, 2005] Said article provides:
Mazer to wit: Nobody may reproduce another person's work without the owner's
[I]f the sole intrinsic function of an article is its utility, the fact that the Republic of the Philippines consent, even merely to annotate or add anything to it, or improve any
work is unique and attractively shaped will not qualify it as a work of art. SUPREME COURT edition thereof.
In this case, the bushing and cushion are not works of art. They are, as Manila Therefore, in order that said article may be violated, it is not necessary,
the petitioner himself admitted, utility models which may be the subject EN BANC as the court below seems to have understood, that a work should be an
of a patent. G.R. No. L-11937 April 1, 1918 improper copy of another work previously published. It is enough that
IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED PEDRO SERRANO LAKTAW, plaintiff-appellant, another's work has been reproduced without the consent of the owner,
for lack of merit. The assailed Decision and Resolution of the Court of vs. even though it be only to annotate, add something to it, or improve any
Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. MAMERTO PAGLINAWAN, defendant-appellee. edition thereof.
01-2401 and 01-2402 issued on October 15, 2001 are ANNULLED AND Perfecto Gabriel for appellant. Upon making a careful and minute comparison of Exhibit A, the
SET ASIDE. Costs against the petitioner. Felix Ferrer and Crossfield and O'Brien for appellee. dictionary written and published by the plaintiff, and Exhibit B, written
SO ORDERED. ARAULLO, J.: and published by the defendant, and, taking into account the
In the complaint presented in the Court of First Instance of the City of memorandum (fols. 55 to 59) presented by the defendant, in which he
Manila on February 20, 1915, it was alleged: (1) That the plaintiff was, enumerates the words and terms which, according to him, are in his
according to the laws regulating literary properties, the registered dictionary but not in that of that of the plaintiff, and viceversa, and the
owner and author of a literary work entitled Diccionario Hispano- equivalents or definitions given by the plaintiff, as well as the new
Tagalog (Spanish-Tagalog Dictionary) published in the City of Manila in Tagalog words which are in the dictionary of the defendant but not in
1889 by the printing establishment La Opinion, and a copy of which was that of the plaintiff; and considering the notes, Exhibit C, first series,
attached to the complaint, as Exhibit A; (2) that the defendant, without presented by the plaintiff, in which the terms copied by the defendant
the consent of the plaintiff, reproduced said literary work, improperly from the plaintiff's dictionary are enumerated in detail and in relation
copied the greater part thereof in the work published by him and to each letter of the alphabet and which the plaintiff's own words and
entitled Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary), a terms are set forth, with a summary, at the foot of each group of letters,
copy of which was also attached to the complaint as Exhibit B; (3) that which shows the number of initial Spanish words contained in the
said act of the defendant, which is a violation of article 7 of the Law of defendant's dictionary, the words that are his own and the fact that the
January 10, 1879, on Intellectual Property, caused irreparable injuries to remaining ones are truly copied from the plaintiff's dictionary
the plaintiff, who was surprised when, on publishing his new work considering all of these facts, we come to a conclusion completely
entitled Diccionario Tagalog-Hispano (Tagalog-Spanish Dictionary) he different and contrary to that of the trial court, for said evidence clearly
learned of the fact, and (4) that the damages occasioned to the plaintiff shows:
by the publication of defendant's work amounted to $10,000. The 1. That, of the Spanish words in the defendant's dictionary, Exhibit B,
plaintiff therefore prayed the court to order the defendant to withdraw which correspond to each letter of the alphabet, those that are
from sale all stock of the work herein identified as Exhibit B and to pay enumerated below have been copied and reproduced from the
the plaintiff the sum of $10,000, with costs. plaintiff's dictionary, with the exception of those that are stated to be
defendant's own.

Page 36 of 46
Intellectual Property Law The Law on Copyright
Letter Words Defendant's own comparison on which its conclusion is based, and consequently the This law was published in the Gaceta de Madrid on January 12, 1879. It
"A" 1,184 231 conclusion reached by it must be inaccurate and not well founded, took effect in these Islands six months after its promulgation or
"B" 364 28 because said comparison was not complete. publication, as provided in article 56 thereof. The body of rules for the
"C" 660 261 In said judgment some words of the defendant's dictionary are execution of said law having been approved by royal decree of
"CH" 76 10 transcribed, the equivalents and meanings of which in Tagalog are September 3, 1880, and published in the Gaceta de Madrid on
"D" 874 231 exactly the same as those that are given in the plaintiff's dictionary, with September 6, 1880 and extended to the Philippine Islands by royal
"E" 880 301 the exception, as to some of them, of only one acceptation, which is the decree of May 5, 1887, it was in turn published in the Gaceta de Manila,
"F" 383 152 defendant's own production. And with respect to the examples used by with the approval of the Governor-General of the Islands, on June 15,
"G" 302 111 the defendant in his dictionary, which, according to the judgment, are 1887. Said law of January 10, 1879, and the rules for its application, were
"H" 57 64 not copied from the plaintiff's the judgment referring to the therefore in force in these Islands when the plaintiff's dictionary was
"I" 814 328 preposition a (to), in Tagalog sa it must be noted that the defendant, edited and published in 1889.
"J" 113 25 in giving in his dictionary an example of said preposition, uses the It appears from the evidence that although the plaintiff did not
"K" 11 11 expression "voy a Tayabas" (I am going to Tayabas) instead of introduce at the trial the certificate of registration of his property rights
"L" 502 94 "voy aBulacan" (I am going to Bulacan), as the plaintiff does in his to said work which, according to said rules, was kept in the Central
"LL" 36 2 dictionary, or what is the same thing, that one speaks of Bulacan while Government of these Islands, and was issued to him in 1890, the same
"M" 994 225 the other speaks of Tayabas. This does not show that there was no having been lost during the revolution against Spain, and no trace
"N" 259 53 reproduction or copying by the defendant of the plaintiffs work, but just relative to the issuance of said certificate being obtainable in the
"" 6 2 the opposite, for he who intends to imitate the work of another, tries to Division of Archives of the Executive Bureau on account of the loss of
"O" 317 67 make it appear in some manner that there is some difference between the corresponding records, yet as in the first page of said dictionary the
"P" 803 358 the original and the imitation; and in the example referred to, with property right of the plaintiff was reserved by means of the words "Es
"Q" 84 11 respect to the preposition a (to), that dissimilarity as to the province propiedad del autor" (All rights reserved), taken in connection with the
"R" 847 140 designated seems to effect the same purpose. permission granted him by the Governor-General on November 24,
"S" 746 118 In the judgment appealed from, the court gives one to understand that 1889, to print and publish said dictionary, after an examination thereof
"T" 591 147 the reproduction of another's dictionary without the owner's consent by the permanent committee of censors, which examination was made,
"U" 107 15 does not constitute a violation of the Law of Intellectual Property for the and the necessary license granted to him, these facts constitute
"V" 342 96 court's idea of a dictionary is stated in the decision itself, as follows: sufficient proof, under the circumstances of the case, as they have not
"X" 6 6 Dictionaries have to be made with the aid of others, and they are been overcome by any evidence on the part of the defendant, showing
"Y" 24 4 improved by the increase of words. What may be said of a pasture that said plaintiff did not comply with the requirements of article 36 of
"Z" 73 17 ground may be said also of a dictionary, i. e., that it should be common said law, which was the prerequisite to the enjoyment of the benefits
______ _____ property for all who may desire to write a new dictionary, and the thereof according to the preceding articles, among which is article 7,
23,560 3,108 defendant has come to this pasture ground and taken whatever he which is alleged in the complaint to have been violated by the
Therefore, of the 23,560 Spanish words in the defendant's dictionary, needed from it in the exercise of a perfect right. defendant.
after deducting 17 words corresponding to the letters K and X (for the Such idea is very erroneous, especially in relation to the Law of Even considering that said Law of January 10, 1879, ceased to operate
plaintiff has no words corresponding to them), only 3,108 words are the Intellectual Property. Danvilla y Collado the author of the Law of January in these Islands, upon the termination of Spanish sovereignty and the
defendant's own, or, what is the same thing, the defendant has added 10, 1879, on Intellectual Property, which was discussed and approved in substitution thereof by that of the United States of America, the right of
only this number of words to those that are in the plaintiff's dictionary, the Spanish Cortes, in his work entitled La Propiedad Intelectual (page the plaintiff to invoke said law in support of the action instituted by him
he having reproduced or copied the remaining 20,452 words. 362, 1st ed.) states with respect to dictionaries and in relation to article in the present case cannot be disputed. His property right to the
2. That the defendant also literally reproduced and copied for the 7 of said law: work Diccionario Hispano-Tagalog (Spanish-Tagalog Dictionary),
Spanish words in his dictionary, the equivalents, definitions and The protection of the law cannot be denied to the author of a dictionary, published by him and edited in 1889, is recognized and sanctioned by
different meanings in Tagalog, given in plaintiff's dictionary, having for although words are not the property of anybody, their definitions, said law, and by virtue thereof, he had acquired a right of which he
reproduced, as to some words, everything that appears in the plaintiff's the example that explain their sense, and the manner of expressing their cannot be deprived merely because the law is not in force now or is of
dictionary for similar Spanish words, although as to some he made some different meanings, may constitute a special work. On this point, the no actual application. This conclusion is necessary to protect intellectual
additions of his own. Said copies and reproductions are numerous as correctional court of the Seine held, on August 16, 1864, that a property rights vested after the sovereignty of Spain was superseded by
may be seen, by comparing both dictionaries and using as a guide or dictionary constitutes property, although some of the words therein are that of the United States. It was so held superseded by that of the United
index the defendant's memorandum and notes, first series, Exhibit C, in explained by mere definitions expressed in a few lines and sanctioned States. It was so held in the Treaty of Paris of December 10, 1898,
which, as to each word, the similarities and differences between them by usage, provided that the greater part of the other words contain new between Spain and the United States, when it declared in article 13
are set forth in detail. meanings; new meanings which evidently may only belonged to the first thereof that the rights to literary, artistic, and industrial properties
3. That the printer's errors in the plaintiff's dictionary as to the person who published them. acquired by the subject of Spain in the Island of Cuba and in Puerto Rico
expression of some words in Spanish as well as their equivalents in Therefore, the plaintiff, Pedro Serrano, cannot be denied the legal and the Philippines and other ceded territories, at the time of the
Tagalog are also reproduced, a fact which shows that the defendant, in protection which he seeks, and which is based on the fact that the exchange of the ratification of said Treaty, shall continue to be respect.
preparing his dictionary, literally copied those Spanish words and their dictionary published by him in 1889 is his property said property right In addition to what has been said, according to article 428 of the Civil
meanings and equivalents in Tagalog from the plaintiff's dictionary. being recognized and having been granted by article 7, in connection Code, the author of a literary, scientific, or artistic work, has the right to
The trial court has chosen at random, as is stated in the judgment with article 2, of said law and on the further fact that said work was exploit it and dispose thereof at will. In relation to this right, there exists
appealed from, some words from said dictionaries in making the reproduced by the defendant without his permission. the exclusive right of the author, who is the absolute owner of his own

Page 37 of 46
Intellectual Property Law
work, to produce it, according to article 2 of the Law of January 10, 1879,
and consequently, nobody may reproduce it, without his permission,
not even to annotate or add something to it, or to improve any edition
thereof, according to article 7 of said law. Manresa, in his commentaries
on article 429 of the Civil Code (vol. 3, p. 633, 3d ed.) says that the
concrete statement of the right to literary properties is found in the legal
doctrine according to which nobody may reproduce another person's
work, without the consent of his owner, or even to annotate or add
something to it or to improve any edition thereof. And on page 616 of
said volume, Manresa says the following:
He who writes a book, or carves a statue, or makes an invention, has the
absolute right to reproduce or sell it, just as the owner of land has the
absolute right to sell it or its fruits. But while the owner of land, by selling
it and its fruits, perhaps fully realizes all its economic value, by receiving
its benefits and utilities, which are presented, for example, by the price,
on the other hand the author of a book, statue or invention, does not
reap all the benefits and advantages of his own property by disposing of
it, for the most important form of realizing the economic advantages of
a book, statue or invention, consists in the right to reproduce it in similar
or like copies, everyone of which serves to give to the person
reproducing them all the conditions which the original requires in order
to give the author the full enjoyment thereof. If the author of a book,
after its publication, cannot prevent its reproduction by any person who
may want to reproduce it, then the property right granted him is
reduced to a very insignificant thing and the effort made in the
production of the book is no way rewarded.
Indeed the property right recognized and protected by the Law of
January 10, 1879, on Intellectual Property, would be illusory if, by reason
of the fact that said law is no longer in force as a consequence of the
change of sovereignty in these Islands, the author of a work, who has
the exclusive right to reproduce it, could not prevent another person
from so doing without his consent, and could not enforce this right
through the courts of justice in order to prosecute the violator of this
legal provision and the defrauder or usurper of his right, for he could not
obtain the full enjoyment of the book or other work, and his property
right thereto, which is recognized by law, would be reduced, as Manresa
says, to an insignificant thing, if he should have no more right than that
of selling his work.
The reproduction by the defendant without the plaintiff's consent of
the Diccionario Hispano-Tagalog (Spanish-Tagalog Dictionary),
published and edited in the City of Manila in 1889, by the publication of
the Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary),
published in the same city and edited in the press El Progreso in 1913,
as appears from Exhibit B, which is attached to the complaint, has
caused the plaintiff, according to the latter, damages in the sum of
$10,000. It is true that it cannot be denied that the reproduction of the
plaintiff's book by the defendant has caused damages to the former, but
the amount thereof has not been determined at the trial, for the
statement of the plaintiff as to the proceeds he would have realized if
he had printed in 1913 the number of copies of his work which he stated
in his declaration a fact which he did not do because the defendant
had reproduced it was not corroborated in any way at the trial and is
based upon mere calculations made by the plaintiff himself; for which
Page 38 of 46
reason no pronouncement can be made in this decision as to the
indemnification for damages which the plaintiff seeks to recover.
The plaintiff having prayed, not for a permanent injunction against the
defendant, as the plaintiff himself in his brief erroneously states, but for
a judgment ordering the defendant to withdraw from sale all stock of
his work Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary), of
which Exhibit B is a copy, and the suit instituted by said plaintiff being
proper, we reverse the judgment appealed from and order the
defendant to withdraw from sale, as prayed for in the complaint, all
stock of his work above-mentioned, and to pay the costs of first
instance. We make no special pronouncement as to the costs of this
instance. So ordered.
Arellano, C. J., Torres, and Street, JJ., concur.
Carson, and Malcolm, JJ., concur in the result.
SECOND DIVISION
[G.R. No. 108946. January 28, 1999]
FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners,
vs. FRANKLIN DRILON GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE
MEDINA, JR., and CASEY FRANCISCO, respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari. Petitioners seek to annul the resolution
of the Department of Justice, dated August 12, 1992, in Criminal Case
No. Q-92-27854, entitled Gabriel Zosa, et al. v. City Prosecutor of
Quezon City and Francisco Joaquin, Jr., and its resolution, dated
December 3, 1992, denying petitioner Joaquins motion for
reconsideration.
Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate
of Copyright No. M922, dated January 28, 1971, of Rhoda and Me, a
dating game show aired from 1970 to 1977.
On June 28, 1973, petitioner BJPI submitted to the National Library an
addendum to its certificate of copyright specifying the shows format and
style of presentation.
On July 14, 1991, while watching television, petitioner Francisco
Joaquin, Jr., president of BJPI, saw on RPN Channel 9 an episode of Its a
Date, which was produced by IXL Productions, Inc. (IXL). On July 18,
1991, he wrote a letter to private respondent Gabriel M. Zosa, president
and general manager of IXL, informing Zosa that BJPI had a copyright
to Rhoda and Me and demanding that IXL discontinue airing Its a Date.
In a letter, dated July 19, 1991, private respondent Zosa apologized to
petitioner Joaquin and requested a meeting to discuss a possible
settlement. IXL, however, continued airing Its a Date, prompting
petitioner Joaquin to send a second letter on July 25, 1991 in which he
reiterated his demand and warned that, if IXL did not comply, he would
endorse the matter to his attorneys for proper legal action.
Meanwhile, private respondent Zosa sought to register IXLs copyright to
the first episode of Its a Date for which it was issued by the National
Library a certificate of copyright on August 14, 1991.
Upon complaint of petitioners, an information for violation of P.D. No.
49 was filed against private respondent Zosa together with certain
officers of RPN Channel 9, namely, William Esposo, Felipe Medina, and
Casey Francisco, in the Regional Trial Court of Quezon City where it was
docketed as Criminal Case No. 92-27854 and assigned to Branch 104
The Law on Copyright
thereof. However, private respondent Zosa sought a review of the
resolution of the Assistant City Prosecutor before the Department of
Justice.
On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon
reversed the Assistant City Prosecutors findings and directed him to
move for the dismissal of the case against private respondents. [1]
Petitioner Joaquin filed a motion for reconsideration, but his motion was
denied by respondent Secretary of Justice on December 3, 1992. Hence,
this petition. Petitioners contend that:
1. The public respondent gravely abused his discretion amounting to
lack of jurisdiction when he invoked non-presentation of the master
tape as being fatal to the existence of probable cause to prove
infringement, despite the fact that private respondents never raised the
same as a controverted issue.
2. The public respondent gravely abused his discretion amounting to
lack of jurisdiction when he arrogated unto himself the determination
of what is copyrightable - an issue which is exclusively within the
jurisdiction of the regional trial court to assess in a proper proceeding.
Both public and private respondents maintain that petitioners failed to
establish the existence of probable cause due to their failure to present
the copyrighted master videotape of Rhoda and Me. They contend that
petitioner BJPIs copyright covers only a specific episode of Rhoda and
Me and that the formats or concepts of dating game shows are not
covered by copyright protection under P. D. No. 49.
Non-Assignment of Error
Petitioners claim that their failure to submit the copyrighted master
videotape of the television show Rhoda and Me was not raised in issue
by private respondents during the preliminary investigation and,
therefore, it was error for the Secretary of Justice to reverse the
investigating prosecutors finding of probable cause on this ground.
A preliminary investigation falls under the authority of the state
prosecutor who is given by law the power to direct and control criminal
actions.[2] He is, however, subject to the control of the Secretary of
Justice. Thus, Rule 112, 4 of the Revised Rules of Criminal Procedure,
provides:
SEC. 4. Duty of investigating fiscal. - If the investigating fiscal finds cause
to hold the respondent for trial, he shall prepare the resolution and
corresponding information. He shall certify under oath that he, or as
shown by the record, an authorized officer, has personally examined the
complainant and his witnesses, that there is reasonable ground to
believe that a crime has been committed and that the accused is
probably guilty thereof, that the accused was informed of the complaint
and of the evidence submitted against him and that he was given an
opportunity to submit controverting evidence. Otherwise, he shall
recommend dismissal of the complaint.
In either case, he shall forward the records of the case to the provincial
or city fiscal or chief state prosecutor within five (5) days from his
resolution. The latter shall take appropriate action thereon within ten
(10) days from receipt thereof, immediately informing the parties of said
action.
No complaint or information may be filed or dismissed by an
investigating fiscal without the prior written authority or approval of the
provincial or city fiscal or chief state prosecutor.
Intellectual Property Law
Where the investigating assistant fiscal recommends the dismissal of the
case but his findings are reversed by the provincial or city fiscal or chief
state prosecutor on the ground that a probable cause exists, the latter
may, by himself, file the corresponding information against the
respondent or direct any other assistant fiscal or state prosecutor to do
so, without conducting another preliminary investigation.
If upon petition by a proper party, the Secretary of Justice reverses the
resolution of the provincial or city fiscal or chief state prosecutor, he
shall direct the fiscal concerned to file the corresponding information
without conducting another preliminary investigation or to dismiss or
move for dismissal of the complaint or information.
In reviewing resolutions of prosecutors, the Secretary of Justice is not
precluded from considering errors, although unassigned, for the
purpose of determining whether there is probable cause for filing cases
in court. He must make his own finding of probable cause and is not
confined to the issues raised by the parties during preliminary
investigation. Moreover, his findings are not subject to review unless
shown to have been made with grave abuse.
Opinion of the Secretary of Justice
Petitioners contend, however, that the determination of the question
whether the format or mechanics of a show is entitled to copyright
protection is for the court, and not the Secretary of Justice, to make.
They assail the following portion of the resolution of the respondent
Secretary of Justice:
[T]he essence of copyright infringement is the copying, in whole or in
part, of copyrightable materials as defined and enumerated in Section 2
of PD. No. 49. Apart from the manner in which it is actually expressed,
however, the idea of a dating game show is, in the opinion of this Office,
a non-copyrightable material. Ideas, concepts, formats, or schemes in
their abstract form clearly do not fall within the class of works or
materials susceptible of copyright registration as provided in PD. No.
49.[3] (Emphasis added.)
It is indeed true that the question whether the format or mechanics of
petitioners television show is entitled to copyright protection is a legal
question for the court to make. This does not, however, preclude
respondent Secretary of Justice from making a preliminary
determination of this question in resolving whether there is probable
cause for filing the case in court. In doing so in this case, he did not
commit any grave error.
Presentation of Master Tape
Petitioners claim that respondent Secretary of Justice gravely abused his
discretion in ruling that the master videotape should have been
presented in order to determine whether there was probable cause for
copyright infringement. They contend
that 20th Century Fox Film Corporation v. Court of Appeals,[4] on which
respondent Secretary of Justice relied in reversing the resolution of the
investigating prosecutor, is inapplicable to the case at bar because in the
present case, the parties presented sufficient evidence which clearly
establish linkages between the copyrighted show Rhoda and Me and
the infringing TV show Its a Date.[5]
The case of 20th Century Fox Film Corporation involved raids conducted
on various videotape outlets allegedly selling or renting out pirated
videotapes. The trial court found that the affidavits of NBI agents, given
in support of the application for the search warrant, were insufficient
Page 39 of 46
without the master tape. Accordingly, the trial court lifted the search
warrants it had previously issued against the defendants. On petition for
review, this Court sustained the action of the trial court and ruled:[6]
The presentation of the master tapes of the copyrighted films from
which the pirated films were allegedly copied, was necessary for the
validity of search warrants against those who have in their possession
the pirated films. The petitioners argument to the effect that the
presentation of the master tapes at the time of application may not be
necessary as these would be merely evidentiary in nature and not
determinative of whether or not a probable cause exists to justify the
issuance of the search warrants is not meritorious. The court cannot
presume that duplicate or copied tapes were necessarily reproduced
from master tapes that it owns.
The application for search warrants was directed against video tape
outlets which allegedly were engaged in the unauthorized sale and
renting out of copyrighted films belonging to the petitioner pursuant to
P.D. 49.
The essence of a copyright infringement is the similarity or at least
substantial similarity of the purported pirated works to the copyrighted
work. Hence, the applicant must present to the court the copyrighted
films to compare them with the purchased evidence of the video tapes
allegedly pirated to determine whether the latter is an unauthorized
reproduction of the former. This linkage of the copyrighted films to the
pirated films must be established to satisfy the requirements of
probable cause. Mere allegations as to the existence of the copyrighted
films cannot serve as basis for the issuance of a search warrant.
This ruling was qualified in the later case of Columbia Pictures, Inc. v.
Court of Appeals[7] in which it was held:
In fine, the supposed pronunciamento in said case regarding the
necessity for the presentation of the master tapes of the copyrighted
films for the validity of search warrants should at most be understood
to merely serve as a guidepost in determining the existence of probable
cause in copyright infringement cases where there is doubt as to the
true nexus between the master tape and the pirated copies.An objective
and careful reading of the decision in said case could lead to no other
conclusion than that said directive was hardly intended to be a sweeping
and inflexible requirement in all or similar copyright infringement cases.
. . .[8]
In the case at bar, during the preliminary investigation, petitioners and
private respondents presented written descriptions of the formats of
their respective televisions shows, on the basis of which the
investigating prosecutor ruled:
As may [be] gleaned from the evidence on record, the substance of the
television productions complainants RHODA AND ME and Zosas ITS A
DATE is that two matches are made between a male and a female, both
single, and the two couples are treated to a night or two of dining and/or
dancing at the expense of the show. The major concepts of both shows
is the same. Any difference appear mere variations of the major
concepts.
That there is an infringement on the copyright of the show RHODA AND
ME both in content and in the execution of the video presentation are
established because respondents ITS A DATE is practically an exact copy
of complainants RHODA AND ME because of substantial similarities as
follows, to wit:
The Law on Copyright
RHODA AND ME ITS A DATE
Set I Set I
a. Unmarried participant a. same
of one gender (searcher) appears on one side of a divider, while three
(3) unmarried participants of the other gender are on the other side of
the divider. This arrangement is done to ensure that the searcher does
not see the searchees.
b. Searcher asks a question b. same
to be answered by each of the searchees. The purpose is to determine
who among the searchees is the most compatible with the searcher.
c. Searcher speculates on the c. same
match to the searchee.
d. Selection is made by the d. Selection is
use of compute (sic) methods, based on the
or by the way questions are answer of the
answered, or similar methods. Searchees.
Set 2 Set 2
Same as above with the genders same
of the searcher and searchees interchanged.[9]
Petitioners assert that the format of Rhoda and Me is a product of
ingenuity and skill and is thus entitled to copyright protection. It is their
position that the presentation of a point-by-point comparison of the
formats of the two shows clearly demonstrates the nexus between the
shows and hence establishes the existence of probable cause for
copyright infringement. Such being the case, they did not have to
produce the master tape.
To begin with, the format of a show is not copyrightable. Section 2 of
P.D. No. 49,[10] otherwise known as the DECREE ON INTELLECTUAL
PROPERTY, enumerates the classes of work entitled to copyright
protection, to wit:
Section 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following classes of works:
(A) Books, including composite and cyclopedic works, manuscripts,
directories, and gazetteers;
(B) Periodicals, including pamphlets and newspapers;
(C) Lectures, sermons, addresses, dissertations prepared for oral
delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works
and entertainments in dumb shows, the acting form of which is fixed in
writing or otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture, engraving,
lithography, and other works of art; models or designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture,
whether or not patentable, and other works of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings or plastic works of a scientific or technical character;
(L) Photographic works and works produced by a process analogous to
photography; lantern slides;
(M) Cinematographic works and works produced by a process analogous
to cinematography or any process for making audio-visual recordings;
(N) Computer programs;
Intellectual Property Law
(O) Prints, pictorial illustrations advertising copies, labels, tags, and box
wraps;
(P) Dramatizations, translations, adaptations, abridgements,
arrangements and other alterations of literary, musical or artistic works
or of works of the Philippine government as herein defined, which shall
be protected as provided in Section 8 of this Decree.
(Q) Collections of literary, scholarly, or artistic works or of works
referred to in Section 9 of this Decree which by reason of the selection
and arrangement of their contents constitute intellectual creations, the
same to be protected as such in accordance with Section 8 of this
Decree.
(R) Other literary, scholarly, scientific and artistic works.
This provision is substantially the same as 172 of the INTELLECTUAL
PROPERTY CODE OF THE PHILIPPINES (R.A. No. 8293).[11] The format or
mechanics of a television show is not included in the list of protected
works in 2 of P.D. No. 49. For this reason, the protection afforded by the
law cannot be extended to cover them.
Copyright, in the strict sense of the term, is purely a statutory right. It is
a new or independent right granted by the statute, and not simply a pre-
existing right regulated by the statute. Being a statutory grant, the rights
are only such as the statute confers, and may be obtained and enjoyed
only with respect to the subjects and by the persons, and on terms and
conditions specified in the statute.[12]
Since . . . copyright in published works is purely a statutory creation, a
copyright may be obtained only for a work falling within the statutory
enumeration or description.[13]
Regardless of the historical viewpoint, it is authoritatively settled in the
United States that there is no copyright
except that which isboth created and secured by act of Congress . . .
.[14]
P.D. No. 49, 2, in enumerating what are subject to copyright, refers to
finished works and not to concepts. The copyright does not extend to an
idea, procedure, process, system, method of operation, concept,
principle, or discovery, regardless of the form in which it is described,
explained, illustrated, or embodied in such work.[15] Thus, the new
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:
Sec. 175. Unprotected Subject Matter. - Notwithstanding the provisions
of Sections 172 and 173, no protection shall extend, under this law, to
any idea, procedure, system, method or operation, concept, principle,
discovery or mere data as such, even if they are expressed, explained,
illustrated or embodied in a work; news of the day and other
miscellaneous facts having the character of mere items of press
information; or any official text of a legislative, administrative or legal
nature, as well as any official translation thereof.
What then is the subject matter of petitioners copyright? This Court is
of the opinion that petitioner BJPIs copyright covers audio-visual
recordings of each episode of Rhoda and Me, as falling within the class
of works mentioned in P.D. 49, 2(M), to wit:
Cinematographic works and works produced by a process analogous to
cinematography or any process for making audio-visual recordings;
The copyright does not extend to the general concept or format of its
dating game show. Accordingly, by the very nature of the subject of
petitioner BJPIs copyright, the investigating prosecutor should have the
opportunity to compare the videotapes of the two shows.
Page 40 of 46
Mere description by words of the general format of the two dating game
shows is insufficient; the presentation of the master videotape in
evidence was indispensable to the determination of the existence of
probable cause. As aptly observed by respondent Secretary of Justice:
A television show includes more than mere words can describe because
it involves a whole spectrum of visuals and effects, video and audio, such
that no similarity or dissimilarity may be found by merely describing the
general copyright/format of both dating game shows.[16]
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
THIRD DIVISION
[G.R. No. 148222. August 15, 2003]
PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART,
INCORPORATED, and NORTH EDSA
MARKETING, INCORPORATED,respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the
Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May
22, 2001 decision[1] of the Court of Appeals reversing the October 31, 1996
decision[2] of the Regional Trial Court of Makati, Branch 133, in Civil Case
No. 92-516 which declared private respondents Shoemart Inc. (SMI) and
North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals[3] contained a
summary of this dispute:
Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in
the manufacture of advertising display units simply referred to as light
boxes. These units utilize specially printed posters sandwiched between
plastic sheets and illuminated with back lights. Pearl and Dean was able to
secure a Certificate of Copyright Registration dated January 20, 1981 over
these illuminated display units. The advertising light boxes were marketed
under the trademark Poster Ads. The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and
Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about
1988, Pearl and Dean employed the services of Metro Industrial Services
to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant
Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was under construction at that
time, SMI offered as an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985, Pearl and Deans General
Manager, Rodolfo Vergara, submitted for signature the contracts covering
SM Cubao and SM Makati to SMIs Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano
inquiring about the other contract and reminding him that their agreement
for installation of light boxes was not only for its SM Makati branch, but
also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMIs house counsel informed
Pearl and Dean that it was rescinding the contract for SM Makati due to
non-performance of the terms thereof. In his reply dated February 17,
The Law on Copyright
1986, Vergara protested the unilateral action of SMI, saying it was without
basis. In the same letter, he pushed for the signing of the contract for SM
Cubao.
Two years later, Metro Industrial Services, the company formerly
contracted by Pearl and Dean to fabricate its display units, offered to
construct light boxes for Shoemarts chain of stores. SMI approved the
proposal and ten (10) light boxes were subsequently fabricated by Metro
Industrial for SMI. After its contract with Metro Industrial was terminated,
SMI engaged the services of EYD Rainbow Advertising Corporation to make
the light boxes. Some 300 units were fabricated in 1991. These were
delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of
its light boxes were installed at SM City and in the fastfood section of SM
Cubao. Upon investigation, Pearl and Dean found out that aside from the
two (2) reported SM branches, light boxes similar to those it manufactures
were also installed in two (2) other SM stores. It further discovered that
defendant-appellant North Edsa Marketing Inc. (NEMI), through its
marketing arm, Prime Spots Marketing Services, was set up primarily to sell
advertising space in lighted display units located in SMIs different
branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December
11, 1991 to both SMI and NEMI enjoining them to cease using the subject
light boxes and to remove the same from SMIs establishments. It also
demanded the discontinued use of the trademark Poster Ads, and the
payment to Pearl and Dean of compensatory damages in the amount of
Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two
hundred twenty-four (224) light boxes and NEMI took down its
advertisements for Poster Ads from the lighted display units in SMIs
stores. Claiming that both SMI and NEMI failed to meet all its demands,
Pearl and Dean filed this instant case for infringement of trademark and
copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it
independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to
Pearl and Deans copyright. SMI noted that the registration of the mark
Poster Ads was only for stationeries such as letterheads, envelopes, and
the like. Besides, according to SMI, the word Poster Ads is a generic term
which cannot be appropriated as a trademark, and, as such, registration of
such mark is invalid. It also stressed that Pearl and Dean is not entitled to
the reliefs prayed for in its complaint since its advertising display units
contained no copyright notice, in violation of Section 27 of P.D. 49. SMI
alleged that Pearl and Dean had no cause of action against it and that the
suit was purely intended to malign SMIs good name. On this basis, SMI,
aside from praying for the dismissal of the case, also counterclaimed for
moral, actual and exemplary damages and for the cancellation of Pearl and
Deans Certification of Copyright Registration No. PD-R-2558 dated January
20, 1981 and Certificate of Trademark Registration No. 4165 dated
September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any
advertising display units, nor having engaged in the business of
advertising. It repleaded SMIs averments, admissions and denials and
prayed for similar reliefs and counterclaims as SMI.
The RTC of Makati City decided in favor of P & D:
Intellectual Property Law
Wherefore, defendants SMI and NEMI are found jointly and severally liable
for infringement of copyright under Section 2 of PD 49, as amended, and
infringement of trademark under Section 22 of RA No. 166, as amended,
and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are
hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00,
representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs
copyright
from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorneys fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National
Library, all light boxes of SMI which were
fabricated by Metro Industrial Services and EYD
Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-
posters using the trademark Poster Ads, for
destruction; and
(4) to permanently refrain from infringing the copyright on
plaintiffs light boxes and its trademark Poster Ads.
Defendants counterclaims are hereby ordered dismissed for
lack of merit.
SO ORDERED.[4]
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be
considered as either prints, pictorial illustrations, advertising copies, labels,
tags or box wraps, to be properly classified as a copyrightable class O work,
we have to agree with SMI when it posited that what was copyrighted were
the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright
over the drawings like plaintiff-appellants will not extend to the actual
object. It has so been held under jurisprudence, of which the leading case
is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained
a copyright protection for a book entitled Seldens Condensed Ledger or
Bookkeeping Simplified which purported to explain a new system of
bookkeeping. Included as part of the book were blank forms and
illustrations consisting of ruled lines and headings, specially designed for
use in connection with the system explained in the work. These forms
showed the entire operation of a day or a week or a month on a single
page, or on two pages following each other. The defendant Baker then
produced forms which were similar to the forms illustrated in Seldens
copyrighted books. The Court held that exclusivity to the actual forms is
not extended by a copyright. The reason was that to grant a monopoly in
the underlying art when no examination of its novelty has ever been made
would be a surprise and a fraud upon the public; that is the province of
letters patent, not of copyright. And that is precisely the point. No doubt
Page 41 of 46
aware that its alleged original design would never pass the rigorous
examination of a patent application, plaintiff-appellant fought to foist a
fraudulent monopoly on the public by conveniently resorting to a copyright
registration which merely employs a recordal system without the benefit
of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs.
Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case,
Muller had obtained a copyright over an unpublished drawing entitled
Bridge Approach the drawing showed a novel bridge approach to unsnarl
traffic congestion. The defendant constructed a bridge approach which
was alleged to be an infringement of the new design illustrated in plaintiffs
drawings. In this case it was held that protection of the drawing does not
extend to the unauthorized duplication of the object drawn because
copyright extends only to the description or expression of the object and
not to the object itself. It does not prevent one from using the drawings to
construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895
and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is
no copyright infringement when one who, without being authorized, uses
a copyrighted architectural plan to construct a structure. This is because
the copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Deans copyright
over the technical drawings of the latters advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs.
Intermediate Appellate Court that the protective mantle of the Trademark
Law extends only to the goods used by the first user as specified in the
certificate of registration, following the clear mandate conveyed by Section
20 of Republic Act 166, as amended, otherwise known as the Trademark
Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A
certificate of registration of a mark or trade-name shall be prima
facie evidence of the validity of the registration, the registrants ownership
of the mark or trade-name, and of the registrants exclusive right to use the
same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein.
(underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the
registration of the trademark Poster Ads with the Bureau of Patents,
Trademarks, and Technology Transfer. Said trademark was recorded in the
Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads,
envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability
on the part of the defendants-appellants for their use of the words Poster
Ads, in the advertising display units in suit. Jurisprudence has interpreted
Section 20 of the Trademark Law as an implicit permission to a
manufacturer to venture into the production of goods and allow that
producer to appropriate the brand name of the senior registrant on goods
other than those stated in the certificate of registration. The Supreme
Court further emphasized the restrictive meaning of Section 20 when it
stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including
goods not specified therein, then a situation may arise whereby an
The Law on Copyright
applicant may be tempted to register a trademark on any and all goods
which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus registration is
not contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Deans
registered trademark and defendants-appellants Poster Ads design, as well
as the parallel use by which said words were used in the parties respective
advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. Poster Ads was registered by Pearl and Dean
for specific use in its stationeries, in contrast to defendants-appellants who
used the same words in their advertising display units. Why Pearl and Dean
limited the use of its trademark to stationeries is simply beyond us. But,
having already done so, it must stand by the consequence of the
registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the
words Poster Ads are a simple contraction of the generic term poster
advertising. In the absence of any convincing proof that Poster Ads has
acquired a secondary meaning in this jurisdiction, we find that Pearl and
Deans exclusive right to the use of Poster Ads is limited to what is written
in its certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the
trademark Poster Ads.
There being no finding of either copyright or trademark infringement on
the part of SMI and NEMI, the monetary award granted by the lower court
to Pearl and Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and
SET ASIDE, and another is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for lack of merit.[5]
Dissatisfied with the above decision, petitioner P & D filed the
instant petition assigning the following errors for the Courts consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING
THAT NO INFRINGEMENT OF PEARL & DEANS
TRADEMARK POSTER ADS WAS COMMITTED BY
RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN
DISMISSING THE AWARD OF THE TRIAL COURT,
DESPITE THE LATTERS FINDING, NOT DISPUTED BY
THE HONORABLE COURT OF APPEALS, THAT SM
WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF
ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING RESPONDENTS SM AND NEMI LIABLE TO
PEARL & DEAN FOR ACTUAL, MORAL &
EXEMPLARY DAMAGES, ATTORNEYS FEES AND
COSTS OF SUIT.[6]
ISSUES
In resolving this very interesting case, we are challenged once again
to put into proper perspective four main concerns of intellectual property
law patents, copyrights, trademarks and unfair competition arising from
Intellectual Property Law
infringement of any of the first three. We shall focus then on the following
issues:
(1) if the engineering or technical drawings of an advertising
display unit (light box) are granted copyright protection
(copyright certificate of registration) by the National
Library, is the light box depicted in such engineering
drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and
protected by a patent issued by the Bureau of Patents
Trademarks and Technology Transfer (now Intellectual
Property Office) in addition to the copyright of the
engineering drawings?
(3) can the owner of a registered trademark legally prevent
others from using such trademark if it is a mere abbreviation
of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & Ds complaint was that SMI infringed on its copyright
over the light boxes when SMI had the units manufactured by Metro and
EYD Rainbow Advertising for its own account. Obviously, petitioners
position was premised on its belief that its copyright over the engineering
drawings extended ipso facto to the light boxes depicted or illustrated in
said drawings. In ruling that there was no copyright infringement, the
Court of Appeals held that the copyright was limited to the drawings alone
and not to the light box itself. We agree with the appellate court.
First, petitioners application for a copyright certificate as well as
Copyright Certificate No. PD-R2588 issued by the National Library on
January 20, 1981 clearly stated that it was for a class O work under Section
2 (O) of PD 49 (The Intellectual Property Decree) which was the statute
then prevailing. Said Section 2 expressly enumerated the works subject to
copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of
creation, subsist with respect to any of the following works:
xxxxxxxxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box
wraps;
xxxxxxxxx
Although petitioners copyright certificate was entitled Advertising
Display Units (which depicted the box-type electrical devices), its claim of
copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory
right. Being a mere statutory grant, the rights are limited to what the
statute confers. It may be obtained and enjoyed only with respect to the
subjects and by the persons, and on terms and conditions specified in the
statute.[7] Accordingly, it can cover only the works falling within the
statutory enumeration or description.[8]
P & D secured its copyright under the classification class O
work. This being so, petitioners copyright protection extended only to the
technical drawings and not to the light box itself because the latter was not
at all in the category of prints, pictorial illustrations, advertising copies,
labels, tags and box wraps. Stated otherwise, even as we find that P & D
indeed owned a valid copyright, the same could have referred only to the
technical drawings within the category of pictorial illustrations. It could not
have possibly stretched out to include the underlying light box. The strict
application[9] of the laws enumeration in Section 2 prevents us from giving
Page 42 of 46
petitioner even a little leeway, that is, even if its copyright certificate was
entitled Advertising Display Units. What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic
piece which could be copyrighted under the copyright law. And no less
clearly, neither could the lack of statutory authority to make the light box
copyrightable be remedied by the simplistic act of entitling the copyright
certificate issued by the National Library as Advertising Display Units.
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale
to the public without license from P & D, then no doubt they would have
been guilty of copyright infringement. But this was not the case. SMIs and
NEMIs acts complained of by P & D were to have units similar or identical
to the light box illustrated in the technical drawings manufactured by
Metro and EYD Rainbow Advertising, for leasing out to different
advertisers. Was this an infringement of petitioners copyright over the
technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the
light box was neither a literary not an artistic work but an engineering or
marketing invention.[10] Obviously, there appeared to be some confusion
regarding what ought or ought not to be the proper subjects of copyrights,
patents and trademarks. In the leading case of Kho vs. Court of
Appeals,[11] we ruled that these three legal rights are completely distinct
and separate from one another, and the protection afforded by one cannot
be used interchangeably to cover items or works that exclusively pertain
to the others:
Trademark, copyright and patents are different intellectual property rights
that cannot be interchanged with one another. A trademark is any visible
sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of
goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a
copyright is confined to literary and artistic works which are original
intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer
to any technical solution of a problem in any field of human activity which
is new, involves an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and
commercial use of the light boxes without license from petitioner, private
respondents cannot be held legally liable for infringement of P & Ds
copyright over its technical drawings of the said light boxes, should they be
liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for
the light boxes. It therefore acquired no patent rights which could have
protected its invention, if in fact it really was.And because it had no patent,
petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals,[12] we held that there can be no infringement of a patent
until a patent has been issued, since whatever right one has to the
invention covered by the patent arises alone from the grant of patent. x x
x (A)n inventor has no common law right to a monopoly of his invention.
He has the right to make use of and vend his invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to copy and use
it with impunity. A patent, however, gives the inventor the right to exclude
all others. As a patentee, he has the exclusive right of making, selling or
The Law on Copyright
using the invention.[13] On the assumption that petitioners advertising
units were patentable inventions, petitioner revealed them fully to the
public by submitting the engineering drawings thereof to the National
Library.
To be able to effectively and legally preclude others from copying
and profiting from the invention, a patent is a primordial requirement. No
patent, no protection. The ultimate goal of a patent system is to bring new
designs and technologies into the public domain through
disclosure.[14] Ideas, once disclosed to the public without the protection of
a valid patent, are subject to appropriation without significant restraint.[15]
On one side of the coin is the public which will benefit from new
ideas; on the other are the inventors who must be protected. As held
in Bauer & Cie vs. ODonnel,[16] The act secured to the inventor the exclusive
right to make use, and vend the thing patented, and consequently to
prevent others from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful invention
and promoting new and useful inventions by the protection and
stimulation given to inventive genius, and was intended to secure to the
public, after the lapse of the exclusive privileges granted the benefit of such
inventions and improvements.
The law attempts to strike an ideal balance between the two
interests:
(The p)atent system thus embodies a carefully crafted bargain for
encouraging the creation and disclosure of new useful and non-obvious
advances in technology and design, in return for the exclusive right to
practice the invention for a number of years. The inventor may keep his
invention secret and reap its fruits indefinitely. In consideration of its
disclosure and the consequent benefit to the community, the patent is
granted. An exclusive enjoyment is guaranteed him for 17 years, but upon
the expiration of that period, the knowledge of the invention inures to the
people, who are thus enabled to practice it and profit by its use.[17]
The patent law has a three-fold purpose: first, patent law seeks to
foster and reward invention; second, it promotes disclosures of inventions
to stimulate further innovation and to permit the public to practice the
invention once the patent expires; third, the stringent requirements for
patent protection seek to ensure that ideas in the public domain remain
there for the free use of the public.[18]
It is only after an exhaustive examination by the patent office that
a patent is issued. Such an in-depth investigation is required because in
rewarding a useful invention, the rights and welfare of the community
must be fairly dealt with and effectively guarded. To that end, the
prerequisites to obtaining a patent are strictly observed and when a patent
is issued, the limitations on its exercise are equally strictly enforced. To
begin with, a genuine invention or discovery must be demonstrated lest in
the constant demand for new appliances, the heavy hand of tribute be laid
on each slight technological advance in art.[19]
There is no such scrutiny in the case of copyrights nor any notice
published before its grant to the effect that a person is claiming the
creation of a work. The law confers the copyright from the moment of
creation[20] and the copyright certificate is issued upon registration with
the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for
patents, the petitioner cannot exclude others from the manufacture, sale
Intellectual Property Law
or commercial use of the light boxes on the sole basis of its copyright
certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any
opportunity for the patent office (IPO) to scrutinize the light boxs eligibility
as a patentable invention. The irony here is that, had petitioner secured a
patent instead, its exclusivity would have been for 17 years only. But
through the simplified procedure of copyright-registration with the
National Library without undergoing the rigor of defending the
patentability of its invention before the IPO and the public the petitioner
would be protected for 50 years. This situation could not have been the
intention of the law.
In the oft-cited case of Baker vs. Selden[21], the United States
Supreme Court held that only the expression of an idea is protected by
copyright, not the idea itself. In that case, the plaintiff held the copyright of
a book which expounded on a new accounting system he had
developed. The publication illustrated blank forms of ledgers utilized in
such a system. The defendant reproduced forms similar to those illustrated
in the plaintiffs copyrighted book. The US Supreme Court ruled that:
There is no doubt that a work on the subject of book-keeping, though only
explanatory of well known systems, may be the subject of a copyright; but,
then, it is claimed only as a book. x x x. But there is a clear distinction
between the books, as such, and the art, which it is, intended to
illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be
predicated of every other art as well as that of bookkeeping. A treatise on
the composition and use of medicines, be they old or new; on the
construction and use of ploughs or watches or churns; or on the mixture
and application of colors for painting or dyeing; or on the mode of drawing
lines to produce the effect of perspective, would be the subject of
copyright; but no one would contend that the copyright of the treatise
would give the exclusive right to the art or manufacture described
therein. The copyright of the book, if not pirated from other works, would
be valid without regard to the novelty or want of novelty of its subject
matter. The novelty of the art or thing described or explained has nothing
to do with the validity of the copyright. To give to the author of the book
an exclusive property in the art described therein, when no examination
of its novelty has ever been officially made, would be a surprise and a
fraud upon the public. That is the province of letters patent, not of
copyright. The claim to an invention of discovery of an art or manufacture
must be subjected to the examination of the Patent Office before an
exclusive right therein can be obtained; and a patent from the
government can only secure it.
The difference between the two things, letters patent and copyright, may
be illustrated by reference to the subjects just enumerated. Take the case
of medicines. Certain mixtures are found to be of great value in the healing
art. If the discoverer writes and publishes a book on the subject (as
regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he
desires to acquire such exclusive right, he must obtain a patent for the
mixture as a new art, manufacture or composition of matter. He may
copyright his book, if he pleases; but that only secures to him the
exclusive right of printing and publishing his book. So of all other
inventions or discoveries.
Page 43 of 46
The copyright of a book on perspective, no matter how many drawings and
illustrations it may contain, gives no exclusive right to the modes of
drawing described, though they may never have been known or used
before. By publishing the book without getting a patent for the art, the
latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material
part thereof, as a book intended to convey instruction in the art, any
person may practice and use the art itself which he has described and
illustrated therein. The use of the art is a totally different thing from a
publication of the book explaining it. The copyright of a book on
bookkeeping cannot secure the exclusive right to make, sell and use
account books prepared upon the plan set forth in such book. Whether the
art might or might not have been patented, is a question, which is not
before us. It was not patented, and is open and free to the use of the
public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case
arises from a confusion of ideas produced by the peculiar nature of the art
described in the books, which have been made the subject of copyright. In
describing the art, the illustrations and diagrams employed happened to
correspond more closely than usual with the actual work performed by the
operator who uses the art. x x x The description of the art in a book,
though entitled to the benefit of copyright, lays no foundation for an
exclusive claim to the art itself. The object of the one is explanation; the
object of the other is use. The former may be secured by copyright. The
latter can only be secured, if it can be secured at all, by letters
patent. (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark Poster Ads
which petitioners president said was a contraction of poster advertising. P
& D was able to secure a trademark certificate for it, but one where the
goods specified were stationeries such as letterheads, envelopes, calling
cards and newsletters.[22] Petitioner admitted it did not commercially
engage in or market these goods. On the contrary, it dealt in electrically
operated backlit advertising units and the sale of advertising spaces
thereon, which, however, were not at all specified in the trademark
certificate.
Under the circumstances, the Court of Appeals correctly
cited Faberge Inc. vs. Intermediate Appellate Court,[23] where we, invoking
Section 20 of the old Trademark Law, ruled that the certificate of
registration issued by the Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only to those goods specified in
the certificate, subject to any conditions and limitations specified in the
certificate x x x. One who has adopted and used a trademark on his
goods does not prevent the adoption and use of the same trademark by
others for products which are of a different description.[24] Faberge,
Inc. was correct and was in fact recently reiterated in Canon Kabushiki
Kaisha vs. Court of Appeals.[25]
Assuming arguendo that Poster Ads could validly qualify as a
trademark, the failure of P & D to secure a trademark registration for
specific use on the light boxes meant that there could not have been any
trademark infringement since registration was an essential element
thereof.
The Law on Copyright
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition,
a situation which was possible even if P & D had no
registration.[26] However, while the petitioners complaint in the RTC also
cited unfair competition, the trial court did not find private respondents
liable therefor. Petitioner did not appeal this particular point; hence, it
cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot
hold respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under
the law on copyrights although it is applicable to disputes over the use of
trademarks. Even a name or phrase incapable of appropriation as a
trademark or tradename may, by long and exclusive use by a business (such
that the name or phrase becomes associated with the business or product
in the mind of the purchasing public), be entitled to protection against
unfair competition.[27] In this case, there was no evidence that P & Ds use
of Poster Ads was distinctive or well-known. As noted by the Court of
Appeals, petitioners expert witnesses himself had testified that Poster Ads
was too generic a name. So it was difficult to identify it with any company,
honestly speaking.[28] This crucial admission by its own expert witness that
Poster Ads could not be associated with P & D showed that, in the mind of
the public, the goods and services carrying the trademark Poster Ads could
not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary
meaning. Poster Ads was generic and incapable of being used as a
trademark because it was used in the field of poster advertising, the very
business engaged in by petitioner. Secondary meaning means that a word
or phrase originally incapable of exclusive appropriation with reference to
an article in the market (because it is geographically or otherwise
descriptive) might nevertheless have been used for so long and so
exclusively by one producer with reference to his article that, in the trade
and to that branch of the purchasing public, the word or phrase has come
to mean that the article was his property.[29] The admission by petitioners
own expert witness that he himself could not associate Poster Ads with
petitioner P & D because it was too generic definitely precluded the
application of this exception.
Having discussed the most important and critical issues, we see no
need to belabor the rest.
All told, the Court finds no reversible error committed by the Court
of Appeals when it reversed the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the
Court of Appeals dated May 22, 2001 is AFFIRMED in toto.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-
Morales, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
Intellectual Property Law
G.R. No. L-36402 March 16, 1987
FILIPINO SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, INC.,
plaintiff-appellant,
vs.
BENJAMIN TAN, defendant-appellee.
Lichauco, Picazo & Agcaoili Law Office for plaintiff-appellant.
Ramon A. Nieves for defendant-appellee.
PARAS, J.:
An appeal was made to the Court of Appeals docketed as CA-G.R. No.
46373-R * entitled Filipino Society of Composers, Authors, Publishers,
Inc., Plaintiff-Appellant v. Benjamin Tan, Defendant-Appellee, from the
decision of the Court of First Instance of Manila, Branch VII in Civil Case
No. 71222 ** "Filipino Society of Composers, Authors and Publishers,
Inc., Plaintiff v. Benjamin Tan, Defendant," which had dismissed
plaintiffs' complaint without special pronouncement as to costs.
The Court of Appeals, finding that the case involves pure questions of
law, certified the same to the Supreme Court for final determination
(Resolution, CA-G.R. No. 46373-R, Rollo, p. 36; Resolution of the
Supreme Court of February 16, 1973 in L-36402, Rollo, p. 38).
The undisputed facts of this case are as follows:
Plaintiff-appellant is a non-profit association of authors, composers and
publishers duly organized under the Corporation Law of the Philippines
and registered with the Securities and Exchange Commission. Said
association is the owner of certain musical compositions among which
are the songs entitled: "Dahil Sa Iyo", "Sapagkat Ikaw Ay Akin,"
"Sapagkat Kami Ay Tao Lamang" and "The Nearness Of You."
On the other hand, defendant-appellee is the operator of a restaurant
known as "Alex Soda Foundation and Restaurant" where a combo with
professional singers, hired to play and sing musical compositions to
entertain and amuse customers therein, were playing and singing the
above-mentioned compositions without any license or permission from
the appellant to play or sing the same. Accordingly, appellant demanded
from the appellee payment of the necessary license fee for the playing
and singing of aforesaid compositions but the demand was ignored.
Hence, on November 7, 1967, appellant filed a complaint with the lower
court for infringement of copyright against defendant-appellee for
allowing the playing in defendant-appellee's restaurant of said songs
copyrighted in the name of the former.
Defendant-appellee, in his answer, countered that the complaint states
no cause of action. While not denying the playing of said copyrighted
compositions in his establishment, appellee maintains that the mere
singing and playing of songs and popular tunes even if they are
copyrighted do not constitute an infringement (Record on Appeal, p. 11;
Resolution, CA-G.R. NO. 46373-R, Rollo, pp. 32-36) under the provisions
of Section 3 of the Copyright Law (Act 3134 of the Philippine Legislature).
The lower court, finding for the defendant, dismissed the complaint
(Record on Appeal, p. 25).
Page 44 of 46
Plaintiff appealed to the Court of Appeals which as already stated
certified the case to the Supreme Court for adjudication on the legal
question involved. (Resolution, Court of Appeals, Rollo, p. 36; Resolution
of the Supreme Court of February 18, 1973, Rollo, p. 38).
In its brief in the Court of Appeals, appellant raised the following
Assignment of Errors:
I singing of copyrighted music in the soda fountain and restaurant of the
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL
COMPOSITIONS OF THE APPELLANT WERE IN THE NATURE OF PUBLIC
PROPERTY WHEN THEY WERE COPYRIGHTED OR REGISTERED.
II
THE LOWER COURT ERRED IN HOLDING THAT THE MUSICAL
COMPOSITIONS OF THE APPELLANT WERE PLAYED AND SUNG IN THE
SODA FOUNTAIN AND RESTAURANT OF THE APPELLEE BY INDEPENDENT
CONTRACTORS AND ONLY UPON THE REQUEST OF CUSTOMERS.
III
THE LOWER COURT ERRED IN HOLDING THAT THE PLAYING AND
SINGING OF COPYRIGHTED MUSICAL COMPOSITIONS IN THE SODA
FOUNTAIN AND RESTAURANT OF THE APPELLEE ARE NOT PUBLIC
PERFORMANCES FOR PROFIT OF THE SAID COMPOSITIONS WITHIN THE
MEANING AND CONTEMPLATION OF THE COPYRIGHT LAW.
IV
THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPELLEE IS
LIABLE TO THE APPELLANT FOR FOUR (4) SEPARATE INFRINGEMENTS.
(Brief for Appellant, pp. A and B).
The petition is devoid of merit.
The principal issues in this case are whether or not the playing and
signing of musical compositions which have been copyrighted under the
provisions of the Copyright Law (Act 3134) inside the establishment of
the defendant-appellee constitute a public performance for profit
within the meaning and contemplation of the Copyright Law of the
Philippines; and assuming that there were indeed public performances
for profit, whether or not appellee can be held liable therefor.
Appellant anchors its claim on Section 3(c) of the Copyright Law which
provides:
SEC. 3. The proprietor of a copyright or his heirs or assigns shall have the
exclusive right:
xxx xxx xxx
The Law on Copyright
(c) To exhibit, perform, represent, produce, or reproduce the
copyrighted work in any manner or by any method whatever for profit
or otherwise; if not reproduced in copies for sale, to sell any manuscripts
or any record whatsoever thereof;
xxx xxx xxx
It maintains that playing or singing a musical composition is universally
accepted as performing the musical composition and that playing and
appellee for the entertainment of the customers although the latter do
not pay for the music but only for the food and drink constitute
performance for profit under the Copyright Law (Brief for the Appellant,
pp. 19-25).
We concede that indeed there were "public performances for profit. "
The word "perform" as used in the Act has been applied to "One who
plays a musical composition on a piano, thereby producing in the air
sound waves which are heard as music ... and if the instrument he plays
on is a piano plus a broadcasting apparatus, so that waves are thrown
out, not only upon the air, but upon the other, then also he is performing
the musical composition." (Buck, et al. v. Duncan, et al.; Same Jewell La
Salle Realty Co., 32F. 2d. Series 367).
In relation thereto, it has been held that "The playing of music in dine
and dance establishment which was paid for by the public in purchases
of food and drink constituted "performance for profit" within a
Copyright Law." (Buck, et al. v. Russon No. 4489 25 F. Supp. 317). Thus,
it has been explained that while it is possible in such establishments for
the patrons to purchase their food and drinks and at the same time
dance to the music of the orchestra, the music is furnished and used by
the orchestra for the purpose of inducing the public to patronize the
establishment and pay for the entertainment in the purchase of food
and drinks. The defendant conducts his place of business for profit, and
it is public; and the music is performed for profit (Ibid, p. 319). In a
similar case, the Court ruled that "The Performance in a restaurant or
hotel dining room, by persons employed by the proprietor, of a
copyrighted musical composition, for the entertainment of patrons,
without charge for admission to hear it, infringes the exclusive right of
the owner of the copyright." (Herbert v. Shanley Co.; John Church Co. v.
Hillard Hotel Co., et al., 242 U.S. 590-591). In delivering the opinion of
the Court in said two cases, Justice Holmes elaborated thus:
If the rights under the copyright are infringed only by a performance
where money is taken at the door, they are very imperfectly protected.
Performances not different in kind from those of the defendants could
be given that might compete with and even destroy the success of the
monopoly that the law intends the plaintiffs to have. It is enough to say
that there is no need to construe the statute so narrowly. The
defendants' performances are not eleemosynary. They are part of a
total for which the public pays, and the fact that the price of the whole
is attributed to a particular item which those present are expected to
order is not important. It is true that the music is not the sole object, but
Intellectual Property Law
neither is the food, which probably could be got cheaper elsewhere. The
object is a repast in surroundings that to people having limited power of
conversation or disliking the rival noise, give a luxurious pleasure not to
be had from eating a silent meal. If music did not pay, it would be given
up. If it pays, it pays out of the public's pocket. Whether it pays or not,
the purpose of employing it is profit, and that is enough. (Ibid., p. 594).
In the case at bar, it is admitted that the patrons of the restaurant in
question pay only for the food and drinks and apparently not for
listening to the music. As found by the trial court, the music provided is
for the purpose of entertaining and amusing the customers in order to
make the establishment more attractive and desirable (Record on
Appeal, p. 21). It will be noted that for the playing and singing the
musical compositions involved, the combo was paid as independent
contractors by the appellant (Record on Appeal, p. 24). It is therefore
obvious that the expenses entailed thereby are added to the overhead
of the restaurant which are either eventually charged in the price of the
food and drinks or to the overall total of additional income produced by
the bigger volume of business which the entertainment was
programmed to attract. Consequently, it is beyond question that the
playing and singing of the combo in defendant-appellee's restaurant
constituted performance for profit contemplated by the Copyright Law.
(Act 3134 amended by P.D. No. 49, as amended).
Nevertheless, appellee cannot be said to have infringed upon the
Copyright Law. Appellee's allegation that the composers of the
contested musical compositions waived their right in favor of the
general public when they allowed their intellectual creations to become
property of the public domain before applying for the corresponding
copyrights for the same (Brief for Defendant-Appellee, pp. 14-15) is
correct.
The Supreme Court has ruled that "Paragraph 33 of Patent Office
Administrative Order No. 3 (as amended, dated September 18, 1947)
entitled 'Rules of Practice in the Philippines Patent Office relating to the
Registration of Copyright Claims' promulgated pursuant to Republic Act
165, provides among other things that an intellectual creation should be
copyrighted thirty (30) days after its publication, if made in Manila, or
within the (60) days if made elsewhere, failure of which renders such
creation public property." (Santos v. McCullough Printing Company, 12
SCRA 324-325 [1964]. Indeed, if the general public has made use of the
object sought to be copyrighted for thirty (30) days prior to the
copyright application the law deems the object to have been donated to
the public domain and the same can no longer be copyrighted.
A careful study of the records reveals that the song "Dahil Sa Iyo" which
was registered on April 20, 1956 (Brief for Appellant, p. 10) became
popular in radios, juke boxes, etc. long before registration (TSN, May 28,
1968, pp. 3-5; 25) while the song "The Nearness Of You" registered on
January 14, 1955 (Brief for Appellant, p. 10) had become popular twenty
five (25) years prior to 1968, (the year of the hearing) or from 1943 (TSN,
May 28, 1968, p. 27) and the songs "Sapagkat Ikaw Ay Akin" and
"Sapagkat Kami Ay Tao Lamang" both registered on July 10, 1966,
appear to have been known and sang by the witnesses as early as 1965
Page 45 of 46
or three years before the hearing in 1968. The testimonies of the
witnesses at the hearing of this case on this subject were unrebutted by
the appellant. (Ibid, pp. 28; 29 and 30).
Under the circumstances, it is clear that the musical compositions in
question had long become public property, and are therefore beyond
the protection of the Copyright Law.
PREMISES CONSIDERED, the appealed decision of the Court of First
Instance of Manila in Civil Case No. 71222 is hereby AFFIRMED.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.
Alampay, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19439 October 31, 1964
MAURO MALANG SANTOS, plaintiff-appellant,
vs.
MCCULLOUGH PRINTING COMPANY, defendant-appellee.
Taada Teehankee & Carreon for plaintiff-appellant.
Esposo & Usison for defendant-appellee.
The Law on Copyright
PAREDES, J.:
This is an action for damages based on the provisions of Articles 721 and
722 of the Civil Code of the Philippines, allegedly on the unauthorized
use, adoption and appropriation by the defendant company of plaintiff's
intellectual creation or artistic design for a Christmas Card. The design
depicts "a Philippine rural Christmas time scene consisting of a woman
and a child in a nipa hut adorned with a star-shaped lantern and a man
astride a carabao, beside a tree, underneath which appears the
plaintiff's pen name, Malang."
The complaint alleges that plaintiff Mauro Malang Santos designed for
former Ambassador Felino Neri, for his personal Christmas Card
greetings for the year 1959, the artistic motif in question. The following
year the defendant McCullough Printing Company, without the
knowledge and authority of plaintiff, displayed the very design in its
album of Christmas cards and offered it for sale, for a price. For such
unauthorized act of defendant, plaintiff suffered moral damages to the
tune of P16,000.00, because it has placed plaintiff's professional
integrity and ethics under serious question and caused him grave
embarrassment before Ambassador Neri. He further prayed for the
additional sum of P3,000.00 by way of attorney's fee.
Defendant in answer to the complaint, after some denials and
admissions, moved for a dismissal of the action claiming that
(1) The design claimed does not contain a clear notice that it
belonged to him and that he prohibited its use by others;
(2) The design in question has been published but does not
contain a notice of copyright, as in fact it had never been copyrighted by
the plaintiff, for which reason this action is barred by the Copyright Law;
(3) The complaint does not state a cause of action.
The documentary evidence submitted were the Christmas cards, as
originally designed by plaintiff, the design as printed for Ambassador
Neri, and the subsequent reprints ordered by other parties. The case
was submitted an a "Stipulation of Fact" the pertinent portions of which
are hereunder reproduced:
1. That the plaintiff was the artist who created the design
shown in Exhibit A, ...
2. That the design carries the pen name of plaintiff, MALANG,
on its face ... and indicated in Exhibit A, ...
3. That said design was created by plaintiff in the latter part of
1959 for the personal use of former Ambassador Felino Neri; ...
4. That former Ambassador Neri had 800 such cards ... printed
by the defendant company in 1959, ... which he distributed to his friends
in December, 1959;
Intellectual Property Law
5. That defendant company utilized plaintiff's design in the
year 1960 in its album of Christmas card samples displayed to its
customers ... .
6. That the Sampaguita Pictures, Inc., placed an order with
defendant company for 700 of said cards ... while Raul Urra & Co.
ordered 200 ..., which cards were sent out by them to their respective
correspondent, clients and friends during the Christmas season of 1960;
7. That defendant company's use of plaintiff's design was
without knowledge, authority or consent of plaintiff;
8. That said design has not been copyrighted;
9. That plaintiff is an artist of established name, good-will and
reputation. ... .
have pirated the work nor guilty of plagiarism Consequently, the
complaint does not state a cause of action against the defendant.
xxx xxx ;xxx
WHEREFORE, the Court dismisses the complaint without
pronouncement as to costs.
In his appeal to this Court, plaintiff-appellant pointed five (5) errors
allegedly committed by the trial court, all of which bring to the fore, the
following propositions: (1) whether plaintiff is entitled to protection,
notwithstanding the, fact that he has not copyrighted his design; (2)
whether the publication is limited, so as to prohibit its use by others, or
it is general publication, and (3) whether the provisions of the Civil Code
or the Copyright Law should apply in the case. We will undertake a
collective discussion of these propositions.
The Law on Copyright
under the protection of the copyright law. (See II Tolentino's Comments
on the Civil Code, p. 433, citing Wright v. Eisle 83 N.Y. Supp. 887.)
CONFORMABLY WITH ALL THE FOREGOING, We find that the errors
assigned have not been committed by the lower court. The decision
appealed from, therefore, should be, as it is hereby affirmed. Costs
taxed against plaintiff-appellant.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,
Dizon, Makalintal, Bengzon, J. P., and Zaldivar JJ., concur.
Regala, J., took no part.

Upon the basis of the facts stipulated, the lower court rendered
judgment on December 1, 1961, the pertinent portions of which are
recited below:
As a general proposition, there can be no dispute that the artist acquires
ownership of the product of his art. At the time of its creation, he has
the absolute dominion over it. To help the author protect his rights the
copyright law was enacted.
In intellectual creations, a distinction must be made between two
classes of property rights; the fact of authorship and the right to publish
and/or distribute copies of the creation. With regard to the first, i.e. the
fact of authorship, the artist cannot be divested of the same. In other
words, he may sell the right to print hundred of his work yet the
purchaser of said right can never be the author of the creation.
It is the second right, i.e., the right to publish, republish, multiply and/or
distribute copies of the intellectual creation which the state, through the
enactment of the copyright law, seeks to protect. The author or his
assigns or heirs may have the work copyrighted and once this is legally
accomplished any infringement of the copyright will render the infringer
liable to the owner of the copyright.
xxx xxx xxx
The plaintiff in this case did not choose to protect his intellectual
creation by a copyright. The fact that the design was used in the
Christmas card of Ambassador Neri who distributed eight hundred
copies thereof among his friends during the Christmas season of 1959,
shows that the, same was published.
Unless satisfactorily explained a delay in applying for a copyright, of
more than thirty days from the date of its publication, converts the
property to one of public domain.
Since the name of the author appears in each of the alleged infringing
copies of the intellectual creation, the defendant may not be said to
Under the established facts, We find that plaintiff is not entitled to a
protection, the provision of the Civil Code, notwithstanding. Paragraph
33 of Patent Office Administrative Order No. 3 (as amended dated
September 18, 1947) entitled "Rules of Practice in the Philippines Patent
Office relating to the Registration of Copyright Claims" promulgated
pursuant to Republic Act 165, provides, among others, that an
intellectual creation should be copyrighted thirty (30) days after its
publication, if made in Manila, or within sixty (60) day's if made
elsewhere, failure of which renders such creation public property. In the
case at bar, even as of this moment, there is no copyright for the design
in question. We are not also prepared to accept the contention of
appellant that the publication of the design was a limited one, or that
there was an understanding that only Ambassador Neri should, have
absolute right to use the same. In the first place, if such were the
condition then Ambassador Neri would be the aggrieved party, and not
the appellant. In the second place, if there was such a limited publication
or prohibition, the same was not shown on the face of the design. When
the purpose is a limited publication, but the effect is general publication,
irrevocable rights thereupon become vested in the public, in
consequence of which enforcement of the restriction becomes
impossible (Nutt vs. National Institute, 31 F [2d] 236). It has been held
that the effect of offering for sale a dress, for example manufactured in
accordance with an original design which is not protected by either a
copyright or a patent, is to divest the owner of his common law rights
therein by virtue of the publication of a 'copy' and thereafter anyone is
free to copy the design or the dress (Fashion Originators Guild of
America v. Federal Trade Commission, 114 F [2d] 80). When
Ambassador Neri distributed 800 copies of the design in controversy,
the plaintiff lost control of his design and the necessary implication was
that there had been a general publication, there having been no
showing of a clear indication that a limited publication was intended.
The author of a literary composition has a light to the first publication
thereof. He has a right to determine whether it shall be published at all,
and if published, when, where, by whom, and in what form. This
exclusive right is confined to the first publication. When once published,
it is dedicated to the public, and the author loses the exclusive right to
control subsequent publication by others, unless the work is placed

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