Ching vs. Salinas, G.R. No.

161295, June 29, 2005

Facts
Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility
Model, described as “Leaf Spring Eye Bushing for Automobile” made up of plastic.
On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration
and Deposit of the said work described therein as “Leaf Spring Eye Bushing for Automobile.”
On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance
for the apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.
After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr.
and the officers and members of the Board of Directors of Wilaware Product Corporation. It was alleged that the
respondents therein reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of Republic
Act (R.A.) No. 8293.
Issues
Whether or not the subject matter is covered by the Copyright of the Intellectual Property Code?
Held
It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and
derivative works (Sec. 173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification.
Being plain automotive spare parts that must conform to the original structural design of the components they seek to
replace, the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or
value that must characterize authentic works of applied art. They are not even artistic creations with incidental utilitarian
functions or works incorporated in a useful article. In actuality, the personal properties described in the search warrants
are mechanical works, the principal function of which is utility sans any aesthetic embellishment.

Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase “other literary, scholarly, scientific
and artistic works” in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which states that “where a statute describes things of
a particular class or kind accompanied by words of a generic character, the generic word will usually be limited to things of a similar nature with those
particularly enumerated, unless there be something in the context of the state which would repel such inference,”[46] the Leaf Spring Eye Bushing and
Vehicle Bearing Cushion are not copyrightable, being not of the same kind and nature as the works enumerated in Section 172 of R.A. No. 8293.

1. G.R. No. 161295               June 29, 2005

JESSIE G. CHING, petitioner, 
vs.
WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS, ALONTO SOLAIMAN
SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of WILAWARE PRODUCT
CORPORATION), respondents.

DECISION

CALLEJO, SR., J.:

This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 70411 affirming
the January 3, 2002 and February 14, 2002 Orders3 of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set aside
Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.

Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model,
described as "Leaf Spring Eye Bushing for Automobile" made up of plastic.

On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit of the
said work described therein as "Leaf Spring Eye Bushing for Automobile."4

On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the
apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.5

After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the officers and
members of the Board of Directors of Wilaware Product Corporation. It was alleged that the respondents therein reproduced and distributed
the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293. The applications sought the seizure of the
following:

a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;

b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;

c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;

d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;

e.) Evidences of sale which include delivery receipts, invoices and official receipts.6
The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles.7 In the
inventory submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:

Leaf Spring eye bushing

a) Plastic Polypropylene

- C190 27 }

- C240 rear 40 }

- C240 front 41 } BAG 1

b) Polyvinyl Chloride Plastic

- C190 13 }

c) Vehicle bearing cushion

- center bearing cushion 11 }

Budder for C190 mold 8 }

Diesel Mold

a) Mold for spring eye bushing rear 1 set

b) Mold for spring eye bushing front 1 set

c) Mold for spring eye bushing for C190 1 set

d) Mold for C240 rear 1 piece of the set

e) Mold for spring eye bushing for L300 2 sets

f) Mold for leaf spring eye bushing C190 with metal 1 set

g) Mold for vehicle bearing cushion 1 set8

The respondents filed a motion to quash the search warrants on the following grounds:

2. The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:

a) the subject matter of the registrations are not artistic or literary;

b) the subject matter of the registrations are spare parts of automobiles meaning – there (sic) are original parts that they are
designed to replace. Hence, they are not original.9

The respondents averred that the works covered by the certificates issued by the National Library are not artistic in nature; they are
considered automotive spare parts and pertain to technology. They aver that the models are not original, and as such are the proper
subject of a patent, not copyright.10

In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper forum in which to
articulate the issue of the validity of the copyrights issued to him. Citing the ruling of the Court inMalaloan v. Court of Appeals,11 the
petitioner stated that a search warrant is merely a judicial process designed by the Rules of Court in anticipation of a criminal case. Until his
copyright was nullified in a proper proceeding, he enjoys rights of a registered owner/holder thereof.

On January 3, 2002, the trial court issued an Order12 granting the motion, and quashed the search warrant on its finding that there was no
probable cause for its issuance. The court ruled that the work covered by the certificates issued to the petitioner pertained to solutions to
technical problems, not literary and artistic as provided in Article 172 of the Intellectual Property Code.
His motion for reconsideration of the order having been denied by the trial court’s Order of February 14, 2002, the petitioner filed a petition
for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and resolve the validity of the copyright certificates issued
to him by the National Library. He insisted that his works are covered by Sections 172.1 and 172.2 of the Intellectual Property Code. The
petitioner averred that the copyright certificates are prima facie evidence of its validity, citing the ruling of the United States Court of
Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc. 13 The petitioner asserted that the respondents failed to adduce evidence
to support their motion to quash the search warrants. The petitioner noted that respondent William Salinas, Jr. was not being honest, as he
was able to secure a similar copyright registration of a similar product from the National Library on January 14, 2002.

On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit any grave abuse of
its discretion in issuing the assailed order, to wit:

It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a search
warrant. In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:

"The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally examine in
the form of searching questions and answers, in writing and under oath, the complainant and any witness he may produce, on facts
personally known to them and attach to the record their sworn statements together with any affidavit submitted.

"In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or
quashal of the search warrant."

In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the offense
of Violation of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act 8293, when the
objects subject of the same, are patently not copyrightable.

It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative works (Sec.
173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification. Accordingly, if, in the first place, the item
subject of the petition is not entitled to be protected by the law on copyright, how can there be any violation?14

The petitioner’s motion for reconsideration of the said decision suffered the same fate. The petitioner forthwith filed the present petition for
review on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not in a search
warrant proceeding.

The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding to quash
a search warrant for allegedly infringing items, the RTC committed a grave abuse of its discretion when it declared that his works are not
copyrightable in the first place. He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of the Philippines, which
took effect on January 1, 1998, provides in no uncertain terms that copyright protection automatically attaches to a work by the sole fact of
its creation, irrespective of its mode or form of expression, as well as of its content, quality or purpose.15 The law gives a non-inclusive
definition of "work" as referring to original intellectual creations in the literary and artistic domain protected from the moment of their
creation; and includes original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design
and other works of applied art under Section 172.1(h) of R.A. No. 8293. [Link]

As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise,
encompasses works which may have a bearing on the utility aspect to which the petitioner’s utility designs were classified. Moreover,
according to the petitioner, what the Copyright Law protects is the author’s intellectual creation, regardless of whether it is one with
utilitarian functions or incorporated in a useful article produced on an industrial scale.

The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent bars or
invalidates its registration under the Law on Copyright. The test of protection for the aesthetic is not beauty and utility, but art for the
copyright and invention of original and ornamental design for design patents.16 In like manner, the fact that his utility designs or models for
articles of manufacture have been expressed in the field of automotive parts, or based on something already in the public domain does not
automatically remove them from the protection of the Law on Copyright.17

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed by an
author who claims copyright ownership of his work.

The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable suspicion of the
commission of the offense. It is not equivalent to absolute certainty or a finding of actual and positive cause.18 He assists that the
determination of probable cause does not concern the issue of whether or not the alleged work is copyrightable. He maintains that to justify
a finding of probable cause in the issuance of a search warrant, it is enough that there exists a reasonable suspicion of the commission of
the offense.

The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of overturning
this presumption is on the alleged infringers, the respondents herein. But this burden cannot be carried in a hearing on a proceeding to
quash the search warrants, as the issue therein is whether there was probable cause for the issuance of the search warrant. The petitioner
concludes that the issue of probable cause should be resolved without invalidating his copyright.

In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution to the problem of
wear and tear in automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft
texture plastic material strong enough to endure pressure brought about by the vibration of the counter bearing and thus brings bushings.
Such work, the respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The respondents posit that a technical
solution in any field of human activity which is novel may be the subject of a patent, and not of a copyright. They insist that the certificates
issued by the National Library are only certifications that, at a point in time, a certain work was deposited in the said office. Furthermore, the
registration of copyrights does not provide for automatic protection. Citing Section 218.2(b) of R.A. No. 8293, the respondents aver that no
copyright is said to exist if a party categorically questions its existence and legality. Moreover, under Section 2, Rule 7 of the Implementing
Rules of R.A. No. 8293, the registration and deposit of work is not conclusive as to copyright outlay or the time of copyright or the right of
the copyright owner. The respondents maintain that a copyright exists only when the work is covered by the protection of R.A. No. 8293.

The petition has no merit.

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models are copyrightable and, if so, whether he
is the owner of a copyright over the said models. It bears stressing that upon the filing of the application for search warrant, the RTC was
duty-bound to determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure:

SEC. 4. Requisite for issuing search warrant. – A search warrant shall not issue but upon probable cause in connection with one specific
offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may
produce, and, particularly, describing the place to be searched and the things to be seized.

In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the determination of probable cause, the court
must necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one already issued
by the court. Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a reasonably cautious
and prudent man to believe that an offense has been committed or is being committed. Besides, in Section 3, Rule 126 of the Rules of
Criminal Procedure, a search warrant may be issued for the search and seizure of personal property (a) subject of the offense; (b) stolen or
embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used as the means of committing an offense.

The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court cannot abdicate its
constitutional obligation by refusing to determine whether an offense has been committed.20 The absence of probable cause will cause the
outright nullification of the search warrant.21

For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the petitioner-
applicant was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and (b) the
copyrighted material was being copied and distributed by the respondents. Thus, the ownership of a valid copyright is essential.22

Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that the material was not
copied, and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same
minimal degree of creativity.23 Copying is shown by proof of access to copyrighted material and substantial similarity between the two
works.24 The applicant must thus demonstrate the existence and the validity of his copyright because in the absence of copyright protection,
even original creation may be freely copied.25

By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under R.A. No. 8293 against
the respondents, the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the validity of the
copyright which he claimed he had over the utility models. The petitioner cannot seek relief from the RTC based on his claim that he was
the copyright owner over the utility models and, at the same time, repudiate the court’s jurisdiction to ascertain the validity of his claim
without running afoul to the doctrine of estoppel.

To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence.26 A
copyright certificate provides prima facie evidence of originality which is one element of copyright validity. It constitutes prima
facie evidence of both validity and ownership27 and the validity of the facts stated in the certificate.28 The presumption of validity to a
certificate of copyright registration merely orders the burden of proof. The applicant should not ordinarily be forced, in the first instance, to
prove all the multiple facts that underline the validity of the copyright unless the respondent, effectively challenging them, shifts the burden
of doing so to the applicant.29 Indeed, Section 218.2 of R.A. No. 8293 provides:

218.2. In an action under this Chapter:

(a) Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if the defendant does
not put in issue the question whether copyright subsists in the work or other subject matter; and

(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright if he
claims to be the owner of the copyright and the defendant does not put in issue the question of his ownership.

A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt on the
question. In such a case, validity will not be presumed.30

To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the petitioner-applicant
submitted to the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and September 4, 2001,
respectively, issued by the National Library covering work identified as Leaf Spring Eye Bushing for Automobile and Vehicle Bearing
Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:
SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works, hereinafter referred to as "works," are original intellectual
creations in the literary and artistic domain protected from the moment of their creation and shall include in particular:

...

(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other works of
applied art.

Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic creation with utilitarian functions or
incorporated in a useful article, whether made by hand or produced on an industrial scale.

But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf Spring
Eye Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial bore that is
centrally located and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the peripheral walls
of said body, with the bushing made of plastic that is either polyvinyl chloride or polypropylene.31 Likewise, the Vehicle Bearing Cushion is
illustrated as a bearing cushion comprising a generally semi-circular body having a central hole to secure a conventional bearing and a
plurality of ridges provided therefore, with said cushion bearing being made of the same plastic materials.32 Plainly, these are not literary or
artistic works. They are not intellectual creations in the literary and artistic domain, or works of applied art. They are certainly not
ornamental designs or one having decorative quality or value.

It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The central inquiry is whether
the article is a work of art.33 Works for applied art include all original pictorials, graphics, and sculptural works that are intended to be or
have been embodied in useful article regardless of factors such as mass production, commercial exploitation, and the potential availability
of design patent protection.34

As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having an
intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information. Indeed, while works of applied
art, original intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are not.35 A useful article
may be copyrightable only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features that can be
identified separately from, and are capable of existing independently of the utilitarian aspects of the article.

We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the author’s intellectual creation, regardless of
whether it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is protected by copyright
law. However, the law refers to a "work of applied art which is an artistic creation." It bears stressing that there is no copyright protection for
works of applied art or industrial design which have aesthetic or artistic features that cannot be identified separately from the utilitarian
aspects of the article.36Functional components of useful articles, no matter how artistically designed, have generally been denied copyright
protection unless they are separable from the useful article.37

In this case, the petitioner’s models are not works of applied art, nor artistic works. They are utility models, useful articles, albeit with no
artistic design or value. Thus, the petitioner described the utility model as follows:

LEAF SPRING EYE BUSHING FOR AUTOMOBILE

Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber bushings after a time,
upon subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of the leaf spring.

The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.

Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant soft
texture plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure brought
about by the up and down movement of said leaf spring.

Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the rubber
bushings.

Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can be
made using simple and ordinary molding equipment.

A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to reinforce the
plastic eye bushing when in engaged with the steel material of the leaf spring.

These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.

Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;

Figure 2 is a sectional view taken along line 2-2 of Fig. 1;

Figure 3 is a longitudinal sectional view of another embodiment of this utility model;

Figure 4 is a perspective view of a third embodiment; and

Figure 5 is a sectional view thereof.

Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is shown a
utility model for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.

Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.

As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a cylindrical
metal jacket 14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring bushing 10 is installed, the metal jacket 14 acts
with the leaf-spring eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not be directly in contact with
steel, but rather the metal jacket, making the life of the bushing 10 longer than those without the metal jacket.

In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard
polypropylene plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and replacement
therefor.

Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17 to
reinforce the inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf
spring and the automobile’s chassis.

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction. Said another
embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel tube 17 and metal jacket 14 may also be applied
to this embodiment as an option thereof.38

VEHICLE BEARING CUSHION

Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These rubber bushings after a
time, upon subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling of the center
bearing.

The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.

Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture plastic
material which causes cushion to the propeller’s center bearing, yet strong enough to endure pressure brought about by the vibration of the
center bearing.

Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.

Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using simple
and ordinary molding equipment.

These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in
conjunction with the accompanying drawings.

Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and

Figure 2 is a sectional view thereof.

Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown a utility
model for a vehicle-bearing cushion generally designated as reference numeral 10.

Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not
shown). As shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.

The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is strong,
durable and capable of enduring severe pressure from the center bearing brought about by the rotating movement of the propeller shaft of
the vehicle.39

A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable. It may be, or may
relate to, a product, or process, or an improvement of any of the aforesaid.40Essentially, a utility model refers to an invention in the
mechanical field. This is the reason why its object is sometimes described as a device or useful object.41 A utility model varies from an
invention, for which a patent for invention is, likewise, available, on at least three aspects: first, the requisite of "inventive step"42 in a patent
for invention is not required; second, the maximum term of protection is only seven years43 compared to a patent which is twenty
years,44 both reckoned from the date of the application; and third, the provisions on utility model dispense with its substantive
examination45 and prefer for a less complicated system.

Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the Leaf
Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative quality or value that must characterize
authentic works of applied art. They are not even artistic creations with incidental utilitarian functions or works incorporated in a useful
article. In actuality, the personal properties described in the search warrants are mechanical works, the principal function of which is
utility sans any aesthetic embellishment.

Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase "other literary,
scholarly, scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle of ejusdem generis which states that
"where a statute describes things of a particular class or kind accompanied by words of a generic character, the generic word will usually be
limited to things of a similar nature with those particularly enumerated, unless there be something in the context of the state which would
repel such inference,"46 the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the same kind and
nature as the works enumerated in Section 172 of R.A. No. 8293.

No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright registration
and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed, inJoaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.),
Incorporated v. Shoemart, Incorporated,48 the Court ruled that:

Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the statute, and not simply a
pre-existing right regulated by it. Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed
only with respect to the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, it can cover only the
works falling within the statutory enumeration or description.

That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for violation
of copyright laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,50 the Court ruled that
"these copyright and patent rights are completely distinct and separate from one another, and the protection afforded by one cannot be
used interchangeably to cover items or works that exclusively pertain to the others." The Court expounded further, thus:

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any
visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise.
Meanwhile, the scope of a copyright is confined to literary and artistic works which are original intellectual creations in the literary and
artistic domain protected from the moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is industrially applicable.

The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein51 to buttress his petition. In that case,
the artifacts involved in that case were statuettes of dancing male and female figures made of semi-vitreous china. The controversy therein
centered on the fact that although copyrighted as "works of art," the statuettes were intended for use and used as bases for table lamps,
with electric wiring, sockets and lampshades attached. The issue raised was whether the statuettes were copyright protected in the United
States, considering that the copyright applicant intended primarily to use them as lamp bases to be made and sold in quantity, and carried
such intentions into effect. At that time, the Copyright Office interpreted the 1909 Copyright Act to cover works of artistic craftsmanship
insofar as their form, but not the utilitarian aspects, were concerned. After reviewing the history and intent of the US Congress on its
copyright legislation and the interpretation of the copyright office, the US Supreme Court declared that the statuettes were held
copyrightable works of art or models or designs for works of art. The High Court ruled that:

"Works of art (Class G) – (a) – In General. This class includes works of artistic craftsmanship, in so far as their form but not their
mechanical or utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works belonging
to the fine arts, such as paintings, drawings and sculpture. …"

So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that would allow
the registration of such a statuette as is in question here.52

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

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

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

IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are
ANNULLED AND SET ASIDE. Costs against the petitioner.
SO ORDERED.

2. G.R. No. 184850               October 20, 2010Non-Use

Sec. 152
1. E.Y. Industrial Sales v. Shen Dar Electricity G.R. No.184850, October 20, 2010

E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners, 

vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008 Decision1and the October 6, 2008
Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y.
Industrial Sales, Inc. and Engracio Yap.

The assailed decision reversed the Decision dated May 25, 20073 issued by the Director General of the Intellectual Property Office (IPO) in
Inter Partes Case No. 14-2004-00084. The IPO Director General upheld Certificate of Registration (COR) No. 4-1999-005393 issued by the
IPO for the trademark "VESPA" in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the cancellation of COR No. 4-1997-
121492, also for the trademark "VESPA," issued in favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The
Decision of the IPO Director General, in effect, affirmed the Decision dated May 29, 20064 issued by the Director of the Bureau of Legal
Affairs (BLA) of the IPO.

The Facts

EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other industrial tools and
equipment.5 Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS.6

Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air compressors.7

Both companies claimed to have the right to register the trademark "VESPA" for air compressors.

From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Sales Contract dated April 20, 2002,8 for
example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of air compressors identified in the
Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of Ladings, the items
were described merely as air compressors.9 There is no documentary evidence to show that such air compressors were marked "VESPA."

On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with the IPO for the mark "VESPA, Chinese Characters
and Device" for use on air compressors and welding machines.10

On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the mark "VESPA," for use on air compressors.11 On
January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of EYIS.12Thereafter, on February 8, 2007, Shen Dar was also issued
COR No. 4-1997-121492.13

In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS’ COR with the BLA.14 In the Petition, Shen Dar
primarily argued that the issuance of the COR in favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA)
8293, otherwise known as the Intellectual Property Code (IP Code), having first filed an application for the mark. Shen Dar further alleged
that EYIS was a mere distributor of air compressors bearing the mark "VESPA" which it imported from Shen Dar. Shen Dar also argued
that it had prior and exclusive right to the use and registration of the mark "VESPA" in the Philippines under the provisions of the Paris
Convention.15

In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark "VESPA" being the sole assembler and
fabricator of air compressors since the early 1990s. They further alleged that the air compressors that Shen Dar allegedly supplied them
bore the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS argued that Shen Dar, not being the owner of the mark, could not seek
protection from the provisions of the Paris Convention or the IP Code.16

Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and against Shen Dar, the dispositive portion of
which reads:
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED. Consequently, Certificate of Registration No.
4-1999-[005393] for the mark "VESPA" granted in the name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby upheld.

Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative, Financial and Human Resource Development
Services Bureau for issuance and appropriate action in accordance with this DECISION and a copy thereof furnished to the Bureau of
Trademarks for information and update of its records.

SO ORDERED.17

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal, Shen Dar raised the following issues:

1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence;

2. Whether the registration of EYIS’ application was proper considering that Shen Dar was the first to file an application for the
mark; and

3. Whether the BLA Director correctly ruled that EYIS is the true owner of the mark.18

Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR issued in favor of EYIS while cancelling the COR
of Shen Dar, the dispositive portion of which reads:

WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-005393 for the mark VESPA for air
compressor issued in favor of Appellee is hereby upheld. Consequently, Certificate of Registration No. 4-1997-121492 for the mark VESPA,
Chinese Characters & Device for goods air compressor and spot welding machine issued in favor of Appellant is hereby ordered cancelled.

Let a copy of this Decision as well as the records of this case be furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of Trademarks, the Administrative, Financial and Human Resources
Development Services Bureau, and the Documentation, Information and Technology Transfer Bureau be furnished a copy of this Decision
for information, guidance, and records purposes.19

Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised the following issues:

1. Whether Shen Dar is guilty of forum shopping;

2. Whether the first-to-file rule applies to the instant case;

3. Whether Shen Dar presented evidence of actual use;

4. Whether EYIS is the true owner of the mark "VESPA";

5. Whether the IPO Director General erred in cancelling Shen Dar’s COR No. 4-1997-121492 without a petition for cancellation;
and

6. Whether Shen Dar sustained damages.20

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar. The dispositive portion states:

WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of the Director General of the
Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET ASIDE. In lieu thereof, a new one is entered: a) ordering
the cancellation of Certificate of Registration No. 4-1999-005393 issued on January 19, 2004 for the trademark VESPA in favor of E.Y.
Industrial Sales, Inc.; b) ordering the restoration of the validity of Certificate of Registration No. 4-1997-121492 for the trademark VESPA in
favor of Shen Dar Electricity and Machinery Co., Ltd. No pronouncement as to costs.

SO ORDERED.21

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its evidence before the BLA, such evidence
was properly attached to the Petition for Cancellation. As such, Shen Dar’s evidence may be properly considered. The CA also enunciated
that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a trademark in favor of a
party when there is an earlier filed application for the same mark. The CA further ruled that Shen Dar should be considered to have prior
use of the mark based on the statements made by the parties in their respective Declarations of Actual Use. The CA added that EYIS is a
mere importer of the air compressors with the mark "VESPA" as may be gleaned from its receipts which indicated that EYIS is an importer,
wholesaler and retailer, and therefore, cannot be considered an owner of the mark.22

EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed resolution.
Hence, the instant appeal.

Issues

EYIS and Yap raise the following issues in their petition:

A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the trademark VESPA.

B. Whether the Director General of the IPO can, under the circumstances, order the cancellation of Respondent’s certificate of
registration for VESPA, which has been fraudulently obtained and erroneously issued.

C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the IPO, which affirm the rights of
Petitioner EYIS over the trademark VESPA and when such findings are supported by the evidence on record.

D. Whether this Honorable Court may review questions of fact considering that the findings of the Court of Appeals and the IPO
are in conflict and the conclusions of the appellee court are contradicted by the evidence on record.23

The Ruling of the Court

The appeal is meritorious.

First Issue:

Whether this Court may review the questions of fact presented

Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court is not a trier of facts. However, such
rule is subject to exceptions.

In New City Builders, Inc. v. National Labor Relations Commission,24 the Court ruled that:

We are very much aware that the rule to the effect that this Court is not a trier of facts admits of exceptions. As we have stated in Insular
Life Assurance Company, Ltd. vs. CA:

[i]t is a settled rule that in the exercise of the Supreme Court’s power of review, the Court is not a trier of facts and does not normally
undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings
of facts of the CA are conclusive and binding on the Court. However, the Court had recognized several exceptions to this rule, to wit: (1)
when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as
in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. (Emphasis supplied.)

In the instant case, the records will show that the IPO and the CA made differing conclusions on the issue of ownership based on the
evidence presented by the parties. Hence, this issue may be the subject of this Court’s review.

Second Issue:

Whether evidence presented before the BLA must be formally offered

Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support of its allegations as required under
Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes Proceedings, having failed to formally offer its
evidence during the proceedings before it. The BLA ruled:

At the outset, we note petitioner’s failure to adduce any evidence in support of its allegations in the Petition for Cancellation. Petitioner did
not file nor submit its marked evidence as required in this Bureau’s Order No. 2006-157 dated 25 January 2006 in compliance with Office
Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes Proceedings.25 x x x

In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and 8 of the rules on summary
proceedings shall be construed as a waiver on the part of the parties. In such a case, the original petition, opposition, answer and the
supporting documents therein shall constitute the entire evidence for the parties subject to applicable rules.

The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach its evidence to its position paper with
the proper markings,26 which it did in this case.

The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish the procedure for the application for the
registration of a trademark, as well as the opposition to it:

Section 10. The Bureau of Legal Affairs.¾The Bureau of Legal Affairs shall have the following functions:

xxxx

10.3. The Director General may by Regulations establish the procedure to govern the implementation of this Section.

Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on Inter Partes Proceedings, Sec. 12.1 of
which provides:

Section 12. Evidence for the Parties¾

12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the documents submitted, shall constitute
the entire evidence for the petitioner or opposer. The verified answer, rejoinder if any, and the duly marked affidavits and documents
submitted shall constitute the evidence for the respondent. Affidavits, documents and other evidence not submitted and duly marked in
accordance with the preceding sections shall not be admitted as evidence.

The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn, provide:

Section 7. Filing of Petition or Opposition¾

7.1. The petition or opposition, together with the affidavits of witnesses and originals of the documents and other requirements, shall be
filed with the Bureau, provided, that in case of public documents, certified copies shall be allowed in lieu of the originals. The Bureau shall
check if the petition or opposition is in due form as provided in the Regulations particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5,
Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and 4. For petition for cancellation of layout design (topography)
of integrated circuits, Rule 3, Section 3 applies as to the form and requirements. The affidavits, documents and other evidence shall be
marked consecutively as "Exhibits" beginning with the letter "A".

Section 8. Answer¾

8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue an order for the respondent to file an
answer together with the affidavits of witnesses and originals of documents, and at the same time shall notify all parties required to be
notified in the IP Code and these Regulations, provided, that in case of public documents, certified true copies may be submitted in lieu of
the originals. The affidavits and documents shall be marked consecutively as "Exhibits" beginning with the number "1".

Section 9. Petition or Opposition and Answer must be verified¾ Subject to Rules 7 and 8 of these regulations, the petition or opposition and
the answer must be verified. Otherwise, the same shall not be considered as having been filed.

In other words, as long as the petition is verified and the pieces of evidence consisting of the affidavits of the witnesses and the original of
other documentary evidence are attached to the petition and properly marked in accordance with Secs. 7.1 and 8.1 abovementioned, these
shall be considered as the evidence of the petitioner. There is no requirement under the abovementioned rules that the evidence of the
parties must be formally offered to the BLA.

In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on Inter Partes Proceedings, the BLA is not
bound by technical rules of procedure. The evidence attached to the petition may, therefore, be properly considered in the resolution of the
case.

Third Issue:

Whether the IPO Director General can

validly cancel Shen Dar’s Certificate of Registration

In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the cancellation of the COR issued in
favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen Dar must be cancelled. The Director General
explained:
Accordingly, while the instant case involves a petition to cancel the registration of the Appellee’s trademark VESPA, the interest of justice
requires that Certificate of Registration No. 4-1997-121492 be cancelled. While the normal course of proceedings should have been the
filing of a petition for cancellation of Certificate of Registration No. 4-1997-121492, that would involve critical facts and issues that have
already been resolved in this case. To allow the Applicant to still maintain in the Trademark Registry Certificate of Registration No. 4-1997-
121492 would nullify the exclusive rights of Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the
trademark registration system.27

Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as required under Sec. 151
of RA 8293.

Office Order No. 79, Series of 2005, provides under its Sec. 5 that:

Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.¾The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be
bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of
proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases,
and which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis supplied.)

The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound by technical rules of
procedure. Such principle, however, is tempered by fundamental evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr. v.
Arpaphil Shipping Corp.:28

That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of procedure in the adjudication of cases does not
mean that the basic rules on proving allegations should be entirely dispensed with. A party alleging a critical fact must still support his
allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due process.

x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic requirements of due process. As this
Court said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure "does not go so far as to justify orders without a basis
in evidence having rational probative value." More specifically, as held in Uichico v. NLRC:

It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of
cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules.

This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:29

While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the
adjudication of cases, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. The
evidence presented must at least have a modicum of admissibility for it to have probative value. Not only must there be some evidence to
support a finding or conclusion, but the evidence must be substantial. Substantial evidence is more than a mere scintilla. It means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Thus, even though technical rules of evidence
are not strictly complied with before the LA and the NLRC, their decision must be based on evidence that must, at the very least, be
substantial.

The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the cancellation of Shen Dar’s
COR. It must be emphasized that, during the hearing for the cancellation of EYIS’ COR before the BLA, Shen Dar tried to establish that it,
not EYIS, was the true owner of the mark "VESPA" and, thus, entitled to have it registered. Shen Dar had more than sufficient opportunity
to present its evidence and argue its case, and it did. It was given its day in court and its right to due process was respected. The IPO
Director General’s disregard of the procedure for the cancellation of a registered mark was a valid exercise of his discretion.

Fourth Issue:

Whether the factual findings of the IPO are binding on the CA

Next, petitioners challenge the CA’s reversal of the factual findings of the BLA that Shen Dar and not EYIS is the prior user and, therefore,
true owner of the mark. In arguing its position, petitioners cite numerous rulings of this Court where it was enunciated that the factual
findings of administrative bodies are given great weight if not conclusive upon the courts when supported by substantial evidence.

We agree with petitioners that the general rule in this jurisdiction is that the factual findings of administrative bodies deserve utmost respect
when supported by evidence. However, such general rule is subject to exceptions.

In Fuentes v. Court of Appeals,30 the Court established the rule of conclusiveness of factual findings of the CA as follows:

Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of Appeals x x x is limited to the
review and revision of errors of law allegedly committed by the appellate court, as its findings of fact are deemed conclusive. As such this
Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. This rule, however,
is not without exceptions." The findings of fact of the Court of Appeals, which are as a general rule deemed conclusive, may admit of review
by this Court:
 (1) when the factual findings of the Court of Appeals and the trial court are contradictory;

(2) when the findings are grounded entirely on speculation, surmises, or conjectures;

(3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or impossible;

(4) when there is grave abuse of discretion in the appreciation of facts;

(5) when the appellate court, in making its findings, goes beyond the issues of the case, and such findings are contrary to the
admissions of both appellant and appellee;

(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;

(7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will justify a different
conclusion;

(8) when the findings of fact are themselves conflicting;

(9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and

(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such findings are
contradicted by the evidence on record. (Emphasis supplied.)

Thereafter, in Villaflor v. Court of Appeals,31 this Court applied the above principle to factual findings of quasi-judicial bodies, to wit:

Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court of Appeals, enumerated
in Fuentes vs. Court of Appeals, can also be applied to those of quasi-judicial bodies x x x. (Emphasis supplied.)

Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO Director General which it opined, when
correctly appreciated, would alter the result of the case. An examination of the IPO Decisions, however, would show that no such evidence
was overlooked.

First, as to the date of first use of the mark by the parties, the CA stated:

To begin with, when respondents-appellees filed its application for registration of the VESPA trademark on July 28, 1999, they stated under
oath, as found in their DECLARATION OF ACTUAL USE, that their first use of the mark was on December 22, 1998. On the other hand,
[Shen Dar] in its application dated June 09, 1997 stated, likewise under oath in their DECLARATION OF ACTUAL USE, that its first use of
the mark was in June 1996. This cannot be made any clearer. [Shen Dar] was not only the first to file an application for registration but
likewise first to use said registrable mark.32

Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of the parties in their respective
Declarations of Actual Use. Such conclusion is premature at best. While a Declaration of Actual Use is a notarized document, hence, a
public document, it is not conclusive as to the fact of first use of a mark. The declaration must be accompanied by proof of actual use as of
the date claimed. In a declaration of actual use, the applicant must, therefore, present evidence of such actual use.

The BLA ruled on the same issue, as follows:

More importantly, the private respondent’s prior adoption and continuous use of the mark ‘VESPA’ on air compressors is bolstered by
numerous documentary evidence consisting of sales invoices issued in the name of E.Y. Industrial and Bill of Lading (Exhibits ‘4’ to ‘375’).
Sales Invoice No. 12075 dated March 27, 1995 antedates petitioner’s date of first use on January 1, 1997 indicated in its trademark
application filed on June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of Actual Use submitted on
December 3, 2001 (Exhibit ‘385’). The use by respondent registrant in the concept of owner is shown by commercial documents, sales
invoices unambiguously describing the goods as "VESPA" air compressors. Private respondents have sold the air compressors bearing the
"VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990’s. We carefully inspected the
evidence consisting of three hundred seventy-one (371) invoices and shipment documents which show that VESPA air compressors were
sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City, Cagayan de Oro City, Davao City,
to name a few. There is no doubt that it is through private respondents’ efforts that the mark "VESPA" used on air compressors has gained
business goodwill and reputation in the Philippines for which it has validly acquired trademark rights. Respondent E.Y. Industrial’s right has
been preserved until the passage of RA 8293 which entitles it to register the same.33

Comparatively, the BLA’s findings were founded upon the evidence presented by the parties. An example of such evidence is Invoice No.
12075 dated March 29, 199534 where EYIS sold four units of VESPA air compressors to Veteran Paint Trade Center. Shen Dar failed to
rebut such evidence. The truth, as supported by the evidence on record, is that EYIS was first to use the mark.

Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the proof submitted was appropriately
considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the concept of an owner as early as 1991.
Although Respondent E.Y. indicated in its trademark application that its first use was in December 22, 1998, it was able to prove by clear
and positive evidence of use prior to such date.

In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the High Court clarified: Where an applicant for
registration of a trademark states under oath the date of his earliest use, and later on he wishes to carry back his first date of use to an
earlier date, he then takes on the greater burden of presenting "clear and convincing evidence" of adoption and use as of that earlier date.
(B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.)35

The CA further found that EYIS is not a manufacturer of air compressors but merely imports and sells them as a wholesaler and retailer.
The CA reasoned:

Conversely, a careful perusal of appellees’ own submitted receipts shows that it is not manufacturer but an importer, wholesaler and
retailer. This fact is corroborated by the testimony of a former employee of appellees. Admittedly too, appellees are importing air
compressors from [Shen Dar] from 1997 to 2004. These matters, lend credence to [Shen Dar’s] claim that the letters SD followed by a
number inscribed in the air compressor is only to describe its type, manufacturer business name and capacity. The VESPA mark is in the
sticker which is attached to the air compressors. The ruling of the Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs.
General Milling Corporation et al., is quite enlightening, thus We quote:

"The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other mark of ownership,
unless such importer is actually the owner thereof in the country from which the goods are imported. Thus, this Court, has on several
occasions ruled that where the applicant’s alleged ownership is not shown in any notarial document and the applicant appears to be merely
an importer or distributor of the merchandise covered by said trademark, its application cannot be granted."36

This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an importer, wholesaler and retailer does
not preclude its being a manufacturer. Sec. 237 of the National Internal Revenue Code states:

Section 237. Issuance of Receipts or Sales or Commercial Invoices.¾All persons subject to an internal revenue tax shall, for each sale and
transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or
commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or
nature of service: Provided, however, That where the receipt is issued to cover payment made as rentals, commissions, compensation or
fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or
client.

The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if
engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3)
years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the
issuer, also in his place of business, for a like period.

The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with the provisions of
this Section. (Emphasis supplied.)

Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal Revenue defined a Sales Invoice and
identified its required information as follows:

Sales Invoices (SI)/Cash Invoice (CI) – is written account of goods sold or services rendered and the prices charged therefor used in the
ordinary course of business evidencing sale and transfer or agreement to sell or transfer of goods and services. It contains the same
information found in the Official Receipt.

Official Receipt (OR) – is a receipt issued for the payment of services rendered or goods sold. It contains the following information:

a. Business name and address;

b. Taxpayer Identification Number;

c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of issuance of receipts.

There is no requirement that a sales invoice should accurately state the nature of all the businesses of the seller. There is no legal ground
to state that EYIS’ "declaration" in its sales invoices that it is an importer, wholesaler and retailer is restrictive and would preclude its being
a manufacturer.

From the above findings, there was no justifiable reason for the CA to disregard the factual findings of the IPO. The rulings of the IPO
Director General and the BLA Director were supported by clear and convincing evidence. The facts cited by the CA and Shen Dar do not
justify a different conclusion from that of the IPO. Hence, the findings of the BLA Director and the IPO Director General must be deemed as
conclusive on the CA.

Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"

In any event, given the length of time already invested by the parties in the instant case, this Court must write finis to the instant controversy
by determining, once and for all, the true owner of the mark "VESPA" based on the evidence presented.

RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:

Section 123. Registrability. - 123.1. A mark cannot be registered if it:

xxxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of:

(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis supplied.)

Under this provision, the registration of a mark is prevented with the filing of an earlier application for registration. This must not, however,
be interpreted to mean that ownership should be based upon an earlier filing date. While RA 8293 removed the previous requirement of
proof of actual use prior to the filing of an application for registration of a mark, proof of prior and continuous use is necessary to establish
ownership of a mark. Such ownership constitutes sufficient evidence to oppose the registration of a mark.

Sec. 134 of the IP Code provides that "any person who believes that he would be damaged by the registration of a mark x x x" may file an
opposition to the application. The term "any person" encompasses the true owner of the mark¾the prior and continuous user.

Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive ownership of the registrant
and be held as the owner of the mark. As aptly stated by the Court in Shangri-la International Hotel Management, Ltd. v. Developers Group
of Companies, Inc.:37

Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is
merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the
mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be
declared owner in an appropriate case.

xxxx

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As
between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter.
For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business
is a pre-requisite to the acquisition of the right of ownership.

xxxx

By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has
no right to apply for registration of the same. Registration merely creates a prima facie presumption of the validity of the registration, of the
registrant’s ownership of the trademark and of the exclusive right to the use thereof. Such presumption, just like the presumptive regularity
in the performance of official functions, is rebuttable and must give way to evidence to the contrary.

Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of the mark. The
exhaustive discussion on the matter made by the BLA sufficiently addresses the issue:

Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying, importing, selling, industrial machineries
and tools, manufacturing, among others since its incorporation in 1988. (Exhibit "1"). Indeed private respondents have submitted
photographs (Exhibit "376", "377", "378", "379") showing an assembly line of its manufacturing or assembly process. 1avvphi1

More importantly, the private respondent’s prior adoption and continuous use of the mark "VESPA" on air compressors is bolstered by
numerous documentary evidence consisting of sales invoices issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits
"4" to "375"). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioner’s date of first use in January 1, 1997 indicated in its
trademark application filed in June 9, 1997 as well as the date of first use in June of 1996 as indicated in the Declaration of Actual Use
submitted on December 3, 2001 (Exhibit "385"). The use by respondent-registrant in the concept of owner is shown by commercial
documents, sales invoices unambiguously describing the goods as "VESPA" air compressors. Private respondents have sold the air
compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990’s. We
carefully inspected the evidence consisting of three hundred seventy one (371) invoices and shipment documents which show that
"VESPA" air compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga City,
Cagayan de Oro City, Davao City to name a few. There is no doubt that it is through private respondents’ efforts that the mark "VESPA"
used on air compressors has gained business goodwill and reputation in the Philippines for which it has validly acquired trademark rights.
Respondent EY Industrial’s right has been preserved until the passage of RA 8293 which entitles it to register the same. x x x38

On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar failed to present
sufficient evidence to prove its own prior use of the mark "VESPA." We cite with approval the ruling of the BLA:

[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air compressors. The thrust of [Shen Dar’s]
argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor of the "VESPA" air compressors. We disagree.

This conclusion is belied by the evidence. We have gone over each and every document attached as Annexes "A", "A" 1-48 which consist
of Bill of Lading and Packing Weight List. Not one of these documents referred to a "VESPA" air compressor. Instead, it simply describes
the goods plainly as air compressors which is type "SD" and not "VESPA". More importantly, the earliest date reflected on the Bill of Lading
was on May 5, 1997. (Annex – "A"-1). [Shen Dar] also attached as Annex "B" a purported Sales Contract with respondent EY Industrial
Sales dated April 20, 2002. Surprisingly, nowhere in the document does it state that respondent EY Industrial agreed to sell "VESPA" air
compressors. The document only mentions air compressors which if genuine merely bolsters respondent Engracio Yap’s contention that
[Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air compressor. (Exhibit "386") In its position paper, [Shen Dar] merely
mentions of Bill of Lading constituting respondent as consignee in 1993 but never submitted the same for consideration of this Bureau. The
document is also not signed by [Shen Dar]. The agreement was not even drafted in the letterhead of either [Shen Dar] nor [sic] respondent
– registrant. Our only conclusion is that [Shen Dar] was not able to prove to be the owner of the VESPA mark by appropriation. Neither was
it able to prove actual commercial use in the Philippines of the mark VESPA prior to its filing of a trademark application in 9 June 1997.39

As such, EYIS must be considered as the prior and continuous user of the mark "VESPA" and its true owner. Hence, EYIS is entitled to the
registration of the mark in its name.

WHEREFORE, the petition is hereby GRANTED. The CA’s February 21, 2008 Decision and October 6, 2008 Resolution in CA-G.R. SP No.
99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2007 issued by the IPO Director General in Inter Partes Case
No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of the IPO are hereby REINSTATED.

No costs.

SO ORDERED.

3. G.R. No. 169974               April 20, 2010

SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner, 
vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC., Respondents.

DECISION

BRION, J.:

We review in this petition for review on certiorari1 the (1) decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 60777 that reversed the
ruling of the Regional Trial Court of Quezon City, Branch 85 (RTC),3 and dismissed the petitioner Superior Commercial Enterprises, Inc.’s
(SUPERIOR) complaint for trademark infringement and unfair competition (with prayer for preliminary injunction) against the respondents
Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor, Inc. (SPORTS CONCEPT); and (2) the CA resolution4 that denied
SUPERIOR’s subsequent motion for reconsideration. The RTC decision that the CA reversed found the respondents liable for trademark
infringement and unfair competition, and ordered them to pay SUPERIOR P2,000,000.00 in damages,P500,000.00 as attorney’s fees, and
costs of the suit.

THE FACTUAL ANTECEDENTS

On February 23, 1993, SUPERIOR5 filed a complaint for trademark infringement and unfair competition with preliminary injunction against
KUNNAN6 and SPORTS CONCEPT7 with the RTC, docketed as Civil Case No. Q-93014888.

In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company names and business
names8 "KENNEX",9 "KENNEX & DEVICE",10 "PRO KENNEX"11 and "PRO-KENNEX" (disputed trademarks).12 Second, it also asserted its
prior use of these trademarks, presenting as evidence of ownership the Principal and Supplemental Registrations of these trademarks in its
name. Third, SUPERIOR also alleged that it extensively sold and advertised sporting goods and products covered by its trademark
registrations. Finally, SUPERIOR presented as evidence of its ownership of the disputed trademarks the preambular clause of the
Distributorship Agreement dated October 1, 1982 (Distributorship Agreement) it executed with KUNNAN, which states:

Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the [sic] Superior in the Philippines. Whereas,
the [sic] Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the territory of the Philippines." [Emphasis
supplied.]13
In its defense, KUNNAN disputed SUPERIOR’s claim of ownership and maintained that SUPERIOR – as mere distributor from October 6,
1982 until December 31, 1991 – fraudulently registered the trademarks in its name. KUNNAN alleged that it was incorporated in 1972,
under the name KENNEX Sports Corporation for the purpose of manufacturing and selling sportswear and sports equipment; it
commercially marketed its products in different countries, including the Philippines since 1972.14 It created and first used "PRO KENNEX,"
derived from its original corporate name, as a distinctive trademark for its products in 1976. KUNNAN also alleged that it registered the
"PRO KENNEX" trademark not only in the Philippines but also in 31 other countries, and widely promoted the "KENNEX" and "PRO
KENNEX" trademarks through worldwide advertisements in print media and sponsorships of known tennis players.

On October 1, 1982, after the expiration of its initial distributorship agreement with another company,15 KUNNAN appointed SUPERIOR as
its exclusive distributor in the Philippines under a Distributorship Agreement whose pertinent provisions state:16

Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in the Philippines. Whereas, the
Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the territory of the Philippines.

Now, therefore, the parties hereto agree as follows:

1. KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in the Philippines, and this
Agreement could be renewed with the consent of both parties upon the time of expiration.

2. The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark, under the registration of
Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects [sic] of its ten (10) years contract of distributorship,
and it is required that the ownership of the said trademark shall be genuine, complete as a whole and without any defects.

3. KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX PRODUCTS in the
Philippines except only to the Superior. If KUNNAN violates this stipulation, the transfer of the KENNEX trademark shall be null
and void.

4. If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the agent in the
Philippines with full power to exercise and granted the power of attorney, to pursue any case of Pirating, Infringement and
Counterfeiting the [sic] KENNEX trade mark in the Philippine territory.

5. The Superior will be granted from [sic] KUNNAN’s approval before making and selling any KENNEX products made in the
Philippines and the other countries, and if this is the situation, KUNNAN is entitled to have a royalty of 5%-8% of FOB as the
right.

6. Without KUNNAN’s permission, the Superior cannot procure other goods supply under KENNEX brand of which are not
available to supply [sic] by KUNNAN. However, in connection with the sporting goods, it is permitted that the Superior can
procure them under KENNEX brand of which are not available to be supplied by KUNNAN. [Emphasis supplied.]

Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of the KENNEX trademark to KUNNAN,
the latter claimed that the Certificate of Registration for the KENNEX trademark remained with SUPERIOR because Mariano Tan Bon
Diong (Mr. Tan Bon Diong), SUPERIOR’s President and General Manager, misled KUNNAN’s officers into believing that KUNNAN was not
qualified to hold the same due to the "many requirements set by the Philippine Patent Office" that KUNNAN could not meet.17 KUNNAN
further asserted that SUPERIOR deceived it into assigning its applications for registration of the "PRO KENNEX" trademark in favor of
SUPERIOR, through an Assignment Agreement dated June 14, 1983 whose pertinent provisions state:18

1. In consideration of the distributorship relationship between KUNNAN and

Superior, KUNNAN, who is the seller in the distributorship relationship, agrees to
assign the following trademark applications owned by itself in the Philippines to
Superior who is the buyer in the distributorship relationship.

Trademark Application Number Class

PROKENNEX 49999 28

PROKENNEX 49998 25

PROKENNEX 49997 18

2. Superior shall acknowledge that KUNNAN is still the real and truthful owner of the abovementioned trademarks, and shall
agree that it will not use the right of the abovementioned trademarks to do anything which is unfavourable or harmful to
KUNNAN.

3. Superior agrees that it will return back the abovementioned trademarks to KUNNAN without hesitation at the request of
KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment of the abovementioned trademarks shall be
compensated by KUNNAN. 1avvphi1
 4. Superior agrees that the abovementioned trademarks when requested by KUNNAN shall be clean and without any
incumbency.

5. Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to reassign or license the
said trademarks to any other parties except KUNNAN. [Emphasis supplied]

Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN filed with the now defunct
Bureau of Patents, Trademarks and Technology Transfer19 separate Petitions for the Cancellation of Registration Trademark Nos. 41032,
SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710, 3811, 3812, 3813 and 3814, as well as
Opposition to Application Serial Nos. 84565 and 84566, docketed as Inter Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for
Cancellation) involving the KENNEX and PRO KENNEX trademarks.20 In essence, KUNNAN filed the Petition for Cancellation and
Opposition on the ground that SUPERIOR fraudulently registered and appropriated the disputed trademarks; as mere distributor and not as
lawful owner, it obtained the registrations and assignments of the disputed trademarks in violation of the terms of the Distributorship
Agreement and Sections 2-A and 17 of Republic Act No. 166, as amended.21

On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed SPORTS CONCEPT as
its new distributor. Subsequently, KUNNAN also caused the publication of a Notice and Warning in the Manila Bulletin’s January 29, 1993
issue, stating that (1) it is the owner of the disputed trademarks; (2) it terminated its Distributorship Agreement with SUPERIOR; and (3) it
appointed SPORTS CONCEPT as its exclusive distributor. This notice prompted SUPERIOR to file its Complaint for Infringement of
Trademark and Unfair Competition with Preliminary Injunction against KUNNAN.22

The RTC Ruling

On March 31, 1998, the RTC issued its decision23 holding KUNNAN liable for trademark infringement and unfair competition. The RTC also
issued a writ of preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using the disputed trademarks.

The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the disputed trademarks in the Philippines, based
on the findings of the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR was "rightfully entitled to register the
mark ‘KENNEX’ as user and owner thereof." It also considered the "Whereas clause" of the Distributorship Agreement, which categorically
stated that "KUNNAN intends to acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines." According to
the RTC, this clause amounts to KUNNAN’s express recognition of SUPERIOR’s ownership of the KENNEX trademarks.24

KUNNAN and SPORTS CONCEPT appealed the RTC’s decision to the CA where the appeal was docketed as CA-G.R. CV No. 60777.
KUNNAN maintained that SUPERIOR was merely its distributor and could not be the owner of the disputed trademarks. SUPERIOR, for its
part, claimed ownership based on its prior use and numerous valid registrations.

Intervening Developments:

The IPO and CA Rulings

In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and Motion praying that the decision of the
Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the Consolidated Petitions for
Cancellation be made of record and be considered by the CA in resolving the case.25The BLA ruled in this decision –

In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its rights to the mark "PRO KENNEX". It
was proven that actual use by Respondent-Registrant is not in the concept of an owner but as a mere distributor (Exhibits "I", "S" to "S-1",
"P" and "P-1" and "Q" and "Q-2") and as enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere
distributor of a product bearing a trademark, even if permitted to use said trademark has no right to and cannot register the said trademark."

WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the prior user and owner of the trademark
"PRO-KENNEX", the consolidated Petitions for Cancellation and the Notices of Opposition are hereby GRANTED. Consequently, the
trademark "PRO-KENNEX" bearing Registration Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of
Superior Commercial Enterprises, Inc., herein Respondent-Registrant under the Principal Register and SR No. 6663 are hereby
CANCELLED. Accordingly, trademark application Nos. 84565 and 84566, likewise for the registration of the mark PRO-KENNEX are
hereby REJECTED.

Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative Finance and Human Resources
Development Services Bureau (AFHRDSB) for appropriate action in accordance with this Decision and a copy thereof be furnished the
Bureau of Trademarks (BOT) for information and update of its record.26

On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director General’s decision on appeal dated
December 8, 2004, denying SUPERIOR’s appeal, be given weight in the disposition of the case.27 The dispositive portion of the decision
reads:28

WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30 October 2003 rendered by the
Director of the Bureau of Legal Affairs. Accordingly, the instant appeal is DENIED and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director General’s ruling before the Court of Appeals on a petition for review
under Rule 43 of the Rules of Court, docketed as CA–G.R. SP No. 87928 (Registration Cancellation Case). On August 30, 2007, the CA
rendered its decision dismissing SUPERIOR’s petition.29 On December 3, 2007, the CA decision was declared final and executory and entry
of judgment was accordingly made. Hence, SUPERIOR’s registration of the disputed trademarks now stands effectively cancelled.

The CA Ruling

On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside the RTC’s decision of March 31,
1998.30 It dismissed SUPERIOR’s Complaint for Infringement of Trademark and Unfair Competition with Preliminary Injunction on the
ground that SUPERIOR failed to establish by preponderance of evidence its claim of ownership over the KENNEX and PRO KENNEX
trademarks. The CA found the Certificates of Principal and Supplemental Registrations and the "whereas clause" of the Distributorship
Agreement insufficient to support SUPERIOR’s claim of ownership over the disputed trademarks.

The CA stressed that SUPERIOR’s possession of the aforementioned Certificates of Principal Registration does not conclusively establish
its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of registration alone;31 at best, registration
merely raises a presumption of ownership that can be rebutted by contrary evidence.32 The CA further emphasized that the Certificates of
Supplemental Registration issued in SUPERIOR’s name do not even enjoy the presumption of ownership accorded to registration in the
principal register; it does not amount to a prima facie evidence of the validity of registration or of the registrant’s exclusive right to use the
trademarks in connection with the goods, business, or services specified in the certificate.33

In contrast with the failure of SUPERIOR’s evidence, the CA found that KUNNAN presented sufficient evidence to rebut SUPERIOR’s
presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the rightful owner of the disputed
trademarks, was merely KUNNAN’s exclusive distributor. This conclusion was based on three pieces of evidence that, to the CA, clearly
established that SUPERIOR had no proprietary interest over the disputed trademarks.

First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed that SUPERIOR sought to be the
KUNNAN’s exclusive distributor. The CA based this conclusion on the following provisions of the Distributorship Agreement:

(1) that SUPERIOR was "desirous of [being] appointed as the sole distributor by KUNNAN in the territory of the Philippines;"

(2) that "KUNNAN will appoint the sole distributorship right to Superior in the Philippines;" and

(3) that "no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except only to Superior."

The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that "KUNNAN intends to acquire
ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines" without considering the entirety of the Distributorship
Agreement indicating that SUPERIOR had been merely appointed by KUNNAN as its distributor.

Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to "acknowledge that KUNNAN is
still the real and truthful owner of the [PRO KENNEX] trademarks," and that it "shall agree that it will not use the right of the
abovementioned trademarks to do anything which is unfavourable or harmful to KUNNAN." To the CA, these provisions are clearly
inconsistent with SUPERIOR’s claim of ownership of the disputed trademarks. The CA also observed that although the Assignment
Agreement was a private document, its authenticity and due execution was proven by the similarity of Mr. Tan Bon Diong’s signature in the
Distributorship Agreement and the Assignment Agreement.

Third, the CA also took note of SUPERIOR’s Letter dated November 12, 1986 addressed to Brig. Gen. Jose Almonte, identifying itself as
the "sole and exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX products." Attached to the letter
was an agreement with KUNNAN, identifying the latter as the "foreign manufacturer of all KENNEX products." The CA concluded that in
this letter, SUPERIOR acknowledged its status as a distributor in its dealings with KUNNAN, and even in its transactions with third persons.

Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the registration of the disputed
trademarks since the right to register a trademark is based on ownership. Citing Section 4 of Republic Act No. 16634 and established
jurisprudence,35 the CA held that SUPERIOR – as an exclusive distributor – did not acquire any proprietary interest in the principal’s
(KUNNAN’s) trademark.

The CA denied SUPERIOR’s motion for reconsideration for lack of merit in its Resolution dated October 4, 2005.

THE PETITION

In the present petition, SUPERIOR raises the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS NOT
THE TRUE AND RIGHTFUL OWNER OF THE TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN THE
PHILIPPINES
 II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER
SUPERIOR IS A MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN THE PHILIPPINES

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE
THE DECISION OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-93-14888, LIFTING
THE PRELIMINARY INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN AND SPORTS CONCEPT AND
DISMISSING THE COMPLAINT FOR INFRINGEMENT OF TRADEMARK AND UNFAIR COMPETITION WITH
PRELIMINARY INJUNCTION

THE COURT’S RULING

We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in the Registration Cancellation Case on the present case. This decision -
rendered after the CA decision for trademark infringement and unfair competition in CA-G.R. CV No. 60777 (root of the present case) -
states:
As to whether respondent Kunnan was able to overcome the presumption of ownership in favor of Superior, the former sufficiently
established the fraudulent registration of the questioned trademarks by Superior. The Certificates of Registration No. SR-4730
(Supplemental Register) and 33487 (Principal Register) for the KENNEX trademark were fraudulently obtained by petitioner Superior. Even
before PROKENNEX products were imported by Superior into the Philippines, the same already enjoyed popularity in various countries and
had been distributed worldwide, particularly among the sports and tennis enthusiasts since 1976. Riding on the said popularity, Superior
caused the registration thereof in the Philippines under its name when it knew fully well that it did not own nor did it manufacture the
PROKENNEX products. Superior claimed ownership of the subject marks and failed to disclose in its application with the IPO that it was
merely a distributor of KENNEX and PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to Kunnan in exchange for the
appointment by the latter as its exclusive distributor, Superior however breached its obligation and failed to assign the same to Kunnan. In a
letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong, misrepresented to Kunnan that the latter cannot own trademarks in
the Philippines. Thus, Kunnan was misled into assigning to Superior its (Kunnan’s) own application for the disputed trademarks. In the
same assignment document, however. Superior was bound to ensure that the PROKENNEX trademarks under Registration Nos. 40326,
39254, and 49998 shall be returned to Kunnan clean and without any incumbency when requested by the latter.
In fine, We see no error in the decision of the Director General of the IPO which affirmed the decision of the Director of the Bureau of Legal
Affairs canceling the registration of the questioned marks in the name of petitioner Superior and denying its new application for registration,
upon a finding that Superior is not the rightful owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO KENNEX" trademarks should be cancelled because SUPERIOR was not
the owner of, and could not in the first place have validly registered these trademarks. Thus, as of the finality of the CA decision on
December 3, 2007, these trademark registrations were effectively cancelled and SUPERIOR was no longer the registrant of the disputed
trademarks.
Section 22 of Republic Act No. 166, as amended ("RA 166"),36 the law applicable to this case, defines trademark infringement as follows:
Section 22. Infringement, what constitutes. — Any person who [1] shall use, without the consent of the registrant,any reproduction,
counterfeit, copy or colorable imitation of any registered mark or trade-name in connection withthe sale, offering for sale, or advertising
of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers
or others as to the source or origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or
services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for infringement. Corollary to this, Section 19 of RA
166 provides that any right conferred upon the registrant under the provisions of RA 16637terminates when the judgment or order of
cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been made out he shall order the cancellation
of the registration. The order shall not become effective until the period for appeal has elapsed, or if appeal is taken, until the judgment on
appeal becomes final. When the order or judgment becomes final, any right conferred by such registration upon the registrant or any
person in interest of record shall terminate. Notice of cancellation shall be published in the Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the registrant of protection from
infringement from the moment judgment or order of cancellation has become final.38
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of SUPERIOR’s case has
been rendered moot and academic in view of the finality of the decision in the Registration Cancellation Case. In short, SUPERIOR is left
without any cause of action for trademark infringement since the cancellation of registration of a trademark deprived it of protection from
infringement from the moment judgment or order of cancellation became final. To be sure, in a trademark infringement, title to the
trademark is indispensable to a valid cause of action and such title is shown by its certificate of registration.39 With its certificates of
registration over the disputed trademarks effectively cancelled with finality, SUPERIOR’s case for trademark infringement lost its legal basis
and no longer presented a valid cause of action.
Even assuming that SUPERIOR’s case for trademark infringement had not been rendered moot and academic, there can be no
infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed trademarks in the Registration
Cancellation Case. Even prior to the cancellation of the registration of the disputed trademarks, SUPERIOR – as a mere distributor and not
the owner – cannot assert any protection from trademark infringement as it had no right in the first place to the registration of the disputed
trademarks. In fact, jurisprudence holds that in the absence of any inequitable conduct on the part of the manufacturer, an exclusive
distributor who employs the trademark of the manufacturer does not acquire proprietary rights of the manufacturer, and a registration of the
trademark by the distributor as such belongs to the manufacturer, provided the fiduciary relationship does not terminate before application
for registration is filed.40 Thus, the CA in the Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its name. Well-entrenched in our
jurisdiction is the rule that the right to register a trademark should be based on ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for the registration of the same. Under the Trademark Law, only the owner of the
trademark, trade name or service mark used to distinguish his goods, business or service from the goods, business or service of others is
entitled to register the same. An exclusive distributor does not acquire any proprietary interest in the principal’s trademark and cannot
register it in his own name unless it is has been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIOR’s present case for trademark infringement. The doctrine of res
judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39, Section 47, and the second is
"conclusiveness of judgment" under paragraph (c) thereof.
In the present case, the second concept – conclusiveness of judgment – applies. Under the concept of res judicata by conclusiveness of
judgment, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their
privies in all later suits on points and matters determined in the former suit.41 Stated differently, facts and issues actually and directly
resolved in a former suit cannot again be raised in any future case between the same parties, even if the latter suit may involve a different
cause of action.42 This second branch of the principle of res judicata bars the re-litigation of particular facts or issues in another litigation
between the same parties on a different claim or cause of action.43
Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and disputing the
same trademarks, we are bound to examine how one case would affect the other. In the present case, even if the causes of action of the
Registration Cancellation Case (the cancellation of trademark registration) differs from that of the present case (the improper or
unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is nevertheless conclusive on the particular facts
and issues that are determinative of the present case.
To establish trademark infringement, the following elements must be proven: (1) the validity of plaintiff’s mark; (2) the plaintiff’s ownership
of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion."44
Based on these elements, we find it immediately obvious that the second element – the plaintiff’s ownership of the mark – was what the
Registration Cancellation Case decided with finality. On this element depended the validity of the registrations that, on their own, only gave
rise to the presumption of, but was not conclusive on, the issue of ownership.45
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere distributor and could not
have been the owner, and was thus an invalid registrant of the disputed trademarks. Significantly, these are the exact terms of the ruling
the CA arrived at in the present petition now under our review. Thus, whether with one or the other, the ruling on the issue of ownership of
the trademarks is the same. Given, however, the final and executory ruling in the Registration Cancellation Case on the issue of ownership
that binds us and the parties, any further discussion and review of the issue of ownership – although the current CA ruling is legally correct
and can stand on its own merits – becomes a pointless academic discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the CA made any factual findings with respect to the issue of unfair
competition. In its Complaint, SUPERIOR alleged that:46
17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to appoint the defendant Sports Concept
and Distributors, Inc. as its alleged distributor for sportswear and sporting goods bearing the trademark "PRO-KENNEX." For this reason,
on January 20, 1993, the plaintiff, through counsel, wrote the defendant Sports Concept and Distributor’s Inc. advising said defendant that
the trademark "PRO-KENNEX" was registered and owned by the plaintiff herein.
18. The above information was affirmed by an announcement made by the defendants in The Manila Bulletin issue of January 29, 1993,
informing the public that defendant Kunnan Enterprises, Ltd. has appointed the defendant Sports Concept and Distributors, Inc. as its
alleged distributor of sportswear and sporting goods and equipment bearing the trademarks "KENNEX and "PRO-KENNEX" which
trademarks are owned by and registered in the name of plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein, were designed to and are of the nature so as to create confusion with the
commercial activities of plaintiff in the Philippines and is liable to mislead the public as to the nature and suitability for their purposes of
plaintiff’s business and the defendant’s acts are likely to discredit the commercial activities and future growth of plaintiff’s business.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public of the
goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public. The
essential elements of unfair competition47 are (1) confusing similarity in the general appearance of the goods; and (2) intent to deceive the
public and defraud a competitor.48
Jurisprudence also formulated the following "true test" of unfair competition: whether the acts of the defendant have the intent of deceiving
or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular trade to which the
controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to deceive, actual
or probable must be shown before the right to recover can exist.49
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e. sportswear, sporting goods
and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or fraud imputable to KUNNAN in using the disputed
trademarks. Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by the above-cited acts intended to deceive the
public as to the identity of the goods sold or of the manufacturer of the goods sold. In McDonald’s Corporation v. L.C. Big Mak Burger,
Inc.,50 we held that there can be trademark infringement without unfair competition such as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus preventing the public from being deceived that the goods originate from the
trademark owner. In this case, no issue of confusion arises because the same manufactured products are sold; only the ownership of the
trademarks is at issue. Furthermore, KUNNAN’s January 29, 1993 notice by its terms prevents the public from being deceived that the
goods originated from SUPERIOR since the notice clearly indicated that KUNNAN is the manufacturer of the goods bearing the trademarks
"KENNEX" and "PRO KENNEX." This notice states in full:51
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks KENNEX and PRO KENNEX for sportswear
and sporting goods and equipment. Kunnan Enterprises Ltd. has registered the trademarks KENNEX and PRO KENNEX in the industrial
property offices of at least 31 countries worldwide where KUNNAN Enterprises Ltd. has been selling its sportswear and sporting goods and
equipment bearing the KENNEX and PRO KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement with Superior Commercial
Enterprises, Inc. on December 31, 1991. As a result, Superior Commercial Enterprises, Inc. is no longer authorized to sell sportswear and
sporting goods and equipment manufactured by Kunnan Enterprises Ltd. and bearing the trademarks KENNEX and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its exclusive Philippine distributor of sportswear
and sporting goods and equipment bearing the trademarks KENNEX and PRO KENNEX. The public is advised to buy sporting goods and
equipment bearing these trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that the products they are
buying are manufactured by Kunnan Enterprises Ltd. [Emphasis supplied.]
Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that SUPERIOR asserts are being
unfairly sold by KUNNAN under trademarks registered in SUPERIOR’s name, the latter is left with no effective right to make a claim. In
other words, with the CA’s final ruling in the Registration Cancellation Case, SUPERIOR’s case no longer presents a valid cause of action.
For this reason, the unfair competition aspect of the SUPERIOR’s case likewise falls.
WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.’s petition for review on certiorari for lack of merit.
Cost against petitioner Superior Commercial Enterprises, Inc.
SO ORDERED.
4. G.R. No. 194307               November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE GMBH),Petitioner, 
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this Petition for Review on Certiorari  are the Court of Appeals (CA) Decision  dated June 25, 2010 and Resolution  dated
1 2 3

October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual Property Office (IPO) Director General’s
Decision  dated December 22, 2009 that allowed the registration of various trademarks in favor of petitioner Birkenstock Orthopaedie
4

GmbH & Co. KG.

The Facts

Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark registrations before the IPO,
namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling under Class 25 of the
International Classification of Goods and Services (Nice Classification) with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD
HONNEF -RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND
SUNBEA M" under TASN 4-1994-091509 for goods falling under Class 25 of the Nice Classification with filing date of March 11, 1994; and
(c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A
FOOT, CROSS AND SUNBEAM" under TASN 4-1994-095043 for goods falling under Class 10 of the Nice Classification with filing date of
September 5, 1994 (subject applications). 5

However, registration proceedings of the subject applications were suspended in view of an existing registration of the mark
"BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town
International and Industrial Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo Marketing Corporation.  In this 6

regard, on May 27, 1997 petitioner filed a petition for cancellation of Registration No. 56334 on the ground that it is the lawful and rightful
owner of the Birkenstock marks (Cancellation Case).  During its pendency, however, respondent and/or its predecessor-in-interest failed to
7

file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No. 56334 on or before October 21, 2004,  thereby 8

resulting in the cancellation of such mark.  Accordingly, the cancellation case was dismissed for being moot and academic.
9 10

The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject applications in the IPO e-Gazette on
February 2, 2007.  In response, respondent filed three (3) separate verified notices of oppositions to the subject applications docketed as
11

Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116,  claiming, inter alia, that: (a) it, together with its predecessor-
12

in-interest, has been using Birkenstock marks in the Philippines for more than 16 years through the mark "BIRKENSTOCK AND DEVICE";
(b) the marks covered by the subject applications are identical to the one covered by Registration No. 56334 and thus, petitioner has no
right to the registration of such marks; (c) on November 15, 1991, respondent’s predecessor-in-interest likewise obtained a Certificate of
Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" ; (d) while respondent and its predecessor-in-interest failed to file the
10th Yea r DAU, it continued the use of "BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its continued ownership and
exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a " re-application " of its old registration,
Registration No. 56334.  On November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating
13

the aforesaid inter partes cases (Consolidated Opposition Cases). 14

The Ruling of the BLA

In its Decision  dated May 28, 2008, the BLA of the IPO sustained respondent’s opposition, thus, ordering the rejection of the subject
15

applications. It ruled that the competing marks of the parties are confusingly similar since they contained the word "BIRKENSTOCK" and
are used on the same and related goods. It found respondent and its predecessor-in-interest as the prior user and adopter of
"BIRKENSTOCK" in the Philippines, while on the other hand, petitioner failed to present evidence of actual use in the trade and business in
this country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior right over the mark was lost, as proof of
continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA likewise opined that petitioner’s marks
are not well -known in the Philippines and internationally and that the various certificates of registration submitted by petitioners were all
photocopies and, therefore, not admissible as evidence. 16

Aggrieved, petitioner appealed to the IPO Director General.

The Ruling of the IPO Director General

In his Decision  dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA, thus allowing the
17

registration of the subject applications. He held that with the cancellation of Registration No. 56334 for respondent’s failure to file the 10th
Year DAU, there is no more reason to reject the subject applications on the ground of prior registration by another proprietor.  More18

importantly, he found that the evidence presented proved that petitioner is the true and lawful owner and prior user of "BIRKENSTOCK"
marks and thus, entitled to the registration of the marks covered by the subject applications.  The IPO Director General further held that
19
respondent’s copyright for the word "BIRKENSTOCK" is of no moment since copyright and trademark are different forms of intellectual
property that cannot be interchanged. 20

Finding the IPO Director General’s reversal of the BLA unacceptable, respondent filed a petition for review with the CA.

Ruling of the CA

In its Decision  dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and reinstated that of the BLA. It
21

disallowed the registration of the subject applications on the ground that the marks covered by such applications "are confusingly similar, if
not outright identical" with respondent’s mark.  It equally held that respondent’s failure to file the 10th Year DAU for Registration No. 56334
22

"did not deprive petitioner of its ownership of the ‘BIRKENSTOCK’ mark since it has submitted substantial evidence showing its continued
use, promotion and advertisement thereof up to the present."  It opined that when respondent’s predecessor-in-interest adopted and
23

started its actual use of "BIRKENSTOCK," there is neither an existing registration nor a pending application for the same and thus, it cannot
be said that it acted in bad faith in adopting and starting the use of such mark.  Finally, the CA agreed with respondent that petitioner’s
24

documentary evidence, being mere photocopies, were submitted in violation of Section 8.1 of Office Order No. 79, Series of 2005 (Rules on
Inter Partes Proceedings).

Dissatisfied, petitioner filed a Motion for Reconsideration  dated July 20, 2010, which was, however, denied in a Resolution  dated October
25 26

27, 2010. Hence, this petition. 27

Issues Before the Court

The primordial issue raised for the Court’s resolution is whether or not the subject marks should be allowed registration in the name of
petitioner.

The Court’s Ruling

The petition is meritorious.

A. Admissibility of Petitioner’s Documentary Evidence.

In its Comment  dated April 29, 2011, respondent asserts that the documentary evidence submitted by petitioner in the Consolidated
28

Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings, which requires
certified true copies of documents and evidence presented by parties in lieu of originals.  As such, they should be deemed inadmissible.
29

The Court is not convinced.

It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration. A strict
and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair
trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must
be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities."  "Indeed,
30

the primordial policy is a faithful observance of [procedural rules], and their relaxation or suspension should only be for persuasive reasons
and only in meritorious cases, to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying
with the procedure prescribed."  This is especially true with quasi-judicial and administrative bodies, such as the IPO, which are not bound
31

by technical rules of procedure.  On this score, Section 5 of the Rules on Inter Partes Proceedings provides:
32

Sec. 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. – The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied suppletorily. The Bureau shall not be
bound by strict technical rules of procedure and evidence but may adopt, in the absence of any applicable rule herein, such mode of
proceedings which is consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition of cases,
and which will give the Bureau the greatest possibility to focus on the contentious issues before it. (Emphasis and underscoring supplied)

In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated Opposition Cases, it should
be noted that the IPO had already obtained the originals of such documentary evidence in the related Cancellation Case earlier filed before
it. Under this circumstance and the merits of the instant case as will be subsequently discussed, the Court holds that the IPO Director
General’s relaxation of procedure was a valid exercise of his discretion in the interest of substantial justice. 33

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.

B. Registration and ownership of "BIRKENSTOCK."

Republic Act No. (RA) 166,  the governing law for Registration No. 56334, requires the filing of a DAU on specified periods,  to wit:
34 35

Section 12. Duration. – Each certificate of registration shall remain in force for twenty years: Provided, That registrations under the
provisions of this Act shall be cancelled by the Director, unless within one year following the fifth, tenth and fifteenth anniversaries of the
date of issue of the certificate of registration, the registrant shall file in the Patent Office an affidavit showing that the mark or trade-name is
still in use or showing that its non-use is due to special circumstance which excuse such non-use and is not due to any intention to abandon
the same, and pay the required fee.

The Director shall notify the registrant who files the above- prescribed affidavits of his acceptance or refusal thereof and, if a refusal, the
reasons therefor. (Emphasis and underscoring supplied)

The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in the automatic cancellation of
registration of a trademark. In turn, such failure is tantamount to the abandonment or withdrawal of any right or interest the registrant has
over his trademark. 36

In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the requisite period, or on or
before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn any right or interest over the mark
"BIRKENSTOCK." Neither can it invoke Section 236  of the IP Code which pertains to intellectual property rights obtained under previous
37

intellectual property laws, e.g., RA 166, precisely because it already lost any right or interest over the said mark.

Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."

Under Section 2  of RA 166, which is also the law governing the subject applications, in order to register a trademark, one must be the
38

owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to the application for
registration. Section 2-A  of the same law sets out to define how one goes about acquiring ownership thereof. Under the same section, it is
39

clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been
so appropriated by another. Significantly, to be an owner, Section 2-A does not require that the actual use of a trademark must be within
the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet have the right to register such
ownership here due to the owner’s failure to use the same in the Philippines for two (2) months prior to registration. 40

It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership.  If the applicant is not the owner of
1âwphi1

the trademark, he has no right to apply for its registration. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant’s ownership of the trademark, and of the exclusive right to the use thereof. Such presumption, just like the
presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary. 41

Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that
confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property rights which cannot
be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true and lawful owner.
The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real ownership of a
trademark.

The Court’s pronouncement in Berris Agricultural Co., Inc. v. Abyadang  is instructive on this point:
42

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made
available to the purchasing public. x x x A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of
the registration, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the
goods or services and those that are related thereto specified in the certificate. x x x In other words, the prima facie presumption brought
about by the registration of a mark may be challenged and overcome in an appropriate action, x x x by evidence of prior use by another
person, i.e. , it will controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a
trademark is a creation of use and belongs to one who first used it in trade or commerce. (Emphasis and underscoring supplied)
43

In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It submitted evidence relating to the
origin and history of "BIRKENSTOCK" and its use in commerce long before respondent was able to register the same here in the
Philippines. It has sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann Birkenstock, a
shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in the manufacture and
sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the petitioner. Petitioner also
submitted various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it has used such mark in different
countries worldwide, including the Philippines. 44

On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented copies of sales invoices and
advertisements, which are not conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these merely show the
transactions made by respondent involving the same. 45

In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the mark "BIRKENSTOCK" and
entitled to its registration, and that respondent was in bad faith in having it registered in its name. In this regard, the Court quotes with
approval the words of the IPO Director General, viz.:

The facts and evidence fail to show that [respondent] was in good faith in using and in registering the mark BIRKENSTOCK.
BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It is very remote that two persons did coin the same or
identical marks. To come up with a highly distinct and uncommon mark previously appropriated by another, for use in the same line of
business, and without any plausible explanation, is incredible. The field from which a person may select a trademark is practically unlimited.
As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and combinations of letters and designs
available, [respondent] had to come up with a mark identical or so closely similar to the [petitioner’s] if there was no intent to take
advantage of the goodwill generated by the [petitioner’s] mark. Being on the same line of business, it is highly probable that the
[respondent] knew of the existence of BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark and
had it registered in its name.
46

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27, 2010 of the Court of
Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009 of the IPO
Director General is hereby REINSTATED.

SO ORDERED.

5. G.R. No. 183404               October 13, 2010

BERRIS AGRICULTURAL CO., INC., Petitioner, 
vs.
NORVY ABYADANG, Respondent.

DECISION

NACHURA, J.:

This petition for review1 on certiorari under Rule 45 of the Rules of Court seeks the reversal of the Decision dated April 14, 20082 and the
Resolution dated June 18, 20083 of the Court of Appeals (CA) in CA-G.R. SP No. 99928.

The antecedents—

On January 16, 2004, respondent Norvy A. Abyadang (Abyadang), proprietor of NS Northern Organic Fertilizer, with address at No. 43
Lower QM, Baguio City, filed with the Intellectual Property Office (IPO) a trademark application for the mark "NS D-10 PLUS" for use in
connection with Fungicide (Class 5) with active ingredient 80% Mancozeb. The application, under Application Serial No. 4-2004-00450, was
given due course and was published in the IPO e-Gazette for opposition on July 28, 2005.

On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with business address in Barangay Masiit, Calauan, Laguna, filed with
the IPO Bureau of Legal Affairs (IPO-BLA) a Verified Notice of Opposition4 against the mark under application allegedly because "NS D-10
PLUS" is similar and/or confusingly similar to its registered trademark "D-10 80 WP," also used for Fungicide (Class 5) with active
ingredient 80% Mancozeb. The opposition was docketed as IPC No. 14-2005-00099.

After an exchange of pleadings, on April 28, 2006, Director Estrellita Beltran-Abelardo (Director Abelardo) of the IPO-BLA issued Decision
No. 2006-245 (BLA decision), the dispositive portion of which reads—

WHEREFORE, viewed in the light of all the foregoing, this Bureau finds and so holds that Respondent-Applicant’s mark "NS D-10 PLUS" is
confusingly similar to the Opposer’s mark and as such, the opposition is hereby SUSTAINED. Consequently, trademark application bearing
Serial No. 4-2004-00450 for the mark "NS D-10 PLUS" filed on January 16, 2004 by Norvy A. Ab[yada]ng covering the goods fungicide
under Class 5 of the International Classification of goods is, as it is hereby, REJECTED.

Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be forwarded to the Administrative, Financial and
Human Resources Development Services Bureau (AFHRDSB) for appropriate action in accordance with this Order with a copy to be
furnished the Bureau of Trademark (BOT) for information and to update its records.

SO ORDERED.6

Abyadang filed a motion for reconsideration, and Berris, in turn, filed its opposition to the motion.

On August 2, 2006, Director Abelardo issued Resolution No. 2006-09(D)7 (BLA resolution), denying the motion for reconsideration and
disposing as follows —

IN VIEW OF THE FOREGOING, the Motion for Reconsideration filed by the Respondent-Applicant is hereby DENIED FOR LACK OF
MERIT. Consequently, Decision No. 2006-24 dated April 28, 2006 STANDS.

Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be forwarded to the Bureau of Trademarks for
appropriate action in accordance with this Resolution.

SO ORDERED.8

Aggrieved, Abyadang filed an appeal on August 22, 2006 with the Office of the Director General, Intellectual Property Philippines (IPPDG),
docketed as Appeal No. 14-06-13.
With the filing of the parties’ respective memoranda, Director General Adrian S. Cristobal, Jr. of the IPPDG rendered a decision dated July
20, 2007,9 ruling as follows—

Wherefore, premises considered[,] the appeal is hereby DENIED. Accordingly, the appealed Decision of the Director is hereby AFFIRMED.

Let a copy of this Decision as well as the trademark application and records be furnished and returned to the Director of Bureau of Legal
Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks, the Administrative, Financial and Human
Resources Development Services Bureau, and the library of the Documentation, Information and Technology Transfer Bureau be furnished
a copy of this Decision for information, guidance, and records purposes.

SO ORDERED.10

Undeterred, Abyadang filed a petition for review11 before the CA.

In its Decision dated April 14, 2008, the CA reversed the IPPDG decision. It held—

In sum, the petition should be granted due to the following reasons: 1) petitioner’s mark "NS D-10 PLUS" is not confusingly similar with
respondent’s trademark "D-10 80 WP"; 2) respondent failed to establish its ownership of the mark "D-10 80 WP" and 3) respondent’s
trademark registration for "D-10 80 WP" may be cancelled in the present case to avoid multiplicity of suits.

WHEREFORE, the petition is GRANTED. The decision dated July 20, 2007 of the IPO Director General in Appeal No. 14-06-13 (IPC No.
14-2005-00099) is REVERSED and SET ASIDE, and a new one is entered giving due course to petitioner’s application for registration of
the mark "NS D-10 PLUS," and canceling respondent’s trademark registration for "D-10 80 WP."

SO ORDERED.12

Berris filed a Motion for Reconsideration, but in its June 18, 2008 Resolution, the CA denied the motion for lack of merit. Hence, this petition
anchored on the following arguments—

I. The Honorable Court of Appeals’ finding that there exists no confusing similarity between Petitioner’s and respondent’s marks is based on
misapprehension of facts, surmise and conjecture and not in accord with the Intellectual Property Code and applicable Decisions of this
Honorable Court [Supreme Court].

II. The Honorable Court of Appeals’ Decision reversing and setting aside the technical findings of the Intellectual Property Office even
without a finding or, at the very least, an allegation of grave abuse of discretion on the part of said agency is not in accord with law and
earlier pronouncements of this Honorable Court [Supreme Court].

III. The Honorable Court of Appeals’ Decision ordering the cancellation of herein Petitioner’s duly registered and validly existing trademark
in the absence of a properly filed Petition for Cancellation before the Intellectual Property Office is not in accord with the Intellectual
Property Code and applicable Decisions of this Honorable Court [Supreme Court].13

The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 829314 (Intellectual Property Code of the
Philippines), specifically Sections 121 to 170 thereof. It took effect on January 1, 1998. Prior to its effectivity, the applicable law was R.A.
No. 166,15 as amended.

Interestingly, R.A. No. 8293 did not expressly repeal in its entirety R.A. No. 166, but merely provided in Section 239.116 that Acts and parts
of Acts inconsistent with it were repealed. In other words, only in the instances where a substantial and irreconcilable conflict is found
between the provisions of R.A. No. 8293 and of R.A. No. 166 would the provisions of the latter be deemed repealed.

R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an
enterprise and shall include a stamped or marked container of goods.17 It also defines a "collective mark" as any visible sign designated as
such in the application for registration and capable of distinguishing the origin or any other common characteristic, including the quality of
goods or services of different enterprises which use the sign under the control of the registered owner of the collective mark.18

On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol, emblem, sign, or device, or any combination
thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or
dealt by another.19 A trademark, being a special property, is afforded protection by law. But for one to enjoy this legal protection, legal
protection ownership of the trademark should rightly be established.

The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made
available to the purchasing public. Section 12220 of R.A. No. 8293 provides that the rights in a mark shall be acquired by means of its valid
registration with the IPO. A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of the
registration, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or
services and those that are related thereto specified in the certificate.21 R.A. No. 8293, however, requires the applicant for registration or the
registrant to file a declaration of actual use (DAU) of the mark, with evidence to that effect, within three (3) years from the filing of the
application for registration; otherwise, the application shall be refused or the mark shall be removed from the register.22 In other words, the
prima facie presumption brought about by the registration of a mark may be challenged and overcome, in an appropriate action, by proof of
the nullity of the registration or of non-use of the mark, except when excused.23 Moreover, the presumption may likewise be defeated by
evidence of prior use by another person, i.e., it will controvert a claim of legal appropriation or of ownership based on registration by a
subsequent user. This is because a trademark is a creation of use and belongs to one who first used it in trade or commerce.24

The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not suffice. One may make
advertisements, issue circulars, distribute price lists on certain goods, but these alone will not inure to the claim of ownership of the mark
until the goods bearing the mark are sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies of witnesses as
customers, or orders of buyers, best prove the actual use of a mark in trade and commerce during a certain period of time.25

In the instant case, both parties have submitted proof to support their claim of ownership of their respective trademarks.

Culled from the records, Berris, as oppositor to Abyadang’s application for registration of his trademark, presented the following evidence:
(1) its trademark application dated November 29, 200226 with Application No. 4-2002-0010272; (2) its IPO certificate of registration dated
October 25, 2004,27 with Registration No. 4-2002-010272 and July 8, 2004 as the date of registration; (3) a photocopy of its
packaging28 bearing the mark "D-10 80 WP"; (4) photocopies of its sales invoices and official receipts;29 and (5) its notarized DAU dated
April 23, 2003,30 stating that the mark was first used on June 20, 2002, and indicating that, as proof of actual use, copies of official receipts
or sales invoices of goods using the mark were attached as Annex "B."

On the other hand, Abyadang’s proofs consisted of the following: (1) a photocopy of the packaging31 for his marketed fungicide bearing
mark "NS D-10 PLUS"; (2) Abyadang’s Affidavit dated February 14, 2006,32 stating among others that the mark "NS D-10 PLUS" was his
own creation derived from: N – for Norvy, his name; S – for Soledad, his wife’s name; D – the first letter for December, his birth month; 10 –
for October, the 10th month of the year, the month of his business name registration; and PLUS – to connote superior quality; that when he
applied for registration, there was nobody applying for a mark similar to "NS D-10 PLUS"; that he did not know of the existence of Berris or
any of its products; that "D-10" could not have been associated with Berris because the latter never engaged in any commercial activity to
sell "D-10 80 WP" fungicide in the local market; and that he could not have copied Berris’ mark because he registered his packaging with
the Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3) Certification dated December 19, 200533 issued by the FPA, stating that "NS
D-10 PLUS" is owned and distributed by NS Northern Organic Fertilizer, registered with the FPA since May 26, 2003, and had been in the
market since July 30, 2003; (4) Certification dated October 11, 200534 issued by the FPA, stating that, per monitoring among dealers in
Region I and in the Cordillera Administrative Region registered with its office, the Regional Officer neither encountered the fungicide with
mark "D-10 80 WP" nor did the FPA provincial officers from the same area receive any report as to the presence or sale of Berris’ product;
(5) Certification dated March 14, 200635 issued by the FPA, certifying that all pesticides must be registered with the said office pursuant to
Section 936 of Presidential Decree (P.D.) No. 114437 and Section 1, Article II of FPA Rules and Regulations No. 1, Series of 1977; (6)
Certification dated March 16, 200638 issued by the FPA, certifying that the pesticide "D-10 80 WP" was registered by Berris on November
12, 2004; and (7) receipts from Sunrise Farm Supply39 in La Trinidad, Benguet of the sale of Abyadang’s goods referred to as "D-10" and
"D-10+."

Based on their proffered pieces of evidence, both Berris and Abyadang claim to be the prior user of their respective marks.

We rule in favor of Berris.

Berris was able to establish that it was using its mark "D-10 80 WP" since June 20, 2002, even before it filed for its registration with the IPO
on November 29, 2002, as shown by its DAU which was under oath and notarized, bearing the stamp of the Bureau of Trademarks of the
IPO on April 25, 2003,40 and which stated that it had an attachment as Annex "B" sales invoices and official receipts of goods bearing the
mark. Indeed, the DAU, being a notarized document, especially when received in due course by the IPO, is evidence of the facts it stated
and has the presumption of regularity, entitled to full faith and credit upon its face. Thus, the burden of proof to overcome the presumption
of authenticity and due execution lies on the party contesting it, and the rebutting evidence should be clear, strong, and convincing as to
preclude all controversy as to the falsity of the certificate.41 What is more, the DAU is buttressed by the Certification dated April 21,
200642 issued by the Bureau of Trademarks that Berris’ mark is still valid and existing.

Hence, we cannot subscribe to the contention of Abyadang that Berris’ DAU is fraudulent based only on his assumption that Berris could
not have legally used the mark in the sale of its goods way back in June 2002 because it registered the product with the FPA only on
November 12, 2004. As correctly held by the IPPDG in its decision on Abyadang’s appeal, the question of whether or not Berris violated
P.D. No. 1144, because it sold its product without prior registration with the FPA, is a distinct and separate matter from the jurisdiction and
concern of the IPO. Thus, even a determination of violation by Berris of P.D. No. 1144 would not controvert the fact that it did submit
evidence that it had used the mark "D-10 80 WP" earlier than its FPA registration in 2004.

Furthermore, even the FPA Certification dated October 11, 2005, stating that the office had neither encountered nor received reports about
the sale of the fungicide "D-10 80 WP" within Region I and the Cordillera Administrative Region, could not negate the fact that Berris was
selling its product using that mark in 2002, especially considering that it first traded its goods in Calauan, Laguna, where its business office
is located, as stated in the DAU.

Therefore, Berris, as prior user and prior registrant, is the owner of the mark "D-10 80 WP." As such, Berris has in its favor the rights
conferred by Section 147 of R.A. No. 8293, which provides—

Sec. 147. Rights Conferred.—

147.1. The owner of a registered mark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in
the course of trade identical or similar signs or containers for goods or services which are identical or similar to those in respect of which
the trademark is registered where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical
goods or services, a likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e) which is registered in the Philippines, shall
extend to goods and services which are not similar to those in respect of which the mark is registered: Provided, That use of that mark in
relation to those goods or services would indicate a connection between those goods or services and the owner of the registered mark:
Provided, further, That the interests of the owner of the registered mark are likely to be damaged by such use.

Now, we confront the question, "Is Abyadang’s mark ‘NS D-10 PLUS’ confusingly similar to that of Berris’ ‘D-10 80 WP’ such that the latter
can rightfully prevent the IPO registration of the former?"

We answer in the affirmative.

According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical with a registered mark belonging to a different
proprietor with an earlier filing or priority date, with respect to: (1) the same goods or services; (2) closely related goods or services; or (3)
near resemblance of such mark as to likely deceive or cause confusion.

In determining similarity and likelihood of confusion, jurisprudence has developed tests—the Dominancy Test and the Holistic or Totality
Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither is it required that
the mark sought to be registered suggests an effort to imitate. Given more consideration are the aural and visual impressions created by
the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market segments.43

In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the predominant words
but also on the other features appearing on both labels so that the observer may draw conclusion on whether one is confusingly similar to
the other.44

Comparing Berris’ mark "D-10 80 WP" with Abyadang’s mark "NS D-10 PLUS," as appearing on their respective packages, one cannot but
notice that both have a common component which is "D-10." On Berris’ package, the "D-10" is written with a bigger font than the "80 WP."
Admittedly, the "D-10" is the dominant feature of the mark. The "D-10," being at the beginning of the mark, is what is most remembered of
it. Although, it appears in Berris’ certificate of registration in the same font size as the "80 WP," its dominancy in the "D-10 80 WP" mark
stands since the difference in the form does not alter its distinctive character.45

Applying the Dominancy Test, it cannot be gainsaid that Abyadang’s "NS D-10 PLUS" is similar to Berris’ "D-10 80 WP," that confusion or
mistake is more likely to occur. Undeniably, both marks pertain to the same type of goods – fungicide with 80% Mancozeb as an active
ingredient and used for the same group of fruits, crops, vegetables, and ornamental plants, using the same dosage and manner of
application. They also belong to the same classification of goods under R.A. No. 8293. Both depictions of "D-10," as found in both marks,
are similar in size, such that this portion is what catches the eye of the purchaser. Undeniably, the likelihood of confusion is present.

This likelihood of confusion and mistake is made more manifest when the Holistic Test is applied, taking into consideration the packaging,
for both use the same type of material (foil type) and have identical color schemes (red, green, and white); and the marks are both
predominantly red in color, with the same phrase "BROAD SPECTRUM FUNGICIDE" written underneath. 1awphi1

Considering these striking similarities, predominantly the "D-10," the buyers of both products, mainly farmers, may be misled into thinking
that "NS D-10 PLUS" could be an upgraded formulation of the "D-10 80 WP."

Moreover, notwithstanding the finding of the IPPDG that the "D-10" is a fanciful component of the trademark, created for the sole purpose
of functioning as a trademark, and does not give the name, quality, or description of the product for which it is used, nor does it describe the
place of origin, such that the degree of exclusiveness given to the mark is closely restricted,46 and considering its challenge by Abyadang
with respect to the meaning he has given to it, what remains is the fact that Berris is the owner of the mark "D-10 80 WP," inclusive of its
dominant feature "D-10," as established by its prior use, and prior registration with the IPO. Therefore, Berris properly opposed and the IPO
correctly rejected Abyadang’s application for registration of the mark "NS D-10 PLUS."

Verily, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the business
established on the goods bearing the mark through actual use over a period of time, but also to safeguard the public as consumers against
confusion on these goods.47 On this matter of particular concern, administrative agencies, such as the IPO, by reason of their special
knowledge and expertise over matters falling under their jurisdiction, are in a better position to pass judgment thereon. Thus, their findings
of fact in that regard are generally accorded great respect, if not finality by the courts, as long as they are supported by substantial
evidence, even if such evidence might not be overwhelming or even preponderant. It is not the task of the appellate court to weigh once
more the evidence submitted before the administrative body and to substitute its own judgment for that of the administrative agency in
respect to sufficiency of evidence.48

Inasmuch as the ownership of the mark "D-10 80 WP" fittingly belongs to Berris, and because the same should not have been cancelled by
the CA, we consider it proper not to belabor anymore the issue of whether cancellation of a registered mark may be done absent a petition
for cancellation.

WHEREFORE, the petition is GRANTED. The assailed Decision dated April 14, 2008 and Resolution dated June 18, 2008 of the Court of
Appeals in CA-G.R. SP No. 99928 are REVERSED and SET ASIDE. Accordingly, the Decision No. 2006-24 dated April 28, 2006 and the
Resolution No. 2006-09(D) dated August 2, 2006 in IPC No. 14-2005-00099, and the Decision dated July 20, 2007 in Appeal No. 14-06-13
are REINSTATED. Costs against respondent.

SO ORDERED.
6. G.R. No. 180073               November 25, 2009

PROSOURCE INTERNATIONAL, INC., Petitioner, 

vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Court of Appeals (CA)
Decision1 dated July 27, 2007 and Resolution2 dated October 15, 2007 in CA-G.R. CV No. 87556. The assailed decision affirmed the
Regional Trial Court (RTC)3 Decision4 dated January 16, 2006 and Order5 dated May 3, 2006 in Civil Case No. 68048; while the assailed
resolution denied petitioner’s motion for reconsideration.

The facts are as follows:

Respondent Horphag Research Management SA is a corporation duly organized and existing under the laws of Switzerland and the
owner6 of trademark PYCNOGENOL, a food supplement sold and distributed by Zuellig Pharma Corporation. Respondent later discovered
that petitioner Prosource International, Inc. was also distributing a similar food supplement using the mark PCO-GENOLS since 1996.7 This
prompted respondent to demand that petitioner cease and desist from using the aforesaid mark.8

Without notifying respondent, petitioner discontinued the use of, and withdrew from the market, the products under the name PCO-
GENOLS as of June 19, 2000. It, likewise, changed its mark from PCO-GENOLS to PCO-PLUS.9

On August 22, 2000, respondent filed a Complaint10 for Infringement of Trademark with Prayer for Preliminary Injunction against petitioner,
praying that the latter cease and desist from using the brand PCO-GENOLS for being confusingly similar with respondent’s trademark
PYCNOGENOL. It, likewise, prayed for actual and nominal damages, as well as attorney’s fees.11

In its Answer,12 petitioner contended that respondent could not file the infringement case considering that the latter is not the registered
owner of the trademark PYCNOGENOL, but one Horphag Research Limited. It, likewise, claimed that the two marks were not confusingly
similar. Finally, it denied liability, since it discontinued the use of the mark prior to the institution of the infringement case. Petitioner thus
prayed for the dismissal of the complaint. By way of counterclaim, petitioner prayed that respondent be directed to pay exemplary damages
and attorney’s fees.13

During the pre-trial, the parties admitted the following:

1. Defendant [petitioner] is a corporation duly organized and existing under the laws of the Republic of the Philippines with
business address at No. 7 Annapolis Street, Greenhills, San Juan, Metro Manila;

2. The trademark PYCNOGENOL of the plaintiff is duly registered with the Intellectual Property Office but not with the Bureau of
Food and Drug (BFAD).

3. The defendant’s product PCO-GENOLS is duly registered with the BFAD but not with the Intellectual Property Office (IPO).

4. The defendant corporation discontinued the use of and had withdrawn from the market the products under the name of PCO-
GENOLS as of June 19, 2000, with its trademark changed from PCO-GENOLS to PCO-PLUS.

5. Plaintiff corporation sent a demand letter to the defendant dated 02 June 2000.14

On January 16, 2006, the RTC decided in favor of respondent. It observed that PYCNOGENOL and PCO-GENOLS have the same suffix
"GENOL" which appears to be merely descriptive and thus open for trademark registration by combining it with other words. The trial court,
likewise, concluded that the marks, when read, sound similar, and thus confusingly similar especially since they both refer to food
supplements. The court added that petitioner’s liability was not negated by its act of pulling out of the market the products bearing the
questioned mark since the fact remains that from 1996 until June 2000, petitioner had infringed respondent’s product by using the
trademark PCO-GENOLS. As respondent manifested that it was no longer interested in recovering actual damages, petitioner was made to
answer only for attorney’s fees amounting to P50,000.00.15 For lack of sufficient factual and legal basis, the court dismissed petitioner’s
counterclaim. Petitioner’s motion for reconsideration was likewise denied.

On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court explained that under the Dominancy or the Holistic
Test, PCO-GENOLS is deceptively similar to PYCNOGENOL. It also found just and equitable the award of attorney’s fees especially since
respondent was compelled to litigate.16

Hence, this petition, assigning the following errors:

 I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF THE LOWER [COURT] THAT RESPONDENT’S
TRADEMARK P[YC]NOGENOLS (SIC) WAS INFRINGED BY PETITIONER’S PCO-GENOLS.

II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEY’S FEES IN FAVOR OF
RESPONDENT HORPHAG RESEARCH MANAGEMENT S.A. IN THE AMOUNT OF Php50,000.00.17

The petition is without merit.

It must be recalled that respondent filed a complaint for trademark infringement against petitioner for the latter’s use of the mark PCO-
GENOLS which the former claimed to be confusingly similar to its trademark PYCNOGENOL. Petitioner’s use of the questioned mark
started in 1996 and ended in June 2000. The instant case should thus be decided in light of the provisions of Republic Act (R.A.) No.
16618 for the acts committed until December 31, 1997, and R.A. No. 829319 for those committed from January 1, 1998 until June 19, 2000.

A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by others. Inarguably, a
trademark deserves protection.20

Section 22 of R.A. No. 166, as amended, and Section 155 of R.A. No. 8293 define what constitutes trademark infringement, as follows:

Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy of colorably imitate any such
mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.

Sec. 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That infringement takes place at the moment any of the acts stated in Subsection
155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material.

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following constitute the elements of
trademark infringement:

(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent
Office[;]

(b) [It] is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services
or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source
or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods,
business or services as to likely cause confusion or mistake or to deceive purchasers[;]

(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark registrant or assignee.21

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:

(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the
same need not be registered;

(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;
 (3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business
or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services;

(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers
or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such
business; and

(5) It is without the consent of the trademark or trade name owner or the assignee thereof.22

In the foregoing enumeration, it is the element of "likelihood of confusion" that is the gravamen of trademark infringement. But "likelihood of
confusion" is a relative concept. The particular, and sometimes peculiar, circumstances of each case are determinative of its existence.
Thus, in trademark infringement cases, precedents must be evaluated in the light of each particular case.23

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the Dominancy Test and the Holistic or Totality
Test. The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and
deception, thus constituting infringement.24 If the competing trademark contains the main, essential and dominant features of another, and
confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause confusion or
mistake in the mind of the public or to deceive purchasers.25 Courts will consider more the aural and visual impressions created by the
marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments.26

In contrast, the Holistic Test entails a consideration of the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.27 The discerning eye of the observer must focus not only on the predominant words but also
on the other features appearing on both labels in order that the observer may draw his conclusion whether one is confusingly similar to the
other.28

The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity between the marks
PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:

Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence, appears to be merely descriptive
and furnish no indication of the origin of the article and hence, open for trademark registration by the plaintiff thru combination with another
word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although the letters "Y" between P and C, "N" between O and
C and "S" after L are missing in the [petitioner’s] mark PCO-GENOLS, nevertheless, when the two words are pronounced, the sound
effects are confusingly similar not to mention that they are both described by their manufacturers as a food supplement and thus, identified
as such by their public consumers. And although there were dissimilarities in the trademark due to the type of letters used as well as the
size, color and design employed on their individual packages/bottles, still the close relationship of the competing products’ name in sounds
as they were pronounced, clearly indicates that purchasers could be misled into believing that they are the same and/or originates from a
common source and manufacturer.29

We find no cogent reason to depart from such conclusion.

This is not the first time that the Court takes into account the aural effects of the words and letters contained in the marks in determining the
issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,30 cited in McDonald’s Corporation v. L.C. Big
Mak Burger, Inc.,31 the Court held:

The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and "Gold Drop";
"Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and
"Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo." Leon Amdur, in his book "Trade-
Mark Law and Practice," pp. 419-421, cities, as coming within the purview of the idem sonans rule, "Yusea" and "U-C-A," "Steinway
Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this Court unequivocally said that
"Celdura" and "Cordura" are confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin"
is an infringement of the trademark "Sapolin," as the sound of the two names is almost the same.32

Finally, we reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts finding the allegations of
infringement to be meritorious. As we have consistently held, factual determinations of the trial court, concurred in by the CA, are final and
binding on this Court.33 Hence, petitioner is liable for trademark infringement.

We, likewise, sustain the award of attorney’s fees in favor of respondent. Article 2208 of the Civil Code enumerates the instances when
attorney’s fees are awarded, viz.:

Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

1. When exemplary damages are awarded;

2. When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect
his interest;
 3. In criminal cases of malicious prosecution against the plaintiff;

4. In case of a clearly unfounded civil action or proceeding against the plaintiff;

5. Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff"s plainly valid, just and
demandable claim;

6. In actions for legal support;

7. In actions for the recovery of wages of household helpers, laborers and skilled workers;

8. In actions for indemnity under workmen’s compensation and employer’s liability laws;

9. In a separate civil action to recover civil liability arising from a crime;

10. When at least double judicial costs are awarded;

11. In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be
recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.

As a rule, an award of attorney’s fees should be deleted where the award of moral and exemplary damages is not granted.34 Nonetheless,
attorney’s fees may be awarded where the court deems it just and equitable even if moral and exemplary damages are unavailing.35 In the
instant case, we find no reversible error in the grant of attorney’s fees by the CA.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated July 27, 2007 and its
Resolution dated October 15, 2007 in CA-G.R. CV No. 87556 are AFFIRMED.

SO ORDERED.

7. G.R. No. 190065               August 16, 2010

DERMALINE, INC., Petitioner, 
vs.
MYRA PHARMACEUTICALS, INC. Respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari1 seeking to reverse and set aside the Decision dated August 7, 20092 and the Resolution dated
October 28, 20093 of the Court of Appeals (CA) in CA-G.R. SP No. 108627.

The antecedent facts and proceedings—

On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property Office (IPO) an application for registration
of the trademark "DERMALINE DERMALINE, INC." (Application No. 4-2006011536). The application was published for Opposition in the
IPO E-Gazette on March 9, 2007.

On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified Opposition4 alleging that the trademark sought to be
registered by Dermaline so resembles its trademark "DERMALIN" and will likely cause confusion, mistake and deception to the purchasing
public. Myra said that the registration of Dermaline’s trademark will violate Section 1235 of Republic Act (R.A.) No. 8293 (Intellectual
Property Code of the Philippines). It further alleged that Dermaline’s use and registration of its applied trademark will diminish the
distinctiveness and dilute the goodwill of Myra’s "DERMALIN," registered with the IPO way back July 8, 1986, renewed for ten (10) years on
July 8, 2006. Myra has been extensively using "DERMALIN" commercially since October 31, 1977, and said mark is still valid and
subsisting.

Myra claimed that, despite Dermaline’s attempt to differentiate its applied mark, the dominant feature is the term "DERMALINE," which is
practically identical with its own "DERMALIN," more particularly that the first eight (8) letters of the marks are identical, and that
notwithstanding the additional letter "E" by Dermaline, the pronunciation for both marks are identical. Further, both marks have three (3)
syllables each, with each syllable identical in sound and appearance, even if the last syllable of "DERMALINE" consisted of four (4) letters
while "DERMALIN" consisted only of three (3).
Myra also pointed out that Dermaline applied for the same mark "DERMALINE" on June 3, 2003 and was already refused registration by
the IPO. By filing this new application for registration, Dermaline appears to have engaged in a fishing expedition for the approval of its
mark. Myra argued that its intellectual property right over its trademark is protected under Section 1476 of R.A. No. 8293.

Myra asserted that the mark "DERMALINE DERMALINE, INC." is aurally similar to its own mark such that the registration and use of
Dermaline’s applied mark will enable it to obtain benefit from Myra’s reputation, goodwill and advertising and will lead the public into
believing that Dermaline is, in any way, connected to Myra. Myra added that even if the subject application was under Classification 447 for
various skin treatments, it could still be connected to the "DERMALIN" mark under Classification 58 for pharmaceutical products, since
ultimately these goods are very closely related.

In its Verified Answer,9 Dermaline countered that a simple comparison of the trademark "DERMALINE DERMALINE, INC." vis-à-vis Myra’s
"DERMALIN" trademark would show that they have entirely different features and distinctive presentation, thus it cannot result in confusion,
mistake or deception on the part of the purchasing public. Dermaline contended that, in determining if the subject trademarks are
confusingly similar, a comparison of the words is not the only determinant, but their entirety must be considered in relation to the goods to
which they are attached, including the other features appearing in both labels. It claimed that there were glaring and striking dissimilarities
between the two trademarks, such that its trademark "DERMALINE DERMALINE, INC." speaks for itself (Res ipsa loquitur). Dermaline
further argued that there could not be any relation between its trademark for health and beauty services from Myra’s trademark classified
under medicinal goods against skin disorders.

The parties failed to settle amicably. Consequently, the preliminary conference was terminated and they were directed to file their
respective position papers.10

On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-7011 sustaining Myra’s opposition pursuant to Section
123.1(d) of R.A. No. 8293. It disposed—

WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED. Consequently, Application Serial No. 4-2006-011536 for the mark
‘DERMALINE, DERMALINE, INC. Stylized Wordmark’ for Dermaline, Inc. under class 44 covering the aforementioned goods filed on 21
October 2006, is as it is hereby, REJECTED.

Let the file wrapper of ‘DERMALINE, DERMALINE, INC. Stylized Wordmark’ subject matter of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this Decision.

SO ORDERED.12

Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution No. 2009-12(D)13 dated January 16, 2009.

Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in an Order14 dated April 17, 2009, the appeal
was dismissed for being filed out of time.

Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17, 2009 and the rejection of Dermaline’s
application for registration of trademark. The CA likewise denied Dermaline’s motion for reconsideration; hence, this petition raising the
issue of whether the CA erred in upholding the IPO’s rejection of Dermaline’s application for registration of trademark.

The petition is without merit.

A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by others.15 Inarguably, it is
an intellectual property deserving protection by law. In trademark controversies, each case must be scrutinized according to its peculiar
circumstances, such that jurisprudential precedents should only be made to apply if they are specifically in point.16

As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of R.A. No. 8293 to prevent third parties from
using a trademark, or similar signs or containers for goods or services, without its consent, identical or similar to its registered trademark,
where such use would result in a likelihood of confusion.

In determining likelihood of confusion, case law has developed two (2) tests, the Dominancy Test and the Holistic or Totality Test.

The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or
deception.17 It is applied when the trademark sought to be registered contains the main, essential and dominant features of the earlier
registered trademark, and confusion or deception is likely to result. Duplication or imitation is not even required; neither is it necessary that
the label of the applied mark for registration should suggest an effort to imitate. The important issue is whether the use of the marks
involved would likely cause confusion or mistake in the mind of or deceive the ordinary purchaser, or one who is accustomed to buy, and
therefore to some extent familiar with, the goods in question.18 Given greater consideration are the aural and visual impressions created by
the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments.19 The test of dominancy is
now explicitly incorporated into law in Section 155.1 of R.A. No. 8293 which provides—

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; (emphasis supplied)

On the other hand, the Holistic Test entails a consideration of the entirety of the marks as applied to the products, including labels and
packaging, in determining confusing similarity. The scrutinizing eye of the observer must focus not only on the predominant words but also
on the other features appearing in both labels so that a conclusion may be drawn as to whether one is confusingly similar to the other.20

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion, viz: (1) confusion of
goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either into that belief or into the belief that there is some connection between
the two parties, though inexistent.21

In rejecting the application of Dermaline for the registration of its mark "DERMALINE DERMALINE, INC.," the IPO applied the Dominancy
Test. It declared that both confusion of goods and service and confusion of business or of origin were apparent in both trademarks. It also
noted that, per Bureau Decision No. 2007-179 dated December 4, 2007, it already sustained the opposition of Myra involving the trademark
"DERMALINE" of Dermaline under Classification 5. The IPO also upheld Myra’s right under Section 138 of R.A. No. 8293, which provides
that a certification of registration of a mark is prima facie evidence of the validity of the registration, the registrant’s ownership of the mark,
and of the registrant’s exclusive right to use the same in connection with the goods and those that are related thereto specified in the
certificate.

We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set rules that can be deduced as
what constitutes a dominant feature with respect to trademarks applied for registration; usually, what are taken into account are signs,
color, design, peculiar shape or name, or some special, easily remembered earmarks of the brand that readily attracts and catches the
attention of the ordinary consumer.22

Dermaline’s insistence that its applied trademark "DERMALINE DERMALINE, INC." had differences "too striking to be mistaken" from
Myra’s "DERMALIN" cannot, therefore, be sustained. While it is true that the two marks are presented differently – Dermaline’s mark is
written with the first "DERMALINE" in script going diagonally upwards from left to right, with an upper case "D" followed by the rest of the
letters in lower case, and the portion "DERMALINE, INC." is written in upper case letters, below and smaller than the long-hand portion;
while Myra’s mark "DERMALIN" is written in an upright font, with a capital "D" and followed by lower case letters – the likelihood of
confusion is still apparent. This is because they are almost spelled in the same way, except for Dermaline’s mark which ends with the letter
"E," and they are pronounced practically in the same manner in three (3) syllables, with the ending letter "E" in Dermaline’s mark
pronounced silently. Thus, when an ordinary purchaser, for example, hears an advertisement of Dermaline’s applied trademark over the
radio, chances are he will associate it with Myra’s registered mark.

Further, Dermaline’s stance that its product belongs to a separate and different classification from Myra’s products with the registered
trademark does not eradicate the possibility of mistake on the part of the purchasing public to associate the former with the latter, especially
considering that both classifications pertain to treatments for the skin.1avvphi1

Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the market, and at
different price levels depending on variations of the products for specific segments of the market. The Court is cognizant that the registered
trademark owner enjoys protection in product and market areas that are the normal potential expansion of his business. Thus, we have
held –

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into
thinking that the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577).23 (Emphasis supplied)

Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such that, considering the current
proliferation of health and beauty products in the market, the purchasers would likely be misled that Myra has already expanded its
business through Dermaline from merely carrying pharmaceutical topical applications for the skin to health and beauty services.

Verily, when one applies for the registration of a trademark or label which is almost the same or that very closely resembles one already
used and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the
owner and user of a previously registered label or trademark. This is intended not only to avoid confusion on the part of the public, but also
to protect an already used and registered trademark and an established goodwill.24

Besides, the issue on protection of intellectual property, such as trademarks, is factual in nature. The findings of the IPO, upheld on appeal
by the same office, and further sustained by the CA, bear great weight and deserves respect from this Court. Moreover, the decision of the
IPO had already attained finality when Dermaline failed to timely file its appeal with the IPO Office of the Director General.

WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution dated October 28, 2009 of the Court of
Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against petitioner.

SO ORDERED.
Dermaline, Inc. vs. Myra Pharmaceuticals, Inc., GR No. 190065, August 16, 2010
Post under case digests, Commercial Law at Friday, December 16, 2011 Posted by Schizophrenic Mind

HAD8J5EKCNKC

Facts: Dermaline filed with the IPO an application to

register thetrademark “Dermaline.” Myra opposed this alleging

that thetrademark resembles its trademark “Dermalin”

and will cause confusion, mistake and deception to
the purchasing public. “Dermalin” was registered way
back 1986 and was commercially used since 1977.
Myra claims that despite attempts of Dermaline to
differentiate its mark, the dominant feature is the term
“Dermaline” to which the first 8 letters were identical to
that of “Dermalin.” The pronunciation for both is
also identical. Further, both have 3 syllables each
with identical sound and appearance.

Issue: W/N the IPO should allow the registration of

the trademark“Dermaline.” NO

Held: As Myra correctly posits, it has the right under

Section 147 of R.A. No. 8293 to prevent third parties from
using a trademark, or similar signs or containers for
goods or services, without its consent,identical or
similar to its registered trademark, where such use would result
in a likelihood of confusion. In determining confusion,
case law has developed two (2) tests, the Dominancy
Test and the Holistic or Totality Test. 

The Dominancy Test focuses on the similarity of the

prevalent features of the competing trademarks that
might cause confusion or deception. Duplication or
imitation is not even required; neither is it necessary
that the label of the applied mark for registration
should suggest an effort to imitate. Relative to the
question on confusion of marks and trade names,
jurisprudence noted two (2) types of confusion, viz:
(1) confusion of goods (product confusion), where the
ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was
purchasing the other; and (2) confusion of business
(source or origin confusion), where, although the
goods of the parties are different, the product, the
mark of which registration is applied for by one party,
is such as might reasonably be assumed to originate
with the registrant of an earlier product, and the public
would then be deceived either into that belief or into
the belief that there is some connection between the
two parties, though inexistent. 

Using this test, the IPO declared that both confusion

of goods and service and confusion of business or of
origin were apparent in both trademarks. While it is
true that the two marks are presented differently, they
are almost spelled in the same way, except for
Dermaline’s mark which ends with the letter "E," and
they are pronounced practically in the same manner
in three (3) syllables, with the ending letter "E" in
Dermaline’s mark pronounced silently. Thus, when an
ordinary purchaser, for example, hears an
advertisement of Dermaline’s applied trademark over
the radio, chances are he will associate it with Myra’s.
When one applies for the registration of
a trademark or label which is almost the same or that
very closely resembles one already used and
registered by another, the application should be rejected and
dismissed outright, even without any opposition on
the part of the owner and user of a previously
registered label or trademark. 

 Further, Dermaline’s stance that its product belongs

to a separate and different classification from Myra’s
products with the registered trademark does not
eradicate the possibility of mistake on the part of the
purchasing public to associate the former with the
latter, especially considering that both classifications
pertain to treatments for the skin.
8. G.R. No. 172276               August 8, 2010

SOCIETE DES PRODUITS NESTLE, S.A., Petitioner, 

vs.
MARTIN T. DY, JR., Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 1 September 2005 Decision and 4
April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Jr.) not liable for
trademark infringement. The Court of Appeals reversed the 18 September 1998 Decision of the Regional Trial Court (RTC), Judicial Region
7, Branch 9, Cebu City, in Civil Case No. CEB-19345.

The Facts

Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation organized under the laws of Switzerland. It manufactures food
products and beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7 April 1969 by the then Bureau of Patents,
Trademarks and Technology Transfer, Nestle owns the "NAN" trademark for its line of infant powdered milk products, consisting of PRE-
NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under Class 6 — "diatetic preparations for infant feeding."

Nestle distributes and sells its NAN milk products all over the Philippines. It has been investing tremendous amounts of resources to train
its sales force and to promote the NAN milk products through advertisements and press releases.

Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks the powdered milk into three sizes of plastic
packs bearing the name "NANNY." The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50 and P39.90, respectively.
NANNY is is also classified under Class 6 — "full cream milk for adults in [sic] all ages." Dy, Jr. distributes and sells the powdered milk in
Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.

In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using "NANNY" and to undertake that he would stop infringing the
"NAN" trademark. Dy, Jr. did not act on Nestle’s request. On 1 March 1990, Nestle filed before the RTC, Judicial Region 7, Branch 31,
Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr. filed a motion to dismiss alleging that the complaint did not state a
cause of action. In its 4 June 1990 order, the trial court dismissed the complaint. Nestle appealed the 4 June 1990 order to the Court of
Appeals. In its 16 February 1993 Resolution, the Court of Appeals set aside the 4 June 1990 order and remanded the case to the trial court
for further proceedings.

Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial court a motion to transfer the case to the RTC,
Judicial Region 7, Branch 9, Cebu City, which was designated as a special court for intellectual property rights.

The RTC’s Ruling

In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for infringement. The trial court held:

If determination of infringement shall only be limited on whether or not the mark used would likely cause confusion or mistake in the minds
of the buying public or deceive customers, such in [sic] the most considered view of this forum would be highly unlikely to happen in the
instant case. This is because upon comparison of the plaintiff’s NAN and defendant’s NANNY, the following features would reveal
the absence of any deceptive tendency in defendant’s NANNY: (1) all NAN products are contained tin cans [sic], while NANNY are
contained in plastic packs; (2) the predominant colors used in the labels of NAN products are blue and white, while the predominant colors
in the plastic packings of NANNY are blue and green; (3) the labels of NAN products have at the bottom portion an elliptical shaped figure
containing inside it a drawing of nestling birds, which is overlapped by the trade-name "Nestle", while the plastic packs of NANNY have a
drawing of milking cows lazing on a vast green field, back-dropped with snow covered mountains; (4) the word NAN are [sic] all in large,
formal and conservative-like block letters, while the word NANNY are [sic] all in small and irregular style of letters with curved ends; and (5)
all NAN products are milk formulas intended for use of [sic] infants, while NANNY is an instant full cream powdered milk intended for use of
[sic] adults.

The foregoing has clearly shown that infringement in the instant case cannot be proven with the use of the "test of dominancy" because the
deceptive tendency of the unregistered trademark NANNY is not apparent from the essential features of the registered trademark NAN.

However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971, Aug. 31, 1982, the Supreme Court took the occasion of
discussing what is implied in the definition of "infringement" when it stated: "Implicit in this definition is the concept that the goods must be
so related that there is likelihood either of confusion of goods or business. x x x But as to whether trademark infringement exists depends
for the most part upon whether or not the goods are so related that the public may be, or is actually, deceived and misled that they came
from the same maker or manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so
related to each other that it might reasonably be assumed that they originate from one manufacturer. Non-competing goods may also be
those which, being entirely unrelated, could not reasonably be assumed to have a common source. In the former case of related goods,
confusion of business could arise out of the use of similar marks; in the latter case of non-related goods, it could not."

Furthermore, in said case the Supreme Court as well discussed on when goods may become so related for purposes of infringement when
it stated: "Goods are related when they belong to the same class or have same descriptive properties; when they possess the same
physical attributes or essential characteristics with reference to their form, composition, texture or quality. They may also be related
because they serve the same purpose or are sold in grocery stores. x x x

Considering that defendant’s NANNY belongs to the same class as that of plaintiff’s NAN because both are food products, the defendant’s
unregistered trade mark NANNY should be held an infringement to plaintiff’s registered trademark NAN because defendant’s use of
NANNY would imply that it came from the manufacturer of NAN. Furthermore, since the word "nanny" means a "child’s nurse," there might
result the not so remote probability that defendant’s NANNY may be confused with infant formula NAN despite the aparent [sic] disparity
between the features of the two products.

Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.

The Court of Appeals’ Ruling

In its 1 September 2005 Decision, the Court of Appeals reversed the trial court’s 18 September 1998 Decision and found Dy, Jr. not liable
for infringement. The Court of Appeals held:

[T]he trial court appeared to have made a finding that there is no colorable imitation of the registered mark "NAN" in Dy’s use of "NANNY"
for his own milk packs. Yet it did not stop there. It continued on applying the "concept of related goods."

The Supreme Court utlilized the "concept of related goods" in the said case of Esso Standard Easter, Inc. versus Court of Appeals, et
al. wherein two contending parties used the same trademark "ESSO" for two different goods, i.e. petroleum products and cigarettes. It rules
that there is infringement of trademark involving two goods bearing the same mark or label, even if the said goods are non-competing, if
and only if they are so related that the public may be, or is actually, deceived that they originate from the one maker or manufacturer. Since
petroleum products and cigarettes, in kind and nature, flow through different trade channels, and since the possibility of confusion is
unlikely in the general appearances of each mark as a whole, the Court held in this case that they cannot be so related in the context of
infringement.

In applying the concept of related goods in the present case, the trial court haphazardly concluded that since plaintiff-appellee’s NAN and
defendant-appellant’s NANNY belong to the same class being food products, the unregistered NANNY should be held an infringement of
Nestle’s NAN because "the use of NANNY would imply that it came from the manufacturer of NAN." Said court went on to elaborate further:
"since the word "NANNY" means a "child’s nurse," there might result the not so remote probability that defendant’s NANNY may be
confused with infant formula NAN despite the aparent (sic) disparity between the features of the two products as discussed above."
The trial court’s application of the doctrine laid down by the Supreme Court in the Esso Standard case aforementioned and the cases cited
therein is quite misplaced. The goods of the two contending parties in those cases bear similar marks or labels: "Esso" for petroleum
products and cigarettes, "Selecta" for biscuits and milk, "X-7" for soap and perfume, lipstick and nail polish. In the instant case, two
dissimilar marks are involved — plaintiff-appellee’s "NAN" and defendant-appellant’s "NANNY." Obviously, the concept of related goods
cannot be utilized in the instant case in the same way that it was used in the Esso Standard case.

In the Esso Standard case, the Supreme Court even cautioned judges that in resolving infringement or trademark cases in the Philippines,
particularly in ascertaining whether one trademark is confusingly similar to or is a colorable imitation of another, precedent must be studied
in the light of the facts of the particular case. Each case must be decided on its own merits. In the more recent case of Societe Des
Produits Nestle S.A. Versus Court of Appeals, the High Court further stressed that due to the peculiarity of the facts of each infringement
case, a judicial forum should not readily apply a certain test or standard just because of seeming similarities. The entire panoply of
elements constituting the relevant factual landscape should be comprehensively examined.

While it is true that both NAN and NANNY are milk products and that the word "NAN" is contained in the word "NANNY," there are more
glaring dissimilarities in the entirety of their trademarks as they appear in their respective labels and also in relation to the goods to which
they are attached. The discerning eye of the observer must focus not only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to the other. Even the trial court found
these glaring dissimilarities as above-quoted. We need not add more of these factual dissimilarities.

NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all infant preparations, while NANNY is a full cream milk for
adults in [sic] all ages. NAN milk products are sold in tin cans and hence, far expensive than the full cream milk NANNY sold in three (3)
plastic packs containing 80, 180 and 450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN products are of the
colors blue and white and have at the bottom portion an elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle." On the other hand, the plastic packs NANNY have a drawing of milking cows lazing on a vast green
field, back-dropped with snow-capped mountains and using the predominant colors of blue and green. The word NAN are [sic] all in large,
formal and conservative-like block letters, while the word NANNY are [sic] all in small and irregular style of letters with curved ends. With
these material differences apparent in the packaging of both milk products, NANNY full cream milk cannot possibly be an infringement of
NAN infant milk. 1avvphi1

Moreover, NAN infant milk preparation is more expensive than NANNY instant full cream milk. The cheaper price of NANNY would give, at
the very first instance, a considerable warning to the ordinary purchaser on whether he is buying an infant milk or a full cream milk for
adults. A cursory examination of the packaging would confirm the striking differences between the products in question.

In view of the foregoing, we find that the mark NANNY is not confusingly similar to NAN. Dy therefore cannot be held liable for infringement.

Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals denied the motion for lack of merit. Hence, the
present petition.

Issue

The issue is whether Dy, Jr. is liable for infringement.

The Court’s Ruling

The petition is meritorious.

Section 22 of Republic Act (R.A.) No. 166, as amended, states:

Infringement, what constitutes. — Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with the sale, offering for sale, or advertising of any goods, business
or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark
or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.

Section 155 of R.A. No. 8293 states:

Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.

In Prosource International, Inc. v. Horphag Research Management SA, the Court laid down the elements of infringement under R.A. Nos.
166 and 8293:

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following constitute the elements of
trademark infringement:

"(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent
Office[;]

(b) [It] is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services
or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source
or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods,
business or services as to likely cause confusion or mistake or to deceive purchasers[;]

(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark registrant or assignee."

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:

·The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the
same need not be registered;

·The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

·The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or services;

·The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or origin of such goods or services or the idenity of such
business; and

·It is without the consent of the trademark or trade name owner or the assignee thereof.

Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement. There are two types of confusion in
trademark infringement: confusion of goods and confusion of business. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, the Court distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods "in which event the ordinarily prudent purchaser would be induced
to purchase one product in the belief that he was purchasing the other." In which case, "defendant’s goods are then bought as the
plaintiff’s, and the poorer quality of the former reflects adversely on the plaintiff’s reputation." The other is the confusion of business: "Here
though the goods of the parties are different, the defendant’s product is such as might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that belief or into the belief that there is some connection between the plaintiff and
defendant which, in fact, does not exist."

There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The dominancy test focuses on the similarity
of the main, prevalent or essential features of the competing trademarks that might cause confusion. Infringement takes place when the
competing trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary. The question is whether the
use of the marks is likely to cause confusion or deceive purchasers.

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is not
only on the predominant words but also on the other features appearing on the labels.

In cases involving trademark infringement, no set of rules can be deduced. Each case must be decided on its own merits. Jurisprudential
precedents must be studied in the light of the facts of each particular case. In McDonald’s Corporation v. MacJoy Fastfood Corporation, the
Court held:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits. In such cases, even more than in any other litigation, precedent must be studied in the
light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to a
case if they are specifically in point.

In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In recent cases with similar factual
milieus, the Court has consistently applied the dominancy test. In Prosource International, Inc., the Court applied the dominancy test in
holding that "PCO-GENOLS" is confusingly similar to "PYCNOGENOL." The Court held:

The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity between the marks
PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:

"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence, appears to be merely descriptive
and furnish no indication of the origin of the article and hence, open for trademark registration by the plaintiff through combination with
another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although the letters "Y" between P and C, "N" between
O and C and "S" after L are missing in the [petitioner’s] mark PCO-GENOLS, nevertheless, when the two words are pronounced, the sound
effects are confusingly similar not to mention that they are both described by their manufacturers as a food supplement and thus, identified
as such by their public consumers. And although there were dissimilarities in the trademark due to the type of letters used as well as the
size, color and design employed on their individual packages/bottles, still the close relationship of the competing product’s name is sounds
as they were pronounced, clearly indicates that purchasers could be misled into believing that they are the same and/or originates from a
common source and manufacturer."

We find no cogent reason to depart from such conclusion.

This is not the first time the Court takes into account the aural effects of the words and letters contained in the marks in determining the
issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited in McDonald’s Corporation v. L.C. Big Mak
Burger, Inc., the Court held:

"The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and ""Gold Drop";
"Jantzen" and "Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and
Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo Hoo." Leon Amdur, in his book "Trade-
Mark Law and Practice," pp. 419-421, cities [sic], as coming within the purview of the idem sonans rule, "Yusea" and "U-C-A," "Steinway
Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this Court unequivocally said that
"Celdura" and "Condura" are confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name
"Lusolin" is an infringement of the trademark "Sapolin," as the sound of the two names is almost the same."

In McDonald’s Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test in holding that "MACJOY" is confusingly
similar to "MCDONALD’S." The Court held:

While we agree with the CA’s detailed enumeration of differences between the two (2) competing trademarks herein involved, we believe
that the holistic test is not the one applicable in this case, the dominancy test being the one more suitable. In recent cases with a similar
factual milieu as here, the Court has consistently used and applied the dominancy test in determining confusing similarity or likelihood of
confusion between competing trademarks.

xxxx

Applying the dominancy test to the instant case, the Court finds that herein petitioner’s "MCDONALD’S" and respondent’s "MACJOY"
marks are are confusingly similar with each other that an ordinary purchaser can conclude an association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features. x x x

For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and aurally catches the attention of the consuming public. Verily, the
word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD’S marks which all use the prefixes Mc and/or Mac.

Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondent’s trademark
application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International Classification of Goods,
namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner’s trademark registration for the
MCDONALD’S marks in the Philippines covers goods which are similar if not identical to those covered by the respondent’s application.

In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in holding that "BIG MAK" is confusingly
similar to "BIG MAC." The Court held:

This Court x x x has relied on the dominancy test rather than the holistic test. The dominancy test considers the dominant features in the
competing marks in determining whether they are confusingly similar. Under the dominancy test, courts give greater weight to the similarity
of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences.
Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:

x x x It has been consistently held that the question of infringement of a trademark is to be determined by the test of dominancy. Similarity
in size, form and color, while relevant, is not conclusive. If the competing trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it
necessary that the infringing label should suggest an effort to imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489,
495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of trademarks is whether
the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn
Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; x x x)

xxxx

The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which defines infringement
as the "colorable imitation of a registered mark x x x or a dominant feature thereof."

Applying the dominancy test, the Court finds that respondents’ use of the "Big Mak" mark results in likelihood of confusion. First, "Big Mak"
sounds exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly the same as the first word in "Big Mac." Third, the first
two letters in "Mak" are the same as the first two letters in "Mac." Fourth, the last letter "Mak" while a "k" sounds the same as "c" when the
word "Mak" is pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."

In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the dominancy test in holding that "FLAVOR MASTER" is
confusingly similar to "MASTER ROAST" and "MASTER BLEND." The Court held:

While this Court agrees with the Court of Appeals’ detailed enumeration of differences between the respective trademarks of the two coffee
products, this Court cannot agree that totality test is the one applicable in this case. Rather, this Court believes that the dominancy test is
more suitable to this case in light of its peculiar factual milieu.

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing
similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the marketplace. The totality or holistic test only relies on visual comparison between
two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.

For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:

From the evidence at hand, it is sufficiently established that the word MASTER is the dominant feature of opposer’s mark. The word
MASTER is printed across the middle portion of the label in bold letters almost twice the size of the printed word ROAST. Further, the word
MASTER has always been given emphasis in the TV and radio commercials and other advertisements made in promoting the product. x x
x In due time, because of these advertising schemes the mind of the buying public had come to learn to associate the word MASTER with
the opposer’s goods.

x x x. It is the observation of this Office that much of the dominance which the word MASTER has acquired through Opposer’s advertising
schemes is carried over when the same is incorporated into respondent-applicant’s trademark FLAVOR MASTER. Thus, when one looks at
the label bearing the trademark FLAVOR MASTER (exh. 4) one’s attention is easily attracted to the word MASTER, rather than to the
dissimilarities that exist. Therefore, the possibility of confusion as to the goods which bear the competing marks or as to the origins thereof
is not farfetched.

Applying the dominancy test in the present case, the Court finds that "NANNY" is confusingly similar to "NAN." "NAN" is the prevalent
feature of Nestle’s line of infant powdered milk products. It is written in bold letters and used in all products. The line consists of PRE-
NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, "NANNY" contains the prevalent feature "NAN." The first three letters of "NANNY" are
exactly the same as the letters of "NAN." When "NAN" and "NANNY" are pronounced, the aural effect is confusingly similar.

In determining the issue of confusing similarity, the Court takes into account the aural effect of the letters contained in the marks. In Marvex
Commercial Company, Inc. v. Petra Hawpia & Company, the Court held:

It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are confusingly similar in sound.

Both these words have the same suffix, "PAS", which is used to denote a plaster that adheres to the body with curative powers. "PAS,"
being merely descriptive, furnishes no indication of the origin of the article and therefore is open for appropriation by anyone
(Ethepa vs. Director of Patents, L-20635, March 31, 1966) and may properly become the subject of a trademark by combination with
another word or phrase.

xxxx

The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are confusingly similar in sound: "Gold Dust" and ""Gold Drop";
"Jantzen" and "Jass-Sea"; "Silver Flash" and Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and
Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and Hoo Hoo." Leon Amdur, in his book "Trade-
Mark Law and Practice," pp. 419-421, cities [sic], as coming within the purview of the idem sonans rule, "Yusea" and "U-C-A," "Steinway
Pianos" and "Steinberg Pianos," and "Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of Patents, this Court unequivocally said that
"Celdura" and "Condura" are confusingly similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name
"Lusolin" is an infringement of the trademark "Sapolin," as the sound of the two names is almost the same.

The scope of protection afforded to registered trademark owners is not limited to protection from infringers with identical goods. The scope
of protection extends to protection from infringers with related goods, and to market areas that are the normal expansion of business of the
registered trademark owners. Section 138 of R.A. No. 8293 states:

Certificates of Registration. — A certificate of registration of a mark shall be prima facie evidence of validity of the registration, the
registrant’s ownership of the mark, and of the registrant’s exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate. (Emphasis supplied)

In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, "Non-competing goods may be those which, though they are not in actual
competition, are so related to each other that it can reasonably be assumed that they originate from one manufacturer, in which case,
confusion of business can arise out of the use of similar marks." In that case, the Court enumerated factors in determining whether goods
are related: (1) classification of the goods; (2) nature of the goods; (3) descriptive properties, physical attributes or essential characteristics
of the goods, with reference to their form, composition, texture or quality; and (4) style of distribution and marketing of the goods, including
how the goods are displayed and sold.

NANNY and NAN have the same classification, descriptive properties and physical attributes. Both are classified under Class 6, both are
milk products, and both are in powder form. Also, NANNY and NAN are displayed in the same section of stores — the milk section.

The Court agrees with the lower courts that there are differences between NAN and NANNY: (1) NAN is intended for infants while NANNY
is intended for children past their infancy and for adults; and (2) NAN is more expensive than NANNY. However, as the registered owner of
the "NAN" mark, Nestle should be free to use its mark on similar products, in different segments of the market, and at different price levels.
In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the Court held that the scope of protection afforded to registered trademark owners
extends to market areas that are the normal expansion of business:

xxx

Even respondent’s use of the "Big Mak" mark on non-hamburger food products cannot excuse their infringement of petitioners’ registered
mark, otherwise registered marks will lose their protection under the law.

The registered trademark owner may use his mark on the same or similar products, in different segments of the market, and at
different price levels depending on variations of the products for specific segments of the market. The Court has recognized that
the registered trademark owner enjoys protection in product and market areas that are the normal potential expansion of his
business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into
thinking that the complaining party has extended his business into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am.
Jur. 576, 577). (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4 April 2006 Resolution of the Court of
Appeals in CA-G.R. CV No. 62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial Court, Judicial Region 7,
Branch 9, Cebu City, in Civil Case No. CEB-19345.

SO ORDERED.

9. G.R. No. 164321               March 23, 2011

SKECHERS, U.S.A., INC., Petitioner, 

vs.
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or
occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Parañaque City, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-Intervenor, 

vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD.,
and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T.
MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or occupants
of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Parañaque City, Respondents.
 RESOLUTION

PERALTA, J.:

For resolution are the twin Motions for Reconsideration1 filed by petitioner and petitioner-intervenor from the Decision rendered in favor of
respondents, dated November 30, 2006.

At the outset, a brief narration of the factual and procedural antecedents that transpired and led to the filing of the motions is in order.

The present controversy arose when petitioner filed with Branch 24 of the Regional Trial Court (RTC) of Manila an application for the
issuance of search warrants against an outlet and warehouse operated by respondents for infringement of trademark under Section 155, in
relation to Section 170 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines.2 In the course of its
business, petitioner has registered the trademark "SKECHERS"3 and the trademark "S" (within an oval design)4 with the Intellectual
Property Office (IPO).

Two search warrants5 were issued by the RTC and were served on the premises of respondents. As a result of the raid, more than 6,000
pairs of shoes bearing the "S" logo were seized.

Later, respondents moved to quash the search warrants, arguing that there was no confusing similarity between petitioner’s "Skechers"
rubber shoes and its "Strong" rubber shoes.

On November 7, 2002, the RTC issued an Order6 quashing the search warrants and directing the NBI to return the seized goods. The RTC
agreed with respondent’s view that Skechers rubber shoes and Strong rubber shoes have glaring differences such that an ordinary prudent
purchaser would not likely be misled or confused in purchasing the wrong article.

Aggrieved, petitioner filed a petition for certiorari7 with the Court of Appeals (CA) assailing the RTC Order. On November 17, 2003, the CA
issued a Decision8 affirming the ruling of the RTC.

Subsequently, petitioner filed the present petition9 before this Court which puts forth the following assignment of errors:

A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CONSIDERING MATTERS OF
DEFENSE IN A CRIMINAL TRIAL FOR TRADEMARK INFRINGEMENT IN PASSING UPON THE VALIDITY OF THE SEARCH
WARRANT WHEN IT SHOULD HAVE LIMITED ITSELF TO A DETERMINATION OF WHETHER THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN QUASHING THE SEARCH WARRANTS.

B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK INFRINGEMENT IN THE CASE WHERE THE SOLE TRIABLE ISSUE
IS THE EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH WARRANT.10

In the meantime, petitioner-intervenor filed a Petition-in-Intervention11 with this Court claiming to be the sole licensed distributor of Skechers
products here in the Philippines.

On November 30, 2006, this Court rendered a Decision12 dismissing the petition.

Both petitioner and petitioner-intervenor filed separate motions for reconsideration.

In petitioner’s motion for reconsideration, petitioner moved for a reconsideration of the earlier decision on the following grounds:

(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS CASE DUE TO THE SIGNIFICANCE AND
REPERCUSSIONS OF ITS DECISION.

(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE UNAUTHORIZED REPRODUCTIONS OF THE "S"
TRADEMARK OWNED BY PETITIONER WERE INTENDED FOR DISTRIBUTION IN THE PHILIPPINE MARKET TO THE
DETRIMENT OF PETITIONER – RETURNING THE GOODS TO RESPONDENTS WILL ADVERSELY AFFECT THE
GOODWILL AND REPUTATION OF PETITIONER.

(c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH ACTED WITH GRAVE ABUSE OF
DISCRETION.

(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE EVIDENCE PRESENTED DURING THE
SEARCH WARRANT APPLICATION PROCEEDINGS.

(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT IS BASED ON A DIFFERENT FACTUAL
MILIEU. PRELIMINARY FINDING OF GUILT (OR ABSENCE THEREOF) MADE BY THE SEARCH WARRANT COURT AND
THE COURT OF APPEALS WAS IMPROPER.
 (f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE LAW IS CLEAR. THE DOMINANCY TEST
SHOULD BE USED.

(g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION.13

On the other hand, petitioner-intervenor’s motion for reconsideration raises the following errors for this Court’s consideration, to wit:

(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE IN ADOPTING THE ALREADY-REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF
CONFUSING SIMILARITY;

(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW IN HOLDING THAT
THERE IS NO PROBABLE CAUSE FOR TRADEMARK INFRINGEMENT; AND

(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURT’S DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS WHEN IT UPHELD THE QUASHAL OF THE SEARCH WARRANT ON THE BASIS
SOLELY OF A FINDING THAT THERE IS NO CONFUSING SIMILARITY.14

A perusal of the motions submitted by petitioner and petitioner-intervenor would show that the primary issue posed by them dwells on the
issue of whether or not respondent is guilty of trademark infringement.

After a thorough review of the arguments raised herein, this Court reconsiders its earlier decision.

The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No.
8293 states:

Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.15

The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause confusion. In determining similarity
and likelihood of confusion, jurisprudence has developed tests  the Dominancy Test and the Holistic or Totality Test. The Dominancy Test
focuses on the similarity of the prevalent or dominant features of the competing trademarks that might cause confusion, mistake, and
deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither is it required that the mark sought to be
registered suggests an effort to imitate. Given more consideration are the aural and visual impressions created by the marks on the buyers
of goods, giving little weight to factors like prices, quality, sales outlets, and market segments.16

In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the predominant
words, but also on the other features appearing on both labels so that the observer may draw conclusion on whether one is confusingly
similar to the other.17

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion, viz.: (1) confusion of
goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either into that belief or into the belief that there is some connection between
the two parties, though inexistent.18

Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by respondent in its Strong rubber shoes
infringes on the mark already registered by petitioner with the IPO. While it is undisputed that petitioner’s stylized "S" is within an oval
design, to this Court’s mind, the dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S" which catches the
eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact that it used the same stylized "S", the same being
the dominant feature of petitioner’s trademark, already constitutes infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be considered as highly identifiable to the
products of petitioner alone. The CA even supported its conclusion by stating that the letter "S" has been used in so many existing
trademarks, the most popular of which is the trademark "S" enclosed by an inverted triangle, which the CA says is identifiable to Superman.
Such reasoning, however, misses the entire point, which is that respondent had used a stylized "S," which is the same stylized "S" which
petitioner has a registered trademark for. The letter "S" used in the Superman logo, on the other hand, has a block-like tip on the upper
portion and a round elongated tip on the lower portion. Accordingly, the comparison made by the CA of the letter "S" used in the Superman
trademark with petitioner’s stylized "S" is not appropriate to the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font and the size of the lettering, the
stylized "S" utilized by respondent is the very same stylized "S" used by petitioner; a stylized "S" which is unique and distinguishes
petitioner’s trademark. Indubitably, the likelihood of confusion is present as purchasers will associate the respondent’s use of the stylized
"S" as having been authorized by petitioner or that respondent’s product is connected with petitioner’s business.

Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed petitioner’s trademark. For its part, the RTC
noted the following supposed dissimilarities between the shoes, to wit:

1. The mark "S" found in Strong Shoes is not enclosed in an "oval design."

2. The word "Strong" is conspicuously placed at the backside and insoles.

3. The hang tags and labels attached to the shoes bears the word "Strong" for respondent and "Skechers U.S.A." for private
complainant;

4. Strong shoes are modestly priced compared to the costs of Skechers Shoes.19

While there may be dissimilarities between the appearances of the shoes, to this Court’s mind such dissimilarities do not outweigh the stark
and blatant similarities in their general features. As can be readily observed by simply comparing petitioner’s Energy20 model and
respondent’s Strong21 rubber shoes, respondent also used the color scheme of blue, white and gray utilized by petitioner. Even the design
and "wavelike" pattern of the midsole and outer sole of respondent’s shoes are very similar to petitioner’s shoes, if not exact patterns
thereof. At the side of the midsole near the heel of both shoes are two elongated designs in practically the same location. Even the outer
soles of both shoes have the same number of ridges, five at the back and six in front. On the side of respondent’s shoes, near the upper
part, appears the stylized "S," placed in the exact location as that of the stylized "S" on petitioner’s shoes. On top of the "tongue" of both
shoes appears the stylized "S" in practically the same location and size. Moreover, at the back of petitioner’s shoes, near the heel counter,
appears "Skechers Sport Trail" written in white lettering. However, on respondent’s shoes appears "Strong Sport Trail" noticeably written in
the same white lettering, font size, direction and orientation as that of petitioner’s shoes. On top of the heel collar of petitioner’s shoes are
two grayish-white semi-transparent circles. Not surprisingly, respondent’s shoes also have two grayish-white semi-transparent circles in the
exact same location. lihpwa1

Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test, ruled that there was no colorable
imitation, when it cannot be any more clear and apparent to this Court that there is colorable imitation. The dissimilarities between the
shoes are too trifling and frivolous that it is indubitable that respondent’s products will cause confusion and mistake in the eyes of the
public. Respondent’s shoes may not be an exact replica of petitioner’s shoes, but the features and overall design are so similar and alike
that confusion is highly likely.
1avvphi1

In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc.,22 this Court, in a case for unfair competition, had opined that even if
not all the details are identical, as long as the general appearance of the two products are such that any ordinary purchaser would be
deceived, the imitator should be liable, to wit:

From said examination, We find the shoes manufactured by defendants to contain, as found by the trial court, practically all the features of
those of the plaintiff Converse Rubber Corporation and manufactured, sold or marketed by plaintiff Edwardson Manufacturing Corporation,
except for their respective brands, of course. We fully agree with the trial court that "the respective designs, shapes, the colors of the ankle
patches, the bands, the toe patch and the soles of the two products are exactly the same ... (such that) at a distance of a few meters, it is
impossible to distinguish "Custombuilt" from "Chuck Taylor." These elements are more than sufficient to serve as basis for a charge of
unfair competition. Even if not all the details just mentioned were identical, with the general appearances alone of the two products, any
ordinary, or even perhaps even a not too perceptive and discriminating customer could be deceived, and, therefore, Custombuilt could
easily be passed off for Chuck Taylor. Jurisprudence supports the view that under such circumstances, the imitator must be held liable. x x
x23

Neither can the difference in price be a complete defense in trademark infringement. In McDonald’s Corporation v. L.C. Big Mak Burger.
Inc.,24 this Court held:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into
thinking that the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577). x x x25

Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the market, and at
different price levels depending on variations of the products for specific segments of the market.26 The purchasing public might be
mistaken in thinking that petitioner had ventured into a lower market segment such that it is not inconceivable for the public to think that
Strong or Strong Sport Trail might be associated or connected with petitioner’s brand, which scenario is plausible especially since both
petitioner and respondent manufacture rubber shoes.

Withal, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the business
established on the goods bearing the mark through actual use over a period of time, but also to safeguard the public as consumers against
confusion on these goods.27 While respondent’s shoes contain some dissimilarities with petitioner’s shoes, this Court cannot close its eye to
the fact that for all intents and purpose, respondent had deliberately attempted to copy petitioner’s mark and overall design and features of
the shoes. Let it be remembered, that defendants in cases of infringement do not normally copy but only make colorable changes.28The
most successful form of copying is to employ enough points of similarity to confuse the public, with enough points of difference to confuse
the courts.29

WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. The Decision dated November 30, 2006 is
RECONSIDERED and SET ASIDE.

SO ORDERED.

10. G.R. No. 158589             June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A., (now known as PHILIP
MORRIS PRODUCTS S.A.), Petitioners, 
vs.
FORTUNE TOBACCO CORPORATION, Respondent.

DECISION

GARCIA, J.:

Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson & Hedges (Canada) Inc., and
Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of the following issuances of the
Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit:

1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch 166, in its
Civil Case No. 47374, which dismissed the complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and

2. Resolution dated May 30, 20032 denying petitioners’ motion for reconsideration.

Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is, per Certificate of
Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office (PPO), the registered owner of the trademark "MARK VII"
for cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the
trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as can be seen in Trademark
Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the
assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and Myers Tobacco Company. On the other hand,
respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells cigarettes using the trademark
"MARK."

The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their respective trademarks
had been committed, filed, on August 18, 1982, a Complaint for Infringement of Trademark and Damages against respondent Fortune
Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.

The decision under review summarized what happened next, as follows:

In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are foreign corporations not
doing business in the Philippines and are suing on an isolated transaction. xxx they averred that the countries in which they are domiciled
grant xxx to corporate or juristic persons of the Philippines the privilege to bring action for infringement, xxx without need of a license to do
business in those countries. [Petitioners] likewise manifested [being registered owners of the trademark "MARK VII" and "MARK TEN" for
cigarettes as evidenced by the corresponding certificates of registration and an applicant for the registration of the trademark "LARK
MILDS"]. xxx. [Petitioners] claimed that they have registered the aforementioned trademarks in their respective countries of origin and that,
by virtue of the long and extensive usage of the same, these trademarks have already gained international fame and acceptance. Imputing
bad faith on the part of the [respondent], petitioners claimed that the [respondent], without any previous consent from any of the
[petitioners], manufactured and sold cigarettes bearing the identical and/or confusingly similar trademark "MARK" xxx Accordingly, they
argued that [respondent’s] use of the trademark "MARK" in its cigarette products have caused and is likely to cause confusion or mistake,
or would deceive purchasers and the public in general into buying these products under the impression and mistaken belief that they are
buying [petitioners’] products.

Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris Convention, for brevity), to
which the Philippines is a signatory xxx, [petitioners] pointed out that upon the request of an interested party, a country of the Union may
prohibit the use of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging to a person entitled to
the benefits of the said Convention. They likewise argued that, in accordance with Section 21-A in relation to Section 23 of Republic Act
166, as amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of preliminary injunction which should be
made permanent to enjoin perpetually the [respondent] from violating [petitioners’] right to the exclusive use of their aforementioned
trademarks.

[Respondent] filed its Answer xxx denying [petitioners’] material allegations and xxx averred [among other things] xxx that "MARK" is a
common word, which cannot particularly identify a product to be the product of the [petitioners] xxx

xxx
[Link]
xxx xxx.
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners’] prayer for the issuance of a writ
of preliminary injunction was negatively resolved by the court in an Order xxx dated March 28, 1973. [The incidental issue of the propriety of
an injunction would eventually be elevated to the CA and would finally be resolved by the Supreme Court in its Decision dated July 16,
1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated November 3, 1999 dismissing the complaint
and counterclaim after making a finding that the [respondent] did not commit trademark infringement against the [petitioners]. Resolving first
the issue of whether or not [petitioners] have capacity to institute the instant action, the trial court opined that [petitioners’] failure to present
evidence to support their allegation that their respective countries indeed grant Philippine corporations reciprocal or similar privileges by law
xxx justifies the dismissal of the complaint xxx. It added that the testimonies of [petitioners’] witnesses xxx essentially declared that
[petitioners] are in fact doing business in the Philippines, but [petitioners] failed to establish that they are doing so in accordance with the
legal requirement of first securing a license. Hence, the court declared that [petitioners] are barred from maintaining any action in Philippine
courts pursuant to Section 133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners’] trademarks by the [respondent] was likewise answered xxx in the
negative. It expounded that "in order for a name, symbol or device to constitute a trademark, it must, either by itself or by association, point
distinctly to the origin or ownership of the article to which it is applied and be of such nature as to permit an exclusive appropriation by one
person". Applying such principle to the instant case, the trial court was of the opinion that the words "MARK", "TEN", "LARK" and the
Roman Numerals "VII", either alone or in combination of each other do not by themselves or by association point distinctly to the origin or
ownership of the cigarettes to which they refer, such that the buying public could not be deceived into believing that [respondent’s] "MARK"
cigarettes originated either from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated that the general rule is
that an infringement exists if the resemblance is so close that it deceives or is likely to deceive a customer exercising ordinary caution in his
dealings and induces him to purchase the goods of one manufacturer in the belief that they are those of another. xxx. The trial court ruled
that the [petitioners] failed to pass these tests as it neither presented witnesses or purchasers attesting that they have bought
[respondent’s] product believing that they bought [petitioners’] "MARK VII", "MARK TEN" or "LARK", and have also failed to introduce in
evidence a specific magazine or periodical circulated locally, which promotes and popularizes their products in the Philippines. It, moreover,
elucidated that the words consisting of the trademarks allegedly infringed by [respondent] failed to show that they have acquired a
secondary meaning as to identify them as [petitioners’] products. Hence, the court ruled that the [petitioners] cannot avail themselves of the
doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating that, since the [petitioners] filed the action
in the belief that they were aggrieved by what they perceived to be an infringement of their trademark, no wrongful act or omission can be
attributed to them. xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed trademark infringement, petitioners went on
appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of their legal capacity to sue in this
country for trademark infringement, nevertheless affirmed the trial court’s decision on the underlying issue of respondent’s liability for
infringement as it found that:
xxx the appellants’ [petitioners’] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not qualify as well-known marks entitled to
protection even without the benefit of actual use in the local market and that the similarities in the trademarks in question are insufficient as
to cause deception or confusion tantamount to infringement. Consequently, as regards the third issue, there is likewise no basis for the
award of damages prayed for by the appellants herein.4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally challenged Resolution of May 30, 2003, petitioners are
now with this Court via this petition for review essentially raising the following issues: (1) whether or not petitioners, as Philippine registrants
of trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed trademark
infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence liable for damages.
In its Comment,5 respondent, aside from asserting the correctness of the CA’s finding on its liability for trademark infringement and
damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of fact and law contrary to
the prescription against raising factual questions in a petition for review on certiorari filed before the Court. A question of law exists when
the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises
as to the truth or falsity of alleged facts.6
Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts.7 Unless the factual findings of the appellate
court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court of
origin,8 we will not disturb them.
It is petitioners’ posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the CA is correct is one of
law.9 But, even if we consider and accept as pure questions of law the issues raised in this petition, still, the Court is not inclined to disturb
the conclusions reached by the appellate court, the established rule being that all doubts shall be resolved in favor of the correctness of
such conclusions.10
Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with law and established
jurisprudence in arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a
manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt in by others.11 Inarguably, a
trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:12
The protection of trademarks is the law’s recognition of the psychological function of symbols. If it is true that we live by symbols, it is no
less true that we purchase goods by them. A trade-mark is a merchandising short-cut which induces a purchaser to select what he wants,
or what he has been led to believe what he wants. The owner of a mark exploits this human propensity by making every effort to
impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is the
same - to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this
is attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has
created, the owner can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark rights in this country, specifically,
the right to sue for trademark infringement in Philippine courts and be accorded protection against unauthorized use of their Philippine-
registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate nationals of member-countries of the Paris
Union, they can sue before Philippine courts for infringement of trademarks, or for unfair competition, without need of obtaining registration
or a license to do business in the Philippines, and without necessity of actually doing business in the Philippines. To petitioners, these
grievance right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as amended, or the Trademark Law,
but also by Article 2 of the Paris Convention for the Protection of Industrial Property, otherwise known as the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the certificates of
registration of their trademarks. The marks "MARK TEN" and "LARK" were registered on the basis of actual use in accordance with
Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a 2-month pre-registration use in local commerce and trade while the
registration of "MARK VII" was on the basis of registration in the foreign country of origin pursuant to Section 37 of the same law wherein it
is explicitly provided that prior use in commerce need not be alleged.15
Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that cigarettes bearing their
trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products, Inc.,16 petitioners state
that such availability and sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in the country in view of
the Philippines’ adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS Agreement and the enactment of R.A.
No. 8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the fame of a trademark may be acquired
through promotion or advertising with no explicit requirement of actual use in local trade or commerce.
Before discussing petitioners’ claimed entitlement to enforce trademark rights in the Philippines, it must be emphasized that their standing
to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought to be pointed out, however, that the appellate court
qualified its holding with a statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune
Tobacco Corporation,17 that such right to sue does not necessarily mean protection of their registered marks in the absence of actual use in
the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of their trademarks in the
Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages denied non-registrants or ordinary users,
like respondent. But while petitioners enjoy the statutory presumptions arising from such registration,19 i.e., as to the validity of the
registration, ownership and the exclusive right to use the registered marks, they may not successfully sue on the basis alone of their
respective certificates of registration of trademarks. For, petitioners are still foreign corporations. As such, they ought, as a condition to
availment of the rights and privileges vis-à-vis their trademarks in this country, to show proof that, on top of Philippine registration, their
country grants substantially similar rights and privileges to Filipino citizens pursuant to Section 21-A20 of R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity requirement is a condition sine qua non to filing
a suit by a foreign corporation which, unless alleged in the complaint, would justify dismissal thereof, a mere allegation that the suit is being
pursued under Section 21-A of R.A. No. 166 not being sufficient. In a subsequent case,22 however, the Court held that where the
complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said Section 21-A would suffice,
because the reciprocal agreement between the two countries is embodied and supplied by the Paris Convention which, being considered
part of Philippine municipal laws, can be taken judicial notice of in infringement suits.23
As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are, together with the
Philippines, members of the Paris Union does not automatically entitle petitioners to the protection of their trademarks in this country absent
actual use of the marks in local commerce and trade.
True, the Philippines’ adherence to the Paris Convention24 effectively obligates the country to honor and enforce its provisions25 as regards
the protection of industrial property of foreign nationals in this country. However, any protection accorded has to be made subject to the
limitations of Philippine laws.26 Hence, despite Article 2 of the Paris Convention which substantially provides that (1) nationals of member-
countries shall have in this country rights specially provided by the Convention as are consistent with Philippine laws, and enjoy the
privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile requirement in the country where
protection is claimed shall be required of persons entitled to the benefits of the Union for the enjoyment of any industrial property
rights,27 foreign nationals must still observe and comply with the conditions imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29 thereof, mandates actual use of the marks and/or emblems
in local commerce and trade before they may be registered and ownership thereof acquired, the petitioners cannot, therefore, dispense with
the element of actual use. Their being nationals of member-countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and Philip Morris v. Court of Appeals
and Fortune Tobacco Corporation33 on the importance of actual commercial use of a trademark in the Philippines notwithstanding the Paris
Convention:
The provisions of the 1965 Paris Convention … relied upon by private respondent and Sec. 21-A of the Trademark Law were sufficiently
expounded upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the requirements of actual use in the Philippines
must subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal. Xxx. Withal, the fact
that international law has been made part of the law of the land does not by any means imply the primacy of international law over national
law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of International Law are given a standing
equal, not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement … but the question of whether they have an exclusive
right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line
with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do
business in the Philippines files a complaint for infringement, the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not necessarily be entitled to
protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use of such trademark in
local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark. The certificate of
registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark. Evidence of non-usage of the
mark rebuts the presumption of trademark ownership,34 as what happened here when petitioners no less admitted not doing business in this
country.35
Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or exclusive
ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group of Companies, Inc.36 trademark
is a creation of use and, therefore, actual use is a pre-requisite to exclusive ownership; registration is only an administrative confirmation of
the existence of the right of ownership of the mark, but does not perfect such right; actual use thereof is the perfecting ingredient.37
Petitioners’ reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different factual milieu. There, we ruled
that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in, business in the Philippines, may actually
earn reputation or goodwill for its goods in the country. But unlike in the instant case, evidence of actual sales of Converse rubber shoes,
such as sales invoices, receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein having been filed in
August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January 1, 1998 without a
provision as to its retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when the suit for infringement was filed, the
Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by actual use thereof in the
country accords the registrant only the standing to sue for infringement in Philippine courts. Entitlement to protection of such trademark in
the country is entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy of color ably imitate any such
mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondent’s mark "MARK" for cigarettes is confusingly or deceptively similar
with their duly registered "MARK VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To them, the word "MARK" would likely
cause confusion in the trade, or deceive purchasers, particularly as to the source or origin of respondent’s cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.40 But likelihood of confusion is a relative concept, the particular,
and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in trademark infringement cases, more
than in other kinds of litigation, precedents must be evaluated in the light of each particular case.41
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and the holistic test.42 The
dominancy test43 sets sight on the similarity of the prevalent features of the competing trademarks that might cause confusion and
deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the marks involved would be
likely to cause confusion or mistake in the mind of the public or deceive purchasers.44
In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of confusion resulting in
infringement arising from the respondent’s use of the trademark "MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear on the products,46 the
striking dissimilarities are significant enough to warn any purchaser that one is different from the other. Indeed, although the perceived
offending word "MARK" is itself prominent in petitioners’ trademarks "MARK VII" and "MARK TEN," the entire marking system should be
considered as a whole and not dissected, because a discerning eye would focus not only on the predominant word but also on the other
features appearing in the labels. Only then would such discerning observer draw his conclusion whether one mark would be confusingly
similar to the other and whether or not sufficient differences existed between the marks.47
This said, the CA then, in finding that respondent’s goods cannot be mistaken as any of the three cigarette brands of the petitioners,
correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark serves as a tool to point
out distinctly the origin or ownership of the goods to which it is affixed,48 the likelihood of confusion tantamount to infringement appears to
be farfetched. The reason for the origin and/or ownership angle is that unless the words or devices do so point out the origin or ownership,
the person who first adopted them cannot be injured by any appropriation or imitation of them by others, nor can the public be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does not point to the origin or
ownership of the cigarettes to which they apply, the local buying public could not possibly be confused or deceived that respondent’s
"MARK" is the product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be overlooked, no actual
commercial use of petitioners’ marks in local commerce was proven. There can thus be no occasion for the public in this country, unfamiliar
in the first place with petitioners’ marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable circumstances in determining
likelihood of confusion. Del Monte Corp. v. CA50 dealt with another, where we instructed to give due regard to the "ordinary purchaser,"
thus:
The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under the normally
prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the "ordinarily intelligent
buyer" considering the type of product involved.51
It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who are already predisposed
to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with his brand and discriminating as well. We, thus,
concur with the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao Bok,52 that the "ordinary purchaser" in this case means
"one accustomed to buy, and therefore to some extent familiar with, the goods in question."
Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point to Section 22 of R.A. No.
166, as amended. As argued, actual use of trademarks in local commerce is, under said section, not a requisite before an aggrieved
trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by another, it being sufficient that he had
registered the trademark or trade-name with the IP Office. In fine, petitioners submit that respondent is liable for infringement, having
manufactured and sold cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly similar with their duly
registered trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the elements of trademark infringement in
accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54and 20 thereof:
(a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent
Office,
 (b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or
in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods,
business or services as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee. [Link]

As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and "LARK" for cigarettes in the
Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners’ judicial admission of not doing business in this
country effectively belies any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known and/or have acquired
goodwill in the Philippines so as to be entitled to protection even without actual use in this country in accordance with Article 6bis55 of the
Paris Convention. As correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants’ [petitioners’] products are indeed well-known in the Philippines, either
through actual sale of the product or through different forms of advertising. This finding is supported by the fact that appellants admit in their
Complaint that they are not doing business in the Philippines, hence, admitting that their products are not being sold in the local market. We
likewise see no cogent reason to disturb the trial court’s finding that the appellants failed to establish that their products are widely known
by local purchasers as "(n)o specific magazine or periodical published in the Philippines, or in other countries but circulated locally" have
been presented by the appellants during trial. The appellants also were not able to show the length of time or the extent of the promotion or
advertisement made to popularize their products in the Philippines.56
Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts having
peremptorily found allegations of infringement on the part of respondent to be without basis. As we said time and time again, factual
determinations of the trial court, concurred in by the CA, are final and binding on this Court.57
For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to respondent’s use of its mark
and for petitioners’ failure to demonstrate confusing similarity between said trademarks, the dismissal of their basic complaint for
infringement and the concomitant plea for damages must be affirmed. The law, the surrounding circumstances and the equities of the
situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of Appeals are AFFIRMED.
Costs against the petitioners.
SO ORDERED.

11. G.R. No. 180677               February 18, 2013

VICTORIO P. DIAZ, Petitioner, 
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.

DECISION

BERSAMIN, J.:

It is the tendency of the allegedly infringing mark to be confused with the registered trademark that is the gravamen of the offense of
infringement of a registered trademark. The acquittal of the accused should follow if the allegedly infringing mark is not likely to cause
confusion. Thereby, the evidence of the State does not satisfy the quantum of proof beyond reasonable doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 20071 and November 22, 2007,2whereby the Court of
Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated filing of the appellant's brief, and denied his
motion for reconsideration. Thereby, the decision rendered on February 13, 2006 in Criminal Case No. 00-0318 and Criminal Case No. 00-
0319 by the Regional Trial Court, Branch 255, in Las Pifias City (RTC) convicting him for two counts of infringement of trademark were
affirmed.3

Antecedents

On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Piñas City, charging Diaz with violation of Section
155, in relation to Section 170, of Republic Act No. 8293, also known as the Intellectual Property Code of the Philippines (Intellectual
Property Code), to wit:

Criminal Case No. 00-0318

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court, the
abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as LEVI’S), did then and there,
willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying and colorably
imitating Levi’s registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH,
and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general consuming
public, without the consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter of its right to the
exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVI’S.

CONTRARY TO LAW.4
Criminal Case No. 00-0319

That on or about August 28, 1998, and on dates prior thereto, in Las Pinas City, and within the jurisdiction of this Honorable Court, the
abovenamed accused, with criminal intent to defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as LEVI’S), did then and there,
willfully, unlawfully, feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying and colorably
imitating Levi’s registered trademarks or dominant features thereof such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH,
and in connection thereto, sold, offered for sale, manufactured, distributed counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely caused confusion, mistake, and /or deceived the general consuming
public, without the consent, permit or authority of the registered owner, LEVI’S, thus depriving and defrauding the latter of its right to the
exclusive use of its trademarks and legitimate trade, to the damage and prejudice of LEVI’S.

CONTRARY TO LAW.5

The cases were consolidated for a joint trial. Diaz entered his pleas of not guilty to each information on June 21, 2000.6

1.

Evidence of the Prosecution

Levi Strauss and Company (Levi’s), a foreign corporation based in the State of Delaware, United States of America, had been engaged in
the apparel business. It is the owner of trademarks and designs of Levi’s jeans like LEVI’S 501, the arcuate design, the two-horse brand,
the two-horse patch, the two-horse patch with pattern arcuate, and the composite tab arcuate. LEVI’S 501 has the following registered
trademarks, to wit: (1) the leather patch showing two horses pulling a pair of pants; (2) the arcuate pattern with the inscription "LEVI
STRAUSS & CO;" (3) the arcuate design that refers to "the two parallel stitching curving downward that are being sewn on both back
pockets of a Levi’s Jeans;" and (4) the tab or piece of cloth located on the structural seam of the right back pocket, upper left side. All these
trademarks were registered in the Philippine Patent Office in the 1970’s, 1980’s and early part of 1990’s.7

Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving information that Diaz was selling counterfeit LEVI’S
501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City, Levi’s Philippines hired a private investigation group to verify the
information. Surveillance and the purchase of jeans from the tailoring shops of Diaz established that the jeans bought from the tailoring
shops of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s Philippines then sought the assistance of the National Bureau of
Investigation (NBI) for purposes of applying for a search warrant against Diaz to be served at his tailoring shops. The search warrants were
issued in due course. Armed with the search warrants, NBI agents searched the tailoring shops of Diaz and seized several fake LEVI’S 501
jeans from them. Levi’s Philippines claimed that it did not authorize the making and selling of the seized jeans; that each of the jeans were
mere imitations of genuine LEVI’S 501 jeans by each of them bearing the registered trademarks, like the arcuate design, the tab, and the
leather patch; and that the seized jeans could be mistaken for original LEVI’S 501 jeans due to the placement of the arcuate, tab, and two-
horse leather patch.8

2.

Evidence of the Defense

On his part, Diaz admitted being the owner of the shops searched, but he denied any criminal liability.

Diaz stated that he did not manufacture Levi’s jeans, and that he used the label "LS Jeans Tailoring" in the jeans that he made and sold;
that the label "LS Jeans Tailoring" was registered with the Intellectual Property Office; that his shops received clothes for sewing or repair;
that his shops offered made-to-order jeans, whose styles or designs were done in accordance with instructions of the customers; that since
the time his shops began operating in 1992, he had received no notice or warning regarding his operations; that the jeans he produced
were easily recognizable because the label "LS Jeans Tailoring," and the names of the customers were placed inside the pockets, and
each of the jeans had an "LSJT" red tab; that "LS" stood for "Latest Style;" and that the leather patch on his jeans had two buffaloes, not
two horses.9

Ruling of the RTC

On February 13, 2006, the RTC rendered its decision finding Diaz guilty as charged, disposing thus:

WHEREFORE, premises considered, the Court finds accused Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of twice
violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged in the Informations in Criminal Case Nos. 00-0318 & 00-0319,
respectively, and hereby sentences him to suffer in each of the cases the penalty of imprisonment of TWO (2) YEARS of prision
correcional, as minimum, up to FIVE (5) YEARS of prision correcional, as maximum, as well as pay a fine of P50,000.00 for each of the
herein cases, with subsidiary imprisonment in case of insolvency, and to suffer the accessory penalties provided for by law.

Also, accused Diaz is hereby ordered to pay to the private complainant Levi’s Strauss (Phils.), Inc. the following, thus:

1. P50,000.00 in exemplary damages; and

2. P222,000.00 as and by way of attorney’s fees.

Costs de officio.

SO ORDERED.10

Ruling of the CA

Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on the ground that Diaz had not filed his appellant’s brief on time despite
being granted his requested several extension periods.

Upon denial of his motion for reconsideration, Diaz is now before the Court to plead for his acquittal.

Issue

Diaz submits that:

THE COURT OF APPEALS VIOLATED EXISTING LAW AND JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE ON
TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY DISMISSING THE APPEAL OF THE PETITIONER FOR LATE FILING
OF APPELLANT’S BRIEF.11

Ruling

The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of his appellant’s brief.

Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellant’s brief in the CA "within forty-five (45) days
from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the record, seven (7) copies of his legibly
typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee." Section 1(e) of Rule 50 of
the Rules of Court grants to the CA the discretion to dismiss an appeal either motu proprio or on motion of the appellee should the
appellant fail to serve and file the required number of copies of the appellant’s brief within the time provided by the Rules of Court.12

The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the appellant’s brief is
not mandatory, but discretionary. Verily, the failure to serve and file the required number of copies of the appellant’s brief within the time
provided by the Rules of Court does not have the immediate effect of causing the outright dismissal of the appeal. This means that the
discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of which the CA may still allow the appeal to proceed despite
the late filing of the appellant’s brief, when the circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the CA is
bound to exercise its sound discretion upon taking all the pertinent circumstances into due consideration.

The records reveal that Diaz’s counsel thrice sought an extension of the period to file the appellant’s brief. The first time was on March 12,
2007, the request being for an extension of 30 days to commence on March 11, 2007. The CA granted his motion under its resolution of
March 21, 2007. On April 10, 2007, the last day of the 30-day extension, the counsel filed another motion, seeking an additional 15 days.
The CA allowed the counsel until April 25, 2007 to serve and file the appellant’s brief. On April 25, 2007, the counsel went a third time to the
CA with another request for 15 days. The CA still granted such third motion for extension, giving the counsel until May 10, 2007.
Notwithstanding the liberality of the CA, the counsel did not literally comply, filing the appellant’s brief only on May 28, 2007, which was the
18th day beyond the third extension period granted.

Under the circumstances, the failure to file the appellant’s brief on time rightly deserved the outright rejection of the appeal. The acts of his
counsel bound Diaz like any other client. It was, of course, only the counsel who was well aware that the Rules of Court fixed the periods to
file pleadings and equally significant papers like the appellant’s brief with the lofty objective of avoiding delays in the administration of
justice.

Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to be heard by the CA on appeal because of
the failure of his counsel to serve and file the appellant’s brief on time despite the grant of several extensions the counsel requested. Diaz
was convicted and sentenced to suffer two indeterminate sentences that would require him to spend time in detention for each conviction
lasting two years, as minimum, to five years, as maximum, and to pay fines totaling P100,000.00 (with subsidiary imprisonment in case of
his insolvency). His personal liberty is now no less at stake. This reality impels us to look beyond the technicality and delve into the merits
of the case to see for ourselves if the appeal, had it not been dismissed, would have been worth the time of the CA to pass upon. After all,
his appellant’s brief had been meanwhile submitted to the CA. While delving into the merits of the case, we have uncovered a weakness in
the evidence of guilt that cannot be simply ignored and glossed over if we were to be true to our oaths to do justice to everyone.

We feel that despite the CA being probably right in dismissing the excuses of oversight and excusable negligence tendered by Diaz’s
counsel to justify the belated filing of the appellant’s brief as unworthy of serious consideration, Diaz should not be made to suffer the dire
consequence. Any accused in his shoes, with his personal liberty as well as his personal fortune at stake, expectedly but innocently put his
fullest trust in his counsel’s abilities and professionalism in the handling of his appeal. He thereby delivered his fate to the hands of his
counsel. Whether or not those hands were efficient or trained enough for the job of handling the appeal was a learning that he would get
only in the end. Likelier than not, he was probably even unaware of the three times that his counsel had requested the CA for extensions. If
he were now to be left to his unwanted fate, he would surely suffer despite his innocence. How costly a learning it would be for him! That is
where the Court comes in. It is most important for us as dispensers of justice not to allow the inadvertence or incompetence of any counsel
to result in the outright deprivation of an appellant’s right to life, liberty or property.13

We do not mind if this softening of judicial attitudes be mislabeled as excessive leniency. With so much on the line, the people whose
futures hang in a balance should not be left to suffer from the incompetence, mindlessness or lack of professionalism of any member of the
Law Profession. They reasonably expect a just result in every litigation. The courts must give them that just result. That assurance is the
people’s birthright. Thus, we have to undo Diaz’s dire fate.

Even as we now set aside the CA’s rejection of the appeal of Diaz, we will not remand the records to the CA for its review. In an appeal of
criminal convictions, the records are laid open for review. To avoid further delays, therefore, we take it upon ourselves to review the records
and resolve the issue of guilt, considering that the records are already before us.

Section 155 of R.A. No. 8293 defines the acts that constitute infringement of trademark, viz:

Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.

The elements of the offense of trademark infringement under the Intellectual Property Code are, therefore, the following:

1. The trademark being infringed is registered in the Intellectual Property Office;

2. The trademark is reproduced, counterfeited, copied, or colorably imitated by the infringer;

3. The infringing mark is used in connection with the sale, offering for sale, or advertising of any goods, business or services; or
the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services;

4. The use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchasers or others as to
the goods or services themselves or as to the source or origin of such goods or services or the identity of such business; and

5. The use or application of the infringing mark is without the consent of the trademark owner or the assignee thereof.14

As can be seen, the likelihood of confusion is the gravamen of the offense of trademark infringement.15 There are two tests to determine
likelihood of confusion, namely: the dominancy test, and the holistic test. The contrasting concept of these tests was explained in Societes
Des Produits Nestle, S.A. v. Dy, Jr., thus:

x x x. The dominancy test focuses on the similarity of the main, prevalent or essential features of the competing trademarks that might
cause confusion. Infringement takes place when the competing trademark contains the essential features of another. Imitation or an effort
to imitate is unnecessary. The question is whether the use of the marks is likely to cause confusion or deceive purchasers.

The holistic test considers the entirety of the marks, including labels and packaging, in determining confusing similarity. The focus is not
only on the predominant words but also on the other features appearing on the labels.16

As to what test should be applied in a trademark infringement case, we said in McDonald’s Corporation v. Macjoy Fastfood
Corporation17 that:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced
because each case must be decided on its merits. In such cases, even more than in any other litigation, precedent must be studied in the
light of the facts of the particular case. That is the reason why in trademark cases, jurisprudential precedents should be applied only to a
case if they are specifically in point.

The case of Emerald Garment Manufacturing Corporation v. Court of Appeals,18 which involved an alleged trademark infringement of jeans
products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the United States of America, claimed that
Emerald Garment’s trademark of "STYLISTIC MR. LEE" that it used on its jeans products was confusingly similar to the "LEE" trademark
that H.D. Lee used on its own jeans products. Applying the holistic test, the Court ruled that there was no infringement.
The holistic test is applicable here considering that the herein criminal cases also involved trademark infringement in relation to jeans
products. Accordingly, the jeans trademarks of Levi’s Philippines and Diaz must be considered as a whole in determining the likelihood of
confusion between them. The maong pants or jeans made and sold by Levi’s Philippines, which included LEVI’S 501, were very popular in
the Philippines. The consuming public knew that the original LEVI’S 501 jeans were under a foreign brand and quite expensive. Such jeans
could be purchased only in malls or boutiques as ready-to-wear items, and were not available in tailoring shops like those of Diaz’s as well
as not acquired on a "made-to-order" basis. Under the circumstances, the consuming public could easily discern if the jeans were original
or fake LEVI’S 501, or were manufactured by other brands of jeans. Confusion and deception were remote, for, as the Court has observed
in Emerald Garments:

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not your ordinary household items like
catsup, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is less
likely. In Del Monte Corporation v. Court of Appeals, we noted that:

.... Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a general
rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in purchasing
a more valuable thing. Expensive and valuable items are normally bought only after deliberate, comparative and analytical investigation.
But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are bought by the
casual consumer without great care....

Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk for generic jeans
but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable and familiar with his preference and
will not easily be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this particular controversy,
the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the type of product
involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There, the "ordinary purchaser" was defined as
one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent simulation is to be found
in the likelihood of the deception of some persons in some measure acquainted with an established design and desirous of purchasing the
commodity with which that design has been associated. The test is not found in the deception, or the possibility of deception, of the person
who knows nothing about the design which has been counterfeited, and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply
and is familiar with the article that he seeks to purchase.19

Diaz used the trademark "LS JEANS TAILORING" for the jeans he produced and sold in his tailoring shops. His trademark was visually and
aurally different from the trademark "LEVI STRAUSS & CO" appearing on the patch of original jeans under the trademark LEVI’S 501. The
word "LS" could not be confused as a derivative from "LEVI STRAUSS" by virtue of the "LS" being connected to the word "TAILORING",
thereby openly suggesting that the jeans bearing the trademark "LS JEANS TAILORING" came or were bought from the tailoring shops of
Diaz, not from the malls or boutiques selling original LEVI’S 501 jeans to the consuming public.

There were other remarkable differences between the two trademarks that the consuming public would easily perceive. Diaz aptly noted
such differences, as follows:

The prosecution also alleged that the accused copied the "two horse design" of the petitioner-private complainant but the evidence will
show that there was no such design in the seized jeans. Instead, what is shown is "buffalo design." Again, a horse and a buffalo are two
different animals which an ordinary customer can easily distinguish. x x x.

The prosecution further alleged that the red tab was copied by the accused. However, evidence will show that the red tab used by the
private complainant indicates the word "LEVI’S" while that of the accused indicates the letters "LSJT" which means LS JEANS TAILORING.
Again, even an ordinary customer can distinguish the word LEVI’S from the letters LSJT.

xxxx

In terms of classes of customers and channels of trade, the jeans products of the private complainant and the accused cater to different
classes of customers and flow through the different channels of trade. The customers of the private complainant are mall goers belonging
to class A and B market group – while that of the accused are those who belong to class D and E market who can only afford Php 300 for a
pair of made-toorder pants.20 x x x.

Moreover, based on the certificate issued by the Intellectual Property Office, "LS JEANS TAILORING" was a registered trademark of Diaz.
He had registered his trademark prior to the filing of the present cases.21 The Intellectual Property Office would certainly not have allowed
the registration had Diaz’s trademark been confusingly similar with the registered trademark for LEVI’S 501 jeans.

Given the foregoing, it should be plain that there was no likelihood of confusion between the trademarks involved. Thereby, the evidence of
guilt did not satisfy the quantum of proof required for a criminal conviction, which is proof beyond reasonable doubt. According to Section 2,
Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not mean such a degree of proof as, excluding possibility of error,
produces absolute certainty. Moral certainty only is required, or that degree of proof which produces conviction in an unprejudiced mind.
Consequently, Diaz should be acquitted of the charges.
WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement of trademark charged in Criminal Case No.
00-0318 and Criminal Case No. 00-0319 for failure of the State to establish his guilt by proof beyond reasonable doubt.

No pronouncement on costs of suit.

SO ORDERED.

12. G.R. No. 164324               August 14, 2009

TANDUAY DISTILLERS, INC., Petitioner, 

vs.
GINEBRA SAN MIGUEL, INC., Respondent.

DECISION

CARPIO, J.:

The Case

Tanduay Distillers, Inc. (Tanduay) filed this Petition for Review on Certiorari1 assailing the Court of Appeals’ Decision dated 9 January
20042 as well as the Resolution dated 2 July 20043 in CA-G.R. SP No. 79655 denying the Motion for Reconsideration. In the assailed
decision, the Court of Appeals (CA) affirmed the Regional Trial Court’s Orders4 dated 23 September 2003 and 17 October 2003 which
respectively granted Ginebra San Miguel, Inc.’s (San Miguel) prayer for the issuance of a temporary restraining order (TRO) and writ of
preliminary injunction. The Regional Trial Court of Mandaluyong City, Branch 214 (trial court), enjoined Tanduay "from committing the acts
complained of, and, specifically, to cease and desist from manufacturing, distributing, selling, offering for sale, advertising, or otherwise
using in commerce the mark "Ginebra," and manufacturing, producing, distributing, or otherwise dealing in gin products which have the
general appearance of, and which are confusingly similar with," San Miguel’s marks, bottle design, and label for its gin products.5

The Facts

Tanduay, a corporation organized and existing under Philippine laws, has been engaged in the liquor business since 1854. In 2002,
Tanduay developed a new gin product distinguished by its sweet smell, smooth taste, and affordable price. Tanduay claims that it engaged
the services of an advertising firm to develop a brand name and a label for its new gin product. The brand name eventually chosen was
"Ginebra Kapitan" with the representation of a revolutionary Kapitan on horseback as the dominant feature of its label. Tanduay points out
that the label design of "Ginebra Kapitan" in terms of color scheme, size and arrangement of text, and other label features were precisely
selected to distinguish it from the leading gin brand in the Philippine market, "Ginebra San Miguel." Tanduay also states that the "Ginebra
Kapitan" bottle uses a resealable twist cap to distinguish it from "Ginebra San Miguel" and other local gin products with bottles which use
the crown cap or tansan.6

After filing the trademark application for "Ginebra Kapitan" with the Intellectual Property Office (IPO) and after securing the approval of the
permit to manufacture and sell "Ginebra Kapitan" from the Bureau of Internal Revenue, Tanduay began selling "Ginebra Kapitan" in
Northern and Southern Luzon areas in May 2003. In June 2003, "Ginebra Kapitan" was also launched in Metro Manila.7

On 13 August 2003, Tanduay received a letter from San Miguel’s counsel. The letter informed Tanduay to immediately cease and desist
from using the mark "Ginebra" and from committing acts that violate San Miguel’s intellectual property rights.8

On 15 August 2003, San Miguel filed a complaint for trademark infringement, unfair competition and damages, with applications for
issuance of TRO and Writ of Preliminary Injunction against Tanduay before the Regional Trial Court of Mandaluyong. The case was raffled
to Branch 214 and docketed as IP Case No. MC-03-01 and Civil Case No. MC-03-073.9

On 25 and 29 August and 4 September 2003, the trial court conducted hearings on the TRO. San Miguel submitted five affidavits, but only
one affiant, Mercedes Abad, was presented for cross-examination because the trial court ruled that such examination would be inconsistent
with the summary nature of a TRO hearing.10 San Miguel submitted the following pieces of evidence:11

1. Affidavit of Mercedes Abad, President and Managing Director of the research firm NFO Trends, Inc. (NFO Trends), to
present, among others, market survey results which prove that gin drinkers associate the term "Ginebra" with San Miguel, and
that the consuming public is being misled that "Ginebra Kapitan" is a product of San Miguel;

2. Market Survey results conducted by NFO Trends to determine the brand associations of the mark "Ginebra" and to prove that
the consuming public is confused as to the manufacturer of "Ginebra Kapitan";

3. Affidavit of Ramon Cruz, San Miguel’s Group Product Manager, to prove, among others, the prior right of San Miguel to the
mark "Ginebra" as shown in various applications for, and registrations of, trademarks that contain the mark "Ginebra." His
affidavit included documents showing that the mark "Ginebra" has been used on San Miguel’s gin products since 1834;

4. Affidavits of Leopoldo Guanzon, Jr., San Miguel’s Trade and Promo Merchandising Head for North Luzon Area, and Juderick
Crescini, San Miguel’s District Sales Supervisor for South Luzon-East Area, to prove, among others, that Tanduay’s salesmen
 or distributors misrepresent "Ginebra Kapitan" as San Miguel’s product and that numerous retailers of San Miguel’s gin products
are confused as to the manufacturer of "Ginebra Kapitan"; and

5. Affidavit of Jose Reginald Pascual, San Miguel’s District Sales Supervisor for the North-Greater Manila Area, to prove,
among others, that gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan" due to the use of the dominant
feature "Ginebra."

Tanduay filed a Motion to Strike Out Hearsay Affidavits and Evidence, which motion was denied by the trial court. Tanduay presented
witnesses who affirmed their affidavits in open court, as follows:12

1. Ramoncito Bugia, General Services Manager of Tanduay. Attached to his affidavit were various certificates of registration of
trademarks containing the word "Ginebra" obtained by Tanduay and other liquor companies, to prove that the word "Ginebra" is
required to be disclaimed by the IPO. The affidavit also attested that there are other liquor companies using the word "Ginebra"
as part of their trademarks for gin products aside from San Miguel and Tanduay.

2. Herbert Rosales, Vice President of J. Salcedo and Associates, Inc., the advertising and promotions company hired by
Tanduay to design the label of "Ginebra Kapitan." His affidavit attested that the label was designed to make it "look absolutely
different from the Ginebra San Miguel label."

On 23 September 2003, the trial court issued a TRO prohibiting Tanduay from manufacturing, selling and advertising "Ginebra
Kapitan."13 The dispositive portion reads in part:

WHEREFORE, the application for temporary restraining order is hereby GRANTED and made effective immediately. Plaintiff is directed to
post a bond of ONE MILLION PESOS (Php 1,000,000.00) within five (5) days from issuance hereof, otherwise, this restraining order shall
lose its efficacy. Accordingly, defendant Tanduay Distillers, Inc., and all persons and agents acting for and in behalf are enjoined to cease
and desist from manufacturing, distributing, selling, offering for sale and/or advertising or otherwise using in commerce the mark "GINEBRA
KAPITAN" which employs, thereon, or in the wrappings, sundry items, cartons and packages thereof, the mark "GINEBRA" as well as from
using the bottle design and labels for its gin products during the effectivity of this temporary restraining order unless a contrary order is
issued by this Court.14

On 3 October 2003, Tanduay filed a petition for certiorari with the CA.15 Despite Tanduay’s Urgent Motion to Defer Injunction Hearing, the
trial court continued to conduct hearings on 8, 9, 13 and 14 October 2003 for Tanduay to show cause why no writ of preliminary injunction
should be issued.16 On 17 October 2003, the trial court granted San Miguel’s application for the issuance of a writ of preliminary
injunction.17 The dispositive portion of the Order reads:

WHEREFORE, the plaintiff’s application for a writ of preliminary injunction is GRANTED. Upon plaintiff’s filing of an injunctive bond
executed to the defendant in the amount of P20,000,000.00 (TWENTY MILLION) PESOS, let a Writ of Preliminary Injunction issue
enjoining the defendant, its employees, agents, representatives, dealers, retailers or assigns, and any all persons acting on its behalf, from
committing the acts complained of, and, specifically, to cease and desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using in commerce the mark "GINEBRA", and manufacturing, producing, distributing or otherwise dealing in gin
products which have the general appearance of, and which are confusingly similar with, plaintiff’s marks, bottle design and label for its gin
products.

SO ORDERED.18

On 22 October 2003, Tanduay filed a supplemental petition in the CA assailing the injunction order. On 10 November 2003, the CA issued
a TRO enjoining the trial court from implementing its injunction order and from further proceeding with the case.19 On 23 December 2003,
the CA issued a resolution directing the parties to appear for a hearing on 6 January 2004 to determine the need for the issuance of a writ
of preliminary injunction.20

On 9 January 2004, the CA rendered a Decision dismissing Tanduay’s petition and supplemental petition. On 28 January 2004, Tanduay
moved for reconsideration which was denied in a Resolution dated 2 July 2004.21

Aggrieved by the decision dismissing the petition and supplemental petition and by the resolution denying the Motion for Reconsideration,
Tanduay elevated the case before this Court.

The Trial Court’s Orders

In the Order dated 23 September 2003, the trial court stated that during the hearings conducted on 25 and 29 August and on 4 and 11
September 2003, the following facts have been established:

1. San Miguel has registered the trademark "Ginebra San Miguel";

2. There is a close resemblance between "Ginebra San Miguel" and "Ginebra Kapitan";

3. The close similarity between "Ginebra San Miguel" and "Ginebra Kapitan" may give rise to confusion of goods since San
Miguel and Tanduay are competitors in the business of manufacturing and selling liquors; and
"Ginebra," which is a well-known trademark, was adopted by Tanduay to benefit from the reputation and advertisement of the originator of
the mark "Ginebra San Miguel," and to convey to the public the impression of some supposed connection between the manufacturer of the
gin product sold under the name "Ginebra San Miguel" and the new gin product "Ginebra Kapitan."22

Based on these facts, the trial court concluded that San Miguel had demonstrated a clear, positive, and existing right to be protected by a
TRO. Otherwise, San Miguel would suffer irreparable injury if infringement would not be enjoined. Hence, the trial court granted the
application for a TRO and set the hearing for preliminary injunction.23

In the Order dated 17 October 2003, the trial court granted the application for a writ of preliminary injunction. The trial court ruled that while
a corporation acquires a trade name for its product by choice, it should not select a name that is confusingly similar to any other name
already protected by law or is patently deceptive, confusing, or contrary to existing law.24

The trial court pointed out that San Miguel and its predecessors have continuously used "Ginebra" as the dominant feature of its gin
products since 1834. On the other hand, Tanduay filed its trademark application for "Ginebra Kapitan" only on 7 January 2003. The trial
court declared that San Miguel is the prior user and registrant of "Ginebra" which has become closely associated to all of San Miguel’s gin
products, thereby gaining popularity and goodwill from such name.25

The trial court noted that while the subject trademarks are not identical, it is obviously clear that the word "Ginebra" is the dominant feature
in the trademarks. The trial court stated that there is a strong indication that confusion is likely to occur since one would inevitably be led to
conclude that both products are affiliated with San Miguel due to the distinctive mark "Ginebra" which is readily identified with San Miguel.
The trial court concluded that ordinary purchasers would not examine the letterings or features printed on the label but would simply be
guided by the presence of the dominant mark "Ginebra." Any difference would pale in significance in the face of evident similarities in the
dominant features and overall appearance of the products. The trial court emphasized that the determinative factor was whether the use of
such mark would likely cause confusion on the part of the buying public, and not whether it would actually cause confusion on the part of
the purchasers. Thus, Tanduay’s choice of "Ginebra" as part of the trademark of "Ginebra Kapitan" tended to show Tanduay’s intention to
ride on the popularity and established goodwill of "Ginebra San Miguel."26

The trial court held that to constitute trademark infringement, it was not necessary that every word should be appropriated; it was sufficient
that enough be taken to deceive the public in the purchase of a protected article.27

The trial court conceded to Tanduay’s assertion that the term "Ginebra" is a generic word; hence, it is non-registrable because generic
words are by law free for all to use. However, the trial court relied on the principle that even if a word is incapable of appropriation as a
trademark, the word may still acquire a proprietary connotation through long and exclusive use by a business entity with reference to its
products. The purchasing public would associate the word to the products of a business entity. The word thus associated would be entitled
to protection against infringement and unfair competition. The trial court held that this principle could be made to apply to this case because
San Miguel has shown that it has established goodwill of considerable value, such that its gin products have acquired a well-known
reputation as just "Ginebra." In essence, the word "Ginebra" has become a popular by-word among the consumers and they had closely
associated it with San Miguel.28

On the other hand, the trial court held that Tanduay failed to substantiate its claim against the issuance of the injunctive relief.29

The Ruling of the Court of Appeals

In resolving the petition and supplemental petition, the CA stated that it is constrained to limit itself to the determination of whether the TRO
and the writ of preliminary injunction were issued by the trial court with grave abuse of discretion amounting to lack of jurisdiction.30

To warrant the issuance of a TRO, the CA ruled that the affidavits of San Miguel’s witnesses and the fact that the registered trademark
"Ginebra San Miguel" exists are enough to make a finding that San Miguel has a clear and unmistakable right to prevent irreparable injury
because gin drinkers confuse San Miguel to be the manufacturer of "Ginebra Kapitan."31

The CA enumerated the requisites for an injunction: (1) there must be a right in esse or the existence of a right to be protected and (2) the
act against which the injunction is to be directed is a violation of such right. The CA stated that the trademarks "Ginebra San Miguel" and
"Ginebra Kapitan" are not identical, but it is clear that the word "Ginebra" is the dominant feature in both trademarks. There was a strong
indication that confusion was likely to occur. One would be led to conclude that both products are affiliated with San Miguel because the
distinctive mark "Ginebra" is identified with San Miguel. It is the mark which draws the attention of the buyer and leads him to conclude that
the goods originated from the same manufacturer.32

The CA observed that the gin products of "Ginebra San Miguel" and "Ginebra Kapitan" possess the same physical attributes with reference
to their form, composition, texture, or quality. The CA upheld the trial court’s ruling that San Miguel has sufficiently established its right to
prior use and registration of the mark "Ginebra" as a dominant feature of its trademark. "Ginebra" has been identified with San Miguel’s
goods, thereby, it acquired a right in such mark, and if another infringed the trademark, San Miguel could invoke its property right.33

The Issue

The central question for resolution is whether San Miguel is entitled to the writ of preliminary injunction granted by the trial court as affirmed
by the CA. For this reason, we shall deal only with the questioned writ and not with the merits of the case pending before the trial court.

The Ruling of the Court

 Clear and Unmistakable Right

Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of a proceeding prior to the
judgment or final order, requiring a party or a court, agency, or a person to refrain from a particular act or acts.

A preliminary injunction is a provisional remedy for the protection of substantive rights and interests. It is not a cause of action in itself but
merely an adjunct to the main case. Its objective is to prevent a threatened or continuous irreparable injury to some of the parties before
their claims can be thoroughly investigated and advisedly adjudicated. It is resorted to only when there is a pressing need to avoid injurious
consequences which cannot be remedied under any standard compensation.34

Section 3, Rule 58 of the Rules of Court provides:

SECTION 3. Grounds for issuance of a writ of preliminary injunction.—A preliminary injunction may be granted when it is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably
work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done,
some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.

Before an injunctive writ is issued, it is essential that the following requisites are present: (1) the existence of a right to be protected and (2)
the acts against which the injunction is directed are violative of the right. The onus probandi is on the movant to show that the invasion of
the right sought to be protected is material and substantial, that the right of the movant is clear and unmistakable, and that there is an
urgent and paramount necessity for the writ to prevent serious damage.35

San Miguel claims that the requisites for the valid issuance of a writ of preliminary injunction were clearly established. The clear and
unmistakable right to the exclusive use of the mark "Ginebra" was proven through the continuous use of "Ginebra" in the manufacture,
distribution, marketing and sale of gin products throughout the Philippines since 1834. To the gin-drinking public, the word "Ginebra" does
not simply indicate a kind of beverage; it is now synonymous with San Miguel’s gin products.36

San Miguel contends that "Ginebra" can be appropriated as a trademark, and there was no error in the trial court’s provisional ruling based
on the evidence on record. Assuming that "Ginebra" is a generic word which is proscribed to be registered as a trademark under Section
123.1(h)37 of Republic Act No. 8293 or the Intellectual Property Code (IP Code),38 it can still be appropriated and registered as a trademark
under Section 123.1(j)39 in relation to Section 123.240 of the IP Code, considering that "Ginebra" is also a mark which designates the kind of
goods produced by San Miguel.41 San Miguel alleges that although "Ginebra," the Spanish word for "gin," may be a term originally
incapable of exclusive appropriation, jurisprudence dictates that the mark has become distinctive of San Miguel’s products due to its
substantially exclusive and continuous use as the dominant feature of San Miguel’s trademarks since 1834. Hence, San Miguel is entitled
to a finding that the mark is deemed to have acquired a secondary meaning.42 San Miguel states that Tanduay failed to present any
evidence to disprove its claims; thus, there is no basis to set aside the grant of the TRO and writ of preliminary injunction.43

San Miguel states that its disclaimer of the word "Ginebra" in some of its registered marks is without prejudice to, and did not affect, its
existing or future rights over "Ginebra," especially since "Ginebra" has demonstrably become distinctive of San Miguel’s products.44 San
Miguel adds that it did not disclaim "Ginebra" in all of its trademark registrations and applications like its registration for "Ginebra Cruz de
Oro," "Ginebra Ka Miguel," "Ginebra San Miguel" bottle, "Ginebra San Miguel," and "Barangay Ginebra."45

Tanduay asserts that not one of the requisites for the valid issuance of a preliminary injunction is present in this case. Tanduay argues that
San Miguel cannot claim the exclusive right to use the generic word "Ginebra" for its gin products based on its registration of the composite
marks "Ginebra San Miguel," "Ginebra S. Miguel 65," and "La Tondeña Cliq! Ginebra Mix," because in all of these registrations, San Miguel
disclaimed any exclusive right to use the non-registrable word "Ginebra" for gin products.46 Tanduay explains that the word "Ginebra," which
is disclaimed by San Miguel in all of its registered trademarks, is an unregistrable component of the composite mark "Ginebra San Miguel."
Tanduay argues that this disclaimer further means that San Miguel does not have an exclusive right to the generic word
"Ginebra."47 Tanduay states that the word "Ginebra" does not indicate the source of the product, but it is merely descriptive of the name of
the product itself and not the manufacturer thereof.48

Tanduay submits that it has been producing gin products under the brand names Ginebra 65, Ginebra Matador, and Ginebra Toro without
any complaint from San Miguel. Tanduay alleges that San Miguel has not filed any complaint against other liquor companies which use
"Ginebra" as part of their brand names such as Ginebra Pinoy, a registered trademark of Webengton Distillery; Ginebra Presidente and
Ginebra Luzon as registered trademarks of Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra Santiago as registered
trademarks of Distileria Limtuaco & Co., Inc.49 Tanduay claims that the existence of these products, the use and registration of the word
"Ginebra" by other companies as part of their trademarks belie San Miguel’s claim that it has been the exclusive user of the trademark
containing the word "Ginebra" since 1834.

Tanduay argues that before a court can issue a writ of preliminary injunction, it is imperative that San Miguel must establish a clear and
unmistakable right that is entitled to protection. San Miguel’s alleged exclusive right to use the generic word "Ginebra" is far from clear and
unmistakable. Tanduay claims that the injunction issued by the trial court was based on its premature conclusion that "Ginebra Kapitan"
infringes "Ginebra San Miguel."50

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

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, this discretion must
be exercised based upon the grounds and in the manner provided by law. The exercise of discretion by the trial court in injunctive matters
is generally not interfered with save in cases of manifest abuse. And to determine whether there was grave abuse of discretion, a scrutiny
must be made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that injunction is the strong arm of
equity which must be issued with great caution and deliberation, and only in cases of great injury where there is no commensurate remedy
in damages.52

The CA upheld the trial court’s ruling that San Miguel has sufficiently established its right to prior use and registration of the word "Ginebra"
as a dominant feature of its trademark. The CA ruled that based on San Miguel’s extensive, continuous, and substantially exclusive use of
the word "Ginebra," it has become distinctive of San Miguel’s gin products; thus, a clear and unmistakable right was shown.

We hold that the CA committed a reversible error. The issue in the main case is San Miguel’s right to the exclusive use of the mark
"Ginebra." The two trademarks "Ginebra San Miguel" and "Ginebra Kapitan" apparently differ when taken as a whole, but according to San
Miguel, Tanduay appropriates the word "Ginebra" which is a dominant feature of San Miguel’s mark.

It is not evident whether San Miguel has the right to prevent other business entities from using the word "Ginebra." It is not settled (1)
whether "Ginebra" is indeed the dominant feature of the trademarks, (2) whether it is a generic word that as a matter of law cannot be
appropriated, or (3) whether it is merely a descriptive word that may be appropriated based on the fact that it has acquired a secondary
meaning.

The issue that must be resolved by the trial court is whether a word like "Ginebra" can acquire a secondary meaning for gin products so as
to prohibit the use of the word "Ginebra" by other gin manufacturers or sellers. This boils down to whether the word "Ginebra" is a generic
mark that is incapable of appropriation by gin manufacturers.

In Asia Brewery, Inc. v. Court of Appeals,53 the Court ruled that "pale pilsen" are generic words, "pale" being the actual name of the color
and "pilsen" being the type of beer, a light bohemian beer with a strong hops flavor that originated in Pilsen City in Czechoslovakia and
became famous in the Middle Ages, and hence incapable of appropriation by any beer manufacturer.54 Moreover, Section 123.1(h) of the IP
Code states that a mark cannot be registered if it "consists exclusively of signs that are generic for the goods or services that they seek to
identify."
1avvphi1

In this case, a cloud of doubt exists over San Miguel’s exclusive right relating to the word "Ginebra." San Miguel’s claim to the exclusive use
of the word "Ginebra" is clearly still in dispute because of Tanduay’s claim that it has, as others have, also registered the word "Ginebra" for
its gin products. This issue can be resolved only after a full-blown trial.

In Ong Ching Kian Chuan v. Court of Appeals,55 we held that in the absence of proof of a legal right and the injury sustained by the movant,
the trial court’s order granting the issuance of an injunctive writ will be set aside, for having been issued with grave abuse of discretion.

We find that San Miguel’s right to injunctive relief has not been clearly and unmistakably demonstrated. The right to the exclusive use of the
word "Ginebra" has yet to be determined in the main case. The trial court’s grant of the writ of preliminary injunction in favor of San Miguel,
despite the lack of a clear and unmistakable right on its part, constitutes grave abuse of discretion amounting to lack of jurisdiction.

Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of preliminary injunction, has prejudged the merits of the case since
nothing is left to be decided by the trial court except the amount of damages to be awarded to San Miguel.56

San Miguel claims that neither the CA nor the trial court prejudged the merits of the case. San Miguel states that the CA did not rule on the
ultimate correctness of the trial court’s evaluation and appreciation of the evidence before it, but merely found that the assailed Orders of
the trial court are supported by the evidence on record and that Tanduay was not denied due process.57 San Miguel argues that the CA only
upheld the trial court’s issuance of the TRO and writ of preliminary injunction upon a finding that there was sufficient evidence on record, as
well as legal authorities, to warrant the trial court’s preliminary findings of fact.58

The instructive ruling in Manila International Airport Authority v. Court of Appeals59 states:

Considering the far-reaching effects of a writ of preliminary injunction, the trial court should have exercised more prudence and
judiciousness in its issuance of the injunction order. We remind trial courts that while generally the grant of a writ of preliminary injunction
rests on the sound discretion of the court taking cognizance of the case, extreme caution must be observed in the exercise of such
discretion. The discretion of the court a quo to grant an injunctive writ must be exercised based on the grounds and in the manner provided
by law. Thus, the Court declared in Garcia v. Burgos:

"It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and
sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never
be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly
or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it." (Emphasis
in the original)

We believe that the issued writ of preliminary injunction, if allowed, disposes of the case on the merits as it effectively enjoins the use of the
word "Ginebra" without the benefit of a full-blown trial. In Rivas v. Securities and Exchange Commission,60 we ruled that courts should avoid
issuing a writ of preliminary injunction which would in effect dispose of the main case without trial. The issuance of the writ of preliminary
injunction had the effect of granting the main prayer of the complaint such that there is practically nothing left for the trial court to try except
the plaintiff’s claim for damages.

Irreparable Injury

Tanduay points out that the supposed damages that San Miguel will suffer as a result of Tanduay’s infringement or unfair competition
cannot be considered irreparable because the damages are susceptible of mathematical computation. Tanduay invokes Section 156.1 of
the IP Code61 as the basis for the computation of damages.62

San Miguel avers that it stands to suffer irreparable injury if the manufacture and sale of Tanduay’s "Ginebra Kapitan" are not enjoined. San
Miguel claims that the rough estimate of the damages63 it would incur is simply a guide for the trial court in computing the appropriate
docket fees. San Miguel asserts that the full extent of the damage it would suffer is difficult to measure with any reasonable accuracy
because it has invested hundreds of millions over a period of 170 years to establish goodwill and reputation now being enjoyed by the
"Ginebra San Miguel" mark.64 San Miguel refutes Tanduay’s claim that the injury which San Miguel stands to suffer can be measured with
reasonable accuracy as the legal formula to determine such injury is provided in Section 156.1 of the IP Code. San Miguel reasons that if
Tanduay’s claim is upheld, then there would never be a proper occasion to issue a writ of preliminary injunction in relation to complaints for
infringement and unfair competition, as the injury which the owner of the mark suffers, or stands to suffer, will always be susceptible of
mathematical computation.65

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,66 this Court upheld the appellate court’s ruling that the damages Levi Strauss & Co. had
suffered or continues to suffer may be compensated in terms of monetary consideration. This Court, quoting Government Service
Insurance System v. Florendo,67 held:

x x x a writ of injunction should never issue when an action for damages would adequately compensate the injuries caused. The very
foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary
compensation and the prevention of the multiplicity of suits, and where facts are not shown to bring the case within these conditions, the
relief of injunction should be refused.

Based on the affidavits and market survey report submitted during the injunction hearings, San Miguel has failed to prove the probability of
irreparable injury which it will stand to suffer if the sale of "Ginebra Kapitan" is not enjoined. San Miguel has not presented proof of
damages incapable of pecuniary estimation. At most, San Miguel only claims that it has invested hundreds of millions over a period of 170
years to establish goodwill and reputation now being enjoyed by the "Ginebra San Miguel" mark such that the full extent of the damage
cannot be measured with reasonable accuracy. Without the submission of proof that the damage is irreparable and incapable of pecuniary
estimation, San Miguel’s claim cannot be the basis for a valid writ of preliminary injunction.

Wherefore, we GRANT the petition. We SET ASIDE the Decision of the Court of Appeals dated 9 January 2004 and the Resolution dated
2 July 2004 in CA-G.R. SP No. 79655. We declare VOID the Order dated 17 October 2003 and the corresponding writ of preliminary
injunction issued by Branch 214 of the Regional Trial Court of Mandaluyong City in IP Case No. MC-03-01 and Civil Case No. MC-03-073.

The Regional Trial Court of Mandaluyong City, Branch 214, is directed to continue expeditiously with the trial to resolve the merits of the
case.

SO ORDERED.

13. G.R. No. 168306              June 19, 2007

WILLIAM C. YAO, SR., LUISA C. YAO, RICHARD C. YAO, WILLIAM C. YAO JR., and ROGER C. YAO,petitioners, 
vs.
THE PEOPLE OF THE PHILIPPINES, PETRON CORPORATION and PILIPINAS SHELL PETROLEUM CORP., and its Principal,
SHELL INT’L PETROLEUM CO. LTD., respondents.

DECISION

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, petitioners William C. Yao, Sr., Luisa C. Yao, Richard C. Yao,
William C. Yao, Jr., and Roger C. Yao pray for the reversal of the Decision dated 30 September 2004,2 and Resolution dated 1 June 2005,
of the Court of Appeals in CA G.R. SP No. 79256,3 affirming the two Orders, both dated 5 June 2003, of the Regional Trial Court (RTC),
Branch 17, Cavite City, relative to Search Warrants No. 2-2003 and No. 3-2003.4 In the said Orders, the RTC denied the petitioners’ Motion
to Quash Search Warrant5 and Motion for the Return of the Motor Compressor and Liquified Petroleum Gas (LPG) Refilling Machine.6
The following are the facts:

Petitioners are incorporators and officers of MASAGANA GAS CORPORATION (MASAGANA), an entity engaged in the refilling, sale and
distribution of LPG products. Private respondents Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Pilipinas Shell)
are two of the largest bulk suppliers and producers of LPG in the Philippines. Their LPG products are sold under the marks "GASUL" and
"SHELLANE," respectively. Petron is the registered owner in the Philippines of the trademarks GASUL and GASUL cylinders used for its
LPG products. It is the sole entity in the Philippines authorized to allow refillers and distributors to refill, use, sell, and distribute GASUL LPG
containers, products and its trademarks. Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the tradename,
trademarks, symbols, or designs of its principal, Shell International Petroleum Company Limited (Shell International), including the marks
SHELLANE and SHELL device in connection with the production, sale and distribution of SHELLANE LPGs. It is the only corporation in the
Philippines authorized to allow refillers and distributors to refill, use, sell and distribute SHELLANE LPG containers and products.7

On 3 April 2003, National Bureau of Investigation (NBI) agent Ritche N. Oblanca (Oblanca) filed two applications for search warrant with the
RTC, Branch 17, Cavite City, against petitioners and other occupants of the MASAGANA compound located at Governor’s Drive, Barangay
Lapidario, Trece Martires, Cavite City, for alleged violation of Section 155, in relation to Section 170 of Republic Act No. 8293, otherwise
known as "The Intellectual Property Code of the Philippines."8 The two applications for search warrant uniformly alleged that per
information, belief, and personal verification of Oblanca, the petitioners are actually producing, selling, offering for sale and/or distributing
LPG products using steel cylinders owned by, and bearing the tradenames, trademarks, and devices of Petron and Pilipinas Shell, without
authority and in violation of the rights of the said entities.

In his two separate affidavits9 attached to the two applications for search warrant, Oblanca alleged:

1. [That] on 11 February 2003, the National Bureau of Investigation ("NBI") received a letter-complaint from Atty. Bienvenido I. Somera Jr.
of Villaraza and Angangco, on behalf of among others, [Petron Corporation (PETRON)] and Pilipinas Shell Petroleum Corporation (PSPC),
the authorized representative of Shell International Petroleum Company Limited ("Shell International"), requesting assistance in the
investigation and, if warranted, apprehension and prosecution of certain persons and/or establishments suspected of violating the
intellectual property rights [of PETRON] and of PSPC and Shell International.

2. [That] on the basis of the letter-complaint, I, together with Agent Angelo Zarzoso, was assigned as the NBI agent on the case.

3. [That] prior to conducting the investigation on the reported illegal activities, he reviewed the certificates of trademark registrations issued
in favor of [PETRON], PSPC and Shell International as well as other documents and other evidence obtained by the investigative agency
authorized by [PETRON], PSPC and Shell International to investigate and cause the investigation of persons and establishments violating
the rights of [PETRON], PSPC and Shell International, represented by Mr. Bernabe C. Alajar. Certified copies of the foregoing trademark
registrations are attached hereto as Annexes "A" to ":E".

4. [That] among the establishments alleged to be unlawfully refilling and unlawfully selling and distributing [Gasul LPG and] Shellane
products is Masagana Gas Corporation ("MASAGANA"). Based on Securities and Exchange Commission Records, MASAGANA has its
principal office address at 9775 Kamagong Street, San Antonio Village, Makati, Metro Manila. The incorporators and directors of
MASAGANA are William C. Yao, Sr., Luisa C. Yao, Richard C. Yao, William C. Yao, Jr., and Roger C. Yao. x x x.

5. I confirmed that MASAGANA is not authorized to use [PETRON and] Shellane LPG cylinders and its trademarks and tradenames or to
be refillers or distributors of [PETRON and] Shellane LPG’s.

6. I went to MASAGANA’s refilling station located at Governor’s Drive, Barangay Lapidario, Trece Martires City (sic), Cavite to investigate
its activities. I confirmed that MASAGANA is indeed engaged in the unauthorized refilling, sale and/or distribution of [Gasul and] Shellane
LPG cylinders. I found out that MASAGANA delivery trucks with Plate Nos. UMN-971, PEZ-612, WTE-527, XAM-970 and WFC-603 coming
in and out of the refilling plant located at the aforementioned address contained multi-brand LPG cylinders including [Gasul and] Shellane. x
x x.

7. [That] on 13 February 2003, I conducted a test-buy accompanied by Mr. Bernabe C. Alajar. After asking the purpose of our visit,
MASAGANA’s guard allowed us to enter the MASAGANA refilling plant to purchase GASUL and SHELLANE LPGs. x x x. We were issued
an order slip which we presented to the cashier’s office located near the refilling station. After paying the amount x x x covering the cost of
the cylinders and their contents, they were issued Cash Invoice No. 56210 dated February 13, 2003. We were, thereafter, assisted by the
plant attendant in choosing empty GASUL and SHELLANE 11 kg. cylinders, x x x were brought to the refilling station [and filled in their
presence.] I noticed that no valve seals were placed on the cylinders.

[That] while inside the refilling plant doing the test-buy, I noticed that stockpiles of multi-branded cylinders including GASUL and
SHELLANE cylinders were stored near the refilling station. I also noticed that the total land area of the refilling plant is about 7,000 to
10,000 square meters. At the corner right side of the compound immediately upon entering the gate is a covered area where the
maintenance of the cylinders is taking place. Located at the back right corner of the compound are two storage tanks while at the left side
also at the corner portion is another storage tank. Several meters and fronting the said storage tank is where the refilling station and the
office are located. It is also in this storage tank where the elevated blue water tank depicting MASAGANA CORP. is located. About eleven
(11) refilling pumps and stock piles of multi-branded cylinders including Shellane and GASUL are stored in the refilling station. At the left
side of the entrance gate is the guard house with small door for the pedestrians and at the right is a blue steel gate used for incoming and
outgoing vehicles.

8. [That] on 27 February 2003, I conducted another test-buy accompanied by Mr. Bernabe C. Alajar. x x x After choosing the cylinders, we
were issued an order slip which we presented to the cashier. Upon payment, Cash Invoice No. 56398 was issued covering the cost of both
GASUL and SHELLANE LPG cylinders and their contents. x x x Both cylinders were refilled in our presence and no valve seals were
placed on the cylinders.
Copies of the photographs of the delivery trucks, LPG cylinders and registration papers were also attached to the aforementioned
affidavits.10

Bernabe C. Alajar (Alajar), owner of Able Research and Consulting Services Inc., was hired by Petron and Pilipinas Shell to assist them in
carrying out their Brand Protection Program. Alajar accompanied Oblanca during the surveillance of and test-buys at the refilling plant of
MASAGANA. He also executed two separate affidavits corroborating the statements of Oblanca. These were annexed to the two
applications for search warrant.11

After conducting the preliminary examination on Oblanca and Alajar, and upon reviewing their sworn affidavits and other attached
documents, Judge Melchor Q.C. Sadang (Judge Sadang), Presiding Judge of the RTC, Branch 17, Cavite City, found probable cause and
correspondingly issued Search Warrants No. 2-2003 and No. 3-2003.12 The search warrants commanded any peace officer to make an
immediate search of the MASAGANA compound and to seize the following items:

Under Search Warrant No. 2-2003:

a. Empty/filled LPG cylinder tanks/containers, bearing the tradename "SHELLANE", "SHELL" (Device) of Pilipinas Shell Petroleum
Corporation and the trademarks and other devices owned by Shell International Petroleum Company, Ltd.;

b. Machinery and/or equipment being used or intended to be used for the purpose of illegally refilling LPG cylinders belonging to Pilipinas
Shell Petroleum Corporation bearing the latter’s tradename as well as the marks belonging to Shell International Petroleum Company, Ltd.,
enumerated hereunder:

1. Bulk/Bullet LPG storage tanks;

2. Compressor/s (for pneumatic refilling system);

3. LPG hydraulic pump/s;

4. LPG refilling heads/hoses and appurtenances or LPG filling assembly;

5. LPG pipeline gate valve or ball valve and handles and levers;

6. LPG weighing scales; and

7. Seals simulating the shell trademark.

c. Sales invoices, ledgers, journals, official receipts, purchase orders, and all other books of accounts, inventories and documents
pertaining to the production, sale and/or distribution of the aforesaid goods/products.

d. Delivery truck bearing Plate Nos. WTE-527, XAM-970 and WFC-603, hauling trucks, and/or other delivery trucks or vehicles or
conveyances being used or intended to be used for the purpose of selling and/or distributing the above-mentioned counterfeit products.

Under Search Warrant No. 3-2003:

a. Empty/filled LPG cylinder tanks/containers, bearing Petron Corporation’s (Petron) tradename and its tradename "GASUL" and other
devices owned and/or used exclusively by Petron;

b. Machinery and/or equipment being used or intended to be used for the purpose of illegally refilling LPG cylinders belonging to Petron
enumerated hereunder;

1. Bulk/Bullet LPG storage tanks;

2. Compressor/s (for pneumatic filling system);

3. LPG hydraulic pump/s;

4. LPG filling heads/hoses and appurtenances or LPG filling assembly;

5. LPG pipeline gate valve or ball valve and handles levers;

6. LPG weighing scales; and

7. Seals bearing the Petron mark;

c. Sales invoices, ledgers, journals, official receipts, purchase orders, and all other books of accounts, inventories and documents
pertaining to the production, sale and/or distribution of the aforesaid goods/products; and

d. Delivery trucks bearing Plate Nos. UMN-971, PEZ-612 and WFC-603, hauling trucks, and/or other delivery trucks or vehicles or
conveyances being used for the purpose of selling and/or distributing the above-mentioned counterfeit products.

Upon the issuance of the said search warrants, Oblanca and several NBI operatives immediately proceeded to the MASAGANA compound
and served the search warrants on petitioners.13 After searching the premises of MASAGANA, the following articles described in Search
Warrant No. 2-2003 were seized:

a. Thirty-eight (38) filled 11 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and
other devices owned by Shell International Petroleum Company, Ltd.;

b. Thirty-nine (39) empty 11 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and
other devices owned by Shell International Petroleum Company, Ltd.;

c. Eight (8) filled 50 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other
devices owned by Shell International Petroleum Company, Ltd.;

d. Three (3) empty 50 kg. LPG cylinders, bearing the tradename of Pilipinas Shell Petroleum Corporation and the trademarks and other
devices owned by Shell International Petroleum Company, Ltd.;

e. One (1) set of motor compressor for filling system.

Pursuant to Search Warrant No. 3-2003, the following articles were also seized:

a. Six (6) filled 11 kg. LPG cylinders without seal, bearing Petron’s tradename and its trademark "GASUL" and other devices owned and/or
used exclusively by Petron;

b. Sixty-three (63) empty 11 kg. LPG cylinders, bearing Petron’s tradename and its trademark "GASUL" and other devices owned and/or
used exclusively by Petron;

c. Seven (7) tampered 11 kg. LPG cylinders, bearing Petron’s tradename and its trademark "GASUL" and other devices owned and/or used
exclusively by Petron;

d. Five (5) tampered 50 kg. LPG cylinders, bearing Petron’s tradename and its trademark "GASUL" and other devices owned and/or used
exclusively by Petron with tampered "GASUL" logo;

e. One (1) set of motor compressor for filling system; and

f. One (1) set of LPG refilling machine.

On 22 April 2003, petitioners filed with the RTC a Motion to Quash Search Warrants No. 2-2003 and No. 3-200314on the following grounds:

1. There is no probable cause for the issuance of the search warrant and the conditions for the issuance of a search warrant were not
complied with;

2. Applicant NBI Agent Ritchie N. Oblanca and his witness Bernabe C. Alajar do not have any authority to apply for a search warrant.
Furthermore, they committed perjury when they alleged in their sworn statements that they conducted a test-buy on two occasions;

3. The place to be searched was not specified in the Search Warrant as the place has an area of 10,000 square meters (one hectare) more
or less, for which reason the place to be searched must be indicated with particularity;

4. The search warrant is characterized as a general warrant as the items to be seized as mentioned in the search warrant are being used in
the conduct of the lawful business of respondents and the same are not being used in refilling Shellane and Gasul LPGs.

On 30 April 2003, MASAGANA, as third party claimant, filed with the RTC a Motion for the Return of Motor Compressor and LPG Refilling
Machine.15 It claimed that it is the owner of the said motor compressor and LPG refilling machine; that these items were used in the
operation of its legitimate business; and that their seizure will jeopardize its business interests.
On 5 June 2003, the RTC issued two Orders, one of which denied the petitioners’ Motion to Quash Search Warrants No. 2-2003 and No. 3-
2003, and the other one also denied the Motion for the Return of Motor Compressor and LPG Refilling Machine of MASAGANA, for lack of
merit.16

With respect to the Order denying the petitioners’ motion to quash Search Warrants No. 2-2003 and No. 3-2003, the RTC held that based
on the testimonies of Oblanca and Alajar, as well as the documentary evidence consisting of receipts, photographs, intellectual property
and corporate registration papers, there is probable cause to believe that petitioners are engaged in the business of refilling or using
cylinders which bear the trademarks or devices of Petron and Pilipinas Shell in the place sought to be searched and that such activity is
probably in violation of Section 155 in relation to Section 170 of Republic Act No. 8293.

It also ruled that Oblanca and Alajar had personal knowledge of the acts complained of since they were the ones who monitored the
activities of and conducted test-buys on MASAGANA; that the search warrants in question are not general warrants because the compound
searched are solely used and occupied by MASAGANA, and as such, there was no need to particularize the areas within the compound
that would be searched; and that the items to be seized in the subject search warrants were sufficiently described with particularity as the
same was limited to cylinder tanks bearing the trademarks GASUL and SHELLANE.

As regards the Order denying the motion of MASAGANA for the return of its motor compressor and LPG refilling machine, the RTC
resolved that MASAGANA cannot be considered a third party claimant whose rights were violated as a result of the seizure since the
evidence disclosed that petitioners are stockholders of MASAGANA and that they conduct their business through the same juridical entity.
It maintained that to rule otherwise would result in the misapplication and debasement of the veil of corporate fiction. It also stated that the
veil of corporate fiction cannot be used as a refuge from liability.

Further, the RTC ratiocinated that ownership by another person or entity of the seized items is not a ground to order its return; that in
seizures pursuant to a search warrant, what is important is that the seized items were used or intended to be used as means of committing
the offense complained of; that by its very nature, the properties sought to be returned in the instant case appear to be related to and
intended for the illegal activity for which the search warrants were applied for; and that the items seized are instruments of an offense.

Petitioners filed Motions for Reconsideration of the assailed Orders,17 but these were denied by the RTC in its Order dated 21 July 2003 for
lack of compelling reasons.18

Subsequently, petitioners appealed the two Orders of the RTC to the Court of Appeals via a special civil action for certiorari under Rule 65
of the Rules of Court.19 On 30 September 2004, the Court of Appeals promulgated its Decision affirming the Orders of the RTC.20 It adopted
in essence the bases and reasons of the RTC in its two Orders. The decretal portion thereof reads:

Based on the foregoing, this Court finds no reason to disturb the assailed Orders of the respondent judge. Grave abuse of discretion has
not been proven to exist in this case.

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The assailed orders both dated June 5, 2003 are hereby AFFIRMED.

Petitioners filed a Motion for Reconsideration21 of the Decision of the Court of Appeals, but this was denied in its Resolution dated 1 June
2005 for lack of merit.22

Petitioners filed the instant petition on the following grounds:

I.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PRESIDING JUDGE OF RTC CAVITE CITY HAD SUFFICIENT
BASIS IN DECLARING THE EXISTENCE OF PROBABLE CAUSE;

II.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NBI AGENT (RITCHIE OBLANCA) CAN APPLY FOR THE SEARCH
WARRANTS NOTHWITHSTANDING HIS LACK OF AUTHORITY;

III.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE REQUIREMENT OF GIVING A PARTICULAR DESCRIPTION
OF THE PLACE TO BE SEARCHED WAS COMPLIED WITH;

IV.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE APPLICATIONS AND THE SEARCH WARRANTS
THEMSELVES SHOW NO AMBIGUITY OF THE ITEMS TO BE SEIZED;

V.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT IS DIRECTED AGAINST MASAGANA GAS
CORPORATION, ACTING THROUGH ITS OFFICERS AND DIRECTORS, HENCE MASAGANA GAS CORPORATION MAY NOT BE
CONSIDERED AS THIRD PARTY CLAIMANT WHOSE RIGHTS WERE VIOLATED AS A RESULT OF THE SEIZURE.23

Apropos the first issue, petitioners allege that Oblanca and Alajar had no personal knowledge of the matters on which they testified; that
Oblanca and Alajar lied to Judge Sadang when they stated under oath that they were the ones who conducted the test-buys on two
different occasions; that the truth of the matter is that Oblanca and Alajar never made the purchases personally; that the transactions were
undertaken by other persons namely, Nikko Javier and G. Villanueva as shown in the Entry/Exit Slips of MASAGANA; and that even if it
were true that Oblanca and Alajar asked Nikko Javier and G. Villanueva to conduct the test-buys, the information relayed by the latter two
to the former was mere hearsay.24

Petitioners also contend that if Oblanca and Alajar had indeed used different names in purchasing the LPG cylinders, they should have
mentioned it in their applications for search warrants and in their testimonies during the preliminary examination; that it was only after the
petitioners had submitted to the RTC the entry/exit slips showing different personalities who made the purchases that Oblanca and Alajar
explained that they had to use different names in order to avoid detection; that Alajar is not connected with either of the private
respondents; that Alajar was not in a position to inform the RTC as to the distinguishing trademarks of SHELLANE and GASUL; that
Oblanca was not also competent to testify on the marks allegedly infringed by petitioners; that Judge Sadang failed to ask probing
questions on the distinguishing marks of SHELLANE and GASUL; that the findings of the Brand Protection Committee of Pilipinas Shell
were not submitted nor presented to the RTC; that although Judge Sadang examined Oblanca and Alajar, the former did not ask
exhaustive questions; and that the questions Judge Sadang asked were merely rehash of the contents of the affidavits of Oblanca and
Alajar.25

These contentions are devoid of merit.

Article III, Section 2, of the present Constitution states the requirements before a search warrant may be validly issued, to wit:

Section 2. The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of
whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause
to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized. (emphasis supplied).

Section 4 of Rule 126 of the Revised Rules on Criminal Procedure, provides with more particularity the requisites in issuing a search
warrant, viz:

SEC. 4. Requisites for issuing search warrant. – A search warrant shall not issue except upon probable cause in connection with one
specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the things to be seized which may be anywhere in the
Philippines.

According to the foregoing provisions, a search warrant can be issued only upon a finding of probable cause. Probable cause for search
warrant means such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been
committed and that the objects sought in connection with the offense are in the place to be searched.26

The facts and circumstances being referred thereto pertain to facts, data or information personally known to the applicant and the witnesses
he may present.27 The applicant or his witnesses must have personal knowledge of the circumstances surrounding the commission of the
offense being complained of. "Reliable information" is insufficient. Mere affidavits are not enough, and the judge must depose in writing the
complainant and his witnesses.28

Section 155 of Republic Act No. 8293 identifies the acts constituting trademark infringement, thus:

SEC. 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.

As can be gleaned in Section 155.1, mere unauthorized use of a container bearing a registered trademark in connection with the sale,
distribution or advertising of goods or services which is likely to cause confusion, mistake or deception among the buyers/consumers can
be considered as trademark infringement.
In his sworn affidavits,29 Oblanca stated that before conducting an investigation on the alleged illegal activities of MASAGANA, he reviewed
the certificates of trademark registrations issued by the Philippine Intellectual Property Office in favor of Petron and Pilipinas Shell; that he
confirmed from Petron and Pilipinas Shell that MASAGANA is not authorized to sell, use, refill or distribute GASUL and SHELLANE LPG
cylinder containers; that he and Alajar monitored the activities of MASAGANA in its refilling plant station located within its compound at
Governor’s Drive, Barangay Lapidario, Trece Martires, Cavite City; that, using different names, they conducted two test-buys therein where
they purchased LPG cylinders bearing the trademarks GASUL and SHELLANE; that the said GASUL and SHELLANE LPG cylinders were
refilled in their presence by the MASAGANA employees; that while they were inside the MASAGANA compound, he noticed stock piles of
multi-branded cylinders including GASUL and SHELLANE LPG cylinders; and that they observed delivery trucks loaded with GASUL and
SHELLANE LPG cylinders coming in and out of the MASAGANA compound and making deliveries to various retail outlets. These
allegations were corroborated by Alajar in his separate affidavits.

In support of the foregoing statements, Oblanca also submitted the following documentary and object evidence:

1. Certified true copy of the Certificate of Registration No. 44046 for "SHELL (DEVICE)" in the name of Shell International;

2. Certified true copy of the Certificate of Registration No. 41789 for "SHELL (DEVICE)’ in the name of Shell International;

3. Certified true copy of the Certificate of Registration No. 37525 for "SHELL (DEVICE) in the name of Shell International;

4. Certified true copy of the Certificate of Registration No. R-2813 for "SHELL" in the name of Shell International;

5. Certified true copy of the Certificate of Registration No. 31443 for "SHELLANE" in the name of Shell International;

6. Certified true copy of the Certificate of Registration No. 57945 for the mark "GASUL" in the name of Petron;

7. Certified true copy of the Certificate of Registration No. C-147 for "GASUL CYLINDER CONTAINING LIQUEFIED PETROLEUM GAS" in
the name of Petron;

8. Certified true copy of the Certificate of Registration No. 61920 for the mark "GASUL AND DEVICE" in the name of Petron;

9. Certified true copy of the Articles of Incorporation of Masagana;

10. Certified true copy of the By-laws of Masagana;

11. Certified true copy of the latest General Information Sheet of Masagana on file with the Securities and Exchange Commission;

12. Pictures of delivery trucks coming in and out of Masagana while it delivered Gasul and Shellane LPG;

13. Cash Invoice No. 56210 dated 13 February 2003 issued by Masagana for the Gasul and Shellane LPG purchased by Agent Oblanca
and witness Alajar;

14. Pictures of the Shellane and Gasul LPG’’s covered by Cash Invoice No. 56210 purchased from Masagana by Agent Oblanca and
witness Alajar;

15. Cash Invoice No. 56398 dated 27 February 2003 issued by Masagana for the Gasul and Shellane LPG purchased by Agent Oblanca
and witness Alajar; and

16. Pictures of the Shellane and Gasul LPG’s covered by Cash Invoice No. 56398 purchased from Masagana by Agent Oblanca and
witness Alajar.30

Extant from the foregoing testimonial, documentary and object evidence is that Oblanca and Alajar have personal knowledge of the fact
that petitioners, through MASAGANA, have been using the LPG cylinders bearing the marks GASUL and SHELLANE without permission
from Petron and Pilipinas Shell, a probable cause for trademark infringement. Both Oblanca and Alajar were clear and insistent that they
were the very same persons who monitored the activities of MASAGANA; that they conducted test-buys thereon; and that in order to avoid
suspicion, they used different names during the test-buys. They also personally witnessed the refilling of LPG cylinders bearing the marks
GASUL and SHELLANE inside the MASAGANA refilling plant station and the deliveries of these refilled containers to some outlets using
mini-trucks.

Indeed, the aforesaid facts and circumstances are sufficient to establish probable cause. It should be borne in mind that the determination
of probable cause does not call for the application of the rules and standards of proof that a judgment of conviction requires after trial on the
merits. As the term implies, "probable cause" is concerned with probability, not absolute or even moral certainty. The standards of judgment
are those of a reasonably prudent man, not the exacting calibrations of a judge after a full blown trial.31

The fact that Oblanca and Alajar used different names in the purchase receipts do not negate personal knowledge on their part. It is a
common practice of the law enforcers such as NBI agents during covert investigations to use different names in order to conceal their true
identities. This is reasonable and understandable so as not to endanger the life of the undercover agents and to facilitate the lawful arrest
or apprehension of suspected violators of the law.

Petitioners’ contention that Oblanca and Alajar should have mentioned the fact that they used different names in their respective affidavits
and during the preliminary examination is puerile. The argument is too vacuous to merit serious consideration. There is nothing in the
provisions of law concerning the issuance of a search warrant which directly or indirectly mandates that the applicant of the search warrant
or his witnesses should state in their affidavits the fact that they used different names while conducting undercover investigations, or to
divulge such fact during the preliminary examination. In the light of other more material facts which needed to be established for a finding of
probable cause, it is not difficult to believe that Oblanca and Alajar failed to mention that they used aliases in entering the MASAGANA
compound due to mere oversight.

It cannot be gainfully said that Oblanca and Alajar are not competent to testify on the trademarks infringed by the petitioners. As earlier
discussed, Oblanca declared under oath that before conducting an investigation on the alleged illegal activities of MASAGANA, he
reviewed the certificates of trademark registrations issued by the Philippine Intellectual Property Office in favor of Petron and Pilipinas
Shell. These certifications of trademark registrations were attached by Oblanca in his applications for the search warrants. Alajar, on the
other hand, works as a private investigator and, in fact, owns a private investigation and research/consultation firm. His firm was hired and
authorized, pursuant to the Brand Protection Program of Petron and Pilipinas Shell, to verify reports that MASAGANA is involved in the
illegal sale and refill of GASUL and SHELLANE LPG cylinders.32 As part of the job, he studied and familiarized himself with the registered
trademarks of GASUL and SHELLANE, and the distinct features of the LPG cylinders bearing the same trademarks before conducting
surveillance and test-buys on MASAGANA.33 He also submitted to Oblanca several copies of the same registered trademark registrations
and accompanied Oblanca during the surveillance and test-buys.

As to whether the form and manner of questioning made by Judge Sadang complies with the requirements of law, Section 5 of Rule 126 of
the Revised Rules on Criminal Procedure, prescribes the rules in the examination of the complainant and his witnesses when applying for
search warrant, to wit:

SEC. 5. Examination of complainant; record.- The judge must, before issuing the warrant, personally examine in the form of searching
questions and answers, in writing under oath, the complainant and the witnesses he may produce on facts personally known to them and
attach to the record their sworn statements, together with the affidavits submitted.

The searching questions propounded to the applicant and the witnesses depend largely on the discretion of the judge. Although there is no
hard-and–fast rule governing how a judge should conduct his investigation, it is axiomatic that the examination must be probing and
exhaustive, not merely routinary, general, peripheral, perfunctory or pro forma. The judge must not simply rehash the contents of the
affidavit but must make his own inquiry on the intent and justification of the application.34

After perusing the Transcript of Stenographic Notes of the preliminary examination, we found the questions of Judge Sadang to be
sufficiently probing, not at all superficial and perfunctory.35 The testimonies of Oblanca and Alajar were consistent with each other and their
narration of facts was credible. As correctly found by the Court of Appeals:

This Court is likewise not convinced that respondent Judge failed to ask probing questions in his determination of the existence of probable
cause. This Court has thoroughly examined the Transcript of Stenographic Notes taken during the investigation conducted by the
respondent Judge and found that respondent Judge lengthily inquired into the circumstances of the case. For instance, he required the NBI
agent to confirm the contents of his affidavit, inquired as to where the "test-buys" were conducted and by whom, verified whether PSPC and
PETRON have registered trademarks or tradenames, required the NBI witness to explain how the "test-buys" were conducted and to
describe the LPG cylinders purchased from Masagana Gas Corporation, inquired why the applications for Search Warrant were filed in
Cavite City considering that Masagana Gas Corporation was located in Trece Martires, Cavite, inquired whether the NBI Agent has a
sketch of the place and if there was any distinguishing sign to identify the place to be searched, and inquired about their alleged tailing and
monitoring of the delivery trucks. x x x.36

Since probable cause is dependent largely on the opinion and findings of the judge who conducted the examination and who had the
opportunity to question the applicant and his witnesses, the findings of the judge deserves great weight. The reviewing court can overturn
such findings only upon proof that the judge disregarded the facts before him or ignored the clear dictates of reason.37 We find no
compelling reason to disturb Judge Sadang’s findings herein.

Anent the second issue, petitioners argue that Judge Sadang failed to require Oblanca to show his authority to apply for search warrants;
that Oblanca is a member of the Anti-Organized Crime and not that of the Intellectual Property Division of the NBI; that all complaints for
infringement should be investigated by the Intellectual Property Division of the NBI; that it is highly irregular that an agent not assigned to
the Intellectual Property Division would apply for a search warrant and without authority from the NBI Director; that the alleged letter-
complaint of Atty. Bienvenido Somera, Jr. of Villaraza and Angangco Law Office was not produced in court; that Judge Sadang did not
require Oblanca to produce the alleged letter-complaint which is material and relevant to the determination of the existence of probable
cause; and that Petron and Pilipinas Shell, being two different corporations, should have issued a board resolution authorizing the Villaraza
and Angangco Law Office to apply for search warrant in their behalf.38

We reject these protestations.

The authority of Oblanca to apply for the search warrants in question is clearly discussed and explained in his affidavit, viz:

[That] on 11 February 2003, the National Bureau of Investigation (NBI) received a letter-complaint from Atty. Bienvenido I. Somera, Jr. of
Villaraza and Angangco, on behalf of among others, Petron Corporation (PETRON) [and Pilipinas Shell Petroleum Corporation (PSPC), the
authorized representative of Shell International Petroleum Company Limited (SHELL INTERNATIONAL)] requesting assistance in the
investigation and, if warranted, apprehension and prosecution of certain persons and/or establishments suspected of violating the
intellectual property rights of PETRON [and of PSPC and Shell International.]

11. [That] on the basis of the letter-complaint, I, together with Agent Angelo Zarzoso, was assigned as the NBI agent on the case.39

The fact that Oblanca is a member of the Anti-Organized Crime Division and not that of the Intellectual Property Division does not abrogate
his authority to apply for search warrant. As aptly stated by the RTC and the Court of Appeals, there is nothing in the provisions on search
warrant under Rule 126 of the Revised Rules on Criminal Procedure, which specifically commands that the applicant law enforcer must be
a member of a division that is assigned or related to the subject crime or offense before the application for search warrant may be acted
upon. The petitioners did not also cite any law, rule or regulation mandating such requirement. At most, petitioners may only be referring to
the administrative organization and/or internal rule or practice of the NBI. However, not only did petitioners failed to establish the existence
thereof, but they also did not prove that such administrative organization and/or internal rule or practice are inviolable.

Neither is the presentation of the letter-complaint of Atty. Somera and board resolutions from Petron and Pilipinas Shell required or
necessary in determining probable cause. As heretofore discussed, the affidavits of Oblanca and Alajar, coupled with the object and
documentary evidence they presented, are sufficient to establish probable cause. It can also be presumed that Oblanca, as an NBI agent,
is a public officer who had regularly performed his official duty.40 He would not have initiated an investigation on MASAGANA without a
proper complaint. Furthermore, Atty. Somera did not step up to deny his letter-complaint.

Regarding the third issue, petitioners posit that the applications for search warrants of Oblanca did not specify the particular area to be
searched, hence, giving the raiding team wide latitude in determining what areas they can search. They aver that the search warrants were
general warrants, and are therefore violative of the Constitution. Petitioners also assert that since the MASAGANA compound is about
10,000.00 square meters with several structures erected on the lot, the search warrants should have defined the areas to be searched.

The long standing rule is that a description of the place to be searched is sufficient if the officer with the warrant can, with reasonable effort,
ascertain and identify the place intended and distinguish it from other places in the community. Any designation or description known to the
locality that points out the place to the exclusion of all others, and on inquiry leads the officers unerringly to it, satisfies the constitutional
requirement.41

Moreover, in the determination of whether a search warrant describes the premises to be searched with sufficient particularity, it has been
held that the executing officer’s prior knowledge as to the place intended in the warrant is relevant. This would seem to be especially true
where the executing officer is the affiant on whose affidavit the warrant had been issued, and when he knows that the judge who issued the
warrant intended the compound described in the affidavit.42

The search warrants in question commanded any peace officer to make an immediate search on MASAGANA compound located at
Governor’s Drive, Barangay Lapidario, Trece Martires, Cavite City. It appears that the raiding team had ascertained and reached
MASAGANA compound without difficulty since MASAGANA does not have any other offices/plants in Trece Martires, Cavite City.
Moreover, Oblanca, who was with the raiding team, was already familiar with the MASAGANA compound as he and Alajar had monitored
and conducted test-buys thereat.

Even if there are several structures inside the MASAGANA compound, there was no need to particularize the areas to be searched
because, as correctly stated by Petron and Pilipinas Shell, these structures constitute the essential and necessary components of the
petitioners’ business and cannot be treated separately as they form part of one entire compound. The compound is owned and used solely
by MASAGANA. What the case law merely requires is that, the place to be searched can be distinguished in relation to the other places in
the community. Indubitably, this requisite was complied with in the instant case.

As to the fourth issue, petitioners asseverate that the search warrants did not indicate with particularity the items to be seized since the
search warrants merely described the items to be seized as LPG cylinders bearing the trademarks GASUL and SHELLANE without
specifying their sizes.

A search warrant may be said to particularly describe the things to be seized when the description therein is as specific as the
circumstances will ordinarily allow; or when the description expresses a conclusion of fact not of law by which the warrant officer may be
guided in making the search and seizure; or when the things described are limited to those which bear direct relation to the offense for
which the warrant is being issued.43

While it is true that the property to be seized under a warrant must be particularly described therein and no other property can be taken
thereunder, yet the description is required to be specific only in so far as the circumstances will ordinarily allow. The law does not require
that the things to be seized must be described in precise and minute details as to leave no room for doubt on the part of the searching
authorities; otherwise it would be virtually impossible for the applicants to obtain a search warrant as they would not know exactly what kind
of things they are looking for. Once described, however, the articles subject of the search and seizure need not be so invariant as to require
absolute concordance, in our view, between those seized and those described in the warrant. Substantial similarity of those articles
described as a class or specie would suffice.44

Measured against this standard, we find that the items to be seized under the search warrants in question were sufficiently described with
particularity. The articles to be confiscated were restricted to the following: (1) LPG cylinders bearing the trademarks GASUL and
SHELLANE; (2) Machines and equipments used or intended to be used in the illegal refilling of GASUL and SHELLANE cylinders. These
machines were also specifically enumerated and listed in the search warrants; (3) Documents which pertain only to the production, sale and
distribution of the GASUL and SHELLANE LPG cylinders; and (4) Delivery trucks bearing Plate Nos. WTE-527, XAM-970 and WFC-603,
hauling trucks, and/or other delivery trucks or vehicles or conveyances being used or intended to be used for the purpose of selling and/or
distributing GASUL and SHELLANE LPG cylinders.45
Additionally, since the described items are clearly limited only to those which bear direct relation to the offense, i.e., violation of section 155
of Republic Act No. 8293, for which the warrant was issued, the requirement of particularity of description is satisfied.

Given the foregoing, the indication of the accurate sizes of the GASUL and SHELLANE LPG cylinders or tanks would be unnecessary.

Finally, petitioners claim that MASAGANA has the right to intervene and to move for the return of the seized items; that the items seized by
the raiding team were being used in the legitimate business of MASAGANA; that the raiding team had no right to seize them under the
guise that the same were being used in refilling GASUL and SHELLANE LPG cylinders; and that there being no action for infringement filed
against them and/or MASAGANA from the seizure of the items up to the present, it is only fair that the seized articles be returned to the
lawful owner in accordance with Section 20 of A.M. No. 02-1-06-SC.

It is an elementary and fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders,
directors or officers. However, when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, the law will regard the corporation as an association of persons, or in the case of two corporations merge them into one.46 In other
words, the law will not recognize the separate corporate existence if the corporation is being used pursuant to the foregoing unlawful
objectives. This non-recognition is sometimes referred to as the doctrine of piercing the veil of corporate entity or disregarding the fiction of
corporate entity. Where the separate corporate entity is disregarded, the corporation will be treated merely as an association of persons
and the stockholders or members will be considered as the corporation, that is, liability will attach personally or directly to the officers and
stockholders.47

As we now find, the petitioners, as directors/officers of MASAGANA, are utilizing the latter in violating the intellectual property rights of
Petron and Pilipinas Shell. Thus, petitioners collectively and MASAGANA should be considered as one and the same person for liability
purposes. Consequently, MASAGANA’s third party claim serves no refuge for petitioners.

Even if we were to sustain the separate personality of MASAGANA from that of the petitioners, the effect will be the same. The law does
not require that the property to be seized should be owned by the person against whom the search warrants is directed. Ownership,
therefore, is of no consequence, and it is sufficient that the person against whom the warrant is directed has control or possession of the
property sought to be seized.48 Hence, even if, as petitioners claimed, the properties seized belong to MASAGANA as a separate entity,
their seizure pursuant to the search warrants is still valid.

Further, it is apparent that the motor compressor, LPG refilling machine and the GASUL and SHELL LPG cylinders seized were the corpus
delicti, the body or substance of the crime, or the evidence of the commission of trademark infringement. These were the very instruments
used or intended to be used by the petitioners in trademark infringement. It is possible that, if returned to MASAGANA, these items will be
used again in violating the intellectual property rights of Petron and Pilipinas Shell.49 Thus, the RTC was justified in denying the petitioners’
motion for their return so as to prevent the petitioners and/or MASAGANA from using them again in trademark infringement.

Petitioners’ reliance on Section 20 of A.M. No. 02-1-06-SC,50 is not tenable. As correctly observed by the Solicitor General, A.M. 02-1-06-
SC is not applicable in the present case because it governs only searches and seizures in civil actions for infringement of intellectual
property rights.51 The offense complained of herein is for criminal violation of Section 155 in relation to Section 17052 of Republic Act No.
8293.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 79256, dated 30
September 2004 and 1 June 2005, respectively, are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

14. G.R. No. 169440               November 23, 2011

GEMMA ONG A.K.A. Maria Teresa Gemma Catacutan, Petitioner, 

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari, filed under Rule 45 of the Rules of Court, to set aside and reverse the June 16, 2005
Decision1 of the Court of Appeals in CA-G.R. CR No. 28308, which affirmed the September 23, 2003 Decision2 of the Regional Trial Court
(RTC) of Manila, Branch 24 in Criminal Case No. 00-184454.

On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma) was charged before the RTC for Infringement
under Section 155 in relation to Section 170 of Republic Act No. 8293 or the Intellectual Property Code. The accusatory portion of the
Information reads:

That sometime in September 25, 1998 and prior thereto at Sta. Cruz, Manila and within the jurisdiction of this Honorable Court, the above-
named accused did then and there, knowingly, maliciously, unlawfully and feloniously engage in the distribution, sale, [and] offering for sale
of counterfeit Marlboro cigarettes which had caused confusion, deceiving the public that such cigarettes [were] Marlboro cigarettes and
those of the Telengtan Brothers and Sons, Inc., doing business under the style of La Suerte Cigar and Cigarettes Factory, the exclusive
manufacturer of Marlboro Cigarette in the Philippines and that of Philip Morris Products, Inc. (PMP7) the registered owner and proprietor of
the MARLBORO trademark together with the devices, including the famous-Root Device, to their damage and prejudice, without the
accused seeking their permit or authority to manufacture and distribute the same.3

On August 1, 2000, Judge Rebecca G. Salvador of RTC Manila, Branch 1, issued a warrant of arrest against Gemma, but lifted4 and set
aside5 the same after Gemma voluntarily surrendered on August 4, 2000, and filed a cash bond for P 12,000.00.

Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000.6 After the pre-trial conference on February 13, 2001,7 trial
on the merits ensued.

The prosecution called to the witness stand the following: Roger Sherman Slagle, the Director of Operations of Philip Morris Malaysia, and
Philip Morris Philippines, Inc.’s (PMPI) product/brand security expert, to testify that according to his examination, the products they seized
at the subject premises were counterfeit cigarettes;8 as well as Jesse Lara, who, as then Senior Investigator III at the Intellectual Property
Rights (IPR) Unit of the Economic Intelligence and Investigation Bureau (EIIB), Department of Finance, led the investigating team, to testify
on the events that led to the arrest of Gemma.9 The prosecution also presented the billing accountant of Quasha Ancheta Peña & Nolasco
Law Office (Quasha Law Office), Juliet Flores, to show that PMPI, being one of Quasha Law Office’s clients, paid the amount of $4,069.12
for legal services rendered.10 The last witness for the prosecution was Atty. Alonzo Q. Ancheta, a senior law partner at Quasha Law Office,
who testified that as the duly appointed Attorney-in-Fact of PMPI, he was in charge of the EIIB search operation in the subject premises.
Atty. Ancheta said that while he was not personally present during the implementation of the search warrant, he sent Atty. Leonardo
Salvador, who constantly reported the developments to him.11

The facts, as succinctly summarized by the Court of Appeals, are as follows:

On September 10, 1998, Jesse S. Lara, then Senior Investigator III at the Intellectual Property Rights (IPR) Unit of the Economic
Intelligence and Investigation Bureau (EIIB), Department of Finance, received reliable information that counterfeit "Marlboro" cigarettes
were being distributed and sold by two (2) Chinese nationals, Johnny Sia and Jessie Concepcion, in the areas of Tondo, Binondo, Sta.
Cruz and Quiapo, Manila. A mission team formed by EIIB, including Lara, conducted surveillance operation to verify the report. EIIB agents
Leonardo Villanueva and Jigo Madrigal did a "test-buy" on the different sari-sari stores of Manila located in Quiapo, Tondo, Sta. Cruz and
Blumentritt areas and took samples of "Marlboro" cigarettes sold therein. During the surveillance, the container van delivering the
"Marlboro" packed in black plastic bags was seen parked at 1677 Bulacan corner Hizon Streets, Sta. Cruz, Manila [(the subject premises)].
Upon inquiry from the Barangay Chairman, they also learned that the place is owned by a certain Mr. Jackson Ong.

The EIIB team coordinated with officers of Philip Morris, Inc., owner of the trademark Marlboro Label in the Philippines duly registered with
the Philippine Patents Office and subsequently with the Intellectual Property Office (IPO) since 1956. Initial examination made by Philip
Morris, Inc. on those random sample purchases revealed that the cigarettes were indeed fake products unauthorized by the company. With
official indorsement by the EIIB, Senior Investigator Lara filed an application for search warrant before the Regional Trial Court of
Dasmariñas, Cavite, Branch 90.

On September 24, 1998, Executive Judge Dolores L. Español issued a search warrant after finding probable cause to believe that Mr.
Jackson Ong has in his possession/control in the premises located at 1675-1677 Bulacan St. cor. M. Hizon St., Sta. Cruz, Manila, the
following properties:

"Substantial number of fake locally made and imported fake cigarettes bearing the Marlboro brand, together with the corresponding labels,
cartons, boxes and other packaging as well as receipts, invoices and other documents relative to the purchase, sale, and distribution of the
aforesaid fake Marlboro cigarettes."

On September 25, 1998, the EIIB team led by Senior Investigator Lara implemented the search warrant, together with SPO2 Rommel P.
Sese of the Western Police District (WPD) as representative of the Philippine National Police (PNP), Barangay Chairman Ernesto Traje,
Sr., Barangay Kagawad Vivian V. Rallonza and Atty. Leonardo P. Salvador who was sent by [Quasha Peña & Nolasco Law Office,] the law
firm engaged by Philip Morris, Inc. They proceeded to the subject premises but Jackson Ong, the alleged owner, was not there. It was
accused, who is supposedly either the spouse or common-law wife of Jackson Ong, who entertained them. At first, accused refused to
allow them entry into the premises but eventually the team was able to search the premises and found Marlboro cigarettes stocked in
several boxes containing fifty (50) reams inside each box which were packed in black plastic sacks like in "balikbayan boxes." The
"Inventory" and "Certification In the Conduct of Search" were duly accomplished and signed by the members of the EIIB and the other
representatives present during the actual search (SPO2 Sese, Jess Lara, Traje, Sr., Henry Mariano, Isidro Burgos and Atty. Salvador).
Accused signed her name in the said documents as "Gemma Ong," as the Owner/Representative, while a certain employee, Girlie Cantillo,
also signed as witness.

On September 28, 1998, a Return of Search Warrant was submitted by the EIIB to the issuing court stating that the articles seized pursuant
to the warrant were stored in the premises of the EIIB and requesting that EIIB be granted temporary custody of the goods. Acting on the
Urgent Motion To Transfer Custody of Confiscated Articles filed by Philip Morris Products, Inc. (PMPI) of Virginia, U.S.A., Executive Judge
Dolores L. Español ordered the custody of the seized goods transferred from EIIB to PMPI c/o Quasha Ancheta Peña and Nolasco Law
Office, the Attorney-in-Fact of PMPI. Judge Español subsequently also issued an order dated October 15, 1998 authorizing PMPI to secure
and take out samples of the unauthorized products from the confiscated cartons/boxes of Marlboro cigarettes which are stored at Four
Winds Phils. Inc. warehouse located at No. 2241 Pasong Tamo Extension, Makati City under the direct and personal control and
supervision of Sheriff IV Tomas C. Azurin. PMPI had earlier sought such order from the court for the purpose of laboratory analysis and
scientific testing of the samples from the confiscated cigarettes.

On the basis of the results of the examination conducted by PMPI on the samples obtained from the confiscated boxes of cigarettes
bearing the Marlboro brand, which confirmed the same to be unauthorized products and not genuine Marlboro cigarettes, the EIIB filed a
case for Violation of Sections 155 and 168 in relation to Section 170 of Republic Act No. 8293 against Jackson Ong who is not an
authorized distributor of Marlboro products in the Philippines.12
After the prosecution rested its case, the defense filed a Demurrer to Evidence,13 which the RTC denied on March 26, 2003.14 The defense
moved for a reconsideration of this order but the same was denied on April 22, 2003.15

Gemma, as the lone witness for the defense, then took the witness stand. She said that she is married to Co Yok Piao, a Chinese national,
but she still uses her maiden name Catacutan.16 She denied that she is the Gemma Ong accused in this case. She testified that she was
arrested on August 4, 2000, without the arresting officers asking for her name. She said that when she pleaded to be released, she was
instructed to post a cash bond, which she did in the amount of P 12,000.00. Gemma averred that when she posted her bond and signed
her certificate of arraignment, she did so under her real name Maria Teresa Gemma Catacutan, as opposed to the signatures in the
Inventory and Certification in the Conduct of Search (search documents), which she denied signing. She claimed that she was not able to
bring up her defense of mistaken identity early on as she did not know when the proper time to raise it was. She avowed that she was not
interrogated by the police prior to her arrest, despite the two-year gap between it and the search of the subject premises. She alleged that
she did not know Jackson Ong and that the prosecution witnesses, whom she first saw during her trial, couldn’t even point to her as the
person present during the raid when they testified in court. Gemma further asseverated that while she could not remember where she was
on September 25, 1998, she was sure that she was not at the subject premises on that date. Gemma presented her Identification Card
issued by the Professional Regulation Commission (PRC) to show that she is a dentist by profession, although she claimed that she is a
businessperson in practice. She said that she used to buy and sell gear fabrics, t-shirts, truck materials, and real estate17 under the
business name "Fascinate Trading" based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in February
1998.18 Gemma denied ever having engaged in the manufacture and sale of any kind of cigarettes and claimed that she could not even
distinguish between a fake and a genuine Marlboro cigarette.19

On September 30, 2003, the RTC convicted Gemma of the crime as charged. The dispositive portion of its Decision reads:

Accordingly, this Court finds accused Gemma Catacutan guilty beyond reasonable doubt of violation of Section 155 in relation to Section
170 of Republic Act No. 8293 and hereby sentences her to suffer the penalty of imprisonment of two (2) years and to pay a fine of Fifty
Thousand (P 50,000.00) Pesos.

Accused is further directed to indemnify private complainant the sum of US$4,069.12 or its peso equivalent, as actual damages.

The records of the case as against Jackson Ong is hereby ordered archived pending his arrest.

With costs against accused Gemma Catacutan.20

In resolving the case, the RTC narrowed down the issue to whether Gemma Catacutan was the same accused identified as Gemma Ong.
The RTC answered this in the affirmative as it found Gemma’s defense of mistaken identity as untenable, especially since she claimed to
be a professional. The RTC explained:

Ranged against the positive and forthright declaration of the prosecution witnesses, the mere uncorroborated and self-serving denials of the
accused cannot stand. (People vs. Hortaleza, 258 SCRA 201)

We note in disbelief that it was only in the hearing of November 26, 2001, that accused’[s] former lawyer manifested that accused is known
as Gemma Catacutan never as Gemma Ong (tsn, November 26, 2001, p. 3) and as admitted by her, she never revealed her true identity
when arrested, when she posted her bail bond and even during her arraignment.

She could have protested at the time of her arrest that they were arresting the wrong person but this she did not do. She proceeded to post
a bond for her provisional liberty, hired a lawyer to defend her but failed to divulge the very information that could have led to an early
dismissal of the case, if true.

Her pretensions of ignorance as to the proper stage of when to explain (tsn, May 26, 2003), p. 13 can hardly be given credit. A dentist by
profession, it is utterly incredible that she remained meek all through-out her arrest and the posting of her bail bond.21

The RTC also unfurled the fact that while Gemma claimed to have never engaged in the sale and manufacture of Marlboro cigarettes, the
address of her business "Fascinate Trading" is registered as 1677 Bulacan Street, Sta. Cruz, Manila, the same property raided by the EIIB
that contained the counterfeit cigarettes.22

Aggrieved, Gemma appealed the RTC’s decision to the Court of Appeals based on the following grounds:

THE LOWER COURT GRIEVOUSLY ERRED IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN GUILTY OF THE
CRIME OF VIOLATION OF THE INTELLECTUAL PROPERTY RIGHTS LAW DESPITE UTTER LACK OF EVIDENCE.

II

THE LOWER COURT IN CONVICTING DR. MARIA TERESA GEMMA CATACUTAN ON THE BASIS OF SURMISE (sic),
CONJECTURES AND GUESSWORK COMMITTED GRAVE VIOLENCE AGAINST THE CONSTITUTIONAL PRESUMPTION
OF INNOCENCE.
 III

THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN CONVICTING THE ACCUSED-APPELLANT WHO
HAD NOT BEEN POSITIVELY IDENTIFIED AND PINPOINTED AS MANUFACTURER NOR (sic) DISTRIBUTOR OF FAKE
MARLBORO PRODUCT.

IV

THE LOWER COURT COMMITTED SERIOUS REVERSIBLE ERROR IN NOT GIVING THE SLIGHTEST CREDENCE TO
THE UNCONTRADICTED, UNREFUTED AND CANDID TESTIMONY OF THE ACCUSED-APPELLANT, BUT INSTEAD,
CONVICTED HER ON [T]HE BASIS OF EXTRAPOLATED EVIDENCE NOT BORNE BY THE RECORDS.

THE LOWER COURT COMMITTED A GRAVE REVERSIBLE ERROR IN CONVICTING ACCUSED-APPELLANT DESPITE
THE UTTER AND PATHETIC LACK OF EVIDENCE TO SUSTAIN THE PROSECUTION’S LAME, SHALLOW AND
UNCONFOUNDED THEORY OF GUILT.23

The Court of Appeals found Gemma’s appeal to be unmeritorious. It said that Gemma was positively identified by the prosecution
witnesses as the woman who entertained them during the search of the subject premises on September 25, 1998, and the woman who
signed the Certification in the Conduct of Search and Inventory. The Court of Appeals agreed with the RTC’s rejection of Gemma’s defense
of mistaken identity, as she should have raised it at the earliest opportunity, which was at the time of her arrest, the posting of her bail bond,
or during her arraignment. The Court of Appeals held that the amendment of the prosecution witnesses’ affidavits was explained during the
hearing, and although the original affidavits were the ones marked during the pre-trial, the amended ones provided the basis for the filing of
the Information against Gemma and her co-accused Jackson Ong. The Court of Appeals also noted that the March 20, 2000 Resolution of
the State Prosecutor specifically mentioned that the search warrant was served on Gemma Ong. The Court of Appeals then proclaimed
that in the hierarchy of evidence, the testimony of the witness in court commands greater weight than his written affidavit.24

The Court of Appeals affirmed the conviction of Gemma for trademark infringement under Section 155 of Republic Act No. 8293, as the
counterfeit goods seized by the EIIB were not only found in her possession and control, but also in the building registered under her
business, Fascinate Trading. The Court of Appeals said that the prosecution had satisfactorily proven Gemma’s commission of the offense
since the unauthorized use of the trademark Marlboro, owned by PMPI, was clearly intended to deceive the public as to the origin of the
cigarettes being distributed and sold, or intended to be distributed and sold. The Court of Appeals further sustained the penalty and
damages imposed by the RTC for being in accord with the law and facts.25

Gemma is now before this Court with the following assignment of errors:

A.

THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION

WITNESSES IDENTIFYING PETITIONER AS PRESENT AT THE TIME AND PLACE WHEN THE SEARCH AND
SEIZURE TOOK PLACE.

B.

THE COURT OF APPEALS ERRED IN GIVING CREDENCE TO THE TESTIMONIES OF PROSECUTION

WITNESSES THAT THEY SAW PETITIONER SIGN HER NAME AS "GEMMA ONG" AS
OWNER/CLAIMANT/REPRESENTATIVE (OF THE ARTICLES SEIZED) ON THE SEARCH WARRANT (EXH. "A"),
CERTIFICATION IN THE CONDUCT OF SEARCH (EXH. "B") AND INVENTORY OF THE S[E]IZED ARTICLES AT
THE TIME OF THE SEARCH (EXH. "D").

C.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER’S SIGNATURE IN EXHIBITS "A", "B"
AND "C" ARE NOT HERS BUT WERE FORGED, BEING COMPLETELY AND PATENTLY DISSIMILAR TO HER
TRUE AND REAL SIGNATURE AS SHOWN IN HER OFFICIAL I.D AS PROFESSIONAL DENTIST.

D.

THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE AFFIDAVITS OF THE PROSECUTION
WITNESSES WHICH DID NOT MENTION PETITIONER’S PRESENCE AT THE TIME AND PLACE OF THE
SEARCH CANNOT TAKE PRECEDENCE OVER THEIR CONTRARY TESTIMONIES IN COURT THAT SHE WAS
PRESENT AND IN FACT THE OCCUPANT AND OWNER OF THE PREMISES FROM WHICH SHE INITIALLY
BLOCKED THEIR ENTRY INTO.

E.
 THE COURT OF APPEALS ERRED IN CONCLUDING THAT [PETITIONER] WAS THE VERY SAME PERSON
WHO WAS CAUGHT IN POSSESSION AND CONTROL OF THE PREMISES WHERE THE COUNTERFEIT
ARTICLES WERE SEIZED BECAUSE SHE ALLEGEDLY NEVER PROTESTED BEING WRONGFULLY
ACCUSED AT THE TIME OF HER ARREST ON 4 AUGUST 2000, WHEN SHE POSTED HER CASH BOND AND
WHEN SHE EVEN SIGNED HER NAME AS MA. TERESA GEMMA CATACUTAN IN THE WAIVER,
UNDERTAKING AND CERTIFICATE OR ARRAIGNMENT, ALL IN THE NAME OF THE ACCUSED AS "GEMMA
ONG, a.k.a. MA. THERESA CATACUTAN."

F.

THE COURT OF APPEALS ERRED IN NOT ACQUITTING [PETITIONER] FOR FAILURE OF THE
PROSECUTION TO PROVE THE GUILT OF THE ACCUSED-APPELLANT BEYOND REASONABLE DOUBT.26

Gemma argues that if it were true that she was in the subject premises when it was raided on September 25, 1998, then her name and
presence would have been mentioned in the respective affidavits of Slagle and Atty. Ancheta; and the EIIB agents who conducted the
search would have confronted, investigated, or arrested her. Gemma insists that the fact that her name was only mentioned for the first
time in the amended affidavits yields to the conclusion that she was not in the subject premises when it was searched and that the
testimonies of the prosecution witnesses were perjured.27
Gemma further claims that the courts below were wrong in finding that she never protested that she was mistakenly identified. She claims
that she was arrested without the benefit of a preliminary investigation and all she wanted to do at that point was to "get out [of] the clutches
of overzealous and eager beaver policemen who were exuberant in arresting an innocent party like"28 her. Gemma also explains that her
non-protest during her arraignment was upon the advice of her former lawyer, who said that he would correct it in the proper time during the
trial.
Respondent People of the Philippines, in its comment,29 avers that there are only two issues to be resolved in this case, to wit:
1. THE INSTANT PETITION IS FATALLY DEFECTIVE AS IT RAISES QUESTIONS OF FACT WHICH ARE NOT PROPER
FOR REVIEW UNDER RULE 45 OF THE REVISED RULES OF COURT.
2. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING PETITIONER’S CONVICTION FOR VIOLATION OF SECTION
155 IN RELATION TO SECTION 170 OF R.A. 8293 (INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES).30
Respondent claims that a perusal of the issues in Gemma’s petition readily discloses that only questions of fact have been raised, which
are not reviewable in an appeal by certiorari.31 Respondent asseverates that Gemma’s conviction was warranted as the prosecution had
sufficiently established her presence during the search of the subject premises where she signed the search documents as "Gemma Ong."
Moreover, the respondent avers, Gemma failed to timely protest her arrest and raise her claim that she is not Gemma Ong.32
Issues
A study of the pleadings filed before this Court shows that the only issues to be resolved are the following:
1. Whether or not accused-appellant’s petition for review on certiorari under Rule 45 of the Rules of Court is fatally defective as
it raises questions of fact; and
2. Whether or not Gemma’s guilt was proven beyond reasonable doubt in light of her alleged mistaken identity.
This Court’s Ruling
Procedural Issue
As this case reached this Court via Rule 45 of the Rules of Court, the basic rule is that factual questions are beyond the province of this
Court, because only questions of law may be raised in a petition for review.33 However, in exceptional cases, this Court has taken
cognizance of questions of fact in order to resolve legal issues, such as when there was palpable error or a grave misapprehension of facts
by the lower court.34 In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals,35 we said that although
submission of issues of fact in an appeal by certiorari taken to this Court is ordinarily proscribed, this Court nonetheless retains the option in
the exercise of its sound discretion, taking into account the attendant circumstances, either to decide the case or refer it to the proper court
for determination.36 Since the determination of the identity of Gemma is the very issue affecting her guilt or innocence, this Court chooses to
take cognizance of this case in the interest of proper administration of justice.
Gemma is guilty of violating Section 155 in relation to Section 170 of Republic Act No. 8293
Gemma was charged and convicted of violating Section 155 in relation to Section 170 of Republic Act No. 8293, or the Intellectual Property
Code of the Philippines.
Section 155. Remedies; Infringement. - Any person who shall, without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material. (Sec. 22, R.A. No 166a)
Section 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two
(2) years to five (5) years and a fine ranging from Fifty thousand pesos (P 50,000) to Two hundred thousand pesos (P 200,000), shall be
imposed on any person who is found guilty of committing any of the acts mentioned in Section 155, Section 168 and Subsection 169.1.
(Arts. 188 and 189, Revised Penal Code.) (Emphases supplied.)
A "mark" is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods.37
In McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc.,38 this Court held:
To establish trademark infringement, the following elements must be shown: (1) the validity of plaintiff’s mark; (2) the plaintiff’s ownership of
the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in "likelihood of confusion." Of these, it is the
element of likelihood of confusion that is the gravamen of trademark infringement.
A mark is valid if it is distinctive and not barred from registration. Once registered, not only the mark’s validity, but also the registrant’s
ownership of the mark is prima facie presumed.39
The prosecution was able to establish that the trademark "Marlboro" was not only valid for being neither generic nor descriptive, it was also
exclusively owned by PMPI, as evidenced by the certificates of registration issued by the Intellectual Property Office of the Department of
Trade and Industry.40
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that the counterfeit cigarettes seized from
Gemma’s possession were intended to confuse and deceive the public as to the origin of the cigarettes intended to be sold, as they not
only bore PMPI’s mark, but they were also packaged almost exactly as PMPI’s products.41
Regarding the Claim of Mistaken Identity
Despite all these findings, Gemma has posited only a single defense, from the RTC all the way up to this Court: that she is not the Gemma
Ong named and accused in this case. She bases this claim on the alleged discrepancies in the prosecution witnesses’ original affidavits
vis-à-vis the amended ones, which discrepancies, according to her, strongly suggest her innocence.
This Court has time and again held that between an affidavit executed outside the court, and a testimony given in open court, the latter
almost always prevails.
Discrepancies between a sworn statement and testimony in court do not outrightly justify the acquittal of an accused. Such discrepancies
do not necessarily discredit the witness since ex parte affidavits are often incomplete. They do not purport to contain a complete
compendium of the details of the event narrated by the affiant. Thus, our rulings generally consider sworn statements taken out of court to
be inferior to in court testimony. x x x.42
A reading of the original affidavits43 executed by Slagle and Atty. Ancheta, readily reveals that they concentrated on the facts and events
leading up to the search and seizure of the contraband materials from the subject premises. They not only failed to mention Gemma Ong’s
presence there, but they also failed to mention the other witnesses’ names and presence there as well. Although this might appear to be a
mistake on the part of a known and established law firm like the Quasha Law Office, the firm immediately sought to rectify this by having
the affidavits of Slagle, Atty. Ancheta, and Lara amended.
If it were true that Gemma was not at the subject premises at all on September 25, 1998, then she should have grabbed every chance to
correct this notion and expose this mistake before she was arrested. She could have brought up her defense of mistaken identity or
absence at the raid in the preliminary investigation conducted prior to the issuance of her warrant of arrest; but instead, she chose to ignore
her subpoena and disregard the preliminary investigation. Even then, Gemma had the opportunity to raise the fact that she was not Gemma
Ong; not only during her arrest, but also during the posting of the cash bond for her bail, and more importantly, during her arraignment,
when she was asked if she understood the charges against her. Gemma also knew that the Information was filed against her on the basis
of the amended affidavits, thus, she could have filed a motion to quash the information before she entered her plea, or asked that a
reinvestigation be conducted. However, all these Gemma failed to do. We agree with the RTC that it is highly unlikely that a person of her
stature and educational attainment would be so meek and timid that she failed to protest against her being wrongly identified, accused,
arrested, and potentially imprisoned. If what she says were true, she would not have agreed to post bail or to be arraigned without at the
very least, bringing up the fact that she was not the Gemma Ong the police officers were looking for. In addition, her own lawyer, Atty.
Maglinao, brought up the fact that she was not Gemma Ong, only for the purpose of correcting the Information, and not to contest it, to wit:
WITNESS ROGER SHERMAN SLAGLE UNDER THE SAME OATH FOR CONTINUATION OF DIRECT EXAMINATION BY:
ATTY. ERESE:
With the kind permission of the hon. court.
COURT: Proceed.
ATTY. MAGLINAO:
I would just want to be on record that my client, Gemma Catacutan has never been known as Gemma Ong because her real name is
Gemma Catacutan.
COURT: Do you have any objection to the amendment of the information?
ATTY. MAGLINAO:
No, your Honor. May we request to correct the information from Gemma Ong to Gemma Catacutan.44
Gemma further accuses the prosecution witnesses of falsely testifying and of perjuring themselves just so they can satisfy a big client like
PMPI by showing that somebody had been arrested for counterfeiting its cigarettes. The crimes Gemma is imputing on these witnesses are
serious crimes, and in the absence of concrete and convincing evidence, this Court could not believe her mere allegations that imply that
these people would destroy someone’s life just so they can please a client, more so over mere cigarettes. In Principio v. Hon.
Barrientos,45 we said:
Bad faith is never presumed while good faith is always presumed and the chapter on Human Relations of the Civil Code directs every
person, inter alia, to observe good faith, which springs from the fountain of good conscience. Therefore, he who claims bad faith must prove
it. For one to be in bad faith, the same must be "evident." x x x.46
The prosecution witnesses, contrary to Gemma’s claim, had positively identified her as the person who initially refused the search team
entrance, then later acquiesced to the search operations. Slagle explained that even though he mentioned Gemma only in his amended
affidavit, he was sure that she was at the subject premises on the day that they searched it:
Testimony of Roger Sherman Slagle
ATTY. MAGLINAO:
Q In this amended affidavit you mentioned the name, Gemma Catacutan as one of the accused?
A Yes sir.
Q Can you tell the court how you were able to include the name of Gemma Catacutan in your amended affidavit, when in fact it did not
appear in the first affidavit?
A When we arrived she was there and she was very nervous and upset.
xxxx
A It is very clear to me when I arrived there that she was somehow involved.47 (Emphases ours.)
Lara on the other hand, even pointed to her and thus positively identified her to be the one who had signed the search documents,48 as the
owner of the subject premises, to wit:
Testimony of Jesse Lara
ATTY. FREZ
Q : Mr. Witness, do you know this person who wrote the name Gemma Ong?
A : Yes, sir, Gemma Ong is the owner of the premises when we served the search warrant and also, she was the one who refused us to
gain entry during the service of the search warrant.
Q : Were you able to gain entry at the premises?
A : Yes, sir.
Q : So, as regard to the person whom you identify as the one who refused you to gain entry, would you be able to identify this person?
A : Yes, sir, that lady in pink is Mrs. Gemma Ong.
(As witness is pointing to the accused Gemma Ong).
Q : Mr. Witness, why do you say that the person whom you pointed to us is the one who wrote the name Mrs. Gemma Ong?
WITNESS
Because when we served the search warrant she signed it in our presence and that is her own signature.
xxxx
ATTY. FREZ
Q : So, Mr. Witness, in this Inventory, we made some markings during the pre-trial conference and I see here above the signature
(Owner/Representative), there exist a handwritten name which reads GEMMA ONG and above it, there exist a signature, are you familiar
with this person which appears to be Gemma Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
Q : Your Honor, during the pre-trial conference, it was previously marked as Exhibit "D-1". Mr. Witness, I also see here a Verification but
there also exist an entry below the name and I quote "Owner/Claimant/Representative", there appears a handwritten name Gemma Ong
and a signature above it, are you familiar with this person which appears to be Gemma Ong?
A : Yes, sir, Gemma Ong signed that in my presence.
xxxx
Q : Mr. Witness, in this document which is the certification in the Conduct of Search and I have here above the entry
(Owner/Representative), a handwritten name which reads Gemma Ong and there exist a signature above the handwritten name, can you
identify the signature?
A : Yes, sir, this was signed by Gemma Ong in my presence.49 (Emphases ours.)
Lara further attested to the fact that the search warrant was served on Gemma, who later on entertained the search team:
ATTY. FREZ
Mr. Witness, the person to whom you served the search warrant is identified as Mrs. Gemma Ong, do you know her relationship with the
accused Jackson Ong?
ATTY. FERNANDEZ
Objection, your honor, the witness would be incompetent . . .
COURT
May answer.
(The stenographer read back the question).
WITNESS
I am not familiar with the relationship of Mrs. Gemma Ong with Jackson Ong because during the service of the search warrant, Mrs.
Gemma Ong was there together with two employees and when I asked where was Jackson Ong, she was the one who entertained us.
ATTY. FREZ
So, the search warrant was served against Gemma Ong?
WITNESS
Yes, Sir.50
Positive identification of a culprit is of great weight in determining whether an accused is guilty or not.51 Gemma, in claiming the defense of
mistaken identity, is in reality denying her involvement in the crime. This Court has held that the defense of denial is insipid and weak as it
is easy to fabricate and difficult to prove; thus, it cannot take precedence over the positive testimony of the offended party.52 The defense of
denial is unavailing when placed astride the undisputed fact that there was positive identification of the accused.53
While Gemma claims she does not know Jackson Ong, the subject premises where the counterfeit cigarettes were seized was registered
under her admitted business "Fascinate Trading."54 Aside from the bare allegation that she had stopped operations in the subject premises
as early as February 1998, she has neither proven nor shown any evidence that she had relinquished control of the building after that date.
Gemma’s allegation that she did not sign the search documents, and that the signatures therein did not match the signature on her PRC
identification card, must also be struck down as she has not shown proof that her PRC signature is the only way she has ever signed her
name. She could have, at the very least, gotten a handwriting expert to testify on her behalf that there is no way that the signatures in the
search documents and the signature on her PRC identification card could have been written by one and the same person; instead, she
relied on the flimsy contention that the two signatures were, on their face, different. 1awp++i1

Gemma’s defense consists of her claim of mistaken identity, her denial of her involvement in the crime, and her accusation against the
prosecution witnesses of allegedly giving false testimonies and committing perjury. These are all weak, unproven, and unfounded claims,
and will not stand against the strong evidence against her.
WHEREFORE, this Court DENIES the Petition. The June 16, 2005 Decision of the Court of Appeals in CA-G.R. CR No. 28308 is
AFFIRMED.
SO ORDERED.

15. G.R. No. 194062               June 17, 2013

REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N. TY, ORLANDO REYES, FERRER SUAZO and ALVIN U.
TV, Petitioners, 
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and SHELL INTERNATIONAL PETROLEUM COMPANY
LIMITED, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioners seeking the reversal of the
Decision1 dated July 2, 2010, and Resolution2 dated October 11, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 106385.

Stripped of non-essentials, the facts of the case, as summarized by the CA, are as follows:

Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum Corporation ("Shell" for brevity) are two of the largest
bulk suppliers and producers of LPG in the Philippines. Petron is the registered owner in the Philippines of the trademarks GASUL and
GASUL cylinders used for its LGP products. It is the sole entity in the Philippines authorized to allow refillers and distributors to refill, use,
sell, and distribute GASUL LPG containers, products and its trademarks.

Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the tradename, trademarks, symbols or designs of its
principal, Shell International Petroleum Company Limited, including the marks SHELLANE and SHELL device in connection with the
production, sale and distribution of SHELLANE LPGs. It is the only corporation in the Philippines authorized to allow refillers and
distributors to refill, use, sell and distribute SHELLANE LGP containers and products. Private respondents, on the other hand, are the
directors and officers of Republic Gas Corporation ("REGASCO" for brevity), an entity duly licensed to engage in, conduct and carry on, the
business of refilling, buying, selling, distributing and marketing at wholesale and retail of Liquefied Petroleum Gas ("LPG").
LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul Dealers Association, Inc. and Totalgaz Dealers
Association, received reports that certain entities were engaged in the unauthorized refilling, sale and distribution of LPG cylinders bearing
the registered tradenames and trademarks of the petitioners. As a consequence, on February 5, 2004, Genesis Adarlo (hereinafter referred
to as Adarlo), on behalf of the aforementioned dealers associations, filed a letter-complaint in the National Bureau of Investigation ("NBI")
regarding the alleged illegal trading of petroleum products and/or underdelivery or underfilling in the sale of LPG products.

Acting on the said letter-complaint, NBI Senior Agent Marvin E. De Jemil (hereinafter referred to as "De Jemil") was assigned to verify and
confirm the allegations contained in the letter-complaint. An investigation was thereafter conducted, particularly within the areas of
Caloocan, Malabon, Novaliches and Valenzuela, which showed that several persons and/or establishments, including REGASCO, were
suspected of having violated provisions of Batas Pambansa Blg. 33 (B.P. 33). The surveillance revealed that REGASCO LPG Refilling
Plant in Malabon was engaged in the refilling and sale of LPG cylinders bearing the registered marks of the petitioners without authority
from the latter. Based on its General Information Sheet filed in the Securities and Exchange Commission, REGASCO’s members of its
Board of Directors are: (1) Arnel U. Ty – President, (2) Marie Antoinette Ty – Treasurer, (3) Orlando Reyes – Corporate Secretary, (4)
Ferrer Suazo and (5) Alvin Ty (hereinafter referred to collectively as private respondents).

De Jemil, with other NBI operatives, then conducted a test-buy operation on February 19, 2004 with the former and a confidential asset
going undercover. They brought with them four (4) empty LPG cylinders bearing the trademarks of SHELLANE and GASUL and included
the same with the purchase of J&S, a REGASCO’s regular customer. Inside REGASCO’s refilling plant, they witnessed that REGASCO’s
employees carried the empty LPG cylinders to a refilling station and refilled the LPG empty cylinders. Money was then given as payment for
the refilling of the J&S’s empty cylinders which included the four LPG cylinders brought in by De Jemil and his companion. Cash Invoice
No. 191391 dated February 19, 2004 was issued as evidence for the consideration paid.

After leaving the premises of REGASCO LPG Refilling Plant in Malabon, De Jemil and the other NBI operatives proceeded to the NBI
headquarters for the proper marking of the LPG cylinders. The LPG cylinders refilled by REGASCO were likewise found later to be
underrefilled.

Thus, on March 5, 2004, De Jemil applied for the issuance of search warrants in the Regional Trial Court, Branch 24, in the City of Manila
against the private respondents and/or occupants of REGASCO LPG Refilling Plant located at Asucena Street, Longos, Malabon, Metro
Manila for alleged violation of Section 2 (c), in relation to Section 4, of B.P. 33, as amended by PD 1865. In his sworn affidavit attached to
the applications for search warrants, Agent De Jemil alleged as follows:

"x x x.

"4. Respondent’s REGASCO LPG Refilling Plant-Malabon is not one of those entities authorized to refill LPG
cylinders bearing the marks of PSPC, Petron and Total Philippines Corporation. A Certification dated February 6,
2004 confirming such fact, together with its supporting documents, are attached as Annex "E" hereof.

6. For several days in the month of February 2004, the other NBI operatives and I conducted surveillance and
investigation on respondents’ REGASCO LPG refilling Plant-Malabon. Our surveillance and investigation revealed
that respondents’ REGASCO LPG Refilling Plant-Malabon is engaged in the refilling and sale of LPG cylinders
bearing the marks of Shell International, PSPC and Petron.

x x x.

8. The confidential asset and I, together with the other operatives of the NBI, put together a test-buy operation. On
February 19, 2004, I, together with the confidential asset, went undercover and executed our testbuy operation.
Both the confidential assets and I brought with us four (4) empty LPG cylinders branded as Shellane and Gasul. x x
x in order to have a successful test buy, we decided to "ride-on" our purchases with the purchase of Gasul and
Shellane LPG by J & S, one of REGASCO’s regular customers.

9. We proceeded to the location of respondents’ REGASCO LPG Refilling Plant-Malabon and asked from an
employee of REGASCO inside the refilling plant for refill of the empty LPG cylinders that we have brought along,
together with the LPG cylinders brought by J & S. The REGASCO employee, with some assistance from other
employees, carried the empty LPG cylinders to a refilling station and we witnessed the actual refilling of our empty
LPG cylinders.

10. Since the REGASCO employees were under the impression that we were together with J & S, they made the
necessary refilling of our empty LPG cylinders alongside the LPG cylinders brought by J & S. When we requested
for a receipt, the REGASCO employees naturally counted our LPG cylinders together with the LPG cylinders
brought by J & S for refilling. Hence, the amount stated in Cash Invoice No. 191391 dated February 19, 2004,
equivalent to Sixteen Thousand Two Hundred Eighty-Six and 40/100 (Php16,286.40), necessarily included the
amount for the refilling of our four (4) empty LPG cylinders. x x x.

11. After we accomplished the purchase of the illegally refilled LPG cylinders from respondents’ REGASCO LPG
Refilling Plant-Malabon, we left its premises bringing with us the said LPG cylinders. Immediately, we proceeded to
our headquarters and made the proper markings of the illegally refilled LPG cylinders purchased from respondents’
REGASCO LPG Refilling Plant-Malabon by indicating therein where and when they were purchased. Since
REGASCO is not an authorized refiller, the four (4) LPG cylinders illegally refilled by respondents’ REGASCO LPG
Refilling Plant-Malabon, were without any seals, and when weighed, were underrefilled. Photographs of the LPG
cylinders illegally refilled from respondents’ REGASCO LPG Refilling Plant-Malabon are attached as Annex "G"
hereof. x x x."
After conducting a personal examination under oath of Agent De Jemil and his witness, Joel Cruz, and upon reviewing their sworn affidavits
and other attached documents, Judge Antonio M. Eugenio, Presiding Judge of the RTC, Branch 24, in the City of Manila found probable
cause and correspondingly issued Search Warrants Nos. 04-5049 and 04-5050.
Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and other NBI operatives immediately proceeded
to the REGASCO LPG Refilling Station in Malabon and served the search warrants on the private respondents. After searching the
premises of REGASCO, they were able to seize several empty and filled Shellane and Gasul cylinders as well as other allied
paraphernalia.
Subsequently, on January 28, 2005, the NBI lodged a complaint in the Department of Justice against the private respondents for alleged
violations of Sections 155 and 168 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the Philippines.
On January 15, 2006, Assistant City Prosecutor Armando C. Velasco recommended the dismissal of the complaint. The prosecutor found
that there was no proof introduced by the petitioners that would show that private respondent REGASCO was engaged in selling
petitioner’s products or that it imitated and reproduced the registered trademarks of the petitioners. He further held that he saw no
deception on the part of REGASCO in the conduct of its business of refilling and marketing LPG. The Resolution issued by Assistant City
Prosecutor Velasco reads as follows in its dispositive portion:
"WHEREFORE, foregoing considered, the undersigned finds the evidence against the respondents to be insufficient to form a well-founded
belief that they have probably committed violations of Republic Act No. 9293. The DISMISSAL of this case is hereby respectfully
recommended for insufficiency of evidence."
On appeal, the Secretary of the Department of Justice affirmed the prosecutor’s dismissal of the complaint in a Resolution dated
September 18, 2008, reasoning therein that:
"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent specifically for refilling. Refilling the same empty
cylinders is by no means an offense in itself – it being the legitimate business of Regasco to engage in the refilling and marketing of
liquefied petroleum gas. In other words, the empty cylinders were merely filled by the employees of Regasco because they were brought
precisely for that purpose. They did not pass off the goods as those of complainants’ as no other act was done other than to refill them in
the normal course of its business.
"In some instances, the empty cylinders were merely swapped by customers for those which are already filled. In this case, the end-users
know fully well that the contents of their cylinders are not those produced by complainants. And the reason is quite simple – it is an
independent refilling station.
"At any rate, it is settled doctrine that a corporation has a personality separate and distinct from its stockholders as in the case of herein
respondents. To sustain the present allegations, the acts complained of must be shown to have been committed by respondents in their
individual capacity by clear and convincing evidence. There being none, the complaint must necessarily fail. As it were, some of the
respondents are even gainfully employed in other business pursuits. x x x."3
Dispensing with the filing of a motion for reconsideration, respondents sought recourse to the CA through a petition for certiorari.
In a Decision dated July 2, 2010, the CA granted respondents’ certiorari petition. The fallo states:
WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby GRANTED. The assailed Resolution dated
September 18, 2008 of the Department of Justice in I.S. No. 2005-055 is hereby REVERSED and SET ASIDE.
SO ORDERED.4
Petitioners then filed a motion for reconsideration. However, the same was denied by the CA in a Resolution dated October 11, 2010.
Accordingly, petitioners filed the instant Petition for Review on Certiorari raising the following issues for our resolution:
Whether the Petition for Certiorari filed by RESPONDENTS should have been denied outright.
Whether sufficient evidence was presented to prove that the crimes of Trademark Infringement and Unfair Competition as defined and
penalized in Section 155 and Section 168 in relation to Section 170 of Republic Act No. 8293 (The Intellectual Property Code of the
Philippines) had been committed.
Whether probable cause exists to hold INDIVIDUAL PETITIONERS liable for the offense charged.5
Let us discuss the issues in seriatim.
Anent the first issue, the general rule is that a motion for reconsideration is a condition sine qua non before a certiorari petition may lie, its
purpose being to grant an opportunity for the court a quo to correct any error attributed to it by re-examination of the legal and factual
circumstances of the case.6
However, this rule is not absolute as jurisprudence has laid down several recognized exceptions permitting a resort to the special civil
action for certiorari without first filing a motion for reconsideration, viz.:
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are
the same as those raised and passed upon in the lower court.
(c) Where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of
the Government or of the petitioner or the subject matter of the petition is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is
improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to object; and,
(i) Where the issue raised is one purely of law or public interest is involved.7
In the present case, the filing of a motion for reconsideration may already be dispensed with considering that the questions raised in this
petition are the same as those that have already been squarely argued and passed upon by the Secretary of Justice in her assailed
resolution.
Apropos the second and third issues, the same may be simplified to one core issue: whether probable cause exists to hold petitioners liable
for the crimes of trademark infringement and unfair competition as defined and penalized under Sections 155 and 168, in relation to Section
170 of Republic Act (R.A.) No. 8293.
Section 155 of R.A. No. 8293 identifies the acts constituting trademark infringement as follows:
Section 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:
155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark of the same container or a dominant
feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory
steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; or
155.2 Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in
Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing
material.8
From the foregoing provision, the Court in a very similar case, made it categorically clear that the mere unauthorized use of a container
bearing a registered trademark in connection with the sale, distribution or advertising of goods or services which is likely to cause
confusion, mistake or deception among the buyers or consumers can be considered as trademark infringement.9
Here, petitioners have actually committed trademark infringement when they refilled, without the respondents’ consent, the LPG containers
bearing the registered marks of the respondents. As noted by respondents, petitioners’ acts will inevitably confuse the consuming public,
since they have no way of knowing that the gas contained in the LPG tanks bearing respondents’ marks is in reality not the latter’s LPG
product after the same had been illegally refilled. The public will then be led to believe that petitioners are authorized refillers and
distributors of respondents’ LPG products, considering that they are accepting empty containers of respondents and refilling them for
resale.
As to the charge of unfair competition, Section 168.3, in relation to Section 170, of R.A. No. 8293 describes the acts constituting unfair
competition as follows:
Section 168. Unfair Competition, Rights, Regulations and Remedies. x x x.
168.3 In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of
unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or
dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such
goods with a like purpose;
xxxx
Section 170. Penalties. Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two
(2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be
imposed on any person who is found guilty of committing any of the acts mentioned in Section 155, Section 168 and Subsection 169.1.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the public of the
goods or business of one person as the goods or business of another with the end and probable effect of deceiving the public.10
Passing off (or palming off) takes place where the defendant, by imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the impression that they are buying that of his competitors. Thus, the defendant
gives his goods the general appearance of the goods of his competitor with the intention of deceiving the public that the goods are those of
his competitor.11
In the present case, respondents pertinently observed that by refilling and selling LPG cylinders bearing their registered marks, petitioners
are selling goods by giving them the general appearance of goods of another manufacturer.
What's more, the CA correctly pointed out that there is a showing that the consumers may be misled into believing that the LPGs contained
in the cylinders bearing the marks "GASUL" and "SHELLANE" are those goods or products of the petitioners when, in fact, they are not.
Obviously, the mere use of those LPG cylinders bearing the trademarks "GASUL" and "SHELLANE" will give the LPGs sold by REGASCO
the general appearance of the products of the petitioners.
In sum, this Court finds that there is sufficient evidence to warrant the prosecution of petitioners for trademark infringement and unfair
competition, considering that petitioner Republic Gas Corporation, being a corporation, possesses a personality separate and distinct from
the person of its officers, directors and stockholders.12Petitioners, being corporate officers and/or directors, through whose act, default or
omission the corporation commits a crime, may themselves be individually held answerable for the crime.13 Veritably, the CA appropriately
pointed out that petitioners, being in direct control and supervision in the management and conduct of the affairs of the corporation, must
have known or are aware that the corporation is engaged in the act of refilling LPG cylinders bearing the marks of the respondents without
authority or consent from the latter which, under the circumstances, could probably constitute the crimes of trademark infringement and
unfair competition. The existence of the corporate entity does not shield from prosecution the corporate agent who knowingly and
intentionally caused the corporation to commit a crime. Thus, petitioners cannot hide behind the cloak of the separate corporate personality
of the corporation to escape criminal liability. A corporate officer cannot protect himself behind a corporation where he is the actual, present
and efficient actor.14
WHEREFORE, premises considered, the petition is hereby DENIED and the Decision dated July 2, 2010 and Resolution dated October 11,
2010 of the Court of Appeals in CA-G.R. SP No. 106385 are AFFIRMED.
SO ORDERED.

16. G.R. No. 188526               November 11, 2013

CENTURY CHINESE MEDICINE CO., MING SENG CHINESE DRUGSTORE, XIANG JIAN CHINESE DRUG STORE, TEK SAN
CHINESE DRUG STORE, SIM SIM CHINESE DRUG STORE, BAN SHIONG TAY CHINESE DRUG STORE and/or WILCENDO TAN
MENDEZ, SHUANG YING CHINESE DRUGSTORE, and BACLARAN CHINESE DRUG STORE, Petitioners, 
vs.
PEOPLE OF THE PHILIPPINES and LING NA LAU, Respondents.

DECISION

PERALTA, J.:

Before us is a petition for review on certiorari which seeks to reverse and set aside the Decision  dated March 31, 2009 of the Court of
1

Appeals in CA-G.R. CV No. 88952 and the Resolution  dated July 2, 2009, which denied reconsideration thereof. The CA reversed the
2

Order  dated September 25, 2006 of the Regional Trial Court (RTC), Branch 143, Makati City, quashing Search Warrants Nos. 05-030, 05-
3

033, 05-038, 05-022, 05-023, 05-025, 05-042 and 05-043, and the Order  dated March 7, 2007 denying reconsideration thereof.
4

The antecedent facts are as follows:

Respondent Ling Na Lau, doing business under the name and style Worldwide Pharmacy,  is the sole distributor and registered trademark
5

owner of TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap as shown by Certificate of Registration 4-2000-009881 issued to
her by the Intellectual Property Office (IPO) for a period of ten years from August 24, 2003.  On November 7, 2005, her representative, Ping
6

Na Lau, (Ping) wrote a letter addressed to National Bureau of Investigation (NBI) Director Reynaldo Wycoco, through Atty. Jose Justo Yap
7
and Agent Joseph G. Furing (Agent Furing), requesting assistance for an investigation on several drugstores which were selling counterfeit
whitening papaya soaps bearing the general appearance of their products.

Agent Furing was assigned to the case and he executed an affidavit  stating that: he conducted his own investigation, and on November 9
8

and 10, 2005, he, together with Junayd Esmael (Esmael), were able to buy whitening soaps bearing the trademark "TOP-GEL", "T.G." &
"DEVICE OF A LEAF" with corresponding receipts from a list of drugstores which included herein petitioners Century Chinese Medicine
Co., Min Seng Chinese Drugstore, Xiang Jiang Chinese Drug Store, Tek San Chinese Drug Store, Sim Sim Chinese Drug Store, Ban
Shiong Tay Drugstore, Shuang Ying Chinese Drugstore, and Baclaran Chinese Drug Store; while conducting the investigation and test
buys, he was able to confirm Ping's complaint to be true as he personally saw commercial quantities of whitening soap bearing the said
trademarks being displayed and offered for sale at the said drugstores; he and Esmael took the purchased items to the NBI, and Ping, as
the authorized representative and expert of Worldwide Pharmacy in determining counterfeit and unauthorized reproductions of its products,
personally examined the purchased samples, and issued a Certification  dated November 18, 2005 wherein he confirmed that, indeed, the
9

whitening soaps bearing the trademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" from the subject drugstores were counterfeit.

Esmael also executed an affidavit  corroborating Agent Furing's statement. Ping's affidavit  stated that upon his personal examination of
10 11

the whitening soaps purchased from petitioners bearing the subject trademark, he found that the whitening soaps were different from the
genuine quality of their original whitening soaps with the trademarks "TOP-GEL", "T.G." & "DEVICE OF A LEAF" and certified that they
were all counterfeit.

On November 21, 2005, Agent Furing applied for the issuance of search warrants before the Regional Trial Court (RTC), Branch 143,
Makati City, against petitioners and other establishments for violations of Sections 168 and 155, both in relation to Section 170 of Republic
Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the Philippines. Section 168, in relation to Section 170, penalizes
unfair competition; while Section 155, in relation to Section 170, punishes trademark infringement.

On November 23, 2005, after conducting searching questions upon Agent Furing and his witnesses, the RTC granted the applications and
issued Search Warrants Nos. 05-030, 05-033, and 05-038 for unfair competition and Search Warrants Nos. 05-022, 05-023, 05-025, 05-
042 and 05-043 for trademark infringement against petitioners.

On December 5, 2005, Agent Furing filed his Consolidated Return of Search Warrants. 12

On December 8, 2005, petitioners collectively filed their Motion to Quash  the Search Warrants contending that their issuances violated the
13

rule against forum shopping; that Benjamin Yu (Yu) is the sole owner and distributor of the product known as "TOP-GEL"; and there was a
prejudicial question posed in Civil Case No. 05-54747 entitled Zenna Chemical Industry v. Ling Na Lau, et al., pending in Branch 93 of the
RTC of Quezon City, which is a case filed by Yu against respondent for damages due to infringement of trademark/tradename, unfair
competition with prayer for the immediate issuance of a temporary restraining order and/or preliminary prohibitory injunction.

On January 9, 2006, respondent filed her Comment/Opposition  thereto arguing the non-existence of forum shopping; that Yu is not a
14

party- respondent in these cases and the pendency of the civil case filed by him is immaterial and irrelevant; and that Yu cannot be
considered the sole owner and distributor of "TOP GEL T.G. & DEVICE OF A LEAF." The motion was then submitted for resolution in an
Order dated January 30, 2006. During the pendency of the case, respondent, on April 20, 2006, filed a Submission  in relation to the Motion
15

to Quash attaching an Order  dated March 21, 2006 of the IPO in IPV Case No. 10-2005-00001 filed by respondent against Yu, doing
16

business under the name and style of MCA Manufacturing and Heidi S. Cua, proprietor of South Ocean Chinese Drug Stores for trademark
infringement and/or unfair competition and damages with prayer for preliminary injunction. The Order approved therein the parties' Joint
Motion To Approve Compromise Agreement filed on March 8, 2006. We quote in its entirety the Order as follows:

The Compromise Agreement between the herein complainant and respondents provides as follows:

1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. & DEVICE OF A LEAF for
use on papaya whitening soap as registered under Registration No. 4-2000-009881 issued on August 24, 2003.

2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as the exclusive Philippine
distributor of its products under the tradename and trademark TOP GEL MCA & MCA DEVICE (A SQUARE DEVICE
CONSISTING OF A STYLIZED REPRESENTATION OF A LETTER "M" ISSUED " OVER THE LETTER "CA") as registered
under Registration No. 4-1996-109957 issued on November 17, 2000, as well as the assignment by Zenna Chemical Industry
Co., Ltd. to Complainant of said mark for use on papaya whitening soap.

3. Respondents admit having used the tradename and trademark aforesaid but after having realized that Complainant is the
legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of TOP GEL T.G. & DEVICE OF A LEAF, now
undertake to voluntarily cease and desist from using the aforesaid tradename and trademark and further undertake not to
manufacture, sell, distribute, and otherwise compete with Complainant, now and at anytime in the future, any papaya whitening
soap using or bearing a mark or name identical or confusingly similar to, or constituting a colorable imitation of, the tradename
and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and described
above.

4. Respondents further undertake to withdraw and/or dismiss their counterclaim and petition to cancel and/or revoke
Registration No. 4-2000-009881 issued to Complainant. Respondents also further undertake to pull out within 45 days from
approval of the Compromise Agreement all their products bearing a mark or name identical or confusingly similar to, or
constituting a colorable imitation of, the tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. &
DEVICE OF A LEAF, from the market nationwide.
 5. Respondents finally agree and undertake to pay Complainant liquidated damages in the amount of FIVE HUNDRED
THOUSAND (Php500,000.00) PESOS for every breach or violation of any of the foregoing undertakings which complainant may
enforce by securing a writ of execution from this Office, under this case.

6. Complainant, on the other hand, agrees to waive all her claim for damages against Respondents as alleged in her complaint
filed in the Intellectual Property Office only.

7. The Parties hereby agree to submit this Compromise Agreement for Approval of this Office and pray for issuance of a
decision on the basis thereof.

Finding the Compromise Agreement to have been duly executed and signed by the parties and/or their representatives/counsels and the
terms and conditions thereof to be in conformity with the law, morals, good customs, public order and public policy, the same is hereby
APPROVED. Accordingly, the above-entitled case is DISMISSED as all issues raised concerning herein parties have been rendered MOOT
AND ACADEMIC.

SO ORDERED. 17

On September 25, 2006, the RTC issued its Order  sustaining the Motion to Quash the Search Warrants, the dispositive portion of which
18

reads as follows:

WHEREFORE, finding that the issuance of the questioned search warrants were not supported by probable cause, the Motion to Quash is
GRANTED. Search warrants nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043 are ordered lifted and recalled.

The NBI Officers who effected the search warrants are hereby ordered to return the seized items to herein respondents within ten (10) days
from receipt of this Order.

So Ordered. 19

In quashing the search warrants, the RTC applied the Rules on Search and Seizure for Civil Action in Infringement of Intellectual Property
Rights.  It found the existence of a prejudicial question which was pending before Branch 93 of RTC Quezon City, docketed as Civil Case
20

No. 05-54747, on the determination as to who between respondent and Yu is the rightful holder of the intellectual property right over the
trademark TOP GEL T.G. & DEVICE OF A LEAF; and there was also a case for trademark infringement and/or unfair competition filed by
respondent against Yu before the IPO which was pending at the time of the application for the search warrants. It is clear, therefore, that at
the time of the filing of the application for the search warrants, there is yet no determination of the alleged right of respondent over the
subject trademark/tradename. Also, the RTC found that petitioners relied heavily on Yu's representation that he is the sole owner/distributor
of the Top Gel whitening soap, as the latter even presented Registration No. 4-1996-109957 from the IPO for a term of 20 years from
November 17, 2000 covering the same product. There too was the notarized certification from Zenna Chemical Industry of Taiwan, owner
of Top Gel MCA, with the caveat that the sale, production or representation of any imitated products under its trademark and tradename
shall be dealt with appropriate legal action.

The RTC further said that in the determination of probable cause, the court must necessarily resolve whether or not an offense exists to
justify the issuance of a search warrant or the quashal of the one already issued. In this case, respondent failed to prove the existence of
probable cause, which warranted the quashal of the questioned search warrants.

On November 13, 2006, respondent filed an Urgent Motion to Hold in Abeyance the Release of Seized Evidence. 21

Respondent filed a motion for reconsideration, which the RTC denied in its Order  dated March 7, 2007.
22

Respondent then filed her appeal with the CA. After respondent filed her appellant's brief and petitioners their appellee's brief, the case was
submitted for decision.

On March 31, 2009, the CA rendered its assailed Decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the appeal filed in this case and
SETTING ASIDE the Order dated March 7, 2007 issued by Branch 143 of the Regional Trial Court of the National Capital Judicial Region
stationed in Makati City in the case involving Search Warrants Nos. 05-030, 05-033, 05-038, 05-022, 05-023, 05-025, 05-042, 05-043. 23

In reversing the RTC's quashal of the search warrants, the CA found that the search warrants were applied for and issued for violations of
Sections 155 and 168, in relation to Section 170, of the Intellectual Property Code and that the applications for the search warrants were in
anticipation of criminal actions which are to be instituted against petitioners; thus, Rule 126 of the Rules of Criminal Procedure was
applicable. It also ruled that the basis for the applications for issuance of the search warrants on grounds of trademarks infringement and
unfair competition was the trademark TOP GEL T.G. & DEVICE OF A LEAF; that respondent was the registered owner of the said
trademark, which gave her the right to enforce and protect her intellectual property rights over it by seeking assistance from the NBI.

The CA did not agree with the RTC that there existed a prejudicial question, since Civil Case No. 05-54747 was already dismissed on June
10, 2005, i.e., long before the search warrants subject of this appeal were applied for; and that Yu's motion for reconsideration was denied
on September 15, 2005 with no appeal having been filed thereon as evidenced by the Certificate of Finality issued by the said court.
Petitioners' motion for reconsideration was denied by the CA in a Resolution dated July 2, 2009. Hence, this petition filed by petitioners
raising the issue that:

(A) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN REVERSING THE FINDINGS OF THE
REGIONAL TRIAL COURT AND HELD THAT THE LATTER APPLIED THE RULES ON SEARCH AND SEIZURE IN CIVIL
ACTIONS FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS. 24

(B) THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT BASED ITS RULING ON THE
ARGUMENT WHICH WAS BROUGHT UP FOR THE FIRST TIME IN RESPONDENT LING NA LAU'S APPELLANT'S BRIEF. 25

Petitioners contend that the products seized from their respective stores cannot be the subject of the search warrants and seizure as those
Top Gel products are not fruits of any crime, infringed product nor intended to be used in any crime; that they are legitimate distributors who
are authorized to sell the same, since those genuine top gel products bore the original trademark/tradename of TOP GEL MCA, owned and
distributed by Yu. Petitioners also claim that despite the RTC's order to release the seized TOP GEL products, not one had been returned;
that one or two samples from each petitioner’s' drugstore would have sufficed in case there is a need to present them in a criminal
prosecution, and that confiscation of thousands of these products was an overkill.

Petitioners also argue that the issue that the RTC erred in applying the rules on search and seizure in anticipation of a civil action was
never raised in the RTC.

The issue for resolution is whether or not the CA erred in reversing the RTC's quashal of the assailed search warrants.

We find no merit in the petition.

The applications for the issuance of the assailed search warrants were for violations of Sections 155 and 168, both in relation to Section
170 of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the Philippines. Section 155, in relation to Section
170, punishes trademark infringement; while Section 168, in relation to Section 170, penalizes unfair competition, to wit:

Sec 155. Remedies; Infringement. – Any person who shall, without the consent of the owner of the registered mark:

155.1 Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark or the same container or a dominant
feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory
steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; or

While

Sec. 168. Unfair Competition, Rights, Regulation and Remedies. –

xxxx

168.3. In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty
of unfair competition:

(a) Any person, who is selling his goods and gives them the general appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or
dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public
and defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in selling such
goods with a like purpose;

And

SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two
(2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00) shall
be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair
Competition] and Subsection 169.1 [False Designation of Origin and False Description or Representation].

Thus, we agree with the CA that A.M. No. 02-1-06-SC, which provides for the Rules on the Issuance of the Search and Seizure in Civil
Actions for Infringement of Intellectual Property Rights, is not applicable in this case as the search warrants were not applied based
thereon, but in anticipation of criminal actions for violation of intellectual property rights under RA 8293. It was established that respondent
had asked the NBI for assistance to conduct investigation and search warrant implementation for possible apprehension of several
drugstore owners selling imitation or counterfeit TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap. Also, in his affidavit to
support his application for the issuance of the search warrants, NBI Agent Furing stated that "the items to be seized will be used as relevant
evidence in the criminal actions that are likely to be instituted." Hence, Rule 126 of the Rules of Criminal Procedure applies.

Rule 126 of the Revised Rules of Court, which governs the issuance of the assailed Search Warrants, provides, to wit:
SEC. 3. Personal property to be seized. - A search warrant may be issued for the search and seizure of personal property:

(a) Subject of the offense;

(b) Stolen or embezzled and other proceeds or fruits of the offense; or

(c) Used or intended to be used as the means of committing an offense.

SEC. 4. Requisites for issuing search warrant. - A search warrant shall not issue except upon probable cause in connection with one
specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the things to be seized which may be anywhere in the
Philippines.

SEC. 5. Examination of complainant; record. - The judge must, before issuing the warrant, personally examine in the form of searching
questions and answers, in writing and under oath, the complainant and the witnesses he may produce on facts personally known to them
and attach to the record their sworn statements together with the affidavits submitted.

A core requisite before a warrant shall validly issue is the existence of a probable cause, meaning "the existence of such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects
sought in connection with the offense are in the place to be searched." And when the law speaks of facts, the reference is to facts, data or
26

information personally known to the applicant and the witnesses he may present. Absent the element of personal knowledge by the
applicant or his witnesses of the facts upon which the issuance of a search warrant may be justified, the warrant is deemed not based on
probable cause and is a nullity, its issuance being, in legal contemplation, arbitrary.  The determination of probable cause does not call for
27

the application of rules and standards of proof that a judgment of conviction requires after trial on the merits.  As implied by the words
28

themselves, "probable cause" is concerned with probability, not absolute or even moral certainty. The prosecution need not present at this
stage proof beyond reasonable doubt. The standards of judgment are those of a reasonably prudent man,  not the exacting calibrations of
29

a judge after a full-blown trial.

30

The RTC quashed the search warrants, saying that (1) there exists a prejudicial question pending before Branch 93 of the RTC of Quezon
City, docketed as Civil Case No. 05-54747, i.e., the determination as to who between respondent and Yu is the rightful holder of the
intellectual property right over the trademark TOP GEL T.G. & DEVICE OF A LEAF; and there was also a case for trademark infringement
and/or unfair competition filed by respondent against Yu pending before the IPO, docketed as IPV Case No. 10-2005-00001; and (2) Yu's
representation that he is the sole distributor of the Top Gel whitening soap, as the latter even presented Registration No. 4-1996-109957
issued by the IPO to Zenna Chemical Industry as the registered owner of the trademark TOP GEL MCA & DEVICE MCA for a term of 20
years from November 17, 2000 covering the same product.

We do not agree. We affirm the CA's reversal of the RTC Order quashing the search warrants.

The affidavits of NBI Agent Furing and his witnesses, Esmael and Ling, clearly showed that they are seeking protection for the trademark
"TOP GEL T.G. and DEVICE OF A LEAF" registered to respondent under Certificate of Registration 4-2000-009881 issued by the IPO on
August 24, 2003, and no other. While petitioners claim that the product they are distributing was owned by Yu with the trademark TOP GEL
MCA and MCA DEVISE under Certificate of Registration 4-1996-109957, it was different from the trademark TOP GEL T.G. and DEVICE
OF A LEAF subject of the application. We agree with the CA's finding in this wise:

x x x It bears stressing that the basis for the applications for issuances of the search warrants on grounds of trademark infringement and
unfair competition is the trademark TOP GEL T.G. & DEVICE OF A LEAF. Private complainant-appellant was issued a Certificate of
Registration No. 4-2000-009881 of said trademark on August 24, 2003 by the Intellectual Property Office, and is thus considered the lawful
holder of the said trademark. Being the registrant and the holder of the same, private complainant-appellant had the authority to enforce
and protect her intellectual property rights over it. This prompted her to request for assistance from the agents of the NBI, who thereafter
conducted a series of investigation, test buys and inspection regarding the alleged trademark infringement by herein respondents-
appellees. Subsequently, Ping Na Lau, private complainant-appellant’s representative, issued a certification with the finding that the
examined goods were counterfeit. This prompted the NBI agents to apply for the issuances of search warrants against the respondents-
appellees. Said applications for the search warrants were granted after by Judge Laguilles after examining under oath the applicant Agent
Furing of the NBI and his witnesses Ping Na Lau and Junayd R. Ismael.

Based on the foregoing, it is clear that the requisites for the issuance of the search warrants had been complied with and that there is
probable cause to believe that an offense had been committed and that the objects sought in connection with the offense were in the places
to be searched. The offense pertains to the alleged violations committed by respondents-appellees upon the intellectual property rights of
herein private complainant-appellant, as holder of the trademark TOP GEL T.G. & DEVICE OF A LEAF under Certificate of Registration No.
4-2000-009881, issued on August 24, 2003 by the Intellectual Property Office. 31

Notably, at the time the applications for the issuance of the search warrants were filed on November 21, 2005, as the CA correctly found,
Civil Case No. Q-05-54747, which the RTC found to be where a prejudicial question was raised, was already dismissed on June 10,
2005,  because of the pendency of a case involving the same issues and parties before the IPO. Yu's motion for reconsideration was
32

denied in an Order  dated September 15, 2005. In fact, a Certificate of Finality  was issued by the RTC on January 4, 2007.
33 34

Moreover, the IPO case for trademark infringement and unfair competition and damages with prayer for preliminary injunction filed by
respondent against Yu and Heidi Cua, docketed as IPV Case No. 10-2005-00001, would not also be a basis for quashing the warrants.  In 1avvphi1

fact, prior to the applications for the issuance of the assailed search warrants on November 21, 2005, the IPO had issued an Order  dated
35

October 20, 2005 granting a writ of preliminary injunction against Yu and Cua, the dispositive portion of which reads:
WHEREFORE, the WRIT OF PRELIMINARY INJUNCTION is hereby issued against Respondent, Benjamin Yu, doing business under the
name and style of MCA Manufacturing and Heidi S. Cua, Proprietor of South Ocean Chinese Drug Store, and their agents, representatives,
dealers and distributors and all persons acting in their behalf, to cease and desist using the trademark "TOP GEL T.G. & DEVICE OF A
LEAF" or any colorable imitation thereof on Papaya whitening soaps they manufacture, sell, and/or offer for sale, and otherwise, from
packing their Papaya Whitening Soaps in boxes with the same general appearance as those of complainant's boxes within a period of
NINETY (90) DAYS, effective upon the receipt of respondent of the copy of the COMPLIANCE filed with this Office by the Complainant
stating that it has posted a CASH BOND in the amount of ONE HUNDRED THOUSAND PESOS (Php100,000.00) together with the
corresponding Official Receipt Number and date thereof. Consequently, complainant is directed to inform this Office of actual date of
receipt by Respondent of the aforementioned COMPLIANCE. 36

To inform the public of the issuance of the writ of preliminary injunction, respondent's counsel had the dispositive portion of the Order
published in The Philippine Star newspaper on October 30, 2005.  Thus, it was clearly stated that Yu, doing business under the name and
37

style of MCA Manufacturing, his agents, representatives, dealers and distributors and all persons acting in his behalf, were to cease and
desist from using the trademark "TOP GEL & DEVICE OF A LEAF" or any colorable imitation thereof on Papaya Whitening soaps they
manufacture, sell and/or offer for sale. Petitioners, who admitted having derived their TOP GEL products from Yu, are, therefore, notified of
such injunction and were enjoined from selling the same.

Notwithstanding, at the time of the application of the search warrants on November 21, 2005, and while the injunction was in effect,
petitioners were still selling the alleged counterfeit products bearing the trademark TOP GEL T.G. & DEVICE OF A LEAF. There exists a
probable cause for violation of respondent's intellectual property rights, which entitles her as the registered owner of the trademark TOP
GEL and DEVICE OF A LEAF to be protected by the issuance of the search warrants.

More importantly, during the pendency of petitioners' motion to quash in the RTC, respondent submitted the Order dated March 8, 2006 of
the IPO in IPV Case No. 10-2005-00001, where the writ of preliminary injunction was earlier issued, approving the compromise agreement
entered into by respondent with Yu and Cua where it was stated, among others, that:

1. Respondents acknowledge the exclusive right of Complainant over the trademark TOP GEL T.G. & DEVICE OF A LEAF for
use on papaya whitening soap as registered under Registration No. 4-2000-009881 issued on August 24, 2003.

2. Respondents acknowledge the appointment by Zenna Chemical Industry Co., Ltd. of Complainant as the exclusive Philippine
distributor of its products under the tradename and trademark TOP GEL MCA & MCA DEVICE (A SQUARE DEVICE
CONSISTING OF A STYLIZED REPRESENTATION OF A LETTER "M" OVER THE LETTER "CA") as registered under
Registration No 4-1996-109957 issued on November 17, 2000, as well as the assignment by Zenna Chemical Industry Co., Ltd.
to Complainant of said mark for use on papaya whitening soap.

3. Respondents admit having used the tradename and trademark aforesaid, but after having realized that Complainant is the
legitimate assignee of TOP GEL MCA & MCA DEVICE and the registered owner of TOP GEL T.G. & DEVICE OF A LEAF, now
undertake to voluntarily cease and desist from using the aforesaid tradename and trademark, and further undertake not to
manufacture, sell and distribute and otherwise compete with complainant, now and at anytime in the future, any papaya
whitening soap using or bearing a mark or name identical or confusingly similar to, or constituting a colorable imitation of the
tradename and trademark TOP GEL MCA & MCA DEVICE and/or TOP GEL T.G. & DEVICE OF A LEAF as registered and
described above. 38

Hence, it appears that there is no more controversy as to who is the rightful holder of the trademark TOP GEL T.G. & DEVICE OF A LEAF.
Therefore, respondent, as owner of such registered trademark has the right to the issuance of the search warrants.

Anent petitioners' claim that one or two samples of the Top Gel products from each of them, instead of confiscating thousands of the
products, would have sufficed for the purpose of an anticipated criminal action, citing our ruling in Summerville General Merchandising Co.
v. Court of Appeals,  is not meritorious.
39

We do not agree.

The factual milieu of the two cases are different. In Summerville, the object of the violation of Summerville's intellectual property rights, as
assignee of Royal playing cards and Royal brand playing cards case, was limited to the design of Summerville's Royal plastic container
case which encased and wrapped the Crown brand playing cards. In the application for the search warrant which the RTC subsequently
issued, one of the items to be seized were the Crown brand playing cards using the copyright plastic and Joker of Royal brand. Thus,
numerous boxes containing Crown playing cards were seized and upon the RTC's instruction were turned over to Summerville, subject to
the condition that the key to the said warehouse be turned over to the court sheriff. Respondents moved for the quashal of the search
warrant and for the return of the seized properties. The RTC partially granted the motion by ordering the release of the seized Crown brand
playing cards and the printing machines; thus, only the Royal plastic container cases of the playing cards were left in the custody of
Summerville. The CA sustained the RTC order. On petition with us, we affirmed the CA. We found therein that the Crown brand playing
cards are not the subject of the offense as they are genuine and the Crown trademark was registered to therein respondents’ names; that it
was the design of the plastic container/case that is alleged to have been utilized by respondents to deceive the public into believing that the
Crown brand playing cards are the same as those manufactured by Summerville. We then said that assuming that the Crown playing cards
could be considered subject of the offense, a sample or two are more than enough to retain should there have been a need to examine
them along with the plastic container/case; and that there was no need to hold the hundreds of articles seized. We said so in the context
that since what was in dispute was the design of the Royal plastic cases/containers of playing cards and not the playing card per se, a
small number of Crown brand playing cards would suffice to examine them with the Royal plastic cases/containers. And the return of the
playing cards would better serve the purposes of justice and expediency. However, in this case, the object of the violation of respondent's
intellectual property right is the alleged counterfeit TOP GEL T.G. & DEVICE OF A LEAF papaya whitening soap being sold by petitioners,
so there is a need to confiscate all these articles to protect respondent's right as the registered owner of such trademark.
Petitioners next contend that the CA's ruling on the applicability of Rule 126 of the Rules of Court that the search warrants were issued in
anticipation of a criminal action was only based on respondent's claim which was only brought for the first time in her appellant's brief.

We are not persuaded.

We find worth quoting respondent's argument addressing this issue in its Comment, thus:

In the assailed Decision, the Court of Appeals found that the Rule correctly applicable to the subject search warrants was Rule 126 of the
Rules of Court. Petitioners fault the appellate court for ruling that the Regional Trial Court incorrectly applied the Rules on Search and
Seizure in Civil Actions for Infringement of Intellectual Property Rights on the basis of an argument that private respondent brought up for
the first time in her Appellant's Brief.

A cursory perusal of the Appellant's Brief shows that the following issues/errors were raised, that: (1) the Honorable Trial Court erred in
holding that the "Rules on Search and Seizure for Infringement of Intellectual Property Rights" apply to the search warrants at bar; (2) x x x.

It must be remembered that there was no trial on the merits to speak of in the trial court, and the matter of the application of the wrong set
of Rules only arose in the Order dated 25th September 2006 which sustained the Motion to Quash. A thorough examination of the
Appellee's Brief filed by petitioners (respondents-appellees in the Court of Appeals) reveals, however, that petitioners NEVER assailed the
first issue/error on the ground that the same was raised for the first time on appeal. It is only now, after the appellate court rendered a
Decision and Resolution unfavorable to them, that petitioners questioned the alleged procedural error. Petitioners should now be
considered in estoppel to question the same. 40

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

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

Appellees (herein petitioners) cannot agree with the contention of the appellant.  Complainant NBI Agent Joseph G. Furing, who applied for
1âwphi1

the search warrants, violated the very rule on search and seizure for infringement of Intellectual Property Rights. The search warrants
applied for by the complainants cannot be considered a criminal action. There was no criminal case yet to speak of when complainants
applied for issuance of the search warrants. There is distinction here because the search applied for is civil in nature and no criminal case
had been filed. The complaint is an afterthought after the respondents-appellees filed their Motion to Quash Search Warrant before the
Regional Trial Court of Manila, Branch 24. The grounds enumerated in the rule must be complied with in order to protect the constitutional
mandate that "no person shall be deprived of life liberty or property without due process of law nor shall any person be denied the equal
protection of the law." Clearly, the application of the search warrants for violation of unfair competition and infringement is in the nature of a
civil action.
41

WHEREFORE, the petition for review is DENIED. The Decision dated March 31, 2009 and the Resolution dated July 2, 2009 of the Court of
Appeals, in CA-G.R. CV No. 88952, are hereby AFFIRMED.

SO ORDERED.

17. G.R. No. 154491             November 14, 2008

COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga

Plant, petitioner, 
vs.
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. GALICIA,
a.k.a. "DANNY GALICIA",respondents.

DECISION

BRION, J.:
Is the hoarding of a competitor's product containers punishable as unfair
competition under the Intellectual Property Code (IP Code, Republic Act
No. 8293) that would entitle the aggrieved party to a search warrant
against the hoarder? This is the issue we grapple with in this petition for
review oncertiorari involving two rival multinational softdrink giants;
petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses Pepsi
Cola Products Phils., Inc. (Pepsi), represented by the respondents, of
hoarding empty Coke bottles in bad faith to discredit its business and to
sabotage its operation in Bicolandia.

BACKGROUND

The facts, as culled from the records, are summarized below.

On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi

for hoarding Coke empty bottles in Pepsi's yard in Concepcion Grande,
Naga City, an act allegedly penalized as unfair competition under the IP
Code. Coca-Cola claimed that the bottles must be confiscated to
preclude their illegal use, destruction or concealment by the
respondents.1 In support of the application, Coca-Cola submitted the
sworn statements of three witnesses: Naga plant representative Arnel
John Ponce said he was informed that one of their plant security guards
had gained access into the Pepsi compound and had seen empty Coke
bottles; acting plant security officer Ylano A. Regaspi said he
investigated reports that Pepsi was hoarding large quantities of Coke
bottles by requesting their security guard to enter the Pepsi plant and he
was informed by the security guard that Pepsi hoarded several Coke
bottles; security guard Edwin Lirio stated that he entered Pepsi's yard
on July 2, 2001 at 4 p.m. and saw empty Coke bottles inside Pepsi
shells or cases.2

Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga

City, after taking the joint deposition of the witnesses, issued Search
Warrant No. 2001-013 to seize 2,500 Litro and 3,000 eight and 12
ounces empty Coke bottles at Pepsi's Naga yard for violation of Section
168.3 (c) of the IP Code.4 The local police seized and brought to the
MTC's custody 2,464 Litro and 4,036 eight and 12 ounces empty Coke
bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for smaller (eight
and 12 ounces) empty Coke bottles, and later filed with the Office of the
City Prosecutor of Naga a complaint against two Pepsi officers for
violation of Section 168.3 (c) in relation to Section 170 of the IP
Code.5The named respondents, also the respondents in this petition,
were Pepsi regional sales managerDanilo E. Galicia (Galicia) and its
Naga general manager Quintin J. Gomez, Jr. (Gomez).

In their counter-affidavits, Galicia and Gomez claimed that the bottles

came from various Pepsi retailers and wholesalers who included them
in their return to make up for shortages of empty Pepsi bottles; they had
no way of ascertaining beforehand the return of empty Coke bottles as
they simply received what had been delivered; the presence of the
bottles in their yard was not intentional nor deliberate; Ponce and
Regaspi's statements are hearsay as they had no personal knowledge
of the alleged crime; there is no mention in the IP Code of the crime of
possession of empty bottles; and that the ambiguity of the law, which
has a penal nature, must be construed strictly against the State and
liberally in their favor. Pepsi security guards Eduardo E. Miral and Rene
Acebuche executed a joint affidavit stating that per their logbook, Lirio
did not visit or enter the plant premises in the afternoon of July 2, 2001.

The respondents also filed motions for the return of their shells and to
quash the search warrant. They contended that no probable cause
existed to justify the issuance of the search warrant; the facts charged
do not constitute an offense; and their Naga plant was in urgent need of
the shells.

Coca-Cola opposed the motions as the shells were part of the evidence
of the crime, arguing that Pepsi used the shells in hoarding the bottles.
It insisted that the issuance of warrant was based on probable cause for
unfair competition under the IP Code, and that the respondents violated
R.A. 623, the law regulating the use of stamped or marked bottles,
boxes, and other similar containers.

THE MTC RULINGS

On September 19, 2001, the MTC issued the first assailed

order6 denying the twin motions. It explained there was an exhaustive
examination of the applicant and its witnesses through searching
questions and that the Pepsi shells are prima facie evidence that the
bottles were placed there by the respondents.

In their motion for reconsideration, the respondents argued for the

quashal of the warrant as the MTC did not conduct a probing and
exhaustive examination; the applicant and its witnesses had no
personal knowledge of facts surrounding the hoarding; the court failed
to order the return of the "borrowed" shells; there was no crime
involved; the warrant was issued based on hearsay evidence; and the
seizure of the shells was illegal because they were not included in the
warrant.

On November 14, 2001, the MTC denied the motion for reconsideration
in the second assailed order,7 explaining that the issue of whether there
was unfair competition can only be resolved during trial.

The respondents responded by filing a petition for certiorari under Rule

65 of the Revised Rules of Court before the Regional Trial Court (RTC)
of Naga City on the ground that the subject search warrant was issued
without probable cause and that the empty shells were neither
mentioned in the warrant nor the objects of the perceived crime.

THE RTC RULINGS

On May 8, 2002, the RTC voided the warrant for lack of probable cause
and the non-commission of the crime of unfair competition, even as it
implied that other laws may have been violated by the respondents. The
RTC, though, found no grave abuse of discretion on the part of the
issuing MTC judge.8 Thus,

Accordingly, as prayed for, Search Warrant No. 2001-02 issued

by the Honorable Judge Julian C. Ocampo III on July 2, 2001 is
ANNULLED and SET ASIDE. The Orders issued by the Pairing
Judge of Br. 1, MTCC of Naga City dated September 19, 2001
and November 14, 2001 are also declared VOID and SET ASIDE.
The City Prosecutor of Naga City and SPO1 Ernesto Paredes are
directed to return to the Petitioner the properties seized by virtue
of Search Warrant No. 2001-02. No costs.

SO ORDERED.9

In a motion for reconsideration, which the RTC denied on July 12, 2002,
the petitioner stressed that the decision of the RTC was contradictory
because it absolved Judge Ocampo of grave abuse of discretion in
issuing the search warrant, but at the same time nullified the issued
warrant. The MTC should have dismissed the petition when it found out
that Judge Ocampo did not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through this
petition for review on certiorariunder Rule 45 of the Rules of Court to
reverse the decision of the RTC. Essentially, the petition raises
questions against the RTC's nullification of the warrant when it found no
grave abuse of discretion committed by the issuing judge.

THE PETITION and 

THE PARTIES' POSITIONS

In its petition, the petitioner insists the RTC should have dismissed the
respondents' petition for certiorari because it found no grave abuse of
discretion by the MTC in issuing the search warrant. The petitioner
further argues that the IP Code was enacted into law to remedy various
forms of unfair competition accompanying globalization as well as to
replace the inutile provision of unfair competition under Article 189 of
the Revised Penal Code. Section 168.3(c) of the IP Code does not limit
the scope of protection on the particular acts enumerated as it expands
the meaning of unfair competition to include "other acts contrary to good
faith of a nature calculated to discredit the goods, business or services
of another." The inherent element of unfair competition is fraud or
deceit, and that hoarding of large quantities of a competitor's empty
bottles is necessarily characterized by bad faith. It claims that its Bicol
bottling operation was prejudiced by the respondents' hoarding and
destruction of its empty bottles.

The petitioner also argues that the quashal of the search warrant was
improper because it complied with all the essential requisites of a valid
warrant. The empty bottles were concealed in Pepsi shells to prevent
discovery while they were systematically being destroyed to hamper the
petitioner's bottling operation and to undermine the capability of its
bottling operations in Bicol.

The respondents counter-argue that although Judge Ocampo

conducted his own examination, he gravely erred and abused his
discretion when he ignored the rule on the need of sufficient evidence to
establish probable cause; satisfactory and convincing evidence is
essential to hold them guilty of unfair competition; the hoarding of empty
Coke bottles did not cause actual or probable deception and confusion
on the part of the general public; the alleged criminal acts do not show
conduct aimed at deceiving the public; there was no attempt to use the
empty bottles or pass them off as the respondents' goods.
The respondents also argue that the IP Code does not criminalize bottle
hoarding, as the acts penalized must always involve fraud and deceit.
The hoarding does not make them liable for unfair competition as there
was no deception or fraud on the end-users.

THE ISSUE

Based on the parties' positions, the basic issue submitted to us for

resolution is whether the Naga MTC was correct in issuing Search
Warrant No. 2001-01 for the seizure of the empty Coke bottles from
Pepsi's yard for probable violation of Section 168.3 (c) of the IP Code.
This basic issue involves two sub-issues, namely, the substantive issue
of whether the application for search warrant effectively charged an
offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the
procedural issue of whether the MTC observed the procedures required
by the Rules of Court in the issuance of search warrants.

OUR RULING

We resolve to deny the petition for lack of merit.

We clarify at the outset that while we agree with the RTC decision, our
agreement is more in the result than in the reasons that supported it.
The decision is correct in nullifying the search warrant because it was
issued on an invalid substantive basis - the acts imputed on the
respondents do not violate Section 168.3 (c) of the IP Code. For this
reason, we deny the present petition.

The issuance of a search warrant10 against a personal property11 is

governed by Rule 126 of the Revised Rules of Court whose relevant
sections state:

Section 4. Requisites for issuing search warrant. - A search

warrant shall not issue except uponprobable cause in
connection with one specific offense to be determined
personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the
things to be seized which may be anywhere in the Philippines.

Section 5. Examination of complainant; record. - The judge must,

before issuing the warrant,personally examine in the form of
 searching questions and answers, in writing and under oath,
the complainant and the witnesses he may produce on facts
personally known to them and attach to the record their sworn
statements together with the affidavits submitted.

Section 6. Issuance and form of search warrant. - If the judge is

satisfied of the existence of facts upon which the application is
based or that there is probable cause to believe that they exist, he
shall issue the warrant, which must be substantially in the form
prescribed by these Rules. [Emphasis supplied]

To paraphrase this rule, a search warrant may be issued only if there is

probable cause in connection with a specific offense alleged in an
application based on the personal knowledge of the applicant and his or
her witnesses. This is the substantive requirement in the issuance of a
search warrant. Procedurally, the determination of probable cause is a
personal task of the judge before whom the application for search
warrant is filed, as he has to examine under oath or affirmation the
applicant and his or her witnesses in the form of "searching questions
and answers" in writing and under oath. The warrant, if issued, must
particularly describe the place to be searched and the things to be
seized.

We paraphrase these requirements to stress that they have substantive

and procedural aspects. Apparently, the RTC recognized this dual
nature of the requirements and, hence, treated them separately; it
approved of the way the MTC handled the procedural aspects of the
issuance of the search warrant but found its action on the substantive
aspect wanting. It therefore resolved to nullify the warrant, without
however expressly declaring that the MTC gravely abused its discretion
when it issued the warrant applied for. The RTC's error, however, is in
the form rather than the substance of the decision as the nullification of
the issued warrant for the reason the RTC gave was equivalent to the
declaration that grave abuse of discretion was committed. In fact, we so
rule as the discussions below will show.

Jurisprudence teaches us that probable cause, as a condition for the

issuance of a search warrant, is such reasons supported by facts and
circumstances as will warrant a cautious man in the belief that his action
and the means taken in prosecuting it are legally just and proper.
Probable cause requires facts and circumstances that would lead a
reasonably prudent man to believe that an offense has been committed
and the objects sought in connection with that offense are in the place
to be searched.12 Implicit in this statement is the recognition that an
underlying offense must, in the first place, exist. In other words, the acts
alleged, taken together, must constitute an offense and that these acts
are imputable to an offender in relation with whom a search warrant is
applied for.

In the context of the present case, the question is whether the act
charged - alleged to be hoarding of empty Coke bottles - constitutes an
offense under Section 168.3 (c) of the IP Code. Section 168 in its
entirety states:

SECTION 168. Unfair Competition, Rights, Regulation and

Remedies. -

168.1. A person who has identified in the mind of the public the
goods he manufactures or deals in, his business or services from
those of others, whether or not a registered mark is employed,
has a property right in the goodwill of the said goods, business or
services so identified, which will be protected in the same manner
as other property rights.

168.2. Any person who shall employ deception or any other

means contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or
services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall
be guilty of unfair competition, and shall be subject to an action
therefor.

168.3. In particular, and without in any way limiting the scope of

protection against unfair competition, the following shall be
deemed guilty of unfair competition:

(a) Any person, who is selling his goods and gives them the
general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers
to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer
 or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another
of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such
goods with a like purpose;

(b) Any person who by any artifice, or device, or who

employs any other means calculated to induce the false
belief that such person is offering the services of another
who has identified such services in the mind of the public; or

(c) Any person who shall make any false statement in the
course of trade or who shall commit any other act contrary
to good faith of a nature calculated to discredit the goods,
business or services of another.

168.4. The remedies provided by Sections 156, 157 and 161 shall
apply mutatis mutandis. (Sec. 29, R.A. No. 166a)

The petitioner theorizes that the above section does not limit the scope
of protection on the particular acts enumerated as it expands the
meaning of unfair competition to include "other acts contrary to good
faith of a nature calculated to discredit the goods, business or services
of another." Allegedly, the respondents' hoarding of Coca Cola empty
bottles is one such act.

We do not agree with the petitioner's expansive interpretation of Section

168.3 (c).

"Unfair competition," previously defined in Philippine jurisprudence in

relation with R.A. No. 166 and Articles 188 and 189 of the Revised
Penal Code, is now covered by Section 168 of the IP Code as this Code
has expressly repealed R.A. No. 165 and R.A. No. 166, and Articles 188
and 189 of the Revised Penal Code.

Articles 168.1 and 168.2, as quoted above, provide the concept and
general rule on the definition of unfair competition. The law does not
thereby cover every unfair act committed in the course of business; it
covers only acts characterized by "deception or any other means
contrary to good faith" in the passing off of goods and services as those
of another who has established goodwill in relation with these goods or
services, or any other act calculated to produce the same result.
What unfair competition is, is further particularized under Section 168.3
when it provides specifics of what unfair competition is "without in any
way limiting the scope of protection against unfair competition." Part of
these particulars is provided under Section 168.3(c) which provides the
general "catch-all" phrase that the petitioner cites. Under this phrase, a
person shall be guilty of unfair competition "who shall commit any other
act contrary to good faith of a nature calculated to discredit the goods,
business or services of another."

From jurisprudence, unfair competition has been defined as the passing

off (or palming off) or attempting to pass off upon the public the goods
or business of one person as the goods or business of another with the
end and probable effect of deceiving the public. It formulated the "true
test" of unfair competition: whether the acts of defendant are such as
are calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions which prevail in the particular trade to
which the controversy relates.13 One of the essential requisites in an
action to restrain unfair competition is proof of fraud; the intent to
deceive must be shown before the right to recover can exist.14 The
advent of the IP Code has not significantly changed these rulings as
they are fully in accord with what Section 168 of the Code in its entirety
provides. Deception, passing off and fraud upon the public are still the
key elements that must be present for unfair competition to exist.

The act alleged to violate the petitioner's rights under Section 168.3 (c)
is hoarding which we gather to be the collection of the petitioner's empty
bottles so that they can be withdrawn from circulation and thus impede
the circulation of the petitioner's bottled products. This, according to the
petitioner, is an act contrary to good faith - a conclusion that, if true, is
indeed an unfair act on the part of the respondents. The critical
question, however, is not the intrinsic unfairness of the act of hoarding;
what is critical for purposes of Section 168.3 (c) is to determine if the
hoarding, as charged, "is of a nature calculated to discredit the goods,
business or services" of the petitioner.

We hold that it is not. Hoarding as defined by the petitioner is not even

an act within the contemplation of the IP Code.

The petitioner's cited basis is a provision of the IP Code, a set of rules

that refer to a very specific subject - intellectual property. Aside from the
IP Code's actual substantive contents (which relate specifically to
patents, licensing, trademarks, trade names, service marks, copyrights,
and the protection and infringement of the intellectual properties that
these protective measures embody), the coverage and intent of the
Code is expressly reflected in its "Declaration of State Policy" which
states:

Section 2. Declaration of State Policy. - The State recognizes that

an effective intellectual and industrial property system is vital to
the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures
market access for our products. It shall protect and secure
the exclusive rights of scientists, inventors, artists and other gifted
citizens to their intellectual property and creations, particularly
when beneficial to the people, for such periods as provided in this
Act.

The use of intellectual property bears a social function. To this

end, the State shall promote the diffusion of knowledge and
information for the promotion of national development and
progress and the common good.

It is also the policy of the State to streamline administrative

procedures of registering patents, trademarks and copyright, to
liberalize the registration on the transfer of technology, and to
enhance the enforcement of intellectual property rights in the
Philippines. (n)

"Intellectual property rights" have furthermore been defined under

Section 4 of the Code to consist of: a) Copyright and Related Rights; b)
Trademarks and Service Marks; c) Geographic Indications; d)
IndustrialDesigns; e) Patents; f) Layout-Designs (Topographies) of
Integrated Circuits; and g)Protection of Undisclosed Information.

Given the IP Code's specific focus, a first test that should be made
when a question arises on whether a matter is covered by the Code is
to ask if it refers to an intellectual property as defined in the Code. If it
does not, then coverage by the Code may be negated.

A second test, if a disputed matter does not expressly refer to an

intellectual property right as defined above, is whether it falls under the
general "unfair competition" concept and definition under Sections 168.1
and 168.2 of the Code. The question then is whether there is
"deception" or any other similar act in "passing off" of goods or services
to be those of another who enjoys established goodwill.

Separately from these tests is the application of the principles of

statutory construction giving particular attention, not so much to the
focus of the IP Code generally, but to the terms of Section 168 in
particular. Under the principle of "noscitur a sociis," when a particular
word or phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and specific by
considering the company of words in which it is found or with which it is
associated.15

As basis for this interpretative analysis, we note that Section

168.1 speaks of a person who has earned goodwill with respect to his
goods and services and who is entitled to protection under the Code,
with or without a registered mark. Section 168.2, as previously
discussed, refers to the general definition of unfair competition. Section
168.3, on the other hand, refers to the specific instances of unfair
competition, with Section 168.1 referring to the sale of goods given the
appearance of the goods of another; Section 168.2, to the inducement
of belief that his or her goods or services are that of another who has
earned goodwill; while the disputed Section 168.3 being a "catch all"
clause whose coverage the parties now dispute.

Under all the above approaches, we conclude that the "hoarding" - as

defined and charged by the petitioner - does not fall within the coverage
of the IP Code and of Section 168 in particular. It does not relate to any
patent, trademark, trade name or service mark that the respondents
have invaded, intruded into or used without proper authority from the
petitioner. Nor are the respondents alleged to be fraudulently "passing
off" their products or services as those of the petitioner. The
respondents are not also alleged to be undertaking any representation
or misrepresentation that would confuse or tend to confuse the goods of
the petitioner with those of the respondents, or vice versa. What in fact
the petitioner alleges is an act foreign to the Code, to the concepts it
embodies and to the acts it regulates; as alleged, hoarding inflicts
unfairness by seeking to limit the opposition's sales by depriving it of the
bottles it can use for these sales.

In this light, hoarding for purposes of destruction is closer to what

another law - R.A. No. 623 - covers, to wit:
 SECTION 1. Persons engaged or licensed to engage in the
manufacture, bottling or selling of soda water, mineral or aerated
waters, cider, milk, cream, or other lawful beverages in bottles,
boxes, casks, kegs, or barrels, and other similar containers, with
their names or the names of their principals or products, or other
marks of ownership stamped or marked thereon, may register
with the Philippine Patent Office a description of the names or are
used by them, under the same conditions, rules, and regulations,
made applicable by law or regulation to the issuance of
trademarks.

SECTION 2. It shall be unlawful for any person, without the

written consent of the manufacturer, bottler or seller who has
successfully registered the marks of ownership in accordance with
the provisions of the next preceding section, to fill such bottles,
boxes, kegs, barrels, or other similar containers so marked
or stamped, for the purpose of sale, or to sell, dispose of,
buy, or traffic in, or wantonly destroy the same, whether filled
or not, or to use the same for drinking vessels or glasses or
for any other purpose than that registered by the
manufacturer, bottler or seller. Any violation of this section shall
be punished by a fine or not more than one hundred pesos or
imprisonment of not more than thirty days or both.

As its coverage is defined under Section 1, the Act appears to be a

measure that may overlap or be affected by the provisions of Part II of
the IP Code on "The Law on Trademarks, Service Marks and Trade
Names." What is certain is that the IP Code has not expressly repealed
this Act. The Act appears, too, to have specific reference to a special
type of registrants - the manufacturers, bottlers or sellers of soda water,
mineral or aerated waters, cider, milk, cream, or other lawful beverages
in bottles, boxes, casks, kegs, or barrels, and other similar containers -
who are given special protection with respect to the containers they use.
In this sense, it is in fact a law of specific coverage and application,
compared with the general terms and application of the IP Code. Thus,
under its Section 2, it speaks specifically of unlawful use of containers
and even of the unlawfulness of their wanton destruction - a matter that
escapes the IP Code's generalities unless linked with the concepts of
"deception" and "passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case and
one that the parties did not consider at all in the search warrant
application. The petitioner in fact could not have cited it in its search
warrant application since the "one specific offense" that the law allows
and which the petitioner used was Section 168.3 (c). If it serves any
purpose at all in our discussions, it is to show that the underlying factual
situation of the present case is in fact covered by another law, not by
the IP Code that the petitioner cites. Viewed in this light, the lack of
probable cause to support the disputed search warrant at once
becomes apparent.

Where, as in this case, the imputed acts do not violate the cited offense,
the ruling of this Court penned by Mr. Justice Bellosillo is particularly
instructive:

In the issuance of search warrants, the Rules of Court requires a

finding of probable cause in connection with one specific
offense to be determined personally by the judge after
examination of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and
the things to be seized. Hence, since there is no crime to speak
of, the search warrant does not even begin to fulfill these
stringent requirements and is therefore defective on its face.
The nullity of the warrant renders moot and academic the other
issues raised in petitioners' Motion to Quash and Motion for
Reconsideration. Since the assailed search warrant is null and
void, all property seized by virtue thereof should be returned to
petitioners in accordance with established jurisprudence.16

Based on the foregoing, we conclude that the RTC correctly ruled that
the petitioner's search warrant should properly be quashed for the
petitioner's failure to show that the acts imputed to the respondents do
not violate the cited offense. There could not have been any probable
cause to support the issuance of a search warrant because no crime in
the first place was effectively charged. This conclusion renders
unnecessary any further discussion on whether the search warrant
application properly alleged that the imputed act of holding Coke
empties was in fact a "hoarding" in bad faith aimed to prejudice the
petitioner's operations, or whether the MTC duly complied with the
procedural requirements for the issuance of a search warrant under
Rule 126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of merit.
Accordingly, we confirm that Search Warrant No. 2001-01, issued by
the Municipal Trial Court, Branch 1, Naga City, is NULL and VOID.
Costs against the petitioner.

SO ORDERED.
18. G.R. No. 169504               March 3, 2010

COFFEE PARTNERS, INC., Petitioner, 

vs.
SAN FRANCISCO COFFEE & ROASTERY, INC., Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 15 June 2005 Decision2 and the 1 September 2005 Resolution3 of the Court of Appeals in CA-G.R. SP
No. 80396. In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 Decision4 of the Office of the Director
General-Intellectual Property Office and reinstated the 14 August 2002 Decision5 of the Bureau of Legal Affairs-Intellectual Property Office.
In its 1 September 2005 Resolution, the Court of Appeals denied petitioner’s motion for reconsideration and respondent’s motion for partial
reconsideration.

The Facts

Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and maintaining coffee shops in the country. It
registered with the Securities and Exchange Commission (SEC) in January 2001. It has a franchise agreement6 with Coffee Partners Ltd.
(CPL), a business entity organized and existing under the laws of British Virgin Islands, for a non-exclusive right to operate coffee shops in
the Philippines using trademarks designed by CPL such as "SAN FRANCISCO COFFEE."

Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It registered with the SEC in May 1995. It registered
the business name "SAN FRANCISCO COFFEE & ROASTERY, INC." with the Department of Trade and Industry (DTI) in June 1995.
Respondent had since built a customer base that included Figaro Company, Tagaytay Highlands, Fat Willy’s, and other coffee companies.

In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company name Boyd Coffee Company Philippines,
Inc. (BCCPI). BCCPI engaged in the processing, roasting, and wholesale selling of coffee. Respondent later embarked on a project study of
setting up coffee carts in malls and other commercial establishments in Metro Manila.

In June 2001, respondent discovered that petitioner was about to open a coffee shop under the name "SAN FRANCISCO COFFEE" in
Libis, Quezon City. According to respondent, petitioner’s shop caused confusion in the minds of the public as it bore a similar name and it
also engaged in the business of selling coffee. Respondent sent a letter to petitioner demanding that the latter stop using the name "SAN
FRANCISCO COFFEE." Respondent also filed a complaint with the Bureau of Legal Affairs-Intellectual Property Office (BLA-IPO) for
infringement and/or unfair competition with claims for damages.

In its answer, petitioner denied the allegations in the complaint. Petitioner alleged it filed with the Intellectual Property Office (IPO)
applications for registration of the mark "SAN FRANCISCO COFFEE & DEVICE" for class 42 in 1999 and for class 35 in 2000. Petitioner
maintained its mark could not be confused with respondent’s trade name because of the notable distinctions in their appearances.
Petitioner argued respondent stopped operating under the trade name "SAN FRANCISCO COFFEE" when it formed a joint venture with
Boyd Coffee USA. Petitioner contended respondent did not cite any specific acts that would lead one to believe petitioner had, through
fraudulent means, passed off its mark as that of respondent, or that it had diverted business away from respondent.

Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis, Quezon City opened sometime in June 2001 and
that another coffee shop would be opened in Glorietta Mall, Makati City. He stated that the coffee shop was set up pursuant to a franchise
agreement executed in January 2001 with CPL, a British Virgin Island Company owned by Robert Boxwell. Mr. Puyat said he became
involved in the business when one Arthur Gindang invited him to invest in a coffee shop and introduced him to Mr. Boxwell. For his part, Mr.
Boxwell attested that the coffee shop "SAN FRANCISCO COFFEE" has branches in Malaysia and Singapore. He added that he formed
CPL in 1997 along with two other colleagues, Shirley Miller John and Leah Warren, who were former managers of Starbucks Coffee Shop
in the United States. He said they decided to invest in a similar venture and adopted the name "SAN FRANCISCO COFFEE" from the
famous city in California where he and his former colleagues once lived and where special coffee roasts came from.

The Ruling of the Bureau of Legal Affairs-Intellectual Property Office

In its 14 August 2002 Decision, the BLA-IPO held that petitioner’s trademark infringed on respondent’s trade name. It ruled that the right to
the exclusive use of a trade name with freedom from infringement by similarity is determined from priority of adoption. Since respondent
registered its business name with the DTI in 1995 and petitioner registered its trademark with the IPO in 2001 in the Philippines and in 1997
in other countries, then respondent must be protected from infringement of its trade name.

The BLA-IPO also held that respondent did not abandon the use of its trade name as substantial evidence indicated respondent
continuously used its trade name in connection with the purpose for which it was organized. It found that although respondent was no
longer involved in blending, roasting, and distribution of coffee because of the creation of BCCPI, it continued making plans and doing
research on the retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that for abandonment to exist, the disuse must be
permanent, intentional, and voluntary.

The BLA-IPO held that petitioner’s use of the trademark "SAN FRANCISCO COFFEE" will likely cause confusion because of the exact
similarity in sound, spelling, pronunciation, and commercial impression of the words "SAN FRANCISCO" which is the dominant portion of
respondent’s trade name and petitioner’s trademark. It held that no significant difference resulted even with a diamond-shaped figure with a
cup in the center in petitioner's trademark because greater weight is given to words – the medium consumers use in ordering coffee
products.

On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that petitioner adopted the trademark "SAN
FRANCISCO COFFEE" because of the authority granted to it by its franchisor. The BLA-IPO held there was no evidence of intent to
defraud on the part of petitioner.

The BLA-IPO also dismissed respondent’s claim of actual damages because its claims of profit loss were based on mere assumptions as
respondent had not even started the operation of its coffee carts. The BLA-IPO likewise dismissed respondent’s claim of moral damages,
but granted its claim of attorney’s fees.

Both parties moved for partial reconsideration. Petitioner protested the finding of infringement, while respondent questioned the denial of
actual damages. The BLA-IPO denied the parties’ partial motion for reconsideration. The parties appealed to the Office of the Director
General-Intellectual Property Office (ODG-IPO).

The Ruling of the Office of the Director General-

Intellectual Property Office

In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioner’s use of the trademark "SAN FRANCISCO
COFFEE" did not infringe on respondent's trade name. The ODG-IPO found that respondent had stopped using its trade name after it
entered into a joint venture with Boyd Coffee USA in 1998 while petitioner continuously used the trademark since June 2001 when it
opened its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user of a trade name in good faith and a prior user
who had stopped using such trade name, it would be inequitable to rule in favor of the latter.

The Ruling of the Court of Appeals

In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision of the ODG-IPO in so far as it ruled that there
was no infringement. It reinstated the 14 August 2002 decision of the BLA-IPO finding infringement. The appellate court denied
respondent’s claim for actual damages and retained the award of attorney’s fees. In its 1 September 2005 Resolution, the Court of Appeals
denied petitioner’s motion for reconsideration and respondent’s motion for partial reconsideration.

The Issue

The sole issue is whether petitioner’s use of the trademark "SAN FRANCISCO COFFEE" constitutes infringement of respondent’s trade
name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade name is not registered with the Intellectual Property Office
(IPO).

The Court’s Ruling

The petition has no merit.

Petitioner contends that when a trade name is not registered, a suit for infringement is not available. Petitioner alleges respondent has
abandoned its trade name. Petitioner points out that respondent’s registration of its business name with the DTI expired on 16 June 2000
and it was only in 2001 when petitioner opened a coffee shop in Libis, Quezon City that respondent made a belated effort to seek the
renewal of its business name registration. Petitioner stresses respondent’s failure to continue the use of its trade name to designate its
goods negates any allegation of infringement. Petitioner claims no confusion is likely to occur between its trademark and respondent’s trade
name because of a wide divergence in the channels of trade, petitioner serving ready-made coffee while respondent is in wholesale
blending, roasting, and distribution of coffee. Lastly, petitioner avers the proper noun "San Francisco" and the generic word "coffee" are not
capable of exclusive appropriation.

Respondent maintains the law protects trade names from infringement even if they are not registered with the IPO. Respondent claims
Republic Act No. 8293 (RA 8293)7 dispensed with registration of a trade name with the IPO as a requirement for the filing of an action for
infringement. All that is required is that the trade name is previously used in trade or commerce in the Philippines. Respondent insists it
never abandoned the use of its trade name as evidenced by its letter to petitioner demanding immediate discontinuation of the use of its
trademark and by the filing of the infringement case. Respondent alleges petitioner’s trademark is confusingly similar to respondent’s trade
name. Respondent stresses ordinarily prudent consumers are likely to be misled about the source, affiliation, or sponsorship of petitioner’s
coffee.

As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that respondent continued to make plans and do
research on the retailing of coffee and the establishment of coffee carts, which negates abandonment. This finding was upheld by the Court
of Appeals, which further found that while respondent stopped using its trade name in its business of selling coffee, it continued to import
and sell coffee machines, one of the services for which the use of the business name has been registered. The binding effect of the factual
findings of the Court of Appeals on this Court applies with greater force when both the quasi-judicial body or tribunal like the BLA-IPO and
the Court of Appeals are in complete agreement on their factual findings. It is also settled that absent any circumstance requiring the
overturning of the factual conclusions made by the quasi-judicial body or tribunal, particularly if affirmed by the Court of Appeals, the Court
necessarily upholds such findings of fact.8

Coming now to the main issue, in Prosource International, Inc. v. Horphag Research Management SA,9 this Court laid down what
constitutes infringement of an unregistered trade name, thus:

(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the
same need not be registered;

(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business
or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles, or
advertisements intended to be used upon or in connection with such goods, business, or services;

(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers
or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such
business; and

(5) It is without the consent of the trademark or trade name owner or the assignee thereof.10 (Emphasis supplied)

Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an
infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the Philippines.11

Section 22 of Republic Act No. 166,12 as amended, required registration of a trade name as a condition for the institution of an infringement
suit, to wit:

Sec. 22. Infringement, what constitutes. – Any person who shall use, without the consent of the registrant, any reproduction, counterfeit,
copy, or colorable imitation of any registered mark or trade name in connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy, or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles, or advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided. (Emphasis supplied)

However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration requirement. Section 165.2 of RA 8293
categorically states that trade names shall be protected, even prior to or without registration with the IPO, against any unlawful act including
any subsequent use of the trade name by a third party, whether as a trade name or a trademark likely to mislead the public.  Thus:
1avvph!1

SEC. 165.2 (a) Notwithstanding any laws or regulations providing for any obligation to register trade names, such names shall be
protected, even prior to or without registration, against any unlawful act committed by third parties.

(b) In particular, any subsequent use of a trade name by a third party, whether as a trade name or a mark or collective mark, or any such
use of a similar trade name or mark, likely to mislead the public, shall be deemed unlawful. (Emphasis supplied)

It is the likelihood of confusion that is the gravamen of infringement. But there is no absolute standard for likelihood of confusion. Only the
particular, and sometimes peculiar, circumstances of each case can determine its existence. Thus, in infringement cases, precedents must
be evaluated in the light of each particular case.13

In determining similarity and likelihood of confusion, our jurisprudence has developed two tests: the dominancy test and the holistic test.
The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and
deception, thus constituting infringement. If the competing trademark contains the main, essential, and dominant features of another, and
confusion or deception is likely to result, infringement occurs. Exact duplication or imitation is not required. The question is whether the use
of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive consumers.14

In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.15 The discerning eye of the observer must focus not only on the predominant words but also
on the other features appearing on both marks in order that the observer may draw his conclusion whether one is confusingly similar to the
other.16

Applying either the dominancy test or the holistic test, petitioner’s "SAN FRANCISCO COFFEE" trademark is a clear infringement of
respondent’s "SAN FRANCISCO COFFEE & ROASTERY, INC." trade name. The descriptive words "SAN FRANCISCO COFFEE" are
precisely the dominant features of respondent’s trade name. Petitioner and respondent are engaged in the same business of selling coffee,
whether wholesale or retail. The likelihood of confusion is higher in cases where the business of one corporation is the same or
substantially the same as that of another corporation. In this case, the consuming public will likely be confused as to the source of the
coffee being sold at petitioner’s coffee shops. Petitioner’s argument that "San Francisco" is just a proper name referring to the famous city
in California and that "coffee" is simply a generic term, is untenable. Respondent has acquired an exclusive right to the use of the trade
name "SAN FRANCISCO COFFEE & ROASTERY, INC." since the registration of the business name with the DTI in 1995. Thus,
respondent’s use of its trade name from then on must be free from any infringement by similarity. Of course, this does not mean that
respondent has exclusive use of the geographic word "San Francisco" or the generic word "coffee." Geographic or generic words are not,
per se, subject to exclusive appropriation. It is only the combination of the words "SAN FRANCISCO COFFEE," which is respondent’s trade
name in its coffee business, that is protected against infringement on matters related to the coffee business to avoid confusing or deceiving
the public.

In Philips Export B.V. v. Court of Appeals,17 this Court held that a corporation has an exclusive right to the use of its name. The right
proceeds from the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business
thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce
persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name.18

This Court is not just a court of law, but also of equity. We cannot allow petitioner to profit by the name and reputation so far built by
respondent without running afoul of the basic demands of fair play. Not only the law but equity considerations hold petitioner liable for
infringement of respondent’s trade name.

The Court of Appeals was correct in setting aside the 22 October 2003 Decision of the Office of the Director General-Intellectual Property
Office and in reinstating the 14 August 2002 Decision of the Bureau of Legal Affairs-Intellectual Property Office.

WHEREFORE, we DENY the petition for review. We AFFIRM the 15 June 2005 Decision and 1 September 2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 80396.

Costs against petitioner.

SO ORDERED.

19. G.R. No. 185830               June 5, 2013

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., Petitioner, 

vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the December 23, 2008 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
104672 which affirmed in toto the Intellectual Property Office (IPO) Director General’s April 21, 2008 Decision3 that declared respondent
Renaud Cointreau & Cie (Cointreau) as the true and lawful owner of the mark "LE CORDON BLEU & DEVICE" and thus, is entitled to
register the same under its name.

The Facts

On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the (now defunct) Bureau of Patents,
Trademarks, and Technology Transfer (BPTTT) of the Department of Trade and Industry a trademark application for the mark "LE
CORDON BLEU & DEVICE" for goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International Classification of Goods and
Services for the Purposes of Registrations of Marks ("Nice Classification") (subject mark). The application was filed pursuant to Section 37
of Republic Act No. 166, as amended (R.A. No. 166), on the basis of Home Registration No. 1,390,912, issued on November 25, 1986 in
France. Bearing Serial No. 72264, such application was published for opposition in the March-April 1993 issue of the BPTTT Gazette and
released for circulation on May 31, 1993.4

On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject application, averring that: (a) it is the
owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE," which it has been using since 1948 in cooking and other culinary
activities, including in its restaurant business; and (b) it has earned immense and invaluable goodwill such that Cointreau’s use of the
subject mark will actually create confusion, mistake, and deception to the buying public as to the origin and sponsorship of the goods, and
cause great and irreparable injury and damage to Ecole’s business reputation and goodwill as a senior user of the same.5
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the subject mark. It averred that: (a) it has filed
applications for the subject mark’s registration in various jurisdictions, including the Philippines; (b) Le Cordon Bleu is a culinary school of
worldwide acclaim which was established in Paris, France in 1895; (c) Le Cordon Bleu was the first cooking school to have set the standard
for the teaching of classical French cuisine and pastry making; and (d) it has trained students from more than eighty (80) nationalities,
including Ecole’s directress, Ms. Lourdes L. Dayrit. Thus, Cointreau concluded that Ecole’s claim of being the exclusive owner of the
subject mark is a fraudulent misrepresentation.6

During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos. 60631 and 54352 for the marks "CORDON
BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 & DEVICE" for goods and services under classes 21 and 41 of the Nice
Classification, respectively.7

The Ruling of the Bureau of Legal Affairs

In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecole’s opposition to the subject mark,
necessarily resulting in the rejection of Cointreau’s application.9 While noting the certificates of registration obtained from other countries
and other pertinent materials showing the use of the subject mark outside the Philippines, the BLA did not find such evidence sufficient to
establishCointreau’s claim of prior use of the same in the Philippines. It emphasized that the adoption and use of trademark must be in
commerce in the Philippines and not abroad. It then concluded that Cointreau has not established any proprietary right entitled to protection
in the Philippine jurisdiction because the law on trademarks rests upon the doctrine of nationality or territoriality.10

On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE CORDON BLEU MANILLE" has been
known and used in the Philippines since 1948 and registered under the name "ECOLE DE CUISINE MANILLE (THE CORDON BLEU OF
THE PHILIPPINES), INC." on May 9, 1980.11

Aggrieved, Cointreau filed an appeal with the IPO Director General.

The Ruling of the IPO Director General

In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLA’s decision, thus, granting Cointreau’s appeal
and allowing the registration of the subject mark.12 He held that while Section 2 of R.A. No. 166 requires actual use of the subject mark in
commerce in the Philippines for at least two (2) months before the filing date of the application, only the owner thereof has the right to
register the same, explaining that the user of a mark in the Philippines is not ipso facto its owner. Moreover, Section 2-A of the same law
does not require actual use in the Philippines to be able to acquire ownership of a mark.13

In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he considered Cointreau’s undisputed use of
such mark since 1895 for its culinary school in Paris, France (in which petitioner’s own directress, Ms. Lourdes L. Dayrit, had trained in
1977). Contrarily, he found that while Ecole may have prior use of the subject mark in the Philippines since 1948, it failed to explain how it
came up with such name and mark. The IPO Director General therefore concluded that Ecole has unjustly appropriated the subject mark,
rendering it beyond the mantle of protection of Section 4(d)14 of R.A. No. 166.15

Finding the IPO Director General’s reversal of the BLA’s Decision unacceptable, Ecole filed a Petition for Review16dated June 7, 2008 with
the CA.

Ruling of the CA

In its Decision dated December 23, 2008, the CA affirmed the IPO Director General’s Decision in toto.17 It declared Cointreau as the true
and actual owner of the subject mark with a right to register the same in the Philippines under Section 37 of R.A. No. 166, having registered
such mark in its country of origin on November 25, 1986.18

The CA likewise held that Cointreau’s right to register the subject mark cannot be barred by Ecole’s prior use thereof as early as 1948 for
its culinary school "LE CORDON BLEU MANILLE" in the Philippines because its appropriation of the mark was done in bad faith. Further,
Ecole had no certificate of registration that would put Cointreau on notice that the former had appropriated or has been using the subject
mark. In fact, its application for trademark registration for the same which was just filed on February 24, 1992 is still pending with the IPO.19

Hence, this petition.

Issues Before the Court

The sole issue raised for the Court’s resolution is whether the CA was correct in upholding the IPO Director General’s ruling that Cointreau
is the true and lawful owner of the subject mark and thus, entitled to have the same registered under its name.

At this point, it should be noted that the instant case shall be resolved under the provisions of the old Trademark Law, R.A. No. 166, which
was the law in force at the time of Cointreau’s application for registration of the subject mark.

The Court’s Ruling

The petition is without merit.

In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was the first entity that used the same in the
Philippines. Hence, it is the one entitled to its registration and not Cointreau.

Petitioner’s argument is untenable.

Under Section 220 of R.A. No. 166, in order to register a trademark, one must be the owner thereof and must have actually used the mark in
commerce in the Philippines for two (2) months prior to the application for registration. Section 2-A21 of the same law sets out to define how
one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have been so appropriated by another. Additionally, it is significant to note that
Section 2-A does not require that the actual use of a trademark must be within the Philippines. Thus, as correctly mentioned by the CA,
under R.A. No. 166, one may be an owner of a mark due to its actual use but may not yet have the right to register such ownership here
due to the owner’s failure to use the same in the Philippines for two (2) months prior to registration.22

Nevertheless, foreign marks which are not registered are still accorded protection against infringement and/or unfair competition. At this
point, it is worthy to emphasize that the Philippines and France, Cointreau’s country of origin, are both signatories to the Paris Convention
for the Protection of Industrial Property (Paris Convention).23 Articles 6bis and 8 of the Paris Convention state:

ARTICLE 6bis

(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to
cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being
already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods.  These provisions shall also
1âwphi1

apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion
therewith.

ARTICLE 8

A trade name shall be protected in all the countries of the Union without the obligation of filing or registration, whether or not it forms part of
a trademark. (Emphasis and underscoring supplied)

In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:

Section 37. Rights of foreign registrants. - Persons who are nationals of, domiciled in, or have a bona fide or effective business or
commercial establishment in any foreign country, which is a party to any international convention or treaty relating to marks or trade-names,
or the repression of unfair competition to which the Philippines may be a party, shall be entitled to the benefits and subject to the provisions
of this Act to the extent and under the conditions essential to give effect to any such convention and treaties so long as the Philippines shall
continue to be a party thereto, except as provided in the following paragraphs of this section.

xxxx

Trade-names of persons described in the first paragraph of this section shall be protected without the obligation of filing or registration
whether or not they form parts of marks.

xxxx

In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to assure nationals of the signatory-countries
that they are afforded an effective protection against violation of their intellectual property rights in the Philippines in the same way that their
own countries are obligated to accord similar protection to Philippine nationals.24 "Thus, under Philippine law, a trade name of a national of
a State that is a party to the Paris Convention, whether or not the trade name forms part of a trademark, is protected "without the obligation
of filing or registration.’"25

In the instant case, it is undisputed that Cointreau has been using the subject mark in France since 1895, prior to Ecole’s averred first use
of the same in the Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecole’s present directress, Ms. Lourdes L. Dayrit
(and even its foundress, Pat Limjuco Dayrit), had trained in Cointreau’s Le Cordon Bleu culinary school in Paris, France. Cointreau was
likewise the first registrant of the said mark under various classes, both abroad and in the Philippines, having secured Home Registration
No. 1,390,912 dated November 25, 1986 from its country of origin, as well as several trademark registrations in the Philippines.26

On the other hand, Ecole has no certificate of registration over the subject mark but only a pending application covering services limited to
Class 41 of the Nice Classification, referring to the operation of a culinary school. Its application was filed only on February 24, 1992, or
after Cointreau filed its trademark application for goods and services falling under different classes in 1990. Under the foregoing
circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot be said to have validly appropriated the same.

It is thus clear that at the time Ecole started using the subject mark, the same was already being used by Cointreau, albeit abroad, of which
Ecole’s directress was fully aware, being an alumna of the latter’s culinary school in Paris, France. Hence, Ecole cannot claim any tinge of
ownership whatsoever over the subject mark as Cointreau is the true and lawful owner thereof. As such, the IPO Director General and the
CA were correct in declaring Cointreau as the true and lawful owner of the subject mark and as such, is entitled to have the same
registered under its name.
In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines,
as amended, has already dispensed with the requirement of prior actual use at the time of registration.27 Thus, there is more reason to allow
the registration of the subject mark under the name of Cointreau as its true and lawful owner.

As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the goods (or services) to which it is affixed;
to secure to him, who has been instrumental in bringing into the market a superior article of merchandise, the fruit of his industry and skill;
to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect the manufacturer against
substitution and sale of an inferior and different article as his product."28 As such, courts will protect trade names or marks, although not
registered or properly selected as trademarks, on the broad ground of enforcing justice and protecting one in the fruits of his toil.29

WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 104672 is
hereby AFFIRMED in toto.

SO ORDERED.

20. G.R. No. 165306 September 20, 2005

MANLY SPORTWEAR MANUFACTURING, INC., Petitioners, 

vs.
DADODETTE ENTERPRISES AND/OR HERMES SPORTS CENTER, Respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari1 under Rule 45 of the Revised Rules of Civil Procedure assails the July 13, 2004 decision2 of the Court
of Appeals3 in CA-G.R. SP No. 79887 and its September 15, 2004 resolution4 denying reconsideration thereof.

The facts are as follows:

On March 14, 2003, Special Investigator Eliezer P. Salcedo of the National Bureau of Investigation (NBI) applied for a search warrant
before the Regional Trial Court (RTC) of Quezon City, based on the information that Dadodette Enterprises and/or Hermes Sports Center
were in possession of goods, the copyright of which belonged to Manly Sportswear Mfg., Inc. (MANLY).5

After finding reasonable grounds that a violation of Sections 172 and 217 of Republic Act (RA) No. 82936 has been committed, Judge
Estrella T. Estrada of RTC-Quezon City, Branch 83, issued on March 17, 2003 Search Warrant No. 4044(03).7

Respondents thereafter moved to quash and annul the search warrant contending that the same is invalid since the requisites for its
issuance have not been complied with. They insisted that the sporting goods manufactured by and/or registered in the name of MANLY are
ordinary and common hence, not among the classes of work protected under Section 172 of RA 8293.

On June 10, 2003, the trial court granted the motion to quash and declared Search Warrant No. 4044(03) null and void based on its finding
that the copyrighted products of MANLY do not appear to be original creations and were being manufactured and distributed by different
companies locally and abroad under various brands, and therefore unqualified for protection under Section 172 of RA 8293. Moreover,
MANLY’s certificates of registrations were issued only in 2002, whereas there were certificates of registrations for the same sports articles
which were issued earlier than MANLY’s, thus further negating the claim that its copyrighted products were original creations.8

On August 11, 2003, the trial court denied9 MANLY’s motion for reconsideration. Hence it filed a petition for certiorari10 before the Court of
Appeals which was denied for lack of merit. The appellate court found that the trial court correctly granted the motion to quash and that its
ruling in the ancillary proceeding did not preempt the findings of the intellectual property court as it did not resolve with finality the status or
character of the seized items.

After denial of its motion for reconsideration on September 15, 2004, MANLY filed the instant petition for review on certiorari raising the sole
issue of whether or not the Court of Appeals erred in finding that the trial court did not gravely abuse its discretion in declaring in the
hearing for the quashal of the search warrant that the copyrighted products of MANLY are not original creations subject to the protection of
RA 8293.

We deny the petition.

The power to issue search warrants is exclusively vested with the trial judges in the exercise of their judicial function.11 As such, the power
to quash the same also rests solely with them. After the judge has issued a warrant, he is not precluded to subsequently quash the same, if
he finds upon reevaluation of the evidence that no probable cause exists.

Our ruling in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93 12 is instructive, thus:
Inherent in the courts’ power to issue search warrants is the power to quash warrants already issued. In this connection, this Court has
ruled that the motion to quash should be filed in the court that issued the warrant unless a criminal case has already been instituted in
another court, in which case, the motion should be filed with the latter. The ruling has since been incorporated in Rule 126 of the Revised
Rules of Criminal Procedure[.]

In the instant case, we find that the trial court did not abuse its discretion when it entertained the motion to quash considering that no
criminal action has yet been instituted when it was filed. The trial court also properly quashed the search warrant it earlier issued after
finding upon reevaluation of the evidence that no probable cause exists to justify its issuance in the first place. As ruled by the trial court,
the copyrighted products do not appear to be original creations of MANLY and are not among the classes of work enumerated under
Section 172 of RA 8293. The trial court, thus, may not be faulted for overturning its initial assessment that there was probable cause in view
of its inherent power to issue search warrants and to quash the same. No objection may be validly posed to an order quashing a warrant
already issued as the court must be provided with the opportunity to correct itself of an error unwittingly committed, or, with like effect, to
allow the aggrieved party the chance to convince the court that its ruling is erroneous.

Moreover, the trial court was acting within bounds when it ruled, in an ancillary proceeding, that the copyrighted products of petitioner are
not original creations. This is because in the determination of the existence of probable cause for the issuance or quashal of a warrant, it is
inevitable that the court may touch on issues properly threshed out in a regular proceeding. In so doing, it does not usurp the power of,
much less preclude, the court from making a final judicial determination of the issues in a full-blown trial. Consequently, MANLY’s assertion
that the trial court’s order quashing the warrant preempted the finding of the intellectual property court has no legal basis.

As pertinently held in Solid Triangle Sales Corp. v. Sheriff, RTC, Q.C., Br. 93:13

When the court, in determining probable cause for issuing or quashing a search warrant, finds that no offense has been committed, it does
not interfere with or encroach upon the proceedings in the preliminary investigation. The court does not oblige the investigating officer not to
file an information for the court’s ruling that no crime exists is only for purposes of issuing or quashing the warrant. This does not, as
petitioners would like to believe, constitute a usurpation of the executive function. Indeed, to shirk from this duty would amount to an
abdication of a constitutional obligation.

...

... The finding by the court that no crime exists does not preclude the authorized officer conducting the preliminary investigation from
making his own determination that a crime has been committed and that probable cause exists for purposes of filing the information.

As correctly observed by the Court of Appeals, the trial court’s finding that the seized products are not copyrightable was merely preliminary
as it did not finally and permanently adjudicate on the status and character of the seized items. MANLY could still file a separate copyright
infringement suit against the respondents because the order for the issuance or quashal of a warrant is not res judicata.

Thus, in Vlasons Enterprises Corporation v. Court of Appeals 14 we held that:

The proceeding for the seizure of property in virtue of a search warrant does not end with the actual taking of the property by the proper
officers and its delivery, usually constructive, to the court. The order for the issuance of the warrant is not a final one and cannot
constitute res judicata. Such an order does not ascertain and adjudicate the permanent status or character of the seized property. By its
very nature, it is provisional, interlocutory. It is merely the first step in the process to determine the character and title of the property. That
determination is done in the criminal action involving the crime or crimes in connection with which the search warrant was issued. Hence,
such a criminal action should be prosecuted, or commenced if not yet instituted, and prosecuted. The outcome of the criminal action will
dictate the disposition of the seized property…

We have also ruled in Ching v. Salinas, Sr., et al.15 that:

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models are copyrightable and, if so, whether he
is the owner of a copyright over the said models. It bears stressing that upon the filing of the application for search warrant, the RTC was
duty-bound to determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure[.]

Further, the copyright certificates issued in favor of MANLY constitute merely prima facie evidence of validity and ownership. However, no
presumption of validity is created where other evidence exist that may cast doubt on the copyright validity. Hence, where there is sufficient
proof that the copyrighted products are not original creations but are readily available in the market under various brands, as in this case,
validity and originality will not be presumed and the trial court may properly quash the issued warrant for lack of probable cause.

Besides, no copyright accrues in favor of MANLY despite issuance of the certificates of registration and deposit16pursuant to Section 2, Rule
7 of the Copyrights Safeguards and Regulations17 which states:

Sec. 2 Effects of Registration and Deposit of Work. The registration and deposit of the work is purely for recording the date of registration
and deposit of the work and shall not be conclusive as to copyright ownership or the term of the copyrights or the rights of the copyright
owner, including neighboring rights.

At most, the certificates of registration and deposit issued by the National Library and the Supreme Court Library serve merely as a notice
of recording and registration of the work but do not confer any right or title upon the registered copyright owner or automatically put his work
under the protective mantle of the copyright law. It is not a conclusive proof of copyright ownership. As it is, non-registration and deposit of
the work within the prescribed period only makes the copyright owner liable to pay a fine.18
WHEREFORE, the petition is DENIED. The July 13, 2004 decision of the Court of Appeals in CA-G.R. SP No. 79887 and resolution dated
September 15, 2004, are AFFIRMED.

SO ORDERED.

21. G.R. No. 175769-70             January 19, 2009

ABS-CBN BROADCASTING CORPORATION, Petitioners, 

vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE
MESA, AND ALOYSIUS M. COLAYCO, Respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari1 assails the July 12, 2006 Decision2 of the Court of Appeals in CA-G.R. SP Nos. 88092 and 90762,
which affirmed the December 20, 2004 Decision of the Director-General of the Intellectual Property Office (IPO) in Appeal No. 10-2004-
0002. Also assailed is the December 11, 2006 Resolution3 denying the motion for reconsideration.

Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the Republic of the Philippines to engage in
television and radio broadcasting.4 It broadcasts television programs by wireless means to Metro Manila and nearby provinces, and by
satellite to provincial stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High Frequency (UHF). The
programs aired over Channels 2 and 23 are either produced by ABS-CBN or purchased from or licensed by other producers.

ABS-CBN also owns regional television stations which pattern their programming in accordance with perceived demands of the region.
Thus, television programs shown in Metro Manila and nearby provinces are not necessarily shown in other provinces.

Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting System. It delivers digital direct-to-home
(DTH) television via satellite to its subscribers all over the Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua,
Manuel F. Abellada, Raul B. De Mesa, and Aloysius M. Colayco, are members of PMSI’s Board of Directors.

PMSI was granted a legislative franchise under Republic Act No. 86305 on May 7, 1998 and was given a Provisional Authority by the
National Telecommunications Commission (NTC) on February 1, 2000 to install, operate and maintain a nationwide DTH satellite service.
When it commenced operations, it offered as part of its program line-up ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC Channel 5,
GMA Channel 7, RPN Channel 9, and IBC Channel 13, together with other paid premium program channels.

However, on April 25, 2001,6 ABS-CBN demanded for PMSI to cease and desist from rebroadcasting Channels 2 and 23. On April 27,
2001,7 PMSI replied that the rebroadcasting was in accordance with the authority granted it by NTC and its obligation under NTC
Memorandum Circular No. 4-08-88,8 Section 6.2 of which requires all cable television system operators operating in a community within
Grade “A” or “B” contours to carry the television signals of the authorized television broadcast stations.9

Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the negotiations were terminated on April
4, 2002 by ABS-CBN allegedly due to PMSI’s inability to ensure the prevention of illegal retransmission and further rebroadcast of its
signals, as well as the adverse effect of the rebroadcasts on the business operations of its regional television stations.10

On May 13, 2002, ABS-CBN filed with the IPO a complaint for “Violation of Laws Involving Property Rights, with Prayer for the Issuance of
a Temporary Restraining Order and/or Writ of Preliminary Injunction,” which was docketed as IPV No. 10-2002-0004. It alleged that PMSI’s
unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and copyright.

On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN’s application for a temporary restraining order. On July 12,
2002, PMSI suspended its retransmission of Channels 2 and 23 and likewise filed a petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 71597.

Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the must-carry rule under Memorandum Circular No.
04-08-88. It also submitted a letter dated December 20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:

This refers to your letter dated December 16, 2002 requesting for regulatory guidance from this Commission in
connection with the application and coverage of NTC Memorandum Circular No. 4-08-88, particularly Section 6
thereof, on mandatory carriage of television broadcast signals, to the direct-to-home (DTH) pay television services
of Philippine Multi-Media System, Inc. (PMSI).

Preliminarily, both DTH pay television and cable television services are broadcast services, the only difference being
the medium of delivering such services (i.e. the former by satellite and the latter by cable). Both can carry broadcast
signals to the remote areas, thus enriching the lives of the residents thereof through the dissemination of social,
economic, educational information and cultural programs.
 The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite services. Concededly,
PMSI’s DTH pay television services covers very much wider areas in terms of carriage of broadcast signals,
including areas not reachable by cable television services thereby providing a better medium of dissemination of
information to the public.

In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88, particularly
section 6 thereof, on mandatory carriage of television broadcast signals, DTH pay television services
should be deemed covered by such NTC Memorandum Circular.

For your guidance. (Emphasis added)11

On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated July 24, 2003 from the NTC enjoining
strict and immediate compliance with the must-carry rule under Memorandum Circular No. 04-08-88, to wit:

Dear Mr. Abellada:

Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated July 17, 2003 from
President/COO Rene Q. Bello of the International Broadcasting Corporation (IBC-Channel 13) complaining that your
company, Dream Broadcasting System, Inc., has cut-off, without any notice or explanation whatsoever, to air the
programs of IBC-13, a free-to-air television, to the detriment of the public.

We were told that, until now, this has been going on.

Please be advised that as a direct broadcast satellite operator, operating a direct-to-home (DTH)
broadcasting system, with a provisional authority (PA) from the NTC, your company, along with cable
television operators, are mandated to strictly comply with the existing policy of NTC on mandatory carriage
of television broadcast signals as provided under Memorandum Circular No. 04-08-88, also known as the
Revised Rules and Regulations Governing Cable Television System in the Philippines.

This mandatory coverage provision under Section 6.2 of said Memorandum Circular, requires all cable
television system operators, operating in a community within the Grade “A” or “B” contours to “must-
carry” the television signals of the authorized television broadcast stations, one of which is IBC-13. Said
directive equally applies to your company as the circular was issued to give consumers and the public a
wider access to more sources of news, information, entertainment and other programs/contents.

This Commission, as the governing agency vested by laws with the jurisdiction, supervision and control over all
public services, which includes direct broadcast satellite operators, and taking into consideration the paramount
interest of the public in general, hereby directs you to immediately restore the signal of IBC-13 in your network
programs, pursuant to existing circulars and regulations of the Commission.

For strict compliance. (Emphasis added)12

Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled “Implementing Rules and Regulations
Governing Community Antenna/Cable Television (CATV) and Direct Broadcast Satellite (DBS) Services to Promote Competition in the
Sector.” Article 6, Section 8 thereof states:

As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of any television
signals without any agreement with or authorization from program/content providers are prohibited.

On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88, the NTC explained to PMSI in a letter
dated November 3, 2003 that:

To address your query on whether or not the provisions of MC 10-10-2003 would have the effect of amending the
provisions of MC 4-08-88 on mandatory carriage of television signals, the answer is in the negative.

xxxx

The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.

Please be advised, therefore, that as duly licensed direct-to-home satellite television service provider
authorized by this Commission, your company continues to be bound by the guidelines provided for under
MC 04-08-88, specifically your obligation under its mandatory carriage provisions, in addition to your
obligations under MC 10-10-2003. (Emphasis added)

Please be guided accordingly.13

On December 22, 2003, the BLA rendered a decision14 finding that PMSI infringed the broadcasting rights and copyright of ABS-CBN and
ordering it to permanently cease and desist from rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO which was docketed as Appeal No. 10-2004-
0002. On December 23, 2004, it also filed with the Court of Appeals a “Motion to Withdraw Petition; Alternatively, Memorandum of the
Petition for Certiorari” in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-General of the IPO rendered a decision15 in favor of PMSI, the dispositive portion of which states:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly, Decision No. 2003-01
dated 22 December 2003 of the Director of Bureau of Legal Affairs is hereby REVERSED and SET ASIDE.

Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for appropriate action, and the
records be returned to her for proper disposition. The Documentation, Information and Technology Transfer Bureau
is also given a copy for library and reference purposes.

SO ORDERED.16

Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining order and writ of preliminary injunction with the
Court of Appeals, which was docketed as CA-G.R. SP No. 88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-CBN filed a petition for contempt against
PMSI for continuing to rebroadcast Channels 2 and 23 despite the restraining order. The case was docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos. 88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the Director-General of the IPO and dismissed
both petitions filed by ABS-CBN.17
ABS-CBN’s motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an infringement of its broadcasting rights and
copyright under the Intellectual Property Code (IP Code);18that Memorandum Circular No. 04-08-88 excludes DTH satellite television
operators; that the Court of Appeals’ interpretation of the must-carry rule violates Section 9 of Article III19 of the Constitution because it
allows the taking of property for public use without payment of just compensation; that the Court of Appeals erred in dismissing the petition
for contempt docketed as CA-G.R. SP No. 90762 without requiring respondents to file comment.
Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is sanctioned by Memorandum Circular No. 04-
08-88; that the must-carry rule under the Memorandum Circular is a valid exercise of police power; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of contempt.
After a careful review of the facts and records of this case, we affirm the findings of the Director-General of the IPO and the Court of
Appeals.
There is no merit in ABS-CBN’s contention that PMSI violated its broadcaster’s rights under Section 211 of the IP Code which provides in
part:

Chapter XIV
BROADCASTING ORGANIZATIONS

Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations shall enjoy the
exclusive right to carry out, authorize or prevent any of the following acts:

211.1. The rebroadcasting of their broadcasts;

xxxx

Neither is PMSI guilty of infringement of ABS-CBN’s copyright under Section 177 of the IP Code which states that copyright or economic
rights shall consist of the exclusive right to carry out, authorize or prevent the public performance of the work (Section 177.6), and other
communication to the public of the work (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as “the transmission by wireless means for the public reception of sounds or of images
or of representations thereof; such transmission by satellite is also ‘broadcasting’ where the means for decrypting are provided to the public
by the broadcasting organization or with its consent.”
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the Protection of Performers, Producers of
Phonograms and Broadcasting Organizations, otherwise known as the 1961 Rome Convention, of which the Republic of the Philippines is
a signatory, 21 is “the simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting organization.”
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and thus cannot be considered to have
infringed ABS-CBN’s broadcasting rights and copyright, thus:

That the Appellant’s [herein respondent PMSI] subscribers are able to view Appellee’s [herein petitioner ABS-CBN]
programs (Channels 2 and 23) at the same time that the latter is broadcasting the same is undisputed. The question
however is, would the Appellant in doing so be considered engaged in broadcasting. Section 202.7 of the IP Code
states that broadcasting means

“the transmission by wireless means for the public reception of sounds or of images or of representations thereof;
such transmission by satellite is also ‘broadcasting’ where the means for decrypting are provided to the public by the
broadcasting organization or with its consent.”

Section 202.7 of the IP Code, thus, provides two instances wherein there is broadcasting, to wit:
 1. The transmission by wireless means for the public reception of sounds or of images or of
representations thereof; and

2. The transmission by satellite for the public reception of sounds or of images or of representations
thereof where the means for decrypting are provided to the public by the broadcasting organization or
with its consent.

It is under the second category that Appellant’s DTH satellite television service must be examined since it is
satellite-based. The elements of such category are as follows:

1. There is transmission of sounds or images or of representations thereof;

2. The transmission is through satellite;

3. The transmission is for public reception; and

4. The means for decrypting are provided to the public by the broadcasting organization or with its
consent.

It is only the presence of all the above elements can a determination that the DTH is broadcasting and
consequently, rebroadcasting Appellee’s signals in violation of Sections 211 and 177 of the IP Code, may be arrived
at.

Accordingly, this Office is of the view that the transmission contemplated under Section 202.7 of the IP Code
presupposes that the origin of the signals is the broadcaster. Hence, a program that is broadcasted is attributed to
the broadcaster. In the same manner, the rebroadcasted program is attributed to the rebroadcaster.

In the case at hand, Appellant is not the origin nor does it claim to be the origin of the programs broadcasted by the
Appellee. Appellant did not make and transmit on its own but merely carried the existing signals of the Appellee.
When Appellant’s subscribers view Appellee’s programs in Channels 2 and 23, they know that the origin thereof was
the Appellee.

Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster transmits, the signals are scattered
or dispersed in the air. Anybody may pick-up these signals. There is no restriction as to its number, type or class of
recipients. To receive the signals, one is not required to subscribe or to pay any fee. One only has to have a
receiver, and in case of television signals, a television set, and to tune-in to the right channel/frequency. The
definition of broadcasting, wherein it is required that the transmission is wireless, all the more supports this
discussion. Apparently, the undiscriminating dispersal of signals in the air is possible only through wireless means.
The use of wire in transmitting signals, such as cable television, limits the recipients to those who are connected.
Unlike wireless transmissions, in wire-based transmissions, it is not enough that one wants to be connected and
possesses the equipment. The service provider, such as cable television companies may choose its subscribers.

The only limitation to such dispersal of signals in the air is the technical capacity of the transmitters and other
equipment employed by the broadcaster. While the broadcaster may use a less powerful transmitter to limit its
coverage, this is merely a business strategy or decision and not an inherent limitation when transmission is through
cable.

Accordingly, the nature of broadcasting is to scatter the signals in its widest area of coverage as possible. On this
score, it may be said that making public means that accessibility is undiscriminating as long as it [is] within the range
of the transmitter and equipment of the broadcaster. That the medium through which the Appellant carries the
Appellee’s signal, that is via satellite, does not diminish the fact that it operates and functions as a cable television. It
remains that the Appellant’s transmission of signals via its DTH satellite television service cannot be considered
within the purview of broadcasting. x x x

xxxx

This Office also finds no evidence on record showing that the Appellant has provided decrypting means to the public
indiscriminately. Considering the nature of this case, which is punitive in fact, the burden of proving the existence of
the elements constituting the acts punishable rests on the shoulder of the complainant.

Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the Appellee’s programs
on Channels 2 and 23, as defined under the Rome Convention.22

Under the Rome Convention, rebroadcasting is “the simultaneous broadcasting by one broadcasting organization of the broadcast of
another broadcasting organization.” The Working Paper23 prepared by the Secretariat of the Standing Committee on Copyright and Related
Rights defines broadcasting organizations as “entities that take the financial and editorial responsibility for the selection and arrangement
of, and investment in, the transmitted content.”24 Evidently, PMSI would not qualify as a broadcasting organization because it does not have
the aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in its unaltered form. PMSI
does not produce, select, or determine the programs to be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or
author of such programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in accordance with
Memorandum Circular 04-08-88. With regard to its premium channels, it buys the channels from content providers and transmits on an as-
is basis to its viewers. Clearly, PMSI does not perform the functions of a broadcasting organization; thus, it cannot be said that it is engaged
in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI’s services are similar to a cable television system
because the services it renders fall under cable “retransmission,” as described in the Working Paper, to wit:

(G) Cable Retransmission

47. When a radio or television program is being broadcast, it can be retransmitted to new audiences by means of
cable or wire. In the early days of cable television, it was mainly used to improve signal reception, particularly in so-
called “shadow zones,” or to distribute the signals in large buildings or building complexes. With improvements in
technology, cable operators now often receive signals from satellites before retransmitting them in an unaltered form
to their subscribers through cable.

48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or delayed
(deferred transmission) on the basis of a fixation or a reproduction of a fixation. Furthermore, they might be
unaltered or altered, for example through replacement of commercials, etc. In general, however, the term
“retransmission” seems to be reserved for such transmissions which are both simultaneous and unaltered.

49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without such a right,
cable operators can retransmit both domestic and foreign over the air broadcasts simultaneously to their subscribers
without permission from the broadcasting organizations or other rightholders and without obligation to pay
remuneration.25 (Emphasis added)

Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the rebroadcasting of its broadcast,
however, this protection does not extend to cable retransmission. The retransmission of ABS-CBN’s signals by PMSI – which functions
essentially as a cable television – does not therefore constitute rebroadcasting in violation of the former’s intellectual property rights under
the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:

Sec. 184. Limitations on Copyright. -

184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement of copyright:

xxxx

(h) The use made of a work by or under the direction or control of the Government, by the National Library or by
educational, scientific or professional institutions where such use is in the public interest and is compatible with fair
use;

The carriage of ABS-CBN’s signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is under the direction and control
of the government though the NTC which is vested with exclusive jurisdiction to supervise, regulate and control telecommunications and
broadcast services/facilities in the Philippines.26 The imposition of the must-carry rule is within the NTC’s power to promulgate rules and
regulations, as public safety and interest may require, to encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it
reasonably feasible.27 As correctly observed by the Director-General of the IPO:

Accordingly, the “Must-Carry Rule” under NTC Circular No. 4-08-88 falls under the foregoing category of limitations
on copyright. This Office agrees with the Appellant [herein respondent PMSI] that the “Must-Carry Rule” is in
consonance with the principles and objectives underlying Executive Order No. 436,28 to wit:

The Filipino people must be given wider access to more sources of news, information,
education, sports event and entertainment programs other than those provided for by mass
media and afforded television programs to attain a well informed, well-versed and culturally
refined citizenry and enhance their socio-economic growth:

WHEREAS, cable television (CATV) systems could support or supplement the services
provided by television broadcast facilities, local and overseas, as the national information
highway to the countryside.29

The Court of Appeals likewise correctly observed that:

[T]he very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a few networks
would have unfettered power to make time available only to the highest bidders, to communicate only their own
views on public issues, people, and to permit on the air only those with whom they agreed – contrary to the state
 policy that the (franchise) grantee like the petitioner, private respondent and other TV station owners, shall provide
at all times sound and balanced programming and assist in the functions of public information and education.

This is for the first time that we have a structure that works to accomplish explicit state policy
goals.30

Indeed, intellectual property protection is merely a means towards the end of making society benefit from the creation of its men and
women of talent and genius. This is the essence of intellectual property laws, and it explains why certain products of ingenuity that are
concealed from the public are outside the pale of protection afforded by the law. It also explains why the author or the creator enjoys no
more rights than are consistent with public welfare.31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative franchises granted to both ABS-CBN
and PMSI are in consonance with state policies enshrined in the Constitution, specifically Sections 9,32 17,33 and 2434 of Article II on the
Declaration of Principles and State Policies.35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which authorizes it “to construct, operate and
maintain, for commercial purposes and in the public interest, television and radio broadcasting in and throughout the Philippines x x x.”
Section 4 thereof mandates that it “shall provide adequate public service time to enable the government, through the said broadcasting
stations, to reach the population on important public issues; provide at all times sound and balanced programming; promote public
participation such as in community programming; assist in the functions of public information and education x x x.”
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which similarly states that it “shall provide
adequate public service time to enable the government, through the said broadcasting stations, to reach the population on important public
issues; provide at all times sound and balanced programming; promote public participation such as in community programming; assist in
the functions of public information and education x x x.” Section 5, paragraph 2 of the same law provides that “the radio spectrum is a finite
resource that is a part of the national patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be
withdrawn anytime, after due process.”
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,36 the Court held that a franchise is a mere privilege which may be
reasonably burdened with some form of public service. Thus:

All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave frequencies
have to be allocated as there are more individuals who want to broadcast than there are frequencies to assign. A
franchise is thus a privilege subject, among other things, to amendment by Congress in accordance with the
constitutional provision that “any such franchise or right granted . . . shall be subject to amendment, alteration or
repeal by the Congress when the common good so requires.”

xxxx

Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and television
broadcast stations and, until the present case was brought, such provisions had not been thought of as taking
property without just compensation. Art. XII, §11 of the Constitution authorizes the amendment of franchises for “the
common good.” What better measure can be conceived for the common good than one for free air time for the
benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully informed
of the issues in an election? “[I]t is the right of the viewers and listeners, not the right of the broadcasters, which is
paramount.”

Nor indeed can there be any constitutional objection to the requirement that broadcast stations give free air time.
Even in the United States, there are responsible scholars who believe that government controls on broadcast media
can constitutionally be instituted to ensure diversity of views and attention to public affairs to further the system of
free expression. For this purpose, broadcast stations may be required to give free air time to candidates in an
election. Thus, Professor Cass R. Sunstein of the University of Chicago Law School, in urging reforms in regulations
affecting the broadcast industry, writes:

xxxx

In truth, radio and television broadcasting companies, which are given franchises, do not own the airwaves and
frequencies through which they transmit broadcast signals and images. They are merely given the temporary
privilege of using them. Since a franchise is a mere privilege, the exercise of the privilege may reasonably be
burdened with the performance by the grantee of some form of public service. x x x37

There is likewise no merit to ABS-CBN’s claim that PMSI’s carriage of its signals is for a commercial purpose; that its being the country’s
top broadcasting company, the availability of its signals allegedly enhances PMSI’s attractiveness to potential customers;38 or that the
unauthorized carriage of its signals by PMSI has created competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that such carriage adversely affected the
business operations of its regional stations. Except for the testimonies of its witnesses,[39] no studies, statistical data or information have
been submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has the burden of proving by substantial
evidence the allegations in the complaint.40 Mere allegation is not evidence, and is not equivalent to proof.41
Anyone in the country who owns a television set and antenna can receive ABS-CBN’s signals for free. Other broadcasting organizations
with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be accessed for free. No payment is required to view the
said channels42 because these broadcasting networks do not generate revenue from subscription from their viewers but from airtime
revenue from contracts with commercial advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI, it offers its customers premium paid
channels from content providers like Star Movies, Star World, Jack TV, and AXN, among others, thus allowing its customers to go beyond
the limits of “Free TV and Cable TV.”43 It does not advertise itself as a local channel carrier because these local channels can be viewed
with or without DTH television.
Relevantly, PMSI’s carriage of Channels 2 and 23 is material in arriving at the ratings and audience share of ABS-CBN and its programs.
These ratings help commercial advertisers and producers decide whether to buy airtime from the network. Thus, the must-carry rule is
actually advantageous to the broadcasting networks because it provides them with increased viewership which attracts commercial
advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television providers such as PMSI. PMSI uses
none of ABS-CBN’s resources or equipment and carries the signals and shoulders the costs without any recourse of charging.44 Moreover,
such carriage of signals takes up channel space which can otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBN’s argument that PMSI’s carriage of Channels 2 and 23 resulted in competition between its Metro Manila and
regional stations. ABS-CBN is free to decide to pattern its regional programming in accordance with perceived demands of the region;
however, it cannot impose this kind of programming on the regional viewers who are also entitled to the free-to-air channels. It must be
emphasized that, as a national broadcasting organization, one of ABS-CBN’s responsibilities is to scatter its signals to the widest area of
coverage as possible. That it should limit its signal reach for the sole purpose of gaining profit for its regional stations undermines public
interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the pursuit of profit. The right of the viewers
and listeners to the most diverse choice of programs available is paramount.45 The Director-General correctly observed, thus:

The “Must-Carry Rule” favors both broadcasting organizations and the public. It prevents cable television companies
from excluding broadcasting organization especially in those places not reached by signal. Also, the rule prevents
cable television companies from depriving viewers in far-flung areas the enjoyment of programs available to city
viewers. In fact, this Office finds the rule more burdensome on the part of the cable television companies. The latter
carries the television signals and shoulders the costs without any recourse of charging. On the other hand, the
signals that are carried by cable television companies are dispersed and scattered by the television stations and
anybody with a television set is free to pick them up.

With its enormous resources and vaunted technological capabilities, Appellee’s [herein petitioner ABS-CBN]
broadcast signals can reach almost every corner of the archipelago. That in spite of such capacity, it chooses to
maintain regional stations, is a business decision. That the “Must-Carry Rule” adversely affects the profitability of
maintaining such regional stations since there will be competition between them and its Metro Manila station is
speculative and an attempt to extrapolate the effects of the rule. As discussed above, Appellant’s DTH satellite
television services is of limited subscription. There was not even a showing on part of the Appellee the number of
Appellant’s subscribers in one region as compared to non-subscribing television owners. In any event, if this Office
is to engage in conjecture, such competition between the regional stations and the Metro Manila station will benefit
the public as such competition will most likely result in the production of better television programs.”46

All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General that PMSI did not infringe on ABS-
CBN’s intellectual property rights under the IP Code. The findings of facts of administrative bodies charged with their specific field of
expertise, are afforded great weight by the courts, and in the absence of substantial showing that such findings are made from an
erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability of the governmental structure, should
not be disturbed.47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not reviewable by the Supreme Court. They
carry even more weight when the Court of Appeals affirms the factual findings of a lower fact-finding body,48 as in the instant case.
There is likewise no merit to ABS-CBN’s contention that the Memorandum Circular excludes from its coverage DTH television services
such as those provided by PMSI. Section 6.2 of the Memorandum Circular requires all cable television system operators operating in a
community within Grade “A” or “B” contours to carry the television signals of the authorized television broadcast stations.49 The rationale
behind its issuance can be found in the whereas clauses which state:

Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their ability to offer
additional programming and to carry much improved broadcast signals in the remote areas, thereby enriching the
lives of the rest of the population through the dissemination of social, economic, educational information and cultural
programs;

Whereas, the national government supports the promotes the orderly growth of the Cable Television industry within
the framework of a regulated fee enterprise, which is a hallmark of a democratic society;

Whereas, public interest so requires that monopolies in commercial mass media shall be regulated or prohibited,
hence, to achieve the same, the cable TV industry is made part of the broadcast media;

Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National Telecommunications
Commission the authority to set down rules and regulations in order to protect the public and promote the general
welfare, the National Telecommunications Commission hereby promulgates the following rules and regulations on
Cable Television Systems;

The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of the general public and to promote
dissemination of information. In line with this policy, it is clear that DTH television should be deemed covered by the Memorandum Circular.
Notwithstanding the different technologies employed, both DTH and cable television have the ability to carry improved signals and promote
dissemination of information because they operate and function in the same way.
In its December 20, 2002 letter,50 the NTC explained that both DTH and cable television services are of a similar nature, the only difference
being the medium of delivering such services. They can carry broadcast signals to the remote areas and possess the capability to enrich
the lives of the residents thereof through the dissemination of social, economic, educational information and cultural programs.
Consequently, while the Memorandum Circular refers to cable television, it should be understood as to include DTH television which
provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation, 51 we held:

The NTC, being the government agency entrusted with the regulation of activities coming under its special and
technical forte, and possessing the necessary rule-making power to implement its objectives, is in the best position
to interpret its own rules, regulations and guidelines. The Court has consistently yielded and accorded great respect
to the interpretation by administrative agencies of their own rules unless there is an error of law, abuse of power,
lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.52

With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its resolution is not necessary in the disposition of
the instant case. One of the essential requisites for a successful judicial inquiry into constitutional questions is that the resolution of the
constitutional question must be necessary in deciding the case.53 In Spouses Mirasol v. Court of Appeals,54 we held:

As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other grounds.
The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of the political
departments are valid, absent a clear and unmistakable showing to the contrary. To doubt is to sustain. This
presumption is based on the doctrine of separation of powers. This means that the measure had first been carefully
studied by the legislative and executive departments and found to be in accord with the Constitution before it was
finally enacted and approved.55

The instant case was instituted for violation of the IP Code and infringement of ABS-CBN’s broadcasting rights and copyright, which can be
resolved without going into the constitutionality of Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance
of the circular in this case is whether or not compliance therewith should be considered manifestation of lack of intent to commit
infringement, and if it is, whether such lack of intent is a valid defense against the complaint of petitioner.56
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-88 by way of a collateral attack before
the Court of Appeals. In Philippine National Bank v. Palma, 57 we ruled that for reasons of public policy, the constitutionality of a law cannot
be collaterally attacked. A law is deemed valid unless declared null and void by a competent court; more so when the issue has not been
duly pleaded in the trial court.58
As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if not raised in the pleadings, ordinarily it
may not be raised in the trial, and if not raised in the trial court, it will not be considered on appeal.59 In Philippine Veterans Bank v. Court of
Appeals,60 we held:

We decline to rule on the issue of constitutionality as all the requisites for the exercise of judicial review are not
present herein. Specifically, the question of constitutionality will not be passed upon by the Court unless, at
the first opportunity, it is properly raised and presented in an appropriate case, adequately argued, and is
necessary to a determination of the case, particularly where the issue of constitutionality is the very lis
mota presented.x x x61

Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any other formal charge requiring the
respondent to show cause why he should not be punished for contempt or (2) by the filing of a verified petition, complying with the
requirements for filing initiatory pleadings.62
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No. 90762, for PMSI’s alleged
disobedience to the Resolution and Temporary Restraining Order, both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However,
after the cases were consolidated, the Court of Appeals did not require PMSI to comment on the petition for contempt. It ruled on the merits
of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without having ordered respondents to comment
on the same. Consequently, it would have us reinstate CA-G.R. No. 90762 and order respondents to show cause why they should not be
held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature. The modes of procedure and rules of
evidence adopted in contempt proceedings are similar in nature to those used in criminal prosecutions. 63 While it may be argued that the
Court of Appeals should have ordered respondents to comment, the issue has been rendered moot in light of our ruling on the merits. To
order respondents to comment and have the Court of Appeals conduct a hearing on the contempt charge when the main case has already
been disposed of in favor of PMSI would be circuitous. Where the issues have become moot, there is no justiciable controversy, thereby
rendering the resolution of the same of no practical use or value.64
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-G.R. SP Nos. 88092 and 90762,
sustaining the findings of the Director-General of the Intellectual Property Office and dismissing the petitions filed by ABS-CBN
Broadcasting Corporation, and the December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.
SO ORDERED.

22. G.R. No. 147043               June 21, 2005

NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners, 

vs.
JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER PHILIPPINES INC., JONATHAN K. CHUA, EMILY K.
CHUA, BENITO T. SANCHEZ, NANCY I. VELASCO, ALFONSO CHUA, ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN
MACHINERY DISPLAY & TRADE CENTER, INC., and THE SECRETARY OF JUSTICE, respondents.

DECISION

CARPIO, J.:
The Case

This is a petition for certiorari1 of the Resolutions2 of the Department of Justice dismissing for "lack of merit and insufficiency of evidence"
petitioner Microsoft Corporation’s complaint against respondents for copyright infringement and unfair competition.

The Facts

Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation, owns the copyright and trademark to several
computer software.3 Respondents Benito Keh and Yvonne Keh are the President/Managing Director and General Manager, respectively, of
respondent Beltron Computer Philippines, Inc. ("Beltron"), a domestic corporation. Respondents Jonathan K. Chua, Emily K. Chua, Benito
T. Sanchez, and Nancy I. Velasco are Beltron’s Directors. On the other hand, respondents Alfonso Chua, Alberto Chua, Judy K. Chua
Hwang, Sophia Ong, and Deanna Chua are the Directors of respondent Taiwan Machinery Display & Trade Center, Inc. ("TMTC"), also a
domestic corporation.4

In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement"). Under Section 2(a) of the Agreement, as amended
in January 1994, Microsoft authorized Beltron, for a fee, to:

(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each Customer System hard disk or Read
Only Memory ("ROM"); [and]

(ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per Section 2(a)(i) and/or acquired from
Authorized Replicator or Authorized Distributor) in object code form to end users[.] xxxx5

The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to comply with any of the Agreement’s
provisions. Microsoft terminated the Agreement effective 22 June 1995 for Beltron’s non-payment of royalties.6

Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft software. Consequently, Microsoft, through its
Philippine agent,7 hired the services of Pinkerton Consulting Services ("PCS"), a private investigative firm. Microsoft also sought the
assistance of the National Bureau of Investigation ("NBI"). On 10 November 1995, PCS employee John Benedic8 Sacriz ("Sacriz") and NBI
agent Dominador Samiano, Jr. ("Samiano"), posing as representatives of a computer shop,9 bought computer hardware (central processing
unit ("CPU") and computer monitor) and software (12 computer disks ("CDs") in read-only memory ("ROM") format) from respondents. The
CPU contained pre-installed10 Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs, encased in plastic containers with
Microsoft packaging, also contained Microsoft software.11 At least two of the CD-ROMs were "installers," so-called because they contain
several software (Microsoft only or both Microsoft and non-Microsoft).12 Sacriz and Samiano were not given the Microsoft end-user license
agreements, user’s manuals, registration cards or certificates of authenticity for the articles they purchased. The receipt issued to Sacriz
and Samiano for the CPU and monitor bore the heading "T.M.T.C. (PHILS.) INC. BELTRON COMPUTER."13 The receipt for the 12 CD-
ROMs did not indicate its source although the name "Gerlie" appears below the entry "delivered by."14

On 17 November 1995, Microsoft applied for search warrants against respondents in the Regional Trial Court, Branch 23, Manila
("RTC").15 The RTC granted Microsoft’s application and issued two search warrants ("Search Warrant Nos. 95-684 and 95-685").16 Using
Search Warrant Nos. 95-684 and 95-685, the NBI searched the premises of Beltron and TMTC and seized several computer-related
hardware, software, accessories, and paraphernalia. Among these were 2,831 pieces of CD-ROMs containing Microsoft software.17

Based on the articles obtained from respondents, Microsoft and a certain Lotus Development Corporation ("Lotus Corporation") charged
respondents before the Department of Justice ("DOJ") with copyright infringement under Section 5(A) in relation to Section 29 of
Presidential Decree No. 49, as amended, ("PD 49")18 and with unfair competition under Article 189(1)19 of the Revised Penal Code. In its
Complaint ("I.S. No. 96-193"), which the NBI indorsed, Microsoft alleged that respondents illegally copied and sold Microsoft software.20

In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K. Chua ("respondent Chua") denied the charges
against respondents. Respondents Keh and Chua alleged that: (1) Microsoft’s real intention in filing the complaint under I.S. No. 96-193
was to pressure Beltron to pay its alleged unpaid royalties, thus Microsoft should have filed a collection suit instead of a criminal complaint;
(2) TMTC bought the confiscated 59 boxes of MS-DOS CDs from a Microsoft dealer in Singapore (R.R. Donnelly); (3) respondents are not
the "source" of the Microsoft Windows 3.1 software pre-installed in the CPU bought by Sacriz and Samiano, but only of the MS-DOS
software; (4) Microsoft’s alleged proof of purchase (receipt) for the 12 CD-ROMs is inconclusive because the receipt does not indicate its
source; and (5) respondents Benito Keh, Jonathan K. Chua, Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, and Deanna
Chua are stockholders of Beltron and TMTC in name only and thus cannot be held criminally liable.21

The other respondents did not file counter-affidavits.

Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The RTC partially granted their motion in its Order of
16 April 1996. Microsoft sought reconsideration but the RTC denied Microsoft’s motion in its Order of 19 July 1996. Microsoft appealed to
the Court of Appeals in CA-G.R. CV No. 54600. In its Decision of 29 November 2001, the Court of Appeals granted Microsoft’s appeal and
set aside the RTC Orders of 16 April 1996 and 19 July 1996. The Court of Appeals’ Decision became final on 27 December 2001.

The DOJ Resolutions

In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State Prosecutor Ong") recommended the dismissal of
Microsoft’s complaint for lack of merit and insufficiency of evidence. State Prosecutor Ong also recommended the dismissal of Lotus
Corporation’s complaint for lack of interest to prosecute and for insufficiency of evidence. Assistant Chief State Prosecutor Lualhati R.
Buenafe ("Assistant Chief State Prosecutor Buenafe") approved State Prosecutor Ong’s recommendations.22 The 26 October 1999
Resolution reads in part:

[T]wo (2) issues have to be resolved in this case, namely:

a) Whether or not Beltron Computer and/or its stockholders should be held liable for the offenses charged.

b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and Trade Center, Inc. (TMTC) for violation of the
offense charged.

Complainant had alleged that from the time the license agreement was terminated, respondent/s is/are no longer authorized to
copy/distribute/sell Microsoft products. However, respondent/s averred that the case is civil in nature, not criminal, considering that the case
stemmed only out of the desire of complainant to collect from them the amount of US$135,121.32 and that the contract entered into by the
parties cannot be unilaterally terminated.

In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration to the Order partially quashing the search
warrants], he observed the following:

"It is further argued by counsel for respondent that the act taken by private complainant is to spite revenge against the respondent Beltron
for the latter failed to pay the alleged monetary obligation in the amount of US$135,121.32. That respondent has some monetary obligation
to complainant which is not denied by the complainant."

["]It appears therefore that prior to the issuance of the subject search warrants, complainant had some business transactions with the
respondent [Beltron] along the same line of products. Complainant failed to reveal the true circumstances existing between the two of them
as it now appears, indeed the search warrant[s] xxx [are] being used as a leverage to secure collection of the money obligation which the
Court cannot allow."

From said order, it can be gleaned that the [RTC] xxx, had admitted that the search warrants applied for by complainant were merely used
as a leverage for the collection of the alleged monetary obligation of the respondent/s.

From said order, it can be surmise (sic) that the obligations between the parties is civil in nature not criminal.

Moreover, complainant had time and again harped that respondent/s is/are not authorized to sell/copy/distribute Microsoft products at the
time of the execution of the search warrants. Still, this office has no power to pass upon said issue for one has then to interpret the
provisions of the contract entered into by the parties, which question, should be raised in a proper civil proceeding.

Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the contract is still binding between the parties at the time of
the execution of the search warrants, this office cannot pass upon the issue of whether respondent/s is or are liable for the offense charged.

As to the second issue, we find for the respondent/s. TMTC had provided sufficient evidence such as pro-forma invoice from R.R.
Donnelley; Debt Advice of the Bank of Commerce; Official Receipts from the Bureau of Customs; and Import Entry Declaration of the
Bureau of Customs to prove that indeed the Microsoft software in their possession were bought from Singapore.

Thus, respondent/s in this case has/have no intent to defraud the public, as provided under Article 189 of the Revised Penal Code, for they
bought said Microsoft MS-DOS 6.0 from an alleged licensee of Microsoft in Singapore, with all the necessary papers. In their opinion, what
they have are genuine Microsoft software, therefore no unfair competition exist.

Moreover, violation of P.D. 49 does not exist, for respondent/s was/were not the manufacturers of the Microsoft software seized and were
selling their products as genuine Microsoft software, considering that they bought it from a Microsoft licensee.

Complainant, on the other hand, considering that it has the burden of proving that the respondent/s is/are liable for the offense charged,
has not presented any evidence that the items seized namely the 59 boxes of MS-DOS 6.0 software are counterfeit.

The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney of the complainant, does not disclose this fact.
For the term used by Mr. Austin was that the items seized were unauthorized.

The question now, is whether the products were unauthorized because TMTC has no license to sell Microsoft products, or is it unauthorized
because R.R. Donnelley has no authority to sell said products here in the Philippines.

Still, to determine the culpability of the respondents, complainant should present evidence that what is in the possession of the
respondent/s is/are counterfeit Microsoft products.

This it failed to do.23

Microsoft sought reconsideration and prayed for an ocular inspection of the articles seized from respondents. However, in the Resolution of
3 December 1999, Assistant Chief State Prosecutor Buenafe, upon State Prosecutor Ong’s recommendation, denied Microsoft’s motion.24

Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000, DOJ Undersecretary Regis V. Puno dismissed
Microsoft’s appeal.25 Microsoft sought reconsideration but its motion was denied in the Resolution of 22 December 2000.26

Hence, this petition. Microsoft contends that:

I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS WAS ONLY CIVIL IN NATURE BY
VIRTUE OF THE LICENSE AGREEMENT.

II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE ENGAGED IN THE ILLEGAL
IMPORTATION, SALE AND DISTRIBUTION OF COUNTERFEIT SOFTWARE AS EVIDENCED BY THE ITEMS
PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZED FROM RESPONDENTS’ PREMISES.

III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT INFRINGEMENT AND UNFAIR COMPETITION.

IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE COUNTER-AFFIDAVITS; HENCE,
THE CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN UNCONTROVERTED.27

In its Comment, filed by the Solicitor General, the DOJ maintains that it did not commit grave abuse of discretion in dismissing Microsoft’s
complaint.28
For their part, respondents allege in their Comment that Microsoft is guilty of forum-shopping because its petition in CA-G.R. CV No. 54600
was filed ahead of, and has a "common interest" with, this petition. On the merits, respondents reiterate their claims in their motion to quash
Search Warrant Nos. 95-684 and 95-685 that the articles seized from them were either owned by others, purchased from legitimate
sources, or not produced by Microsoft. Respondents also insist that the Agreement entitled Beltron to "copy and replicate or reproduce"
Microsoft products. On the confiscated 2,831 CD-ROMs, respondents allege that a certain corporation29 left the CD-ROMs with them for
safekeeping. Lastly, respondents claim that there is no proof that the CPU Sacriz and Samiano bought from them contained pre-installed
Microsoft software because the receipt for the CPU does not indicate "[s]oftware hard disk." 30
In its Reply, Microsoft counters that it is not liable for forum-shopping because its petition in CA-G.R. CV No. 54600 involved the Orders of
the RTC partially quashing Search Warrant Nos. 95-684 and 95-685 while this petition concerns the DOJ Resolutions dismissing its
complaint against respondents for copyright infringement and unfair competition. On the merits, Microsoft maintains that respondents
should be indicted for copyright infringement and unfair competition.31
The Issues
The petition raises the following issues:
(1) Whether Microsoft engaged in forum-shopping; and
(2) Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge respondents with copyright
infringement and unfair competition.
The Ruling of the Court
The petition has merit.
Microsoft did not Engage in Forum-Shopping
Forum-shopping takes place when a litigant files multiple suits involving the same parties, either simultaneously or successively, to secure
a favorable judgment.32 Thus, it exists where the elements of litis pendentia are present, namely: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts; and (c) the identity with respect to the two preceding particulars in the two cases is such that any judgment that may be
rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.33 Forum-shopping is
an act of malpractice because it abuses court processes.34 To check this pernicious practice, Section 5, Rule 7 of the 1997 Rules of Civil
Procedure requires the principal party in an initiatory pleading to submit a certification against forum-shopping.35 Failure to comply with this
requirement is a cause for the dismissal of the case and, in case of willful forum-shopping, for the imposition of administrative sanctions.
Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft appealed in CA-G.R. CV No. 54600 were the RTC
Orders partially quashing Search Warrant Nos. 95-684 and 95-685. In the present case, Microsoft is appealing from the DOJ Resolutions
dismissing its complaint against respondents for copyright infringement and unfair competition. Thus, although the parties in CA-G.R. CV
No. 54600 and this petition are identical, the rights asserted and the reliefs prayed for are not such that the judgment in CA-G.R. CV No.
54600 does not amount to res judicata in the present case. This renders forum-shopping impossible here.
The DOJ Acted with Grave Abuse of Discretion
in not Finding Probable Cause to Charge Respondents with
Copyright Infringement and Unfair Competition
Generally, this Court is loath to interfere in the prosecutor’s discretion in determining probable cause36 — unless such discretion is shown to
have been abused.37 This case falls under the exception.
Unlike the higher quantum of proof beyond reasonable doubt required to secure a conviction, it is the lower standard of probable cause
which is applied during the preliminary investigation to determine whether the accused should be held for trial. This standard is met if the
facts and circumstances incite a reasonable belief that the act or omission complained of constitutes the offense charged. As we explained
in Pilapil v. Sandiganbayan:38
The term [probable cause] does not mean "actual and positive cause" nor does it import absolute certainty. It is merely based on opinion
and reasonable belief. Thus, a finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission complained of constitutes the offense charged. Precisely, there is a trial
for the reception of evidence of the prosecution in support of the charge.
PD 49 and Article 189(1)
Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright owner. Contrary to the DOJ’s ruling, the
gravamen of copyright infringement is not merely the unauthorized "manufacturing" of intellectual works but rather the unauthorized
performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts under Section 5 without obtaining
the copyright owner’s prior consent renders himself civilly40 and criminally41 liable for copyright infringement. We held in Columbia Pictures,
Inc. v. Court of Appeals:42
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected
by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person, without
the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright.
(Emphasis supplied)
Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to "copy, distribute, multiply, [and] sell" his intellectual
works.
On the other hand, the elements of unfair competition under Article 189(1)43 of the Revised Penal Code are:
(a) That the offender gives his goods the general appearance of the goods of another manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of their packages, or in the (3)
device or words therein, or in (4) any other feature of their appearance[;]
(c) That the offender offers to sell or sells those goods or gives other persons a chance or opportunity to do the same with a like
purpose[; and]
(d) That there is actual intent to deceive the public or defraud a competitor.44
The element of intent to deceive may be inferred from the similarity of the goods or their appearance.45
On the Sufficiency of Evidence to
Support a Finding of Probable Cause
Against Respondents
In its pleadings filed with the DOJ, Microsoft invoked three clusters of evidence to support its complaint against respondents, namely: (1)
the 12 CD-ROMs containing Microsoft software Sacriz and Samiano bought from respondents; (2) the CPU with pre-installed Microsoft
software Sacriz and Samiano also purchased from respondents; and (3) the 2,831 CD-ROMs containing Microsoft software seized from
respondents.46 The DOJ, on the one hand, refused to pass upon the relevance of these pieces of evidence because: (1) the "obligations
between the parties is civil and not criminal" considering that Microsoft merely sought the issuance of Search Warrant Nos. 95-684 and 95-
685 to pressure Beltron to pay its obligation under the Agreement, and (2) the validity of Microsoft’s termination of the Agreement must first
be resolved by the "proper court." On the other hand, the DOJ ruled that Microsoft failed to present evidence proving that what were
obtained from respondents were counterfeit Microsoft products.
This is grave abuse of discretion.47
First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its rights in filing the complaint
under I.S. No. 96-193 based on the incriminating evidence obtained from respondents. Hence, it was highly irregular for the
DOJ to hold, based on the RTC Order of 19 July 1996, that Microsoft sought the issuance of Search Warrant Nos. 95-684 and
95-685, and by inference, the filing of the complaint under I.S. No. 96-193, merely to pressure Beltron to pay its overdue
royalties to Microsoft. Significantly, in its Decision in CA-G.R. CV No. 54600 dated 29 November 2001, the Court of Appeals set
aside the RTC Order of 19 July 1996. Respondents no longer contested that ruling which became final on 27 December 2001.
Second. There is no basis for the DOJ to rule that Microsoft must await a prior "resolution from the proper court of (sic) whether
or not the [Agreement] is still binding between the parties." Beltron has not filed any suit to question Microsoft’s termination of
the Agreement. Microsoft can neither be expected nor compelled to wait until Beltron decides to sue before Microsoft can seek
remedies for violation of its intellectual property rights.
Furthermore, some of the counterfeit CD-ROMs bought from respondents were "installer" CD-ROMs containing Microsoft
software only or both Microsoft and non-Microsoft software. These articles are counterfeit per se because Microsoft does not
(and could not have authorized anyone to) produce such CD-ROMs. The copying of the genuine Microsoft software to produce
these fake CD-ROMs and their distribution are illegal even if the copier or distributor is a Microsoft licensee. As far as these
installer CD-ROMs are concerned, the Agreement (and the alleged question on the validity of its termination) is immaterial to
the determination of respondents’ liability for copyright infringement and unfair competition.
Lastly, Section 10(b)48 of the Agreement provides that Microsoft’s "rights and remedies" under the contract are "not xxx
exclusive and are in addition to any other rights and remedies provided by law or [the] Agreement." Thus, even if the Agreement
still subsists, Microsoft is not precluded from seeking remedies under PD 49 and Article 189(1) of the Revised Penal Code to
vindicate its rights.
Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the CPU with pre-installed Microsoft software
Sacriz and Samiano bought from respondents and the 2,831 Microsoft CD-ROMs seized from respondents suffice to support a
finding of probable cause to indict respondents for copyright infringement under Section 5(A) in relation to Section 29 of PD 49
for unauthorized copying and selling of protected intellectual works. The installer CD-ROMs with Microsoft software, to repeat,
are counterfeit per [Link] the other hand, the illegality of the "non-installer" CD-ROMs purchased from respondents and of the
Microsoft software pre-installed in the CPU is shown by the absence of the standard features accompanying authentic Microsoft
products, namely, the Microsoft end-user license agreements, user’s manuals, registration cards or certificates of authenticity.
On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only respondent who was party to the Agreement,
could not have reproduced them under the Agreement as the Solicitor General50 and respondents contend. Beltron’s rights51 under the
Agreement were limited to:
(1) the "reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on each Customer System hard disk
or Read Only Memory ("ROM")"; and
(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced above] and/or acquired from
Authorized Replicator or Authorized Distributor) in object code form to end users."
The Agreement defines an authorized replicator as "a third party approved by [Microsoft] which may reproduce and manufacture [Microsoft]
Product[s] for [Beltron] xxx."52 An authorized distributor, on the other hand, is a "third party approved by [Microsoft] from which [Beltron] may
purchase MED53 Product."54 Being a mere reproducer/installer of one Microsoft software copy on each customer’s hard disk or ROM,
Beltron could only have acquired the hundreds of Microsoft CD-ROMs found in respondents’ possession from Microsoft distributors or
replicators.
However, respondents makes no such claim. What respondents contend is that these CD-ROMs were left to them for safekeeping. But
neither is this claim tenable for lack of substantiation. Indeed, respondents Keh and Chua, the only respondents who filed counter-affidavits,
did not make this claim in the DOJ. These circumstances give rise to the reasonable inference that respondents mass-produced the CD-
ROMs in question without securing Microsoft’s prior authorization.
The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from respondents also suffice to support a finding of probable cause
to indict respondents for unfair competition under Article 189(1) of the Revised Penal Code for passing off Microsoft products. From the
pictures of the CD-ROMs’ packaging,55 one cannot distinguish them from the packaging of CD-ROMs containing genuine Microsoft
software. Such replication, coupled with the similarity of content of these fake CD-ROMs and the CD-ROMs with genuine Microsoft
software, implies intent to deceive.
Respondents’ contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be traced to them because the receipt for these
articles does not indicate its source is unavailing. The receipt in question should be taken together with Microsoft’s claim that Sacriz and
Samiano bought the CD-ROMs from respondents.56 Together, these considerations point to respondents as the vendor of the counterfeit
CD-ROMs. Respondents do not give any reason why the Court should not give credence to Microsoft’s claim. For the same reason, the fact
that the receipt for the CPU does not indicate "[s]oftware hard disk" does not mean that the CPU had no pre-installed Microsoft software.
Respondents Keh and Chua admit in their counter-affidavit that respondents are the "source" of the pre-installed MS-DOS software.
WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 26 October 1999, 3 December 1999, 3 August 2000, and 22
December 2000 of the Department of Justice.
SO ORDERED.