G.R. No.

154342 July 14, 2004 bracket with at least P10,000 monthly income while GALLO cigarette buyers
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to were farmers, fishermen, laborers and other low-income workers; the
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., La Campana which, on July 16, 1985, applied for trademark registration in the dominant feature of the GALLO cigarette mark was the rooster device with
petitioner, vs. E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., Philippine Patent Office.11 On July 17, 1985, the National Library issued the manufacturer’s name clearly indicated as MIGHTY CORPORATION while,
respondents. Certificate of Copyright Registration No. 5834 for La Campana’s lifetime in the case of Gallo Winery’s wines, it was the full names of the founders-
copyright claim over GALLO cigarette labels.12 owners ERNEST & JULIO GALLO or just their surname GALLO; by their inaction
DECISION and conduct, respondents were guilty of laches and estoppel; and petitioners
CORONA, J.: Subsequently, La Campana authorized Mighty Corporation to manufacture acted with honesty, justice and good faith in the exercise of their right to
In this petition for review on certiorari under Rule 45, petitioners Mighty and sell cigarettes bearing the GALLO trademark.13 BIR approved Mighty manufacture and sell GALLO cigarettes.
Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek to Corporation’s use of GALLO 100’s cigarette brand, under licensing agreement
annul, reverse and set aside: (a) the November 15, 2001 decision1 of the with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL In an order dated April 21, 1993,24 the Makati RTC denied, for lack of merit,
Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the November 26, 100’s cigarette brand on April 3, 1989.14 respondent’s prayer for the issuance of a writ of preliminary injunction,25
1998 decision,2 as modified by the June 24, 1999 order,3 of the Regional Trial holding that respondent’s GALLO trademark registration certificate covered
Court of Makati City, Branch 57 (Makati RTC) in Civil Case No. 93-850, which Petitioners claim that GALLO cigarettes have been sold in the Philippines wines only, that respondents’ wines and petitioners’ cigarettes were not
held petitioners liable for, and permanently enjoined them from, committing since 1973, initially by Tobacco Industries, then by La Campana and finally by related goods and respondents failed to prove material damage or great
trademark infringement and unfair competition, and which ordered them to Mighty Corporation.15 irreparable injury as required by Section 5, Rule 58 of the Rules of Court.26
pay damages to respondents E. & J. Gallo Winery (Gallo Winery) and The
Andresons Group, Inc. (Andresons); (b) the July 11, 2002 CA resolution On the other hand, although the GALLO wine trademark was registered in the On August 19, 1993, the Makati RTC denied, for lack of merit, respondents’
denying their motion for reconsideration4 and (c) the aforesaid Makati RTC Philippines in 1971, respondents claim that they first introduced and sold the motion for reconsideration. The court reiterated that respondents’ wines and
decision itself. GALLO and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within petitioners’ cigarettes were not related goods since the likelihood of
the then U.S. military facilities only. By 1979, they had expanded their deception and confusion on the part of the consuming public was very
I. The Factual Background Philippine market through authorized distributors and independent outlets.16 remote. The trial court emphasized that it could not rely on foreign rulings
cited by respondents "because the[se] cases were decided by foreign courts
Respondent Gallo Winery is a foreign corporation not doing business in the Respondents claim that they first learned about the existence of GALLO on the basis of unknown facts peculiar to each case or upon factual
Philippines but organized and existing under the laws of the State of cigarettes in the latter part of 1992 when an Andresons employee saw such surroundings which may exist only within their jurisdiction. Moreover, there
California, United States of America (U.S.), where all its wineries are located. cigarettes on display with GALLO wines in a Davao supermarket wine cellar [was] no showing that [these cases had] been tested or found applicable in
Gallo Winery produces different kinds of wines and brandy products and sells section.17 Forthwith, respondents sent a demand letter to petitioners asking our jurisdiction."27
them in many countries under different registered trademarks, including the them to stop using the GALLO trademark, to no avail.
GALLO and ERNEST & JULIO GALLO wine trademarks. On February 20, 1995, the CA likewise dismissed respondents’ petition for
II. The Legal Dispute review on certiorari, docketed as CA-G.R. No. 32626, thereby affirming the
Respondent domestic corporation, Andresons, has been Gallo Winery’s Makati RTC’s denial of the application for issuance of a writ of preliminary
exclusive wine importer and distributor in the Philippines since 1991, selling On March 12, 1993, respondents sued petitioners in the Makati RTC for injunction against petitioners.28
these products in its own name and for its own account.5 trademark and tradename infringement and unfair competition, with a prayer
for damages and preliminary injunction. After trial on the merits, however, the Makati RTC, on November 26, 1998,
Gallo Winery’s GALLO wine trademark was registered in the principal register held petitioners liable for, and permanently enjoined them from, committing
of the Philippine Patent Office (now Intellectual Property Office) on Respondents charged petitioners with violating Article 6bis of the Paris trademark infringement and unfair competition with respect to the GALLO
November 16, 1971 under Certificate of Registration No. 17021 which was Convention for the Protection of Industrial Property (Paris Convention)18 and trademark:
renewed on November 16, 1991 for another 20 years.6 Gallo Winery also RA 166 (Trademark Law),19 specifically, Sections 22 and 23 (for trademark
applied for registration of its ERNEST & JULIO GALLO wine trademark on infringement),20 29 and 3021 (for unfair competition and false designation of WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and
October 11, 1990 under Application Serial No. 901011-00073599-PN but the origin) and 37 (for tradename infringement).22 They claimed that petitioners against the defendant (sic), to wit:
records do not disclose if it was ever approved by the Director of Patents.7 adopted the GALLO trademark to ride on Gallo Winery’s GALLO and ERNEST &
JULIO GALLO trademarks’ established reputation and popularity, thus causing a. permanently restraining and enjoining defendants, their
On the other hand, petitioners Mighty Corporation and La Campana and their confusion, deception and mistake on the part of the purchasing public who distributors, trade outlets, and all persons acting for them or under
sister company, Tobacco Industries of the Philippines (Tobacco Industries), had always associated GALLO and ERNEST & JULIO GALLO trademarks with their instructions, from (i) using E & J’s registered trademark GALLO
are engaged in the cultivation, manufacture, distribution and sale of tobacco Gallo Winery’s wines. Respondents prayed for the issuance of a writ of or any other reproduction, counterfeit, copy or colorable imitation
products for which they have been using the GALLO cigarette trademark since preliminary injunction and ex parte restraining order, plus P2 million as actual of said trademark, either singly or in conjunction with other words,
1973. 8 and compensatory damages, at least P500,000 as exemplary and moral designs or emblems and other acts of similar nature, and (ii)
damages, and at least P500,000 as attorney’s fees and litigation expenses.23 committing other acts of unfair competition against plaintiffs by
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of manufacturing and selling their cigarettes in the domestic or export
GALLO 100’s cigarette mark on September 14, 1973 and GALLO filter cigarette In their answer, petitioners alleged, among other affirmative defenses, that: markets under the GALLO trademark.
mark on March 26, 1976, both for the manufacture and sale of its cigarette petitioner’s GALLO cigarettes and Gallo Winery’s wines were totally unrelated b. ordering defendants to pay plaintiffs –
products. In 1976, Tobacco Industries filed its manufacturer’s sworn products; Gallo Winery’s GALLO trademark registration certificate covered
statement as basis for BIR’s collection of specific tax on GALLO cigarettes.9 wines only, not cigarettes; GALLO cigarettes and GALLO wines were sold (i) actual and compensatory damages for the injury and
through different channels of trade; GALLO cigarettes, sold at P4.60 for prejudice and impairment of plaintiffs’ business and goodwill as
On February 5, 1974, Tobacco Industries applied for, but eventually did not GALLO filters and P3 for GALLO menthols, were low-cost items compared to a result of the acts and conduct pleaded as basis for this suit, in
pursue, the registration of the GALLO cigarette trademark in the principal Gallo Winery’s high-priced luxury wines which cost between P98 to P242.50; an amount equal to 10% of FOURTEEN MILLION TWO
register of the then Philippine Patent Office.10 the target market of Gallo Winery’s wines was the middle or high-income

1
 HUNDRED THIRTY FIVE THOUSAND PESOS (PHP14,235,000.00) (2) the inference of the Court of Appeals from its findings of fact is effective cannot be considered as conclusively known by the populace. To
from the filing of the complaint until fully paid; manifestly mistaken, absurd and impossible; make a law binding even before it takes effect may lead to the arbitrary
(3) there is grave abuse of discretion; exercise of the legislative power.40 Nova constitutio futuris formam imponere
(ii) exemplary damages in the amount of PHP100,000.00; (4) the judgment is based on a misapprehension of facts; debet non praeteritis. A new state of the law ought to affect the future, not
(5) the appellate court, in making its findings, went beyond the issues of the past. Any doubt must generally be resolved against the retroactive
(iii) attorney’s fees and expenses of litigation in the amount of the case, and the same are contrary to the admissions of both the operation of laws, whether these are original enactments, amendments or
PHP1,130,068.91; appellant and the appellee; repeals.41 There are only a few instances when laws may be given retroactive
(6) the findings are without citation of specific evidence on which they effect,42 none of which is present in this case.
(iv) the cost of suit. are based; The IP Code, repealing the Trademark Law,43 was approved on June 6, 1997.
(7) the facts set forth in the petition as well as in the petitioner's main Section 241 thereof expressly decreed that it was to take effect only on
SO ORDERED."29 and reply briefs are not disputed by the respondents; and January 1, 1998, without any provision for retroactive application. Thus, the
(8) the findings of fact of the Court of Appeals are premised on the Makati RTC and the CA should have limited the consideration of the present
On June 24, 1999, the Makati RTC granted respondent’s motion for partial absence of evidence and are contradicted [by the evidence] on record.36 case within the parameters of the Trademark Law and the Paris Convention,
reconsideration and increased the award of actual and compensatory the laws in force at the time of the filing of the complaint.
damages to 10% of P199,290,000 or P19,929,000.30 In this light, after thoroughly examining the evidence on record, weighing,
analyzing and balancing all factors to determine whether trademark DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENT AND UNFAIR
On appeal, the CA affirmed the Makati RTC decision and subsequently denied infringement and/or unfair competition has been committed, we conclude COMPETITION
petitioner’s motion for reconsideration. that both the Court of Appeals and the trial court veered away from the law
and well-settled jurisprudence. Although the laws on trademark infringement and unfair competition have a
III. The Issues common conception at their root, that is, a person shall not be permitted to
Thus, we give due course to the petition. misrepresent his goods or his business as the goods or business of another,
Petitioners now seek relief from this Court contending that the CA did not the law on unfair competition is broader and more inclusive than the law on
follow prevailing laws and jurisprudence when it held that: [a] RA 8293 THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE APPLICABLE trademark infringement. The latter is more limited but it recognizes a more
(Intellectual Property Code of the Philippines [IP Code]) was applicable in this LAWS, NOT THE INTELLECTUAL PROPERTY CODE exclusive right derived from the trademark adoption and registration by the
case; [b] GALLO cigarettes and GALLO wines were identical, similar or related person whose goods or business is first associated with it. The law on
goods for the reason alone that they were purportedly forms of vice; [c] both We note that respondents sued petitioners on March 12, 1993 for trademark trademarks is thus a specialized subject distinct from the law on unfair
goods passed through the same channels of trade and [d] petitioners were infringement and unfair competition committed during the effectivity of the competition, although the two subjects are entwined with each other and are
liable for trademark infringement, unfair competition and damages.31 Paris Convention and the Trademark Law. dealt with together in the Trademark Law (now, both are covered by the IP
Code). Hence, even if one fails to establish his exclusive property right to a
Respondents, on the other hand, assert that this petition which invokes Rule Yet, in the Makati RTC decision of November 26, 1998, petitioners were held trademark, he may still obtain relief on the ground of his competitor’s
45 does not involve pure questions of law, and hence, must be dismissed liable not only under the aforesaid governing laws but also under the IP Code unfairness or fraud. Conduct constitutes unfair competition if the effect is to
outright. which took effect only on January 1, 1998,37 or about five years after the filing pass off on the public the goods of one man as the goods of another. It is not
of the complaint: necessary that any particular means should be used to this end.44
IV. Discussion
Defendants’ unauthorized use of the GALLO trademark constitutes In Del Monte Corporation vs. Court of Appeals,45 we distinguished trademark
THE EXCEPTIONAL CIRCUMSTANCES IN THIS CASE OBLIGE THE COURT TO trademark infringement pursuant to Section 22 of Republic Act No. 166, infringement from unfair competition:
REVIEW THE CA’S FACTUAL FINDINGS Section 155 of the IP Code, Article 6bis of the Paris Convention, and
Article 16 (1) of the TRIPS Agreement as it causes confusion, deception (1) Infringement of trademark is the unauthorized use of a
As a general rule, a petition for review on certiorari under Rule 45 must raise and mistake on the part of the purchasing public.38 (Emphasis and trademark, whereas unfair competition is the passing off of
only "questions of law"32 (that is, the doubt pertains to the application and underscoring supplied) one's goods as those of another.
interpretation of law to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of alleged facts),33 The CA apparently did not notice the error and affirmed the Makati RTC (2) In infringement of trademark fraudulent intent is unnecessary,
otherwise, the petition will be denied. We are not a trier of facts and the decision: whereas in unfair competition fraudulent intent is essential.
Court of Appeals’ factual findings are generally conclusive upon us.34
In the light of its finding that appellants’ use of the GALLO trademark on (3) In infringement of trademark the prior registration of the
This case involves questions of fact which are directly related and intertwined its cigarettes is likely to create confusion with the GALLO trademark on trademark is a prerequisite to the action, whereas in unfair
with questions of law. The resolution of the factual issues concerning the wines previously registered and used in the Philippines by appellee E & J competition registration is not necessary.
goods’ similarity, identity, relation, channels of trade, and acts of trademark Gallo Winery, the trial court thus did not err in holding that appellants’
infringement and unfair competition is greatly dependent on the acts not only violated the provisions of the our trademark laws (R.A. No. Pertinent Provisions on Trademark Infringement under the Paris Convention
interpretation of applicable laws. The controversy here is not simply the 166 and R.A. Nos. (sic) 8293) but also Article 6bis of the Paris and the Trademark Law
identity or similarity of both parties’ trademarks but whether or not Convention.39 (Emphasis and underscoring supplied)
infringement or unfair competition was committed, a conclusion based on Article 6bis of the Paris Convention,46 an international agreement binding on
statutory interpretation. Furthermore, one or more of the following We therefore hold that the courts a quo erred in retroactively applying the IP the Philippines and the United States (Gallo Winery’s country of domicile and
exceptional circumstances oblige us to review the evidence on record:35 Code in this case. origin) prohibits "the [registration] or use of a trademark which constitutes a
reproduction, imitation or translation, liable to create confusion, of a mark
(1) the conclusion is grounded entirely on speculation, surmises, and It is a fundamental principle that the validity and obligatory force of a law considered by the competent authority of the country of registration or use
conjectures; proceed from the fact that it has first been promulgated. A law that is not yet to be well-known in that country as being already the mark of a person

2
entitled to the benefits of the [Paris] Convention and used for identical or packages, wrappers, receptacles or advertisements intended to be
similar goods. [This rule also applies] when the essential part of the mark used upon or in connection with such goods, business or services as xxx xxx xxx
constitutes a reproduction of any such well-known mark or an imitation liable to likely cause confusion or mistake or to deceive purchasers, In addition to the foregoing, we are constrained to agree with
to create confusion therewith." There is no time limit for seeking the petitioner's contention that private respondent failed to prove
prohibition of the use of marks used in bad faith.47 (c) the trademark is used for identical or similar goods, and prior actual commercial use of its "LEE" trademark in the
Philippines before filing its application for registration with the
Thus, under Article 6bis of the Paris Convention, the following are the (d) such act is done without the consent of the trademark registrant BPTTT and hence, has not acquired ownership over said mark.
elements of trademark infringement: or assignee. Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a trademark
(a) registration or use by another person of a trademark which is a In summary, the Paris Convention protects well-known trademarks only (to pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No.
reproduction, imitation or translation liable to create confusion, be determined by domestic authorities), while the Trademark Law protects all 166) x x x
trademarks, whether well-known or not, provided that they have been
(b) of a mark considered by the competent authority of the country of registered and are in actual commercial use in the Philippines. Following xxx xxx xxx
registration or use48 to be well-known in that country and is already the universal acquiescence and comity, in case of domestic legal disputes on any The provisions of the 1965 Paris Convention for the Protection of
mark of a person entitled to the benefits of the Paris Convention, and conflicting provisions between the Paris Convention (which is an international Industrial Property relied upon by private respondent and Sec. 21-A
agreement) and the Trademark law (which is a municipal law) the latter will of the Trademark Law (R.A. No. 166) were sufficiently expounded
(c) such trademark is used for identical or similar goods. prevail.54 upon and qualified in the recent case of Philip Morris, Inc. v. Court
of Appeals (224 SCRA 576 [1993]):
On the other hand, Section 22 of the Trademark Law holds a person liable for Under both the Paris Convention and the Trademark Law, the protection of a
infringement when, among others, he "uses without the consent of the registered trademark is limited only to goods identical or similar to those in xxx xxx xxx
registrant, any reproduction, counterfeit, copy or colorable imitation of any respect of which such trademark is registered and only when there is Following universal acquiescence and comity, our municipal
registered mark or tradename in connection with the sale, offering for sale, likelihood of confusion. Under both laws, the time element in commencing law on trademarks regarding the requirement of actual use in
or advertising of any goods, business or services or in connection with which infringement cases is material in ascertaining the registrant’s express or the Philippines must subordinate an international agreement
such use is likely to cause confusion or mistake or to deceive purchasers or implied consent to another’s use of its trademark or a colorable imitation inasmuch as the apparent clash is being decided by a
others as to the source or origin of such goods or services, or identity of such thereof. This is why acquiescence, estoppel or laches may defeat the municipal tribunal (Mortisen vs. Peters, Great Britain, High
business; or reproduce, counterfeit, copy or colorably imitate any such mark registrant’s otherwise valid cause of action. Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
or tradename and apply such reproduction, counterfeit, copy or colorable Hence, proof of all the elements of trademark infringement is a condition International Law and World Organization, 1971 Ed., p. 20).
imitation to labels, signs, prints, packages, wrappers, receptacles or precedent to any finding of liability. Withal, the fact that international law has been made part of
advertisements intended to be used upon or in connection with such goods, the law of the land does not by any means imply the primacy of
business or services."49 Trademark registration and actual use are material to THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO CIGARETTE international law over national law in the municipal sphere.
the complaining party’s cause of action. TRADEMARK PRECEDED THAT OF GALLO WINE TRADEMARK. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal,
Corollary to this, Section 20 of the Trademark Law50 considers the trademark By respondents’ own judicial admission, the GALLO wine trademark was not superior, to national legislative enactments.
registration certificate as prima facie evidence of the validity of the registered in the Philippines in November 1971 but the wine itself was first xxx xxx xxx
registration, the registrant’s ownership and exclusive right to use the marketed and sold in the country only in 1974 and only within the former U.S.
trademark in connection with the goods, business or services as classified by military facilities, and outside thereof, only in 1979. To prove commercial use In other words, (a foreign corporation) may have the capacity
the Director of Patents51 and as specified in the certificate, subject to the of the GALLO wine trademark in the Philippines, respondents presented sales to sue for infringement irrespective of lack of business activity
conditions and limitations stated therein. Sections 2 and 2-A52 of the invoice no. 29991 dated July 9, 1981 addressed to Conrad Company Inc., in the Philippines on account of Section 21-A of the Trademark
Trademark Law emphasize the importance of the trademark’s actual use in Makati, Philippines and sales invoice no. 85926 dated March 22, 1996 Law but the question of whether they have an exclusive right
commerce in the Philippines prior to its registration. In the adjudication of addressed to Andresons Global, Inc., Quezon City, Philippines. Both invoices over their symbol as to justify issuance of the controversial
trademark rights between contending parties, equitable principles of laches, were for the sale and shipment of GALLO wines to the Philippines during that writ will depend on actual use of their trademarks in the
estoppel, and acquiescence may be considered and applied.53 period.55 Nothing at all, however, was presented to evidence the alleged sales Philippines in line with Sections 2 and 2-A of the same law. It
of GALLO wines in the Philippines in 1974 or, for that matter, prior to July 9, is thus incongruous for petitioners to claim that when a foreign
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the 1981. corporation not licensed to do business in the Philippines files a
following constitute the elements of trademark infringement: On the other hand, by testimonial evidence supported by the BIR complaint for infringement, the entity need not be actually
authorization letters, forms and manufacturer’s sworn statement, it appears using the trademark in commerce in the Philippines. Such a
(a) a trademark actually used in commerce in the Philippines and that petitioners and its predecessor-in-interest, Tobacco Industries, have foreign corporation may have the personality to file a suit for
registered in the principal register of the Philippine Patent Office indeed been using and selling GALLO cigarettes in the Philippines since 1973 infringement but it may not necessarily be entitled to
or before July 9, 1981.56 protection due to absence of actual use of the emblem in the
(b) is used by another person in connection with the sale, offering In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we local market.
for sale, or advertising of any goods, business or services or in reiterated our rulings in Pagasa Industrial Corporation vs. Court of Appeals,58 xxx xxx xxx
connection with which such use is likely to cause confusion or Converse Rubber Corporation vs. Universal Rubber Products, Inc.,59 Sterling
mistake or to deceive purchasers or others as to the source or origin Products International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft,60 Undisputably, private respondent is the senior registrant,
of such goods or services, or identity of such business; or such Kabushi Kaisha Isetan vs. Intermediate Appellate Court,61 and Philip Morris vs. having obtained several registration certificates for its various
trademark is reproduced, counterfeited, copied or colorably Court of Appeals,62 giving utmost importance to the actual commercial use of trademarks "LEE," "LEE RIDERS," and "LEESURES" in both the
imitated by another person and such reproduction, counterfeit, a trademark in the Philippines prior to its registration, notwithstanding the supplemental and principal registers, as early as 1969 to 1973.
copy or colorable imitation is applied to labels, signs, prints, provisions of the Paris Convention: However, registration alone will not suffice. In Sterling

3
 Products International, Inc. v. Farbenfabriken Bayer zippers sent to the Philippines were to be used as "samples" adduced by petitioner, the certificate of registration issued by the
Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated in Kabushi and "of no commercial value." The evidence for respondent Director of Patents can confer upon petitioner the exclusive right
Isetan vs. Intermediate Appellate Court (203 SCRA 583 [1991]) must be clear, definite and free from inconsistencies. "Samples" to use its own symbol only to those goods specified in the
we declared: are not for sale and therefore, the fact of exporting them to the certificate, subject to any conditions and limitations stated therein.
Philippines cannot be considered to be equivalent to the "use" This basic point is perhaps the unwritten rationale of Justice Escolin
xxx xxx xxx contemplated by law. Respondent did not expect income from in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]),
A rule widely accepted and firmly entrenched because it has such "samples." There were no receipts to establish sale, and when he stressed the principle enunciated by the United States
come down through the years is that actual use in commerce no proof were presented to show that they were subsequently Supreme Court in American Foundries vs. Robertson (269 U.S. 372,
or business is a prerequisite in the acquisition of the right of sold in the Philippines. 381, 70 L ed 317, 46 Sct. 160) that one who has adopted and used a
ownership over a trademark. xxx xxx xxx trademark on his goods does not prevent the adoption and use of
xxx xxx xxx the same trademark by others for products which are of a different
For lack of adequate proof of actual use of its trademark in the description. Verily, this Court had the occasion to observe in the
The credibility placed on a certificate of registration of one's Philippines prior to petitioner's use of its own mark and for failure 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944
trademark, or its weight as evidence of validity, ownership and to establish confusing similarity between said trademarks, private [1966]) that no serious objection was posed by the petitioner
exclusive use, is qualified. A registration certificate serves merely as respondent's action for infringement must necessarily fail. therein since the applicant utilized the emblem "Tango" for no other
prima facie evidence. It is not conclusive but can and may be (Emphasis supplied.) product than hair pomade in which petitioner does not deal.
rebutted by controverting evidence.
xxx xxx xxx In view of the foregoing jurisprudence and respondents’ judicial admission This brings Us back to the incidental issue raised by petitioner which
that the actual commercial use of the GALLO wine trademark was subsequent private respondent sought to belie as regards petitioner's alleged
In the case at bench, however, we reverse the findings of the to its registration in 1971 and to Tobacco Industries’ commercial use of the expansion of its business. It may be recalled that petitioner claimed
Director of Patents and the Court of Appeals. After a meticulous GALLO cigarette trademark in 1973, we rule that, on this account, that it has a pending application for registration of the emblem
study of the records, we observe that the Director of Patents and respondents never enjoyed the exclusive right to use the GALLO wine "BRUT 33" for briefs (page 25, Brief for the Petitioner; page 202,
the Court of Appeals relied mainly on the registration certificates trademark to the prejudice of Tobacco Industries and its successors-in- Rollo) to impress upon Us the Solomonic wisdom imparted by
as proof of use by private respondent of the trademark "LEE" interest, herein petitioners, either under the Trademark Law or the Paris Justice JBL Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to
which, as we have previously discussed are not sufficient. We Convention. the effect that dissimilarity of goods will not preclude relief if the
cannot give credence to private respondent's claim that its "LEE" junior user's goods are not remote from any other product which
mark first reached the Philippines in the 1960's through local sales Respondents’ GALLO trademark registration is limited to wines only the first user would be likely to make or sell (vide, at page 1025).
by the Post Exchanges of the U.S. Military Bases in the Philippines Commenting on the former provision of the Trademark Law now
(Rollo, p. 177) based as it was solely on the self-serving statements We also note that the GALLO trademark registration certificates in the embodied substantially under Section 4(d) of Republic Act No. 166,
of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a Philippines and in other countries expressly state that they cover wines only, as amended, the erudite jurist opined that the law in point "does
wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein without any evidence or indication that registrant Gallo Winery expanded or not require that the articles of manufacture of the previous user and
private respondent. (Original Records, p. 52) Similarly, we give intended to expand its business to cigarettes.63 late user of the mark should possess the same descriptive properties
little weight to the numerous vouchers representing various or should fall into the same categories as to bar the latter from
advertising expenses in the Philippines for "LEE" products. It is well Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery’s registering his mark in the principal register." (supra at page 1026).
to note that these expenses were incurred only in 1981 and 1982 exclusive right to use the GALLO trademark should be limited to wines, the
by LEE (Phils.), Inc. after it entered into a licensing agreement with only product indicated in its registration certificates. This strict statutory Yet, it is equally true that as aforesaid, the protective mantle of
private respondent on 11 May 1981. (Exhibit E) limitation on the exclusive right to use trademarks was amply clarified in our the Trademark Law extends only to the goods used by the first
ruling in Faberge, Inc. vs. Intermediate Appellate Court:64 user as specified in the certificate of registration following the
On the other hand, petitioner has sufficiently shown that it has clear message conveyed by Section 20.
been in the business of selling jeans and other garments adopting Having thus reviewed the laws applicable to the case before Us, it is
its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by not difficult to discern from the foregoing statutory enactments that How do We now reconcile the apparent conflict between Section
appropriate sales invoices to various stores and retailers. (Exhibit 1- private respondent may be permitted to register the trademark 4(d) which was relied upon by Justice JBL Reyes in the Sta. Ana
e to 1-o) "BRUTE" for briefs produced by it notwithstanding petitioner's case and Section 20? It would seem that Section 4(d) does not
vehement protestations of unfair dealings in marketing its own set require that the goods manufactured by the second user be
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA of items which are limited to: after-shave lotion, shaving cream, related to the goods produced by the senior user while Section 20
526 [1982]) and Converse Rubber Corp. v. Universal Rubber deodorant, talcum powder and toilet soap. Inasmuch as petitioner limits the exclusive right of the senior user only to those goods
Products, Inc., (147 SCRA 154 [1987]), respectively, are instructive: has not ventured in the production of briefs, an item which is not specified in the certificate of registration. But the rule has been laid
listed in its certificate of registration, petitioner cannot and should down that the clause which comes later shall be given paramount
The Trademark Law is very clear. It requires actual commercial not be allowed to feign that private respondent had invaded significance over an anterior proviso upon the presumption that it
use of the mark prior to its registration. There is no dispute petitioner's exclusive domain. To be sure, it is significant that expresses the latest and dominant purpose. (Graham Paper Co. vs.
that respondent corporation was the first registrant, yet it petitioner failed to annex in its Brief the so-called "eloquent proof National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett vs.
failed to fully substantiate its claim that it used in trade or that petitioner indeed intended to expand its mark ‘BRUT’ to other Merchant's L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo,
business in the Philippines the subject mark; it did not present goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even 26 N.E., p. 1061; cited by Martin, Statutory Construction Sixth ed.,
proof to invest it with exclusive, continuous adoption of the then, a mere application by petitioner in this aspect does not suffice 1980 Reprinted, p. 144). It ineluctably follows that Section 20 is
trademark which should consist among others, of and may not vest an exclusive right in its favor that can ordinarily be controlling and, therefore, private respondent can appropriate its
considerable sales since its first use. The invoices submitted by protected by the Trademark Law. In short, paraphrasing Section 20 symbol for the briefs it manufactures because as aptly remarked
respondent which were dated way back in 1957 show that the of the Trademark Law as applied to the documentary evidence

4
 by Justice Sanchez in Sterling Products International Inc. vs. (c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim other features appearing in both labels in order that he may draw his
Farbenfabriken Bayer (27 SCRA 1214 [1969]): Bun Liong,69 we dismissed Hickok’s petition to cancel private conclusion whether one is confusingly similar to the other.81
respondent’s HICKOK trademark registration for its Marikina shoes as
"Really, if the certificate of registration were to be deemed as against petitioner’s earlier registration of the same trademark for In comparing the resemblance or colorable imitation of marks, various factors
including goods not specified therein, then a situation may handkerchiefs, briefs, belts and wallets; have been considered, such as the dominant color, style, size, form, meaning
arise whereby an applicant may be tempted to register a of letters, words, designs and emblems used, the likelihood of deception of
trademark on any and all goods which his mind may conceive (d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute the mark or name's tendency to confuse82 and the commercial impression
even if he had never intended to use the trademark for the resolution, we dismissed the petition for review for lack of merit and likely to be conveyed by the trademarks if used in conjunction with the
said goods. We believe that such omnibus registration is not affirmed the Patent Office’s registration of the trademark SHELL used in respective goods of the parties.83
contemplated by our Trademark Law." (1226). the cigarettes manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Company’s opposition as the prior Applying the Dominancy and Holistic Tests, we find that the dominant feature
NO LIKELIHOOD OF CONFUSION, MISTAKE OR DECEIT AS TO THE IDENTITY registrant of the same trademark for its gasoline and other petroleum of the GALLO cigarette trademark is the device of a large rooster facing left,
OR SOURCE OF PETITIONERS’ AND RESPONDENTS’ GOODS OR BUSINESS products; outlined in black against a gold background. The rooster’s color is either
green or red – green for GALLO menthols and red for GALLO filters. Directly
A crucial issue in any trademark infringement case is the likelihood of (e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we dismissed below the large rooster device is the word GALLO. The rooster device is given
confusion, mistake or deceit as to the identity, source or origin of the goods ESSO’s complaint for trademark infringement against United Cigarette prominence in the GALLO cigarette packs in terms of size and location on the
or identity of the business as a consequence of using a certain mark. Corporation and allowed the latter to use the trademark ESSO for its labels.84
Likelihood of confusion is admittedly a relative term, to be determined rigidly cigarettes, the same trademark used by ESSO for its petroleum products,
according to the particular (and sometimes peculiar) circumstances of each and The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes
case. Thus, in trademark cases, more than in other kinds of litigation, as it has no relation at all to the product but was chosen merely as a
precedents must be studied in the light of each particular case. 65 (f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber trademark due to the fondness for fighting cocks of the son of petitioners’
Corporation,72 we affirmed the rulings of the Patent Office and the CA president. Furthermore, petitioners adopted GALLO, the Spanish word for
There are two types of confusion in trademark infringement. The first is that NSR Rubber Corporation could use the trademark CANON for its rooster, as a cigarette trademark to appeal to one of their target markets, the
"confusion of goods" when an otherwise prudent purchaser is induced to sandals (Class 25) despite Canon Kabushiki Kaisha’s prior registration and sabungeros (cockfight aficionados).85
purchase one product in the belief that he is purchasing another, in which use of the same trademark for its paints, chemical products, toner and
case defendant’s goods are then bought as the plaintiff’s and its poor quality dyestuff (Class 2). Also, as admitted by respondents themselves,86 on the side of the GALLO
reflects badly on the plaintiff’s reputation. The other is "confusion of cigarette packs are the words "MADE BY MIGHTY CORPORATION," thus
business" wherein the goods of the parties are different but the defendant’s Whether a trademark causes confusion and is likely to deceive the public clearly informing the public as to the identity of the manufacturer of the
product can reasonably (though mistakenly) be assumed to originate from hinges on "colorable imitation"73 which has been defined as "such similarity in cigarettes.
the plaintiff, thus deceiving the public into believing that there is some form, content, words, sound, meaning, special arrangement or general
connection between the plaintiff and defendant which, in fact, does not appearance of the trademark or tradename in their overall presentation or in On the other hand, GALLO Winery’s wine and brandy labels are diverse. In
exist.66 their essential and substantive and distinctive parts as would likely mislead or many of them, the labels are embellished with sketches of buildings and
confuse persons in the ordinary course of purchasing the genuine article."74 trees, vineyards or a bunch of grapes while in a few, one or two small
In determining the likelihood of confusion, the Court must consider: [a] the Jurisprudence has developed two tests in determining similarity and roosters facing right or facing each other (atop the EJG crest, surrounded by
resemblance between the trademarks; [b] the similarity of the goods to likelihood of confusion in trademark resemblance:75 leaves or ribbons), with additional designs in green, red and yellow colors,
which the trademarks are attached; [c] the likely effect on the purchaser and appear as minor features thereof.87 Directly below or above these sketches is
[d] the registrant’s express or implied consent and other fair and equitable (a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of the entire printed name of the founder-owners, "ERNEST & JULIO GALLO" or
considerations. Appeals76 and other cases,77 and just their surname "GALLO,"88 which appears in different fonts, sizes, styles
and labels, unlike petitioners’ uniform casque-font bold-lettered GALLO mark.
Petitioners and respondents both use "GALLO" in the labels of their (b) the Holistic or Totality Test used in Del Monte Corporation vs. Court
respective cigarette and wine products. But, as held in the following cases, of Appeals78 and its preceding cases.79 Moreover, on the labels of Gallo Winery’s wines are printed the words
the use of an identical mark does not, by itself, lead to a legal conclusion that "VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
there is trademark infringement: The Dominancy Test focuses on the similarity of the prevalent features of the CALIFORNIA."89
competing trademarks which might cause confusion or deception, and thus
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we ordered the infringement. If the competing trademark contains the main, essential or The many different features like color schemes, art works and other markings
approval of Acoje Mining’s application for registration of the trademark dominant features of another, and confusion or deception is likely to result, of both products drown out the similarity between them – the use of the word
LOTUS for its soy sauce even though Philippine Refining Company had infringement takes place. Duplication or imitation is not necessary; nor is it “GALLO” ― a family surname for the Gallo Winery’s wines and a Spanish word
prior registration and use of such identical mark for its edible oil which, necessary that the infringing label should suggest an effort to imitate. The for rooster for petitioners’ cigarettes.
like soy sauce, also belonged to Class 47; question is whether the use of the marks involved is likely to cause confusion
or mistake in the mind of the public or deceive purchasers.80 WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING OR
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,68 RELATED GOODS
we upheld the Patent Director’s registration of the same trademark On the other hand, the Holistic Test requires that the entirety of the marks in
CAMIA for Ng Sam’s ham under Class 47, despite Philippine Refining question be considered in resolving confusing similarity. Comparison of words Confusion of goods is evident where the litigants are actually in competition;
Company’s prior trademark registration and actual use of such mark on is not the only determining factor. The trademarks in their entirety as they but confusion of business may arise between non-competing interests as
its lard, butter, cooking oil (all of which belonged to Class 47), abrasive appear in their respective labels or hang tags must also be considered in well.90
detergents, polishing materials and soaps; relation to the goods to which they are attached. The discerning eye of the Thus, apart from the strict application of Section 20 of the Trademark Law
observer must focus not only on the predominant words but also on the and Article 6bis of the Paris Convention which proscribe trademark

5
infringement not only of goods specified in the certificate of registration but appears likely to mislead the ordinary intelligent buyer who has a need to In his decision, the Director of Patents enumerated the factors that set
also of identical or similar goods, we have also uniformly recognized and supply and is familiar with the article that he seeks to purchase."110 respondent’s products apart from the goods of petitioner. He opined and
applied the modern concept of "related goods."91 Simply stated, when goods we quote:
are so related that the public may be, or is actually, deceived and misled that Hence, in the adjudication of trademark infringement, we give due regard to
they come from the same maker or manufacturer, trademark infringement the goods’ usual purchaser’s character, attitude, habits, age, training and "I have taken into account such factors as probable purchaser
occurs.92 education. 111 attitude and habits, marketing activities, retail outlets, and
Non-competin commercial impression likely to be conveyed by the trademarks if
g goods may be those which, though they are not in actual competition, are Applying these legal precepts to the present case, petitioner’s use of the used in conjunction with the respective goods of the parties, I
so related to each other that it can reasonably be assumed that they originate GALLO cigarette trademark is not likely to cause confusion or mistake, or to believe that ham on one hand, and lard, butter, oil, and soap on
from one manufacturer, in which case, confusion of business can arise out of deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both the other are products that would not move in the same manner
the use of similar marks.93 They may also be those which, being entirely as to the identity of the goods, their source and origin, or identity of the through the same channels of trade. They pertain to unrelated
unrelated, cannot be assumed to have a common source; hence, there is no business of petitioners and respondents. fields of manufacture, might be distributed and marketed under
confusion of business, even though similar marks are used.94 Thus, there is no dissimilar conditions, and are displayed separately even though
trademark infringement if the public does not expect the plaintiff to make or Obviously, wines and cigarettes are not identical or competing products. they frequently may be sold through the same retail food
sell the same class of goods as those made or sold by the defendant.95 Neither do they belong to the same class of goods. Respondents’ GALLO establishments. Opposer’s products are ordinary day-to-day
wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of household items whereas ham is not necessarily so. Thus, the goods
In resolving whether goods are related,96 several factors come into play: Practice in Trademark Cases while petitioners’ GALLO cigarettes fall under of the parties are not of a character which purchasers would likely
Class 34. attribute to a common origin.
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong We are mindful that product classification alone cannot serve as the decisive The observations and conclusion of the Director of Patents are correct.
(c) the product's quality, quantity, or size, including the nature of the factor in the resolution of whether or not wines and cigarettes are related The particular goods of the parties are so unrelated that consumers,
package, wrapper or container 97 goods. Emphasis should be on the similarity of the products involved and not would not, in any probability mistake one as the source of origin of the
(d) the nature and cost of the articles98 on the arbitrary classification or general description of their properties or product of the other. (Emphasis supplied).
(e) the descriptive properties, physical attributes or essential characteristics characteristics. But the mere fact that one person has adopted and used a
with reference to their form, composition, texture or quality particular trademark for his goods does not prevent the adoption and use of The same is true in the present case. Wines and cigarettes are non-competing
(f) the purpose of the goods99 the same trademark by others on articles of a different description. 112 and are totally unrelated products not likely to cause confusion vis-à-vis the
(g) whether the article is bought for immediate consumption,100 that is, day- goods or the business of the petitioners and respondents.
to-day household items101 Both the Makati RTC and the CA held that wines and cigarettes are related
(h) the fields of manufacture102 products because: (1) "they are related forms of vice, harmful when taken in Wines are bottled and consumed by drinking while cigarettes are packed in
(i) the conditions under which the article is usually purchased103 and excess, and used for pleasure and relaxation" and (2) "they are grouped or cartons or packages and smoked. There is a whale of a difference between
(j) the channels of trade through which the goods flow,104 how they are classified in the same section of supermarkets and groceries." their descriptive properties, physical attributes or essential characteristics like
distributed, marketed, displayed and sold.105 form, composition, texture and quality.
We find these premises patently insufficient and too arbitrary to support the
The wisdom of this approach is its recognition that each trademark legal conclusion that wines and cigarettes are related products within the GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO
infringement case presents its own unique set of facts. No single factor is contemplation of the Trademark Law and the Paris Convention. wines are patronized by middle-to-high-income earners while GALLO
preeminent, nor can the presence or absence of one determine, without cigarettes appeal only to simple folks like farmers, fishermen, laborers and
analysis of the others, the outcome of an infringement suit. Rather, the court First, anything –- not only wines and cigarettes ― can be used for pleasure other low-income workers.116 Indeed, the big price difference of these two
is required to sift the evidence relevant to each of the criteria. This requires and relaxation and can be harmful when taken in excess. Indeed, it would be products is an important factor in proving that they are in fact unrelated and
that the entire panoply of elements constituting the relevant factual a grave abuse of discretion to treat wines and cigarettes as similar or related that they travel in different channels of trade. There is a distinct price
landscape be comprehensively examined.106 It is a weighing and balancing products likely to cause confusion just because they are pleasure-giving, segmentation based on vastly different social classes of purchasers.117
process. With reference to this ultimate question, and from a balancing of the relaxing or potentially harmful. Such reasoning makes no sense.
determinations reached on all of the factors, a conclusion is reached whether GALLO cigarettes and GALLO wines are not sold through the same channels of
the parties have a right to the relief sought.107 Second, it is common knowledge that supermarkets sell an infinite variety of trade. GALLO cigarettes are Philippine-made and petitioners neither claim nor
wholly unrelated products and the goods here involved, wines and cigarettes, pass off their goods as imported or emanating from Gallo Winery. GALLO
A very important circumstance though is whether there exists a likelihood have nothing whatsoever in common with respect to their essential cigarettes are distributed, marketed and sold through ambulant and sidewalk
that an appreciable number of ordinarily prudent purchasers will be misled, characteristics, quality, quantity, size, including the nature of their packages, vendors, small local sari-sari stores and grocery stores in Philippine rural
or simply confused, as to the source of the goods in question.108 The wrappers or containers.113 areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu.118 On the
"purchaser" is not the "completely unwary consumer" but is the "ordinarily Accordingly, the U.S. patent office and courts have consistently held that the other hand, GALLO wines are imported, distributed and sold in the Philippines
intelligent buyer" considering the type of product involved.109 He is mere fact that goods are sold in one store under the same roof does not through Gallo Winery’s exclusive contracts with a domestic entity, which is
"accustomed to buy, and therefore to some extent familiar with, the goods in automatically mean that buyers are likely to be confused as to the goods’ currently Andresons. By respondents’ own testimonial evidence, GALLO
question. The test of fraudulent simulation is to be found in the likelihood of respective sources, connections or sponsorships. The fact that different wines are sold in hotels, expensive bars and restaurants, and high-end
the deception of some persons in some measure acquainted with an products are available in the same store is an insufficient standard, in and of grocery stores and supermarkets, not through sari-sari stores or ambulant
established design and desirous of purchasing the commodity with which that itself, to warrant a finding of likelihood of confusion.114 vendors.119
design has been associated. The test is not found in the deception, or the Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing
possibility of deception, of the person who knows nothing about the design In this regard, we adopted the Director of Patents’ finding in Philippine Company vs. Philip Morris, Inc.120 to support its finding that GALLO wines and
which has been counterfeited, and who must be indifferent between that and Refining Co., Inc. vs. Ng Sam and the Director of Patents:115 GALLO cigarettes are related goods. The courts a quo should have taken into
the other. The simulation, in order to be objectionable, must be such as

6
consideration the subsequent case of IDV North America, Inc. and R & A xxx xxx xxx the Paris Convention in this case since wines and cigarettes are not identical
Bailey Co. Limited vs. S & M Brands, Inc.:121 Of equal significance, it is undisputed that S & M Brands had no intent, or similar goods:
by adopting the family name ‘Bailey’s’ as the mark for its cigarettes, to
IDV correctly acknowledges, however, that there is no per se rule that capitalize upon the fame of the ‘BAILEYS’ mark for liqueurs. See Schenley, We agree with public respondents that the controlling doctrine with
the use of the same mark on alcohol and tobacco products always will 427 F. 2d at 785. Moreover, as will be discussed below, and as found in respect to the applicability of Article 8 of the Paris Convention is
result in a likelihood of confusion. Nonetheless, IDV relies heavily on the Mckesson & Robbins, the survey evidence refutes the contention that that established in Kabushi Kaisha Isetan vs. Intermediate Appellate
decision in John Walker & Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. cigarettes and alcoholic beverages are so intimately associated in the Court (203 SCRA 59 [1991]). As pointed out by the BPTTT:
254, 256 (S.D. Fla. 1954), aff’d, 222 F. 2d 460 (5th Cir. 1955), wherein the public mind that they cannot under any circumstances be sold under
court enjoined the use of the mark "JOHNNIE WALKER" on cigars the same mark without causing confusion. See Mckesson & Robbins, "Regarding the applicability of Article 8 of the Paris
because the fame of the plaintiff’s mark for scotch whiskey and because 120 U.S.P.Q. at 308. Convention, this Office believes that there is no automatic
the plaintiff advertised its scotch whiskey on, or in connection with protection afforded an entity whose tradename is alleged to
tobacco products. The court, in John Walker & Sons, placed great Taken as a whole, the evidence here demonstrates the absence of the have been infringed through the use of that name as a
significance on the finding that the infringers use was a deliberate ‘special circumstances’ in which courts have found a relationship trademark by a local entity.
attempt to capitalize on the senior marks’ fame. Id. At 256. IDV also between tobacco and alcohol products sufficient to tip the similarity of
relies on Carling Brewing Co. v. Philip Morris, Inc., 297 F. Supp. 1330, goods analysis in favor of the protected mark and against the allegedly In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court,
1338 (N.D. Ga. 1968), in which the court enjoined the defendant’s use infringing mark. It is true that BAILEYS liqueur, the world’s best selling et. al., G.R. No. 75420, 15 November 1991, the Honorable
of the mark "BLACK LABEL" for cigarettes because it was likely to cause liqueur and the second best selling in the United States, is a well- Supreme Court held that:
confusion with the plaintiff’s well-known mark "BLACK LABEL" for beer. known product. That fact alone, however, is insufficient to invoke the
special circumstances connection here where so much other evidence ‘The Paris Convention for the Protection of Industrial
xxx xxx xxx and so many other factors disprove a likelihood of confusion. The Property does not automatically exclude all countries of
Those decisions, however, must be considered in perspective of the similarity of products analysis, therefore, augers against finding that the world which have signed it from using a tradename
principle that tobacco products and alcohol products should be there is a likelihood of confusion. (Emphasis supplied). which happens to be used in one country. To illustrate —
considered related only in cases involving special circumstances. if a taxicab or bus company in a town in the United
Schenley Distillers, Inc. v. General Cigar Co., 57C.C.P.A. 1213, 427 F. 2d In short, tobacco and alcohol products may be considered related only in Kingdom or India happens to use the tradename ‘Rapid
783, 785 (1970). The presence of special circumstances has been found cases involving special circumstances which exist only if a famous mark is Transportation,’ it does not necessarily follow that ‘Rapid’
to exist where there is a finding of unfair competition or where a involved and there is a demonstrated intent to capitalize on it. Both of these can no longer be registered in Uganda, Fiji, or the
‘famous’ or ‘well-known mark’ is involved and there is a demonstrated are absent in the present case. Philippines.
intent to capitalize on that mark. For example, in John Walker & Sons,
the court was persuaded to find a relationship between products, and THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE This office is not unmindful that in (sic) the Treaty of Paris for
hence a likelihood of confusion, because of the plaintiff’s long use and CONTEXT OF THE PARIS CONVENTION IN THIS CASE SINCE WINES AND the Protection of Intellectual Property regarding well-known
extensive advertising of its mark and placed great emphasis on the fact CIGARETTES ARE NOT IDENTICAL OR SIMILAR GOODS marks and possible application thereof in this case. Petitioner,
that the defendant used the trademark ‘Johnnie Walker with full as this office sees it, is trying to seek refuge under its protective
knowledge of its fame and reputation and with the intention of taking First, the records bear out that most of the trademark registrations took place mantle, claiming that the subject mark is well known in this
advantage thereof.’ John Walker & Sons, 124 F. Supp. At 256; see in the late 1980s and the 1990s, that is, after Tobacco Industries’ use of the country at the time the then application of NSR Rubber was
Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q. GALLO cigarette trademark in 1973 and petitioners’ use of the same mark in filed.
306, 307 (1959) (holding that the decision in John Walker & Sons was 1984.
‘merely the law on the particular case based upon its own peculiar However, the then Minister of Trade and Industry, the Hon.
facts’); see also Alfred Dunhill, 350 F. Supp. At 1363 (defendant’s GALLO wines and GALLO cigarettes are neither the same, identical, similar nor Roberto V. Ongpin, issued a memorandum dated 25 October
adoption of ‘Dunhill’ mark was not innocent). However, in Schenley, the related goods, a requisite element under both the Trademark Law and the 1983 to the Director of Patents, a set of guidelines in the
court noted that the relation between tobacco and whiskey products is Paris Convention. implementation of Article 6bis of the Treaty of Paris. These
significant where a widely known arbitrary mark has long been used for conditions are:
diversified products emanating from a single source and a newcomer Second, the GALLO trademark cannot be considered a strong and distinct
seeks to use the same mark on unrelated goods. Schenley, 427 F.2d. at mark in the Philippines. Respondents do not dispute the documentary a) the mark must be internationally known;
785. Significantly, in Schenley, the court looked at the industry practice evidence that aside from Gallo Winery’s GALLO trademark registration, the b) the subject of the right must be a trademark, not a
and the facts of the case in order to determine the nature and extent of Bureau of Patents, Trademarks and Technology Transfer also issued on patent or copyright or anything else;
the relationship between the mark on the tobacco product and the mark September 4, 1992 Certificate of Registration No. 53356 under the Principal c) the mark must be for use in the same or similar kinds of
on the alcohol product. Register approving Productos Alimenticios Gallo, S.A’s April 19, 1990 goods; and
application for GALLO trademark registration and use for its "noodles, d) the person claiming must be the owner of the mark (The
The record here establishes conclusively that IDV has never advertised prepared food or canned noodles, ready or canned sauces for noodles, Parties Convention Commentary on the Paris Convention.
BAILEYS liqueurs in conjunction with tobacco or tobacco accessory semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream, Article by Dr. Bogsch, Director General of the World
products and that IDV has no intent to do so. And, unlike the defendant honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species Intellectual Property Organization, Geneva, Switzerland,
in Dunhill, S & M Brands does not market bar accessories, or liqueur and ice."122 1985)’
related products, with its cigarettes. The advertising and promotional
materials presented a trial in this action demonstrate a complete lack of Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha From the set of facts found in the records, it is ruled that the
affiliation between the tobacco and liqueur products bearing the marks vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO" cannot be Petitioner failed to comply with the third requirement of the
here at issue. considered a "well-known" mark within the contemplation and protection of said memorandum that is the mark must be for use in the
same or similar kinds of goods. The Petitioner is using the

7
 mark "CANON" for products belonging to class 2 (paints, trademark was filed with the Bureau of Patents, Trademarks and Technology
chemical products) while the Respondent is using the same (c) Any person who shall make any false statement in the course of Transfer on June 20, 1983, but was approved only on September 12, 1988,
mark for sandals (class 25). trade or who shall commit any other act contrary to good faith of a per Registration No. 41165. From 1981 to about 1988, Pearl and Dean
nature calculated to discredit the goods, business or services of employed the services of Metro Industrial Services to manufacture its
Hence, Petitioner's contention that its mark is well-known at another. advertising displays.
the time the Respondent filed its application for the same
mark should fail." (Emphasis supplied.) The universal test question is whether the public is likely to be deceived. Sometime in 1985, Pearl and Dean negotiated with defendant-appellant
Nothing less than conduct tending to pass off one man’s goods or business as Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City
Consent of the Registrant and Other air, Just and Equitable that of another constitutes unfair competition. Actual or probable deception North Edsa. Since SM City North Edsa was under construction at that time,
Considerations and confusion on the part of customers by reason of defendant’s practices SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and
must always appear.125 On this score, we find that petitioners never Dean agreed. On September 11, 1985, Pearl and Deans General Manager,
Each trademark infringement case presents a unique problem which must be attempted to pass off their cigarettes as those of respondents. There is no Rodolfo Vergara, submitted for signature the contracts covering SM Cubao
answered by weighing the conflicting interests of the litigants.124 evidence of bad faith or fraud imputable to petitioners in using their GALLO and SM Makati to SMIs Advertising Promotions and Publicity Division
cigarette mark. Manager, RamonlitoAbano. Only the contract for SM Makati, however, was
Respondents claim that GALLO wines and GALLO cigarettes flow through the All told, after applying all the tests provided by the governing laws as well as returned signed. On October 4, 1985, Vergara wrote Abano inquiring about
same channels of trade, that is, retail trade. If respondents’ assertion is true, those recognized by jurisprudence, we conclude that petitioners are not the other contract and reminding him that their agreement for installation of
then both goods co-existed peacefully for a considerable period of time. It liable for trademark infringement, unfair competition or damages. light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI
took respondents almost 20 years to know about the existence of GALLO did not bother to reply.
cigarettes and sue petitioners for trademark infringement. Given, on one WHEREFORE, finding the petition for review meritorious, the same is hereby
hand, the long period of time that petitioners were engaged in the GRANTED. The questioned decision and resolution of the Court of Appeals in Instead, in a letter dated January 14, 1986, SMIs house counsel informed
manufacture, marketing, distribution and sale of GALLO cigarettes and, on CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, Pearl and Dean that it was rescinding the contract for SM Makati due to non-
the other, respondents’ delay in enforcing their rights (not to mention 1999 order of the Regional Trial Court of Makati, Branch 57 in Civil Case No. performance of the terms thereof. In his reply dated February 17, 1986,
implied consent, acquiescence or negligence) we hold that equity, justice and 93-850 are hereby REVERSED and SET ASIDE and the complaint against Vergara protested the unilateral action of SMI, saying it was without basis. In
fairness require us to rule in favor of petitioners. The scales of conscience and petitioners DISMISSED. the same letter, he pushed for the signing of the contract for SM Cubao.
reason tip far more readily in favor of petitioners than respondents.
Costs against respondents. Two years later, Metro Industrial Services, the company formerly contracted
Moreover, there exists no evidence that petitioners employed malice, bad SO ORDERED. by Pearl and Dean to fabricate its display units, offered to construct light
faith or fraud, or that they intended to capitalize on respondents’ goodwill in boxes for Shoemarts chain of stores. SMI approved the proposal and ten (10)
adopting the GALLO mark for their cigarettes which are totally unrelated to light boxes were subsequently fabricated by Metro Industrial for SMI. After its
respondents’ GALLO wines. Thus, we rule out trademark infringement on the [G.R. No. 148222. August 15, 2003] contract with Metro Industrial was terminated, SMI engaged the services of
part of petitioners. PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART, EYD Rainbow Advertising Corporation to make the light boxes. Some 300
INCORPORATED, and NORTH EDSA units were fabricated in 1991.These were delivered on a staggered basis and
PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION MARKETING, INCORPORATED, respondents. installed at SM Megamall and SM City.

Under Section 29 of the Trademark Law, any person who employs deception DECISION Sometime in 1989, Pearl and Dean, received reports that exact copies of its
or any other means contrary to good faith by which he passes off the goods CORONA, J.: light boxes were installed at SM City and in the fastfood section of SM
manufactured by him or in which he deals, or his business, or services for Cubao. Upon investigation, Pearl and Dean found out that aside from the two
those of the one having established such goodwill, or who commits any acts In the instant petition for review on certiorari under Rule 45 of the (2) reported SM branches, light boxes similar to those it manufactures were
calculated to produce said result, is guilty of unfair competition. It includes Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, also installed in two (2) other SM stores. It further discovered that defendant-
the following acts: 2001 decision[1] of the Court of Appeals reversing the October 31, 1996 appellant North Edsa Marketing Inc. (NEMI), through its marketing arm,
decision[2] of the Regional Trial Court of Makati, Branch 133, in Civil Case No. Prime Spots Marketing Services, was set up primarily to sell advertising space
(a) Any person, who in selling his goods shall give them the general 92-516 which declared private respondents Shoemart Inc. (SMI) and North in lighted display units located in SMIs different branches. Pearl and Dean
appearance of goods of another manufacturer or dealer, either as to Edsa Marketing Inc. (NEMI) liable for infringement of trademark and noted that NEMI is a sister company of SMI.
the goods themselves or in the wrapping of the packages in which copyright, and unfair competition.
they are contained, or the devices or words thereon, or in any other In the light of its discoveries, Pearl and Dean sent a letter dated December 11,
feature of their appearance, which would be likely to influence FACTUAL ANTECEDENTS 1991 to both SMI and NEMI enjoining them to cease using the subject light
purchasers to believe that the goods offered are those of a boxes and to remove the same from SMIs establishments. It also demanded
manufacturer or dealer other than the actual manufacturer or The May 22, 2001 decision of the Court of Appeals[3] contained a the discontinued use of the trademark Poster Ads, and the payment to Pearl
dealer, or who otherwise clothes the goods with such appearance as summary of this dispute: and Dean of compensatory damages in the amount of Twenty Million Pesos
shall deceive the public and defraud another of his legitimate trade, (P20,000,000.00).
or any subsequent vendor of such goods or any agent of any vendor Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
engaged in selling such goods with a like purpose; manufacture of advertising display units simply referred to as light Upon receipt of the demand letter, SMI suspended the leasing of two
boxes. These units utilize specially printed posters sandwiched between hundred twenty-four (224) light boxes and NEMI took down its
(b) Any person who by any artifice, or device, or who employs any plastic sheets and illuminated with back lights. Pearl and Dean was able to advertisements for Poster Ads from the lighted display units in SMIs
other means calculated to induce the false belief that such person is secure a Certificate of Copyright Registration dated January 20, 1981 over stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl
offering the services of another who has identified such services in these illuminated display units. The advertising light boxes were marketed and Dean filed this instant case for infringement of trademark and copyright,
the mind of the public; under the trademark Poster Ads. The application for registration of the unfair competition and damages.

8
 On appeal, however, the Court of Appeals reversed the trial court: 20 of Republic Act 166, as amended, otherwise known as the Trademark Law,
In denying the charges hurled against it, SMI maintained that it independently which reads:
developed its poster panels using commonly known techniques and available Since the light boxes cannot, by any stretch of the imagination, be considered
technology, without notice of or reference to Pearl and Deans copyright. SMI as either prints, pictorial illustrations, advertising copies, labels, tags or box SEC. 20. Certification of registration prima facie evidence of validity.- A
noted that the registration of the mark Poster Ads was only for stationeries wraps, to be properly classified as a copyrightable class O work, we have to certificate of registration of a mark or trade-name shall be prima
such as letterheads, envelopes, and the like. Besides, according to SMI, the agree with SMI when it posited that what was copyrighted were the technical facie evidence of the validity of the registration, the registrants ownership of
word Poster Ads is a generic term which cannot be appropriated as a drawings only, and not the light boxes themselves, thus: the mark or trade-name, and of the registrants exclusive right to use the
trademark, and, as such, registration of such mark is invalid. It also stressed same in connection with the goods, business or services specified in the
that Pearl and Dean is not entitled to the reliefs prayed for in its complaint 42. When a drawing is technical and depicts a utilitarian object, a copyright certificate, subject to any conditions and limitations stated therein.
since its advertising display units contained no copyright notice, in violation of over the drawings like plaintiff-appellants will not extend to the actual (underscoring supplied)
Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action object. It has so been held under jurisprudence, of which the leading case
against it and that the suit was purely intended to malign SMIs good is Baker vs. Selden(101 U.S. 841 (1879). In that case, Selden had obtained a The records show that on June 20, 1983, Pearl and Dean applied for the
name. On this basis, SMI, aside from praying for the dismissal of the case, also copyright protection for a book entitled Seldens Condensed Ledger or registration of the trademark Poster Ads with the Bureau of Patents,
counterclaimed for moral, actual and exemplary damages and for the Bookkeeping Simplified which purported to explain a new system of Trademarks, and Technology Transfer. Said trademark was recorded in the
cancellation of Pearl and Deans Certification of Copyright Registration No. PD- bookkeeping. Included as part of the book were blank forms and illustrations Principal Register on September 12, 1988 under Registration No. 41165
R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. consisting of ruled lines and headings, specially designed for use in covering the following products: stationeries such as letterheads, envelopes
4165 dated September 12, 1988. connection with the system explained in the work. These forms showed the and calling cards and newsletters.
entire operation of a day or a week or a month on a single page, or on two
NEMI, for its part, denied having manufactured, installed or used any pages following each other. The defendant Baker then produced forms which With this as factual backdrop, we see no legal basis to the finding of liability
advertising display units, nor having engaged in the business of advertising. It were similar to the forms illustrated in Seldens copyrighted books. The Court on the part of the defendants-appellants for their use of the words Poster
repleaded SMIs averments, admissions and denials and prayed for similar held that exclusivity to the actual forms is not extended by a copyright. The Ads, in the advertising display units in suit. Jurisprudence has interpreted
reliefs and counterclaims as SMI. reason was that to grant a monopoly in the underlying art when no Section 20 of the Trademark Law as an implicit permission to a manufacturer
examination of its novelty has ever been made would be a surprise and a to venture into the production of goods and allow that producer to
The RTC of Makati City decided in favor of P & D: fraud upon the public; that is the province of letters patent, not of copyright. appropriate the brand name of the senior registrant on goods other than
And that is precisely the point. No doubt aware that its alleged original design those stated in the certificate of registration.The Supreme Court further
Wherefore, defendants SMI and NEMI are found jointly and severally liable would never pass the rigorous examination of a patent application, plaintiff- emphasized the restrictive meaning of Section 20 when it stated, through
for infringement of copyright under Section 2 of PD 49, as amended, and appellant fought to foist a fraudulent monopoly on the public by conveniently Justice Conrado V. Sanchez, that:
infringement of trademark under Section 22 of RA No. 166, as amended, and resorting to a copyright registration which merely employs a recordal system
are hereby penalized under Section 28 of PD 49, as amended, and Sections 23 without the benefit of an in-depth examination of novelty. Really, if the certificate of registration were to be deemed as including goods
and 24 of RA 166, as amended. Accordingly, defendants are hereby directed: not specified therein, then a situation may arise whereby an applicant may be
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough tempted to register a trademark on any and all goods which his mind may
(1) to pay plaintiff the following damages: Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had conceive even if he had never intended to use the trademark for the said
(a) actual damages - P16,600,000.00, obtained a copyright over an unpublished drawing entitled Bridge Approach goods. We believe that such omnibus registration is not contemplated by our
representing profits the drawing showed a novel bridge approach to unsnarl traffic congestion. Trademark Law.
derived by defendants The defendant constructed a bridge approach which was alleged to be an
as a result of infringe- infringement of the new design illustrated in plaintiffs drawings. In this case it While we do not discount the striking similarity between Pearl and Deans
ment of plaintiffs copyright was held that protection of the drawing does not extend to the unauthorized registered trademark and defendants-appellants Poster Ads design, as well as
from 1991 to 1992 duplication of the object drawn because copyright extends only to the the parallel use by which said words were used in the parties respective
(b) moral damages - P1,000.000.00 description or expression of the object and not to the object itself. It does not advertising copies, we cannot find defendants-appellants liable for
(c) exemplary damages - P1,000,000.00 prevent one from using the drawings to construct the object portrayed in the infringement of trademark. Poster Ads was registered by Pearl and Dean for
(d) attorneys fees - P1,000,000.00 drawing. specific use in its stationeries, in contrast to defendants-appellants who used
plus the same words in their advertising display units. Why Pearl and Dean limited
(e) costs of suit; In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz the use of its trademark to stationeries is simply beyond us. But, having
(2) to deliver, under oath, for impounding in the National Library, all Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright already done so, it must stand by the consequence of the registration which it
light boxes of SMI which were fabricated by Metro Industrial infringement when one who, without being authorized, uses a copyrighted had caused.
Services and EYD Rainbow Advertising Corporation; architectural plan to construct a structure. This is because the copyright does
not extend to the structures themselves. xxx xxx xxx
(3) to deliver, under oath, to the National Library, all filler-posters We are constrained to adopt the view of defendants-appellants that the
using the trademark Poster Ads, for destruction; and In fine, we cannot find SMI liable for infringing Pearl and Deans copyright words Poster Ads are a simple contraction of the generic term poster
over the technical drawings of the latters advertising display units. advertising. In the absence of any convincing proof that Poster Ads has
(4) to permanently refrain from infringing the copyright on plaintiffs acquired a secondary meaning in this jurisdiction, we find that Pearl and
light boxes and its trademark Poster Ads. xxx xxx xxx Deans exclusive right to the use of Poster Ads is limited to what is written in
The Supreme Court trenchantly held in Faberge, Incorporated vs. its certificate of registration, namely, stationeries.
Defendants counterclaims are hereby ordered dismissed for lack of Intermediate Appellate Court that the protective mantle of the Trademark
merit. Law extends only to the goods used by the first user as specified in the Defendants-appellants cannot thus be held liable for infringement of the
SO ORDERED.[4] certificate of registration, following the clear mandate conveyed by Section trademark Poster Ads.

9
There being no finding of either copyright or trademark infringement on the Rainbow Advertising for its own account. Obviously, petitioners position was infringement of petitioners copyright over the technical drawings? We do not
part of SMI and NEMI, the monetary award granted by the lower court to premised on its belief that its copyright over the engineering drawings think so.
Pearl and Dean has no leg to stand on. extended ipso facto to the light boxes depicted or illustrated in said
xxx xxx xxx drawings. In ruling that there was no copyright infringement, the Court of During the trial, the president of P & D himself admitted that the light
Appeals held that the copyright was limited to the drawings alone and not to box was neither a literary not an artistic work but an engineering or
WHEREFORE, premises considered, the assailed decision is REVERSED and SET the light box itself. We agree with the appellate court. marketing invention.[10] Obviously, there appeared to be some confusion
ASIDE, and another is rendered DISMISSING the complaint and counterclaims regarding what ought or ought not to be the proper subjects of copyrights,
in the above-entitled case for lack of merit.[5] First, petitioners application for a copyright certificate as well as patents and trademarks. In the leading case of Kho vs. Court of Appeals,[11] we
Copyright Certificate No. PD-R2588 issued by the National Library on January ruled that these three legal rights are completely distinct and separate from
Dissatisfied with the above decision, petitioner P & D filed the instant 20, 1981 clearly stated that it was for a class O work under Section 2 (O) of PD one another, and the protection afforded by one cannot be used
petition assigning the following errors for the Courts consideration: 49 (The Intellectual Property Decree) which was the statute then interchangeably to cover items or works that exclusively pertain to the
prevailing. Said Section 2 expressly enumerated the works subject to others:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO copyright: Trademark, copyright and patents are different intellectual property rights
COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS that cannot be interchanged with one another. A trademark is any visible sign
SM AND NEMI; SEC. 2. The rights granted by this Decree shall, from the moment of creation, capable of distinguishing the goods (trademark) or services (service mark) of
subsist with respect to any of the following works: an enterprise and shall include a stamped or marked container of goods. In
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO relation thereto, a trade name means the name or designation identifying or
INFRINGEMENT OF PEARL & DEANS TRADEMARK POSTER ADS WAS x xx xxx xxx distinguishing an enterprise. Meanwhile, the scope of a copyright is confined
COMMITTED BY RESPONDENTS SM AND NEMI; (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box to literary and artistic workswhich are original intellectual creations in the
wraps; literary and artistic domain protected from the moment of their
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE creation. Patentable inventions, on the other hand, refer to any technical
AWARD OF THE TRIAL COURT, DESPITE THE LATTERS FINDING, NOT x xx xxx xxx solution of a problem in any field of human activity which is new, involves an
DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS Although petitioners copyright certificate was entitled Advertising inventive step and is industrially applicable.
GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING Display Units (which depicted the box-type electrical devices), its claim of
CONTRACTS WITH PEARL & DEAN. copyright infringement cannot be sustained. ON THE ISSUE OF PATENT INFRINGEMENT

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING Copyright, in the strict sense of the term, is purely a statutory This brings us to the next point: if, despite its manufacture and
RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR right. Being a mere statutory grant, the rights are limited to what the statute commercial use of the light boxes without license from petitioner, private
ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEYS FEES AND confers. It may be obtained and enjoyed only with respect to the subjects and respondents cannot be held legally liable for infringement of P & Ds copyright
COSTS OF SUIT.[6] by the persons, and on terms and conditions specified in the over its technical drawings of the said light boxes, should they be liable
statute.[7] Accordingly, it can cover only the works falling within the statutory instead for infringement of patent? We do not think so either.
ISSUES enumeration or description.[8]
For some reason or another, petitioner never secured a patent for the
In resolving this very interesting case, we are challenged once again to P & D secured its copyright under the classification class O work. This light boxes. It therefore acquired no patent rights which could have protected
put into proper perspective four main concerns of intellectual property law being so, petitioners copyright protection extended only to the technical its invention, if in fact it really was. And because it had no patent, petitioner
patents, copyrights, trademarks and unfair competition arising from drawings and not to the light box itself because the latter was not at all in the could not legally prevent anyone from manufacturing or commercially using
infringement of any of the first three. We shall focus then on the following category of prints, pictorial illustrations, advertising copies, labels, tags and the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,[12] we
issues: box wraps. Stated otherwise, even as we find that P & D indeed owned a valid held that there can be no infringement of a patent until a patent has been
copyright, the same could have referred only to the technical drawings within issued, since whatever right one has to the invention covered by the
(1) if the engineering or technical drawings of an advertising display unit the category of pictorial illustrations. It could not have possibly stretched out patent arises alone from the grant of patent. x xx (A)n inventor has no
(light box) are granted copyright protection (copyright certificate of to include the underlying light box. The strict application[9] of the laws common law right to a monopoly of his invention. He has the right to make
registration) by the National Library, is the light box depicted in such enumeration in Section 2 prevents us from giving petitioner even a little use of and vend his invention, but if he voluntarily discloses it, such as by
engineering drawings ipso facto also protected by such copyright? leeway, that is, even if its copyright certificate was entitled Advertising offering it for sale, the world is free to copy and use it with impunity. A
Display Units. What the law does not include, it excludes, and for the good patent, however, gives the inventor the right to exclude all others. As a
(2) or should the light box be registered separately and protected by a reason: the light box was not a literary or artistic piece which could be patentee, he has the exclusive right of making, selling or using the
patent issued by the Bureau of Patents Trademarks and Technology copyrighted under the copyright law. And no less clearly, neither could the invention.[13] On the assumption that petitioners advertising units were
Transfer (now Intellectual Property Office) in addition to the copyright of lack of statutory authority to make the light box copyrightable be remedied patentable inventions, petitioner revealed them fully to the public by
the engineering drawings? by the simplistic act of entitling the copyright certificate issued by the submitting the engineering drawings thereof to the National Library.
National Library as Advertising Display Units.
(3) can the owner of a registered trademark legally prevent others from To be able to effectively and legally preclude others from copying and
using such trademark if it is a mere abbreviation of a term descriptive of In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to profiting from the invention, a patent is a primordial requirement. No patent,
his goods, services or business? the public without license from P & D, then no doubt they would have been no protection. The ultimate goal of a patent system is to bring new designs
guilty of copyright infringement. But this was not the case. SMIs and NEMIs and technologies into the public domain through disclosure.[14] Ideas, once
ON THE ISSUE OF COPYRIGHT INFRINGEMENT acts complained of by P & D were to have units similar or identical to the light disclosed to the public without the protection of a valid patent, are subject to
box illustrated in the technical drawings manufactured by Metro and EYD appropriation without significant restraint.[15]
Petitioner P & Ds complaint was that SMI infringed on its copyright Rainbow Advertising, for leasing out to different advertisers.Was this an
over the light boxes when SMI had the units manufactured by Metro and EYD

10
 On one side of the coin is the public which will benefit from new ideas; before the IPO and the public the petitioner would be protected for 50 the book explaining it. The copyright of a book on bookkeeping cannot
on the other are the inventors who must be protected. As held in Bauer &Cie years. This situation could not have been the intention of the law. secure the exclusive right to make, sell and use account books prepared upon
vs. ODonnel,[16] The act secured to the inventor the exclusive right to make the plan set forth in such book.Whether the art might or might not have been
use, and vend the thing patented, and consequently to prevent others from In the oft-cited case of Baker vs. Selden[21], the United States Supreme patented, is a question, which is not before us. It was not patented, and is
exercising like privileges without the consent of the patentee. It was passed Court held that only the expression of an idea is protected by copyright, not open and free to the use of the public. And, of course, in using the art, the
for the purpose of encouraging useful invention and promoting new and the idea itself. In that case, the plaintiff held the copyright of a book which ruled lines and headings of accounts must necessarily be used as incident to
useful inventions by the protection and stimulation given to inventive genius, expounded on a new accounting system he had developed. The publication it.
and was intended to secure to the public, after the lapse of the exclusive illustrated blank forms of ledgers utilized in such a system. The defendant
privileges granted the benefit of such inventions and improvements. reproduced forms similar to those illustrated in the plaintiffs copyrighted The plausibility of the claim put forward by the complainant in this case arises
book. The US Supreme Court ruled that: from a confusion of ideas produced by the peculiar nature of the art
The law attempts to strike an ideal balance between the two interests: described in the books, which have been made the subject of copyright. In
There is no doubt that a work on the subject of book-keeping, though only describing the art, the illustrations and diagrams employed happened to
(The p)atent system thus embodies a carefully crafted bargain for explanatory of well known systems, may be the subject of a copyright; but, correspond more closely than usual with the actual work performed by the
encouraging the creation and disclosure of new useful and non-obvious then, it is claimed only as a book. x xx. But there is a clear distinction between operator who uses the art. x x x The description of the art in a book, though
advances in technology and design, in return for the exclusive right to the books, as such, and the art, which it is, intended to illustrate. The mere entitled to the benefit of copyright, lays no foundation for an exclusive
practice the invention for a number of years. The inventor may keep his statement of the proposition is so evident that it requires hardly any claim to the art itself. The object of the one is explanation; the object of the
invention secret and reap its fruits indefinitely. In consideration of its argument to support it. The same distinction may be predicated of every other is use. The former may be secured by copyright. The latter can only be
disclosure and the consequent benefit to the community, the patent is other art as well as that of bookkeeping. A treatise on the composition and secured, if it can be secured at all, by letters patent. (underscoring supplied)
granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the use of medicines, be they old or new; on the construction and use of ploughs
expiration of that period, the knowledge of the invention inures to the or watches or churns; or on the mixture and application of colors for painting ON THE ISSUE OF TRADEMARK INFRINGEMENT
people, who are thus enabled to practice it and profit by its use.[17] 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 This issue concerns the use by respondents of the mark Poster Ads
The patent law has a three-fold purpose: first, patent law seeks to that the copyright of the treatise would give the exclusive right to the art or which petitioners president said was a contraction of poster advertising. P &
foster and reward invention; second, it promotes disclosures of inventions to manufacture described therein. The copyright of the book, if not pirated from D was able to secure a trademark certificate for it, but one where the goods
stimulate further innovation and to permit the public to practice the other works, would be valid without regard to the novelty or want of novelty specified were stationeries such as letterheads, envelopes, calling cards and
invention once the patent expires; third, the stringent requirements for of its subject matter. The novelty of the art or thing described or explained newsletters.[22] Petitioner admitted it did not commercially engage in or
patent protection seek to ensure that ideas in the public domain remain has nothing to do with the validity of the copyright. To give to the author of market these goods. On the contrary, it dealt in electrically operated backlit
there for the free use of the public.[18] the book an exclusive property in the art described therein, when no advertising units and the sale of advertising spaces thereon, which, however,
examination of its novelty has ever been officially made, would be were not at all specified in the trademark certificate.
It is only after an exhaustive examination by the patent office that a a surprise and a fraud upon the public. That is the province of letters patent,
patent is issued. Such an in-depth investigation is required because in not of copyright. The claim to an invention of discovery of an art or Under the circumstances, the Court of Appeals correctly cited Faberge
rewarding a useful invention, the rights and welfare of the community must manufacture must be subjected to the examination of the Patent Office Inc. vs. Intermediate Appellate Court,[23] where we, invoking Section 20 of the
be fairly dealt with and effectively guarded. To that end, the prerequisites to before an exclusive right therein can be obtained; and a patent from the old Trademark Law, ruled that the certificate of registration issued by the
obtaining a patent are strictly observed and when a patent is issued, the government can only secure it. Director of Patents can confer (upon petitioner) the exclusive right to use its
limitations on its exercise are equally strictly enforced. To begin with, a own symbol only to those goods specified in the certificate, subject to any
genuine invention or discovery must be demonstrated lest in the constant The difference between the two things, letters patent and copyright, may be conditions and limitations specified in the certificate x xx. One who has
demand for new appliances, the heavy hand of tribute be laid on each slight illustrated by reference to the subjects just enumerated. Take the case of adopted and used a trademark on his goods does not prevent the adoption
technological advance in art.[19] medicines. Certain mixtures are found to be of great value in the healing and use of the same trademark by others for products which are of a
art. If the discoverer writes and publishes a book on the subject (as regular different description.[24] Faberge, Inc. was correct and was in fact recently
There is no such scrutiny in the case of copyrights nor any notice physicians generally do), he gains no exclusive right to the manufacture and reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.[25]
published before its grant to the effect that a person is claiming the creation sale of the medicine; he gives that to the public. If he desires to acquire such
of a work. The law confers the copyright from the moment of creation[20] and exclusive right, he must obtain a patent for the mixture as a new art, Assuming arguendo that Poster Ads could validly qualify as a
the copyright certificate is issued upon registration with the National Library manufacture or composition of matter. He may copyright his book, if he trademark, the failure of P & D to secure a trademark registration for specific
of a sworn ex-parte claim of creation. pleases; but that only secures to him the exclusive right of printing and use on the light boxes meant that there could not have been any trademark
publishing his book. So of all other inventions or discoveries. infringement since registration was an essential element thereof.
Therefore, not having gone through the arduous examination for
patents, the petitioner cannot exclude others from the manufacture, sale or The copyright of a book on perspective, no matter how many drawings and ON THE ISSUE OF UNFAIR COMPETITION
commercial use of the light boxes on the sole basis of its copyright certificate illustrations it may contain, gives no exclusive right to the modes of drawing
over the technical drawings. described, though they may never have been known or used before. By If at all, the cause of action should have been for unfair competition, a
publishing the book without getting a patent for the art, the latter is given to situation which was possible even if P & D had no registration.[26] However,
Stated otherwise, what petitioner seeks is exclusivity without any the public. while the petitioners complaint in the RTC also cited unfair competition, the
opportunity for the patent office (IPO) to scrutinize the light boxs eligibility as trial court did not find private respondents liable therefor. Petitioner
a patentable invention. The irony here is that, had petitioner secured a patent xxx did not appeal this particular point; hence, it cannot now revive its claim of
instead, its exclusivity would have been for 17 years only. But through the Now, whilst no one has a right to print or publish his book, or any material unfair competition.
simplified procedure of copyright-registration with the National Library part thereof, as a book intended to convey instruction in the art, any person
without undergoing the rigor of defending the patentability of its invention may practice and use the art itself which he has described and illustrated But even disregarding procedural issues, we nevertheless cannot hold
therein. The use of the art is a totally different thing from a publication of respondents guilty of unfair competition.

11
 On December 20, 1991, petitioner Elidad C. Kho filed a complaint for prohibiting forum shopping. According to the petitioner, the respondents did
By the nature of things, there can be no unfair competition under the injunction and damages with a prayer for the issuance of a writ of preliminary not state the docket number of the civil case in the caption of their petition
law on copyrights although it is applicable to disputes over the use of injunction, docketed as Civil Case No. Q-91-10926, against the respondents and, more significantly, they did not include therein a certificate of non-
trademarks. Even a name or phrase incapable of appropriation as a Summerville General Merchandising and Company (Summerville, for brevity) forum shopping. The respondents opposed the petition and submitted to the
trademark or tradename may, by long and exclusive use by a business (such and Ang TiamChay. appellate court a certificate of non-forum shopping for their petition.
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 The petitioners complaint alleges that petitioner, doing business under On May 24, 1993, the appellate court rendered a Decision in CA-G.R.
competition.[27] In this case, there was no evidence that P & Ds use of Poster the name and style of KEC Cosmetics Laboratory, is the registered owner of SP No. 27803 ruling in favor of the respondents, the dispositive portion of
Ads was distinctive or well-known. As noted by the Court of Appeals, the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown which reads:
petitioners expert witnesses himself had testified that Poster Ads was too by Certificates of Copyright Registration No. 0-1358 and No. 0-3678; that she
generic a name. So it was difficult to identify it with any company, honestly also has patent rights on Chin Chun Su & Device and Chin Chun Su for WHEREFORE, the petition is hereby given due course and the orders of
speaking.[28] This crucial admission by its own expert witness that Poster Ads medicated cream after purchasing the same from Quintin Cheng, the respondent court dated February 10, 1992 and March 19, 1992 granting the
could not be associated with P & D showed that, in the mind of the public, registered owner thereof in the Supplemental Register of the Philippine writ of preliminary injunction and denying petitioners motion for
the goods and services carrying the trademark Poster Ads could not be Patent Office on February 7, 1980 under Registration Certificate No. 4529; reconsideration are hereby set aside and declared null and void. Respondent
distinguished from the goods and services of other entities. that respondent Summerville advertised and sold petitioners cream products court is directed to forthwith proceed with the trial of Civil Case No. Q-91-
under the brand name Chin Chun Su, in similar containers that petitioner 10926 and resolve the issue raised by the parties on the merits.
This fact also prevented the application of the doctrine of secondary uses, thereby misleading the public, and resulting in the decline in the
meaning. Poster Ads was generic and incapable of being used as a trademark petitioners business sales and income; and, that the respondents should be SO ORDERED.[5]
because it was used in the field of poster advertising, the very business enjoined from allegedly infringing on the copyrights and patents of the
engaged in by petitioner. Secondary meaning means that a word or phrase petitioner. In granting the petition, the appellate court ruled that:
originally incapable of exclusive appropriation with reference to an article in
the market (because it is geographically or otherwise descriptive) might The respondents, on the other hand, alleged as their defense that The registration of the trademark or brandname Chin Chun Su by KEC with
nevertheless have been used for so long and so exclusively by one producer Summerville is the exclusive and authorized importer, re-packer and the supplemental register of the Bureau of Patents, Trademarks and
with reference to his article that, in the trade and to that branch of the distributor of Chin Chun Su products manufactured by Shun Yi Factory of Technology Transfer cannot be equated with registration in the principal
purchasing public, the word or phrase has come to mean that the article was Taiwan; that the said Taiwanese manufacturing company authorized register, which is duly protected by the Trademark Law.
his property.[29] The admission by petitioners own expert witness that he Summerville to register its trade name Chin Chun Su Medicated Cream with
himself could not associate Poster Ads with petitioner P & D because it was the Philippine Patent Office and other appropriate governmental agencies; xxx xxx xxx
too generic definitely precluded the application of this exception. that KEC Cosmetics Laboratory of the petitioner obtained the copyrights As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
through misrepresentation and falsification; and, that the authority of
Having discussed the most important and critical issues, we see no Quintin Cheng, assignee of the patent registration certificate, to distribute Registration in the Supplemental Register, therefore, serves as notice that the
need to belabor the rest. and market Chin Chun Su products in the Philippines had already been registrant is using or has appropriated the trademark. By the very fact that
terminated by the said Taiwanese Manufacturing Company. the trademark cannot as yet be on guard and there are certain defects, some
All told, the Court finds no reversible error committed by the Court of obstacles which the use must still overcome before he can claim legal
Appeals when it reversed the Regional Trial Court of Makati City. After due hearing on the application for preliminary injunction, the ownership of the mark or ask the courts to vindicate his claims of an exclusive
trial court granted the same in an Order dated February 10, 1992, the right to the use of the same. It would be deceptive for a party with nothing
WHEREFORE, the petition is hereby DENIED and the decision of the dispositive portion of which reads: more than a registration in the Supplemental Register to posture before
Court of Appeals dated May 22, 2001 is AFFIRMED in toto. courts of justice as if the registration is in the Principal Register.
SO ORDERED. ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under
the style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby The reliance of the private respondent on the last sentence of the Patent
[G.R. No. 115758. March 19, 2002] granted. Consequentially, plaintiff is required to file with the Court a bond office action on application Serial No. 30954 that registrants is presumed to
ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS executed to defendants in the amount of five hundred thousand pesos be the owner of the mark until after the registration is declared cancelled is,
LABORATORY, petitioner, vs. HON. COURT OF APPEALS, SUMMERVILLE (P500,000.00) to the effect that plaintiff will pay to defendants all damages therefore, misplaced and grounded on shaky foundation. The supposed
GENERAL MERCHANDISING and COMPANY, and ANG TIAM which defendants may sustain by reason of the injunction if the Court should presumption not only runs counter to the precept embodied in Rule 124 of
CHAY, respondents. finally decide that plaintiff is not entitled thereto. the Revised Rules of Practice before the Philippine Patent Office in Trademark
Cases but considering all the facts ventilated before us in the four
DECISION SO ORDERED.[3] interrelated petitions involving the petitioner and the respondent, it is devoid
DE LEON, JR., J.: of factual basis. As even in cases where presumption and precept may
The respondents moved for reconsideration but their motion for factually be reconciled, we have held that the presumption is rebuttable, not
Before us is a petition for review on certiorari of the Decision[1] dated reconsideration was denied by the trial court in an Order dated March 19, conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported).
May 24, 1993 of the Court of Appeals setting aside and declaring as null and 1992.[4] One may be declared an unfair competitor even if his competing trademark is
void the Orders[2] dated February 10, 1992 and March 19, 1992 of the registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana
Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ On April 24, 1992, the respondents filed a petition for certiorari with Co. v. chuaSeco& Co., 14 Phil 534).[6]
of preliminary injunction. 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. The petitioner filed a motion for reconsideration. This she followed
The facts of the case are as follows: After the respondents filed their reply and almost a month after petitioner with several motions to declare respondents in contempt of court for
submitted her comment, or on August 14 1992, the latter moved to dismiss publishing advertisements notifying the public of the promulgation of the
the petition for violation of Supreme Court Circular No. 28-91, a circular assailed decision of the appellate court and stating that genuine Chin Chun

12
Su products could be obtained only from Summerville General Merchandising a preliminary injunction order may be granted only when the application for final injunction in favor of petitioner in its decision rendered after trial on the
and Co. the issuance of the same shows facts entitling the applicant to the relief merits xxx the Court resolved to Dismiss the instant petition having been
demanded.[10] This is the reason why we have ruled that it must be shown rendered moot and academic. An injunction issued by the trial court after it
In the meantime, the trial court went on to hear petitioners complaint that the invasion of the right sought to be protected is material and has already made a clear pronouncement as to the plaintiffs right thereto,
for final injunction and damages. On October 22, 1993, the trial court substantial, that the right of complainant is clear and unmistakable, and, that that is, after the same issue has been decided on the merits, the trial court
rendered a Decision[7] barring the petitioner from using the trademark Chin there is an urgent and paramount necessity for the writ to prevent serious having appreciated the evidence presented, is proper, notwithstanding the
Chun Su and upholding the right of the respondents to use the same, but damage.[11] fact that the decision rendered is not yet final xxx. Being an ancillary remedy,
recognizing the copyright of the petitioner over the oval shaped container of the proceedings for preliminary injunction cannot stand separately or
her beauty cream. The trial court did not award damages and costs to any of In the case at bar, the petitioner applied for the issuance of a proceed independently of the decision rendered on the merit of the main
the parties but to their respective counsels were awarded Seventy-Five preliminary injunctive order on the ground that she is entitled to the use of case for injunction. The merit of the main case having been already
Thousand Pesos (P75,000.00) each as attorneys fees. The petitioner duly the trademark on Chin Chun Su and its container based on her copyright and determined in favor of the applicant, the preliminary determination of its
appealed the said decision to the Court of Appeals. patent over the same. We first find it appropriate to rule on whether the non-existence ceases to have any force and effect. (italics supplied)
copyright and patent over the name and container of a beauty cream product
On June 3, 1994, the Court of Appeals promulgated a would entitle the registrant to the use and ownership over the same to the La Vista categorically pronounced that the issuance of a final injunction
Resolution[8] denying the petitioners motions for reconsideration and for exclusion of others. renders any question on the preliminary injunctive order moot and academic
contempt of court in CA-G.R. SP No. 27803. despite the fact that the decision granting a final injunction is pending appeal.
Trademark, copyright and patents are different intellectual property Conversely, a decision denying the applicant-plaintiffs right to a final
Hence, this petition anchored on the following assignment of errors: rights that cannot be interchanged with one another. A trademark is any injunction, although appealed, renders moot and academic any objection to
I visible sign capable of distinguishing the goods (trademark) or services the prior dissolution of a writ of preliminary injunction.
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED (service mark) of an enterprise and shall include a stamped or marked
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF container of goods.[12] In relation thereto, a trade name means the name or The petitioner argues that the appellate court erred in not dismissing
JURISDICTION IN FAILING TO RULE ON PETITIONERS MOTION designation identifying or distinguishing an enterprise.[13] Meanwhile, the the petition for certiorari for non-compliance with the rule on forum
TO DISMISS. scope of a copyright is confined to literary and artistic works which are shopping. We disagree. First, the petitioner improperly raised the technical
II original intellectual creations in the literary and artistic domain protected objection of non-compliance with Supreme Court Circular No. 28-91 by filing
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED from the moment of their creation.[14] Patentable inventions, on the other a motion to dismiss the petition for certiorari filed in the appellate court. This
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF hand, refer to any technical solution of a problem in any field of human is prohibited by Section 6, Rule 66 of the Revised Rules of Civil Procedure
JURISDICTION IN REFUSING TO PROMPTLY RESOLVE activity which is new, involves an inventive step and is industrially which provides that (I)n petitions for certiorari before the Supreme Court and
PETITIONERS MOTION FOR RECONSIDERATION. applicable.[15] the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed.
III Before giving due course thereto, the court may require the respondents to
IN DELAYING THE RESOLUTION OF PETITIONERS MOTION FOR Petitioner has no right to support her claim for the exclusive use of the file their comment to, and not a motion to dismiss, the petition xxx (italics
RECONSIDERATION, THE HONORABLE COURT OF APPEALS subject trade name and its container. The name and container of a beauty supplied). Secondly, the issue was raised one month after petitioner had filed
DENIED PETITIONERS RIGHT TO SEEK TIMELY APPELLATE cream product are proper subjects of a trademark inasmuch as the same falls her answer/comment and after private respondent had replied thereto.
RELIEF AND VIOLATED PETITIONERS RIGHT TO DUE PROCESS. squarely within its definition. In order to be entitled to exclusively use the Under Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to
IV same in the sale of the beauty cream product, the user must sufficiently dismiss shall be filed within the time for but before filing the answer to the
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED prove that she registered or used it before anybody else did. The petitioners complaint or pleading asserting a claim. She therefore could no longer submit
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF copyright and patent registration of the name and container would not a motion to dismiss nor raise defenses and objections not included in the
JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS guarantee her the right to the exclusive use of the same for the reason that answer/comment she had earlier tendered. Thirdly, substantial justice and
IN CONTEMPT.[9] they are not appropriate subjects of the said intellectual rights. Consequently, equity require this Court not to revive a dissolved writ of injunction in favor of
a preliminary injunction order cannot be issued for the reason that the a party without any legal right thereto merely on a technical infirmity. The
The petitioner faults the appellate court for not dismissing the petition petitioner has not proven that she has a clear right over the said name and granting of an injunctive writ based on a technical ground rather than
on the ground of violation of Supreme Court Circular No. 28-91. Also, the container to the exclusion of others, not having proven that she has compliance with the requisites for the issuance of the same is contrary to the
petitioner contends that the appellate court violated Section 6, Rule 9 of the registered a trademark thereto or used the same before anyone did. primary objective of legal procedure which is to serve as a means to dispense
Revised Internal Rules of the Court of Appeals when it failed to rule on her justice to the deserving party.
motion for reconsideration within ninety (90) days from the time it is We cannot likewise overlook the decision of the trial court in the case
submitted for resolution. The appellate court ruled only after the lapse of for final injunction and damages. The dispositive portion of said decision held The petitioner likewise contends that the appellate court unduly
three hundred fifty-four (354) days, or on June 3, 1994. In delaying the that the petitioner does not have trademark rights on the name and delayed the resolution of her motion for reconsideration. But we find that
resolution thereof, the appellate court denied the petitioners right to seek container of the beauty cream product. The said decision on the merits of the petitioner contributed to this delay when she filed successive contentious
the timely appellate relief. Finally, petitioner describes as arbitrary the denial trial court rendered the issuance of the writ of a preliminary injunction moot motions in the same proceeding, the last of which was on October 27, 1993,
of her motions for contempt of court against the respondents. and academic notwithstanding the fact that the same has been appealed in necessitating counter-manifestations from private respondents with the last
the Court of Appeals. This is supported by our ruling in La Vista Association, one being filed on November 9, 1993. Nonetheless, it is well-settled that non-
We rule in favor of the respondents. Inc. v. Court of Appeals[16], to wit: 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
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, Considering that preliminary injunction is a provisional remedy which may be she suffered due to the alleged delay in resolving her motion for
one of the grounds for the issuance of a writ of preliminary injunction is a granted at any time after the commencement of the action and before reconsideration, we find that the said issue has likewise been rendered moot
proof that the applicant is entitled to the relief demanded, and the whole or judgment when it is established that the plaintiff is entitled to the relief and academic by our ruling that she has no right over the trademark and,
part of such relief consists in restraining the commission or continuance of demanded and only when his complaint shows facts entitling such reliefs xxx consequently, to the issuance of a writ of preliminary injunction.
the act or acts complained of, either for a limited period or perpetually. Thus, and it appearing that the trial court had already granted the issuance of a

13
 Finally, we rule that the Court of Appeals correctly denied the 1. a. Anti-Friction MPL- 153,941.40 5714 05/20/99 c. Dry Lubricant to be compared with Anti-
petitioners several motions for contempt of court. There is nothing Fluid 800 155,496.00 5888 06/20/99 Seize Compound[.]
contemptuous about the advertisements complained of which, as regards the MPL-
proceedings in CA-G.R. SP No. 27803 merely announced in plain and b. Excellent Rust 008 [Respondent] Pennswell, Inc. is given fifteen (15) days from
straightforward language the promulgation of the assailed Decision of the Corrosion (fake) receipt of this Order to submit to [petitioner] Air Philippines
appellate court. Moreover, pursuant to Section 4 of Rule 39 of the Revised 2. a. Contact Grease COG #2 115,236.00 5540 04/26/99 Corporation the chemical components of all the above-
Rules of Civil Procedure, the said decision nullifying the injunctive writ was b. Connector Grease CG 230,519.52 6327 08/05/99 mentioned products for chemical comparison/analysis.[12]
immediately executory. (fake)
3. a. Trixohtropic EPC 81,876.96 4582 01/29/99 Respondent sought reconsideration of the foregoing Order, contending that it
WHEREFORE, the petition is DENIED. The Decision and Resolution of Grease EPC#2 81,876.96 5446 04/21/99 cannot be compelled to disclose the chemical components sought because
the Court of Appeals dated May 24, 1993 and June 3, 1994, respectively, are b. Di-Electric the matter is confidential. It argued that what petitioner endeavored to
hereby AFFIRMED. With costs against the petitioner. Strength Protective inquire upon constituted a trade secret which respondent cannot be forced
SO ORDERED. Coating (fake) to divulge. Respondent maintained that its products are specialized
4. a. Dry Lubricant ASC-EP 87,346.52 5712 05/20/99 lubricants, and if their components were revealed, its business competitors
b. Anti-Seize ASC-EP 124,108.10 4763 & 02/16/99 & 0 may easily imitate and market the same types of products, in violation of its
THIRD DIVISION Compound (fake) 2000 5890 6/24/99 proprietary rights and to its serious damage and prejudice.
G.R. No. 172835 December 13, 2007
AIR PHILIPPINES CORPORATION vs. PENNSWELL, INC. The RTC gave credence to respondents reasoning, and reversed itself. It
According to petitioner, respondents products, namely Excellent Rust
issued an Order dated 30 June 2004, finding that the chemical components
Corrosion, Connector Grease, Electric Strength Protective Coating, and Anti-
DECISION are respondents trade secrets and are privileged in character.A priori, it
Seize Compound, are identical with its Anti-Friction Fluid, Contact Grease,
CHICO-NAZARIO, J.: rationalized:
Thixohtropic Grease, and Dry Lubricant, respectively. Petitioner asseverated
that had respondent been forthright about the identical character of the
Petitioner Air Philippines Corporation seeks, via the instant Petition for The Supreme Court held in the case of Chavez vs. Presidential
products, it would not have purchased the items complained of. Moreover,
Review under Rule 45 of the Rules of Court, the nullification of the 16 Commission on Good Government, 299 SCRA 744, p. 764, that the
petitioner alleged that when the purported fraud was discovered, a
February 2006 Decision[1] and the 25 May 2006 Resolution[2] of the Court of drafters of the Constitution also unequivocally affirmed that aside
conference was held between petitioner and respondent on 13 January 2000,
Appeals in CA-G.R. SP No. 86329, which affirmed the Order[3] dated 30 June from national security matters and intelligence information, trade or
whereby the parties agreed that respondent would return to petitioner the
2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in Civil Case industrial secrets (pursuant to the Intellectual Property Code and
amount it previously paid. However, petitioner was surprised when it
No. 00-561. other related laws) as well as banking transactions (pursuant to the
received a letter from the respondent, demanding payment of the amount
Secrecy of Bank Deposit Act) are also exempted from compulsory
of P449,864.94, which later became the subject of respondents Complaint for
Petitioner Air Philippines Corporation is a domestic corporation engaged in disclosure.
Collection of a Sum of Money against petitioner.
the business of air transportation services. On the other hand, respondent
Pennswell, Inc. was organized to engage in the business of manufacturing and Trade secrets may not be the subject of compulsory disclosure. By
During the pendency of the trial, petitioner filed a Motion to
selling industrial chemicals, solvents, and special lubricants. reason of [their] confidential and privileged character, ingredients or
Compel[10] respondent to give a detailed list of the ingredients and chemical
chemical components of the products ordered by this Court to be
components of the following products, to wit: (a) Contact Grease and
On various dates, respondent delivered and sold to petitioner sundry goods in disclosed constitute trade secrets lest [herein respondent] would
Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength Protective
trade, covered by Sales Invoices No. 8846,[4] 9105,[5] 8962,[6] and eventually be exposed to unwarranted business competition with
Coating; and (c) Dry Lubricant and Anti-Seize Compound.[11] It appears that
8963,[7] which correspond to Purchase Orders No. 6433, 6684, 6634 and others who may imitate and market the same kinds of products in
petitioner had earlier requested the Philippine Institute of Pure and Applied
6633, respectively. Under the contracts, petitioners total outstanding violation of [respondents] proprietary rights. Being privileged, the
Chemistry (PIPAC) for the latter to conduct a comparison of respondents
obligation amounted to P449,864.98 with interest at 14% per annum until the detailed list of ingredients or chemical components may not be the
goods.
amount would be fully paid. For failure of the petitioner to comply with its subject of mode of discovery under Rule 27, Section 1 of the Rules
obligation under said contracts, respondent filed a Complaint[8] for a Sum of of Court, which expressly makes privileged information an exception
On 15 March 2004, the RTC rendered an Order granting the petitioners
Money on 28 April 2000 with the RTC. from its coverage.[13]
motion. It disposed, thus:

In its Answer,[9] petitioner contended that its refusal to pay was not without Alleging grave abuse of discretion on the part of the RTC,
The Court directs [herein respondent] Pennswell, Inc. to give
valid and justifiable reasons. In particular, petitioner alleged that it was petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Court
[herein petitioner] Air Philippines Corporation[,] a detailed list of
defrauded in the amount of P592,000.00 by respondent for its previous sale with the Court of Appeals, which denied the Petition and affirmed the Order
the ingredients or chemical components of the following chemical
of four items, covered by Purchase Order No. 6626. Said items were dated 30 June 2004 of the RTC.
products:
misrepresented by respondent as belonging to a new line, but were in truth
and in fact, identical with products petitioner had previously purchased from The Court of Appeals ruled that to compel respondent to reveal in
a. Contact Grease to be compared with
respondent. Petitioner asserted that it was deceived by respondent which detail the list of ingredients of its lubricants is to disregard respondents rights
Connector Grease;
merely altered the names and labels of such goods. Petitioner specifically over its trade secrets. It was categorical in declaring that the chemical
identified the items in question, as follows: formulation of respondents products and their ingredients are embraced
b. Thixohtropic Grease to be
within the meaning of trade secrets. In disallowing the disclosure, the Court
compared with Di-Electric
Label/Description Item Amount P.O. Date of Appeals expounded, thus:
Strength Protective Coating;
No. and
The Supreme Court in Garcia v. Board of Investments (177 SCRA 374
[1989]) held that trade secrets and confidential, commercial and

14
 financial information are exempt from public scrutiny. This is reiterated In Cocoland Development Corporation v. National Labor Relations
in Chavez v. Presidential Commission on Good Government (299 SCRA WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH Commission,[23] the issue was the legality of an employees termination on the
744 [1998]) where the Supreme Court enumerated the kinds of PREVAILING LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING ground of unauthorized disclosure of trade secrets. The Court laid down the
information and transactions that are recognized as restrictions on or OF THE TRIAL COURT THAT THE CHEMICAL COMPONENTS OR rule that any determination by management as to the confidential nature of
privileges against compulsory disclosure. There, the Supreme Court INGREDIENTS OF RESPONDENTS PRODUCTS ARE TRADE SECRETS OR technologies, processes, formulae or other so-called trade secrets must have
explicitly stated that: INDUSTRIAL SECRETS THAT ARE NOT SUBJECT TO COMPULSORY a substantial factual basis which can pass judicial scrutiny. The Court rejected
DISCLOSURE.[15] the employers naked contention that its own determination as to what
The drafters of the Constitution also unequivocally affirmed that, aside constitutes a trade secret should be binding and conclusive upon the
from national security matters and intelligence information, trade or Petitioner seeks to convince this Court that it has a right to obtain the NLRC. As a caveat, the Court said that to rule otherwise would be to permit
industrial secrets (pursuant to the Intellectual Property Code and other chemical composition and ingredients of respondents products to conduct a an employer to label almost anything a trade secret, and thereby create a
related laws) as well as banking transactions (pursuant to the Secrecy of comparative analysis of its products. Petitioner assails the conclusion reached weapon with which he/it may arbitrarily dismiss an employee on the pretext
Bank Deposits Act) re also exempt from compulsory disclosure. by the Court of Appeals that the matters are trade secrets which are that the latter somehow disclosed a trade secret, even if in fact there be none
protected by law and beyond public scrutiny. Relying on Section 1, Rule 27 of at all to speak of.[24] Hence, in Cocoland, the parameters in the determination
It is thus clear from the foregoing that a party cannot be compelled to the Rules of Court, petitioner argues that the use of modes of discovery of trade secrets were set to be such substantial factual basis that can
produce, release or disclose documents, papers, or any object which are operates with desirable flexibility under the discretionary control of the trial withstand judicial scrutiny.
considered trade secrets. court. Furthermore, petitioner posits that its request is not done in bad faith
or in any manner as to annoy, embarrass, or oppress respondent. The chemical composition, formulation, and ingredients of
In the instant case, petitioner [Air Philippines Corporation] would have respondents special lubricants are trade secrets within the contemplation of
[respondent] Pennswell produce a detailed list of ingredients or A trade secret is defined as a plan or process, tool, mechanism or compound the law. Respondent was established to engage in the business of general
composition of the latters lubricant products so that a chemical known only to its owner and those of his employees to whom it is necessary manufacturing and selling of, and to deal in, distribute, sell or otherwise
comparison and analysis thereof can be obtained. On this note, We to confide it.[16] The definition also extends to a secret formula or process not dispose of goods, wares, merchandise, products, including but not limited to
believe and so hold that the ingredients or composition of [respondent] patented, but known only to certain individuals using it in compounding some industrial chemicals, solvents, lubricants, acids, alkalies, salts, paints, oils,
Pennswells lubricants are trade secrets which it cannot be compelled to article of trade having a commercial value.[17] A trade secret may consist of varnishes, colors, pigments and similar preparations, among others. It is
disclose. any formula, pattern, device, or compilation of information that: (1) is used in unmistakable to our minds that the manufacture and production of
one's business; and (2) gives the employer an opportunity to obtain an respondents products proceed from a formulation of a secret list of
[Respondent] Pennswell has a proprietary or economic right over the advantage over competitors who do not possess the ingredients. In the creation of its lubricants, respondent expended efforts,
ingredients or components of its lubricant products. The formulation information.[18] Generally, a trade secret is a process or device intended for skills, research, and resources. What it had achieved by virtue of its
thereof is not known to the general public and is peculiar only to continuous use in the operation of the business, for example, a machine or investments may not be wrested from respondent on the mere pretext that it
[respondent] Pennswell. The legitimate and economic interests of formula, but can be a price list or catalogue or specialized customer list.[19] It is necessary for petitioners defense against a collection for a sum of
business enterprises in protecting their manufacturing and business is indubitable that trade secrets constitute proprietary rights. The inventor, money. By and large, the value of the information to respondent is crystal
secrets are well-recognized in our system. discoverer, or possessor of a trade secret or similar innovation has rights clear. The ingredients constitute the very fabric of respondents production
therein which may be treated as property, and ordinarily an injunction will be and business. No doubt, the information is also valuable to respondents
[Respondent] Pennswell has a right to guard its trade secrets, granted to prevent the disclosure of the trade secret by one who obtained competitors. To compel its disclosure is to cripple respondents business, and
manufacturing formulas, marketing strategies and other confidential the information "in confidence" or through a "confidential to place it at an undue disadvantage. If the chemical composition of
programs and information against the public. Otherwise, such relationship."[20] American jurisprudence has utilized the following respondents lubricants are opened to public scrutiny, it will stand to lose the
information can be illegally and unfairly utilized by business competitors factors[21] to determine if an information is a trade secret, to wit: backbone on which its business is founded. This would result in nothing less
who, through their access to [respondent] Pennswells business secrets, than the probable demise of respondents business. Respondents proprietary
may use the same for their own private gain and to the irreparable (1) the extent to which the information is known outside of the interest over the ingredients which it had developed and expended money
prejudice of the latter. employer's business; and effort on is incontrovertible. Our conclusion is that the detailed
ingredients sought to be revealed have a commercial value to
x xxx (2) the extent to which the information is known by employees respondent. Not only do we acknowledge the fact that the information grants
In the case before Us, the alleged trade secrets have a factual basis, i.e., and others involved in the business; it a competitive advantage; we also find that there is clearly a glaring intent
it comprises of the ingredients and formulation of [respondent] on the part of respondent to keep the information confidential and not
Pennswells lubricant products which are unknown to the public and (3) the extent of measures taken by the employer to guard the available to the prying public.
peculiar only to Pennswell. secrecy of the information;
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits
All told, We find no grave abuse of discretion amounting to lack or excess (4) the value of the information to the employer and to parties to inspect documents or things upon a showing of good cause before
of jurisdiction on the part of public respondent Judge in finding that the competitors; the court in which an action is pending. Its entire provision reads:
detailed list of ingredients or composition of the subject lubricant
products which petitioner [Air Philippines Corporation] seeks to be (5) the amount of effort or money expended by the company in SECTION 1. Motion for production or inspection order. Upon motion
disclosed are trade secrets of [respondent] Pennswell; hence, privileged developing the information; and of any party showing good cause therefore, the court in which an
against compulsory disclosure.[14] action is pending may (a) order any party to produce and permit the
(6) the extent to which the information could be easily or inspection and copying or photographing, by or on behalf of the
Petitioners Motion for Reconsideration was denied. readily obtained through an independent source.[22] moving party, of any designated documents, papers, books,
accounts, letters, photographs, objects or tangible things, not
Unyielding, petitioner brought the instant Petition before us, on privileged, which constitute or contain evidence material to any
the sole issue of: matter involved in the action and which are in his possession,

15
 custody or control; or (b) order any party to permit entry upon the RTCs pursuant to Republic Act No. 8799, otherwise known as The
designated land or other property in his possession or control for Securities Regulation Code, expressly provides that the court may issue an Clearly, in accordance with our statutory laws, this Court has
the purpose of inspecting, measuring, surveying, or photographing order to protect trade secrets or other confidential research, development, declared that intellectual and industrial property rights cases are not simple
the property or any designated relevant object or operation or commercial information belonging to the debtor.[32] Moreover, the property cases.[36] Without limiting such industrial property rights to
thereon. The order shall specify the time, place and manner of Securities Regulation Code is explicit that the Securities and Exchange trademarks and trade names, this Court has ruled that all agreements
making the inspection and taking copies and photographs, and may Commission is not required or authorized to require the revelation of trade concerning intellectual property are intimately connected with economic
prescribe such terms and conditions as are just. secrets or processes in any application, report or document filed with the development.[37] The protection of industrial property encourages
Commission.[33] This confidentiality is made paramount as a limitation to the investments in new ideas and inventions and stimulates creative efforts for
A more than cursory glance at the above text would show that right of any member of the general public, upon request, to have access to all the satisfaction of human needs. It speeds up transfer of technology and
the production or inspection of documents or things as a mode of discovery information filed with the Commission.[34] industrialization, and thereby bring about social and economic
sanctioned by the Rules of Court may be availed of by any party upon a progress.[38] Verily, the protection of industrial secrets is inextricably linked to
showing of good cause therefor before the court in which an action is Furthermore, the Revised Penal Code endows a cloak of protection to the advancement of our economy and fosters healthy competition in trade.
pending. The court may order any party: a) to produce and permit the trade secrets under the following articles:
inspection and copying or photographing of any designated documents, Jurisprudence has consistently acknowledged the private character of trade
papers, books, accounts, letters, photographs, objects or tangible things, Art. 291. Revealing secrets with abuse of office. The penalty of arresto secrets. There is a privilege not to disclose ones trade secrets.[39] Foremost,
which are not privileged;[25] which constitute or contain evidence material to mayor and a fine not exceeding 500 pesos shall be imposed upon any this Court has declared that trade secrets and banking transactions are
any matter involved in the action; and which are in his possession, custody or manager, employee or servant who, in such capacity, shall learn the among the recognized restrictions to the right of the people to information as
control; or b) to permit entry upon designated land or other property in his secrets of his principal or master and shall reveal such secrets. embodied in the Constitution.[40] We said that the drafters of the Constitution
possession or control for the purpose of inspecting, measuring, surveying, or also unequivocally affirmed that, aside from national security matters and
photographing the property or any designated relevant object or operation Art. 292. Revelation of industrial secrets. The penalty intelligence information, trade or industrial secrets (pursuant to the
thereon. of prisioncorreccional in its minimum and medium periods and a fine not Intellectual Property Code and other related laws) as well as banking
exceeding 500 pesos shall be imposed upon the person in charge, transactions (pursuant to the Secrecy of Bank Deposits Act), are also
Rule 27 sets an unequivocal proviso that the documents, papers, employee or workman of any manufacturing or industrial establishment exempted from compulsory disclosure.[41]
books, accounts, letters, photographs, objects or tangible things that may be who, to the prejudice of the owner thereof, shall reveal the secrets of
produced and inspected should not be privileged.[26] The documents must the industry of Significantly, our cases on labor are replete with examples of a
not be privileged against disclosure.[27] On the ground of public policy, the the latter. protectionist stance towards the trade secrets of employers. For instance,
rules providing for production and inspection of books and papers do not this Court upheld the validity of the policy of a pharmaceutical company
authorize the production or inspection of privileged matter; that is, books and Similarly, Republic Act No. 8424, otherwise known as the National prohibiting its employees from marrying employees of any competitor
papers which, because of their confidential and privileged character, could Internal Revenue Code of 1997, has a restrictive provision on trade company, on the rationalization that the company has a right to guard its
not be received in evidence.[28] Such a condition is in addition to the requisite secrets, penalizing the revelation thereof by internal revenue officers or trade secrets, manufacturing formulas, marketing strategies and other
that the items be specifically described, and must constitute or contain employees, to wit: confidential programs and information from competitors.[42] Notably, it was
evidence material to any matter involved in the action and which are in the in a labor-related case that this Court made a stark ruling on the proper
partys possession, custody or control. SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any determination of trade secrets.
person who causes or procures an officer or employee of the Bureau of
Section 24[29] of Rule 130 draws the types of disqualification by Internal Revenue to divulge any confidential information regarding the In the case at bar, petitioner cannot rely on Section 77[43] of
reason of privileged communication, to wit: (a) communication between business, income or inheritance of any taxpayer, knowledge of which Republic Act 7394, or the Consumer Act of the Philippines, in order to compel
husband and wife; (b) communication between attorney and client; (c) was acquired by him in the discharge of his official duties, and which it is respondent to reveal the chemical components of its products.While it is true
communication between physician and patient; (d) communication between unlawful for him to reveal, and any person who publishes or prints in any that all consumer products domestically sold, whether manufactured locally
priest and penitent; and (e) public officers and public interest. There are, manner whatever, not provided by law, any income, profit, loss or or imported, shall indicate their general make or active ingredients in their
however, other privileged matters that are not mentioned by Rule expenditure appearing in any income tax return, shall be punished by a respective labels of packaging, the law does not apply to
130. Among them are the following: (a) editors may not be compelled to fine of not more than two thousand pesos (P2,000), or suffer respondent. Respondents specialized lubricants -- namely, Contact Grease,
disclose the source of published news; (b) voters may not be compelled to imprisonment of not less than six (6) months nor more than five (5) Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective
disclose for whom they voted; (c) trade secrets; (d) information contained in years, or both. Coating, Dry Lubricant and Anti-Seize Compound -- are not consumer
tax census returns; and (d) bank deposits. [30] products. Consumer products, as it is defined in Article 4(q),[44] refers
Republic Act No. 6969, or the Toxic Substances and Hazardous to goods, services and credits, debts or obligations which are primarily for
We, thus, rule against the petitioner. We affirm the ruling of the and Nuclear Wastes Control Act of 1990, enacted to implement the policy of personal, family, household or agricultural purposes, which shall include, but
Court of Appeals which upheld the finding of the RTC that there is substantial the state to regulate, restrict or prohibit the importation, manufacture, not be limited to, food, drugs, cosmetics, and devices. This is not the nature
basis for respondent to seek protection of the law for its proprietary rights processing, sale, distribution, use and disposal of chemical substances and of respondents products. Its products are not intended for personal, family,
over the detailed chemical composition of its products. mixtures that present unreasonable risk and/or injury to health or the household or agricultural purposes. Rather, they are for industrial use,
environment, also contains a provision that limits the right of the public to specifically for the use of aircraft propellers and engines.
That trade secrets are of a privileged nature is beyond have access to records, reports or information concerning chemical
quibble. The protection that this jurisdiction affords to trade secrets is substances and mixtures including safety data submitted and data on Petitioners argument that Republic Act No. 8203, or the Special
evident in our laws. The Interim Rules of Procedure on Government emission or discharge into the environment, if the matter is confidential Law on Counterfeit Drugs, requires the disclosure of the active ingredients of
Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for such that it would divulge trade secrets, production or sales figures; or a drug is also on faulty ground.[45] Respondents products are outside the
rehabilitation filed by corporations, partnerships, and associations pursuant methods, production or processes unique to such manufacturer, processor scope of the cited law. They do not come within the purview of a
to Presidential Decree No. 902-A,[31] as amended; and (2) cases for or distributor; or would otherwise tend to affect adversely the competitive drug[46] which, as defined therein, refers to any chemical compound or
rehabilitation transferred from the Securities and Exchange Commission to position of such manufacturer, processor or distributor.[35] biological substance, other than food, that is intended for use in the

16
treatment, prevention or diagnosis of disease in man or animals. Again, such 1144[2] and the assailed provision does not encroach on one of the
are not the characteristics of respondents products. [G.R. NO. 156041 | February 21, 2007] PEST MANAGEMENT ASSOCIATION functions of the Intellectual Properly Office (IPO).[3]
OF THEPHILIPPINES (PMAP),represented by its President, Present:MANUEL J.
What is clear from the factual findings of the RTC and the Court of CHAVEZ, Petitioner, - versus - CALLEJO, SR.,FERTILIZER AND Dissatisfied with the RTC Decision, petitioner resorted to
Appeals is that the chemical formulation of respondents products is not PESTICIDEAUTHORITY (FPA), SECRETARYOF THE DEPARTMENT filing this petition for review on certiorari where the following issues
known to the general public and is unique only to it. Both courts uniformly OFAGRICULTURE, FPA OFFICER-IN-CHARGE CESAR M. DRILON,AND FPA are raised:
ruled that these ingredients are not within the knowledge of the public. Since DEPUTY DIRECTORDARIO C. SALUBARSE,Respondents
such factual findings are generally not reviewable by this Court, it is not duty- I
bound to analyze and weigh all over again the evidence already considered in DECISION WHETHER OR NOT RESPONDENT FPA HAS ACTED BEYOND THE SCOPE OF
the proceedings below.[47] We need not delve into the factual bases of such AUSTRIA-MARTINEZ, J.: ITS DELEGATED POWER WHEN IT GRANTED A SEVEN-YEAR PROPRIETARY
findings as questions of fact are beyond the pale of Rule 45 of the Rules of PROTECTION TO DATA SUBMITTED TO SUPPORT THE FIRST FULL OR
Court. Factual findings of the trial court when affirmed by the Court of This resolves the Petition for Review on Certiorari seeking to set CONDITIONAL REGISTRATION OF A PESTICIDE INGREDIENT IN THE
Appeals, are binding and conclusive on the Supreme Court.[48] aside the Decision[1] of the Regional Trial Court of Quezon City, Branch 90 PHILIPPINES;
(RTC) dated November 5, 2002.
We do not find merit or applicability in petitioners invocation of The case commenced upon petitioners filing of a Petition For II
Section 12[49] of the Toxic Substances and Hazardous and Nuclear Wastes Declaratory Relief With Prayer For Issuance Of A Writ Of Preliminary WHETHER OR NOT RESPONDENT FPA IS ENCROACHING ON THE
Control Act of 1990, which grants the public access to records, reports or Injunction And/Or Temporary Restraining Order with the RTC on January 4, EXCLUSIVE JURISDICTION OF THE INTELLECTUAL PROPERTY OFFICE (IPO)
information concerning chemical substances and mixtures, including safety 2002. Petitioner, a non-stock corporation duly organized and existing under WHEN IT INCLUDED IN ITS PESTICIDE REGULATORY POLICIES AND
data submitted, and data on emission or discharge into the environment. To the laws of the Philippines, is an association of pesticide handlers duly IMPLEMENTING GUIDELINES THE SUBJECT SEVEN-YEAR PROPRIETARY
reiterate, Section 12[50] of said Act deems as confidential matters, which licensed by respondent Fertilizer and Pesticide Authority (FPA). It questioned DATA PROTECTION;
may not be made public, those that would divulge trade secrets, including the validity of Section 3.12 of the 1987 Pesticide Regulatory Policies and
production or sales figures or methods; production or processes unique to Implementing Guidelines, which provides thus: III
such manufacturer, processor or distributor, or would otherwise tend to WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION IS AN
affect adversely the competitive position of such manufacturer, processor 3.12 Protection of Proprietary Data UNLAWFUL RESTRAINT OF FREE TRADE;
or distributor. It is true that under the same Act, the Department of
Environment and Natural Resources may release information; however, the Data submitted to support the first full or conditional registration of a IV
clear import of the law is that said authority is limited by the right to pesticide active ingredient in the Philippines will be granted proprietary WHETHER OR NOT SAID PROPRIETARY DATA PROTECTION RUNS
confidentiality of the manufacturer, processor or distributor, which protection for a period of seven years from the date of such COUNTER TO THE OBJECTIVES OF P.D. NO. 1144;
information may be released only to a medical research or scientific registration. During this period subsequent registrants may rely on
institution where the information is needed for the purpose of medical these data only with third party authorization or otherwise must V
diagnosis or treatment of a person exposed to the chemical substance or submit their own data. After this period, all data may be freely cited in WHETHER OR NOT THE REGIONAL TRIAL COURT OF QUEZON CITY,
mixture. The right to confidentiality is recognized by said Act as support of registration by any applicant, provided convincing proof is BRANCH 90, COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD THE
primordial. Petitioner has not made the slightest attempt to show that these submitted that the product being registered is identical or substantially VALIDITY OF SECTION 3.12 OF THE PESTICIDE REGULATORY POLICIES
circumstances are availing in the case at bar. similar to any current registered pesticide, or differs only in ways that AND IMPLEMENTING GUIDELINES ISSUED BY RESPONDENT FPA.
would not significantly increase the risk of unreasonable adverse effects.
Indeed, the privilege is not absolute; the trial court may compel Respondents, on the other hand, maintain that the provision on
disclosure where it is indispensable for doing justice.[51] We do not, however, Pesticides granted provisional registration under P.D. 1144 will be the protection of proprietary data in the FPA's Pesticide Regulatory Policies
find reason to except respondents trade secrets from the application of the considered first registered in 1977, the date of the Decree. and Implementing Guidelines is valid and legal as it does not violate the
rule on privilege. The revelation of respondents trade secrets serves no better objectives of P.D. No. 1144; the proprietary data are a substantial asset which
purpose to the disposition of the main case pending with the RTC, which is on Pesticide products in which data is still under protection shall be referred must be protected; the protection for a limited number of years does not
the collection of a sum of money.As can be gleaned from the facts, petitioner to as proprietary pesticides, and all others as commodity constitute unlawful restraint of free trade; and such provision does not
received respondents goods in trade in the normal course of business. To be pesticides. (Emphasis supplied) encroach upon the jurisdiction of the Intellectual Property Office.
sure, there are defenses under the laws of contracts and sales available to
petitioner. On the other hand, the greater interest of justice ought to favor Petitioner argued that the specific provision on the protection of Respondents expound that since under P.D. No. 1144, the FPA is
respondent as the holder of trade secrets. If we were to weigh the conflicting the proprietary data in FPAs Pesticide Regulatory Policies and Implementing mandated to regulate, control and develop the pesticide industry, it was
interests between the parties, we rule in favor of the greater interest of Guidelines is unlawful for going counter to the objectives of Presidential necessary to provide for such protection of proprietary data, otherwise,
respondent. Trade secrets should receive greater protection from discovery, Decree No. 1144 (P.D. No. 1144); for exceeding the limits of delegated pesticide handlers will proliferate to the the detriment of the industry and the
because they derive economic value from being generally unknown and not authority; and for encroaching on the exclusive jurisdiction of the Intellectual public since the inherent toxicity of pesticides are hazardous and are
readily ascertainable by the public.[52] To the mind of this Court, petitioner Property Office. potential environmental contaminants.
was not able to show a compelling reason for us to lift the veil of
confidentiality which shields respondents trade secrets. On November 5, 2002, the RTC dismissed the petition for declaratory They also pointed out that the protection under the assailed
relief for lack of merit. The RTC held that the FPA did not exceed the Pesticide Regulatory Policies and Implementing Guidelines is warranted,
WHEREFORE, the Petition is DENIED. The Decision dated 16 limits of its delegated authority in issuing the aforecitedSection 3.12 of considering that the development of proprietary data involves an investment
February 2006, and the Resolution dated 25 May 2006, of the Court of the Guidelines granting protection to proprietary data x x x because the of many years and large sums of money, thus, the data generated by an
Appeals in CA-G.R. SP No. 86329 are AFFIRMED. No costs. issuance of the aforecited Section was a valid exercise of its power to applicant in support of his application for registration are owned and
regulate, control and develop the pesticide industry under P.D. proprietary to him. Moreover, since the protection accorded to the
SO ORDERED.

17
proprietary data is limited in time, then such protection is reasonable and one way of fulfilling its mandate. In Republic v. Sandiganbayan,[4] the Court There is also no evidence whatsoever to support
does not constitute unlawful restraint of trade. emphasized that: petitioner's allegation that the grant of protection to proprietary data
would result in restraining free trade. Petitioner did not adduce any
Lastly, respondents emphasize that the provision on protection of x x x [t]he interpretation of an administrative government agency, reliable data to prove its bare allegation that the protection of
proprietary data does not usurp the functions of the Intellectual Property which is tasked to implement a statute is generally accorded great proprietary data would unduly restrict trade on
Office (IPO) since a patent and data protection are two different matters. A respect and ordinarily controls the construction of the courts. The pesticides. Furthermore, as held in Association of Philippine Coconut
patent prohibits all unlicensed making, using and selling of a particular reason behind this rule was explained in Nestle Philippines, Inc. vs. Court Desiccators v. Philippine Coconut Authority,[6] despite the fact that our
product, while data protection accorded by the FPA merely prevents copying of Appeals in this wise: present Constitution enshrines free enterprise as a policy, it
or unauthorized use of an applicant's data, but any other party may nonetheless reserves to the government the power to intervene
independently generate and use his own data. It is further argued that under The rationale for this rule relates not only to the emergence of the whenever necessary to promote the general welfare. There can be no
Republic Act No. 8293 (R.A. No. 8293), the grant of power to the IPO to multifarious needs of a modern or modernizing society and the question that the unregulated use or proliferation of pesticides would
administer and implement State policies on intellectual property is not establishment of diverse administrative agencies for addressing and be hazardous to our environment. Thus, in the aforecited case, the
exclusionary as the IPO is even allowed to coordinate with other government satisfying those needs; it also relates to the accumulation of Court declared that free enterprise does not call for removal
agencies to formulate and implement plans and policies to strengthen the experience and growth of specialized capabilities by the of protective regulations.[7] More recently, in Coconut Oil Refiners
protection of intellectual property rights. administrative agency charged with implementing a particular Association, Inc. v. Torres,[8] the Court held that [t]he mere fact that
statute. In Asturias Sugar Central, Inc. vs. Commissioner of Customs, incentives and privileges are granted to certain enterprises to the
The petition is devoid of merit. the Court stressed that executive officials are presumed to have exclusion of others does not render the issuance unconstitutional for
familiarized themselves with all the considerations pertinent to espousing unfair competition. It must be clearly explained and proven
The law being implemented by the assailed Pesticide Regulatory the meaning and purpose of the law, and to have formed an by competent evidence just exactly how such protective regulation
Policies and Implementing Guidelines is P.D. No. 1144, entitled Creating the independent, conscientious and competent expert opinion would result in the restraint of trade.
Fertilizer and Pesticide Authority and Abolishing the Fertilizer Industry thereon. The courts give much weight to the government agency
Authority. As stated in the Preamble of said decree, there is an urgent need officials charged with the implementation of the law, their In sum, the assailed provision in the 1987 Pesticide
to create a technically-oriented government authority equipped with the competence, expertness, experience and informed judgment, and Regulatory Policies and Implementing Guidelines granting protection to
required expertise to regulate, control and develop both the fertilizer and the the fact that they frequently are the drafters of the law they proprietary data is well within the authority of the FPA to issue so as to
pesticide industries. (Underscoring supplied) The decree further provided as interpret. carry out its purpose of controlling, regulating and developing the
follows: x x x.[5] [Emphasis supplied] pesticide industry.

Section 6. Powers and Functions. The FPA shall have jurisdiction, Verily, in this case, the Court acknowledges the experience WHEREFORE, the petition is DENIED. The Decision of the
over all existing handlers of pesticides, fertilizers and other and expertise of FPA officials who are best qualified to formulate ways Regional Trial Court of Quezon City, Branch 90, in SP. Civil Case No. Q-
agricultural chemical inputs. The FPA shall have the following and means of ensuring the quality and quantity of pesticides and 01-42790 is AFFIRMED.
powers and functions: handlers thereof that should enter the Philippine market, such as giving SO ORDERED.
limited protection to proprietary data submitted by applicants for
I. Common to Fertilizers, Pesticides and other Agricultural registration. The Court ascribes great value and will not disturb
Chemicals the FPA's determination that one way of attaining the purposes of its
charter is by granting such protection, specially where there is nothing
xxx on record which shows that said administrative agency went beyond its
4. To promulgate rules and regulations for the registration and delegated powers.
licensing of handlers of these products, collect fees pertaining
thereto, as well as the renewal, suspension, revocation, or Moreover, petitioner has not succeeded in convincing the
cancellation of such registration or licenses and such other rules and Court that the provision in question has legal infirmities.
regulations as may be necessary to implement this Decree;
There is no encroachment upon the powers of the IPO
xxx granted under R.A. No. 8293, otherwise known as the Intellectual
Section 7. Power to Issue Rules and Regulations to Implement Property Code of the Philippines. Section 5 thereof enumerates the
Decree. The FPA is hereby authorized to issue or promulgate rules functions of the IPO. Nowhere in said provision does it state nor can it
and regulations to implement, and carry out the purposes and be inferred that the law intended the IPO to have the exclusive
provisions of this Decree. authority to protect or promote intellectual property rights in
the Philippines. On the contrary, paragraph (g) of said Section even
Did the FPA go beyond its delegated power and undermine the objectives of provides that the IPO shall [c]oordinate with other government
P.D. No. 1144 by issuing regulations that provide for protection of proprietary agencies and the private sector efforts to formulate and implement
data? The answer is in the negative. plans and policies to strengthen the protection of intellectual property
rights in the country. Clearly, R.A. No. 8293 recognizes that efforts to
Under P.D. No. 1144, the FPA is given the broad power to issue rules and fully protect intellectual property rights cannot be undertaken by the
regulations to implement and carry out the purposes and provisions of said IPO alone. Other agencies dealing with intellectual property rights are,
decree, i.e., to regulate, control and develop the pesticide industry. In therefore, not precluded from issuing policies, guidelines and
furtherance of such ends, the FPA sees the protection of proprietary data as regulations to give protection to such rights.

18