Republic Act No.

8293

AN ACT PRESCRIBING THE INTELLECTUAL PROPERTY CODE AND

ESTABLISHING THE INTELLECTUAL PROPERTY OFFICE, PROVIDING FOR
ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled::

PART I THE INTELLECTUAL PROPERTY OFFICE

Section 1. Title. - This Act shall be known as
the "Intellectual Property Code of the
Philippines."
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)
Section 3. International Conventions and
Reciprocity. - Any person who is a national or
who is domiciled or has a real and effective
industrial establishment in a country which is a
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party to any convention, treaty or agreement
relating to intellectual property rights or the
repression of unfair competition, to which the
Philippines is also a party, or extends
reciprocal rights to nationals of the
Philippines by law, shall be entitled to
benefits to the extent necessary to give effect
to any provision of such convention, treaty or
reciprocal law, in addition to the rights to
which any owner of an intellectual property
right is otherwise entitled by this Act. (n)
A. Intellectual Property Rights
Section 4. Definitions. - 4.1. The term
"intellectual property rights" consists of:
a) Copyright and Related Rights;
b) Trademarks and Service Marks;
c) Geographic Indications;
d) Industrial Designs;
e) Patents;
f) Layout-Designs (Topographies) of Integrated
Circuits; and
g) Protection of Undisclosed Information (n,
TRIPS).
4.2. The term "technology transfer arrangements"
refers to contracts or agreements involving the
transfer of systematic knowledge for the
manufacture of a product, the application of a
process, or rendering of a service including
management contracts; and the transfer,
assignment or licensing of all forms of
intellectual property rights, including
licensing of computer software except computer
software developed for mass market.
4.3. The term "Office" refers to the
Intellectual Property Office created by this
Act.
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4.4. The term "IPO Gazette" refers to the
gazette published by the Office under this Act.
(n)
MIGHTY CORPORATION and LA CAMPANA FABRICA DE
TABACO, INC. vs. E. & J. GALLO
WINERY and THE ANDRESONS GROUP, INC.

In this petition for review on certiorari under

Rule 45, petitioners Mighty Corporation and La
Campana Fabrica de Tabaco, Inc. (La Campana)
seek to annul, reverse and set aside: (a) the
November 15, 2001 decision1[1] of the Court of
Appeals (CA) in CA-G.R. CV No. 65175 affirming
the November 26, 1998 decision,2[2] as modified
by the June 24, 1999 order,3[3] of the Regional
Trial Court of Makati City, Branch 57 (Makati
RTC) in Civil Case No. 93-850, which held
petitioners liable for, and permanently enjoined
them from, committing trademark infringement and
unfair competition, and which ordered them to
pay damages to respondents E. & J. Gallo Winery
(Gallo Winery) and The Andresons Group, Inc.
(Andresons); (b) the July 11, 2002 CA resolution
denying their motion for reconsideration4[4] and
(c) the aforesaid Makati RTC decision itself.

I.

The Factual Background

Respondent Gallo Winery is a foreign corporation

not doing business in the Philippines but
organized and existing under the laws of the
State of California, United States of America
(U.S.), where all its wineries are located.

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Gallo Winery produces different kinds of wines
and brandy products and sells them in many
countries under different registered trademarks,
including the GALLO and ERNEST & JULIO GALLO
wine trademarks.

Respondent domestic corporation, Andresons, has

been Gallo Winerys exclusive wine importer and
distributor in the Philippines since 1991,
selling these products in its own name and for
its own account.5[5]

Gallo Winerys GALLO wine trademark was

registered in the principal register of the
Philippine Patent Office (now Intellectual
Property Office) on November 16, 1971 under
Certificate of Registration No. 17021 which was
renewed on November 16, 1991 for another 20
years.6[6] Gallo Winery also applied for
registration of its ERNEST & JULIO GALLO wine
trademark on October 11, 1990 under Application
Serial No. 901011-00073599-PN but the records do
not disclose if it was ever approved by the
Director of Patents.7[7]

On the other hand, petitioners Mighty

Corporation and La Campana and their sister
company, Tobacco Industries of the Philippines
(Tobacco Industries), are engaged in the
cultivation, manufacture, distribution and sale
of tobacco products for which they have been
using the GALLO cigarette trademark since 1973.
8[8]

The Bureau of Internal Revenue (BIR) approved

Tobacco Industries use of GALLO 100s cigarette

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mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the
manufacture and sale of its cigarette products.
In 1976, Tobacco Industries filed its
manufacturers sworn statement as basis for BIRs
collection of specific tax on GALLO
cigarettes.9[9]

On February 5, 1974, Tobacco Industries applied

for, but eventually did not pursue, the
registration of the GALLO cigarette trademark in
the principal register of the then Philippine
Patent Office.10[10]

In May 1984, Tobacco Industries assigned the

GALLO cigarette trademark to La Campana which,
on July 16, 1985, applied for trademark
registration in the Philippine Patent
Office.11[11] On July 17, 1985, the National
Library issued Certificate of Copyright
Registration No. 5834 for La Campanas lifetime
copyright claim over GALLO cigarette
labels.12[12]

Subsequently, La Campana authorized Mighty

Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13[13] BIR approved
Mighty Corporations use of GALLO 100s cigarette
brand, under licensing agreement with Tobacco
Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100s cigarette brand on April 3,
1989.14[14]

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Petitioners claim that GALLO cigarettes have
been sold in the Philippines since 1973,
initially by Tobacco Industries, then by La
Campana and finally by Mighty Corporation.15[15]

On the other hand, although the GALLO wine

trademark was registered in the Philippines in
1971, respondents claim that they first
introduced and sold the GALLO and ERNEST & JULIO
GALLO wines in the Philippines circa 1974 within
the then U.S. military facilities only. By 1979,
they had expanded their Philippine market
through authorized distributors and independent
outlets.16[16]

Respondents claim that they first learned about

the existence of GALLO cigarettes in the latter
part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a
Davao supermarket wine cellar section.17[17]
Forthwith, respondents sent a demand letter to
petitioners asking them to stop using the GALLO
trademark, to no avail.

II.

The Legal Dispute

On March 12, 1993, respondents sued petitioners

in the Makati RTC for trademark and tradename
infringement and unfair competition, with a
prayer for damages and preliminary injunction.

Respondents charged petitioners with violating

Article 6bis of the Paris Convention for the
Protection of Industrial Property (Paris
Convention)18[18] and RA 166 (Trademark

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Law),19[19] specifically, Sections 22 and 23
(for trademark infringement),20[20] 29 and
3021[21] (for unfair competition and false
designation of origin) and 37 (for tradename
infringement).22[22] They claimed that
petitioners adopted the GALLO trademark to ride
on Gallo Winerys GALLO and ERNEST & JULIO GALLO
trademarks established reputation and
popularity, thus causing confusion, deception
and mistake on the part of the purchasing public
who had always associated GALLO and ERNEST &
JULIO GALLO trademarks with Gallo Winerys wines.
Respondents prayed for the issuance of a writ of
preliminary injunction and ex parte restraining
order, plus P2 million as actual and
compensatory damages, at least P500,000 as
exemplary and moral damages, and at least
P500,000 as attorneys fees and litigation
expenses.23[23]

In their answer, petitioners alleged, among

other affirmative defenses, that: petitioners
GALLO cigarettes and Gallo Winerys wines were
totally unrelated products; Gallo Winerys GALLO
trademark registration certificate covered wines
only, not cigarettes; GALLO cigarettes and GALLO
wines were sold through different channels of
trade; GALLO cigarettes, sold at P4.60 for GALLO
filters and P3 for GALLO menthols, were low-cost
items compared to Gallo Winerys high-priced
luxury wines which cost between P98 to P242.50;

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the target market of Gallo Winerys wines was the
middle or high-income bracket with at least
P10,000 monthly income while GALLO cigarette
buyers were farmers, fishermen, laborers and
other low-income workers; the dominant feature
of the GALLO cigarette mark was the rooster
device with the manufacturers name clearly
indicated as MIGHTY CORPORATION while, in the
case of Gallo Winerys wines, it was the full
names of the founders-owners ERNEST & JULIO
GALLO or just their surname GALLO; by their
inaction and conduct, respondents were guilty of
laches and estoppel; and petitioners acted with
honesty, justice and good faith in the exercise
of their right to manufacture and sell GALLO
cigarettes.

In an order dated April 21, 1993,24[24] the

Makati RTC denied, for lack of merit,
respondents prayer for the issuance of a writ of
preliminary injunction,25[25] holding that
respondents GALLO trademark registration
certificate covered wines only, that respondents
wines and petitioners cigarettes were not
related goods and respondents failed to prove
material damage or great irreparable injury as
required by Section 5, Rule 58 of the Rules of
Court.26[26]

On August 19, 1993, the Makati RTC denied, for

lack of merit, respondents motion for
reconsideration. The court reiterated that
respondents wines and petitioners cigarettes
were not related goods since the likelihood of
deception and confusion on the part of the
consuming public was very remote. The trial
court emphasized that it could not rely on
foreign rulings cited by respondents because

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the[se] cases were decided by foreign courts on
the basis of unknown facts peculiar to each case
or upon factual surroundings which may exist
only within their jurisdiction. Moreover, there
[was] no showing that [these cases had] been
tested or found applicable in our
jurisdiction.27[27]

On February 20, 1995, the CA likewise dismissed

respondents petition for review on certiorari,
docketed as CA-G.R. No. 32626, thereby affirming
the Makati RTCs denial of the application for
issuance of a writ of preliminary injunction
against petitioners.28[28]

After trial on the merits, however, the Makati

RTC, on November 26, 1998, held petitioners
liable for, and permanently enjoined them from,
committing trademark infringement and unfair
competition with respect to the GALLO trademark:

WHEREFORE, judgment is rendered in favor of the

plaintiff (sic) and against the defendant (sic),
to wit:

a. permanently restraining and enjoining

defendants, their distributors, trade outlets,
and all persons acting for them or under their
instructions, from (i) using E & Js registered
trademark GALLO or any other reproduction,
counterfeit, copy or colorable imitation of said
trademark, either singly or in conjunction with
other words, designs or emblems and other acts
of similar nature, and (ii) committing other
acts of unfair competition against plaintiffs by
manufacturing and selling their cigarettes in
the domestic or export markets under the GALLO
trademark.

b. ordering defendants to pay plaintiffs

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(i) actual and compensatory damages for the
injury and prejudice and impairment of
plaintiffs business and goodwill as a result of
the acts and conduct pleaded as basis for this
suit, in an amount equal to 10% of FOURTEEN
MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS
(PHP14,235,000.00) from the filing of the
complaint until fully paid;

(ii) exemplary damages in the amount of

PHP100,000.00;

(iii) attorneys fees and expenses of litigation

in the amount of PHP1,130,068.91;

(iv) the cost of suit.

SO ORDERED.29[29]

On June 24, 1999, the Makati RTC granted

respondents motion for partial reconsideration
and increased the award of actual and
compensatory damages to 10% of P199,290,000 or
P19,929,000.30[30]

On appeal, the CA affirmed the Makati RTC

decision and subsequently denied petitioners
motion for reconsideration.

III.

The Issues

Petitioners now seek relief from this Court

contending that the CA did not follow prevailing
laws and jurisprudence when it held that: [a] RA
8293 (Intellectual Property Code of the
Philippines [IP Code]) was applicable in this
case; [b] GALLO cigarettes and GALLO wines were
identical, similar or related goods for the
reason alone that they were purportedly forms of
vice; [c] both goods passed through the same
channels of trade and [d] petitioners were

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liable for trademark infringement, unfair
competition and damages.31[31]

Respondents, on the other hand, assert that this

petition which invokes Rule 45 does not involve
pure questions of law, and hence, must be
dismissed outright.

IV.

Discussion

THE EXCEPTIONAL CIRCUMSTANCES

IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS

As a general rule, a petition for review on

certiorari under Rule 45 must raise only
questions of law32[32] (that is, the doubt
pertains to the application and interpretation
of law to a certain set of facts) and not
questions of fact (where the doubt concerns the
truth or falsehood of alleged facts),33[33]
otherwise, the petition will be denied. We are
not a trier of facts and the Court of Appeals
factual findings are generally conclusive upon
us.34[34]

This case involves questions of fact which are

directly related and intertwined with questions
of law. The resolution of the factual issues
concerning the goods similarity, identity,
relation, channels of trade, and acts of
trademark infringement and unfair competition is
greatly dependent on the interpretation of
applicable laws. The controversy here is not
simply the identity or similarity of both

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parties trademarks but whether or not
infringement or unfair competition was
committed, a conclusion based on statutory
interpretation. Furthermore, one or more of the
following exceptional circumstances oblige us to
review the evidence on record:35[35]

(1) the conclusion is grounded entirely on

speculation, surmises, and conjectures;
(2) the inference of the Court of Appeals
from its findings of fact is manifestly
mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a
misapprehension of facts;
(5) the appellate court, in making its
findings, went beyond the issues of the
case, and the same are contrary to the
admissions of both the appellant and the
appellee;
(6) the findings are without citation of
specific evidence on which they are based;
(7) the facts set forth in the petition as
well as in the petitioner's main and reply
briefs are not disputed by the
respondents; and
(8) the findings of fact of the Court of
Appeals are premised on the absence of
evidence and are contradicted [by the
evidence] on record.36[36]

In this light, after thoroughly examining the

evidence on record, weighing, analyzing and
balancing all factors to determine whether
trademark infringement and/or unfair competition
has been committed, we conclude that both the
Court of Appeals and the trial court veered away
from the law and well-settled jurisprudence.

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Thus, we give due course to the petition.

THE TRADEMARK LAW AND THE PARIS

CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE

We note that respondents sued petitioners on

March 12, 1993 for trademark infringement and
unfair competition committed during the
effectivity of the Paris Convention and the
Trademark Law.

Yet, in the Makati RTC decision of November 26,

1998, petitioners were held liable not only
under the aforesaid governing laws but also
under the IP Code which took effect only on
January 1, 1998,37[37] or about five years after
the filing of the complaint:

Defendants unauthorized use of the GALLO

trademark constitutes trademark infringement
pursuant to Section 22 of Republic Act No. 166,
Section 155 of the IP Code, Article 6bis of the
Paris Convention, and Article 16 (1) of the
TRIPS Agreement as it causes confusion,
deception and mistake on the part of the
purchasing public.38[38] (Emphasis and
underscoring supplied)

The CA apparently did not notice the error and

affirmed the Makati RTC decision:

In the light of its finding that appellants use

of the GALLO trademark on its cigarettes is
likely to create confusion with the GALLO
trademark on wines previously registered and
used in the Philippines by appellee E & J Gallo
Winery, the trial court thus did not err in
holding that appellants acts not only violated
the provisions of the our trademark laws (R.A.
No. 166 and R.A. Nos. (sic) 8293) but also

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Article 6bis of the Paris Convention.39[39]
(Emphasis and underscoring supplied)

We therefore hold that the courts a quo erred in

retroactively applying the IP Code in this case.

It is a fundamental principle that the validity

and obligatory force of a law proceed from the
fact that it has first been promulgated. A law
that is not yet effective cannot be considered
as conclusively known by the populace. To make a
law binding even before it takes effect may lead
to the arbitrary exercise of the legislative
power.40[40] Nova constitutio futuris formam
imponere debet non praeteritis. A new state of
the law ought to affect the future, not the
past. Any doubt must generally be resolved
against the retroactive operation of laws,
whether these are original enactments,
amendments or repeals.41[41] There are only a
few instances when laws may be given retroactive
effect,42[42] none of which is present in this
case.

The IP Code, repealing the Trademark Law,43[43]

was approved on June 6, 1997. Section 241
thereof expressly decreed that it was to take
effect only on January 1, 1998, without any
provision for retroactive application. Thus, the
Makati RTC and the CA should have limited the
consideration of the present case within the
parameters of the Trademark Law and the Paris

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Convention, the laws in force at the time of the
filing of the complaint.

DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION

Although the laws on trademark infringement and

unfair competition have a common conception at
their root, that is, a person shall not be
permitted to misrepresent his goods or his
business as the goods or business of another,
the law on unfair competition is broader and
more inclusive than the law on trademark
infringement. The latter is more limited but it
recognizes a more exclusive right derived from
the trademark adoption and registration by the
person whose goods or business is first
associated with it. The law on trademarks is
thus a specialized subject distinct from the law
on unfair competition, although the two subjects
are entwined with each other and are dealt with
together in the Trademark Law (now, both are
covered by the IP Code). Hence, even if one
fails to establish his exclusive property right
to a trademark, he may still obtain relief on
the ground of his competitors unfairness or
fraud. Conduct constitutes unfair competition if
the effect is to pass off on the public the
goods of one man as the goods of another. It is
not necessary that any particular means should
be used to this end.44[44]

In Del Monte Corporation vs. Court of

Appeals,45[45] we distinguished trademark
infringement from unfair competition:

(1) Infringement of trademark is the

unauthorized use of a trademark,
whereas unfair competition is the
passing off of one's goods as those of
another.

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 (2) In infringement of trademark fraudulent
intent is unnecessary, whereas in
unfair competition fraudulent intent is
essential.
(3) In infringement of trademark the prior
registration of the trademark is a
prerequisite to the action, whereas in
unfair competition registration is not
necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law

Article 6bis of the Paris Convention,46[46] an

international agreement binding on the
Philippines and the United States (Gallo Winerys
country of domicile and origin) prohibits the
[registration] or use of a trademark which
constitutes a reproduction, imitation or
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 the
[Paris] Convention and used for identical or
similar goods. [This rule also applies] when the
essential part of the mark constitutes a
reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
There is no time limit for seeking the
prohibition of the use of marks used in bad
faith.47[47]

Thus, under Article 6bis of the Paris Convention,

the following are the elements of trademark
infringement:

(a) registration or use by another person of

a trademark which is a reproduction,
imitation or translation liable to create
confusion,

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 (b) of a mark considered by the competent
authority of the country of registration or
use48[48] to be well-known in that country
and is already the mark of a person entitled
to the benefits of the Paris Convention, and

(c) such trademark is used for identical or

similar goods.

On the other hand, Section 22 of the Trademark

Law holds a person liable for infringement when,
among others, he uses 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 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 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.49[49] Trademark registration and
actual use are material to the complaining
partys cause of action.

Corollary to this, Section 20 of the Trademark

Law50[50] considers the trademark registration
certificate as prima facie evidence of the
validity of the registration, the registrants
ownership and exclusive right to use the
trademark in connection with the goods, business
or services as classified by the Director of

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Patents51[51] and as specified in the
certificate, subject to the conditions and
limitations stated therein. Sections 2 and 2-
A52[52] of the Trademark Law emphasize the
importance of the trademarks actual use in
commerce in the Philippines prior to its
registration. In the adjudication of trademark
rights between contending parties, equitable
principles of laches, estoppel, and acquiescence
may be considered and applied.53[53]

Under Sections 2, 2-A, 9-A, 20 and 22 of the

Trademark Law therefore, 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) 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,

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(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.

In summary, the Paris Convention protects well-

known trademarks only (to be determined by
domestic authorities), while the Trademark Law
protects all trademarks, whether well-known or
not, provided that they have been registered and
are in actual commercial use in the Philippines.
Following universal acquiescence and comity, in
case of domestic legal disputes on any
conflicting provisions between the Paris
Convention (which is an international agreement)
and the Trademark law (which is a municipal law)
the latter will prevail.54[54]

Under both the Paris Convention and the

Trademark Law, the protection of a registered
trademark is limited only to goods identical or
similar to those in respect of which such
trademark is registered and only when there is
likelihood of confusion. Under both laws, the
time element in commencing infringement cases is
material in ascertaining the registrants express
or implied consent to anothers use of its
trademark or a colorable imitation thereof. This
is why acquiescence, estoppel or laches may
defeat the registrants otherwise valid cause of
action.

Hence, proof of all the elements of trademark

infringement is a condition precedent to any
finding of liability.

THE ACTUAL COMMERCIAL USE IN THE

PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.

By respondents own judicial admission, the GALLO

wine trademark was registered in the Philippines
in November 1971 but the wine itself was first

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marketed and sold in the country only in 1974
and only within the former U.S. military
facilities, and outside thereof, only in 1979.
To prove commercial use of the GALLO wine
trademark in the Philippines, respondents
presented sales invoice no. 29991 dated July 9,
1981 addressed to Conrad Company Inc., Makati,
Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global,
Inc., Quezon City, Philippines. Both invoices
were for the sale and shipment of GALLO wines to
the Philippines during that period.55[55]
Nothing at all, however, was presented to
evidence the alleged sales of GALLO wines in the
Philippines in 1974 or, for that matter, prior
to July 9, 1981.

On the other hand, by testimonial evidence

supported by the BIR authorization letters,
forms and manufacturers sworn statement, it
appears that petitioners and its predecessor-in-
interest, Tobacco Industries, have indeed been
using and selling GALLO cigarettes in the
Philippines since 1973 or before July 9,
1981.56[56]

In Emerald Garment Manufacturing Corporation vs.

Court of Appeals,57[57] we reiterated our
rulings in Pagasa Industrial Corporation vs.
Court of Appeals,58[58] Converse Rubber
Corporation vs. Universal Rubber Products,
Inc.,59[59] Sterling Products International,
Inc. vs. Farbenfabriken Bayer

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Aktiengesellschaft,60[60] Kabushi Kaisha Isetan
vs. Intermediate Appellate Court,61[61] and
Philip Morris vs. Court of Appeals,62[62] giving
utmost importance to the actual commercial use
of a trademark in the Philippines prior to its
registration, notwithstanding the provisions of
the Paris Convention:

xxx xxx xxx

In addition to the foregoing, we are constrained

to agree with petitioner's contention that
private respondent failed to prove prior actual
commercial use of its LEE trademark in the
Philippines before filing its application for
registration with the BPTTT and hence, has not
acquired ownership over said mark.

Actual use in commerce in the Philippines is an

essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2
and 2-A of the Philippine Trademark Law (R.A.
No. 166) x x x

xxx xxx xxx

The provisions of the 1965 Paris Convention for
the Protection of Industrial Property relied
upon by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) were sufficiently
expounded upon and qualified in the recent case
of Philip Morris, Inc. v. Court of Appeals (224
SCRA 576 [1993]):

xxx xxx xxx

Following universal acquiescence and comity, our
municipal law on trademarks regarding the
requirement of actual use in the Philippines
must subordinate an international agreement

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inasmuch as the apparent clash is being decided
by a municipal tribunal (Mortisen vs. Peters,
Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971
Ed., p. 20). 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
irrespective of lack of business activity in the
Philippines on account of Section 21-A of the
Trademark Law 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 the
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.

xxx xxx xxx

Undisputably, private respondent is the senior
registrant, having obtained several registration
certificates for its various trademarks LEE, LEE
RIDERS, and LEESURES in both the supplemental
and principal registers, as early as 1969 to
1973. However, registration alone will not
suffice. In Sterling Products International,
Inc. v. Farbenfabriken Bayer Aktiengesellschaft

22 | P a g e
(27 SCRA 1214 [1969]; Reiterated in Kabushi
Isetan vs. Intermediate Appellate Court (203
SCRA 583 [1991]) we declared:

xxx xxx xxx

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
prerequisite in the acquisition of the right of
ownership over a trademark.

xxx xxx xxx

The credibility placed on a certificate of

registration of one's trademark, or its weight
as evidence of validity, ownership and exclusive
use, is qualified. A registration certificate
serves merely as prima facie evidence. It is not
conclusive but can and may be rebutted by
controverting evidence.

xxx xxx xxx

In the case at bench, however, we reverse the

findings of the Director of Patents and the
Court of Appeals. After a meticulous study of
the records, we observe that the Director of
Patents and the Court of Appeals relied mainly
on the registration certificates as proof of use
by private respondent of the trademark LEE
which, as we have previously discussed are not
sufficient. We cannot give credence to private
respondent's claim that its LEE mark first
reached the Philippines in the 1960's through
local sales by the Post Exchanges of the U.S.
Military Bases in the Philippines (Rollo, p.
177) based as it was solely on the self-serving
statements of Mr. Edward Poste, General Manager
of Lee (Phils.), Inc., a wholly owned subsidiary
of the H.D. Lee, Co., Inc., U.S.A., herein
private respondent. (Original Records, p. 52)
Similarly, we give little weight to the numerous
vouchers representing various advertising
expenses in the Philippines for LEE products. It
is well to note that these expenses were
incurred only in 1981 and 1982 by LEE (Phils.),
Inc. after it entered into a licensing agreement

23 | P a g e
with private respondent on 11 May 1981. (Exhibit
E)
On the other hand, petitioner has sufficiently
shown that it has been in the business of
selling jeans and other garments adopting its
STYLISTIC MR. LEE trademark since 1975 as
evidenced by appropriate sales invoices to
various stores and retailers. (Exhibit 1-e to 1-
o)

Our rulings in Pagasa Industrial Corp. v. Court

of Appeals (118 SCRA 526 [1982]) and Converse
Rubber Corp. v. Universal Rubber Products, Inc.,
(147 SCRA 154 [1987]), respectively, are
instructive:

The Trademark Law is very clear. It requires

actual commercial use of the mark prior to its
registration. There is no dispute that
respondent corporation was the first registrant,
yet it failed to fully substantiate its claim
that it used in trade or business in the
Philippines the subject mark; it did not present
proof to invest it with exclusive, continuous
adoption of the trademark which should consist
among others, of considerable sales since its
first use. The invoices submitted by respondent
which were dated way back in 1957 show that the
zippers sent to the Philippines were to be used
as samples and of no commercial value. The
evidence for respondent must be clear, definite
and free from inconsistencies. Samples are not
for sale and therefore, the fact of exporting
them to the Philippines cannot be considered to
be equivalent to the use contemplated by law.
Respondent did not expect income from such
samples. There were no receipts to establish
sale, and no proof were presented to show that
they were subsequently sold in the Philippines.

xxx xxx xxx

For lack of adequate proof of actual use of its
trademark in the Philippines prior to
petitioner's use of its own mark and for failure
to establish confusing similarity between said
trademarks, private respondent's action for

24 | P a g e
infringement must necessarily fail. (Emphasis
supplied.)

In view of the foregoing jurisprudence and

respondents judicial admission that the actual
commercial use of the GALLO wine trademark was
subsequent to its registration in 1971 and to
Tobacco Industries commercial use of the GALLO
cigarette trademark in 1973, we rule that, on
this account, respondents never enjoyed the
exclusive right to use the GALLO wine trademark
to the prejudice of Tobacco Industries and its
successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris
Convention.

Respondents GALLO trademark

registration is limited to
wines only

We also note that the GALLO trademark

registration certificates in the Philippines and
in other countries expressly state that they
cover wines only, without any evidence or
indication that registrant Gallo Winery expanded
or intended to expand its business to
cigarettes.63[63]

Thus, by strict application of Section 20 of the

Trademark Law, Gallo Winerys exclusive right to
use the GALLO trademark should be limited to
wines, the only product indicated in its
registration certificates. This strict statutory
limitation on the exclusive right to use
trademarks was amply clarified in our ruling in
Faberge, Inc. vs. Intermediate Appellate
Court:64[64]

Having thus reviewed the laws applicable to the

case before Us, it is not difficult to discern
from the foregoing statutory enactments that
private respondent may be permitted to register

25 | P a g e
the trademark BRUTE for briefs produced by it
notwithstanding petitioner's vehement
protestations of unfair dealings in marketing
its own set of items which are limited to:
after-shave lotion, shaving cream, deodorant,
talcum powder and toilet soap. Inasmuch as
petitioner has not ventured in the production of
briefs, an item which is not listed in its
certificate of registration, petitioner cannot
and should not be allowed to feign that private
respondent had invaded petitioner's exclusive
domain. To be sure, it is significant that
petitioner failed to annex in its Brief the so-
called eloquent proof that petitioner indeed
intended to expand its mark BRUT to other goods
(Page 27, Brief for the Petitioner; page 202,
Rollo). Even then, a mere application by
petitioner in this aspect does not suffice and
may not vest an exclusive right in its favor
that can ordinarily be protected by the
Trademark Law. In short, paraphrasing Section 20
of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the
certificate of registration issued by the
Director of Patents can confer upon petitioner
the exclusive right to use its own symbol only
to those goods specified in the certificate,
subject to any conditions and limitations stated
therein. This basic point is perhaps the
unwritten rationale of Justice Escolin in
Philippine Refining Co., Inc. vs. Ng Sam (115
SCRA 472 [1982]), when he stressed the principle
enunciated by the United States Supreme Court in
American Foundries vs. Robertson (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has
adopted and used a trademark on his goods does
not prevent the adoption and use of the same
trademark by others for products which are of a
different description. Verily, this Court had
the occasion to observe in the 1966 case of
George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA
944 [1966]) that no serious objection was posed
by the petitioner therein since the applicant
utilized the emblem Tango for no other product
than hair pomade in which petitioner does not
deal.

26 | P a g e
This brings Us back to the incidental issue
raised by petitioner which private respondent
sought to belie as regards petitioner's alleged
expansion of its business. It may be recalled
that petitioner claimed that it has a pending
application for registration of the emblem BRUT
33 for briefs (page 25, Brief for the
Petitioner; page 202, Rollo) to impress upon Us
the Solomonic wisdom imparted by Justice JBL
Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018
[1968]), to the effect that dissimilarity of
goods will not preclude relief if the junior
user's goods are not remote from any other
product which the first user would be likely to
make or sell (vide, at page 1025). Commenting on
the former provision of the Trademark Law now
embodied substantially under Section 4(d) of
Republic Act No. 166, as amended, the erudite
jurist opined that the law in point does not
require that the articles of manufacture of the
previous user and late user of the mark should
possess the same descriptive properties or
should fall into the same categories as to bar
the latter from registering his mark in the
principal register. (supra at page 1026).
Yet, it is equally true that as aforesaid, the
protective mantle of the Trademark Law extends
only to the goods used by the first user as
specified in the certificate of registration
following the clear message conveyed by Section
20.

How do We now reconcile the apparent conflict

between Section 4(d) which was relied upon by
Justice JBL Reyes in the Sta. Ana case and
Section 20? It would seem that Section 4(d) does
not require that the goods manufactured by the
second user be related to the goods produced by
the senior user while Section 20 limits the
exclusive right of the senior user only to those
goods specified in the certificate of
registration. But the rule has been laid down
that the clause which comes later shall be given
paramount significance over an anterior proviso
upon the presumption that it expresses the
latest and dominant purpose. (Graham Paper Co.
vs. National Newspapers Asso. (Mo. App.) 193
27 | P a g e
S.W. 1003; Barnett vs. Merchant's L. Ins. Co.,
87 Okl. 42; State ex nel Atty. Gen. vs. Toledo,
26 N.E., p. 1061; cited by Martin, Statutory
Construction Sixth ed., 1980 Reprinted, p. 144).
It ineluctably follows that Section 20 is
controlling and, therefore, private respondent
can appropriate its symbol for the briefs it
manufactures because as aptly remarked by
Justice Sanchez in Sterling Products
International Inc. vs. Farbenfabriken Bayer (27
SCRA 1214 [1969]):
Really, if the certificate of registration were
to be deemed as including goods not specified
therein, then a situation may arise whereby an
applicant may be tempted to register a trademark
on any and all goods which his mind may conceive
even if he had never intended to use the
trademark for the said goods. We believe that
such omnibus registration is not contemplated by
our Trademark Law. (1226).

NO LIKELIHOOD OF CONFUSION, MISTAKE

OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS

A crucial issue in any trademark infringement

case is the likelihood of confusion, mistake or
deceit as to the identity, source or origin of
the goods or identity of the business as a
consequence of using a certain mark. Likelihood
of confusion is admittedly a relative term, to
be determined rigidly according to the
particular (and sometimes peculiar)
circumstances of each case. Thus, in trademark
cases, more than in other kinds of litigation,
precedents must be studied in the light of each
particular case. 65[65]

There are two types of confusion in trademark

infringement. The first is confusion of goods
when an otherwise prudent purchaser is induced
to purchase one product in the belief that he is
purchasing another, in which case defendants

28 | P a g e
goods are then bought as the plaintiffs and its
poor quality reflects badly on the plaintiffs
reputation. The other is confusion of business
wherein the goods of the parties are different
but the defendants product can reasonably
(though mistakenly) be assumed to originate from
the plaintiff, thus deceiving the public into
believing that there is some connection between
the plaintiff and defendant which, in fact, does
not exist.66[66]

In determining the likelihood of confusion, the

Court must consider: [a] the resemblance between
the trademarks; [b] the similarity of the goods
to which the trademarks are attached; [c] the
likely effect on the purchaser and [d] the
registrants express or implied consent and other
fair and equitable considerations.

Petitioners and respondents both use GALLO in

the labels of their respective cigarette and
wine products. But, as held in the following
cases, the use of an identical mark does not, by
itself, lead to a legal conclusion that there is
trademark infringement:

(a) in Acoje Mining Co., Inc. vs. Director of

Patent,67[67] we ordered the approval of
Acoje Minings application for registration
of the trademark LOTUS for its soy sauce
even though Philippine Refining Company had
prior registration and use of such
identical mark for its edible oil which,
like soy sauce, also belonged to Class 47;

(b) in Philippine Refining Co., Inc. vs. Ng Sam

and Director of Patents,68[68] we upheld
the Patent Directors registration of the
same trademark CAMIA for Ng Sams ham under

29 | P a g e
 Class 47, despite Philippine Refining
Companys prior trademark registration and
actual use of such mark on its lard,
butter, cooking oil (all of which belonged
to Class 47), abrasive detergents,
polishing materials and soaps;

(c) in Hickok Manufacturing Co., Inc. vs.

Court of Appeals and Santos Lim Bun
Liong,69[69] we dismissed Hickoks petition
to cancel private respondents HICKOK
trademark registration for its Marikina
shoes as against petitioners earlier
registration of the same trademark for
handkerchiefs, briefs, belts and wallets;

(d) in Shell Company of the Philippines vs.

Court of Appeals,70[70] in a minute
resolution, we dismissed the petition for
review for lack of merit and affirmed the
Patent Offices registration of the
trademark SHELL used in the cigarettes
manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Companys
opposition as the prior registrant of the
same trademark for its gasoline and other
petroleum products;

(e) in Esso Standard Eastern, Inc. vs. Court of

Appeals,71[71] we dismissed ESSOs complaint
for trademark infringement against United
Cigarette Corporation and allowed the
latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO
for its petroleum products, and

(f) in Canon Kabushiki Kaisha vs. Court of

Appeals and NSR Rubber Corporation,72[72]

30 | P a g e
 we affirmed the rulings of the Patent
Office and the CA that NSR Rubber
Corporation could use the trademark CANON
for its sandals (Class 25) despite Canon
Kabushiki Kaishas prior registration and
use of the same trademark for its paints,
chemical products, toner and dyestuff
(Class 2).

Whether a trademark causes confusion and is

likely to deceive the public hinges on colorable
imitation73[73] which has been defined as such
similarity in form, content, words, sound,
meaning, special arrangement or general
appearance of the trademark or tradename in
their overall presentation or in their essential
and substantive and distinctive parts as would
likely mislead or confuse persons in the
ordinary course of purchasing the genuine
article.74[74]

Jurisprudence has developed two tests in

determining similarity and likelihood of
confusion in trademark resemblance:75[75]

(a) the Dominancy Test applied in Asia

Brewery, Inc. vs. Court of Appeals76[76]
and other cases,77[77] and

(b) the Holistic or Totality Test used in Del

Monte Corporation vs. Court of

31 | P a g e
 Appeals78[78] and its preceding
cases.79[79]

The Dominancy Test focuses on the similarity of

the prevalent features of the competing
trademarks which might cause confusion or
deception, and thus infringement. If the
competing trademark contains the main, essential
or 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 deceive
purchasers.80[80]

On the other hand, the Holistic Test requires

that the entirety of the marks in question be
considered in resolving confusing similarity.
Comparison of words is not the only determining
factor. The trademarks in their entirety as they
appear in their respective labels or hang tags
must also be considered 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.81[81]

In comparing the resemblance or colorable

imitation of marks, various factors have been
considered, such as the dominant color, style,
size, form, meaning of letters, words, designs

32 | P a g e
and emblems used, the likelihood of deception of
the mark or name's tendency to confuse82[82] and
the commercial impression likely to be conveyed
by the trademarks if used in conjunction with
the respective goods of the parties.83[83]

Applying the Dominancy and Holistic Tests, we

find that the dominant feature of the GALLO
cigarette trademark is the device of a large
rooster facing left, outlined in black against a
gold background. The roosters color is either
green or red green for GALLO menthols and red
for GALLO filters. Directly below the large
rooster device is the word GALLO. The rooster
device is given prominence in the GALLO
cigarette packs in terms of size and location on
the labels.84[84]

The GALLO mark appears to be a fanciful and

arbitrary mark for the cigarettes as it has no
relation at all to the product but was chosen
merely as a trademark due to the fondness for
fighting cocks of the son of petitioners
president. Furthermore, petitioners adopted
GALLO, the Spanish word for rooster, as a
cigarette trademark to appeal to one of their
target markets, the sabungeros (cockfight
aficionados).85[85]

Also, as admitted by respondents

themselves,86[86] on the side of the GALLO
cigarette packs are the words MADE BY MIGHTY
CORPORATION, thus clearly informing the public

33 | P a g e
as to the identity of the manufacturer of the
cigarettes.

On the other hand, GALLO Winerys wine and brandy

labels are diverse. In many of them, the labels
are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a
few, one or two small roosters facing right or
facing each other (atop the EJG crest,
surrounded by leaves or ribbons), with
additional designs in green, red and yellow
colors, appear as minor features thereof.87[87]
Directly below or above these sketches is the
entire printed name of the founder-owners,
ERNEST & JULIO GALLO or just their surname
GALLO,88[88] which appears in different fonts,
sizes, styles and labels, unlike petitioners
uniform casque-font bold-lettered GALLO mark.

Moreover, on the labels of Gallo Winerys wines

are printed the words VINTED AND BOTTLED BY
ERNEST & JULIO GALLO, MODESTO, CALIFORNIA.89[89]

The many different features like color schemes,

art works and other markings of both products
drown out the similarity between them the use of
the word GALLO ― a family surname for the Gallo
Winerys wines and a Spanish word for rooster for
petitioners cigarettes.

WINES AND CIGARETTES ARE NOT

IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS

Confusion of goods is evident where the

litigants are actually in competition; but
confusion of business may arise between non-
competing interests as well.90[90]

34 | P a g e
Thus, apart from the strict application of
Section 20 of the Trademark Law and Article 6bis
of the Paris Convention which proscribe
trademark infringement not only of goods
specified in the certificate of registration but
also of identical or similar goods, we have also
uniformly recognized and applied the modern
concept of related goods.91[91] Simply stated,
when goods are so related that the public may
be, or is actually, deceived and misled that
they come from the same maker or manufacturer,
trademark infringement occurs.92[92]

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.93[93] They may also be those which, being
entirely unrelated, cannot be assumed to have a
common source; hence, there is no confusion of
business, even though similar marks are
used.94[94] Thus, there is no trademark
infringement if the public does not expect the
plaintiff to make or sell the same class of
goods as those made or sold by the
defendant.95[95]

35 | P a g e
In resolving whether goods are related,96[96]
several factors come into play:

(a) the business (and its location) to which

the goods belong

(b) the class of product to which the goods

belong

(c) the product's quality, quantity, or size,

including the nature of the package,
wrapper or container 97[97]

(d) the nature and cost of the articles98[98]

(e) the descriptive properties, physical

attributes or essential characteristics
with reference to their form, composition,
texture or quality

(f) the purpose of the goods99[99]

(g) whether the article is bought for immediate

consumption,100[100] that is, day-to-day
household items101[101]

(h) the fields of manufacture102[102]

36 | P a g e
 (i) the conditions under which the article is
usually purchased103[103] and

(j) the channels of trade through which the

goods flow,104[104] how they are
distributed, marketed, displayed and
sold.105[105]

The wisdom of this approach is its recognition

that each trademark infringement case presents
its own unique set of facts. No single factor is
preeminent, nor can the presence or absence of
one determine, without analysis of the others,
the outcome of an infringement suit. Rather, the
court is required to sift the evidence relevant
to each of the criteria. This requires that the
entire panoply of elements constituting the
relevant factual landscape be comprehensively
examined.106[106] It is a weighing and balancing
process. With reference to this ultimate
question, and from a balancing of the
determinations reached on all of the factors, a
conclusion is reached whether the parties have a
right to the relief sought.107[107]

A very important circumstance though is whether

there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be
misled, or simply confused, as to the source of
the goods in question.108[108] The purchaser is

37 | P a g e
not the completely unwary consumer but is the
ordinarily intelligent buyer considering the
type of product involved.109[109] He is
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.110[110]

Hence, in the adjudication of trademark

infringement, we give due regard to the goods
usual purchasers character, attitude, habits,
age, training and education. 111[111]

Applying these legal precepts to the present

case, petitioners use of the GALLO cigarette
trademark is not likely to cause confusion or
mistake, or to deceive the ordinarily
intelligent buyer of either wines or cigarettes
or both as to the identity of the goods, their
source and origin, or identity of the business
of petitioners and respondents.

Obviously, wines and cigarettes are not

identical or competing products. Neither do they
belong to the same class of goods. Respondents
GALLO wines belong to Class 33 under Rule 84[a]

38 | P a g e
Chapter III, Part II of the Rules of Practice in
Trademark Cases while petitioners GALLO
cigarettes fall under Class 34.

We are mindful that product classification alone

cannot serve as the decisive factor in the
resolution of whether or not wines and
cigarettes are related goods. Emphasis should be
on the similarity of the products involved and
not on the arbitrary classification or general
description of their properties or
characteristics. But the mere fact that one
person has adopted and used a particular
trademark for his goods does not prevent the
adoption and use of the same trademark by others
on articles of a different description. 112[112]

Both the Makati RTC and the CA held that wines

and cigarettes are related products because: (1)
they are related forms of vice, harmful when
taken in excess, and used for pleasure and
relaxation and (2) they are grouped or
classified in the same section of supermarkets
and groceries.

We find these premises patently insufficient and

too arbitrary to support the legal conclusion
that wines and cigarettes are related products
within the contemplation of the Trademark Law
and the Paris Convention.

First, anything - not only wines and cigarettes

― can be used for pleasure and relaxation and
can be harmful when taken in excess. Indeed, it
would be a grave abuse of discretion to treat
wines and cigarettes as similar or related
products likely to cause confusion just because
they are pleasure-giving, relaxing or
potentially harmful. Such reasoning makes no
sense.

Second, it is common knowledge that supermarkets

sell an infinite variety of wholly unrelated
products and the goods here involved, wines and
cigarettes, have nothing whatsoever in common

39 | P a g e
with respect to their essential characteristics,
quality, quantity, size, including the nature of
their packages, wrappers or containers.113[113]

Accordingly, the U.S. patent office and courts

have consistently held that the mere fact that
goods are sold in one store under the same roof
does not automatically mean that buyers are
likely to be confused as to the goods respective
sources, connections or sponsorships. The fact
that different products are available in the
same store is an insufficient standard, in and
of itself, to warrant a finding of likelihood of
confusion.114[114]

In this regard, we adopted the Director of

Patents finding in Philippine Refining Co., Inc.
vs. Ng Sam and the Director of Patents:115[115]

In his decision, the Director of Patents

enumerated the factors that set respondents
products apart from the goods of petitioner. He
opined and we quote:

I have taken into account such factors as

probable purchaser attitude and habits,
marketing activities, retail outlets, and
commercial impression likely to be conveyed by
the trademarks if used in conjunction with the
respective goods of the parties, I believe that
ham on one hand, and lard, butter, oil, and soap
on the other are products that would not move in
the same manner through the same channels of
trade. They pertain to unrelated fields of
manufacture, might be distributed and marketed
under dissimilar conditions, and are displayed
separately even though they frequently may be
sold through the same retail food
establishments. Opposers products are ordinary

40 | P a g e
day-to-day household items whereas ham is not
necessarily so. Thus, the goods of the parties
are not of a character which purchasers would
likely attribute to a common origin.

The observations and conclusion of the Director

of Patents are correct. The particular goods of
the parties are so unrelated that consumers,
would not, in any probability mistake one as the
source of origin of the product of the other.
(Emphasis supplied).

The same is true in the present case. Wines and

cigarettes are non-competing and are totally
unrelated products not likely to cause confusion
vis--vis the goods or the business of the
petitioners and respondents.

Wines are bottled and consumed by drinking while

cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between
their descriptive properties, physical
attributes or essential characteristics like
form, composition, texture and quality.

GALLO cigarettes are inexpensive items while

GALLO wines are not. GALLO wines are patronized
by middle-to-high-income earners while GALLO
cigarettes appeal only to simple folks like
farmers, fishermen, laborers and other low-
income workers.116[116] Indeed, the big price
difference of these two products is an important
factor in proving that they are in fact
unrelated and that they travel in different
channels of trade. There is a distinct price
segmentation based on vastly different social
classes of purchasers.117[117]

GALLO cigarettes and GALLO wines are not sold

through the same channels of trade. GALLO
cigarettes are Philippine-made and petitioners
neither claim nor pass off their goods as

41 | P a g e
imported or emanating from Gallo Winery. GALLO
cigarettes are distributed, marketed and sold
through ambulant and sidewalk vendors, small
local sari-sari stores and grocery stores in
Philippine rural areas, mainly in Misamis
Oriental, Pangasinan, Bohol, and Cebu.118[118]
On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through
Gallo Winerys exclusive contracts with a
domestic entity, which is currently Andresons.
By respondents own testimonial evidence, GALLO
wines are sold in hotels, expensive bars and
restaurants, and high-end grocery stores and
supermarkets, not through sari-sari stores or
ambulant vendors.119[119]

Furthermore, the Makati RTC and the CA erred in

relying on Carling Brewing Company vs. Philip
Morris, Inc.120[120] to support its finding that
GALLO wines and GALLO cigarettes are related
goods. The courts a quo should have taken into
consideration the subsequent case of IDV North
America, Inc. and R & A Bailey Co. Limited vs. S
& M Brands, Inc.:121[121]

IDV correctly acknowledges, however, that there

is no per se rule that the use of the same mark
on alcohol and tobacco products always will
result in a likelihood of confusion.
Nonetheless, IDV relies heavily on the decision
in John Walker & Sons, Ltd. vs. Tampa Cigar Co.,
124 F. Supp. 254, 256 (S.D. Fla. 1954), affd,
222 F. 2d 460 (5th Cir. 1955), wherein the court
enjoined the use of the mark JOHNNIE WALKER on
cigars because the fame of the plaintiffs mark
for scotch whiskey and because the plaintiff

42 | P a g e
advertised its scotch whiskey on, or in
connection with tobacco products. The court, in
John Walker & Sons, placed great significance on
the finding that the infringers use was a
deliberate attempt to capitalize on the senior
marks fame. Id. At 256. IDV also relies on
Carling Brewing Co. v. Philip Morris, Inc., 297
F. Supp. 1330, 1338 (N.D. Ga. 1968), in which
the court enjoined the defendants use of the
mark BLACK LABEL for cigarettes because it was
likely to cause confusion with the plaintiffs
well-known mark BLACK LABEL for beer.

xxx xxx xxx

Those decisions, however, must be considered in
perspective of the principle that tobacco
products and alcohol products should be
considered related only in cases involving
special circumstances. Schenley Distillers, Inc.
v. General Cigar Co., 57C.C.P.A. 1213, 427 F. 2d
783, 785 (1970). The presence of special
circumstances has been found to exist where
there is a finding of unfair competition or
where a famous or well-known mark is involved
and there is a demonstrated intent to capitalize
on that mark. For example, in John Walker &
Sons, the court was persuaded to find a
relationship between products, and hence a
likelihood of confusion, because of the
plaintiffs long use and extensive advertising of
its mark and placed great emphasis on the fact
that the defendant used the trademark Johnnie
Walker with full knowledge of its fame and
reputation and with the intention of taking
advantage thereof. John Walker & Sons, 124 F.
Supp. At 256; see Mckesson & Robbins, Inc. v. P.
Lorillard Co., 1959 WL 5894, 120 U.S.P.Q. 306,
307 (1959) (holding that the decision in John
Walker & Sons was merely the law on the
particular case based upon its own peculiar
facts); see also Alfred Dunhill, 350 F. Supp. At
1363 (defendants adoption of Dunhill mark was
not innocent). However, in Schenley, the court
noted that the relation between tobacco and
whiskey products is significant where a widely
known arbitrary mark has long been used for
diversified products emanating from a single
43 | P a g e
source and a newcomer seeks to use the same mark
on unrelated goods. Schenley, 427 F.2d. at 785.
Significantly, in Schenley, the court looked at
the industry practice and the facts of the case
in order to determine the nature and extent of
the relationship between the mark on the tobacco
product and the mark on the alcohol product.

The record here establishes conclusively that

IDV has never advertised BAILEYS liqueurs in
conjunction with tobacco or tobacco accessory
products and that IDV has no intent to do so.
And, unlike the defendant in Dunhill, S & M
Brands does not market bar accessories, or
liqueur related products, with its cigarettes.
The advertising and promotional materials
presented a trial in this action demonstrate a
complete lack of affiliation between the tobacco
and liqueur products bearing the marks here at
issue.

xxx xxx xxx

Of equal significance, it is undisputed that S &

M Brands had no intent, by adopting the family
name Baileys as the mark for its cigarettes, to
capitalize upon the fame of the BAILEYS mark for
liqueurs. See Schenley, 427 F. 2d at 785.
Moreover, as will be discussed below, and as
found in Mckesson & Robbins, the survey evidence
refutes the contention that cigarettes and
alcoholic beverages are so intimately associated
in the public mind that they cannot under any
circumstances be sold under the same mark
without causing confusion. See Mckesson &
Robbins, 120 U.S.P.Q. at 308.

Taken as a whole, the evidence here demonstrates

the absence of the special circumstances in
which courts have found a relationship between
tobacco and alcohol products sufficient to tip
the similarity of goods analysis in favor of the
protected mark and against the allegedly
infringing mark. It is true that BAILEYS
liqueur, the worlds best selling liqueur and the
second best selling in the United States, is a
well-known product. That fact alone, however, is
insufficient to invoke the special circumstances

44 | P a g e
connection here where so much other evidence and
so many other factors disprove a likelihood of
confusion. The similarity of products analysis,
therefore, augers against finding that there is
a likelihood of confusion. (Emphasis supplied).

In short, tobacco and alcohol products may be

considered related only in cases involving
special circumstances which exist only if a
famous mark is involved and there is a
demonstrated intent to capitalize on it. Both of
these are absent in the present case.

THE GALLO WINE TRADEMARK IS NOT A

WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS

First, the records bear out that most of the

trademark registrations took place in the late
1980s and the 1990s, that is, after Tobacco
Industries use of the GALLO cigarette trademark
in 1973 and petitioners use of the same mark in
1984.

GALLO wines and GALLO cigarettes are neither the

same, identical, similar nor related goods, a
requisite element under both the Trademark Law
and the Paris Convention.

Second, the GALLO trademark cannot be considered

a strong and distinct mark in the Philippines.
Respondents do not dispute the documentary
evidence that aside from Gallo Winerys GALLO
trademark registration, the Bureau of Patents,
Trademarks and Technology Transfer also issued
on September 4, 1992 Certificate of Registration
No. 53356 under the Principal Register approving
Productos Alimenticios Gallo, S.As April 19,
1990 application for GALLO trademark
registration and use for its noodles, prepared
food or canned noodles, ready or canned sauces
for noodles, semolina, wheat flour and bread
crumbs, pastry, confectionery, ice cream, honey,

45 | P a g e
molasses syrup, yeast, baking powder, salt,
mustard, vinegar, species and ice.122[122]

Third and most important, pursuant to our ruling

in Canon Kabushiki Kaisha vs. Court of Appeals
and NSR Rubber Corporation,123[123] GALLO cannot
be considered a well-known mark within the
contemplation and protection of the Paris
Convention in this case since wines and
cigarettes are not identical or similar goods:

We agree with public respondents that the

controlling doctrine with respect to the
applicability of Article 8 of the Paris
Convention is that established in Kabushi Kaisha
Isetan vs. Intermediate Appellate Court (203
SCRA 59 [1991]). As pointed out by the BPTTT:
Regarding the applicability of Article 8 of the
Paris Convention, this Office believes that
there is no automatic protection afforded an
entity whose tradename is alleged to have been
infringed through the use of that name as a
trademark by a local entity.

In Kabushiki Kaisha Isetan vs. The Intermediate

Appellate Court, et. al., G.R. No. 75420, 15
November 1991, the Honorable Supreme Court held
that:
The Paris Convention for the Protection of
Industrial Property does not automatically
exclude all countries of the world which have
signed it from using a tradename which happens
to be used in one country. To illustrate if a
taxicab or bus company in a town in the United
Kingdom or India happens to use the tradename
Rapid Transportation, it does not necessarily
follow that Rapid can no longer be registered in
Uganda, Fiji, or the Philippines.

46 | P a g e
This office is not unmindful that in (sic) the
Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks
and possible application thereof in this case.
Petitioner, as this office sees it, is trying to
seek refuge under its protective mantle,
claiming that the subject mark is well known in
this country at the time the then application of
NSR Rubber was filed.

However, the then Minister of Trade and

Industry, the Hon. Roberto V. Ongpin, issued a
memorandum dated 25 October 1983 to the Director
of Patents, a set of guidelines in the
implementation of Article 6 bis of the Treaty of
Paris. These conditions are:

a) the mark must be internationally

known;
b) the subject of the right must be a
trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the
same or similar kinds of goods; and
d) the person claiming must be the
owner of the mark (The Parties
Convention Commentary on the Paris
Convention. Article by Dr. Bogsch,
Director General of the World
Intellectual Property Organization,
Geneva, Switzerland, 1985)

From the set of facts found in the records, it

is ruled that the Petitioner failed to comply
with the third requirement of the said
memorandum that is the mark must be for use in
the same or similar kinds of goods. The
Petitioner is using the mark CANON for products
belonging to class 2 (paints, chemical products)
while the Respondent is using the same mark for
sandals (class 25).

Hence, Petitioner's contention that its mark is

well-known at the time the Respondent filed its
application for the same mark should fail.
(Emphasis supplied.)

47 | P a g e
Consent of the Registrant and
Other air, Just and Equitable
Considerations

Each trademark infringement case presents a

unique problem which must be answered by
weighing the conflicting interests of the
litigants.124[124]

Respondents claim that GALLO wines and GALLO

cigarettes flow through the same channels of
trade, that is, retail trade. If respondents
assertion is true, then both goods co-existed
peacefully for a considerable period of time. It
took respondents almost 20 years to know about
the existence of GALLO cigarettes and sue
petitioners for trademark infringement. Given,
on one hand, the long period of time that
petitioners were engaged in the manufacture,
marketing, distribution and sale of GALLO
cigarettes and, on the other, respondents delay
in enforcing their rights (not to mention
implied consent, acquiescence or negligence) we
hold that equity, justice and fairness require
us to rule in favor of petitioners. The scales
of conscience and reason tip far more readily in
favor of petitioners than respondents.

Moreover, there exists no evidence that

petitioners employed malice, bad faith or fraud,
or that they intended to capitalize on
respondents goodwill in adopting the GALLO mark
for their cigarettes which are totally unrelated
to respondents GALLO wines. Thus, we rule out
trademark infringement on the part of
petitioners.

PETITIONERS ARE ALSO NOT LIABLE

FOR UNFAIR COMPETITION

Under Section 29 of the Trademark Law, any

person who employs deception or any other means
contrary to good faith by which he passes off
the goods manufactured by him or in which he
deals, or his business, or services for those of

48 | P a g e
the one having established such goodwill, or who
commits any acts calculated to produce said
result, is guilty of unfair competition. It
includes the following acts:

(a) Any person, who in selling his goods shall

give 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;

(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.

The universal test question is whether the

public is likely to be deceived. Nothing less
than conduct tending to pass off one mans goods
or business as that of another constitutes
unfair competition. Actual or probable deception
and confusion on the part of customers by reason
of defendants practices must always
appear.125[125] On this score, we find that
petitioners never attempted to pass off their
cigarettes as those of respondents. There is no

49 | P a g e
evidence of bad faith or fraud imputable to
petitioners in using their GALLO cigarette mark.

All told, after applying all the tests provided

by the governing laws as well as those
recognized by jurisprudence, we conclude that
petitioners are not liable for trademark
infringement, unfair competition or damages.
WHEREFORE, finding the petition for review
meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court
of Appeals in CA-G.R. CV No. 65175 and the
November 26, 1998 decision and the June 24, 1999
order of the Regional Trial Court of Makati,
Branch 57 in Civil Case No. 93-850 are hereby
REVERSED and SET ASIDE and the complaint against
petitioners DISMISSED.
B. Differences between Copyrights, Trademarks
and Patent

1. PEARL & DEAN (PHIL.), INCORPORATED vs.

SHOEMART, INCORPORATED, and NORTH EDSA
MARKETING, INCORPORATED.

In the instant petition for review on certiorari

under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the
May 22, 2001 decision126[1] of the Court of
Appeals reversing the October 31, 1996
decision127[2] of the Regional Trial Court of
Makati, Branch 133, in Civil Case No. 92-516
which declared private respondents Shoemart Inc.
(SMI) and North Edsa Marketing Inc. (NEMI)
liable for infringement of trademark and
copyright, and unfair competition.

FACTUAL ANTECEDENTS

50 | P a g e
The May 22, 2001 decision of the Court of
Appeals128[3] contained a summary of this
dispute:

Plaintiff-appellant Pearl and Dean (Phil.), Inc.

is a corporation engaged in the manufacture of
advertising display units simply referred to as
light boxes. These units utilize specially
printed posters sandwiched between plastic
sheets and illuminated with back lights. Pearl
and Dean was able to secure a Certificate of
Copyright Registration dated January 20, 1981
over these illuminated display units. The
advertising light boxes were marketed under the
trademark Poster Ads. The application for
registration of the trademark was filed with the
Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only
on September 12, 1988, per Registration No.
41165. From 1981 to about 1988, Pearl and Dean
employed the services of Metro Industrial
Services to manufacture its advertising
displays.

Sometime in 1985, Pearl and Dean negotiated with

defendant-appellant Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM
City North Edsa. Since SM City North Edsa was
under construction at that time, SMI offered as
an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985,
Pearl and Deans General Manager, Rodolfo
Vergara, submitted for signature the contracts
covering SM Cubao and SM Makati to SMIs
Advertising Promotions and Publicity Division
Manager, Ramonlito Abano. Only the contract for
SM Makati, however, was returned signed. On
October 4, 1985, Vergara wrote Abano inquiring
about the other contract and reminding him that
their agreement for installation of light boxes
was not only for its SM Makati branch, but also
for SM Cubao. SMI did not bother to reply.

51 | P a g e
Instead, in a letter dated January 14, 1986,
SMIs house counsel informed Pearl and Dean that
it was rescinding the contract for SM Makati due
to non-performance of the terms thereof. In his
reply dated February 17, 1986, Vergara protested
the unilateral action of SMI, saying it was
without basis. In the same letter, he pushed for
the signing of the contract for SM Cubao.

Two years later, Metro Industrial Services, the

company formerly contracted by Pearl and Dean to
fabricate its display units, offered to
construct light boxes for Shoemarts chain of
stores. SMI approved the proposal and ten (10)
light boxes were subsequently fabricated by
Metro Industrial for SMI. After its contract
with Metro Industrial was terminated, SMI
engaged the services of EYD Rainbow Advertising
Corporation to make the light boxes. Some 300
units were fabricated in 1991. These were
delivered on a staggered basis and installed at
SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received

reports that exact copies of its light boxes
were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl
and Dean found out that aside from the two (2)
reported SM branches, light boxes similar to
those it manufactures were also installed in two
(2) other SM stores. It further discovered that
defendant-appellant North Edsa Marketing Inc.
(NEMI), through its marketing arm, Prime Spots
Marketing Services, was set up primarily to sell
advertising space in lighted display units
located in SMIs different branches. Pearl and
Dean noted that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean

sent a letter dated December 11, 1991 to both
SMI and NEMI enjoining them to cease using the
subject light boxes and to remove the same from
SMIs establishments. It also demanded the
discontinued use of the trademark Poster Ads,
and the payment to Pearl and Dean of
compensatory damages in the amount of Twenty
Million Pesos (P20,000,000.00).

52 | P a g e
Upon receipt of the demand letter, SMI suspended
the leasing of two hundred twenty-four (224)
light boxes and NEMI took down its
advertisements for Poster Ads from the lighted
display units in SMIs stores. Claiming that both
SMI and NEMI failed to meet all its demands,
Pearl and Dean filed this instant case for
infringement of trademark and copyright, unfair
competition and damages.

In denying the charges hurled against it, SMI

maintained that it independently developed its
poster panels using commonly known techniques
and available technology, without notice of or
reference to Pearl and Deans copyright. SMI
noted that the registration of the mark Poster
Ads was only for stationeries such as
letterheads, envelopes, and the like. Besides,
according to SMI, the word Poster Ads is a
generic term which cannot be appropriated as a
trademark, and, as such, registration of such
mark is invalid. It also stressed that Pearl and
Dean is not entitled to the reliefs prayed for
in its complaint since its advertising display
units contained no copyright notice, in
violation of Section 27 of P.D. 49. SMI alleged
that Pearl and Dean had no cause of action
against it and that the suit was purely intended
to malign SMIs good name. On this basis, SMI,
aside from praying for the dismissal of the
case, also counterclaimed for moral, actual and
exemplary damages and for the cancellation of
Pearl and Deans Certification of Copyright
Registration No. PD-R-2558 dated January 20,
1981 and Certificate of Trademark Registration
No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured,

installed or used any advertising display units,
nor having engaged in the business of
advertising. It repleaded SMIs averments,
admissions and denials and prayed for similar
reliefs and counterclaims as SMI.

The RTC of Makati City decided in favor of P &

D:

53 | P a g e
Wherefore, defendants SMI and NEMI are found
jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended,
and infringement of trademark under Section 22
of RA No. 166, as amended, and are hereby
penalized under Section 28 of PD 49, as amended,
and Sections 23 and 24 of RA 166, as amended.
Accordingly, defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - P16,600,000.00,

representing profits
derived by defendants
as a result of infringe-
ment of plaintiffs copyright
from 1991 to 1992

(b) moral damages - P1,000.000.00

(c) exemplary damages - P1,000,000.00

(d) attorneys fees - P1,000,000.00

plus

(e) costs of suit;

(2) to deliver, under oath, for

impounding in the National Library, all
light boxes of SMI which were fabricated
by Metro Industrial Services and EYD
Rainbow Advertising Corporation;

(3) to deliver, under oath, to the

National Library, all filler-posters
using the trademark Poster Ads, for
destruction; and

(4) to permanently refrain from

infringing the copyright on plaintiffs
light boxes and its trademark Poster Ads.

Defendants counterclaims are hereby ordered

dismissed for lack of merit.

SO ORDERED.129[4]

54 | P a g e
On appeal, however, the Court of Appeals
reversed the trial court:

Since the light boxes cannot, by any stretch of

the imagination, be considered as either prints,
pictorial illustrations, advertising copies,
labels, tags or box wraps, to be properly
classified as a copyrightable class O work, we
have to agree with SMI when it posited that what
was copyrighted were the technical drawings
only, and not the light boxes themselves, thus:

42. When a drawing is technical and depicts a

utilitarian object, a copyright over the
drawings like plaintiff-appellants will not
extend to the actual object. It has so been held
under jurisprudence, of which the leading case
is Baker vs. Selden (101 U.S. 841 (1879). In
that case, Selden had obtained a copyright
protection for a book entitled Seldens Condensed
Ledger or Bookkeeping Simplified which purported
to explain a new system of bookkeeping. Included
as part of the book were blank forms and
illustrations consisting of ruled lines and
headings, specially designed for use in
connection with the system explained in the
work. These forms showed the entire operation of
a day or a week or a month on a single page, or
on two pages following each other. The defendant
Baker then produced forms which were similar to
the forms illustrated in Seldens copyrighted
books. The Court held that exclusivity to the
actual forms is not extended by a copyright. The
reason was that to grant a monopoly in the
underlying art when no examination of its
novelty has ever been made would be a surprise
and a fraud upon the public; that is the
province of letters patent, not of copyright.
And that is precisely the point. No doubt aware
that its alleged original design would never
pass the rigorous examination of a patent
application, plaintiff-appellant fought to foist
a fraudulent monopoly on the public by
conveniently resorting to a copyright
registration which merely employs a recordal
system without the benefit of an in-depth
examination of novelty.

55 | P a g e
The principle in Baker vs. Selden was likewise
applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In
this case, Muller had obtained a copyright over
an unpublished drawing entitled Bridge Approach
the drawing showed a novel bridge approach to
unsnarl traffic congestion. The defendant
constructed a bridge approach which was alleged
to be an infringement of the new design
illustrated in plaintiffs drawings. In this case
it was held that protection of the drawing does
not extend to the unauthorized duplication of
the object drawn because copyright extends only
to the description or expression of the object
and not to the object itself. It does not
prevent one from using the drawings to construct
the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v.

Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is
no copyright infringement when one who, without
being authorized, uses a copyrighted
architectural plan to construct a structure.
This is because the copyright does not extend to
the structures themselves.

In fine, we cannot find SMI liable for

infringing Pearl and Deans copyright over the
technical drawings of the latters advertising
display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge,

Incorporated vs. Intermediate Appellate Court
that the protective mantle of the Trademark Law
extends only to the goods used by the first user
as specified in the certificate of registration,
following the clear mandate conveyed by Section
20 of Republic Act 166, as amended, otherwise
known as the Trademark Law, which reads:

SEC. 20. Certification of registration prima

facie evidence of validity.- A certificate of
registration of a mark or trade-name shall be
prima facie evidence of the validity of the
registration, the registrants ownership of the

56 | P a g e
mark or trade-name, and of the registrants
exclusive right to use the same in connection
with the goods, business or services specified
in the certificate, subject to any conditions
and limitations stated therein. (underscoring
supplied)

The records show that on June 20, 1983, Pearl

and Dean applied for the registration of the
trademark Poster Ads with the Bureau of Patents,
Trademarks, and Technology Transfer. Said
trademark was recorded in the Principal Register
on September 12, 1988 under Registration No.
41165 covering the following products:
stationeries such as letterheads, envelopes and
calling cards and newsletters.

With this as factual backdrop, we see no legal

basis to the finding of liability on the part of
the defendants-appellants for their use of the
words Poster Ads, in the advertising display
units in suit. Jurisprudence has interpreted
Section 20 of the Trademark Law as an implicit
permission to a manufacturer to venture into the
production of goods and allow that producer to
appropriate the brand name of the senior
registrant on goods other than those stated in
the certificate of registration. The Supreme
Court further emphasized the restrictive meaning
of Section 20 when it stated, through Justice
Conrado V. Sanchez, that:

Really, if the certificate of registration were

to be deemed as including goods not specified
therein, then a situation may arise whereby an
applicant may be tempted to register a trademark
on any and all goods which his mind may conceive
even if he had never intended to use the
trademark for the said goods. We believe that
such omnibus registration is not contemplated by
our Trademark Law.

While we do not discount the striking similarity

between Pearl and Deans registered trademark and
defendants-appellants Poster Ads design, as well
as the parallel use by which said words were
used in the parties respective advertising
copies, we cannot find defendants-appellants

57 | P a g e
liable for infringement of trademark. Poster Ads
was registered by Pearl and Dean for specific
use in its stationeries, in contrast to
defendants-appellants who used the same words in
their advertising display units. Why Pearl and
Dean limited the use of its trademark to
stationeries is simply beyond us. But, having
already done so, it must stand by the
consequence of the registration which it had
caused.

xxx xxx xxx

We are constrained to adopt the view of

defendants-appellants that the words Poster Ads
are a simple contraction of the generic term
poster advertising. In the absence of any
convincing proof that Poster Ads has acquired a
secondary meaning in this jurisdiction, we find
that Pearl and Deans exclusive right to the use
of Poster Ads is limited to what is written in
its certificate of registration, namely,
stationeries.

Defendants-appellants cannot thus be held liable

for infringement of the trademark Poster Ads.

There being no finding of either copyright or

trademark infringement on the part of SMI and
NEMI, the monetary award granted by the lower
court to Pearl and Dean has no leg to stand on.

xxx xxx xxx

WHEREFORE, premises considered, the assailed

decision is REVERSED and SET ASIDE, and another
is rendered DISMISSING the complaint and
counterclaims in the above-entitled case for
lack of merit.130[5]

Dissatisfied with the above decision, petitioner

P & D filed the instant petition assigning the
following errors for the Courts consideration:

58 | P a g e
 A. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT NO COPYRIGHT INFRINGEMENT WAS
COMMITTED BY RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN

RULING THAT NO INFRINGEMENT OF PEARL &
DEANS TRADEMARK POSTER ADS WAS COMMITTED
BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN

DISMISSING THE AWARD OF THE TRIAL COURT,
DESPITE THE LATTERS FINDING, NOT DISPUTED
BY THE HONORABLE COURT OF APPEALS, THAT
SM WAS GUILTY OF BAD FAITH IN ITS
NEGOTIATION OF ADVERTISING CONTRACTS WITH
PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN

NOT HOLDING RESPONDENTS SM AND NEMI
LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL
& EXEMPLARY DAMAGES, ATTORNEYS FEES AND
COSTS OF SUIT.131[6]

ISSUES

In resolving this very interesting case, we are

challenged once again to put into proper
perspective four main concerns of intellectual
property law patents, copyrights, trademarks and
unfair competition arising from infringement of
any of the first three. We shall focus then on
the following issues:

(1) if the engineering or technical drawings

of an advertising display unit (light box)
are granted copyright protection (copyright
certificate of registration) by the National
Library, is the light box depicted in such
engineering drawings ipso facto also
protected by such copyright?

(2) or should the light box be registered

separately and protected by a patent issued
by the Bureau of Patents Trademarks and
Technology Transfer (now Intellectual

59 | P a g e
 Property Office) in addition to the
copyright of the engineering drawings?

(3) can the owner of a registered trademark

legally prevent others from using such
trademark if it is a mere abbreviation of a
term descriptive of his goods, services or
business?

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & Ds complaint was that SMI

infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and
EYD Rainbow Advertising for its own account.
Obviously, petitioners position was premised on
its belief that its copyright over the
engineering drawings extended ipso facto to the
light boxes depicted or illustrated in said
drawings. In ruling that there was no copyright
infringement, the Court of Appeals held that the
copyright was limited to the drawings alone and
not to the light box itself. We agree with the
appellate court.

First, petitioners application for a copyright

certificate as well as Copyright Certificate No.
PD-R2588 issued by the National Library on
January 20, 1981 clearly stated that it was for
a class O work under Section 2 (O) of PD 49 (The
Intellectual Property Decree) which was the
statute then prevailing. Said Section 2
expressly enumerated the works subject to
copyright:

SEC. 2. The rights granted by this Decree shall,

from the moment of creation, subsist with
respect to any of the following works:

x x x x x x x x x

(O) Prints, pictorial illustrations, advertising

copies, labels, tags, and box wraps;

x x x x x x x x x

Although petitioners copyright certificate was

entitled Advertising Display Units (which
depicted the box-type electrical devices), its

60 | P a g e
claim of copyright infringement cannot be
sustained.

Copyright, in the strict sense of the term, is

purely a statutory right. Being a mere statutory
grant, the rights are limited to what the
statute confers. It may be obtained and enjoyed
only with respect to the subjects and by the
persons, and on terms and conditions specified
in the statute.132[7] Accordingly, it can cover
only the works falling within the statutory
enumeration or description.133[8]

P & D secured its copyright under the

classification class O work. This being so,
petitioners copyright protection extended only
to the technical drawings and not to the light
box itself because the latter was not at all in
the category of prints, pictorial illustrations,
advertising copies, labels, tags and box wraps.
Stated otherwise, even as we find that P & D
indeed owned a valid copyright, the same could
have referred only to the technical drawings
within the category of pictorial illustrations.
It could not have possibly stretched out to
include the underlying light box. The strict
application134[9] of the laws enumeration in
Section 2 prevents us from giving petitioner
even a little leeway, that is, even if its
copyright certificate was entitled Advertising
Display Units. What the law does not include, it
excludes, and for the good reason: the light box
was not a literary or artistic piece which could
be copyrighted under the copyright law. And no
less clearly, neither could the lack of
statutory authority to make the light box
copyrightable be remedied by the simplistic act
of entitling the copyright certificate issued by

61 | P a g e
the National Library as Advertising Display
Units.

In fine, if SMI and NEMI reprinted P & Ds

technical drawings for sale to the public
without license from P & D, then no doubt they
would have been guilty of copyright
infringement. But this was not the case. SMIs
and NEMIs acts complained of by P & D were to
have units similar or identical to the light box
illustrated in the technical drawings
manufactured by Metro and EYD Rainbow
Advertising, for leasing out to different
advertisers. Was this an infringement of
petitioners copyright over the technical
drawings? We do not think so.

During the trial, the president of P & D himself

admitted that the light box was neither a
literary not an artistic work but an engineering
or marketing invention.135[10] Obviously, there
appeared to be some confusion regarding what
ought or ought not to be the proper subjects of
copyrights, patents and trademarks. In the
leading case of Kho vs. Court of Appeals,136[11]
we ruled that these three legal rights are
completely distinct and separate from one
another, and the protection afforded by one
cannot be used interchangeably to cover items or
works that exclusively pertain to the others:

Trademark, copyright and patents are different

intellectual property rights that cannot be
interchanged with one another. A trademark is
any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of
an enterprise and shall include a stamped or
marked container of goods. In relation thereto,
a trade name means the name or designation
identifying or distinguishing an enterprise.
Meanwhile, the scope of a copyright is confined

62 | P a g e
to literary and artistic works which are
original intellectual creations in the literary
and artistic domain protected from the moment of
their creation. Patentable inventions, on the
other hand, refer to any technical solution of a
problem in any field of human activity which is
new, involves an inventive step and is
industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite

its manufacture and commercial use of the light
boxes without license from petitioner, private
respondents cannot be held legally liable for
infringement of P & Ds copyright over its
technical drawings of the said light boxes,
should they be liable instead for infringement
of patent? We do not think so either.

For some reason or another, petitioner never

secured a patent for the light boxes. It
therefore acquired no patent rights which could
have protected its invention, if in fact it
really was. And because it had no patent,
petitioner could not legally prevent anyone from
manufacturing or commercially using the
contraption. In Creser Precision Systems, Inc.
vs. Court of Appeals,137[12] we held that there
can be no infringement of a patent until a
patent has been issued, since whatever right one
has to the invention covered by the patent
arises alone from the grant of patent. x x x
(A)n inventor has no common law right to a
monopoly of his invention. He has the right to
make use of and vend his invention, but if he
voluntarily discloses it, such as by offering it
for sale, the world is free to copy and use it
with impunity. A patent, however, gives the
inventor the right to exclude all others. As a
patentee, he has the exclusive right of making,
selling or using the invention.138[13] On the

63 | P a g e
assumption that petitioners advertising units
were patentable inventions, petitioner revealed
them fully to the public by submitting the
engineering drawings thereof to the National
Library.

To be able to effectively and legally preclude

others from copying and profiting from the
invention, a patent is a primordial requirement.
No patent, no protection. The ultimate goal of a
patent system is to bring new designs and
technologies into the public domain through
disclosure.139[14] Ideas, once disclosed to the
public without the protection of a valid patent,
are subject to appropriation without significant
restraint.140[15]

On one side of the coin is the public which will

benefit from new ideas; on the other are the
inventors who must be protected. As held in
Bauer & Cie vs. ODonnel,141[16] The act secured
to the inventor the exclusive right to make use,
and vend the thing patented, and consequently to
prevent others from exercising like privileges
without the consent of the patentee. It was
passed for the purpose of encouraging useful
invention and promoting new and useful
inventions by the protection and stimulation
given to inventive genius, and was intended to
secure to the public, after the lapse of the
exclusive privileges granted the benefit of such
inventions and improvements.

The law attempts to strike an ideal balance

between the two interests:

(The p)atent system thus embodies a carefully

crafted bargain for encouraging the creation and
disclosure of new useful and non-obvious

64 | P a g e
advances in technology and design, in return for
the exclusive right to practice the invention
for a number of years. The inventor may keep his
invention secret and reap its fruits
indefinitely. In consideration of its disclosure
and the consequent benefit to the community, the
patent is granted. An exclusive enjoyment is
guaranteed him for 17 years, but upon the
expiration of that period, the knowledge of the
invention inures to the people, who are thus
enabled to practice it and profit by its
use.142[17]

The patent law has a three-fold purpose: first,

patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to
stimulate further innovation and to permit the
public to practice the invention once the patent
expires; third, the stringent requirements for
patent protection seek to ensure that ideas in
the public domain remain there for the free use
of the public.143[18]

It is only after an exhaustive examination by

the patent office that a patent is issued. Such
an in-depth investigation is required because in
rewarding a useful invention, the rights and
welfare of the community must be fairly dealt
with and effectively guarded. To that end, the
prerequisites to obtaining a patent are strictly
observed and when a patent is issued, the
limitations on its exercise are equally strictly
enforced. To begin with, a genuine invention or
discovery must be demonstrated lest in the
constant demand for new appliances, the heavy
hand of tribute be laid on each slight
technological advance in art.144[19]

65 | P a g e
There is no such scrutiny in the case of
copyrights nor any notice published before its
grant to the effect that a person is claiming
the creation of a work. The law confers the
copyright from the moment of creation145[20] and
the copyright certificate is issued upon
registration with the National Library of a
sworn ex-parte claim of creation.

Therefore, not having gone through the arduous

examination for patents, the petitioner cannot
exclude others from the manufacture, sale or
commercial use of the light boxes on the sole
basis of its copyright certificate over the
technical drawings.

Stated otherwise, what petitioner seeks is

exclusivity without any opportunity for the
patent office (IPO) to scrutinize the light boxs
eligibility as a patentable invention. The irony
here is that, had petitioner secured a patent
instead, its exclusivity would have been for 17
years only. But through the simplified procedure
of copyright-registration with the National
Library without undergoing the rigor of
defending the patentability of its invention
before the IPO and the public the petitioner
would be protected for 50 years. This situation
could not have been the intention of the law.

In the oft-cited case of Baker vs.

Selden146[21], the United States Supreme Court
held that only the expression of an idea is
protected by copyright, not the idea itself. In
that case, the plaintiff held the copyright of a
book which expounded on a new accounting system
he had developed. The publication illustrated
blank forms of ledgers utilized in such a
system. The defendant reproduced forms similar
to those illustrated in the plaintiffs

66 | P a g e
copyrighted book. The US Supreme Court ruled
that:

There is no doubt that a work on the subject of

book-keeping, though only explanatory of well
known systems, may be the subject of a
copyright; but, then, it is claimed only as a
book. x x x. But there is a clear distinction
between the books, as such, and the art, which
it is, intended to illustrate. The mere
statement of the proposition is so evident that
it requires hardly any argument to support it.
The same distinction may be predicated of every
other art as well as that of bookkeeping. A
treatise on the composition and use of
medicines, be they old or new; on the
construction and use of ploughs or watches or
churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of
drawing lines to produce the effect of
perspective, would be the subject of copyright;
but no one would contend that the copyright of
the treatise would give the exclusive right to
the art or manufacture described therein. The
copyright of the book, if not pirated from other
works, would be valid without regard to the
novelty or want of novelty of its subject
matter. The novelty of the art or thing
described or explained has nothing to do with
the validity of the copyright. To give to the
author of the book an exclusive property in the
art described therein, when no examination of
its novelty has ever been officially made, would
be a surprise and a fraud upon the public. That
is the province of letters patent, not of
copyright. The claim to an invention of
discovery of an art or manufacture must be
subjected to the examination of the Patent
Office before an exclusive right therein can be
obtained; and a patent from the government can
only secure it.

The difference between the two things, letters

patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take
the case of medicines. Certain mixtures are
found to be of great value in the healing art.
If the discoverer writes and publishes a book on
67 | P a g e
the subject (as regular physicians generally
do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives
that to the public. If he desires to acquire
such exclusive right, he must obtain a patent
for the mixture as a new art, manufacture or
composition of matter. He may copyright his
book, if he pleases; but that only secures to
him the exclusive right of printing and
publishing his book. So of all other inventions
or discoveries.

The copyright of a book on perspective, no

matter how many drawings and illustrations it
may contain, gives no exclusive right to the
modes of drawing described, though they may
never have been known or used before. By
publishing the book without getting a patent for
the art, the latter is given to the public.

x x x

Now, whilst no one has a right to print or

publish his book, or any material part thereof,
as a book intended to convey instruction in the
art, any person may practice and use the art
itself which he has described and illustrated
therein. The use of the art is a totally
different thing from a publication of the book
explaining it. The copyright of a book on
bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon
the plan set forth in such book. Whether the art
might or might not have been patented, is a
question, which is not before us. It was not
patented, and is open and free to the use of the
public. And, of course, in using the art, the
ruled lines and headings of accounts must
necessarily be used as incident to it.

The plausibility of the claim put forward by the

complainant in this case arises from a confusion
of ideas produced by the peculiar nature of the
art described in the books, which have been made
the subject of copyright. In describing the art,
the illustrations and diagrams employed happened
to correspond more closely than usual with the
actual work performed by the operator who uses

68 | P a g e
the art. x x x The description of the art in a
book, though entitled to the benefit of
copyright, lays no foundation for an exclusive
claim to the art itself. The object of the one
is explanation; the object of the other is use.
The former may be secured by copyright. The
latter can only be secured, if it can be secured
at all, by letters patent. (underscoring
supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of

the mark Poster Ads which petitioners president
said was a contraction of poster advertising. P
& D was able to secure a trademark certificate
for it, but one where the goods specified were
stationeries such as letterheads, envelopes,
calling cards and newsletters.147[22] Petitioner
admitted it did not commercially engage in or
market these goods. On the contrary, it dealt in
electrically operated backlit advertising units
and the sale of advertising spaces thereon,
which, however, were not at all specified in the
trademark certificate.

Under the circumstances, the Court of Appeals

correctly cited Faberge Inc. vs. Intermediate
Appellate Court,148[23] where we, invoking
Section 20 of the old Trademark Law, ruled that
the certificate of registration issued by the
Director of Patents can confer (upon petitioner)
the exclusive right to use its own symbol only
to those goods specified in the certificate,
subject to any conditions and limitations
specified in the certificate x x x. One who has
adopted and used a trademark on his goods does
not prevent the adoption and use of the same
trademark by others for products which are of a
different description.149[24] Faberge, Inc. was

69 | P a g e
correct and was in fact recently reiterated in
Canon Kabushiki Kaisha vs. Court of
Appeals.150[25]

Assuming arguendo that Poster Ads could validly

qualify as a trademark, the failure of P & D to
secure a trademark registration for specific use
on the light boxes meant that there could not
have been any trademark infringement since
registration was an essential element thereof.

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been

for unfair competition, a situation which was
possible even if P & D had no
registration.151[26] However, while the
petitioners complaint in the RTC also cited
unfair competition, the trial court did not find
private respondents liable therefor. Petitioner
did not appeal this particular point; hence, it
cannot now revive its claim of unfair
competition.

But even disregarding procedural issues, we

nevertheless cannot hold respondents guilty of
unfair competition.

By the nature of things, there can be no unfair

competition under the law on copyrights although
it is applicable to disputes over the use of
trademarks. Even a name or phrase incapable of
appropriation as a trademark or tradename may,
by long and exclusive use by a business (such
that the name or phrase becomes associated with
the business or product in the mind of the
purchasing public), be entitled to protection
against unfair competition.152[27] In this case,

70 | P a g e
there was no evidence that P & Ds use of Poster
Ads was distinctive or well-known. As noted by
the Court of Appeals, petitioners expert
witnesses himself had testified that Poster Ads
was too generic a name. So it was difficult to
identify it with any company, honestly
speaking.153[28] This crucial admission by its
own expert witness that Poster Ads could not be
associated with P & D showed that, in the mind
of the public, the goods and services carrying
the trademark Poster Ads could not be
distinguished from the goods and services of
other entities.

This fact also prevented the application of the

doctrine of secondary meaning. Poster Ads was
generic and incapable of being used as a
trademark because it was used in the field of
poster advertising, the very business engaged in
by petitioner. Secondary meaning means that a
word or phrase originally incapable of exclusive
appropriation with reference to an article in
the market (because it is geographically or
otherwise descriptive) might nevertheless have
been used for so long and so exclusively by one
producer with reference to his article that, in
the trade and to that branch of the purchasing
public, the word or phrase has come to mean that
the article was his property.154[29] The
admission by petitioners own expert witness that
he himself could not associate Poster Ads with
petitioner P & D because it was too generic
definitely precluded the application of this
exception.

Having discussed the most important and critical

issues, we see no need to belabor the rest.

All told, the Court finds no reversible error

committed by the Court of Appeals when it

71 | P a g e
reversed the Regional Trial Court of Makati
City.
WHEREFORE, the petition is hereby DENIED and the
decision of the Court of Appeals dated May 22,
2001 is AFFIRMED in toto.
2. ELIDAD C. KHO, doing business under the name
and style of KEC COSMETICS LABORATORY vs. HON.
COURT OF APPEALS, SUMMERVILLE GENERAL
MERCHANDISING and COMPANY, and ANG TIAM CHAY.

Before us is a petition for review on certiorari

of the Decisioni[1] dated May 24, 1993 of the
Court of Appeals setting aside and declaring as
null and void the Ordersii[2] dated February 10,
1992 and March 19, 1992 of the Regional Trial
Court, Branch 90, of Quezon City granting the
issuance of a writ of preliminary injunction.

The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho

filed a complaint for injunction and damages
with a prayer for the issuance of a writ of
preliminary injunction, docketed as Civil Case
No. Q-91-10926, against the respondents
Summerville General Merchandising and Company
(Summerville, for brevity) and Ang Tiam Chay.

The petitioners complaint alleges that

petitioner, doing business under the name and
style of KEC Cosmetics Laboratory, is the
registered owner of the copyrights Chin Chun Su
and Oval Facial Cream Container/Case, as shown
by Certificates of Copyright Registration No. 0-
1358 and No. 0-3678; that she also has patent
rights on Chin Chun Su & Device and Chin Chun Su
for medicated cream after purchasing the same
from Quintin Cheng, the registered owner thereof
in the Supplemental Register of the Philippine
Patent Office on February 7, 1980 under
Registration Certificate No. 4529; that
respondent Summerville advertised and sold
petitioners cream products under the brand name
Chin Chun Su, in similar containers that
petitioner uses, thereby misleading the public,
and resulting in the decline in the petitioners
business sales and income; and, that the
72 | P a g e
respondents should be enjoined from allegedly
infringing on the copyrights and patents of the
petitioner.

The respondents, on the other hand, alleged as

their defense that Summerville is the exclusive
and authorized importer, re-packer and
distributor of Chin Chun Su products
manufactured by Shun Yi Factory of Taiwan; that
the said Taiwanese manufacturing company
authorized Summerville to register its trade
name Chin Chun Su Medicated Cream with the
Philippine Patent Office and other appropriate
governmental agencies; that KEC Cosmetics
Laboratory of the petitioner obtained the
copyrights through misrepresentation and
falsification; and, that the authority of
Quintin Cheng, assignee of the patent
registration certificate, to distribute and
market Chin Chun Su products in the Philippines
had already been terminated by the said
Taiwanese Manufacturing Company.

After due hearing on the application for

preliminary injunction, the trial court granted
the same in an Order dated February 10, 1992,
the dispositive portion of which reads:

ACCORDINGLY, the application of plaintiff Elidad

C. Kho, doing business under the style of KEC
Cosmetic Laboratory, for preliminary injunction,
is hereby granted. Consequentially, plaintiff is
required to file with the Court a bond executed
to defendants in the amount of five hundred
thousand pesos (P500,000.00) to the effect that
plaintiff will pay to defendants all damages
which defendants may sustain by reason of the
injunction if the Court should finally decide
that plaintiff is not entitled thereto.

SO ORDERED.iii[3]

The respondents moved for reconsideration but

their motion for reconsideration was denied by
the trial court in an Order dated March 19,
1992.iv[4]

On April 24, 1992, the respondents filed a

petition for certiorari with the Court of
73 | P a g e
Appeals, docketed as CA-G.R. SP No. 27803,
praying for the nullification of the said writ
of preliminary injunction issued by the trial
court. After the respondents filed their reply
and almost a month after petitioner submitted
her comment, or on August 14 1992, the latter
moved to dismiss the petition for violation of
Supreme Court Circular No. 28-91, a circular
prohibiting forum shopping. According to the
petitioner, the respondents did not state the
docket number of the civil case in the caption
of their petition and, more significantly, they
did not include therein a certificate of non-
forum shopping. The respondents opposed the
petition and submitted to the appellate court a
certificate of non-forum shopping for their
petition.

On May 24, 1993, the appellate court rendered a

Decision in CA-G.R. SP No. 27803 ruling in favor
of the respondents, the dispositive portion of
which reads:

WHEREFORE, the petition is hereby given due

course and the orders of respondent court dated
February 10, 1992 and March 19, 1992 granting
the writ of preliminary injunction and denying
petitioners motion for reconsideration are
hereby set aside and declared null and void.
Respondent court is directed to forthwith
proceed with the trial of Civil Case No. Q-91-
10926 and resolve the issue raised by the
parties on the merits.

SO ORDERED.v[5]

In granting the petition, the appellate court

ruled that:

The registration of the trademark or brandname

Chin Chun Su by KEC with the supplemental
register of the Bureau of Patents, Trademarks
and Technology Transfer cannot be equated with
registration in the principal register, which is
duly protected by the Trademark Law.

xxx xxx xxx

74 | P a g e
As ratiocinated in La Chemise Lacoste, S.S. vs.
Fernandez, 129 SCRA 373, 393:

Registration in the Supplemental Register,

therefore, serves as notice that the registrant
is using or has appropriated the trademark. By
the very fact that the trademark cannot as yet
be on guard and there are certain defects, some
obstacles which the use must still overcome
before he can claim legal ownership of the mark
or ask the courts to vindicate his claims of an
exclusive right to the use of the same. It would
be deceptive for a party with nothing more than
a registration in the Supplemental Register to
posture before courts of justice as if the
registration is in the Principal Register.

The reliance of the private respondent on the

last sentence of the Patent office action on
application Serial No. 30954 that registrants is
presumed to be the owner of the mark until after
the registration is declared cancelled is,
therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only
runs counter to the precept embodied in Rule 124
of the Revised Rules of Practice before the
Philippine Patent Office in Trademark Cases but
considering all the facts ventilated before us
in the four interrelated petitions involving the
petitioner and the respondent, it is devoid of
factual basis. As even in cases where
presumption and precept may factually be
reconciled, we have held that the presumption is
rebuttable, not conclusive, (People v. Lim Hoa,
G.R. No. L-10612, May 30, 1958, Unreported). One
may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis
& Co. v. Kiu Foo & Co., et al., 60 Phil 928; La
Yebana Co. v. chua Seco & Co., 14 Phil 534).

The petitioner filed a motion for

reconsideration. This she followed with several
motions to declare respondents in contempt of
court for publishing advertisements notifying
the public of the promulgation of the assailed
decision of the appellate court and stating that
genuine Chin Chun Su products could be obtained

75 | P a g e
only from Summerville General Merchandising and
Co.

In the meantime, the trial court went on to hear

petitioners complaint for final injunction and
damages. On October 22, 1993, the trial court
rendered a Decision barring the petitioner from
using the trademark Chin Chun Su and upholding
the right of the respondents to use the same,
but recognizing the copyright of the petitioner
over the oval shaped container of her beauty
cream. The trial court did not award damages and
costs to any of the parties but to their
respective counsels were awarded Seventy-Five
Thousand Pesos (P75,000.00) each as attorneys
fees. The petitioner duly appealed the said
decision to the Court of Appeals.

On June 3, 1994, the Court of Appeals

promulgated a Resolution denying the petitioners
motions for reconsideration and for contempt of
court in CA-G.R. SP No. 27803.

Hence, this petition anchored on the following

assignment of errors:

RESPONDENT HONORABLE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING
TO RULE ON PETITIONERS MOTION TO DISMISS.

II

RESPONDENT HONORABLE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN
REFUSING TO PROMPTLY RESOLVE PETITIONERS
MOTION FOR RECONSIDERATION.

III

IN DELAYING THE RESOLUTION OF PETITIONERS

MOTION FOR RECONSIDERATION, THE HONORABLE
COURT OF APPEALS DENIED PETITIONERS RIGHT TO
SEEK TIMELY APPELLATE RELIEF AND VIOLATED
PETITIONERS RIGHT TO DUE PROCESS.

76 | P a g e
IV

RESPONDENT HONORABLE COURT OF APPEALS

COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING
TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT.

The petitioner faults the appellate court for

not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91.
Also, the petitioner contends that the appellate
court violated Section 6, Rule 9 of the Revised
Internal Rules of the Court of Appeals when it
failed to rule on her motion for reconsideration
within ninety (90) days from the time it is
submitted for resolution. The appellate court
ruled only after the lapse of three hundred
fifty-four (354) days, or on June 3, 1994. In
delaying the resolution thereof, the appellate
court denied the petitioners right to seek the
timely appellate relief. Finally, petitioner
describes as arbitrary the denial of her motions
for contempt of court against the respondents.

We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised

Rules of Civil Procedure, one of the grounds for
the issuance of a writ of preliminary injunction
is a proof that the applicant is entitled to the
relief demanded, and the whole or part of such
relief consists in restraining the commission or
continuance of the act or acts complained of,
either for a limited period or perpetually.
Thus, a preliminary injunction order may be
granted only when the application for the
issuance of the same shows facts entitling the
applicant to the relief demanded. This is the
reason why we have ruled that it must be shown
that the invasion of the right sought to be
protected is material and substantial, that the
right of complainant is clear and unmistakable,
and, that there is an urgent and paramount
necessity for the writ to prevent serious
damage.

In the case at bar, the petitioner applied for

the issuance of a preliminary injunctive order

77 | P a g e
on the ground that she is entitled to the use of
the trademark on Chin Chun Su and its container
based on her copyright and patent over the same.
We first find it appropriate to rule on whether
the copyright and patent over the name and
container of a beauty cream product would
entitle the registrant to the use and ownership
over the same to the exclusion of others.

Trademark, copyright and patents are different

intellectual property rights that cannot be
interchanged with one another. A trademark is
any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of
an enterprise and shall include a stamped or
marked container of goods. 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.

Petitioner has no right to support her claim for

the exclusive use of the subject trade name and
its container. The name and container of a
beauty cream product are proper subjects of a
trademark inasmuch as the same falls squarely
within its definition. In order to be entitled
to exclusively use the same in the sale of the
beauty cream product, the user must sufficiently
prove that she registered or used it before
anybody else did. The petitioners copyright and
patent registration of the name and container
would not guarantee her the right to the
exclusive use of the same for the reason that
they are not appropriate subjects of the said
intellectual rights. Consequently, a preliminary
injunction order cannot be issued for the reason
that the petitioner has not proven that she has
a clear right over the said name and container
to the exclusion of others, not having proven

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that she has registered a trademark thereto or
used the same before anyone did.

We cannot likewise overlook the decision of the

trial court in the case for final injunction and
damages. The dispositive portion of said
decision held that the petitioner does not have
trademark rights on the name and container of
the beauty cream product. The said decision on
the merits of the trial court rendered the
issuance of the writ of a preliminary injunction
moot and academic notwithstanding the fact that
the same has been appealed in the Court of
Appeals. This is supported by our ruling in La
Vista Association, Inc. v. Court of Appeals, to
wit:

Considering that preliminary injunction is a

provisional remedy which may be granted at any
time after the commencement of the action and
before judgment when it is established that the
plaintiff is entitled to the relief demanded and
only when his complaint shows facts entitling
such reliefs xxx and it appearing that the trial
court had already granted the issuance of a
final injunction in favor of petitioner in its
decision rendered after trial on the merits xxx
the Court resolved to Dismiss the instant
petition having been rendered moot and academic.
An injunction issued by the trial court after it
has already made a clear pronouncement as to the
plaintiffs right thereto, that is, after the
same issue has been decided on the merits, the
trial court having appreciated the evidence
presented, is proper, notwithstanding the fact
that the decision rendered is not yet final xxx.
Being an ancillary remedy, the proceedings for
preliminary injunction cannot stand separately
or proceed independently of the decision
rendered on the merit of the main case for
injunction. The merit of the main case having
been already determined in favor of the
applicant, the preliminary determination of its
non-existence ceases to have any force and
effect. (italics supplied)

La Vista categorically pronounced that the

issuance of a final injunction renders any
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question on the preliminary injunctive order
moot and academic despite the fact that the
decision granting a final injunction is pending
appeal. Conversely, a decision denying the
applicant-plaintiffs right to a final
injunction, although appealed, renders moot and
academic any objection to the prior dissolution
of a writ of preliminary injunction.

The petitioner argues that the appellate court

erred in not dismissing the petition for
certiorari for non-compliance with the rule on
forum shopping. We disagree. First, the
petitioner improperly raised the technical
objection of non-compliance with Supreme Court
Circular No. 28-91 by filing a motion to dismiss
the petition for certiorari filed in the
appellate court. This is prohibited by Section
6, Rule 66 of the Revised Rules of Civil
Procedure which provides that (I)n petitions for
certiorari before the Supreme Court and the
Court of Appeals, the provisions of Section 2,
Rule 56, shall be observed. Before giving due
course thereto, the court may require the
respondents to file their comment to, and not a
motion to dismiss, the petition xxx (italics
supplied). Secondly, the issue was raised one
month after petitioner had filed her
answer/comment and after private respondent had
replied thereto. Under Section 1, Rule 16 of the
Revised Rules of Civil Procedure, a motion to
dismiss shall be filed within the time for but
before filing the answer to the complaint or
pleading asserting a claim. She therefore could
no longer submit a motion to dismiss nor raise
defenses and objections not included in the
answer/comment she had earlier tendered.
Thirdly, substantial justice and equity require
this Court not to revive a dissolved writ of
injunction in favor of a party without any legal
right thereto merely on a technical infirmity.
The granting of an injunctive writ based on a
technical ground rather than compliance with the
requisites for the issuance of the same is
contrary to the primary objective of legal
procedure which is to serve as a means to
dispense justice to the deserving party.

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The petitioner likewise contends that the
appellate court unduly delayed the resolution of
her motion for reconsideration. But we find that
petitioner contributed to this delay when she
filed successive contentious motions in the same
proceeding, the last of which was on October 27,
1993, necessitating counter-manifestations from
private respondents with the last one being
filed on November 9, 1993. Nonetheless, it is
well-settled that non-observance of the period
for deciding cases or their incidents does not
render such judgments ineffective or void. With
respect to the purported damages she suffered
due to the alleged delay in resolving her motion
for reconsideration, we find that the said issue
has likewise been rendered moot and academic by
our ruling that she has no right over the
trademark and, consequently, to the issuance of
a writ of preliminary injunction.

Finally, we rule that the Court of Appeals

correctly denied the petitioners several motions
for contempt of court. There is nothing
contemptuous about the advertisements complained
of which, as regards the proceedings in CA-G.R.
SP No. 27803 merely announced in plain and
straightforward language the promulgation of the
assailed Decision of the appellate court.
Moreover, pursuant to Section 4 of Rule 39 of
the Revised Rules of Civil Procedure, the said
decision nullifying the injunctive writ was
immediately executory.
WHEREFORE, the petition is DENIED. The Decision
and Resolution of the Court of Appeals dated May
24, 1993 and June 3, 1994, respectively, are
hereby AFFIRMED. With costs against the
petitioner.
CHAPTER IV
PATENT APPLICATION

Section 32. The Application. - 32.1. The patent

application shall be in Filipino or English and
shall contain the following:

(a) A request for the grant of a patent;

(b) A description of the invention;

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 (c) Drawings necessary for the understanding
of the invention;

(d) One or more claims; and

(e) An abstract.

32.2. No patent may be granted unless the

application identifies the inventor. If the
applicant is not the inventor, the Office may
require him to submit said authority. (Sec. 13,
R.A. No. 165a)
Section 33. Appointment of Agent or
Representative. - An applicant who is not a
resident of the Philippines must appoint and
maintain a resident agent or representative in
the Philippines upon whom notice or process for
judicial or administrative procedure relating to
the application for patent or the patent may be
served. (Sec. 11, R.A. No. 165a)
Section 34. The Request. - The request shall
contain a petition for the grant of the patent,
the name and other data of the applicant, the
inventor and the agent and the title of the
invention. (n)
Section 35. Disclosure and Description of the
Invention. - 35.1. Disclosure. - The application
shall disclose the invention in a manner
sufficiently clear and complete for it to be
carried out by a person skilled in the art.
Where the application concerns a microbiological
process or the product thereof and involves the
use of a micro-organism which cannot be
sufficiently disclosed in the application in
such a way as to enable the invention to be
carried out by a person skilled in the art, and
such material is not available to the public,
the application shall be supplemented by a
deposit of such material with an international
depository institution.

35.2. Description. - The Regulations shall

prescribe the contents of the description and
the order of presentation. (Sec. 14, R.A. No.
165a)

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Section 36. The Claims. - 36.1. The application
shall contain one (1) or more claims which shall
define the matter for which protection is
sought. Each claim shall be clear and concise,
and shall be supported by the description.

36.2. The Regulations shall prescribe the manner

of the presentation of claims. (n)
Section 37. The Abstract. - The abstract shall
consist of a concise summary of the disclosure
of the invention as contained in the
description, claims and drawings in preferably
not more than one hundred fifty (150) words. It
must be drafted in a way which allows the clear
understanding of the technical problem, the gist
of the solution of that problem through the
invention, and the principal use or uses of the
invention. The abstract shall merely serve for
technical information. (n)
Section 38. Unity of Invention. - 38.1. The
application shall relate to one invention only
or to a group of inventions forming a single
general inventive concept.

38.2. If several independent inventions which do

not form a single general inventive concept are
claimed in one application, the Director may
require that the application be restricted to a
single invention. A later application filed for
an invention divided out shall be considered as
having been filed on the same day as the first
application: Provided, That the later
application is filed within four (4) months
after the requirement to divide becomes final or
within such additional time, not exceeding four
(4) months, as may be granted: Provided further,
That each divisional application shall not go
beyond the disclosure in the initial
application.

38.3. The fact that a patent has been granted on

an application that did not comply with the
requirement of unity of invention shall not be a
ground to cancel the patent. (Sec. 17, R.A. No.
165a)

83 | P a g e
Section 39. Information Concerning Corresponding
Foreign Application for Patents. - The applicant
shall, at the request of the Director, furnish
him with the date and number of any application
for a patent filed by him abroad, hereafter
referred to as the "foreign application,"
relating to the same or essentially the same
invention as that claimed in the application
filed with the Office and other documents
relating to the foreign application. (n)
CHAPTER V
PROCEDURE FOR GRANT OF PATENT

Section 40. Filing Date Requirements. - 40.1.

The filing date of a patent application shall be
the date of receipt by the Office of at least
the following elements:

(a) An express or implicit indication that a

Philippine patent is sought;

(b) Information identifying the applicant;

and

(c) Description of the invention and one (1)

or more claims in Filipino or English.

40.2. If any of these elements is not submitted

within the period set by the Regulations, the
application shall be considered withdrawn. (n)
Section 41. According a Filing Date. - The
Office shall examine whether the patent
application satisfies the requirements for the
grant of date of filing as provided in Section
40 hereof. If the date of filing cannot be
accorded, the applicant shall be given an
opportunity to correct the deficiencies in
accordance with the implementing Regulations. If
the application does not contain all the
elements indicated in Section 40, the filing
date should be that date when all the elements
are received. If the deficiencies are not
remedied within the prescribed time limit, the
application shall be considered withdrawn. (n)
Section 42. Formality Examination. - 42.1. After
the patent application has been accorded a

84 | P a g e
filing date and the required fees have been paid
on time in accordance with the Regulations, the
applicant shall comply with the formal
requirements specified by Section 32 and the
Regulations within the prescribed period,
otherwise the application shall be considered
withdrawn.

42.2. The Regulations shall determine the

procedure for the re-examination and revival of
an application as well as the appeal to the
Director of Patents from any final action by the
examiner. (Sec. 16, R.A. No. 165a)
Section 43. Classification and Search. - An
application that has complied with the formal
requirements shall be classified and a search
conducted to determine the prior art. (n)
Section 44. Publication of Patent Application. -
44.1. The patent application shall be published
in the IPO Gazette together with a search
document established by or on behalf of the
Office citing any documents that reflect prior
art, after the expiration of eighteen ( 18)
months from the filing date or priority date.

44.2. After publication of a patent application,

any interested party may inspect the application
documents filed with the Office.

44.3. The Director General subject to the

approval of the Secretary of Trade and Industry,
may prohibit or restrict the publication of an
application, if in his opinion, to do so would
be prejudicial to the national security and
interests of the Republic of the Philippines.
(n)
Section 45. Confidentiality Before Publication.
- A patent application, which has not yet been
published, and all related documents, shall not
be made available for inspection without the
consent of the applicant. (n)
Section 46. Rights Conferred by a Patent
Application After Publication. - The applicant
shall have all the rights of a patentee under
Section 76 against any person who, without his
85 | P a g e
authorization, exercised any of the rights
conferred under Section 71 of this Act in
relation to the invention claimed in the
published patent application, as if a patent had
been granted for that invention: Provided, That
the said person had:

46.1. Actual knowledge that the invention that

he was using was the subject matter of a
published application; or

46.2. Received written notice that the invention

that he was using was the subject matter of a
published application being identified in the
said notice by its serial number: Provided, That
the action may not be filed until after the
grant of a patent on the published application
and within four (4) years from the commission of
the acts complained of. (n)
Section 47. Observation by Third Parties. -
Following the publication of the patent
application, any person may present observations
in writing concerning the patentability of the
invention. Such observations shall be
communicated to the applicant who may comment on
them. The Office shall acknowledge and put such
observations and comment in the file of the
application to which it relates. (n)
Section 48. Request for Substantive Examination.
- 48.1. The application shall be deemed
withdrawn unless within six (6) months from the
date of publication under Section 41, a written
request to determine whether a patent
application meets the requirements of Sections
21 to 27 and Sections 32 to 39 and the fees have
been paid on time.

48.2. Withdrawal of the request for examination

shall be irrevocable and shall not authorize the
refund of any fee. (n)
Section 49. Amendment of Application. - An
applicant may amend the patent application
during examination: Provided, That such
amendment shall not include new matter outside
the scope of the disclosure contained in the
application as filed. (n)
86 | P a g e
Section 50. Grant of Patent. - 50.1. If the
application meets the requirements of this Act,
the Office shall grant the patent: Provided,
That all the fees are paid on time.

50.2. If the required fees for grant and

printing are not paid in due time, the
application shall be deemed to be withdrawn.

50.3. A patent shall take effect on the date of

the publication of the grant of the patent in
the IPO Gazette. (Sec. 18, R.A. No. 165a)
Section 51. Refusal of the Application. - 51.1.
The final order of refusal of the examiner to
grant the patent shall be appealable to the
Director in accordance with this Act.

51.2. The Regulations shall provide for the

procedure by which an appeal from the order of
refusal from the Director shall be undertaken.
(n)
Section 52. Publication Upon Grant of Patent. -
52.1. The grant of the patent together with
other related information shall be published in
the IPO Gazette within the time prescribed by
the Regulations.

52.2. Any interested party may inspect the

complete description, claims, and drawings of
the patent on file with the Office. (Sec. 18,
R.A. No. 165a)
Section 53. Contents of Patent. - The patent
shall be issued in the name of the Republic of
the Philippines under the seal of the Office and
shall be signed by the Director, and registered
together with the description, claims, and
drawings, if any, in books and records of the
Office. (Secs. 19 and 20, R.A. No. 165a)
Section 54. Term of Patent. - The term of a
patent shall be twenty (20) years from the
filing date of the application. (Sec. 21, R.A.
No. 165a)
Section 55. Annual Fees. - 55.1. To maintain the
patent application or patent, an annual fee

87 | P a g e
shall be paid upon the expiration of four (4)
years from the date the application was
published pursuant to Section 44 hereof, and on
each subsequent anniversary of such date.
Payment may be made within three (3) months
before the due date. The obligation to pay the
annual fees shall terminate should the
application be withdrawn, refused, or cancelled.

55.2. If the annual fee is not paid, the patent

application shall be deemed withdrawn or the
patent considered as lapsed from the day
following the expiration of the period within
which the annual fees were due. A notice that
the application is deemed withdrawn or the lapse
of a patent for non-payment of any annual fee
shall be published in the IPO Gazette and the
lapse shall be recorded in the Register of the
Office.

55.3. A grace period of six (6) months shall be

granted for the payment of the annual fee, upon
payment of the prescribed surcharge for delayed
payment. (Sec. 22, R.A. No. 165a)
Section 56. Surrender of Patent. - 56.1. The
owner of the patent, with the consent of all
persons having grants or licenses or other
right, title or interest in and to the patent
and the invention covered thereby, which have
been recorded in the Office, may surrender his
patent or any claim or claims forming part
thereof to the Office for cancellation.

56.2. A person may give notice to the Office of

his opposition to the surrender of a patent
under this section, and if he does so, the
Bureau shall notify the proprietor of the patent
and determine the question.

56.3. If the Office is satisfied that the patent

may properly be surrendered, he may accept the
offer and, as from the day when notice of his
acceptance is published in the IPO Gazette, the
patent shall cease to have effect, but no action
for infringement shall lie and no right
compensation shall accrue for any use of the
patented invention before that day for the

88 | P a g e
services of the government. (Sec. 24, R.A. No.
165a)
Section 57. Correction of Mistakes of the
Office. - The Director shall have the power to
correct, without fee, any mistake in a patent
incurred through the fault of the Office when
clearly disclosed in the records thereof, to
make the patent conform to the records. (Sec.
25, R.A. No. 165)
Section 58. Correction of Mistake in the
Application. - On request of any interested
person and payment of the prescribed fee, the
Director is authorized to correct any mistake in
a patent of a formal and clerical nature, not
incurred through the fault of the Office. (Sec.
26, R.A. No. 165a)
Section 59. Changes in Patents. - 59.1. The
owner of a patent shall have the right to
request the Bureau to make the changes in the
patent in order to:

(a) Limit the extent of the protection

conferred by it;

(b) Correct obvious mistakes or to correct

clerical errors; and

(c) Correct mistakes or errors, other than

those referred to in letter (b), made in
good faith: Provided, That where the change
would result in a broadening of the extent
of protection conferred by the patent, no
request may be made after the expiration of
two (2) years from the grant of a patent and
the change shall not affect the rights of
any third party which has relied on the
patent, as published.

59.2. No change in the patent shall be permitted

under this section, where the change would
result in the disclosure contained in the patent
going beyond the disclosure contained in the
application filed.

89 | P a g e
59.3. If, and to the extent to which the Office
changes the patent according to this section, it
shall publish the same. (n)
Section 60. Form and Publication of Amendment. -
An amendment or correction of a patent shall be
accomplished by a certificate of such amendment
or correction, authenticated by the seal of the
Office and signed by the Director, which
certificate shall be attached to the patent.
Notice of such amendment or correction shall be
published in the IPO Gazette and copies of the
patent kept or furnished by the Office shall
include a copy of the certificate of amendment
or correction. (Sec. 27, R.A. No. 165)

90 | P a g e
91 | P a g e
Invention Patent Application Procedures

1. Application for Invention Patent

The application for a grant of

Philippine Patent (for Invention) must be filed
with the Bureau of Patents (BOP) of the
Intellectual Property Office (IPO) through the
Receiving Section/Counter of the Administrative,
Financial and Human Resource Development
Services Bureau (AFHRDSB) located at the ground
floor of the IPO Building. To obtain a filing
date, the following has to be submitted:

(a) Properly filled-out Request Form

for a Grant of Philippine Patent;

(b) Name, address and signature of

applicant(s); for non-resident applicant, the
name and address of his/her/their resident
agent; and

(c) Description of the invention and

one or more claims.
NOTE: It is advised that any drawing/s necessary
to understand the subject invention should be
submitted at the time of filing so that there
would not be a possible change in filing date
due to late submission/filing of said drawing/s
. (Rule 602 of the IRR)The other formal
requirements, which are not needed to obtain a
filing date, but maybe included at the time of
filing are:

(a) A filing fee (for big or small

entities) which maybe paid during application
filing or within one month from the date of
filing. The application shall be deemed
automatically cancelled/withdrawn in case of
non-payment of such fees;

(b) Drawing(s) necessary to understand

the invention;

(c) An abstract; and

92 | P a g e
 (d) If the priority of an earlier filed
application is being claimed, the details of the
claim, i.e. filing date, file number and country
of origin.
2. Formality Examination

Upon receipt of the application, the

examiner checks if the application satisfies the
formal requirements needed for the grant of a
filing date. The date of filing is very
important under the present “first-to-file”
system because it serves to determine, in case
of a dispute with another applicant for the same
invention, who has the right to the patent.
3. Publication of Unexamined Application

After the formality examination,

search and the classification of the field of
technology to which the invention is
assigned, the application together with the
results of the search (which contains a list of
published patent applications or issued patents
for inventions, which are identical or
equivalent to those claimed by the application),
will be published in the IPO Gazette (after the
expiration of 18 months from the filing date or
priority date). After the publication of the
application, any person may present observations
in writing concerning the patentability of the
invention. Such observation shall be
communicated to the applicant who may comment on
them.
4. Request for Substantive Examination
Substantive examination is conducted upon
request

The request for substantive

examination of the application must be filed
within six (6) months from the date of the
publication. The application is considered
withdrawn if no request is made within that
period. If the examiner finds reason to refuse
the registration of the application, i.e. the
application is not new, inventive or
industrially applicable, the Bureau shall notify
the applicant of the reason for
93 | P a g e
refusal/rejection giving the applicant the
chance to defend or amend the application.
5. Decision to Grant Patent Registration or
Decision of Refusal

If the examiner finds no reason for

refusal of the application, or if the notice of
reason for refusal is satisfactorily complied
with by amendment or correction, the examiner
issues a decision to grant the patent
registration. Otherwise, the examiner refuses
the application.
6. Inspection of Records

The grant of a patent together with

other information shall be published in the IPO
Gazette within six (6) months. Any interested
party may inspect the complete description,
claims, and drawings of the patent on file with
the Office.
7. Appeal

(a) Every applicant may appeal to the

Director of Patents the final refusal of the
examiner to grant the patent within two (2)
months from the mailing date of the final
refusal. The decision or order of the Director
shall become final and executory fifteen (15)
days after receipt of a copy by the appellant
unless within the same period, a motion for
reconsideration is filed with the Director or an
appeal to the Director General is filed together
with the payment of the required fee. (b) The
decision of the Director General may be appealed
to the Court of Appeals. If the applicant is
still not satisfied with the decision of the
Court of Appeals, he may appeal to the Supreme
Court.

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 CHAPTER VI
CANCELLATION OF PATENTS AND SUBSTITUTION OF
PATENTEE

Section 61. Cancellation of Patents. - 61.1. Any

interested person may, upon payment of the
required fee, petition to cancel the patent or
any claim thereof, or parts of the claim, on any
of the following GROUNDS:

(a) That what is claimed as the invention is

not new or Patentable;

(b) That the patent does not disclose the

invention in a manner sufficiently clear and
complete for it to be carried out by any
person skilled in the art; or

(c) That the patent is contrary to public

order or morality.

61.2. Where the grounds for cancellation relate

to some of the claims or parts of the claim,
cancellation may be effected to such extent
only. (Secs. 28 and 29, R.A. No. 165a)
Section 62. Requirement of the Petition. - The
petition for cancellation shall be in writing,
verified by the petitioner or by any person in
his behalf who knows the facts, specify the
grounds upon which it is based, include a
statement of the facts to be relied upon, and
filed with the Office. Copies of printed
publications or of patents of other countries,
and other supporting documents mentioned in the
petition shall be attached thereto, together
with the translation thereof in English, if not
in the English language. (Sec. 30, R.A. No. 165)
Section 63. Notice of Hearing. - Upon filing of
a petition for cancellation, the Director of
Legal Affairs shall forthwith serve notice of
the filing thereof upon the patentee and all
persons having grants or licenses, or any other
right, title or interest in and to the patent
and the invention covered thereby, as appears of
record in the Office, and of notice of the date
of hearing thereon on such persons and the
petitioner. Notice of the filing of the petition
95 | P a g e
shall be published in the IPO Gazette. (Sec. 31,
R.A. No. 165a)
Section 64. Committee of Three. - In cases
involving highly technical issues, on motion of
any party, the Director of Legal Affairs may
order that the petition be heard and decided by
a committee composed of the Director of Legal
Affairs as chairman and two (2) members who have
the experience or expertise in the field of
technology to which the patent sought to be
cancelled relates. The decision of the committee
shall be appealable to the Director General. (n)
Section 65. Cancellation of the Patent. - 65.1.
If the Committee finds that a case for
cancellation has been proved, it shall order the
patent or any specified claim or claims thereof
cancelled.

65.2. If the Committee finds that, taking into

consideration the amendment made by the patentee
during the cancellation proceedings, the patent
and the invention to which it relates meet the
requirement of this Act, it may decide to
maintain the patent as amended: Provided, That
the fee for printing of a new patent is paid
within the time limit prescribed in the
Regulations.

65.3. If the fee for the printing of a new

patent is not paid in due time, the patent
should be revoked.

65.4. If the patent is amended under Subsection

65.2 hereof, the Bureau shall, at the same time
as it publishes the mention of the cancellation
decision, publish the abstract, representative
claims and drawings indicating clearly what the
amendments consist of. (n)
Section 66. Effect of Cancellation of Patent or
Claim. - The rights conferred by the patent or
any specified claim or claims cancelled shall
terminate. Notice of the cancellation shall be
published in the IPO Gazette. Unless restrained
by the Director General, the decision or order
to cancel by Director of Legal Affairs shall be

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immediately executory even pending appeal. (Sec.
32, R.A. No. 165a)
CHAPTER VII
REMEDIES OF A PERSON WITH A RIGHT TO A PATENT

Section 67. Patent Application by Persons Not

Having the Right to a Patent. . - 67.1. If a
person referred to in Section 29 other than the
applicant, is declared by final court order or
decision as having the right to the patent, such
person may, within three (3) months after the
decision has become final:

(a) Prosecute the application as his own

application in place of the applicant;

(b) File a new patent application in respect

of the same invention;

(c) Request that the application be refused;

or

(d) Seek cancellation of the patent, if one

has already been issued.

67.2. The provisions of Subsection 38.2 shall

apply mutatis mutandis to a new application
filed under Subsection 67. 1(b). (n)
Section 68. Remedies of the True and Actual
Inventor. - If a person, who was deprived of the
patent without his consent or through fraud is
declared by final court order or decision to be
the true and actual inventor, the court shall
order for his substitution as patentee, or at
the option of the true inventor, cancel the
patent, and award actual and other damages in
his favor if warranted by the circumstances.
(Sec. 33, R.A. No. 165a)
Section 69. Publication of the Court Order. -
The court shall furnish the Office a copy of the
order or decision referred to in Sections 67 and
68, which shall be published in the IPO Gazette
within three (3) months from the date such order
or decision became final and executory, and
shall be recorded in the register of the Office.
(n)

97 | P a g e
Section 70. Time to File Action in Court. - The
actions indicated in Sections 67 and 68 shall be
filed within one (1) year from the date of
publication made in accordance with Sections 44
and 51, respectively. (n)
CHAPTER VIII
RIGHTS OF PATENTEES AND INFRINGEMENT OF PATENTS

Section 71. Rights Conferred by Patent. - 71.1.

A patent shall confer on its owner the following
exclusive rights:

(a) Where the subject matter of a patent is

a product, to restrain, prohibit and prevent
any unauthorized person or entity from
making, using, offering for sale, selling or
importing that product;

(b) Where the subject matter of a patent is

a process, to restrain, prevent or prohibit
any unauthorized person or entity from using
the process, and from manufacturing, dealing
in, using, selling or offering for sale, or
importing any product obtained directly or
indirectly from such process.

71.2. Patent owners shall also have the right to

assign, or transfer by succession the patent,
and to conclude licensing contracts for the
same. (Sec. 37, R.A. No. 165a)
Section 72. Limitations of Patent Rights. - The
owner of a patent has no right to prevent third
parties from performing, without his
authorization, the acts referred to in Section
71 hereof in the following circumstances:

72.1. Using a patented product which has been

put on the market in the Philippines by the
owner of the product, or with his express
consent, insofar as such use is performed after
that product has been so put on the said market;

72.2. Where the act is done privately and on a

non-commercial scale or for a non-commercial
purpose: Provided, That it does not
significantly prejudice the economic interests
of the owner of the patent;

98 | P a g e
72.3. Where the act consists of making or using
exclusively for the purpose of experiments that
relate to the subject matter of the patented
invention;

72.4. Where the act consists of the preparation

for individual cases, in a pharmacy or by a
medical professional, of a medicine in
accordance with a medical prescription or acts
concerning the medicine so prepared;

72.5. Where the invention is used in any ship,

vessel, aircraft, or land vehicle of any other
country entering the territory of the
Philippines temporarily or accidentally:
Provided, That such invention is used
exclusively for the needs of the ship, vessel,
aircraft, or land vehicle and not used for the
manufacturing of anything to be sold within the
Philippines. (Secs. 38 and 39, R.A. No. 165a)
Section 73. Prior User. - 73.1. Notwithstanding
Section 72 hereof, any prior user, who, in good
faith was using the invention or has undertaken
serious preparations to use the invention in his
enterprise or business, before the filing date
or priority date of the application on which a
patent is granted, shall have the right to
continue the use thereof as envisaged in such
preparations within the territory where the
patent produces its effect.

73.2. The right of the prior user may only be

transferred or assigned together with his
enterprise or business, or with that part of his
enterprise or business in which the use or
preparations for use have been made. (Sec. 40,
R.A. No. 165a)
Section 74. Use of Invention by Government. -
74.1. A Government agency or third person
authorized by the Government may exploit the
invention even without agreement of the patent
owner where:

(a) The public interest, in particular,

national security, nutrition, health or the
development of other sectors, as determined

99 | P a g e
 by the appropriate agency of the government,
so requires; or

(b) A judicial or administrative body has

determined that the manner of exploitation,
by the owner of the patent or his licensee
is anti-competitive.

74.2. The use by the Government, or third person

authorized by the Government shall be subject,
mutatis mutandis, to the conditions set forth in
Sections 95 to 97 and 100 to 102. (Sec. 41, R.A.
No. 165a)
Section 75. Extent of Protection and
Interpretation of Claims. - 75.1. The extent of
protection conferred by the patent shall be
determined by the claims, which are to be
interpreted in the light of the description and
drawings.

75.2. For the purpose of determining the extent

of protection conferred by the patent, due
account shall be taken of elements which are
equivalent to the elements expressed in the
claims, so that a claim shall be considered to
cover not only all the elements as expressed
therein, but also equivalents. (n)

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Patent Infringement

1. Tests in patent infringement

a. Literal Infringement - In using literal

infringement as a test, ". . . resort must be
had, in the first instance, to the words of the
claim. If accused matter clearly falls within
the claim, infringement is made out and that is
the end of it." To determine whether the
particular item falls within the literal meaning
of the patent claims, the court must juxtapose
the claims of the patent and the accused product
within the overall context of the claims and
specifications, to determine whether there is
exact identity of all material elements.
Literal infringement exists when every
limitation recited in a patent claim is found in
the infringing device (or process).
b. Infringement by equivalents happens when a
device (or process) appropriates a prior
invention by incorporating its innovative
concept and, although with some modification and
change, performs substantially the same function
in substantially the same way to achieve
substantially the same result. This "function-
way-result" equation lies at the heart of the
doctrine of equivalents.
SMITH KLINE BECKMAN CORPORATION vs.CA

Smith Kline Beckman Corporation (petitioner), a

corporation existing by virtue of the laws of
the state of Pennsylvania, United States of
America (U.S.) and licensed to do business in
the Philippines, filed on October 8, 1976, as
assignee, before the Philippine Patent Office
(now Bureau of Patents, Trademarks and
Technology Transfer) an application for patent
over an invention entitled "Methods and
Compositions for Producing Biphasic Parasiticide
Activity Using Methyl 5 Propylthio-2-
Benzimidazole Carbamate." The application bore
Serial No. 18989.

101 | P a g e
On September 24, 1981, Letters Patent No. 14561 1
for the aforesaid invention was issued to
petitioner for a term of seventeen (17) years.

The letters patent provides in its claims 2 that

the patented invention consisted of a new
compound named methyl 5 propylthio-2-
benzimidazole carbamate and the methods or
compositions utilizing the compound as an active
ingredient in fighting infections caused by
gastrointestinal parasites and lungworms in
animals such as swine, sheep, cattle, goats,
horses, and even pet animals.

Tryco Pharma Corporation (private respondent) is

a domestic corporation that manufactures,
distributes and sells veterinary products
including Impregon, a drug that has Albendazole
for its active ingredient and is claimed to be
effective against gastro-intestinal roundworms,
lungworms, tapeworms and fluke infestation in
carabaos, cattle and goats.

Petitioner sued private respondent for

infringement of patent and unfair competition
before the Caloocan City Regional Trial Court
(RTC).3 It claimed that its patent covers or
includes the substance Albendazole such that
private respondent, by manufacturing, selling,
using, and causing to be sold and used the drug
Impregon without its authorization, infringed
Claims 2, 3, 4, 7, 8 and 9 of Letters Patent No.
145614 as well as committed unfair competition
under Article 189, paragraph 1 of the Revised
Penal Code and Section 29 of Republic Act No.
166 (The Trademark Law) for advertising and
selling as its own the drug Impregon although
the same contained petitioner’s patented
Albendazole. 5

On motion of petitioner, Branch 125 of the

Caloocan RTC issued a temporary restraining
order against private respondent enjoining it
from committing acts of patent infringement and
unfair competition.6 A writ of preliminary
injunction was subsequently issued.7

102 | P a g e
Private respondent in its Answer8 averred that
Letters Patent No. 14561 does not cover the
substance Albendazole for nowhere in it does
that word appear; that even if the patent were
to include Albendazole, such substance is
unpatentable; that the Bureau of Food and Drugs
allowed it to manufacture and market Impregon
with Albendazole as its known ingredient; that
there is no proof that it passed off in any way
its veterinary products as those of petitioner;
that Letters Patent No. 14561 is null and void,
the application for the issuance thereof having
been filed beyond the one year period from the
filing of an application abroad for the same
invention covered thereby, in violation of
Section 15 of Republic Act No. 165 (The Patent
Law); and that petitioner is not the registered
patent holder.

Private respondent lodged a Counterclaim against

petitioner for such amount of actual damages as
may be proven; P1,000,000.00 in moral damages;
P300,000.00 in exemplary damages; and
P150,000.00 in attorney’s fees.

Finding for private respondent, the trial court

rendered a Decision dated July 23, 1991,9 the
dispositive portion of which reads:

WHEREFORE, in view of the foregoing, plaintiff’s

complaint should be, as it is hereby, DISMISSED.
The Writ of injunction issued in connection with
the case is hereby ordered DISSOLVED.

The Letters Patent No. 14561 issued by the then

Philippine Patents Office is hereby declared
null and void for being in violation of Sections
7, 9 and 15 of the Patents Law.

Pursuant to Sec. 46 of the Patents Law, the

Director of Bureau of Patents is hereby directed
to cancel Letters Patent No. 14561 issued to the
plaintiff and to publish such cancellation in
the Official Gazette.

Defendant Tryco Pharmaceutical Corporation is

hereby awarded P330,000.00 actual damages and
P100,000.00 attorney’s fees as prayed for in its
counterclaim but said amount awarded to
103 | P a g e
defendant is subject to the lien on correct
payment of filing fees.

SO ORDERED. (Underscoring supplied)

On appeal, the Court of Appeals, by Decision of

April 21, 1995,10 upheld the trial court’s
finding that private respondent was not liable
for any infringement of the patent of petitioner
in light of the latter’s failure to show that
Albendazole is the same as the compound subject
of Letters Patent No. 14561. Noting petitioner’s
admission of the issuance by the U.S. of a
patent for Albendazole in the name of Smith
Kline and French Laboratories which was
petitioner’s former corporate name, the
appellate court considered the U.S. patent as
implying that Albendazole is different from
methyl 5 propylthio-2-benzimidazole carbamate.
It likewise found that private respondent was
not guilty of deceiving the public by
misrepresenting that Impregon is its product.

The appellate court, however, declared that

Letters Patent No. 14561 was not void as it
sustained petitioner’s explanation that Patent
Application Serial No. 18989 which was filed on
October 8, 1976 was a divisional application of
Patent Application Serial No. 17280 filed on
June 17, 1975 with the Philippine Patent Office,
well within one year from petitioner’s filing on
June 19, 1974 of its Foreign Application
Priority Data No. 480,646 in the U.S. covering
the same compound subject of Patent Application
Serial No. 17280.

Applying Section 17 of the Patent Law, the Court

of Appeals thus ruled that Patent Application
Serial No. 18989 was deemed filed on June 17,
1995 or still within one year from the filing of
a patent application abroad in compliance with
the one-year rule under Section 15 of the Patent
Law. And it rejected the submission that the
compound in Letters Patent No. 14561 was not
patentable, citing the jurisprudentially
established presumption that the Patent Office’s
determination of patentability is correct.
Finally, it ruled that petitioner established

104 | P a g e
itself to be the one and the same assignee of
the patent notwithstanding changes in its
corporate name. Thus the appellate court
disposed:

WHEREFORE, the judgment appealed from is

AFFIRMED with the MODIFICATION that the orders
for the nullification of Letters Patent No.
14561 and for its cancellation are deleted
therefrom.

SO ORDERED.

Petitioner’s motion for reconsideration of the

Court of Appeals’ decision having been denied11
the present petition for review on certiorari 12
was filed, assigning as errors the following:

I. THE COURT OF APPEALS GRAVELY ERRED IN NOT

FINDING THAT ALBENDAZOLE, THE ACTIVE
INGREDIENT IN TRYCO’S "IMPREGON" DRUG, IS
INCLUDED IN PETITIONER’S LETTERS PATENT NO.
14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.

II. THE COURT OF APPEALS GRAVELY ERRED IN

AWARDING TO PRIVATE RESPONDENT TRYCO PHARMA
CORPORATION P330,000.00 ACTUAL DAMAGES AND
P100,000.00 ATTORNEY’S FEES.

Petitioner argues that under the doctrine of

equivalents for determining patent infringement,
Albendazole, the active ingredient it alleges
was appropriated by private respondent for its
drug Impregon, is substantially the same as
methyl 5 propylthio-2-benzimidazole carbamate
covered by its patent since both of them are
meant to combat worm or parasite infestation in
animals. It cites the "unrebutted" testimony of
its witness Dr. Godofredo C. Orinion (Dr.
Orinion) that the chemical formula in Letters
Patent No. 14561 refers to the compound
Albendazole. Petitioner adds that the two
substances substantially do the same function in
substantially the same way to achieve the same
results, thereby making them truly identical.
Petitioner thus submits that the appellate court
should have gone beyond the literal wordings
used in Letters Patent No. 14561, beyond merely
105 | P a g e
applying the literal infringement test, for in
spite of the fact that the word Albendazole does
not appear in petitioner’s letters patent, it
has ably shown by evidence its sameness with
methyl 5 propylthio-2-benzimidazole carbamate.

Petitioner likewise points out that its

application with the Philippine Patent Office on
account of which it was granted Letters Patent
No. 14561 was merely a divisional application of
a prior application in the U. S. which granted a
patent for Albendazole. Hence, petitioner
concludes that both methyl 5 propylthio-2-
benzimidazole carbamate and the U.S.-patented
Albendazole are dependent on each other and
mutually contribute to produce a single result,
thereby making Albendazole as much a part of
Letters Patent No. 14561 as the other substance
is.

Petitioner concedes in its Sur-Rejoinder13 that

although methyl 5 propylthio-2-benzimidazole
carbamate is not identical with Albendazole, the
former is an improvement or improved version of
the latter thereby making both substances still
substantially the same.

With respect to the award of actual damages in

favor of private respondent in the amount of
P330,000.00 representing lost profits,
petitioner assails the same as highly
speculative and conjectural, hence, without
basis. It assails too the award of P100,000.00
in attorney’s fees as not falling under any of
the instances enumerated by law where recovery
of attorney’s fees is allowed.

In its Comment,14 private respondent contends

that application of the doctrine of equivalents
would not alter the outcome of the case,
Albendazole and methyl 5 propylthio-2-
benzimidazole carbamate being two different
compounds with different chemical and physical
properties. It stresses that the existence of a
separate U.S. patent for Albendazole indicates
that the same and the compound in Letters Patent
No. 14561 are different from each other; and
that since it was on account of a divisional

106 | P a g e
application that the patent for methyl 5
propylthio-2-benzimidazole carbamate was issued,
then, by definition of a divisional application,
such a compound is just one of several
independent inventions alongside Albendazole
under petitioner’s original patent application.

As has repeatedly been held, only questions of

law may be raised in a petition for review on
certiorari before this Court. Unless the factual
findings of the appellate court are mistaken,
absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or
contrary to the findings culled by the court of
origin,15 this Court does not review them.

From an examination of the evidence on record,

this Court finds nothing infirm in the appellate
court’s conclusions with respect to the
principal issue of whether private respondent
committed patent infringement to the prejudice
of petitioner.

The burden of proof to substantiate a charge for

patent infringement rests on the plaintiff. 16 In
the case at bar, petitioner’s evidence consists
primarily of its Letters Patent No. 14561, and
the testimony of Dr. Orinion, its general
manager in the Philippines for its Animal Health
Products Division, by which it sought to show
that its patent for the compound methyl 5
propylthio-2-benzimidazole carbamate also covers
the substance Albendazole.

From a reading of the 9 claims of Letters Patent

No. 14561 in relation to the other portions
thereof, no mention is made of the compound
Albendazole. All that the claims disclose are:
the covered invention, that is, the compound
methyl 5 propylthio-2-benzimidazole carbamate;
the compound’s being anthelmintic but nontoxic
for animals or its ability to destroy parasites
without harming the host animals; and the
patented methods, compositions or preparations
involving the compound to maximize its efficacy
against certain kinds of parasites infecting
specified animals.

107 | P a g e
When the language of its claims is clear and
distinct, the patentee is bound thereby and may
not claim anything beyond them.17 And so are the
courts bound which may not add to or detract
from the claims matters not expressed or
necessarily implied, nor may they enlarge the
patent beyond the scope of that which the
inventor claimed and the patent office allowed,
even if the patentee may have been entitled to
something more than the words it had chosen
would include.18

It bears stressing that the mere absence of the

word Albendazole in Letters Patent No. 14561 is
not determinative of Albendazole’s non-inclusion
in the claims of the patent. While Albendazole
is admittedly a chemical compound that exists by
a name different from that covered in
petitioner’s letters patent, the language of
Letter Patent No. 14561 fails to yield anything
at all regarding Albendazole. And no extrinsic
evidence had been adduced to prove that
Albendazole inheres in petitioner’s patent in
spite of its omission therefrom or that the
meaning of the claims of the patent embraces the
same.

While petitioner concedes that the mere literal

wordings of its patent cannot establish private
respondent’s infringement, it urges this Court
to apply the doctrine of equivalents.

The doctrine of equivalents provides that an

infringement also takes place when a device
appropriates a prior invention by incorporating
its innovative concept and, although with some
modification and change, performs substantially
the same function in substantially the same way
to achieve substantially the same result.19 Yet
again, a scrutiny of petitioner’s evidence fails
to convince this Court of the substantial
sameness of petitioner’s patented compound and
Albendazole. While both compounds have the
effect of neutralizing parasites in animals,
identity of result does not amount to
infringement of patent unless Albendazole
operates in substantially the same way or by
substantially the same means as the patented
108 | P a g e
compound, even though it performs the same
function and achieves the same result.20 In other
words, the principle or mode of operation must
be the same or substantially the same.21

The doctrine of equivalents thus requires

satisfaction of the function-means-and-result
test, the patentee having the burden to show
that all three components of such equivalency
test are met.22

As stated early on, petitioner’s evidence fails

to explain how Albendazole is in every essential
detail identical to methyl 5 propylthio-2-
benzimidazole carbamate. Apart from the fact
that Albendazole is an anthelmintic agent like
methyl 5 propylthio-2-benzimidazole carbamate,
nothing more is asserted and accordingly
substantiated regarding the method or means by
which Albendazole weeds out parasites in
animals, thus giving no information on whether
that method is substantially the same as the
manner by which petitioner’s compound works. The
testimony of Dr. Orinion lends no support to
petitioner’s cause, he not having been presented
or qualified as an expert witness who has the
knowledge or expertise on the matter of chemical
compounds.

As for the concept of divisional applications

proffered by petitioner, it comes into play when
two or more inventions are claimed in a single
application but are of such a nature that a
single patent may not be issued for them.23 The
applicant thus is required "to divide," that is,
to limit the claims to whichever invention he
may elect, whereas those inventions not elected
may be made the subject of separate applications
which are called "divisional applications."24
What this only means is that petitioner’s methyl
5 propylthio-2-benzimidazole carbamate is an
invention distinct from the other inventions
claimed in the original application divided out,
Albendazole being one of those other inventions.
Otherwise, methyl 5 propylthio-2-benzimidazole
carbamate would not have been the subject of a
divisional application if a single patent could

109 | P a g e
have been issued for it as well as
Albendazole.1âwphi1

The foregoing discussions notwithstanding, this

Court does not sustain the award of actual
damages and attorney’s fees in favor of private
respondent. The claimed actual damages of
P330,000.00 representing lost profits or
revenues incurred by private respondent as a
result of the issuance of the injunction against
it, computed at the rate of 30% of its alleged
P100,000.00 monthly gross sales for eleven
months, were supported by the testimonies of
private respondent’s President25 and Executive
Vice-President that the average monthly sale of
Impregon was P100,000.00 and that sales
plummeted to zero after the issuance of the
injunction.26 While indemnification for actual or
compensatory damages covers not only the loss
suffered (damnum emergens) but also profits
which the obligee failed to obtain (lucrum
cessans or ganacias frustradas), it is necessary
to prove the actual amount of damages with a
reasonable degree of certainty based on
competent proof and on the best evidence
obtainable by the injured party.27 The
testimonies of private respondent’s officers are
not the competent proof or best evidence
obtainable to establish its right to actual or
compensatory damages for such damages also
require presentation of documentary evidence to
substantiate a claim therefor.28

In the same vein, this Court does not sustain

the grant by the appellate court of attorney’s
fees to private respondent anchored on Article
2208 (2) of the Civil Code, private respondent
having been allegedly forced to litigate as a
result of petitioner’s suit. Even if a claimant
is compelled to litigate with third persons or
to incur expenses to protect its rights, still
attorney’s fees may not be awarded where no
sufficient showing of bad faith could be
reflected in a party’s persistence in a case
other than an erroneous conviction of the
righteousness of his cause.29 There exists no
evidence on record indicating that petitioner
was moved by malice in suing private respondent.
110 | P a g e
This Court, however, grants private respondent
temperate or moderate damages in the amount of
P20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary
loss the amount of which cannot, from the nature
of the case, be established with certainty.30
WHEREFORE, the assailed decision of the Court of
Appeals is hereby AFFIRMED with MODIFICATION.
The award of actual or compensatory damages and
attorney’s fees to private respondent, Tryco
Pharma Corporation, is DELETED; instead, it is
hereby awarded the amount of P20,000.00 as
temperate or moderate damages.

111 | P a g e
Section 76. Civil Action for Infringement. -
76.1. The making, using, offering for sale,
selling, or importing a patented product or a
product obtained directly or indirectly from a
patented process, or the use of a patented
process without the authorization of the
patentee constitutes patent infringement.

76.2. Any patentee, or anyone possessing any

right, title or interest in and to the patented
invention, whose rights have been infringed, may
bring a civil action before a court of competent
jurisdiction, to recover from the infringer such
damages sustained thereby, plus attorney's fees
and other expenses of litigation, and to secure
an injunction for the protection of his rights.

76.3. If the damages are inadequate or cannot be

readily ascertained with reasonable certainty,
the court may award by way of damages a sum
equivalent to reasonable royalty.

76.4. The court may, according to the

circumstances of the case, award damages in a
sum above the amount found as actual damages
sustained: Provided, That the award does not
exceed three (3) times the amount of such actual
damages.

76.5. The court may, in its discretion, order

that the infringing goods, materials and
implements predominantly used in the
infringement be disposed of outside the channels
of commerce or destroyed, without compensation.

76.6. Anyone who actively induces the

infringement of a patent or provides the
infringer with a component of a patented product
or of a product produced because of a patented
process knowing it to be especially adopted for
infringing the patented invention and not
suitable for substantial non-infringing use
shall be liable as a contributory infringer and
shall be jointly and severally liable with the
infringer. (Sec. 42, R.A. No. 165a)
Section 77. Infringement Action by a Foreign
National. - Any foreign national or juridical
entity who meets the requirements of Section 3
112 | P a g e
and not engaged in business in the Philippines,
to which a patent has been granted or assigned
under this Act, may bring an action for
infringement of patent, whether or not it is
licensed to do business in the Philippines under
existing law. (Sec. 41-A, R.A. No. 165a)
Section 78. Process Patents; Burden of Proof . -
If the subject matter of a patent is a process
for obtaining a product, any identical product
shall be presumed to have been obtained through
the use of the patented process if the product
is new or there is substantial likelihood that
the identical product was made by the process
and the owner of the patent has been unable
despite reasonable efforts, to determine the
process actually used. In ordering the defendant
to prove that the process to obtain the
identical product is different from the patented
process, the court shall adopt measures to
protect, as far as practicable, his
manufacturing and business secrets. (n)
Section 79. Limitation of Action for Damages. -
No damages can be recovered for acts of
infringement committed more than four (4) years
before the institution of the action for
infringement. (Sec. 43, R.A. No. 165)
Section 80. Damages, Requirement of Notice. -
Damages cannot be recovered for acts of
infringement committed before the infringer had
known, or had reasonable grounds to know of the
patent. It is presumed that the infringer had
known of the patent if on the patented product,
or on the container or package in which the
article is supplied to the public, or on the
advertising material relating to the patented
product or process, are placed the words
"Philippine Patent" with the number of the
patent. (Sec. 44, R.A. No. 165a)
Section 81. Defenses in Action for Infringement.
- In an action for infringement, the defendant,
in addition to other defenses available to him,
may show the invalidity of the patent, or any
claim thereof, on any of the grounds on which a

113 | P a g e
petition of cancellation can be brought under
Section 61 hereof. (Sec. 45, R.A. No. 165)
Section 82. Patent Found Invalid May be
Cancelled. - In an action for infringement, if
the court shall find the patent or any claim to
be invalid, it shall cancel the same, and the
Director of Legal Affairs upon receipt of the
final judgment of cancellation by the court,
shall record that fact in the register of the
Office and shall publish a notice to that effect
in the IPO Gazette. (Sec. 46, R.A. No. 165a)
Section 83. Assessor in Infringement Action. -
83.1. Two (2) or more assessors may be appointed
by the court. The assessors shall be possessed
of the necessary scientific and technical
knowledge required by the subject matter in
litigation. Either party may challenge the
fitness of any assessor proposed for
appointment.

83.2. Each assessor shall receive a compensation

in an amount to be fixed by the court and
advanced by the complaining party, which shall
be awarded as part of his costs should he
prevail in the action. (Sec. 47, R.A. No. 165a)
Section 84. Criminal Action for Repetition of
Infringement. - If infringement is repeated by
the infringer or by anyone in connivance with
him after finality of the judgment of the court
against the infringer, the offenders shall,
without prejudice to the institution of a civil
action for damages, be criminally liable
therefor and, upon conviction, shall suffer
imprisonment for the period of not less than six
(6) months but not more than three (3) years
and/or a fine of not less than One hundred
thousand pesos (P100,000) but not more than
Three hundred thousand pesos (P300,000), at the
discretion of the court. The criminal action
herein provided shall prescribe in three (3)
years from date of the commission of the crime.
(Sec. 48, R.A. No. 165a)

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 CHAPTER IX
VOLUNTARY LICENSING

Section 85. Voluntary License Contract. - To

encourage the transfer and dissemination of
technology, prevent or control practices and
conditions that may in particular cases
constitute an abuse of intellectual property
rights having an adverse effect on competition
and trade, all technology transfer arrangements
shall comply with the provisions of this
Chapter. (n)
Section 86. Jurisdiction to Settle Disputes on
Royalties. - The Director of the Documentation,
Information and Technology Transfer Bureau shall
exercise quasi-judicial jurisdiction in the
settlement of disputes between parties to a
technology transfer arrangement arising from
technology transfer payments, including the
fixing of appropriate amount or rate of royalty.
(n)
Section 87. Prohibited Clauses. - Except in
cases under Section 91, the following provisions
shall be deemed prima facie to have an adverse
effect on competition and trade:

87.1. Those which impose upon the licensee the

obligation to acquire from a specific source
capital goods, intermediate products, raw
materials, and other technologies, or of
permanently employing personnel indicated by the
licensor;

87.2. Those pursuant to which the licensor

reserves the right to fix the sale or resale
prices of the products manufactured on the basis
of the license;

87.3. Those that contain restrictions regarding

the volume and structure of production;

87.4. Those that prohibit the use of competitive

technologies in a non-exclusive technology
transfer agreement;

87.5. Those that establish a full or partial

purchase option in favor of the licensor;

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87.6. Those that obligate the licensee to
transfer for free to the licensor the inventions
or improvements that may be obtained through the
use of the licensed technology;

87.7. Those that require payment of royalties to

the owners of patents for patents which are not
used;

87.8. Those that prohibit the licensee to export

the licensed product unless justified for the
protection of the legitimate interest of the
licensor such as exports to countries where
exclusive licenses to manufacture and/or
distribute the licensed product(s) have already
been granted;

87.9. Those which restrict the use of the

technology supplied after the expiration of the
technology transfer arrangement, except in cases
of early termination of the technology transfer
arrangement due to reason(s) attributable to the
licensee;

87.10. Those which require payments for patents

and other industrial property rights after their
expiration, termination arrangement;

87.11. Those which require that the technology

recipient shall not contest the validity of any
of the patents of the technology supplier;

87.12. Those which restrict the research and

development activities of the licensee designed
to absorb and adapt the transferred technology
to local conditions or to initiate research and
development programs in connection with new
products, processes or equipment;

87.13. Those which prevent the licensee from

adapting the imported technology to local
conditions, or introducing innovation to it, as
long as it does not impair the quality standards
prescribed by the licensor;

87.14. Those which exempt the licensor for

liability for non-fulfilment of his
responsibilities under the technology transfer
arrangement and/or liability arising from third

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party suits brought about by the use of the
licensed product or the licensed technology; and

87.15. Other clauses with equivalent effects.

(Sec. 33-C (2), R.A 165a)
Section 88. Mandatory Provisions. - The
following provisions shall be included in
voluntary license contracts:

88.1. That the laws of the Philippines shall

govern the interpretation of the same and in the
event of litigation, the venue shall be the
proper court in the place where the licensee has
its principal office;

88.2. Continued access to improvements in

techniques and processes related to the
technology shall be made available during the
period of the technology transfer arrangement;

88.3. In the event the technology transfer

arrangement shall provide for arbitration, the
Procedure of Arbitration of the Arbitration Law
of the Philippines or the Arbitration Rules of
the United Nations Commission on International
Trade Law (UNCITRAL) or the Rules of
Conciliation and Arbitration of the
International Chamber of Commerce (ICC) shall
apply and the venue of arbitration shall be the
Philippines or any neutral country; and

88.4. The Philippine taxes on all payments

relating to the technology transfer arrangement
shall be borne by the licensor. (n)

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 CHAPTER X
COMPULSORY LICENSING

Section 93. Grounds for Compulsory Licensing. -

The Director of Legal Affairs may grant a
license to exploit a patented invention, even
without the agreement of the patent owner, in
favor of any person who has shown his capability
to exploit the invention, under any of the
following circumstances:

93.1. National emergency or other circumstances

of extreme urgency;

93.2. Where the public interest, in particular,

national security, nutrition, health or the
development of other vital sectors of the
national economy as determined by the
appropriate agency of the Government, so
requires; or

93.3. Where a judicial or administrative body

has determined that the manner of exploitation
by the owner of the patent or his licensee is
anti-competitive; or

93.4. In case of public non-commercial use of

the patent by the patentee, without satisfactory
reason;

93.5. If the patented invention is not being

worked in the Philippines on a commercial scale,
although capable of being worked, without
satisfactory reason: Provided, That the
importation of the patented article shall
constitute working or using the patent. (Secs.
34, 34-A, 34-B, R.A. No. 165a)
Section 94. Period for Filing a Petition for a
Compulsory License. - 94.1. A compulsory license
may not be applied for on the ground stated in
Subsection 93.5 before the expiration of a
period of four (4) years from the date of filing
of the application or three (3) years from the
date of the patent whichever period expires
last.

94.2. A compulsory license which is applied for

on any of the grounds stated in Subsections

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93.2, 93.3, and 93.4 and Section 97 may be
applied for at any time after the grant of the
patent. (Sec. 34(1), R.A. No. 165)
Section 95. Requirement to Obtain a License on
Reasonable Commercial Terms. - 95.1. The license
will only be granted after the petitioner has
made efforts to obtain authorization from the
patent owner on reasonable commercial terms and
conditions but such efforts have not been
successful within a reasonable period of time.

95.2. The requirement under Subsection 95.1

shall not apply in the following cases:

(a) Where the petition for compulsory

license seeks to remedy a practice
determined after judicial or administrative
process to be anti-competitive;

(b) In situations of national emergency or

other circumstances of extreme urgency;

(c) In cases of public non-commercial use.

95.3. In situations of national emergency or

other circumstances of extreme urgency, the
right holder shall be notified as soon as
reasonably practicable.

95.4. In the case of public non-commercial use,

where the government or contractor, without
making a patent search, knows or has
demonstrable grounds to know that a valid patent
is or will be used by or for the government, the
right holder shall be informed promptly. (n)
Section 96. Compulsory Licensing of Patents
Involving Semi-Conductor Technology. - In the
case of compulsory licensing of patents
involving semi-conductor technology, the license
may only be granted in case of public non-
commercial use or to remedy a practice
determined after judicial or administrative
process to be anti-competitive. (n)
Section 97. Compulsory License Based on
Interdependence of Patents. - If the invention
protected by a patent, hereafter referred to as

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the "second patent," within the country cannot
be worked without infringing another patent,
hereafter referred to as the "first patent,"
granted on a prior application or benefiting
from an earlier priority, a compulsory license
may be granted to the owner of the second patent
to the extent necessary for the working of his
invention, subject to the following conditions:

97.1. The invention claimed in the second patent

involves an important technical advance of
considerable economic significance in relation
to the first patent;

97.2. The owner of the first patent shall be

entitled to a cross-license on reasonable terms
to use the invention claimed in the second
patent;

97.3. The use authorized in respect of the first

patent shall be non-assignable except with the
assignment of the second patent; and

97.4. The terms and conditions of Sections 95,

96 and 98 to 100 of this Act. (Sec. 34-C, R.A.
No. 165a)
Section 98. Form and Contents of Petition. - The
petition for compulsory licensing must be in
writing, verified by the petitioner and
accompanied by payment of the required filing
fee. It shall contain the name and address of
the petitioner as well as those of the
respondents, the number and date of issue of the
patent in connection with which compulsory
license is sought, the name of the patentee, the
title of the invention, the statutory grounds
upon which compulsory license is sought, the
ultimate facts constituting the petitioner's
cause of action, and the relief prayed for.
(Sec. 34-D, R.A. No. 165)
Section 99. Notice of Hearing. - 99.1. Upon
filing of a petition, the Director of Legal
Affairs shall forthwith serve notice of the
filing thereof upon the patent owner and all
persons having grants or licenses, or any other
right, title or interest in and to the patent
and invention covered thereby as appears of
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record in the Office, and of notice of the date
of hearing thereon, on such persons and
petitioner. The resident agent or representative
appointed in accordance with Section 33 hereof,
shall be bound to accept service of notice of
the filing of the petition within the meaning of
this Section.

99.2. In every case, the notice shall be

published by the said Office in a newspaper of
general circulation, once a week for three (3)
consecutive weeks and once in the IPO Gazette at
applicant's expense. (Sec. 34-E, R.A. No. 165)
Section 100. Terms and Conditions of Compulsory
License. - The basic terms and conditions
including the rate of royalties of a compulsory
license shall be fixed by the Director of Legal
Affairs subject to the following conditions:

100.1. The scope and duration of such license

shall be limited to the purpose for which it was
authorized;

100.2. The license shall be non-exclusive;

100.3. The license shall be non-assignable,

except with that part of the enterprise or
business with which the invention is being
exploited;

100.4. Use of the subject matter of the license

shall be devoted predominantly for the supply of
the Philippine market: Provided, That this
limitation shall not apply where the grant of
the license is based on the ground that the
patentee's manner of exploiting the patent is
determined by judicial or administrative
process, to be anti-competitive.

100.5. The license may be terminated upon proper

showing that circumstances which led to its
grant have ceased to exist and are unlikely to
recur: Provided, That adequate protection shall
be afforded to the legitimate interest of the
licensee; and

100.6. The patentee shall be paid adequate

remuneration taking into account the economic

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value of the grant or authorization, except that
in cases where the license was granted to remedy
a practice which was determined after judicial
or administrative process, to be anti-
competitive, the need to correct the anti-
competitive practice may be taken into account
in fixing the amount of remuneration. (Sec. 35-
B, R.A. No. 165a)
Section 101. Amendment, Cancellation, Surrender
of Compulsory License. - 101.1. Upon the request
of the patentee or the licensee, the Director of
Legal Affairs may amend the decision granting
the compulsory license, upon proper showing of
new facts or circumstances justifying such
amendment.

101.2. Upon the request of the patentee, the

said Director may cancel the compulsory license:

(a) If the ground for the grant of the

compulsory license no longer exists and is
unlikely to recur;

(b) If the licensee has neither begun to

supply the domestic market nor made serious
preparation therefor;

(c) If the licensee has not complied with

the prescribed terms of the license;

101.3. The licensee may surrender the license by

a written declaration submitted to the Office.

101.4. The said Director shall cause the

amendment, surrender, or cancellation in the
Register, notify the patentee, and/or the
licensee, and cause notice thereof to be
published in the IPO Gazette. (Sec. 35-D, R.A.
No. 165a)
Section 102. Licensee's Exemption from
Liability. - Any person who works a patented
product, substance and/or process under a
license granted under this Chapter, shall be
free from any liability for infringement:
Provided however, That in the case of voluntary
licensing, no collusion with the licensor is
proven. This is without prejudice to the right

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of the rightful owner of the patent to recover
from the licensor whatever he may have received
as royalties under the license. (Sec. 35-E, R.A.
No. 165a)

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