Court upholds dismissal of plagiarism case over English textbooks

1
G.R. No. 131522 July 19, 1999
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,

vs.
FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.
PARDO, J.:
The case before us is a petition for review on certiorari1 to set aside the (a) decision or the Court of Appeals2, and (b) the
resolution denying petitioners' motion for reconsideration,3 in which the appellate court affirmed the trial court's
dismissal of the complaint for infringement and/or unfair competition and damages but deleted the award for
attorney's fees.1âwphi1.nêt
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright registration covering their
published works, produced through their combined resources and efforts, entitled COLLEGE ENGLISH FOR TODAY (CET
for brevity), Books 1 and 2, and WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller of another
published work entitled "DEVELOPING ENGLISH PROFICIENCY" (DEP for brevity), Books 1 and 2 (1985 edition) which
book was covered by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around various bookstores to check on
other textbooks dealing with the same subject matter. By chance they came upon the book of respondent Robles and
upon perusal of said book they were surprised to see that the book was strikingly similar to the contents, scheme of
presentation, illustrations and illustrative examples in their own book, CET.
After an itemized examination and comparison of the two books (CET and DEP), petitioners found that several pages of
the respondent's book are similar, if not all together a copy of petitioners' book, which is a case of plagiarism and
copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease and desist from
further selling and distributing to the general public the infringed copies of respondent Robles' works.
However, respondents ignored the demands, hence, on July 7, 1988; petitioners filed with the Regional Trial Court,
Makati, a complaint for "Infringement and/or unfair competition with damages" 4 against private respondents.5
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially familiar with the
contents of petitioners' works, and without securing their permission, lifted, copied, plagiarized and/or transposed
certain portions of their book CET. The textual contents and illustrations of CET were literally reproduced in the book
DEP. The plagiarism, incorporation and reproduction of particular portions of the book CET in the book DEP, without
the authority or consent of petitioners, and the misrepresentations of respondent Robles that the same was her original
work and concept adversely affected and substantially diminished the sale of the petitioners' book and caused them
actual damages by way of unrealized income.
2
Despite the demands of the petitioners for respondents to desist from committing further acts of infringement and for
respondent to recall DEP from the market, respondents refused. Petitioners asked the court to order the submission of
all copies of the book DEP, together with the molds, plates and films and other materials used in its printing destroyed,
and for respondents to render an accounting of the proceeds of all sales and profits since the time of its publication
and sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the acts of infringement
complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the publisher and joint co-owner of the
copyright certificates of registration covering the two books authored and caused to be published by respondent
Robles with obvious connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars6 which the trial court approved on August 17,
1988. Petitioners complied with the desired particularization, and furnished respondent Robles the specific portions,
inclusive of pages and lines, of the published and copyrighted books of the petitioners which were transposed, lifted,
copied and plagiarized and/or otherwise found their way into respondent's book.
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the complaint7 and alleged that petitioners
had no cause of action against Goodwill Trading Co., Inc. since it was not privy to the misrepresentation, plagiarism,
incorporation and reproduction of the portions of the book of petitioners; that there was an agreement between
Goodwill and the respondent Robles that Robles guaranteed Goodwill that the materials utilized in the manuscript were
her own or that she had secured the necessary permission from contributors and sources; that the author assumed sole
responsibility and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer8, and denied the allegations of plagiarism and copying that
petitioners claimed. Respondent stressed that (1) the book DEP is the product of her independent researches, studies
and experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and sequence
or syllabus which are common to all English grammar writers as recommended by the Association of Philippine
Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and that of the petitioners was
due to the orientation of the authors to both works and standards and syllabus; and (3) the similarities may be due to
the authors' exercise of the "right to fair use of copyrigthed materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended the filing of the
complaint, because petitioner Habana was professionally jealous and the book DEP replaced CET as the official
textbook of the graduate studies department of the Far Eastern University.9
During the pre-trial conference, the parties agreed to a stipulation of

facts 10 and for the trial court to first resolve the issue of infringement before disposing of the claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:
WHEREFORE, premises considered, the court hereby orders that the complaint filed against defendants
Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED; that said plaintiffs solidarily
reimburse defendant Robles for P20,000.00 attorney's fees and defendant Goodwill for P5,000.00
attorney's fees. Plaintiffs are liable for cost of suit.
IT IS SO ORDERED.
Done in the City of Manila this 23rd day of April, 1993.

3
(s/t) MARVIE R. ABRAHAM SINGSON
Assisting Judge
S. C. Adm. Order No. 124-92 11
On May 14, 1993, petitioners filed their notice of appeal with the trial court 12, and on July 19, 1993, the court directed its
branch clerk of court to forward all the records of the case to the Court of Appeals. 13
In the appeal, petitioners argued that the trial court completely disregarded their evidence and fully subscribed to the
arguments of respondent Robles that the books in issue were purely the product of her researches and studies and that
the copied portions were inspired by foreign authors and as such not subject to copyright. Petitioners also assailed the
findings of the trial court that they were animated by bad faith in instituting the complaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and Goodwill Trading Co.,
Inc. The relevant portions of the decision state:
It must be noted, however, that similarity of the allegedly infringed work to the author's or proprietor's
copyrighted work does not of itself establish copyright infringement, especially if the similarity results
from the fact that both works deal with the same subject or have the same common source, as in this
case.
Appellee Robles has fully explained that the portion or material of the book claimed by appellants to
have been copied or lifted from foreign books. She has duly proven that most of the topics or materials
contained in her book, with particular reference to those matters claimed by appellants to have been
plagiarized were topics or matters appearing not only in appellants and her books but also in earlier
books on College English, including foreign books, e.i. Edmund Burke's "Speech on Conciliation",
Boerigs' "Competence in English" and Broughton's, "Edmund Burke's Collection."
xxx xxx xxx
Appellant's reliance on the last paragraph on Section II is misplaced. It must be emphasized that they
failed to prove that their books were made sources by appellee. 15
The Court of Appeals was of the view that the award of attorneys' fees was not proper, since there was no bad faith on
the part of petitioners Habana et al. in instituting the action against respondents.
On July 12, 1997, petitioners filed a motion for reconsideration, 16 however, the Court of Appeals denied the same in a
Resolution 17 dated November 25, 1997.
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial court's decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic and sequential
similarity between DEP and CET, respondents committed no copyright infringement; (2) whether or not there
was animus furandi on the part of respondent when they refused to withdraw the copies of CET from the market
despite notice to withdraw the same; and (3) whether or not respondent Robles abused a writer's right to fair use, in
violation of Section 11 of Presidential Decree No. 49. 18
4
We find the petition impressed with merit.
The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in force. At present,
all laws dealing with the protection of intellectual property rights have been consolidated and as the law now stands,
the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding the change in the law, the same
principles are reiterated in the new law under Section 177. It provides for the copy or economic rights of an owner of a
copyright as follows:
Sec. 177. Copy or Economic rights. — Subject to the provisions of chapter VIII, copyright or economic
rights shall consist of the exclusive right to carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substanlial portion of the work;
177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of the

work;
177.3 The first public distribution of the original and each copy of the work by sale or other forms of
transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a
sound recording, a computer program, a compilation of data and other materials or a musical work in
graphic form, irrespective of the ownership of the original or the copy which is the subject of the rental;
(n)
177.5 Public display of the original or copy of the work;
177.6 Public performance of the work; and
177.7 Other communication to the public of the work 19
The law also provided for the limitations on copyright, thus:
Sec. 184.1 Limitations on copyright. — Notwithstanding the provisions of Chapter V, the following acts
shall not constitute infringement of copyright:
(a) the recitation or performance of a work, once it has been lawfully made accessible to
the public, if done privately and free of charge or if made strictly for a charitable or
religious institution or society; [Sec. 10(1), P.D. No. 49]
(b) The making of quotations from a published work if they are compatible with fair use
and only to the extent justified for the purpose, including quotations from newspaper
articles and periodicals in the form of press summaries; Provided, that the source and
the name of the author, if appearing on the work are mentioned; (Sec. 11 third par. P.D.
49)
xxx xxx xxx
(e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound
recording of film, if such inclusion is made by way of illustration for teaching purposes and is
5
compatible with fair use: Provided, That the source and the name of the author, if appearing in the work
is mentioned; 20
In the above quoted provisions, "work" has reference to literary and artistic creations and this includes books and other
literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of CET.
On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue,
Manila 22
On page 73 of respondents Book 1 Developing English Today, they wrote:
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus:
The proposition is peace. Not peace through the medium of war; not peace to be hunted through the
labyrinth of intricate and endless negotiations; not peace to arise out of universal discord, fomented
from principle, in all parts of the empire; not peace to depend on the juridical determination of
perplexing questions, or the precise marking of the boundary of a complex government. It is simple
peace; sought in its natural course, and in its ordinary haunts. It is peace sought in the spirit of peace,
and laid in principles purely pacific.
— Edmund Burke, "Speech on Criticism." 24
On page 100 of the book DEP 25, also in the topic of parallel structure and repetition, the same example is found in toto.
The only difference is that petitioners acknowledged the author Edmund Burke, and respondents did not.
In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if not a rehash of
that contained in CET.
We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of discussions and
examples, and her failure to acknowledge the same in her book is an infringement of petitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the entire copyrighted work, or
even a large portion of it, be copied. If so much is taken that the value of the original work is substantially diminished,
there is an infringement of copyright and to an injurious extent, the work is appropriated. 27
6
In determining the question of infringement, the amount of matter copied from the copyrighted work is an important
consideration. To constitute infringement, it is not necessary that the whole or even a large portion of the work shall
have been copied. If so much is taken that the value of the original is sensibly diminished, or the labors of the original
author are substantially and to an injurious extent appropriated by another, that is sufficient in point of law to constitute
piracy. 28
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an
appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and occupied
by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the
copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright. 29
The respondents' claim that the copied portions of the book CET are also found in foreign books and other grammar
books, and that the similarity between her style and that of petitioners can not be avoided since they come from the
same background and orientation may be true. However, in this jurisdiction under Sec 184 of Republic Act 8293 it is
provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not
constitute infringement of copyright:
xxx xxx xxx
(c) The making of quotations from a published work if they are compatible with fair use
and only to the extent justified for the purpose, including quotations from newspaper
articles and periodicals in the form of press summaries: Provided, That the source and
the name of the author, if appearing on the work, are mentioned.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know
whether or not he was infringing any copyright; he at least knew that what he was copying was not his, and he copied
at his peril. 30
The next question to resolve is to what extent can copying be injurious to the author of the book being copied. Is it
enough that there are similarities in some sections of the books or large segments of the books are the same?
In the case at bar, there is no question that petitioners presented several pages of the books CET and DEP that more or
less had the same contents. It may be correct that the books being grammar books may contain materials similar as to
some technical contents with other grammar books, such as the segment about the "Author Card". However, the
numerous pages that the petitioners presented showing similarity in the style and the manner the books were
presented and the identical examples can not pass as similarities merely because of technical consideration.
The respondents claim that their similarity in style can be attributed to the fact that both of them were exposed to the
APCAS syllabus and their respective academic experience, teaching approach and methodology are almost identical
because they were of the same background.
However, we believe that even if petitioners and respondent Robles were of the same background in terms of teaching
experience and orientation, it is not an excuse for them to be identical even in examples contained in their books. The
similarities in examples and material contents are so obviously present in this case. How can similar/identical examples
not be considered as a mark of copying?
7
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from Goodwill bookstores
the book DEP upon learning of petitioners' complaint while pharisaically denying petitioners' demand. It was further
noted that when the book DEP was re-issued as a revised version, all the pages cited by petitioners to contain portion
of their book College English for Today were eliminated.
In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect". Here,
the injury consists in that respondent Robles lifted from petitioners' book materials that were the result of the latter's
research work and compilation and misrepresented them as her own. She circulated the book DEP for commercial use
did not acknowledged petitioners as her source.
Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent Robles committed.
Petitioners' work as authors is the product of their long and assiduous research and for another to represent it as her
own is injury enough. In copyrighting books the purpose is to give protection to the intellectual product of an author.
This is precisely what the law on copyright protected, under Section 184.1 (b). Quotations from a published work if they
are compatible with fair use and only to the extent justified by the purpose, including quotations from newspaper
articles and periodicals in the form of press summaries are allowed provided that the source and the name of the
author, if appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana et. al. as
the source of the portions of DEP. The final product of an author's toil is her book. To allow another to copy the book
without appropriate acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G. R. CV No.
44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings to receive evidence of the
parties to ascertain the damages caused and sustained by petitioners and to render decision in accordance with the
evidence submitted to it.
SO ORDERED.
Kapunan and Ynares-Santiago, JJ., concur.
Davide, Jr., C.J., I dissent, please see dissenting opinion.
Melo, J., no part, personal reason.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.

8
From the following factual and procedural antecedents, I find no alternative but to sustain both the trial court and the
Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court a complaint for infringement and unfair competition, with
damages against private respondent Felicidad C. Robles (hereafter ROBLES) and her publisher and distributor, Goodwill
Trading Co., Inc. (hereafter GOODWILL). The case was docketed as Civil Case No. 88-1317.
HABANA, et al. averred in their complaint that they were the co-authors and joint copyright owners of their published
works College English for Today, Books 1 and 2 (hereafter CET) and Workbook for College Freshman English, Series 1 1;
they discovered that ROBLES' own published works, Developing English Proficiency, Books 1 and 2, (hereafter DEP),
published and distributed in 1985, exhibited an uncanny resemblance, if not outright physical similarity, to CET as to
content, scheme, sequence of topics and ideas, manner of presentation and illustrative examples; the plagiarism,
incorporation and reproduction of particular portions of CET into DEP could not be gainsaid since ROBLES was
substantially familiar with CET and the textual asportation was accomplished without their authority and/or consent;
ROBLES and GOODWILL jointly misrepresented DEP (over which they shared copyright ownership) "as the former's
original published works and concept;" and "notwithstanding formal demands made . . . to cease and desist from the
sale and distribution of DEP, [ROBLES and GOODWILL] persistently failed and refused to comply therewith." HABANA et
al. then prayed for the court to: (1) order the submission and thereafter the destruction of all copies of DEP, together
with the molds, plates, films and other materials used in the printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of the "infringing works from the time of its (sic) inceptive publication up to the time
of judgment, as well as the amount of sales and profits . . . derived;" and (3) to enjoin ROBLES and GOODWILL to
solidarily pay actual, moral and exemplary damages, as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information sufficient to form a belief as to
the allegations of plagiarism, incorporation and reproduction" and hence "could not be privy to the same, if (there
were) any;" and that in an Agreement with co-defendant ROBLES, the latter would be solely responsible for acts of
plagiarism or violations of copyright or any other law, to the extent of answering for any and all damages GOODWILL
may suffer. GOODWILL also interposed a compulsory counterclaim against PACITA, et al. and a crossclaim against its
co-defendant anchored on the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her independent research, studies and
experience; (2) DEP, particularly the segments where the alleged literal similitude appeared, were admittedly influenced
or inspired by earlier treatises, mostly by foreign authors; but that "influences and/or inspirations from other writers" like
the methodology and techniques as to presentation, teaching concept and design, research and orientation which she
employed, fell within the ambit of general information, ideas, principles of general or universal knowledge which were
commonly and customarily understood as incapable of private and exclusive use, appropriation or copyright; and (3)
her works were the result of the legitimate and reasonable exercise of an author's "right to fair use of even copyrighted
materials as [a] guide." She further claimed that her various national and regional professional activities in general
education, language and literature, as well as her teaching experience in graduate and post graduate education would
obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and sequence could be
attributed to "the orientation of the authors to the scope and sequence or syllabus — which incorporates standards
known among English grammar book writers — of the subject-matter for Basic Communication Arts recommended by
the Association of Philippine Colleges of Arts and Sciences (APCAS)." While the syllabus was admittedly adopted in DEP,
she claimed to have treated quite differently in DEP the very ideas, techniques or principles expressed in CET such that
neither textbook could be considered a copy or plagiarism of the other.
9
At the pre-trial conference, the parties agreed to a stipulation of facts2 and for the court to first resolve the issue of
infringement before disposing of the claims for damages. After trial on the merits, the trial court rendered its decision in
favor of defendants, the dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby orders that the complaint filed against defendants
Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED: that said plaintiffs solidarily
attorney's fees. Plaintiffs are liable for costs of suit.
IT IS SO ORDERED. 3
Noting that the law applicable to the case was Presidential Decree No. 49, 4 the trial court found that HABANA, et al.
failed to discharge their onus of proving that ROBLES and GOODWILL committed acts constituting copyright
infringement. Moreover, the trial court found that "the cause of action or acts complained of [were] not covered by said
decree" as Section 10 thereof barred authors of works already lawfully made accessible to the public from prohibiting
the reproductions, translations, adaptations, recitation and performance of the same, while Section 11 allowed the
utilization of reproductions, quotations and excerpts of such works. The trial court thus agreed with ROBLES that "the
complained acts [were] of general and universal knowledge and use which plaintiffs cannot claim originality or seek
redress to the law for protection" and observed that DEP and CET had the same sources, consisting chiefly of earlier
works, mostly foreign books. GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al. as well as
ROBLES' compulsory counterclaim against GOODWILL were all dismissed for lack of factual and legal bases.
HABANA, et al. appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No. 44053. Before said court
HABANA, et al., in the main, argued that the trial court totally disregarded their evidence and merely subscribed to
ROBLES' arguments. The Court of Appeals, however, likewise disposed of the controversy in favor of ROBLES and
GOODWILL.5
However, the Court of Appeals modified the trial court's decision by reversing the award for attorney's fees. It held that
the good faith and sincerity of HABANA, et al. in commencing the action negated the basis therefor. Their motion for
reconsideration having been denied for want of cogent reasons, HABANA, et al., instituted this petition. They claim that
the Court of Appeals committed reversible error in failing to appreciate: (1) the insuperable evidence and facts admitted
and proved demonstrating plagiarism or piracy and instead afforded full weight and credit to ROBLES' matrix of
general, hypothetical and sweeping statements and/or defenses; (2) ROBLES' and GOODWILL's animo furandi or intent
to appropriate or copy CET with the non-removal of the damaging copies of DEP from the bookstores despite notice to
withdraw the same; and (3) the fact that ROBLES abused a writer's right to fair use, in violation of Section 11 of P.D. No.
49. 6 They invoke Laktaw v. Paglinawan 7 which, they theorize is on all fours with the case at bar. ROBLES contends that
appeal by certiorari does not lie in this case for the challenged decision and the trial court's judgment were amply
supported by evidence, pertinent laws and jurisprudence. Hence, her counterclaim for moral damages should,
therefore, be granted or for us to order the remand of the case to the trial court for reception of evidence on damages.
GOODWILL, on its part, stood pat on its disclaimer, with the assertion that no proof was ever introduced. that it co-
authored DEP or that it singly or in cabal with ROBLES committed any act constituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial court's judgment that despite the
apparent textual, thematic and sequential similarity between DEP and CET, no copyright was committed by ROBLES and
GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No. 49, the provisions of the new
intellectual property law, R.A. No. 8293, 8 nevertheless bears significance here. It took effect on 1 January 1998, but its
Section 239.3 clearly states that its provisions shall apply to works in which copyright protection obtained prior to the
10
effectivity of the Act subsists, provided, however, that the application of the Act shall not result in the diminution of such
protection. Also, the philosophy behind both statutes as well as the essential principles of copyright protection and
copyright infringement have, to a certain extent, remained the same.
A copyright may be accurately defined as the right granted by statute to the proprietor of an intellectual production to
its exclusive use and enjoyment to the extent specified in the statute.9 Under Section 177 of R.A. No. 8293, 10 the copy or
economic right (copyright and economic right are used interchangeably in the statute) consists of the exclusive right to
carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the

work;
177.5 Public display of the original or a copy of the work;
177.7 Other communication to the public of the work.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as original intellectual creations in
the literary and artistic domain protected from the moment of their creation and enumerated in Section 172.1, which
includes books and other literary, scholarly, scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of intellectual property or
creations should basically promote the creator or author's personal and economic gain. Hence, the copyright protection
extended to the creator should ensure his attainment of some form of personal satisfaction and economic reward from
the work he produced. Without conceding the suitability of Laktaw as precedent, the Court there quoted Manresa and
explained:
He who writes a book, or carves a statute, or makes an invention, has the absolute right to reproduce or
sell it, just as the owner of the land has the absolute right to sell it or its fruits. But while the owner of
the land, by selling it and its fruits, perhaps fully realizes all its economic value, by receiving its benefits
and utilities, which are represented for example, by the price, on the other hand the author of a book,
statue or invention does not reap all the benefits and advantages of his own property by disposing of it,
for the most important form of realizing the economic advantages of a book, statue or invention,
consists in the right to reproduce it in similar or like copies, everyone of which serves to give to the
person reproducing them all the conditions which the original requires in order to give the author the
full enjoyment thereof. If the author of a book, after its publication, cannot prevent its reproduction by
any person who may want to reproduce it, then the property right granted him is reduced to a very
insignificant thing and the effort made in the production of the book is in no way rewarded. 13
11
The execution, therefore, of any one or more of the exclusive rights conferred by law on a copyright owner, without his
consent, constitutes copyright infringement. In essence, copyright infringement, known in general as "piracy," is a
trespass on a domain owned and occupied by a copyright owner; it is violation of a private right protected by
law. 14 With the invasion of his property rights, a copyright owner is naturally entitled to seek redress, enforce and hold
accountable the defrauder or usurper of said economic rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al. by publishing DEP, which the latter
alleged to be a reproduction, or in the least, a substantial reproduction of CET? Both the trial court and respondent
court found in the negative. I submit they were correct.
To constitute infringement, the usurper must have copied or appropriated the "original" work of an author or copyright
proprietor; 15 absent copying, there can be no infringement of copyright. 16 In turn, a work is deemed by law an original
if the author created it by his own skill, labor and judgment. 17 On its part, a copy is that which comes so near to the
original so as to give to every person seeing it the idea created by the original. It has been held that the test of
copyright infringement is whether an ordinary observer comparing the works can readily see that one has been copied
from the other. 18 A visual comparison of the portions of CET 19 juxtaposed against certain pages of DEP, 20 would
inescapably lead to a conclusion that there is a discernible similarity between the two; however, as correctly assessed by
respondent court and the lower court, no conclusion, can be drawn that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it is not necessary that the entire
copyrighted work, or even a large portion of it, be copied, if so much is taken that the value of the original is
substantially diminished, or if the labors of the original author are substantially, and to an injurious extent,
appropriated. 21 But the similarity of the books here does not amount to an appropriation of a substantial portion of
CET. If the existence of substantial similarities does not of itself establish infringement, 22 mere similarities (not
substantial similarities) in some sections of the books in question decisively militate against a claim for infringement
where the similarities had been convincingly established as proceeding from a number of reasons and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically and ordinarily treated by
writers of such genre, 23 e.g., system of book classification, the different kinds of card catalogs and their entries, use of
punctuation marks, paragraphs, the characteristics of an effective paragraph, language structure, different parts of a
book, etc. These standard subjects fall within the domain of ideas, concepts, universal and general knowledge that have,
as admitted by the protagonists here, been in existence for quite a long time. 24 As such, HABANA, et al. cannot
demand monopoly, by way of example, in the use of the recognized library classification systems (Dewey Decimal
System and the Library of Congress System), or how a book can be divided into parts (frontispiece, title page, copyright
page, preface, table of contents, etc.) or to the different headings used in a card catalogue (title card, author card and
subject card), since these are of common or general knowledge. Even in this jurisdiction, no protection can be extended
to such an idea, procedure, system method or operation, concept, principle, discovery or mere data, even if expressed,
explained, illustrated or embodied in a work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such that the particular portions
claimed to have been lifted and literally reproduced also appeared in earlier works, mostly by foreign authors. This is
clear from the testimony of petitioner Dr. Pacita Habana:
Q Let's clarify your position Dra. Habana. When defendants test (sic) showed 10 words
similar to yours, you so concluded it was (sic) copied from yours but when I pointed out
to you same (sic) words contained in the earlier book of Wills then you earlier in your
test in your book (sic) you refused to admit that it was copied from Wills.
A Yes, sir. We have never — all 35 words were copied from there.
12
Q But what I am asking how could you conclude that by just similarity of 10 words of
defendants words that was copied from yours [sic] and when I point out to you the
similarity of that same words from the words earlier than yours (sic) you refused to
admit that you copied?
A I would like to change the final statement now that in the case of defendant Robles
you pointed out her source very clear. She copied it from that book by Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a pattern of plagerism [sic]. 27
3. Similarity in orientation and style can likewise be attributed to the exposure of the authors to the APCAS syllabus and
their respective academic experience, teaching approaches and methodology. It is not farfetched that they could have
even influenced each other as textbook writers. ROBLES and Dr. Pacita Habana were faculty members of the Institute of
English of the Far Eastern University from 1964 to 1974. 28 Both were ardent students, researchers, lecturers, textbook
writers and teachers of English and grammar. They even used to be on friendly terms with each other, to the extent that
Dr. Habana admitted that ROBLES assisted the former in the preparation of her doctoral dissertation. Given their near-
identical academic and professional background, it is natural they would use many expressions and definitions peculiar
to teaching English grammar. It comes therefore with no surprise that there are similarities in some parts of the rival
books. Indeed, it is difficult to conceive how writers on the same subject matter can very well avoid resorting to
common sources of information and materials and employing similar expressions and terms peculiar to the subject they
are treating. 29
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
1. the author's complete name on the first line, surname first, which may be followed by
the date of his birth and death if he is no longer living;
2. the title of the book, and the subtitle, if there is one;
3. the edition, if it is not the first;
4. the translator or illustrator, if there is any;
5. the imprint which includes the publisher, the place and date of publication;
6. the collation composed of the number of pages, volume, illustrations, and the size of
the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.

13
Names beginning with Mc, or M are filed in the card catalog as though spelled out as MAC, for example
Mc Graw — MacGraw. The same is true of St. and Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
2. the title of the book, and the subtitle if there is one;
4. the translator or illustrator, if any;
6. the collation, composed of the number of pages, volume, illustrations, and the size of
the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered spelled out as MAC, for
example: Mcleod-Macleod. This is true also of St. and Saint.
The entries found in an author card, having been developed over quite sometime, are expectedly uniform. Hence,
HABANA et al. and ROBLES would have no choice but to articulate the terms particular to the entries in an identical
manner.
I thus find that the ruling of the respondent court is totally supported by the evidence on record. Of doctrinal
persuasion is the principle that factual determinations of the Court of Appeals and the trial court are conclusive and
binding upon this Court, and the latter will not, as a rule, disturb these findings unless compelling and cogent reasons
necessitate a reexamination, if not a reversal, of the same. 30 Tested against this jurisprudential canon, to subject the
challenged decision of the Court of Appeals to further scrutiny would be superfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et al. that Laktaw is on all fours with and hence applicable to the case at
bar. There, this Court disposed that defendant, without the consent of and causing irreparable damage to Laktaw,
reproduced the latter's literary work Diccionario Hisapano-Tagalog, and improperly copied the greater part thereof in
the work Diccionariong Kastila-Tagalog published by defendant, in violation of Article 7 of the Law of 10 January 1879
on Intellectual Property. This Court anchored its decision on the following observations:
(1) [O] the 23,560 Spanish words in the defendant's

dictionary . . . only 3,108 words are the defendant's own, or, what is the same thing, the defendant has
added only this number of words to those that are in the plaintiff's dictionary, he having reproduced or
copied the remaining 20,452 words;
14
(2) [T]he defendant also literally reproduced and copied for the Spanish words in his dictionary, the
equivalents, definitions and different meanings in Tagalog, given in plaintiffs dictionary, having
reproduced, as to some words, everything that appears in the plaintiff's dictionary for similar Spanish
words, although as to some he made some additions of his own. Said copies and reproductions are
numerous. . .;
(3) [T]he printer's errors in the plaintiff's dictionary as to the expression of some words in Spanish as
well as their equivalents in Tagalog are also reproduced, a fact which shows that the defendant, in
preparing his dictionary, literally copied those Spanish words and their meanings and equivalents in
Tagalog from the plaintiff's dictionary. 31
Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated accounting of the number of
words supposedly usurped in a segment of DEP from CET, 32 the records do not disclose that all the words allegedly
copied were tallied and that the words thus tallied were numerous enough to support a finding of copying. Second, as
already conceded, while there is an identity in the manner by which some of the ideas and concepts were articulated,
this prescinded from various factors already elucidated. Besides, ROBLES' testimony that she made an independent
investigation or research of the original works or authors she consulted was unrebutted; 33 for germane here is the
question of whether the alleged infringer could have obtained the same information by going to the same source by
her own independent research. 34 ROBLES convinced the trial court and the Court of Appeals on this; thus, we are
bound by this factual determination, as likewise explained earlier. Third, reproduction of the printer's errors or the
author's blunders and inaccuracies in the infringing copy does not ipso facto constitute copying or plagiarism or
infringement, but it is conceded that they are telltale signs that infringement might have been committed. 35 However,
the records do not reveal this to be the case. Fourth, the law on intellectual property violated in Laktaw was a world and
time apart from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879, the Court ruled
that nobody could reproduce another person's work without the owner's consent, even merely to annotate or add
anything to it, or improve any edition thereof. The more recent laws on intellectual property, however, recognize recent
advancements in technology transfer and information dissemination. They thus allow the use of copyrighted materials if
compatible with fair use and to the extent justified for the purpose. In particular, the new laws sanction the fair use of
copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research and similar purposes. 36 Further, the limitations of the exclusive use of copyrighted materials under
Sections 10 and 11 of P.D. No. 49 in consonance with the principle of fair use have been reproduced and incorporated in
the new law. 37 All told, Laktaw is inapplicable.1âwphi1.nêt
Fair use has been defined as a privilege to use the copyrighted material in a reasonable manner without the consent of
the copyright owner or as copying the theme or ideas rather than their expression. 38 No question of fair or unfair use
arises however, if no copying is proved to begin with. This is in consonance with the principle that there can be no
infringement if there was no copying. 39 It is only where some form of copying has been shown that it becomes
necessary to determine whether it has been carried to an "unfair," that is, illegal, extent. 40 Consequently, there is no
reason to address the issue of whether ROBLES abused a writer's right to fair use with the ascertainment that DEP was
not a copy or a substantial copy of CET.
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June 1997 of the Court of
Appeals.
Separate Opinions
DAVIDE, JR., C.J., dissenting opinion:
I am unable to join the majority view.

15
From the following factual and procedural antecedents, I find no alternative but to sustain both the trial court and the
Court of Appeals.
On 12 July 1988, HABANA, et al. filed with the trial court a complaint for infringement and unfair competition, with
damages against private respondent Felicidad C. Robles (hereafter ROBLES) and her publisher and distributor, Goodwill
Trading Co., Inc. (hereafter GOODWILL). The case was docketed as Civil Case No. 88-1317.
HABANA, et al. averred in their complaint that they were the co-authors and joint copyright owners of their published
works College English for Today, Books 1 and 2 (hereafter CET) and Workbook for College Freshman English, Series 1 1;
they discovered that ROBLES' own published works, Developing English Proficiency, Books 1 and 2, (hereafter DEP),
published and distributed in 1985, exhibited an uncanny resemblance, if not outright physical similarity, to CET as to
content, scheme, sequence of topics and ideas, manner of presentation and illustrative examples; the plagiarism,
incorporation and reproduction of particular portions of CET into DEP could not be gainsaid since ROBLES was
substantially familiar with CET and the textual asportation was accomplished without their authority and/or consent;
ROBLES and GOODWILL jointly misrepresented DEP (over which they shared copyright ownership) "as the former's
original published works and concept;" and "notwithstanding formal demands made . . . to cease and desist from the
sale and distribution of DEP, [ROBLES and GOODWILL] persistently failed and refused to comply therewith." HABANA et
al. then prayed for the court to: (1) order the submission and thereafter the destruction of all copies of DEP, together
with the molds, plates, films and other materials used in the printing thereof; (2) require ROBLES and GOODWILL to
render an accounting of the sales of the "infringing works from the time of its (sic) inceptive publication up to the time
of judgment, as well as the amount of sales and profits . . . derived;" and (3) to enjoin ROBLES and GOODWILL to
solidarily pay actual, moral and exemplary damages, as well as attorney's fees and expenses of litigation.
In its Answer, GOODWILL denied culpability since "it had no knowledge or information sufficient to form a belief as to
the allegations of plagiarism, incorporation and reproduction" and hence "could not be privy to the same, if (there
were) any;" and that in an Agreement with co-defendant ROBLES, the latter would be solely responsible for acts of
plagiarism or violations of copyright or any other law, to the extent of answering for any and all damages GOODWILL
may suffer. GOODWILL also interposed a compulsory counterclaim against PACITA, et al. and a crossclaim against its
co-defendant anchored on the aforementioned Agreement.
In her answer, ROBLES asserted that: (1) DEP was the exclusive product of her independent research, studies and
experience; (2) DEP, particularly the segments where the alleged literal similitude appeared, were admittedly influenced
or inspired by earlier treatises, mostly by foreign authors; but that "influences and/or inspirations from other writers" like
the methodology and techniques as to presentation, teaching concept and design, research and orientation which she
employed, fell within the ambit of general information, ideas, principles of general or universal knowledge which were
commonly and customarily understood as incapable of private and exclusive use, appropriation or copyright; and (3)
her works were the result of the legitimate and reasonable exercise of an author's "right to fair use of even copyrighted
materials as [a] guide." She further claimed that her various national and regional professional activities in general
education, language and literature, as well as her teaching experience in graduate and post graduate education would
obviate the remotest possibility of plagiarism.
ROBLES likewise suggested that any similarity between DEP and CET as regards scope and sequence could be
attributed to "the orientation of the authors to the scope and sequence or syllabus — which incorporates standards
known among English grammar book writers — of the subject-matter for Basic Communication Arts recommended by
the Association of Philippine Colleges of Arts and Sciences (APCAS)." While the syllabus was admittedly adopted in DEP,
she claimed to have treated quite differently in DEP the very ideas, techniques or principles expressed in CET such that
neither textbook could be considered a copy or plagiarism of the other.
16
At the pre-trial conference, the parties agreed to a stipulation of facts2 and for the court to first resolve the issue of
infringement before disposing of the claims for damages. After trial on the merits, the trial court rendered its decision in
favor of defendants, the dispositive portion of which reads:
WHEREFORE, premises considered, the Court hereby orders that the complaint filed against defendants
Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED: that said plaintiffs solidarily
attorney's fees. Plaintiffs are liable for costs of suit.
IT IS SO ORDERED. 3
Noting that the law applicable to the case was Presidential Decree No. 49, 4 the trial court found that HABANA, et al.
failed to discharge their onus of proving that ROBLES and GOODWILL committed acts constituting copyright
infringement. Moreover, the trial court found that "the cause of action or acts complained of [were] not covered by said
decree" as Section 10 thereof barred authors of works already lawfully made accessible to the public from prohibiting
the reproductions, translations, adaptations, recitation and performance of the same, while Section 11 allowed the
utilization of reproductions, quotations and excerpts of such works. The trial court thus agreed with ROBLES that "the
complained acts [were] of general and universal knowledge and use which plaintiffs cannot claim originality or seek
redress to the law for protection" and observed that DEP and CET had the same sources, consisting chiefly of earlier
works, mostly foreign books. GOODWILL's crossclaim against ROBLES, counterclaim against HABANA, et al. as well as
ROBLES' compulsory counterclaim against GOODWILL were all dismissed for lack of factual and legal bases.
HABANA, et al. appealed to the Court of Appeals. The case was docketed as CA-G.R. CV No. 44053. Before said court
HABANA, et al., in the main, argued that the trial court totally disregarded their evidence and merely subscribed to
ROBLES' arguments. The Court of Appeals, however, likewise disposed of the controversy in favor of ROBLES and
GOODWILL.5
However, the Court of Appeals modified the trial court's decision by reversing the award for attorney's fees. It held that
the good faith and sincerity of HABANA, et al. in commencing the action negated the basis therefor. Their motion for
reconsideration having been denied for want of cogent reasons, HABANA, et al., instituted this petition. They claim that
the Court of Appeals committed reversible error in failing to appreciate: (1) the insuperable evidence and facts admitted
and proved demonstrating plagiarism or piracy and instead afforded full weight and credit to ROBLES' matrix of
general, hypothetical and sweeping statements and/or defenses; (2) ROBLES' and GOODWILL's animo furandi or intent
to appropriate or copy CET with the non-removal of the damaging copies of DEP from the bookstores despite notice to
withdraw the same; and (3) the fact that ROBLES abused a writer's right to fair use, in violation of Section 11 of P.D. No.
49. 6 They invoke Laktaw v. Paglinawan 7 which, they theorize is on all fours with the case at bar. ROBLES contends that
appeal by certiorari does not lie in this case for the challenged decision and the trial court's judgment were amply
supported by evidence, pertinent laws and jurisprudence. Hence, her counterclaim for moral damages should,
therefore, be granted or for us to order the remand of the case to the trial court for reception of evidence on damages.
GOODWILL, on its part, stood pat on its disclaimer, with the assertion that no proof was ever introduced. that it co-
authored DEP or that it singly or in cabal with ROBLES committed any act constituting copyright infringement.
The core issue then is whether or not the Court of Appeals erred in affirming the trial court's judgment that despite the
apparent textual, thematic and sequential similarity between DEP and CET, no copyright was committed by ROBLES and
GOODWILL.
While the complaint, in Civil Case No. 88-1317 was filed during the effectivity of P.D. No. 49, the provisions of the new
intellectual property law, R.A. No. 8293, 8 nevertheless bears significance here. It took effect on 1 January 1998, but its
Section 239.3 clearly states that its provisions shall apply to works in which copyright protection obtained prior to the
17
effectivity of the Act subsists, provided, however, that the application of the Act shall not result in the diminution of such
protection. Also, the philosophy behind both statutes as well as the essential principles of copyright protection and
copyright infringement have, to a certain extent, remained the same.
A copyright may be accurately defined as the right granted by statute to the proprietor of an intellectual production to
its exclusive use and enjoyment to the extent specified in the statute.9 Under Section 177 of R.A. No. 8293, 10 the copy or
economic right (copyright and economic right are used interchangeably in the statute) consists of the exclusive right to
carry out, authorize or prevent the following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the

work;
177.5 Public display of the original or a copy of the work;
177.7 Other communication to the public of the work.
"The work," as repeatedly mentioned, refers to the literary and artistic works defined as original intellectual creations in
the literary and artistic domain protected from the moment of their creation and enumerated in Section 172.1, which
includes books and other literary, scholarly, scientific and artistic works. 11
Stripped in the meantime of its indisputable social and beneficial functions, 12 the use of intellectual property or
creations should basically promote the creator or author's personal and economic gain. Hence, the copyright protection
extended to the creator should ensure his attainment of some form of personal satisfaction and economic reward from
the work he produced. Without conceding the suitability of Laktaw as precedent, the Court there quoted Manresa and
explained:
He who writes a book, or carves a statute, or makes an invention, has the absolute right to reproduce or
sell it, just as the owner of the land has the absolute right to sell it or its fruits. But while the owner of
the land, by selling it and its fruits, perhaps fully realizes all its economic value, by receiving its benefits
and utilities, which are represented for example, by the price, on the other hand the author of a book,
statue or invention does not reap all the benefits and advantages of his own property by disposing of it,
for the most important form of realizing the economic advantages of a book, statue or invention,
consists in the right to reproduce it in similar or like copies, everyone of which serves to give to the
person reproducing them all the conditions which the original requires in order to give the author the
full enjoyment thereof. If the author of a book, after its publication, cannot prevent its reproduction by
any person who may want to reproduce it, then the property right granted him is reduced to a very
insignificant thing and the effort made in the production of the book is in no way rewarded. 13
18
The execution, therefore, of any one or more of the exclusive rights conferred by law on a copyright owner, without his
consent, constitutes copyright infringement. In essence, copyright infringement, known in general as "piracy," is a
trespass on a domain owned and occupied by a copyright owner; it is violation of a private right protected by
law. 14 With the invasion of his property rights, a copyright owner is naturally entitled to seek redress, enforce and hold
accountable the defrauder or usurper of said economic rights.
Now, did ROBLES and GOODWILL infringe upon the copyright of HABANA et al. by publishing DEP, which the latter
alleged to be a reproduction, or in the least, a substantial reproduction of CET? Both the trial court and respondent
court found in the negative. I submit they were correct.
To constitute infringement, the usurper must have copied or appropriated the "original" work of an author or copyright
proprietor; 15 absent copying, there can be no infringement of copyright. 16 In turn, a work is deemed by law an original
if the author created it by his own skill, labor and judgment. 17 On its part, a copy is that which comes so near to the
original so as to give to every person seeing it the idea created by the original. It has been held that the test of
copyright infringement is whether an ordinary observer comparing the works can readily see that one has been copied
from the other. 18 A visual comparison of the portions of CET 19 juxtaposed against certain pages of DEP, 20 would
inescapably lead to a conclusion that there is a discernible similarity between the two; however, as correctly assessed by
respondent court and the lower court, no conclusion, can be drawn that DEP, in legal contemplation, is a copy of CET.
Was DEP a substantial reproduction of CET? To constitutes a substantial reproduction, it is not necessary that the entire
copyrighted work, or even a large portion of it, be copied, if so much is taken that the value of the original is
substantially diminished, or if the labors of the original author are substantially, and to an injurious extent,
appropriated. 21 But the similarity of the books here does not amount to an appropriation of a substantial portion of
CET. If the existence of substantial similarities does not of itself establish infringement, 22 mere similarities (not
substantial similarities) in some sections of the books in question decisively militate against a claim for infringement
where the similarities had been convincingly established as proceeding from a number of reasons and/or factors.
1. As both books are grammar books, they inevitably deal with the same subjects typically and ordinarily treated by
writers of such genre, 23 e.g., system of book classification, the different kinds of card catalogs and their entries, use of
punctuation marks, paragraphs, the characteristics of an effective paragraph, language structure, different parts of a
book, etc. These standard subjects fall within the domain of ideas, concepts, universal and general knowledge that have,
as admitted by the protagonists here, been in existence for quite a long time. 24 As such, HABANA, et al. cannot
demand monopoly, by way of example, in the use of the recognized library classification systems (Dewey Decimal
System and the Library of Congress System), or how a book can be divided into parts (frontispiece, title page, copyright
page, preface, table of contents, etc.) or to the different headings used in a card catalogue (title card, author card and
subject card), since these are of common or general knowledge. Even in this jurisdiction, no protection can be extended
to such an idea, procedure, system method or operation, concept, principle, discovery or mere data, even if expressed,
explained, illustrated or embodied in a work. 25
2. As found by respondent court, CET and DEP had common sources and materials, 26 such that the particular portions
claimed to have been lifted and literally reproduced also appeared in earlier works, mostly by foreign authors. This is
clear from the testimony of petitioner Dr. Pacita Habana:
Q Let's clarify your position Dra. Habana. When defendants test (sic) showed 10 words
similar to yours, you so concluded it was (sic) copied from yours but when I pointed out
to you same (sic) words contained in the earlier book of Wills then you earlier in your
test in your book (sic) you refused to admit that it was copied from Wills.
A Yes, sir. We have never — all 35 words were copied from there.
19
Q But what I am asking how could you conclude that by just similarity of 10 words of
defendants words that was copied from yours [sic] and when I point out to you the
similarity of that same words from the words earlier than yours (sic) you refused to
admit that you copied?
A I would like to change the final statement now that in the case of defendant Robles
you pointed out her source very clear. She copied it from that book by Wills.
Q So, she did not copy it from yours?
A Alright, maybe she did not copy it but definitely it is a pattern of plagerism [sic]. 27
3. Similarity in orientation and style can likewise be attributed to the exposure of the authors to the APCAS syllabus and
their respective academic experience, teaching approaches and methodology. It is not farfetched that they could have
even influenced each other as textbook writers. ROBLES and Dr. Pacita Habana were faculty members of the Institute of
English of the Far Eastern University from 1964 to 1974. 28 Both were ardent students, researchers, lecturers, textbook
writers and teachers of English and grammar. They even used to be on friendly terms with each other, to the extent that
Dr. Habana admitted that ROBLES assisted the former in the preparation of her doctoral dissertation. Given their near-
identical academic and professional background, it is natural they would use many expressions and definitions peculiar
to teaching English grammar. It comes therefore with no surprise that there are similarities in some parts of the rival
books. Indeed, it is difficult to conceive how writers on the same subject matter can very well avoid resorting to
common sources of information and materials and employing similar expressions and terms peculiar to the subject they
are treating. 29
To illustrate, an excerpt from page 21 of CET reads:
Author Card
The author card is the main entry card. It contains
2. the title of the book, and the subtitle, if there is one;
4. the translator or illustrator, if there is any;
6. the collation composed of the number of pages, volume, illustrations, and the size of
the book;
7. the subjects with which the book deals [sic];
8. the call number on the upper left-hand corner.

20
Names beginning with Mc, or M are filed in the card catalog as though spelled out as MAC, for example
Mc Graw — MacGraw. The same is true of St. and Saint.
While a portion of DEP found on page 18 which discusses the author card provides:
The author card is the main entry card containing:
2. the title of the book, and the subtitle if there is one;
4. the translator or illustrator, if any;
6. the collation, composed of the number of pages, volume, illustrations, and the size of
the book;
7. the subject with which the book deals; and
8. the call number on the upper-left hand corner.
Names beginning with MC, or M are filed in the card catalog considered spelled out as MAC, for
example: Mcleod-Macleod. This is true also of St. and Saint.
The entries found in an author card, having been developed over quite sometime, are expectedly uniform. Hence,
HABANA et al. and ROBLES would have no choice but to articulate the terms particular to the entries in an identical
manner.
I thus find that the ruling of the respondent court is totally supported by the evidence on record. Of doctrinal
persuasion is the principle that factual determinations of the Court of Appeals and the trial court are conclusive and
binding upon this Court, and the latter will not, as a rule, disturb these findings unless compelling and cogent reasons
necessitate a reexamination, if not a reversal, of the same. 30 Tested against this jurisprudential canon, to subject the
challenged decision of the Court of Appeals to further scrutiny would be superfluous, if not, improvident.
I am not persuaded by the claim of HABANA, et al. that Laktaw is on all fours with and hence applicable to the case at
bar. There, this Court disposed that defendant, without the consent of and causing irreparable damage to Laktaw,
reproduced the latter's literary work Diccionario Hisapano-Tagalog, and improperly copied the greater part thereof in
the work Diccionariong Kastila-Tagalog published by defendant, in violation of Article 7 of the Law of 10 January 1879
on Intellectual Property. This Court anchored its decision on the following observations:
(1) [O] the 23,560 Spanish words in the defendant's

dictionary . . . only 3,108 words are the defendant's own, or, what is the same thing, the defendant has
added only this number of words to those that are in the plaintiff's dictionary, he having reproduced or
copied the remaining 20,452 words;
21
(2) [T]he defendant also literally reproduced and copied for the Spanish words in his dictionary, the
equivalents, definitions and different meanings in Tagalog, given in plaintiffs dictionary, having
reproduced, as to some words, everything that appears in the plaintiff's dictionary for similar Spanish
words, although as to some he made some additions of his own. Said copies and reproductions are
numerous. . .;
(3) [T]he printer's errors in the plaintiff's dictionary as to the expression of some words in Spanish as
well as their equivalents in Tagalog are also reproduced, a fact which shows that the defendant, in
preparing his dictionary, literally copied those Spanish words and their meanings and equivalents in
Tagalog from the plaintiff's dictionary. 31
Plainly, the rationale in Laktaw does not apply in this case. First, aside from an isolated accounting of the number of
words supposedly usurped in a segment of DEP from CET, 32 the records do not disclose that all the words allegedly
copied were tallied and that the words thus tallied were numerous enough to support a finding of copying. Second, as
already conceded, while there is an identity in the manner by which some of the ideas and concepts were articulated,
this prescinded from various factors already elucidated. Besides, ROBLES' testimony that she made an independent
investigation or research of the original works or authors she consulted was unrebutted; 33 for germane here is the
question of whether the alleged infringer could have obtained the same information by going to the same source by
her own independent research. 34 ROBLES convinced the trial court and the Court of Appeals on this; thus, we are
bound by this factual determination, as likewise explained earlier. Third, reproduction of the printer's errors or the
author's blunders and inaccuracies in the infringing copy does not ipso facto constitute copying or plagiarism or
infringement, but it is conceded that they are telltale signs that infringement might have been committed. 35 However,
the records do not reveal this to be the case. Fourth, the law on intellectual property violated in Laktaw was a world and
time apart from R.A. No. 8293 or even P.D. No. 49. Thus, under Article 7 of the Law of 10 January 1879, the Court ruled
that nobody could reproduce another person's work without the owner's consent, even merely to annotate or add
anything to it, or improve any edition thereof. The more recent laws on intellectual property, however, recognize recent
advancements in technology transfer and information dissemination. They thus allow the use of copyrighted materials if
compatible with fair use and to the extent justified for the purpose. In particular, the new laws sanction the fair use of
copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use,
scholarship, research and similar purposes. 36 Further, the limitations of the exclusive use of copyrighted materials under
Sections 10 and 11 of P.D. No. 49 in consonance with the principle of fair use have been reproduced and incorporated in
the new law. 37 All told, Laktaw is inapplicable.
Fair use has been defined as a privilege to use the copyrighted material in a reasonable manner without the consent of
the copyright owner or as copying the theme or ideas rather than their expression. 38 No question of fair or unfair use
arises however, if no copying is proved to begin with. This is in consonance with the principle that there can be no
infringement if there was no copying. 39 It is only where some form of copying has been shown that it becomes
necessary to determine whether it has been carried to an "unfair," that is, illegal, extent. 40 Consequently, there is no
reason to address the issue of whether ROBLES abused a writer's right to fair use with the ascertainment that DEP was
not a copy or a substantial copy of CET.1âwphi1.nêt
WHEREFORE, I vote to DENY the petition and to AFFIRM the challenged decision of 27 June 1997 of the Court of
Appeals.
G.R. No. 195956 March 11, 2015
ABS-CBN CORPORATION, Petitioner,

vs.
22
FELIPE GOZON, GILBERTO R. DUAVIT, JR., MARISSA L. FLORES, JESSICA A. SORO, GRACE DELA PENA-REYES, JOHN
OLIVER T. MANALASTAS, JOHN DOES AND JANE DOES, Respondents.
DECISION
LEONEN, J.:
The main issue in this case is whether there is probable cause to charge respondents with infringement under Republic
Act No. 8293, otherwise known as the Intellectual Property Code. The resolution of this issue requires clarification of the
concept of "copyrightable material" in relation to material that is rebroadcast live as a news story. We are also asked to
rule on whether criminal prosecution for infringement of copyrightable material, such as live rebroadcast, can be
negated by good faith.
ABS-CBN Corporation (ABS-CBN) filed the Petition for Review on Certiorari1 to assail the November 9, 2010
Decision2 and the March 3, 2011 Resolution3 of the Court of Appeals. The Court of Appeals reinstated the Department of
Justice Resolution dated August 1, 2005 that ordered the withdrawal of the Information finding probable cause for
respondents’ violation of Sections 1774 and 2115 of the Intellectual Property Code.6 Respondents are officers and
employees of GMA Network, Inc. (GMA-7). They are: Felipe Gozon (Gozon), GMA-7 President; Gilberto R. Duavit, Jr.
(Duavit, Jr.), Executive Vice-President; Marissa L. Flores (Flores), Vice-President for New and Public Affairs; Jessica A.
Soho (Soho), Director for News; Grace Dela Peña-Reyes (Dela Peña-Reyes), Head of News and Public Affairs; John Oliver
Manalastas (Manalastas), Program Manager; and others.
The controversy arose from GMA-7’s news coverage on the homecoming of Filipino overseas worker and hostage
victim Angelo dela Cruz on July 22, 2004. As summarized by the Court of Appeals:
Overseas Filipino worker Angelo dela Cruz was kidnapped by Iraqi militants and as a condition for his release, a demand
was made for the withdrawal of Filipino troops in Iraq. After negotiations, he was released by his captors and was
scheduled to return to the country in the afternoon of 22 July 2004. Occasioned by said homecoming and the public
interest it generated, both . . . GMA Network, Inc. . . . and [petitioner] made their respective broadcasts and coverage of
the live event.7
ABS-CBN "conducted live audio-video coverage of and broadcasted the arrival of Angelo dela Cruz at the Ninoy
Aquino International Airport (NAIA) and the subsequent press conference."8 ABS-CBN allowed Reuters Television
Service (Reuters) to air the footages it had taken earlier under a special embargo agreement.9
ABS-CBN alleged that under the special embargo agreement, any of the footages it took would be for the "use of
Reuter’s international subscribers only, and shall be considered and treated by Reuters under ‘embargo’ against use by
other subscribers in the Philippines. . . . [N]o other Philippine subscriber of Reuters would be allowed to use ABS-CBN
footage without the latter’s consent."10
GMA-7, to which Gozon, Duavit, Jr., Flores, Soho, Dela Peña-Reyes, and Manalastas are connected, "assigned and
stationed news reporters and technical men at the NAIA for its live broadcast and non-live news coverage of the arrival
of dela Cruz."11 GMA-7 subscribes to both Reuters and Cable News Network (CNN). It received a live video feed of the
coverage of Angelo dela Cruz’s arrival from Reuters.12
GMA-7 immediately carried the live news feed in its program "Flash Report," together with its live broadcast.13Allegedly,
GMA-7 did not receive any notice or was not aware that Reuters was airing footages of ABS-CBN.14 GMA-7’s news
control room staff saw neither the "No Access Philippines" notice nor a notice that the video feed was under embargo
in favor of ABS-CBN.15
23
On August 13, 2004, ABS-CBN filed the Complaint for copyright infringement under Sections 17716 and 21117 of the
Intellectual Property Code.18
On December 3, 2004, Assistant City Prosecutor Dindo Venturanza issued the Resolution19 finding probable cause to
indict Dela Peña-Reyes and Manalastas.20 Consequently, the Information21 for violation of the Intellectual Property Code
was filed on December 17, 2004. It reads:
That on or about the 22nd of July 2004, in Quezon City, Philippines, the above-named accused, conspiring together,
confederating with and mutually helping each other, being the Head of News Operations and the Program Manager,
respectively, for the News and Public Affairs Department of GMA Network, Inc., did then and there, willfully, unlawfully
and feloniously use and broadcast the footage of the arrival of Angelo [d]ela Cruz at the Ninoy Aquino International
Airport of which ABS-CBN holds the exclusive ownership and copyright by then and there using, airing, and
broadcasting the said footage in its news program "FLASH REPORT" without first obtaining the consent or authority of
said copyright owner, to their damage and prejudice.
Contrary to law.22
On January 4, 2005, respondents filed the Petition for Review before the Department of Justice.23 In the Resolution
(Gonzalez Resolution) dated August 1, 2005, Department of Justice Secretary Raul M. Gonzalez (Secretary Gonzalez)
ruled in favor of respondents and held that good faith may be raised as a defense in the case.24 The dispositive portion
of the Resolution reads:
WHEREFORE, THE PETITION FOR REVIEW FILED BY GMA-7 in I.S. No. 04-10458 is considered meritorious and is hereby
GRANTED. This case is hereby Dismissed, the resolution of the City Prosecutor of Quezon City is hereby reversed and
the same is ordered to withdraw the information if any and report action taken to this office within ten (10)
days.25 (Emphasis in the original)
Both parties moved for reconsideration of the Gonzalez Resolution.26
Meanwhile, on January 19, 2005, the trial court granted the Motion to Suspend Proceedings filed earlier by Dela Peña-
Reyes and Manalastas.27 The trial court Order reads:
Perusing the motion, the court finds that a petition for review was filed with the Department of Justice on January 5,
2005 as confirmed by the public prosecutor. Under Section 11 (c), Rule 116 of the Rules of Criminal Procedure, once a
petition for review is filed with the Department of Justice, a suspension of the criminal proceedings may be allowed by
the court.
Accordingly, to allow the Department of Justice the opportunity to act on said petition for review, let the proceedings
on this case be suspended for a period of sixty (60) days counted from January 5, 2005, the date the petition was filed
with the Department of Justice. The arraignment of the accused on February 1, 2005 is accordingly cancelled. Let the
arraignment be rescheduled to March 8, 2005 at 8:30 a.m. The accused through counsel are notified in open court.
SO ORDERED.28
On June 29, 2010, Department of Justice Acting Secretary Alberto C. Agra (Secretary Agra) issued the Resolution (Agra
Resolution) that reversed the Gonzalez Resolution and found probable cause to charge Dela Peña-Reyes and
Manalastas for violation of the Intellectual Property Code.29 Secretary Agra also found probable cause to indict Gozon,
Duavit, Jr., Flores, and Soho for the same violation.30 He ruled that:
24
[w]hile good faith may be a defense in copyright infringement, the same is a disputable presumption that must be
proven in a full-blown trial. Disputable presumptions may be contradicted and overcome by other evidence. Thus, a
full-blown trial is the proper venue where facts, issues and laws are evaluated and considered. The very purpose of trial
is to allow a party to present evidence to overcome the disputable presumptions involved.31
The dispositive portion of the Agra Resolution provides:
WHEREFORE, premises considered:
(a) The Motion for Reconsideration filed by appellees ABS-CBN Broadcasting Corporation (ABS-CBN) of our
Resolution promulgated on August 1, 2005 (Resolution No. 364, Series of 2005) and the Petition for Review filed
by complainant-appellant ABS-CBN in I.S. No. 04-10458 on April10, 2006, are GRANTED and the City Prosecutor
of Quezon City is hereby ordered to file the necessary Information for violation of Section 177 and 211 of
Republic Act No. 8293 against GMA-7. Felipe L. Gozon, Gilberto R. Duavit, Jr., Marissa L.Flores, Jessica A. Soho,
Grace Dela Pena-Reyes, John Oliver T. Manalastas[.]
....
SO ORDERED.32 (Emphasis in the original)
Respondents assailed the Agra Resolution through the Petition for Certiorari with prayer for issuance of a temporary
restraining order and/or Writ of Preliminary Injunction on September 2, 2010 before the Court of Appeals. In the
Resolution dated September 13, 2010, the Court of Appeals granted the temporary restraining order preventing the
Department of Justice from enforcing the Agra Resolution.33
On November 9, 2010, the Court of Appeals rendered the Decision granting the Petition and reversing and setting aside
the Agra Resolution.34 The Court of Appeals held that Secretary Agra committed errors of jurisdiction in issuing the
assailed Resolution. Resolving the issue of copyright infringement, the Court of Appeals said:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video feed, petitioner GMA is
liable under the provisions of the Intellectual Property Code, which was enacted purposely to protect copyright owners
from infringement. However, it is an admitted fact that petitioner GMA had only aired a five (5) second footage of the
disputed live video feed that it had received from Reuters and CNN as a subscriber. Indeed, petitioners had no notice of
the right of ownership of private respondent over the same. Without notice of the "No Access Philippines" restriction of
the live video feed, petitioner cannot be faulted for airing a live video feed from Reuters and CNN.
Verily, as aptly opined by Secretary Gonzalez in his earlier Resolution, the act of petitioners in airing the five (5) second
footage was undeniably attended by good faith and it thus serves to exculpate them from criminal liability under the
Code. While the Intellectual Property Code is a special law, and thus generally categorized as malum prohibitum, it
bears to stress that the provisions of the Code itself do not ipso facto penalize a person or entity for copyright
infringement by the mere fact that one had used a copyrighted work or material.
Certainly so, in the exercise of one’s moral and economic or copyrights, the very provisions of Part IV of the Intellectual
Property Code provide for the scope and limitations on copyright protection under Section 184 and in fact permit fair
use of copyrighted work under Section 185. With the aforesaid statutory limitations on one’s economic and copyrights
and the allowable instances where the other persons can legally use a copyrighted work, criminal culpability clearly
attaches only when the infringement had been knowingly and intentionally committed.35 (Emphasis supplied)
The dispositive portion of the Decision reads:

25
WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the assailed Resolution dated 29
June 2010 REVERSED and SET ASIDE. Accordingly, the earlier Resolution dated 1 August 2005, which ordered the
withdrawal of the Information filed, if any, against the petitioners for violation of Sections 177 and 211 of the Intellectual
Property Code, is hereby REINSTATED. No costs.
SO ORDERED.36 (Emphasis in the original)
ABS-CBN’s Motion for Reconsideration was denied.37 It then filed its Petition for Review before this court assailing the
Decision and Resolution of the Court of Appeals.38
The issues for this court’s consideration are:
First, whether Secretary Agra committed errors of jurisdiction in the Resolution dated June 29, 2010 and, therefore,
whether a petition for certiorari was the proper remedy in assailing that Resolution;
Second, whether news footage is copyrightable under the law;
Third, whether there was fair use of the broadcast material;
Fourth, whether lack of knowledge that a material is copyrighted is a defense against copyright infringement;
Fifth, whether good faith is a defense in a criminal prosecution for violation of the Intellectual Property Code; and
Lastly, whether the Court of Appeals was correct in overturning Secretary Agra’s finding of probable cause.
The trial court granted respondents’ Motion to Suspend Proceedings and deferred respondents Dela Peña-Reyes and
Manalastas’ arraignment for 60 days in view of the Petition for Review filed before the Department of Justice.
Rule 116, Section 11 (c) of the Rules of Criminal Procedure allows
the suspension of the accused’s arraignment in certain circumstances only:
SEC. 11. Suspension of arraignment.–Upon motion by the proper party, the arraignment shall be suspended in the
following cases:
(a) The accused appears to be suffering from an unsound mental condition which effectively renders him unable
to fully understand the charge against him and to plead intelligently thereto. In such case, the court shall order
his mental examination and, if necessary, his confinement for such purpose;
(b) There exists a prejudicial question; and
(c) A petition for review of the resolution of the prosecutor is pending at either the Department of Justice, or
the Office of the President; provided, that the period of suspension shall not exceed sixty (60) days counted
from the filing of the petition with the reviewing office. (12a) (Emphasis supplied)
26
In Samson v. Daway,39 this court acknowledged the applicability of Rule 116, Section (c) in a criminal prosecution for
infringement under the Intellectual Property Code. However, this court emphasized the limits of the order of deferment
under the Rule:
While the pendency of a petition for review is a ground for suspension of the arraignment, the . . . provision limits the
deferment of the arraignment to a period of 60 days reckoned from the filing of the petition with the reviewing office. It
follows, therefore, that after the expiration of said period, the trial court is bound to arraign the accused or to deny the
motion to defer arraignment.40
We clarify that the suspension of the arraignment should always be within the limits allowed by law. In Crespo v. Judge
Mogul,41 this court outlined the effects of filing an information before the trial court, which includes initiating a criminal
action and giving this court "authority to hear and determine the case":42
The preliminary investigation conducted by the fiscal for the purpose of determining whether a prima facie case exists
warranting the prosecution of the accused is terminated upon the filing of the information in the proper court. In turn,
as above stated, the filing of said information sets in motion the criminal action against the accused in Court. Should the
fiscal find it proper to conduct a reinvestigation of the case, at such stage, the permission of the Court must be secured.
After such reinvestigation the finding and recommendations of the fiscal should be submitted to the Court for
appropriate action. While it is true that the fiscal has the quasi judicial discretion to determine whether or not a criminal
case should be filed in court or not, once the case had already been brought to Court whatever disposition the fiscal
may feel should be proper in the case thereafter should be addressed for the consideration of the Court, the only
qualification is that the action of the Court must not impair the substantial rights of the accused or the right of the
People to due process of law.
Whether the accused had been arraigned or not and whether it was due to a reinvestigation by the fiscal or a review by
the Secretary of Justice whereby a motion to dismiss was submitted to the Court, the Court in the exercise of its
discretion may grant the motion or deny it and require that the trial on the merits proceed for the proper determination
of the case.
However, one may ask, if the trial court refuses to grant the motion to dismiss filed by the fiscal upon the directive of
the Secretary of Justice will there not be a vacuum in the prosecution? A state prosecutor to handle the case cannot
possibly be designated by the Secretary of Justice who does not believe that there is a basis for prosecution nor can the
fiscal be expected to handle the prosecution of the case thereby defying the superior order of the Secretary of Justice.
The answer is simple. The role of the fiscal or prosecutor as We all know is to see that justice is done and not necessarily
to secure the conviction of the person accused before the Courts. Thus, in spite of his opinion to the contrary, it is the
duty of the fiscal to proceed with the presentation of evidence of the prosecution to the Court to enable the Court to
arrive at its own independent judgment as to whether the accused should be convicted or acquitted. The fiscal should
not shirk from the responsibility of appearing for the People of the Philippines even under such circumstances much
less should he abandon the prosecution of the case leaving it to the hands of a private prosecutor for then the entire
proceedings will be null and void. The least that the fiscal should do is to continue to appear for the prosecution
although he may turn over the presentation of the evidence to the private prosecutor but still under his direction and
control.
The rule therefore in this jurisdiction is that once a complaint or information is filed in Court any disposition of the case
as to its dismissal or the conviction or acquittal of the accused rests in the sound discretion of the Court. Although the
fiscal retains the direction and control of the prosecution of criminal cases even while the case is already in Court he
cannot impose his opinion on the trial court. The Court is the best and sole judge on what to do with the case before it.
The determination of the case is within its exclusive jurisdiction and competence. A motion to dismiss the case filed by
the fiscal should be addressed to the Court who has the option to grant or deny the same. It does not matter if this is
27
done before or after the arraignment of the accused or that the motion was filed after a reinvestigation or upon
instructions of the Secretary of Justice who reviewed the records of the investigation.43 (Emphasis supplied, citations
omitted)
The doctrine in Crespo was reiterated in Mayor Balindong v. Court of Appeals,44 where this court reminded the
Department of Justice Secretary to refrain from entertaining petitions for review when the case is already pending with
this court:
[I]n order to avoid a situation where the opinion of the Secretary of Justice who reviewed the action of the fiscal may be
disregarded by the trial court, the Secretary of Justice should, as far as practicable, refrain from entertaining a petition
for review or appeal from the action of the fiscal, when the complaint or information has already been filed in the Court.
The matter should be left entirely for the determination of the Court.45
The trial court should have proceeded with respondents Dela Peña-Reyes and Manalastas’ arraignment after the 60-day
period from the filing of the Petition for Review before the Department of Justice on March 8, 2005. It was only on
September 13, 2010 that the temporary restraining order was issued by the Court of Appeals. The trial court erred when
it did not act on the criminal case during the interim period. It had full control and direction of the case. As Judge
Mogul reasoned in denying the motion to dismiss in Crespo, failure to proceed with the arraignment "disregards the
requirements of due process [and] erodes the Court’s independence and integrity."46
II
According to ABS-CBN, the Court of Appeals erred in finding that: a motion for reconsideration was not necessary
before a petition for certiorari could be filed; the Department of Justice Secretary committed errors of jurisdiction since
the Agra Resolution was issued within its authority and in accordance with settled laws and jurisprudence; and
respondents were not liable for copyright infringement.
In its assailed Decision, the Court of Appeals found that respondents committed a procedural error when they failed to
file a motion for reconsideration before filing the Petition for Certiorari. However, the Court of Appeals held that a
motion for reconsideration was unnecessary since the Agra Resolution was a patent nullity and it would have been
useless under the circumstances: Given that a reading of the assailed Resolution and the instant records readily reveals
errors of jurisdiction on the part of respondent Secretary, direct judicial recourse is warranted under the circumstances.
Aside from the fact that said Resolution is a patent nullity having been issued in grave abuse of discretion amounting to
lack or excess of jurisdiction, the filing of a motion for reconsideration is evidently useless on account of the fact that
the issues and arguments before this Court have already been duly raised and accordingly delved into by respondent
Secretary in his disposition of the petition a quo.47 (Emphasis in the original)
In Elma v. Jacobi,48 this court ruled that a petition for certiorari under Rule 65 of the Rules of Court is proper when
assailing adverse resolutions of the Department of Justice stemming from the determination of probable
cause.49However, grave abuse of discretion must be alleged.50
In Sanrio Company Limited v. Lim,51 this court stressed the prosecutor’s role in determining probable cause. Judicial
review will only lie when it is shown that the prosecutor acted with grave abuse of discretion amounting to lack or
excess of jurisdiction:
A prosecutor alone determines the sufficiency of evidence that will establish probable cause justifying the filing of a
criminal information against the respondent. By way of exception, however, judicial review is allowed where respondent
has clearly established that the prosecutor committed grave abuse of discretion. Otherwise stated, such review is
appropriate only when the prosecutor has exercised his discretion in an arbitrary, capricious, whimsical or despotic
28
manner by reason of passion or personal hostility, patent and gross enough to amount to an evasion of a positive duty
or virtual refusal to perform a duty enjoined by law.52 (Citations omitted)
Grave abuse of discretion refers to:
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must
be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility
and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.53
Resorting to certiorari requires that there be there be "no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law[,]"54 such as a motion for reconsideration. Generally, "a motion for reconsideration is a condition
sine qua non before a petition for certiorari may lie, its purpose being to grant an opportunity for the [tribunal or
officer] to correct any error attributed to it by a re-examination of the legal and factual circumstances of the
case."55 However, exceptions to the rule exist:
(a) where the order is a patent nullity, as where the Court a quo had no jurisdiction; (b) where the questions raised in
the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised
and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is
perishable; (d) where, under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was
deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial Court is improbable; (g) where the proceedings in the lower
court are a nullity for lack of due process; (h) where the proceedings was ex parte or in which the petitioner had no
opportunity to object; and (i) where the issue raised is one purely of law or where public interest is involved. 56(Emphasis
in the original, citations omitted)
As argued by respondents, "[a] second motion for reconsideration would have been useless and futile since the
D[epartment] [of] J[ustice] had already passed upon the same issues twice."57 Equally pressing under the circumstances
was the need to resolve the matter, as the Information’s filing would lead to respondents’ imminent arrest.58
Moreover, Department of Justice Department Circular No. 70 dated July 3, 2000, or the 2000 NPS Rules on Appeal,
provides that no second motion for reconsideration of the Department of Justice Secretary’s resolution shall be
entertained:
SECTION 13. Motion for reconsideration. The aggrieved party may file a motion for reconsideration within a non-
extendible period of ten (10) days from receipt of the resolution on appeal, furnishing the adverse party and the
Prosecution Office concerned with copies thereof and submitting proof of such service. No second or further motion for
reconsideration shall be entertained.
The Agra Resolution was the result of respondents’ Motion for Reconsideration assailing the Gonzalez Resolution. To
file a motion for reconsideration of the Agra Resolution would be superfluous. Respondents were, therefore, correct in
filing the Petition for Certiorari of the Agra Resolution before the Court of Appeals.
III
The Court of Appeals ruled that Secretary Agra committed errors of jurisdiction, which then required the grant of the
writ of certiorari:
29
So viewed, by ordering the filing of information without proof that probable cause exists to charge petitioners with a
crime, respondent Secretary clearly committed an error of jurisdiction thus warranting the issuance of the writ of
certiorari. Surely, probable cause cannot be had when the very provisions of the statute exculpates criminal liability in
cases classified as fair use of copyrighted materials. The fact that they admittedly used the Reuters live video feed is not,
as a matter of course, tantamount to copyright infringement that would justify the filing of an information against the
petitioners.59
Error of jurisdiction must be distinguished from error of judgment:
A line must be drawn between errors of judgment and errors of jurisdiction. An error of judgment is one which the
court may commit in the exercise of its jurisdiction. An error of jurisdiction renders an order or judgment void or
voidable. Errors of jurisdiction are reviewable on certiorari; errors of judgment, only by appeal.60
In People v. Hon. Sandiganbayan61:
An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error of jurisdictionis one
where the act complained of was issued by the court without or in excess of jurisdiction, or with grave abuse of
discretion, which is tantamount to lack or in excess of jurisdiction and which error is correctible only by the
extraordinary writ of certiorari. Certiorari will not be issued to cure errors of the trial court in its appreciation of the
evidence of the parties, or its conclusions anchored on the said findings and its conclusions of law.62 (Emphasis
supplied)
This court has adopted a deferential attitude towards review of the executive’s finding of probable cause.63 This is based
"not only upon the respect for the investigatory and [prosecutorial] powers granted by the Constitution to the executive
department but upon practicality as well."64 Review of the Department of Justice Secretary’s decision or resolution will
be allowed only when grave abuse of discretion is alleged:
The full discretionary authority to determine probable cause in a preliminary investigation to ascertain sufficient ground
for the filing of information rests with the executive branch. Hence, judicial review of the resolution of the Secretary of
Justice is limited to a determination whether there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction. Courts cannot substitute the executive branch’s judgment.
....
It is only where the decision of the Justice Secretary is tainted with grave abuse of discretion amounting to lack or
excess of jurisdiction that the Court of Appeals may take cognizance of the case in a petition for certiorari under Rule 65
of the Revised Rules of Civil Procedure. The Court of Appeals decision may then be appealed to this Court by way of a
petition for review on certiorari.65 (Emphasis supplied, citations omitted)
In this case, it must be shown that Secretary Agra exceeded his authority when he reversed the findings of Secretary
Gonzalez. This court must determine whether there is probable cause to file an information for copyright infringement
under the Intellectual Property Code.
IV
Probable cause pertains to "such facts as are sufficient to engender a well-founded belief that a crime has been
committed and that respondent is probably guilty thereof."66 Preliminary investigation is the inquiry or proceeding to
determine whether there is probable cause.67
30
In Webb v. De Leon,68 this court ruled that determination of probable cause during preliminary investigation does not
require trial-like evaluation of evidence since existence of probable cause does not equate to guilt:
It ought to be emphasized that in determining probable cause, the average man weighs facts and circumstances
without resorting to the calibrations of our technical rules of evidence of which his knowledge is nil. Rather, he relies on
the calculus of common sense of which all reasonable men have an abundance.
....
. . . A finding of probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt.69
In Reyes v. Pearlbank Securities, Inc.,70 finding probable cause is not equivalent to finding with moral certainty that the
accused committed the crime:
A finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been
committed by the suspects. It need not be based on clear and convincing evidence of guilt, not on evidence
establishing guilt beyond reasonable doubt, and definitely not on evidence establishing absolute certainty of guilt. In
determining probable cause, the average man weighs facts and circumstances without resorting to the calibrations of
the rules of evidence of which he has no technical knowledge. He relies on common sense.71
During preliminary investigation, a public prosecutor does not adjudicate on the parties’ rights, obligations, or
liabilities.72
In the recent case of Estrada v. Office of the Ombudsman, et al.,73 we reiterated Webb on the determination of probable
cause during preliminary investigation and traced the history of probable cause as borrowed from American
jurisprudence:
The purpose in determining probable cause is to make sure that the courts are not clogged with weak cases that will
only be dismissed, as well as to spare a person from the travails of a needless prosecution.
....
. . . In the United States, from where we borrowed the concept of probable cause, the prevailing definition of probable
cause is this:
In dealing with probable cause, however, as the very name implies, we deal with probabilities. These are not technical;
they are the factual and practical considerations of everyday life on which reasonable and prudent men, not legal
technicians, act. The standard of proof is accordingly correlative to what must be proved.
"The substance of all the definitions" of probable cause "is a reasonable ground for belief of guilt." McCarthy v. De
Armit, 99 Pa. St. 63, 69, quoted with approval in the Carroll opinion. 267 U. S. at 161. And this "means less than evidence
which would justify condemnation" or conviction, as Marshall, C. J., said for the Court more than a century ago in Locke
v. United States, 7 Cranch 339, 348. Since Marshall’s time, at any rate, it has come to mean more than bare suspicion:
Probable cause exists where "the facts and circumstances within their [the officers’] knowledge and of which they had
reasonably trustworthy information [are] sufficient in themselves to warrant a man of reasonable caution in the belief
that" an offense has been or is being committed. Carroll v. United States, 267 U. S. 132, 162.
These long-prevailing standards seek to safeguard citizens from rash and unreasonable interferences with privacy and
from unfounded charges of crime. They also seek to give fair leeway for enforcing the law in the community’s
31
protection. Because many situations which confront officers in the course of executing their duties are more or less
ambiguous, room must be allowed for some mistakes on their part. But the mistakes must be those of reasonable men,
acting on facts leading sensibly to their conclusions of probability. The rule of probable cause is a practical, non
technical conception affording the best compromise that has been found for accommodating these often opposing
interests. Requiring more would unduly hamper law enforcement. To allow less would be to leave law-abiding citizens
at the mercy of the officers’ whim or caprice.
In the Philippines, there are four instances in the Revised Rules of Criminal Procedure where probable cause is needed
to be established:
(1) In Sections 1 and 3 of Rule 112: By the investigating officer, to determine whether there is sufficient ground to
engender a well-founded belief that a crime has been committed and the respondent is probably guilty thereof,
and should be held for trial. A preliminary investigation is required before the filing of a complaint or
information for an offense where the penalty prescribed by law is at least four years, two months and one day
without regard to the fine;
(2) In Sections 6 and 9 of Rule 112: By the judge, to determine whether a warrant of arrest or a commitment
order, if the accused has already been arrested, shall be issued and that there is a necessity of placing the
respondent under immediate custody in order not to frustrate the ends of justice;
(3) In Section 5(b) of Rule 113:By a peace officer or a private person making a warrantless arrest when an offense
has just been committed, and he has probable cause to believe based on personal knowledge of facts or
circumstances that the person to be arrested has committed it; and
(4) In Section 4 of Rule 126: By the judge, to determine whether a search warrant shall be issued, and only upon
probable cause in connection with one specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized which may be anywhere in the Philippines.
In all these instances, the evidence necessary to establish probable cause is based only on the likelihood, or probability,
of guilt.74
Estrada also highlighted that a "[p]reliminary investigation is not part of the criminal action. It is merely preparatory and
may even be disposed of in certain situations."75
To determine whether there is probable cause that respondents committed copyright infringement, a review of the
elements of the crime, including the existing facts, is required.
ABS-CBN claims that news footage is subject to copyright and prohibited use of copyrighted material is punishable
under the Intellectual Property Code. It argues that the new footage is not a "newsworthy event" but "merely an
account of the arrival of Angelo dela Cruz in the Philippines — the latter being the newsworthy event":76
To be clear, it is the event itself or the arrival of Angelo dela Cruz which is not copyrightable because that is the
newsworthy event. However, any footage created from the event itself, in this case the arrival of Angelo dela Cruz, are
intellectual creations which are copyrightable. Thus, the footage created by ABS-CBN during the arrival of Angelo dela
Cruz, which includes the statements of Dindo Amparo, are copyrightable and protected by the laws on copyright.77
32
On the other hand, respondents argue that ABS-CBN’s news footage of Angelo dela Cruz’s arrival is not copyrightable
or subject to protection:
Certainly, the arrival of Angelo [d]ela Cruz, which aroused public attention and the consciousness of the Filipino people
with regard to their countrymen, OFWs working in foreign countries and how the Philippine government responds to
the issues concerning them, is "news". There is no ingenuity or inventiveness added in the said news footage. The video
footage of this "news" is not copyrightable by any legal standard as facts of everyday life depicted in the news and
items of press information is part of the public domain.78 (Emphasis in the original)
The news footage is copyrightable.
The Intellectual Property Code is clear about the rights afforded to authors of various kinds of work. Under the Code,
"works are protected by the sole fact of their creation, irrespective of their mode or form of expression, as well as of
their content, quality and purpose."79 These include "[a]udiovisual works and cinematographic works and works
produced by a process analogous to cinematography or any process for making audiovisual recordings."80
Contrary to the old copyright law,81 the Intellectual Property Code does not require registration of the work to fully
recover in an infringement suit. Nevertheless, both copyright laws provide that copyright for a work is acquired by an
intellectual creator from the moment of creation.82
It is true that under Section 175 of the Intellectual Property Code, "news of the day and other miscellaneous facts having
the character of mere items of press information" are considered unprotected subject matter.83 However, the Code
does not state that expression of the news of the day, particularly when it underwent a creative process, is not entitled
to protection.
An idea or event must be distinguished from the expression of that idea or event. An idea has been likened to a ghost
in that it "must be spoken to a little before it will explain itself."84 It is a concept that has eluded exact legal
definition.85To get a better grasp of the idea/expression dichotomy, the etymology of the term "idea" is traced:
The word "idea" is derived from a Greek term, meaning "a form, the look or appearance of a thing as opposed to its
reality, from idein, to see." In the Timaeus, Plato saw ideas as eternal paradigms, independent objects to which the
divine demiurge looks as patterns in forming the world. This was later modified to the religious conception of ideas as
the thoughts of God. "It is not a very long step to extend the term ‘idea’ to cover patterns, blueprints, or plans in
anyone's mind, not only in God’s." The word entered the French and English vernacular in the 1600s and possessed two
meanings. The first was the Platonic meaning of a perfect exemplar or paradigm. The second, which probably has its
origin with Descartes, is of a mental concept or image or, more broadly, any object of the mind when it is active.
Objects of thought may exist independently. The sun exists (probably) before and after you think of it. But it is also
possible to think of things that have never existed, such as a unicorn or Pegasus. John Locke defined ideas very
comprehensively, to include: all objects of the mind. Language was a way of translating the invisible, hidden ideas that
make up a person’s thoughts into the external, perceptible world of articulate sounds and visible written symbols that
others can understand.86 (Citations omitted) There is no one legal definition of "idea" in this jurisdiction. The term "idea"
is mentioned only once in the Intellectual Property Code.87 In Joaquin, Jr. v. Drilon,88 a television format (i.e., a dating
show format) is not copyrightable under Section 2 of Presidential Decree No. 49;89 it is a mere concept:
P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and not to concepts. The
copyright does not extend to an idea, procedure, process, system, method of operation, concept, principle, or
discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. Thus, the new
INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:
33
SEC. 175. Unprotected Subject Matter.—Notwithstanding the provisions of Sections 172 and 173, no protection shall
extend, under this law, to any idea, procedure, system, method or operation, concept, principle, discovery or mere data
as such, even if they are expressed, explained, illustrated or embodied in a work; news of the day and other
miscellaneous facts having the character of mere items of press information; or any official text of a legislative,
administrative or legal nature, as well as any official translation thereof.
What then is the subject matter of petitioners’ copyright? This Court is of the opinion that petitioner BJPI’s copyright
covers audio-visual recordings of each episode of Rhoda and Me, as falling within the class of works mentioned in P.D.
49, §2(M),to wit:
Cinematographic works and works produced by a process analogous to cinematography or any process for making
audio-visual recordings;
The copyright does not extend to the general concept or format of its dating game show. Accordingly, by the very
nature of the subject of petitioner BJPI’s copyright, the investigating prosecutor should have the opportunity to
compare the videotapes of the two shows.
Mere description by words of the general format of the two dating game shows is insufficient; the presentation of the
master videotape in evidence was indispensable to the determination of the existence of probable cause. As aptly
observed by respondent Secretary of Justice:
A television show includes more than mere words can describe because it involves a whole spectrum of visuals and
effects, video and audio, such that no similarity or dissimilarity may be found by merely describing the general
copyright/format of both dating game shows.90 (Emphasis supplied, citations omitted)
Ideas can be either abstract or concrete.91 It is the concrete ideas that are generally referred to as expression:
The words "abstract" and "concrete" arise in many cases dealing with the idea/expression distinction. The Nichols court,
for example, found that the defendant’s film did not infringe the plaintiff’s play because it was "too generalized an
abstraction from what plaintiff wrote . . . only a part of her ideas." In Eichel v. Marcin, the court said that authors may
exploit facts, experiences, field of thought, and general ideas found in another’s work, "provided they do not
substantially copy a concrete form, in which the circumstances and ideas have been developed, arranged, and put into
shape." Judge Hand, in National Comics Publications, Inc. v. Fawcett Publications, Inc. said that "no one infringes, unless
he descends so far into what is concrete as to invade. . . ‘expression.’"
These cases seem to be distinguishing "abstract" ideas from "concrete" tangible embodiments of these abstractions that
may be termed expression. However, if the concrete form of a work means more than the literal expression contained
within it, it is difficult to determine what is meant by "concrete." Webster's New Twentieth Century Dictionary of the
English Language provides several meanings for the word concrete. These include: "having a material, perceptible
existence; of, belonging to, or characterized by things or events that can be perceived by the senses; real; actual;" and
"referring to a particular; specific, not general or abstract."92
In Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,93 this court, citing the American case of Baker v. Selden,
distinguished copyright from patents and illustrated how an idea or concept is different from the expression of that
idea:
In the oft-cited case of Baker vs. Selden, 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.
34
The defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted book. The US Supreme Court
ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be
the subject of a copyright; but, then, it is claimed only as a book. x x x But there is a clear distinction between the books,
as such, and the art, which it is, intended to illustrate. The mere statement of the proposition is so evident that it
requires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of
bookkeeping.
A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs or
watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines
to produce the effect of perspective, would be the subject of copyright; but no one would contend that the copyright of
the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the book, if not
pirated from other works, would be valid without regard to the novelty or want of novelty of its subject matter. The
novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been
officially made, would be a surprise and a fraud upon the public. That is the province of letters patent, not of copyright.
The claim to an invention of discovery of an art or manufacture must be subjected to the examination of the Patent
Office before an exclusive right therein can be obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just
enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the
discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no exclusive right to
the manufacture and sale of the medicine; he gives that to the public. If he desires to acquire such exclusive right, he
must obtain a patent for the mixture as a new art, manufacture or composition of matter. He may copyright his book, if
he pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other
inventions or discoveries.
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.
....
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey
instruction in the art, any person may practice and use the art itself which he has described and illustrated therein. The
use of the art is a totally different thing from a publication of the book explaining it. The copyright of a book on
bookkeeping cannot secure the exclusive right to make, sell and use account books prepared upon the plan set forth in
such book. Whether the art might or might not have been patented, is a question, which is not before us. It was not
patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by
the peculiar nature of the art described in the books, which have been made the subject of copyright. In describing the
art, the illustrations and diagrams employed happened to correspond more closely than usual with the actual work
performed by the operator who uses the art. x x x The description of the art in a book, though entitled to the benefit of
copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of
the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by
letters patent."94 (Emphasis supplied)
35
News or the event itself is not copyrightable. However, an event can be captured and presented in a specific medium.
As recognized by this court in Joaquin, television "involves a whole spectrum of visuals and effects, video and
audio."95 News coverage in television involves framing shots, using images, graphics, and sound effects.96 It involves
creative process and originality. Television news footage is an expression of the news.
In the United States, a line of cases dwelt on the possibility of television newscasts to be copyrighted. 97 Most of these
cases focused on private individuals’ sale or resale of tapes of news broadcasts. Conflicting decisions were rendered by
its courts. Noteworthy, however, is the District Court’s pronouncement in Pacific & Southern Co. v. Duncan,98 which
involves a News Monitoring Service’s videotaping and sale of WXIA-TV’s news broadcasts:
It is axiomatic that copyright protection does not extend to news "events" or the facts or ideas which are the subject of
news reports. Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1368 (5th Cir. 1981); Wainwright Securities, Inc. v. Wall
Street Transcript Corp., 558 F.2d 91, 95 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978). But
it is equally well-settled that copyright protection does extend to the reports themselves, as distinguished from the
substance of the information contained in the reports. Wainwright, 558 F.2d at 95; International News Service v.
Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918); see Chicago Record-Herald Co. v. Tribune Assn., 275 F.
797 (7th Cir.1921); 1 Nimmer on Copyright § 2.11[B] (1983). Copyright protects the manner of expression of news reports,
"the particular form or collocation of words in which the writer has communicated it." International News Service, 248
U.S. at 234, 39 S.Ct. at 70. Such protection extends to electronic news reports as well as written reports. See17 U.S.C. §
102(a) (5), (6), and (7); see also Iowa State University Research Foundations, Inc. v. American Broadcasting Cos., 621 F.2d
57, 61 (2d Cir. 1980).99 (Emphasis supplied)
The idea/expression dichotomy has long been subject to debate in the field of copyright law. Abolishing the dichotomy
has been proposed, in that non-protectibility of ideas should be re-examined, if not stricken, from decisions and the
law:
If the underlying purpose of the copyright law is the dual one expressed by Lord Mansfield, the only excuse for the
continuance of the idea-expression test as a judicial standard for determining protectibility would be that it was or
could be a truly useful method of determining the proper balance between the creator’s right to profit from his work
and the public's right that the "progress of the arts not be retarded."
. . . [A]s used in the present-day context[,] the dichotomy has little or no relationship to the policy which it should
effectuate. Indeed, all too often the sweeping language of the courts regarding the non-protectibility of ideas gives the
impression that this is of itself a policy of the law, instead of merely a clumsy and outdated tool to achieve a much more
basic end.100
The idea/expression dichotomy is a complex matter if one is trying to determine whether a certain material is a copy of
another.101 This dichotomy would be more relevant in determining, for instance, whether a stage play was an
infringement of an author’s book involving the same characters and setting. In this case, however, respondents
admitted that the material under review — which is the subject of the controversy — is an exact copy of the original.
Respondents did not subject ABS-CBN’s footage to any editing of their own. The news footage did not undergo any
transformation where there is a need to track elements of the original.
Having established the protectible nature of news footage, we now discuss the concomitant rights accorded to authors.
The authors of a work are granted several rights in relation to it, including copyright or economic rights:
SECTION 177. Copyright or Economic Rights. — Subject to the provisions of Chapter VIII, copyright or economic rights
shall consist of the exclusive right to carry out, authorize or prevent the following acts:
36
177.1. Reproduction of the work or substantial portion of the work;
177.2. Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work;
177.3. The first public distribution of the original and each copy of the work by sale or other forms of transfer of
ownership;
177.4. Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound
recording, a computer program, a compilation of data and other materials or a musical work in graphic form,
irrespective of the ownership of the original or the copy which is the subject of the rental; (n)
177.5. Public display of the original or a copy of the work;
177.6. Public performance of the work; and
177.7. Other communication to the public of the work.(Sec. 5, P. D. No. 49a) (Emphasis supplied)
Under Section 211 of the Intellectual Property Code, broadcasting organizations are granted a more specific set of rights
called related or neighboring rights:
SECTION 211. Scope of Right. — Subject to the provisions of Section 212, broadcasting organizations shall enjoy the
exclusive right to carry out, authorize or prevent any of the following acts:
211.1. The rebroadcasting of their broadcasts;
211.2. The recording in any manner, including the making of films or the use of video tape, of their broadcasts
for the purpose of communication to the public of television broadcasts of the same; and
211.3. The use of such records for fresh transmissions or for fresh recording. (Sec. 52, P.D. No. 49) (Emphasis
supplied)
Section 212 of the Code provides:
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts referred to in those
Sections are related to:
212.1. The use by a natural person exclusively for his own personal purposes;
212.2. Using short excerpts for reporting current events;
212.3. Use solely for the purpose of teaching or for scientific research; and
212.4. Fair use of the broadcast subject to the conditions under Section 185. (Sec. 44, P.D. No. 49a)
The Code defines what broadcasting is and who broadcasting organizations include:
37
202.7. "Broadcasting" means the transmission by wireless means for the public reception of sounds or of images
or of representations thereof; such transmission by satellite is also "broadcasting" where the means for
decrypting are provided to the public by the broadcasting organization or with its consent;
202.8. "Broadcasting organization" shall include a natural person or a juridical entity duly authorized to engage
in broadcasting[.]
Developments in technology, including the process of preserving once ephemeral works and disseminating them,
resulted in the need to provide a new kind of protection as distinguished from copyright.102 The designation
"neighboring rights" was abbreviated from the phrase "rights neighboring to copyright."103 Neighboring or related
rights are of equal importance with copyright as established in the different conventions covering both kinds of
rights.104
Several treaties deal with neighboring or related rights of copyright.105 The most prominent of these is the "International
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations" (Rome
Convention).106
The Rome Convention protects the rights of broadcasting organizations in relation to their broadcasts. Article XIII of the
Rome Convention enumerates the minimum rights accorded to broadcasting organizations:
Article 13
Minimum Rights for Broadcasting Organizations
Broadcasting organisations shall enjoy the right to authorize or prohibit:
(a) the rebroadcasting of their broadcasts;
(b) the fixation of their broadcasts;
(c) the reproduction:
(i) of fixations, made without their consent, of their broadcasts;
(ii) of fixations, made in accordance with the provisions of Article 15, of their broadcasts, if the
reproduction is made for purposes different from those referred to in those provisions;
(d) the communication to the public of their television broadcasts if such communication is made in places
accessible to the public against payment of an entrance fee; it shall be a matter for the domestic law of the
State where protection of this right is claimed to determine the conditions under which it may be exercised.
With regard to the neighboring rights of a broadcasting organization in this jurisdiction, this court has discussed the
difference between broadcasting and rebroadcasting:
Section 202.7 of the IP Code defines broadcasting as "the transmission by wireless means for the public reception of
sounds or of images or of representations thereof; such transmission by satellite is also ‘broadcasting’ where the means
for decrypting are provided to the public by the broadcasting organization or with its consent."
38
On the other hand, rebroadcasting as defined in Article 3(g) of the International Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations, otherwise known as the 1961 Rome Convention,
of which the Republic of the Philippines is a signatory, is "the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization."
....
Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one broadcasting organization of
the broadcast of another broadcasting organization." The Working Paper prepared by the Secretariat of the Standing
Committee on Copyright and Related Rights defines broadcasting organizations as "entities that take the financial and
editorial responsibility for the selection and arrangement of, and investment in, the transmitted content."107 (Emphasis in
the original, citations omitted)
Broadcasting organizations are entitled to several rights and to the protection of these rights under the Intellectual
Property Code. Respondents’ argument that the subject news footage is not copyrightable is erroneous. The Court of
Appeals, in its assailed Decision, correctly recognized the existence of ABS-CBN’s copyright over the news footage:
Surely, private respondent has a copyright of its news coverage. Seemingly, for airing said video feed, petitioner GMA is
liable under the provisions of the Intellectual Property Code, which was enacted purposely to protect copyright owners
from infringement.108
News as expressed in a video footage is entitled to copyright protection. Broadcasting organizations have not only
copyright on but also neighboring rights over their broadcasts. Copyrightability of a work is different from fair use of a
work for purposes of news reporting.
VI
ABS-CBN assails the Court of Appeals’ ruling that the footage shown by GMA-7 falls under the scope of Section 212.2
and 212.4 of the Intellectual Property Code:
The evidence on record, as well as the discussions above, show that the footage used by[respondents] could hardlybe
characterized as a short excerpt, as it was aired over one and a half minutes.
Furthermore, the footage used does not fall under the contemplation of Section 212.2 of the Intellectual Property Code.
A plain reading of the provision would reveal that copyrighted material referred to in Section 212 are short portions of
an artist’s performance under Section 203, or a producer’s sound recordings under Sections 208 and 209. Section 212
does not refer to actual use of video footage of another as its own.
The Angelo dela Cruz footage does not fall under the rule on Section 212.4 of the Intellectual Property Code on fair use
of the broadcast.
....
In determining fair use, several factors are considered, including the nature of the copyrighted work, and the amount
and substantiality of the person used in relation to the copyrighted work as a whole.
In the business of television news reporting, the nature of the copyrighted work or the video footages, are such that,
footage created, must be a novelty to be a good report. Thus, when the . . . Angelo dela Cruz footage was used by
[respondents], the novelty of the footage was clearly affected.
39
Moreover, given that a substantial portion of the Angelo dela Cruz footage was utilized by GMA-7 for its own, its use
can hardly be classified as fair use.
Hence, [respondents] could not be considered as having used the Angelo dela Cruz [footage] following the provisions
on fair use.
It is also worthy to note that the Honorable Court of Appeals seem to contradict itself when it relied on the provisions of
fair use in its assailed rulings considering that it found that the Angelo dela Cruz footage is not copyrightable, given
that the fair use presupposes an existing copyright. Thus, it is apparent that the findings of the Honorable Court of
Appeals are erroneous and based on wrong assumptions.109 (Underscoring in the original)
On the other hand, respondents counter that GMA-7’s use of ABS-CBN’s news footage falls under fair use as defined in
the Intellectual Property Code. Respondents, citing the Court of Appeals Decision, argue that a strong statutory defense
negates any finding of probable cause under the same statute.110 The Intellectual Property Code provides that fair use
negates infringement.
Respondents point out that upon seeing ABS-CBN’s reporter Dindo Amparo on the footage, GMA-7 immediately shut
off the broadcast. Only five (5) seconds passed before the footage was cut. They argue that this shows that GMA-7 had
no prior knowledge of ABS-CBN’s ownership of the footage or was notified of it. They claim that the Angelo dela Cruz
footage is considered a short excerpt of an event’s "news" footage and is covered by fair use.111
Copyright protection is not absolute.112 The Intellectual Property Code provides the limitations on copyright:
CHAPTER VIII
LIMITATIONS ON COPYRIGHT
Section 184. Limitations on Copyright. - 184.1. Notwithstanding the provisions of Chapter V, the following acts shall not
constitute infringement of copyright:
....
184.2. The provisions of this section shall be interpreted in such a way as to allow the work to be used in a manner
which does not conflict with the normal exploitation of the work and does not unreasonably prejudice the right holder's
legitimate interests.
....
CHAPTER XV
LIMITATIONS ON PROTECTION
Section 212. Limitations on Rights. - Sections 203, 208 and 209 shall not apply where the acts referred to in those
Sections are related to:
....
212.2. Using short excerpts for reporting current events;
....
40
212.4. Fair use of the broadcast subject to the conditions under Section 185.(Sec. 44, P.D. No. 49a) (Emphasis supplied)
The determination of what constitutes fair use depends on several factors. Section 185 of the Intellectual Property Code
states:
SECTION 185. Fair Use of a Copyrighted Work. —
185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for
classroom use, scholarship, research, and similar purposes is not an infringement of copyright. . . . In determining
whether the use made of a work in any particular case is fair use, the factors to be considered shall include:
a. The purpose and character of the use, including whether such use is of a commercial nature or is for non-
profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work. Respondents allege that
the news footage was only five (5) seconds long, thus falling under fair use. ABS-CBN belies this contention and
argues that the footage aired for two (2) minutes and 40 seconds.113 According to the Court of Appeals, the
parties admitted that only five (5) seconds of the news footage was broadcasted by GMA-7.114
This court defined fair use as "aprivilege to use the copyrighted material in a reasonable manner without the consent of
the copyright owner or as copying the theme or ideas rather than their expression."115 Fair use is an exception to the
copyright owner’s monopoly of the use of the work to avoid stifling "the very creativity which that law is designed to
foster."116
Determining fair use requires application of the four-factor test. Section 185 of the Intellectual Property Code lists four
(4) factors to determine if there was fair use of a copyrighted work:
a. The purpose and character of the use, including whether such use is of a commercial nature or is for non-
profit educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value of the copyrighted work.
First, the purpose and character of the use of the copyrighted material must fall under those listed in Section 185, thus:
"criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and
similar purposes."117 The purpose and character requirement is important in view of copyright’s goal to promote
creativity and encourage creation of works. Hence, commercial use of the copyrighted work can be weighed against fair
use.
The "transformative test" is generally used in reviewing the purpose and character of the usage of the copyrighted
work.118 This court must look into whether the copy of the work adds "new expression, meaning or message" to
41
transform it into something else.119 "Meta-use" can also occur without necessarily transforming the copyrighted work
used.120
Second, the nature of the copyrighted work is significant in deciding whether its use was fair. If the nature of the work is
more factual than creative, then fair use will be weighed in favor of the user.
Third, the amount and substantiality of the portion used is important to determine whether usage falls under fair use.
An exact reproduction of a copyrighted work, compared to a small portion of it, can result in the conclusion that its use
is not fair. There may also be cases where, though the entirety of the copyrighted work is used without consent, its
purpose determines that the usage is still fair.121 For example, a parody using a substantial amount of copyrighted work
may be permissible as fair use as opposed to a copy of a work produced purely for economic gain. Lastly, the effect of
the use on the copyrighted work’s market is also weighed for or against the user. If this court finds that the use had or
will have a negative impact on the copyrighted work’s market, then the use is deemed unfair.
The structure and nature of broadcasting as a business requires assigned values for each second of broadcast or
airtime. In most cases, broadcasting organizations generate revenue through sale of time or timeslots to advertisers,
which, in turn, is based on market share:122 Once a news broadcast has been transmitted, the broadcast becomes
relatively worthless to the station. In the case of the aerial broadcasters, advertising sales generate most of the profits
derived from news reports. Advertising rates are, in turn, governed by market share. Market share is determined by the
number of people watching a show at any particular time, relative to total viewers at that time. News is by nature time-
limited, and so re-broadcasts are generally of little worth because they draw few viewers. Newscasts compete for
market share by presenting their news in an appealing format that will capture a loyal audience. Hence, the primary
reason for copyrighting newscasts by broadcasters would seem to be to prevent competing stations from
rebroadcasting current news from the station with the best coverage of a particular news item, thus misappropriating a
portion of the market share.
Of course, in the real world there are exceptions to this perfect economic view. However, there are also many caveats
with these exceptions. A common exception is that some stations rebroadcast the news of others. The caveat is that
generally, the two stations are not competing for market share. CNN, for example, often makes news stories available to
local broadcasters. First, the local broadcaster is often not affiliated with a network (hence its need for more
comprehensive programming), confining any possible competition to a small geographical area. Second, the local
broadcaster is not in competition with CNN. Individuals who do not have cable TV (or a satellite dish with decoder)
cannot receive CNN; therefore there is no competition. . . . Third, CNN sells the right of rebroadcast to the local stations.
Ted Turner, owner of CNN, does not have First Amendment freedom of access argument foremost on his mind. (Else he
would give everyone free cable TV so everyone could get CNN.) He is in the business for a profit. Giving away resources
does not a profit make.123 (Emphasis supplied)
The high value afforded to limited time periods is also seen in other media. In social media site Instagram, users are
allowed to post up to only 15 seconds of video.124 In short-video sharing website Vine,125 users are allowed a shorter
period of six (6) seconds per post. The mobile application 1 Second Everyday takes it further by capturing and stitching
one (1) second of video footage taken daily over a span of a certain period.126
Whether the alleged five-second footage may be considered fair use is a matter of defense. We emphasize that the
case involves determination of probable cause at the preliminary investigation stage. Raising the defense of fair use
does not automatically mean that no infringement was committed. The investigating prosecutor has full discretion to
evaluate the facts, allegations, and evidence during preliminary investigation. Defenses raised during preliminary
investigation are subject to further proof and evaluation before the trial court. Given the insufficiency of available
evidence, determination of whether the Angelo dela Cruz footage is subject to fair use is better left to the trial court
where the proceedings are currently pending. GMA-7’s rebroadcast of ABS-CBN’s news footage without the latter’s
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consent is not an issue. The mere act of rebroadcasting without authority from the owner of the broadcast gives rise to
the probability that a crime was committed under the Intellectual Property Code.
VII
Respondents cannot invoke the defense of good faith to argue that no probable cause exists.
Respondents argue that copyright infringement is malum in se, in that "[c]opying alone is not what is being prohibited,
but its injurious effect which consists in the lifting from the copyright owners’ film or materials, that were the result of
the latter’s creativity, work and productions and without authority, reproduced, sold and circulated for commercial use
to the detriment of the latter."127
Infringement under the Intellectual Property Code is malum prohibitum. The Intellectual Property Code is a special law.
Copyright is a statutory creation:
Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by the
statute, and not simply a pre-existing right regulated by the statute. Being a statutory grant, the rights are only such as
the statute confers, and may be obtained and enjoyed only with respect to the subjects and by the persons, and on
terms and conditions specified in the statute.128
The general rule is that acts punished under a special law are malum prohibitum.129 "An act which is declared malum
prohibitum, malice or criminal intent is completely immaterial."130
In contrast, crimes mala in seconcern inherently immoral acts:
Not every criminal act, however, involves moral turpitude. It is for this reason that "as to what crime involves moral
turpitude, is for the Supreme Court to determine". In resolving the foregoing question, the Court is guided by one of
the general rules that crimes mala in se involve moral turpitude, while crimes mala prohibita do not, the rationale of
which was set forth in "Zari v. Flores," to wit:
It (moral turpitude) implies something immoral in itself, regardless of the fact that it is punishable by law or not. It must
not be merely mala prohibita, but the act itself must be inherently immoral. The doing of the act itself, and not its
prohibition by statute fixes the moral turpitude. Moral turpitude does not, however, include such acts as are not of
themselves immoral but whose illegality lies in their being positively prohibited. (Emphasis supplied)
[These] guidelines nonetheless proved short of providing a clear cut solution, for in International Rice Research Institute
v. NLRC, the Court admitted that it cannot always be ascertained whether moral turpitude does or does not exist by
merely classifying a crime as malum in se or as malum prohibitum. There are crimes which are mala in se and yet but
rarely involve moral turpitude and there are crimes which involve moral turpitude and are mala prohibita only. In the
final analysis, whether or not a crime involves moral turpitude is ultimately a question of fact and frequently depends on
all the circumstances surrounding the violation of the statue.131 (Emphasis in the original)
"Implicit in the concept of mala in se is that of mens rea."132 Mens reais defined as "the nonphysical element which,
combined with the act of the accused, makes up the crime charged. Most frequently it is the criminal intent, or the
guilty mind[.]"133
Crimes mala in sepre suppose that the person who did the felonious act had criminal intent to do so, while crimes mala
prohibita do not require knowledge or criminal intent:
43
In the case of mala in se it is necessary, to constitute a punishable offense, for the person doing the act to have
knowledge of the nature of his act and to have a criminal intent; in the case of mala prohibita, unless such words as
"knowingly" and "willfully" are contained in the statute, neither knowledge nor criminal intent is necessary. In other
words, a person morally quite innocent and with every intention of being a law abiding citizen becomes a criminal, and
liable to criminal penaltes, if he does an act prohibited by these statutes.134 (Emphasis supplied) Hence, "[i]ntent to
commit the crime and intent to perpetrate the act must be distinguished. A person may not have consciously intended
to commit a crime; but he did intend to commit an act, and that act is, by the very nature of things, the crime
itself[.]"135When an act is prohibited by a special law, it is considered injurious to public welfare, and the performance of
the prohibited act is the crime itself.136
Volition, or intent to commit the act, is different from criminal intent. Volition or voluntariness refers to knowledge of
the act being done. On the other hand, criminal intent — which is different from motive, or the moving power for the
commission of the crime137 — refers to the state of mind beyond voluntariness. It is this intent that is being punished by
crimes mala in se.
Unlike other jurisdictions that require intent for a criminal prosecution of copyright infringement, the Philippines does
not statutorily support good faith as a defense. Other jurisdictions provide in their intellectual property codes or
relevant laws that mens rea, whether express or implied, is an element of criminal copyright infringement.138
In Canada, criminal offenses are categorized under three (3) kinds: "the full mens rea offence, meaning the accused’s
actual or subjective state of mind has to be proved; strict liability offences where no mens rea has to be proved but the
accused can avoid liability if he can prove he took all reasonable steps to avoid the particular event; [and] absolute
liability offences where Parliament has made it clear that guilt follows proof of the prescribed act only."139 Because of
the use of the word "knowingly" in Canada’s Copyright Act, it has been held that copyright infringement is a full mens
rea offense.140
In the United States, willful intent is required for criminal copyright infringement.141 Before the passage of the No
Electronic Theft Act, "civil copyright infringements were violations of criminal copyright laws only if a defendant willfully
infringed a copyright ‘for purposes of commercial advantage or private financial gain.’"142 However, the No Electronic
Theft Act now allows criminal copyright infringement without the requirement of commercial gain. The infringing act
may or may not be for profit.143
There is a difference, however, between the required liability in civil copyright infringement and that in criminal
copyright infringement in the United States. Civil copyright infringement does not require culpability and employs a
strict liability regime144 where "lack of intention to infringe is not a defense to an action for infringement."145
In the Philippines, the Intellectual Property Code, as amended, provides for the prosecution of criminal actions for the
following violations of intellectual property rights: Repetition of Infringement of Patent (Section 84); Utility Model
(Section 108); Industrial Design (Section 119); Trademark Infringement (Section 155 in relation to Section 170); Unfair
Competition (Section 168 in relation to Section 170); False Designations of Origin, False Description or Representation
(Section 169.1 in relation to Section 170); infringement of copyright, moral rights, performers’ rights, producers’ rights,
and broadcasting rights (Section 177, 193, 203, 208 and 211 in relation to Section 217); and other violations of intellectual
property rights as may be defined by law.
The Intellectual Property Code requires strict liability for copyright infringement whether for a civil action or a criminal
prosecution; it does not require mens rea or culpa:146
SECTION 216. Remedies for Infringement. —

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216.1. Any person infringing a right protected under this law shall be liable:
a. To an injunction restraining such infringement. The court may also order the defendant to desist from
an infringement, among others, to prevent the entry into the channels of commerce of imported goods
that involve an infringement, immediately after customs clearance of such goods.
b. Pay to the copyright proprietor or his assigns or heirs such actual damages, including legal costs and
other expenses, as he may have incurred due to the infringement as well as the profits the infringer may
have made due to such infringement, and in proving profits the plaintiff shall be required to prove sales
only and the defendant shall be required to prove every element of cost which he claims, or, in lieu of
actual damages and profits, such damages which to the court shall appear to be just and shall not be
regarded as penalty.
c. Deliver under oath, for impounding during the pendency of the action, upon such terms and
conditions as the court may prescribe, sales invoices and other documents evidencing sales, all articles
and their packaging alleged to infringe a copyright and implements for making them.
d. Deliver under oath for destruction without any compensation all infringing copies or devices, as well
as all plates, molds, or other means for making such infringing copies as the court may order.
e. Such other terms and conditions, including the payment of moral and exemplary damages, which the
court may deem proper, wise and equitable and the destruction of infringing copies of the work even in
the event of acquittal in a criminal case.
216.2. In an infringement action, the court shall also have the power to order the seizure and impounding of any
article which may serve as evidence in the court proceedings. (Sec. 28, P.D. No. 49a)
SECTION 217. Criminal Penalties. — 217.1. Any person infringing any right secured by provisions of Part IV of this Actor
aiding or abetting such infringement shall be guilty of a crime punishable by:
a. Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty thousand pesos
(₱50,000) to One hundred fifty thousand pesos (₱150,000) for the first offense.
b. Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging from One hundred
fifty thousand pesos (₱150,000) to Five hundred thousand pesos (₱500,000) for the second offense.
c. Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging from Five hundred
thousand pesos (₱500,000) to One million five hundred thousand pesos (₱1,500,000) for the third and
subsequent offenses.
d. In all cases, subsidiary imprisonment in cases of insolvency.
217.2. In determining the number of years of imprisonment and the amount of fine, the court shall consider the
value of the infringing materials that the defendant has produced or manufactured and the damage that the
copyright owner has suffered by reason of the infringement.
217.3. Any person who at the time when copyright subsists in a work has in his possession an article which he
knows, or ought to know, to be an infringing copy of the work for the purpose of: a. Selling, letting for hire, or
by way of trade offering or exposing for sale, or hire, the article;
45
b. Distributing the article for purpose of trade, or for any other purpose to an extent that will prejudice
the rights of the copyright owner in the work; or
c. Trade exhibit of the article in public, shall be guilty of an offense and shall be liable on conviction to
imprisonment and fine as above mentioned. (Sec. 29, P.D. No. 49a) (Emphasis supplied)
The law is clear. Inasmuch as there is wisdom in prioritizing the flow and exchange of ideas as opposed to rewarding
the creator, it is the plain reading of the law in conjunction with the actions of the legislature to which we defer. We
have continuously "recognized the power of the legislature . . . to forbid certain acts in a limited class of cases and to
make their commission criminal without regard to the intent of the doer. Such legislative enactments are based on the
experience that repressive measures which depend for their efficiency upon proof of the dealer’s knowledge or of his
intent are of little use and rarely accomplish their purposes."147
Respondents argue that live broadcast of news requires a different treatment in terms of good faith, intent, and
knowledge to commit infringement. To argue this point, they rely on the differences of the media used in Habana et al.
v. Robles, Columbia Pictures v. Court of Appeals, and this case:
Petitioner ABS-CBN argues that lack of notice that the Angelo dela Cruz was under embargo is not a defense in
copyright infringement and cites the case of Columbia Pictures vs. Court of Appeals and Habana et al. vs. Robles(310
SCRA 511). However, these cases refer to film and literary work where obviously there is "copying" from an existing
material so that the copier knew that he is copying from an existing material not owned by him. But, how could
respondents know that what they are "copying was not [theirs]" when they were not copying but merely receiving live
video feed from Reuters and CNN which they aired? What they knew and what they aired was the Reuters live video
feed and the CNN feed which GMA-7 is authorized to carry in its news broadcast, it being a subscriber of these
companies[.]
It is apt to stress that the subject of the alleged copyright infringement is not a film or literary work but live broadcast of
news footage. In a film or literary work, the infringer is confronted face to face with the material he is allegedly copying
and therefore knows, or is presumed to know, that what he is copying is owned by another. Upon the other hand, in
live broadcast, the alleged infringer is not confronted with the fact that the material he airs or re-broadcasts is owned
by another, and therefore, he cannot be charged of knowledge of ownership of the material by another. This specially
obtains in the Angelo dela Cruz news footage which GMA-7 received from Reuters and CNN. Reuters and CNN were
beaming live videos from the coverage which GMA-7 received as a subscriber and, in the exercise of its rights as a
subscriber, GMA-7 picked up the live video and simultaneously re-broadcast it. In simultaneously broadcasting the live
video footage of Reuters, GMA-7 did not copy the video footage of petitioner ABS-CBN[.]148 (Emphasis in the original)
Respondents’ arguments must fail.
Respondents are involved and experienced in the broadcasting business. They knew that there would be consequences
in carrying ABS-CBN’s footage in their broadcast. That is why GMA-7 allegedly cut the feed from Reuters upon seeing
ABS-CBN’s ogo and reporter. To admit a different treatment for broadcasts would mean abandonment of a
broadcasting organization’s minimum rights, including copyright on the broadcast material and the right against
unauthorized rebroadcast of copyrighted material. The nature of broadcast technology is precisely why related or
neighboring rights were created and developed. Carving out an exception for live broadcasts would go against our
commitments under relevant international treaties and agreements, which provide for the same minimum rights.149
Contrary to respondents’ assertion, this court in Habana,150 reiterating the ruling in Columbia Pictures,151 ruled that lack
of knowledge of infringement is not a valid defense. Habana and Columbia Pictures may have different factual scenarios
from this case, but their rulings on copyright infringement are analogous. In Habana, petitioners were the authors and
46
copyright owners of English textbooks and workbooks. The case was anchored on the protection of literary and artistic
creations such as books. In Columbia Pictures, video tapes of copyrighted films were the subject of the copyright
infringement suit.
In Habana, knowledge of the infringement is presumed when the infringer commits the prohibited act:
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an
appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and occupied
by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the
copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright.
....
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know
whether or not he was infringing any copyright; he at least knew that what he was copying was not his, and he copied
at his peril.
....
In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect". Here,
the injury consists in that respondent Robles lifted from petitioners’ book materials that were the result of the latter’s
research work and compilation and misrepresented them as her own. She circulated the book DEP for commercial use
and did not acknowledge petitioners as her source.152 (Emphasis supplied)
Habana and Columbia Pictures did not require knowledge of the infringement to constitute a violation of the copyright.
One does not need to know that he or she is copying a work without consent to violate copyright law. Notice of fact of
the embargo from Reuters or CNN is not material to find probable cause that respondents committed infringement.
Knowledge of infringement is only material when the person is charged of aiding and abetting a copyright infringement
under Section 217 of the Intellectual Property Code.153
We look at the purpose of copyright in relation to criminal prosecutions requiring willfulness: Most importantly, in
defining the contours of what it means to willfully infringe copyright for purposes of criminal liability, the courts should
remember the ultimate aim of copyright. Copyright is not primarily about providing the strongest possible protection
for copyright owners so that they have the highest possible incentive to create more works. The control given to
copyright owners is only a means to an end: the promotion of knowledge and learning. Achieving that underlying goal
of copyright law also requires access to copyrighted works and it requires permitting certain kinds of uses of
copyrighted works without the permission of the copyright owner. While a particular defendant may appear to be
deserving of criminal sanctions, the standard for determining willfulness should be set with reference to the larger goals
of copyright embodied in the Constitution and the history of copyright in this country.154
In addition, "[t]he essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity
by an appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and
occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy,
which is a synonymous term in this connection, consists in the doing by any person, without the consent of the owner
of the copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright."155
Intellectual property rights, such as copyright and the neighboring right against rebroadcasting, establish an artificial
and limited monopoly to reward creativity. Without these legally enforceable rights, creators will have extreme difficulty
47
recovering their costs and capturing the surplus or profit of their works as reflected in their markets. This, in turn, is
based on the theory that the possibility of gain due to creative work creates an incentive which may improve efficiency
or simply enhance consumer welfare or utility. More creativity redounds to the public good.
These, however, depend on the certainty of enforcement. Creativity, by its very nature, is vulnerable to the free rider
problem. It is easily replicated despite the costs to and efforts of the original creator. The more useful the creation is in
the market, the greater the propensity that it will be copied. The most creative and inventive individuals are usually
those who are unable to recover on their creations.
Arguments against strict liability presuppose that the Philippines has a social, historical, and economic climate similar to
those of Western jurisdictions. As it stands, there is a current need to strengthen intellectual property protection.
Thus, unless clearly provided in the law, offenses involving infringement of copyright protections should be considered
malum prohibitum. It is the act of infringement, not the intent, which causes the damage. To require or assume the
need to prove intent defeats the purpose of intellectual property protection.
Nevertheless, proof beyond reasonable doubt is still the standard for criminal prosecutions under the Intellectual
Property Code.
VIII
Respondents argue that GMA-7’s officers and employees cannot be held liable for infringement under the Intellectual
Property Code since it does not expressly provide direct liability of the corporate officers. They explain that "(i) a
corporation may be charged and prosecuted for a crime where the penalty is fine or both imprisonment and fine, and if
found guilty, may be fined; or (ii) a corporation may commit a crime but if the statute prescribes the penalty therefore
to be suffered by the corporate officers, directors or employees or other persons, the latter shall be responsible for the
offense."156
Section 217 of the Intellectual Property Code states that "any person" may be found guilty of infringement. It also
imposes the penalty of both imprisonment and fine:
Section 217. Criminal Penalties. - 217.1. Any person infringing any right secured by provisions of Part IV of this Act or
aiding or abetting such infringement shall be guilty of a crime punishable by:
(a) Imprisonment of one (1) year to three (3) years plus a fine ranging from Fifty thousand pesos (₱50,000) to
One hundred fifty thousand pesos (₱150,000) for the first offense.
(b) Imprisonment of three (3) years and one (1) day to six (6) years plus a fine ranging from One hundred fifty
thousand pesos (₱150,000) to Five hundred thousand pesos (₱500,000) for the second offense.
(c) Imprisonment of six (6) years and one (1) day to nine (9) years plus a fine ranging from five hundred
thousand pesos (₱500,000) to One million five hundred thousand pesos (₱1,500,000) for the third and
subsequent offenses.
(d) In all cases, subsidiary imprisonment in cases of insolvency. (Emphasis supplied) Corporations have separate
and distinct personalities from their officers or directors.157 This court has ruled that corporate officers and/or
agents may be held individually liable for a crime committed under the Intellectual Property Code:158
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Petitioners, being corporate officers and/or directors, through whose act, default or omission the corporation commits a
crime, may themselves be individually held answerable for the crime. . . . The existence of the corporate entity does not
shield from prosecution the corporate agent who knowingly and intentionally caused the corporation to commit a
crime. Thus, petitioners cannot hide behind the cloak of the separate corporate personality of the corporation to escape
criminal liability. A corporate officer cannot protect himself behind a corporation where he is the actual, present and
efficient actor.159
However, the criminal liability of a corporation’s officers or employees stems from their active participation in the
commission of the wrongful act:
The principle applies whether or not the crime requires the consciousness of wrongdoing. It applies to those corporate
agents who themselves commit the crime and to those, who, by virtue of their managerial positions or other similar
relation to the corporation, could be deemed responsible for its commission, if by virtue of their relationship to the
corporation, they had the power to prevent the act. Moreover, all parties active in promoting a crime, whether agents or
not, are principals. Whether such officers or employees are benefited by their delictual acts is not a touchstone of their
criminal liability. Benefit is not an operative fact.160 (Emphasis supplied) An accused’s participation in criminal acts
involving violations of intellectual property rights is the subject of allegation and proof. The showing that the accused
did the acts or contributed in a meaningful way in the commission of the infringements is certainly different from the
argument of lack of intent or good faith. Active participation requires a showing of overt physical acts or intention to
commit such acts. Intent or good faith, on the other hand, are inferences from acts proven to have been or not been
committed.
We find that the Department of Justice committed grave abuse of discretion when it resolved to file the Information
against respondents despite lack of proof of their actual participation in the alleged crime.
Ordering the inclusion of respondents Gozon, GMA-7 President; Duavit, Jr., Executive Vice-President; Flores, Vice-
President for News and Public Affairs; and Soho, Director for News, as respondents, Secretary Agra overturned the City
Prosecutor’s finding that only respondents Dela Peña-Reyes and Manalastas are responsible for the crime charged due
to their duties.161 The Agra Resolution reads:
Thus, from the very nature of the offense and the penalty involved, it is necessary that GMA-7’s directors, officers,
employees or other officers thereof responsible for the offense shall be charged and penalized for violation of the
Sections 177 and 211 of Republic Act No. 8293. In their complaint for libel, respondents Felipe L Gozon, Gilberto R.
Duavit, Jr., Marissa L. Flores, Jessica A.Soho, Grace Dela Pena-Reyes, John Oliver T. Manalastas felt they were aggrieved
because they were "in charge of the management, operations and production of news and public affairs programs of
the network" (GMA-7). This is clearly an admission on respondents’ part. Of course, respondents may argue they have
no intention to infringe the copyright of ABS-CBN; that they acted in good faith; and that they did not directly cause the
airing of the subject footage, but again this is preliminary investigation and what is required is simply probable cause.
Besides, these contentions can best be addressed in the course of trial.162 (Citation omitted)
In contrast, the Office of the City Prosecutor, in the Resolution dated December 3, 2004, found that respondents Gozon,
Duavit, Jr., Flores, and Soho did not have active participation in the commission of the crime charged:
This Office, however, does not subscribe to the view that respondents Atty. Felipe Gozon, Gilberto Duavit, Marissa
Flores and Jessica Soho should be held liable for the said offense. Complainant failed to present clear and convincing
evidence that the said respondents conspired with Reyes and Manalastas. No evidence was adduced to prove that
these respondents had an active participation in the actual commission of the copyright infringement or they exercised
their moral ascendancy over Reyes and Manalastas in airing the said footage. It must be stressed that, conspiracy must
49
be established by positive and conclusive evidence. It must be shown to exist as clearly and convincingly as the
commission of the offense itself.163 (Emphasis supplied, citations omitted)
The City Prosecutor found respondents Dela Peña-Reyes and Manalastas liable due to the nature of their work and
responsibilities. He found that:
[t]his Office however finds respondents Grace Dela Peña-Reyes and John Oliver T. Manalastas liable for copyright
infringement penalized under Republic Act No. 8293. It is undisputed that complainant ABSCBN holds the exclusive
ownership and copyright over the "Angelo [d]ela Cruz news footage". Hence, any airing and re-broadcast of the said
footage without any consent and authority from ABS-CBN will be held as an infringement and violation of the
intellectual property rights of the latter. Respondents Grace Dela Peña-Reyes as the Head of the News Operation and
John Oliver T. Manalastas as the Program Manager cannot escape liability since the news control room was under their
direct control and supervision. Clearly, they must have been aware that the said footage coming from Reuters or CNN
has a "No Access Philippines" advisory or embargo thus cannot be re-broadcast. We find no merit to the defense of
ignorance interposed by the respondents. It is simply contrary to human experience and logic that experienced
employees of an established broadcasting network would be remiss in their duty in ascertaining if the said footage has
an embargo.164 (Emphasis supplied)
We agree with the findings as to respondents Dela Peña-Reyes and Manalastas. Both respondents committed acts that
promoted infringement of ABS-CBN’s footage. We note that embargoes are common occurrences in and between
news agencies and/or broadcast organizations.165 Under its Operations Guide, Reuters has two (2) types of embargoes:
transmission embargo and publication embargo.166 Under ABS-CBN’s service contract with Reuters, Reuters will
embargo any content contributed by ABS-CBN from other broadcast subscribers within the same geographical location:
4a. Contributed Content
You agree to supply us at our request with news and sports news stories broadcast on the Client Service of up to three
(3) minutes each for use in our Services on a non-exclusive basis and at a cost of US$300.00 (Three Hundred United
States Dollars) per story. In respect of such items we agree to embargo them against use by other broadcast subscribers
in the Territory and confirm we will observe all other conditions of usage regarding Contributed Content, as specified in
Section 2.5 of the Reuters Business Principles for Television Services. For the purposes of clarification, any geographical
restriction imposed by you on your use of Contributed Content will not prevent us or our clients from including such
Contributed Content in online transmission services including the internet. We acknowledge Contributed Content is
your copyright and we will not acquire any intellectual property rights in the Contributed Content.167 (Emphasis
supplied)
Respondents Dela Peña-Reyes and Manalastas merely denied receiving the advisory sent by Reuters to its clients,
including GMA-7. As in the records, the advisory reads:
ADVISORY - - +++LIVE COVER PLANS+++

PHILIPPINES: HOSTAGE RETURN
**ATTENTION ALL CLIENTS**
PLEASE BE ADVISED OF THE FOLLOWING LIVE COVER

PLANNED FOR THURSDAY, JULY 22:
....
50
SOURCE: ABS-CBN
TV AND WEB RESTRICTIONS: NO ACCESS PHILIPPINES.168
There is probable cause that respondents Dela Peña-Reyes and Manalastas directly committed copyright infringement
of ABS-CBN’s news footage to warrant piercing of the corporate veil. They are responsible in airing the embargoed
Angelo dela Cruz footage. They could have prevented the act of infringement had they been diligent in their functions
as Head of News Operations and Program Manager.
Secretary Agra, however, committed grave abuse of discretion when he ordered the filing of the Information against all
respondents despite the erroneous piercing of the corporate veil. Respondents Gozon, Duavit, Jr., Flores, and Soho
cannot be held liable for the criminal liability of the corporation.
Mere membership in the Board or being President per se does not mean knowledge, approval, and participation in the
act alleged as criminal. There must be a showing of active participation, not simply a constructive one.
Under principles of criminal law, the principals of a crime are those "who take a direct part in the execution of the act;
[t]hose who directly force or induce others to commit it; [or] [t]hose who cooperate in the commission of the offense by
another act without which it would not have been accomplished."169 There is conspiracy "when two or more persons
come to an agreement concerning the commission of a felony and decide to commit it":170
Conspiracy is not presumed. Like the physical acts constituting the crime itself, the elements of conspiracy must be
proven beyond reasonable doubt.1âwphi1 While conspiracy need not be established by direct evidence, for it may be
inferred from the conduct of the accused before, during and after the commission of the crime, all taken together,
however, the evidence must be strong enough to show the community of criminal design. For conspiracy to exist, it is
essential that there must be a conscious design to commit an offense. Conspiracy is the product of intentionality on the
part of the cohorts.
It is necessary that a conspirator should have performed some overt act as a direct or indirect contribution to the
execution of the crime committed. The overt act may consist of active participation in the actual commission of the
crime itself, or it may consist of moral assistance to his co-conspirators by being present at the commission of the crime
or by exerting moral ascendancy over the other co-conspirators[.]171 (Emphasis supplied, citations omitted)
In sum, the trial court erred in failing to resume the proceedings after the designated period. The Court of Appeals
erred when it held that Secretary Agra committed errors of jurisdiction despite its own pronouncement that ABS-CBN is
the owner of the copyright on the news footage. News should be differentiated from expression of the news,
particularly when the issue involves rebroadcast of news footage. The Court of Appeals also erroneously held that good
faith, as. well as lack of knowledge of infringement, is a defense against criminal prosecution for copyright and
neighboring rights infringement. In its current form, the Intellectual Property Code is malum prohibitum and prescribes
a strict liability for copyright infringement. Good faith, lack of knowledge of the copyright, or lack of intent to infringe is
not a defense against copyright infringement. Copyright, however, is subject to the rules of fair. use and will be judged
on a case-to-case basis. Finding probable cause includes a determination of the defendant's active participation,
particularly when the corporate veil is pierced in cases involving a corporation's criminal liability.
WHEREFORE, the Petition is partially GRANTED. The Department of Justice Resolution dated June 29, 2010 ordering the
filing of the Information is hereby REINSTATED as to respondents Grace Dela Pena-Reyes and John Oliver T.
Manalastas. Branch 93 of the Regional Trial Court of Quezon City is directed to continue with the proceedings in
Criminal Case No. Q-04-131533.
SO ORDERED.
51
G.R. No. 184850 October 20, 2010
E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners,

vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21, 2008 Decision1and the
October 6, 2008 Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 99356 entitled Shen Dar
Electricity and Machinery Co., Ltd. v. E.Y. Industrial Sales, Inc. and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 20073 issued by the Director General of the Intellectual
Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director General upheld Certificate of
Registration (COR) No. 4-1999-005393 issued by the IPO for the trademark "VESPA" in favor of petitioner E.Y. Industrial
Sales, Inc. (EYIS), but ordered the cancellation of COR No. 4-1997-121492, also for the trademark "VESPA," issued in
favor of respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO Director General, in
effect, affirmed the Decision dated May 29, 20064 issued by the Director of the Bureau of Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors and other industrial
tools and equipment.5 Petitioner Engracio Yap is the Chairman of the Board of Directors of EYIS.6
Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air compressors.7
Both companies claimed to have the right to register the trademark "VESPA" for air compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the Sales Contract dated
April 20, 2002,8 for example, Shen Dar would supply EYIS in one (1) year with 24 to 30 units of 40-ft. containers worth of
air compressors identified in the Packing/Weight Lists simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68.
In the corresponding Bill of Ladings, the items were described merely as air compressors.9 There is no documentary
evidence to show that such air compressors were marked "VESPA."
On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with the IPO for the mark "VESPA,
Chinese Characters and Device" for use on air compressors and welding machines.10
On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the mark "VESPA," for use on air
compressors.11 On January 18, 2004, the IPO issued COR No. 4-1999-005393 in favor of EYIS.12 Thereafter, on February 8,
2007, Shen Dar was also issued COR No. 4-1997-121492.13
In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS’ COR with the BLA.14 In the Petition,
Shen Dar primarily argued that the issuance of the COR in favor of EYIS violated Section 123.1 paragraphs (d), (e) and (f)
of Republic Act No. (RA) 8293, otherwise known as the Intellectual Property Code (IP Code), having first filed an
application for the mark. Shen Dar further alleged that EYIS was a mere distributor of air compressors bearing the mark
52
"VESPA" which it imported from Shen Dar. Shen Dar also argued that it had prior and exclusive right to the use and
registration of the mark "VESPA" in the Philippines under the provisions of the Paris Convention.15
In its Answer, EYIS and Yap denied the claim of Shen Dar to be the true owners of the mark "VESPA" being the sole
assembler and fabricator of air compressors since the early 1990s. They further alleged that the air compressors that
Shen Dar allegedly supplied them bore the mark "SD" for Shen Dar and not "VESPA." Moreover, EYIS argued that Shen
Dar, not being the owner of the mark, could not seek protection from the provisions of the Paris Convention or the IP
Code.16
Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and against Shen Dar, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED. Consequently, Certificate of
Registration No. 4-1999-[005393] for the mark "VESPA" granted in the name of E.Y. Industrial Sales, Inc. on 9 January
2007 is hereby upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative, Financial and Human
Resource Development Services Bureau for issuance and appropriate action in accordance with this DECISION and a
copy thereof furnished to the Bureau of Trademarks for information and update of its records.
SO ORDERED.17
Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal, Shen Dar raised
the following issues:
1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence;
2. Whether the registration of EYIS’ application was proper considering that Shen Dar was the first to file an
application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the true owner of the mark.18
Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR issued in favor of EYIS while
cancelling the COR of Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-005393 for the mark
VESPA for air compressor issued in favor of Appellee is hereby upheld. Consequently, Certificate of Registration No. 4-
1997-121492 for the mark VESPA, Chinese Characters & Device for goods air compressor and spot welding machine
issued in favor of Appellant is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned to the Director of Bureau of
Legal Affairs for appropriate action. Further, let also the Directors of the Bureau of Trademarks, the Administrative,
Financial and Human Resources Development Services Bureau, and the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes.19
Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised the following
issues:
1. Whether Shen Dar is guilty of forum shopping;

53
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dar’s COR No. 4-1997-121492 without a petition
for cancellation; and
6. Whether Shen Dar sustained damages.20
In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar. The dispositive
portion states:
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision of the Director
General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED and SET ASIDE. In lieu thereof, a
new one is entered: a) ordering the cancellation of Certificate of Registration No. 4-1999-005393 issued on January 19,
2004 for the trademark VESPA in favor of E.Y. Industrial Sales, Inc.; b) ordering the restoration of the validity of
Certificate of Registration No. 4-1997-121492 for the trademark VESPA in favor of Shen Dar Electricity and Machinery
Co., Ltd. No pronouncement as to costs.
SO ORDERED.21
In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its evidence before the
BLA, such evidence was properly attached to the Petition for Cancellation. As such, Shen Dar’s evidence may be
properly considered. The CA also enunciated that the IPO failed to properly apply the provisions of Sec. 123.1(d) of RA
8293, which prohibits the registration of a trademark in favor of a party when there is an earlier filed application for the
same mark. The CA further ruled that Shen Dar should be considered to have prior use of the mark based on the
statements made by the parties in their respective Declarations of Actual Use. The CA added that EYIS is a mere
importer of the air compressors with the mark "VESPA" as may be gleaned from its receipts which indicated that EYIS is
an importer, wholesaler and retailer, and therefore, cannot be considered an owner of the mark.22
EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the trademark VESPA.
B. Whether the Director General of the IPO can, under the circumstances, order the cancellation of
Respondent’s certificate of registration for VESPA, which has been fraudulently obtained and erroneously
issued.
C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the IPO, which
affirm the rights of Petitioner EYIS over the trademark VESPA and when such findings are supported by the
evidence on record.
54
D. Whether this Honorable Court may review questions of fact considering that the findings of the Court of
Appeals and the IPO are in conflict and the conclusions of the appellee court are contradicted by the evidence
on record.23
The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court is not a trier of facts.
However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission,24 the Court ruled that:
We are very much aware that the rule to the effect that this Court is not a trier of facts admits of exceptions. As we have
stated in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Court’s power of review, the Court is not a trier of facts and does
not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the
case considering that the findings of facts of the CA are conclusive and binding on the Court. However, the Court had
recognized several exceptions to this rule, to wit: (1) when the findings are grounded entirely on speculation, surmises
or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse
of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court;
(8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts
set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when
the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record;
and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion. (Emphasis supplied.)
In the instant case, the records will show that the IPO and the CA made differing conclusions on the issue of ownership
based on the evidence presented by the parties. Hence, this issue may be the subject of this Court’s review.
Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support of its allegations as
required under Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter Partes Proceedings,
having failed to formally offer its evidence during the proceedings before it. The BLA ruled:
At the outset, we note petitioner’s failure to adduce any evidence in support of its allegations in the Petition for
Cancellation. Petitioner did not file nor submit its marked evidence as required in this Bureau’s Order No. 2006-157
dated 25 January 2006 in compliance with Office Order No. 79, Series of 2005, Amendments to the Regulations on Inter
Partes Proceedings.25 x x x
55
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and 8 of the rules on
summary proceedings shall be construed as a waiver on the part of the parties. In such a case, the original petition,
opposition, answer and the supporting documents therein shall constitute the entire evidence for the parties subject to
applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach its evidence to its
position paper with the proper markings,26 which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish the procedure for the
application for the registration of a trademark, as well as the opposition to it:
Section 10. The Bureau of Legal Affairs.¾The Bureau of Legal Affairs shall have the following functions:
xxxx
10.3. The Director General may by Regulations establish the procedure to govern the implementation of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on Inter Partes
Proceedings, Sec. 12.1 of which provides:
Section 12. Evidence for the Parties¾
12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the documents
submitted, shall constitute the entire evidence for the petitioner or opposer. The verified answer, rejoinder if any, and
the duly marked affidavits and documents submitted shall constitute the evidence for the respondent. Affidavits,
documents and other evidence not submitted and duly marked in accordance with the preceding sections shall not be
admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn, provide:
Section 7. Filing of Petition or Opposition¾
7.1. The petition or opposition, together with the affidavits of witnesses and originals of the documents and other
requirements, shall be filed with the Bureau, provided, that in case of public documents, certified copies shall be allowed
in lieu of the originals. The Bureau shall check if the petition or opposition is in due form as provided in the Regulations
particularly Rule 3, Section 3; Rule 4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8,
Sections 3 and 4. For petition for cancellation of layout design (topography) of integrated circuits, Rule 3, Section 3
applies as to the form and requirements. The affidavits, documents and other evidence shall be marked consecutively as
"Exhibits" beginning with the letter "A".
Section 8. Answer¾
8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue an order for the
respondent to file an answer together with the affidavits of witnesses and originals of documents, and at the same time
shall notify all parties required to be notified in the IP Code and these Regulations, provided, that in case of public
documents, certified true copies may be submitted in lieu of the originals. The affidavits and documents shall be
marked consecutively as "Exhibits" beginning with the number "1".
56
Section 9. Petition or Opposition and Answer must be verified¾ Subject to Rules 7 and 8 of these regulations, the
petition or opposition and the answer must be verified. Otherwise, the same shall not be considered as having been
filed.
In other words, as long as the petition is verified and the pieces of evidence consisting of the affidavits of the witnesses
and the original of other documentary evidence are attached to the petition and properly marked in accordance with
Secs. 7.1 and 8.1 abovementioned, these shall be considered as the evidence of the petitioner. There is no requirement
under the abovementioned rules that the evidence of the parties must be formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on Inter Partes Proceedings, the
BLA is not bound by technical rules of procedure. The evidence attached to the petition may, therefore, be properly
considered in the resolution of the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dar’s Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the cancellation of the
COR issued in favor of EYIS, the interests of justice dictate, and in view of its findings, that the COR of Shen Dar must be
cancelled. The Director General explained:
Accordingly, while the instant case involves a petition to cancel the registration of the Appellee’s trademark VESPA, the
interest of justice requires that Certificate of Registration No. 4-1997-121492 be cancelled. While the normal course of
proceedings should have been the filing of a petition for cancellation of Certificate of Registration No. 4-1997-121492,
that would involve critical facts and issues that have already been resolved in this case. To allow the Applicant to still
maintain in the Trademark Registry Certificate of Registration No. 4-1997-121492 would nullify the exclusive rights of
Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the trademark registration
system.27
Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for cancellation as
required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 5. Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases.¾The rules of procedure
herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court may be applied
suppletorily. The Bureau shall not be bound by strict technical rules of procedure and evidence but may adopt, in the
absence of any applicable rule herein, such mode of proceedings which is consistent with the requirements of fair play
and conducive to the just, speedy and inexpensive disposition of cases, and which will give the Bureau the greatest
possibility to focus on the contentious issues before it. (Emphasis supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies are not bound by
technical rules of procedure. Such principle, however, is tempered by fundamental evidentiary rules, including due
process. Thus, we ruled in Aya-ay, Sr. v. Arpaphil Shipping Corp.:28
That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of procedure in the
adjudication of cases does not mean that the basic rules on proving allegations should be entirely dispensed with. A
57
party alleging a critical fact must still support his allegation with substantial evidence. Any decision based on
unsubstantiated allegation cannot stand as it will offend due process.
x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic requirements of due
process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in administrative procedure "does not go so
far as to justify orders without a basis in evidence having rational probative value." More specifically, as held in Uichico
v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in
the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:29
While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the technical rules of
procedure in the adjudication of cases, this procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules. The evidence presented must at least have a modicum of admissibility for it to have
probative value. Not only must there be some evidence to support a finding or conclusion, but the evidence must be
substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. Thus, even though technical rules of evidence are not strictly
complied with before the LA and the NLRC, their decision must be based on evidence that must, at the very least, be
substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not preclude the
cancellation of Shen Dar’s COR. It must be emphasized that, during the hearing for the cancellation of EYIS’ COR before
the BLA, Shen Dar tried to establish that it, not EYIS, was the true owner of the mark "VESPA" and, thus, entitled to have
it registered. Shen Dar had more than sufficient opportunity to present its evidence and argue its case, and it did. It was
given its day in court and its right to due process was respected. The IPO Director General’s disregard of the procedure
for the cancellation of a registered mark was a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CA’s reversal of the factual findings of the BLA that Shen Dar and not EYIS is the prior
user and, therefore, true owner of the mark. In arguing its position, petitioners cite numerous rulings of this Court where
it was enunciated that the factual findings of administrative bodies are given great weight if not conclusive upon the
courts when supported by substantial evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual findings of administrative bodies
deserve utmost respect when supported by evidence. However, such general rule is subject to exceptions.
In Fuentes v. Court of Appeals,30 the Court established the rule of conclusiveness of factual findings of the CA as follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of Appeals x
x x is limited to the review and revision of errors of law allegedly committed by the appellate court, as its findings of fact
are deemed conclusive. As such this Court is not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below. This rule, however, is not without exceptions." The findings of fact of the Court of
Appeals, which are as a general rule deemed conclusive, may admit of review by this Court:
58
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or
impossible;
(4) when there is grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, goes beyond the issues of the case, and such findings are
contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant facts which, if properly considered, will justify a
different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which they are based;
and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence but such
findings are contradicted by the evidence on record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,31 this Court applied the above principle to factual findings of quasi-judicial
bodies, to wit:
Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court of Appeals,
enumerated in Fuentes vs. Court of Appeals, can also be applied to those of quasi-judicial bodies x x x. (Emphasis
supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO Director General
which it opined, when correctly appreciated, would alter the result of the case. An examination of the IPO Decisions,
however, would show that no such evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application for registration of the VESPA trademark on July 28,
1999, they stated under oath, as found in their DECLARATION OF ACTUAL USE, that their first use of the mark was on
December 22, 1998. On the other hand, [Shen Dar] in its application dated June 09, 1997 stated, likewise under oath in
their DECLARATION OF ACTUAL USE, that its first use of the mark was in June 1996. This cannot be made any clearer.
[Shen Dar] was not only the first to file an application for registration but likewise first to use said registrable mark.32
Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of the parties in their
respective Declarations of Actual Use. Such conclusion is premature at best. While a Declaration of Actual Use is a
notarized document, hence, a public document, it is not conclusive as to the fact of first use of a mark. The declaration
must be accompanied by proof of actual use as of the date claimed. In a declaration of actual use, the applicant must,
therefore, present evidence of such actual use.
59
The BLA ruled on the same issue, as follows:
More importantly, the private respondent’s prior adoption and continuous use of the mark ‘VESPA’ on air compressors
is bolstered by numerous documentary evidence consisting of sales invoices issued in the name of E.Y. Industrial and
Bill of Lading (Exhibits ‘4’ to ‘375’). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioner’s date of first use
on January 1, 1997 indicated in its trademark application filed on June 9, 1997 as well as the date of first use in June of
1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit ‘385’). The use by respondent
registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously describing the
goods as "VESPA" air compressors. Private respondents have sold the air compressors bearing the "VESPA" to various
locations in the Philippines, as far as Mindanao and the Visayas since the early 1990’s. We carefully inspected the
evidence consisting of three hundred seventy-one (371) invoices and shipment documents which show that VESPA air
compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga
City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that it is through private respondents’ efforts
that the mark "VESPA" used on air compressors has gained business goodwill and reputation in the Philippines for
which it has validly acquired trademark rights. Respondent E.Y. Industrial’s right has been preserved until the passage of
RA 8293 which entitles it to register the same.33
Comparatively, the BLA’s findings were founded upon the evidence presented by the parties. An example of such
evidence is Invoice No. 12075 dated March 29, 199534 where EYIS sold four units of VESPA air compressors to Veteran
Paint Trade Center. Shen Dar failed to rebut such evidence. The truth, as supported by the evidence on record, is that
EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the proof submitted
was appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the concept of an owner as
early as 1991. Although Respondent E.Y. indicated in its trademark application that its first use was in December 22,
1998, it was able to prove by clear and positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the High Court clarified: Where an
applicant for registration of a trademark states under oath the date of his earliest use, and later on he wishes to carry
back his first date of use to an earlier date, he then takes on the greater burden of presenting "clear and convincing
evidence" of adoption and use as of that earlier date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.)35
The CA further found that EYIS is not a manufacturer of air compressors but merely imports and sells them as a
wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees’ own submitted receipts shows that it is not manufacturer but an importer,
wholesaler and retailer. This fact is corroborated by the testimony of a former employee of appellees. Admittedly too,
appellees are importing air compressors from [Shen Dar] from 1997 to 2004. These matters, lend credence to [Shen
Dar’s] claim that the letters SD followed by a number inscribed in the air compressor is only to describe its type,
manufacturer business name and capacity. The VESPA mark is in the sticker which is attached to the air compressors.
The ruling of the Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General Milling Corporation et
al., is quite enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing the trademark, trade name, service mark, or other
mark of ownership, unless such importer is actually the owner thereof in the country from which the goods are
imported. Thus, this Court, has on several occasions ruled that where the applicant’s alleged ownership is not shown in
60
any notarial document and the applicant appears to be merely an importer or distributor of the merchandise covered
by said trademark, its application cannot be granted."36
This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an importer, wholesaler
and retailer does not preclude its being a manufacturer. Sec. 237 of the National Internal Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial Invoices.¾All persons subject to an internal revenue tax shall,
for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue
duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction,
quantity, unit cost and description of merchandise or nature of service: Provided, however, That where the receipt is
issued to cover payment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued which
shall show the name, business style, if any, and address of the purchaser, customer or client.
The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is
effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of
business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued,
while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance
with the provisions of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal Revenue defined a
Sales Invoice and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) – is written account of goods sold or services rendered and the prices charged
therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer of goods
and services. It contains the same information found in the Official Receipt.
Official Receipt (OR) – is a receipt issued for the payment of services rendered or goods sold. It contains the following
information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of issuance of receipts.
There is no requirement that a sales invoice should accurately state the nature of all the businesses of the seller. There is
no legal ground to state that EYIS’ "declaration" in its sales invoices that it is an importer, wholesaler and retailer is
restrictive and would preclude its being a manufacturer.
From the above findings, there was no justifiable reason for the CA to disregard the factual findings of the IPO. The
rulings of the IPO Director General and the BLA Director were supported by clear and convincing evidence. The facts
cited by the CA and Shen Dar do not justify a different conclusion from that of the IPO. Hence, the findings of the BLA
Director and the IPO Director General must be deemed as conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"

61
In any event, given the length of time already invested by the parties in the instant case, this Court must write finis to
the instant controversy by determining, once and for all, the true owner of the mark "VESPA" based on the evidence
presented.
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date,
in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis supplied.)
Under this provision, the registration of a mark is prevented with the filing of an earlier application for registration. This
must not, however, be interpreted to mean that ownership should be based upon an earlier filing date. While RA 8293
removed the previous requirement of proof of actual use prior to the filing of an application for registration of a mark,
proof of prior and continuous use is necessary to establish ownership of a mark. Such ownership constitutes sufficient
evidence to oppose the registration of a mark.
Sec. 134 of the IP Code provides that "any person who believes that he would be damaged by the registration of a mark
x x x" may file an opposition to the application. The term "any person" encompasses the true owner of the mark¾the
prior and continuous user.
Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the presumptive
ownership of the registrant and be held as the owner of the mark. As aptly stated by the Court in Shangri-la
International Hotel Management, Ltd. v. Developers Group of Companies, Inc.:37
Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate
of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name.
Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership
of the registrant and may very well entitle the former to be declared owner in an appropriate case.
xxxx
Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade
or commerce. As between actual use of a mark without registration, and registration of the mark without actual use
thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down
through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of
ownership.
xxxx
62
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being
applied for, he has no right to apply for registration of the same. Registration merely creates a prima facie presumption
of the validity of the registration, of the registrant’s ownership of the trademark and of the exclusive right to the use
thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and
must give way to evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS is the prior user of
the mark. The exhaustive discussion on the matter made by the BLA sufficiently addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying, importing, selling,
industrial machineries and tools, manufacturing, among others since its incorporation in 1988. (Exhibit "1"). Indeed
private respondents have submitted photographs (Exhibit "376", "377", "378", "379") showing an assembly line of its
manufacturing or assembly process.1avvphi1
More importantly, the private respondent’s prior adoption and continuous use of the mark "VESPA" on air compressors
is bolstered by numerous documentary evidence consisting of sales invoices issued in the name of respondent EY
Industrial and Bills of Lading. (Exhibits "4" to "375"). Sales Invoice No. 12075 dated March 27, 1995 antedates petitioner’s
date of first use in January 1, 1997 indicated in its trademark application filed in June 9, 1997 as well as the date of first
use in June of 1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit "385"). The use
by respondent-registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously
describing the goods as "VESPA" air compressors. Private respondents have sold the air compressors bearing the
"VESPA" to various locations in the Philippines, as far as Mindanao and the Visayas since the early 1990’s. We carefully
inspected the evidence consisting of three hundred seventy one (371) invoices and shipment documents which show
that "VESPA" air compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete
City, Zamboanga City, Cagayan de Oro City, Davao City to name a few. There is no doubt that it is through private
respondents’ efforts that the mark "VESPA" used on air compressors has gained business goodwill and reputation in the
Philippines for which it has validly acquired trademark rights. Respondent EY Industrial’s right has been preserved until
the passage of RA 8293 which entitles it to register the same. x x x38
On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More importantly, Shen Dar
failed to present sufficient evidence to prove its own prior use of the mark "VESPA." We cite with approval the ruling of
the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air compressors. The thrust of
[Shen Dar’s] argument is that respondent E.Y. Industrial Sales, Inc. is a mere distributor of the "VESPA" air compressors.
We disagree.
This conclusion is belied by the evidence. We have gone over each and every document attached as Annexes "A", "A" 1-
48 which consist of Bill of Lading and Packing Weight List. Not one of these documents referred to a "VESPA" air
compressor. Instead, it simply describes the goods plainly as air compressors which is type "SD" and not "VESPA". More
importantly, the earliest date reflected on the Bill of Lading was on May 5, 1997. (Annex – "A"-1). [Shen Dar] also
attached as Annex "B" a purported Sales Contract with respondent EY Industrial Sales dated April 20, 2002. Surprisingly,
nowhere in the document does it state that respondent EY Industrial agreed to sell "VESPA" air compressors. The
document only mentions air compressors which if genuine merely bolsters respondent Engracio Yap’s contention that
[Shen Dar] approached them if it could sell the "Shen Dar" or "SD" air compressor. (Exhibit "386") In its position paper,
[Shen Dar] merely mentions of Bill of Lading constituting respondent as consignee in 1993 but never submitted the
same for consideration of this Bureau. The document is also not signed by [Shen Dar]. The agreement was not even
drafted in the letterhead of either [Shen Dar] nor [sic] respondent – registrant. Our only conclusion is that [Shen Dar]
63
was not able to prove to be the owner of the VESPA mark by appropriation. Neither was it able to prove actual
commercial use in the Philippines of the mark VESPA prior to its filing of a trademark application in 9 June 1997.39
As such, EYIS must be considered as the prior and continuous user of the mark "VESPA" and its true owner. Hence, EYIS
is entitled to the registration of the mark in its name.
WHEREFORE, the petition is hereby GRANTED. The CA’s February 21, 2008 Decision and October 6, 2008 Resolution in
CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision dated May 25, 2007 issued by the IPO
Director General in Inter Partes Case No. 14-2004-00084 and the Decision dated May 29, 2006 of the BLA Director of
the IPO are hereby REINSTATED.
No costs.
SO ORDERED.
G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC., petitioner,

vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP, INC., respondents.
DECISION
CORONA, J.:
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 of the Court of
Appeals (CA) in CA-G.R. CV No. 65175 affirming the November 26, 1998 decision,2 as modified by the June 24, 1999
order,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 reconsideration4and (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. 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.
64
Respondent domestic corporation, Andresons, has been Gallo Winery’s exclusive wine importer and distributor in the
Philippines since 1991, selling these products in its own name and for its own account.5
Gallo Winery’s 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 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
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
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of GALLO 100’s cigarette 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 manufacturer’s sworn statement as basis for BIR’s collection of specific tax on GALLO
cigarettes.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
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 On July 17, 1985, the National Library issued
Certificate of Copyright Registration No. 5834 for La Campana’s lifetime copyright claim over GALLO cigarette labels.12
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the GALLO
trademark.13 BIR approved Mighty Corporation’s use of GALLO 100’s cigarette brand, under licensing agreement with
Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100’s cigarette brand on April 3, 1989.14
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
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 circa1974 within the
then U.S. military facilities only. By 1979, they had expanded their Philippine market through authorized distributors and
independent outlets.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 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.
65
Respondents charged petitioners with violating Article 6bis of the Paris Convention for the Protection of Industrial
Property (Paris Convention)18 and RA 166 (Trademark Law),19 specifically, Sections 22 and 23 (for trademark
infringement),20 29 and 3021 (for unfair competition and false designation of origin) and 37 (for tradename
infringement).22 They claimed that petitioners adopted the GALLO trademark to ride on Gallo Winery’s 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 Winery’s 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 attorney’s fees and litigation expenses.23
In their answer, petitioners alleged, among other affirmative defenses, that: petitioner’s GALLO cigarettes and Gallo
Winery’s wines were totally unrelated products; Gallo Winery’s 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 Winery’s
high-priced luxury wines which cost between P98 to P242.50; the target market of Gallo Winery’s 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 manufacturer’s name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo Winery’s 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 the Makati RTC denied, for lack of merit, respondent’s prayer for the issuance of a writ
of preliminary injunction,25 holding that respondent’s 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
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 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
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 RTC’s denial of the application for issuance of a writ of preliminary injunction
against petitioners.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 & J’s 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.
66
b. ordering defendants to pay plaintiffs –
(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) attorney’s fees and expenses of litigation in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondent’s motion for partial reconsideration and increased the award of
actual and compensatory damages to 10% of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioner’s 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 liable for
trademark infringement, unfair competition and damages.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 CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of law"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 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
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
67
is not simply the identity or similarity of both 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
(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
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.
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 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 (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 &
68
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 Article 6bis of the Paris
Convention.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 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 There are only a few instances when laws may be given retroactive effect,42 none of which is
present in this case.
The IP Code, repealing the Trademark Law,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 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 competitor’s 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
In Del Monte Corporation vs. Court of Appeals,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.
(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
69
Article 6bis of the Paris Convention,46 an international agreement binding on the Philippines and the United States (Gallo
Winery’s 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 createconfusion therewith."
There is no time limit for seeking the prohibition of the use of marks used in bad faith.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,
(b) of a mark considered by the competent authority of the country of registration or use48 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 Trademark registration and actual use are material to the complaining party’s cause of
action.
Corollary to this, Section 20 of the Trademark Law50 considers the trademark registration certificate as prima
facieevidence of the validity of the registration, the registrant’s ownership and exclusive right to use the trademark in
connection with the goods, business or services as classified by the Director of Patents51 and as specified in the
certificate, subject to the conditions and limitations stated therein. Sections 2 and 2-A52 of the Trademark Law
emphasize the importance of the trademark’s 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
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,
70
(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
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
registrant’s express or implied consent to another’s use of its trademark or a colorable imitation thereof. This is why
acquiescence, estoppel or laches may defeat the registrant’s 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 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 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 manufacturer’s 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
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,57 we reiterated our rulings in Pagasa Industrial
Corporation vs. Court of Appeals,58 Converse Rubber Corporation vs. Universal Rubber Products, Inc.,59 Sterling Products
International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate
Court,61 and Philip Morris vs. Court of Appeals,62 giving utmost importance to the actual commercial useof 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.
71
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 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 (27 SCRA 1214 [1969]; Reiterated inKabushi 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

72
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 facieevidence. 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 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
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.
73
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
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery’s 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
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 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.
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.
74
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 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
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
defendant’s goods are then bought as the plaintiff’s and its poor quality reflects badly on the plaintiff’s reputation. The
other is "confusion of business" wherein the goods of the parties are different but the defendant’s 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
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
registrant’s 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 we ordered the approval of Acoje Mining’s 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 we upheld the Patent Director’s
registration of the same trademark CAMIA for Ng Sam’s ham under Class 47, despite Philippine Refining
75
Company’s 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 we dismissed Hickok’s
petition to cancel private respondent’s HICKOK trademark registration for its Marikina shoes as against
petitioner’s earlier registration of the same trademark for handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals,70 in a minute resolution, we dismissed the petition
for review for lack of merit and affirmed the Patent Office’s registration of the trademark SHELL used in the
cigarettes manufactured by respondent Fortune Tobacco Corporation, notwithstanding Shell Company’s
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 we dismissed ESSO’s 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 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 Kaisha’s 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 imitation"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
Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of Appeals78 and its preceding cases.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
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
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 and emblems used, the likelihood of deception of
the mark or name's tendency to confuse82 and the commercial impression likely to be conveyed by the trademarks if
used in conjunction with the respective goods of the parties.83
76
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 rooster’s 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
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
Also, as admitted by respondents themselves,86 on the side of the GALLO cigarette packs are the words "MADE BY
MIGHTY CORPORATION," thus clearly informing the public as to the identity of the manufacturer of the cigarettes.
On the other hand, GALLO Winery’s 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 Directly below or above these sketches is the entire printed name
of the founder-owners, "ERNEST & JULIO GALLO" or just their surname "GALLO,"88which appears in different fonts, sizes,
styles and labels, unlike petitioners’ uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winery’s wines are printed the words "VINTED AND BOTTLED BY ERNEST & JULIO
GALLO, MODESTO, CALIFORNIA."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 Winery’s 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
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."91Simply 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
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 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 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
In resolving whether goods are related,96 several factors come into play:
77
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
97
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or container
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition,
texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption,100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased103 and
(j) the channels of trade through which the goods flow,104 how they are distributed, marketed, displayed and sold.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 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
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 The "purchaser" is
not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the type of product
involved.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
Hence, in the adjudication of trademark infringement, we give due regard to the goods’ usual purchaser’s character,
attitude, habits, age, training and education. 111
Applying these legal precepts to the present case, petitioner’s 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.
78
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] 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
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 with respect to their essential characteristics,
quality, quantity, size, including the nature of their packages, wrappers or containers.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
In this regard, we adopted the Director of Patents’ finding in Philippine Refining Co., Inc. vs. Ng Sam and the Director of
Patents:115
In his decision, the Director of Patents enumerated the factors that set respondent’s 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. Opposer’s products are ordinary 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.
79
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-à-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 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
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 imported or emanating from Gallo Winery. GALLO
cigarettes are distributed, marketed and sold through ambulant and sidewalk vendors, small local sari-saristores and
grocery stores in Philippine rural areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu.118 On the other hand,
GALLO wines are imported, distributed and sold in the Philippines through Gallo Winery’s 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
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip Morris, Inc.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
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), aff’d, 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 plaintiff’s mark for scotch whiskey and because the plaintiff 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 defendant’s use of the mark "BLACK LABEL" for cigarettes because it was likely to cause confusion
with the plaintiff’s 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
80
the plaintiff’s 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 (defendant’s 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 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 ‘Bailey’s’ 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
world’s 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 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 circumstanceswhich
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.
81
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods, a requisite elementunder
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 Winery’s 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.A’s 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, molasses syrup, yeast, baking powder, salt,
mustard, vinegar, species and ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,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.
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
6bis 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
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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.)
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
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 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;
83
(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 man’s goods or business as that of another constitutes unfair competition. Actual or probable deception and
confusion on the part of customers by reason of defendant’s practices must always appear.125 On this score, we find that
petitioners never attempted to pass off their cigarettes as those of respondents. There is no 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.
Costs against respondents.
SO ORDERED.
January 20, 2016
G.R. No. 198889
UFC PHILIPPINES, INC. (now merged with NUTRI-ASIA, INC., with NUTRI-ASIA, INC. as the surviving entity),Petitioner,
vs.
BARRIO FIESTA MANUFACTURING CORPORATION, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
For our disposition is a petition for review on certiorari under Rule 45 seeking to annul and set aside the June 23,
2011 Decision1 and the October 4, 2011 Resolution2 of the Court of Appeals in CA-G.R. SP No. 107570, which reversed
and set aside the March 26, 2008 Decision3 of the Bureau of Legal Affairs of the Intellectual Property Office (IPO-BLA)
and the January 29, 2009 Decision4 of the Director General of the IPO.
Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly organized and existing under Philippine laws. 5 It is the
emergent entity in a merger with UFC Philippines, Inc. that was completed on February 11, 2009.6 Respondent Barrio
Fiesta Manufacturing Corporation (respondent) is likewise a corporation organized and existing under Philippine laws.
On April 4, 2002, respondent filed Application No. 4-2002-002757 for the mark "PAPA BOY & DEVICE" for goods under
Class 30, specifically for "lechon sauce."7 The Intellectual Property Office (IPO) published said application for opposition
in the IP Phil. e-Gazette released on September 8, 2006. The mark appears as follows:
84
On December 11, 2006, petitioner filed with the IPO-BLA a Verified Notice of Opposition to the above-mentioned
application and alleged that:
1. The mark "PAPA" for use on banana catsup and other similar goods was first used [in] 1954 by Neri Papa, and thus,
was taken from his surname;
2. After using the mark "PAP A" for about twenty-seven (27) years, Neri Papa subsequently assigned the mark "PAPA" to
Heman D. Reyes who, on September 17, 1981, filed an application to register said mark "PAP A" for use on banana
catsup, chili sauce, achara, banana chips, and instant ube powder;
3. On August 14, 1983, Heman D. Reyes was issued Certificate of Registration No. 32416;
4. [Certificate of] Registration No. 32416 was subsequently assigned to the following in successive fashion: Acres &
Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc., and Opposer UFC Philippines, Inc.;
5. Last October 28, 2005, Heinz-UFC Philippines, Inc. filed Application Serial No. 4-2005-010788 which, in effect, is a re-
registration of Registration No. 32416 which expired on August 11, 2003;
6. Heman D. Reyes also filed on March 04, 1982 an application to register in the Supplemental Register the "PAPA
BANANA CATSUP Label";
7. On August 11, 1983, Heman D. Reyes was issued Certificate of Registration No. SR-6282 which was subsequently
assigned to Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc.;
8. After its expiration, Opposer filed on November 15, 2006 Trademark Application Serial No. 4-2006-012346 for the re-
registration of the "PAP A Label Design";
9. The mark "PAP A KETSARAP" for use on banana sauce falling under Class 30 was also registered in favor of Acres &
Acres Food, Inc. under Registration No. 34681 issued on August 23, 1985 and renewed last August 23, 2005 by Heinz-
UFC Philippines, Inc. for ten (10) years;
10. On November 07, 2006, Registration No. 34681 was assigned to Opposer;
11. Opposer has not abandoned the use of the mark "PAP A" and the variations thereof as Opposer has continued their
use up to the present;
12. The mark "PAPA BOY & DEVICE" is identical to the mark "PAPA" owned by Opposer and duly registered in its favor,
particularly the dominant feature thereof;
85
13. [With the] dominant feature of respondent-applicant's mark "PAPA BOY & DEVICE", which is Opposer's "PAPA" and
the variations thereof, confusion and deception is likely to result: The consuming public, particularly the unwary
customers, will be deceived, confused, and mistaken into believing that respondent-applicant's goods come from
Opposer or are authorized by Opposer to Opposer's prejudice, which is particularly true considering that Opposer's
sister company, Southeast Asia Food, Inc., and its predecessors-in-interest have been major manufacturers and
distributors of lechon sauce and other table sauces since 1965 under its registered mark "Mang Tomas";
14. Respondent-applicant's mark "PAPA BOY & DEVICE" which nearly resembles Opposer's mark "PAPA" and the
variations thereof will impress upon the gullible or unsuspecting public that it is the same or related to Opposer as to
source because its dominant part is the same as Opposer's mark and, thus, will likely be mistaken to be the mark, or
related to, or a derivative or variation of, Opposer's mark;
15. The goods covered by respondent-applicant's application fall under Class 30, the same Class under which Opposer's
goods enumerated in its earlier issued registrations;
16. The test of dominancy is now explicitly incorporated into law in Section 155 .1 of the IP Code which defines
infringement as the colorable imitation of a registered mark or a dominant feature thereof, and is provided for by
jurisprudence;
17. As a corporation also engaged in the food business, Respondent-applicant knew and/or ought to know that
Opposer and its predecessors-in-interest have been using the mark "PAPA" and the variations thereof for the last fifty-
two (52) years while its sister company is engaged in the business of manufacturing and distributing "lechon sauce" and
other table sauces for the last forty-one (41) years;
18. The approval of the subject application will violate Opposer's right to the exclusive use of its registered mark "PAPA"
and the variations thereof per Section 138 of the IP Code;
19. The approval of the subject application has caused and will continue to cause great and irreparable damage and
injury to Opposer;
20. Respondent-applicant filed the subject application fraudulently and in bad faith; and
21. Respondent-applicant is not entitled to register the subject mark in its favor.8
In its verified opposition before the IPO, petitioner contended that "PAPA BOY & DEVICE" is confusingly similar with its
"PAPA" marks inasmuch as the former incorporates the term "PAP A," which is the dominant feature of petitioner's
"PAPA" marks. Petitioner averred that respondent's use of "PAPA BOY & DEVICE" mark for its lechon sauce product, if
allowed, would likely lead the consuming public to believe that said lechon sauce product originates from or is
authorized by petitioner, and that the "PAPA BOY & DEVICE" mark is a variation or derivative of petitioner's "PAPA"
marks. Petitioner argued that this was especially true considering that petitioner's ketchup product and respondent's
lechon sauce product are related articles that fall under the same Class 30.9
Petitioner alleged that the registration of respondent's challenged mark was also likely to damage the petitioner,
considering that its former sister company, Southeast Asia Food, Inc., and the latter's predecessors-in-interest, had been
major manufacturers and distributors of lechon and other table sauces since 1965, such as products employing the
registered "Mang Tomas" mark.
86
In its Verified Answer, respondent argued that there is no likelihood of confusion between petitioner's family of "PAPA"
trademarks and respondent's "PAPA BOY & DEVICE" trademark. Respondent raised affirmative defenses and we quote
the relevant ones below:
3. Opposer cites several of its following marks in support of its opposition to the application but an examination of said
marks [reveals] that these have already expired and/or that no confusing similarity exists x xx;
4. Assuming that the mark "PAPA KETSARAP" had been timely renewed on August 23, 2005 for "banana sauce" under
Class 30, the same is not a hindrance to the successful registration of the mark "PAPA BOY & DEVICE": Jurisprudence
provides that a certificate of registration confers upon the trademark owner the exclusive right to use its own symbol
only to those goods specified in the certificate subject to the conditions and limitations stated therein;
5. As a result, Opposer's right to use the mark "PAPAKETSARAP" is limited to the products covered by its certificate of
registration which is Class 30 for banana sauce;
6. Contrary to Opposer's belief, the dominant features of Respondent-applicant's mark "PAPA BOY & DEVICE" are the
words "PAPA BOY" and the representation of a smiling hog-like character gesturing the thumbs-up sign and wearing a
traditional Filipino hat and scarf while the dominant feature of Opposer's mark "PAPA KETSARAP" are the words "Papa"
and "Ketsarap", not the word "Papa"; and the word "Ketsarap " is more prominently printed and displayed in the
foreground than the word "Papa" for which reasons opposer's reference to the Dominancy Test fails;
7. Opposer's allegation that the registration of Respondent-applicant's mark "PAPA BOY & DEVICE" will damage and
prejudice the mark "MANG TOMAS" is irrelevant considering that Opposer's basis for filing this opposition is the alleged
confusing similarity between Respondent-applicant's mark and Opposer's mark "PAPA KETSARAP", not the mark
"MANG TOMAS";
8. Respondent-applicant's mark "PAPA BOY & DEVICE" is neither identical nor confusingly similar to Opposer's mark
"PAPA KETSARAP": Respondent-applicant's mark "PAPABOY & DEVICE" is an arbitrary mark which differs in overall
sound, spelling, meaning, style, configuration, presentation, and appearance from Opposer's mark "PAPA KETSARAP";
9. The dissimilarities between the marks are so distinct, thus, confusion is very unlikely: While Opposer's mark is a plain
word mark, Respondent-applicant's mark "PAPA BOY & DEVICE" is much more intricate and distinctive such as
Opposer's mark not having the words "Lechon Sauce" printed inside a blue ribbon-like device which is illustrated below
the words "PAPA BOY", Opposer's mark not having a prominent smiling hog-like character gesturing a thumbs-up sign
and wearing a Filipino hat and scarf stands beside the words "PAPA BOY", and Opposer's mark not having the words
"Barrio Fiesta" albeit conspicuously displayed above the mark, all which leave no doubt in the consumer's mind on the
product that he is purchasing;
10. Aside from the fact that Respondent-applicant's mark "PAPA BOY & DEVICE" is distinct and different in appearance,
spelling, sound, meaning, and style from Opposer's mark "PAPA KETSARAP", the difference in the goods covered by
both marks is obvious: Since the goods covered by Respondent-applicant's mark is unrelated and non-competing to
those covered by Opposer's mark, the doctrine allowing the registrations of marks covering unrelated and non-
competing goods as enunciated by the Supreme Court is therefore applicable in this case;
11. Respondent-applicant's mark cannot be confusingly similar to Opposer's mark considering that the products covered
by these marks are different: While Respondent-applicant's mark "PAPA BOY & DEVICE" covers lechon sauce under
Class 30, Opposer's mark "PAPA KETSARAP" covers banana sauce;
87
12. If a consumer is in the market for banana sauce, he will not buy lechon sauce and vice-versa and as a result, the
margin of error in the acquisition of one from the other is simply remote;
13. Respondent-applicant is the exclusive owner of the mark "PAPA BOY & DEVICE" for lechon sauce under Class 30:
The words "PAPA BOY" is a combination of the nickname of Bonifacio Ongpauco who is one of Respondent-applicant's
incorporators and founders" BOY"- and the word "PAPA" as Bonifacio Ongpauco's mother, Sixta P. Evangelista, had
been fondly known as "Mama Chit", making Respondent-applicant the prior adopter, user, and applicant of the mark
"PAPA BOY & DEVICE" in the Philippines;
14. To protect its ownership over the mark "PAPA BOY & DEVICE" considering that it is the first to adopt and use said
mark, Respondent-applicant applied for its registration under Application Serial No. 4-2002-002757 for Class 30, and
said application was found registrable by the Examiner as. a consequence of which the same was recommended for
allowance after undergoing a thorough process of examination, which recommendation was then approved by the
Director of the Bureau of Trademarks (BOT);
15. Respondent-applicant's mark "PAPA BOY & DEVICE" has been commercially used in the Philippines;
16. Respondent-applicant's mark "PAPA BOY & DEVICE" has been promoted and advertised for a considerable duration
of time and over wide geographical areas: Respondent-applicant has invested tremendous amount of resources in the
promotion of its mark "PAPA BOY & DEVICE" through various media including print publications and promotional
materials;
17. The widespread local commercial use of the subject mark by Respondent-applicant to distinguish and identify its
various high-quality consumer products has earned Respondent-applicant a well-deserved business reputation and
goodwill;
18. Respondent-applicant's mark is distinctive and capable of identifying its goods and distinguishing them from those
offered for sale by others in the market including Opposer's goods for which reason no confusion will result because
Respondent-applicant's mark is for lechon sauce while Opposer's mark is for banana sauce; and
19. The presence of a common prefix "PAPA" in the marks of both parties does not render said marks identical or
confusingly similar: Opposer cannot exclusively appropriate said prefix considering that other marks such as "Papa
Heinz Pizza", "Papa Heinz Sausage", "Papa Beaver", "Papa Pop", "Pizza Papa John's & Design", "Papadoods", and "Papa
in Wine and Device" are valid and active.10
Petitioner's mark and its variations appear as follows:
1. "PAPA" under Registration No. 32416 for Class 29 goods;11

88
2. The mark "PAPA" as it appeared upon re-registration of Certificate No. 32416, under Application No. 4-2005-010788
for Classes 29 and 30 goods;12
3. "PAPA LABEL DESIGN" under Registration No. 4-2006-012364·13 and

89
4. "PAPA KETSARAP" under Certificate of Registration No. 34681, for banana sauce (Class 30).14
PROCEEDINGS BEFORE THE INTELLECTUAL PROPERTY OFFICE
The case was referred to mediation but the parties failed to arrive at an amicable settlement. The case was thus set for
preliminary conference. Subsequently, the IPO-BLA directed the parties to file their respective position papers and draft
decisions.
The IPO-BLA rendered a Decision on March 26, 2008 sustaining petitioner's Opposition and rejecting respondent's
application for "PAPA BOY & DEVICE." The fallo of said decision reads as follows:
WHEREFORE, the VERIFIED NOTICE OF OPPOSITION filed by UFC Philippines, Inc. is, as it is hereby, SUSTAINED.
Consequently, Application Serial No. 4-2002-002757 for the mark "PAPA BOY & DEVICE" for lechon sauce under Class
30 filed on April 04, 2002 by Barrio Fiesta Manufacturing Corporation, is, as it is hereby, REJECTED.
Let the file wrapper of PAPA BOY & Device subject matter of this case be forwarded to the Bureau of Trademarks (BOT)
for appropriate action in accordance with this Decision.15
90
Respondent filed an appeal before the IPO Director General, who found it unmeritorious, and disposed of the case in
the following manner:
WHEREFORE, the instant appeal is hereby DISMISSED. Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of the Bureau of Legal Affairs for appropriate action. Further, let
also the Director of the Bureau of Trademarks and the library of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes."16
DECISION OF THE COURT OF APPEALS
Respondent then filed a petition with the Court of Appeals, questioning the above decision of the IPO Director General
that affirmed the decision of the IPO Bureau of Legal Affairs Director, which disallowed respondent's application for
trademark registration. Respondent's arguments before the Court of Appeals are quoted below:
A.
REGISTRATION NOS. 32416 AND 42005010788 ISSUED FOR THE "PAPA" MARK AND REGISTRATION NOS. SR-6282
AND 42006012364 ISSUED FOR THE TRADEMARK "PAPA BANANA CATSUP LABEL/PAPA LABEL DESIGN" SHOULD NOT
BE USED AS BASIS IN DETERMINING THE EXISTENCE OF CONFUSING SIMILARITY.
B.
THERE IS NO CONFUSING SIMILARITY BETWEEN PETITIONER-APPLICANT'S "PAPA BOY & DEVICE" AND
RESPONDENT'S "PAPA KETSARAP" MARK.
C.
PETITIONER-APPLICANT IS ENTITLED TO THE REGISTRATION OF THE MARK "PAPA BOY & DEVICE."
D.
THE OPPOSITION STATES NO CAUSE OF ACTION, AND HENCE, SHOULD BE DENIED OUTRIGHT.17
As regards the first ground, the Court of Appeals held:
Records show that respondent UFC has Certificates of Registration for the trademarks PAPA, PAPA BANANA CATSUP
label and PAPA KETSARAP. A closer look at the respective Certificate[ s] of Registration of the aforementioned marks,
however, reveals that at the time the trademark application of petitioner was published in the IPO e-Gazette on
September 8, 2006, the duration of the trademark registration of respondent over the marks PAPA and PAPA BANANA
CATSUP have already expired. On the other hand, the mark PAPA KETSARAP was timely renewed by respondent as
shown by the Certificate of Renewal of Registration issued on September 1, 2006 by the Director of the Bureau of
Trademarks.
Under R.A. No. 8293, as amended by R.A. No. 9150, the duration of a trademark registration is 10 years, renewable for
periods of 10 years each renewal. The request for renewal must be made within 6 months before or after the expiration
of the registration. Respondent's PAPA mark was not renewed within the period provided for under RA No. 8293. Its
registered term ended on August 11, 2003 but was reapplied for registration only on April 4, 2005. Meanwhile, the mark
PAPA BANANA CATSUP was registered by respondent only in the Supplemental Register, hence, was not provided any
protection. x x x. It is noted that the PAPA BANANA CATSUP label was applied for registration on November 15, 2006,
91
over three years after the expiration of its registration in the Supplemental Register of the Philippine Patent Office on
August 11, 2003. Thus, while petitioner has a point that the marks PAPA and PAPA BANANA CATSUP have already
expired and the latter having been afforded no protection at all and should not be juxtaposed with petitioner's
trademark, respondent can still use the marks PAPA KETSARAP and PAPA BANANA CATSUP, it appearing that the
Intellectual Property Office issued a Certificate of Registration No. 4-2006-012364 for the latter on April 30, 2007, to bar
the registration of petitioner's "PAPA BOY & DEVICE" mark.18 (Emphases supplied, citations omitted.)
Anent the second ground, the Court of Appeals ruled in the following manner:
After taking into account the aforementioned doctrines and the factual circumstances of the case at bar, this Court,
after considering the trademarks involved as a whole, is of the view that petitioner's trademark "PAP A BOY & DEVICE"
is not confusingly similar to respondent's "PAPA KETSARAP" and "PAPA BANANA CATSUP" trademark. Petitioner's
trademark is "PAPA BOY" as a whole as opposed to respondent's "PAPA". Although on its label the word "PAPA" is
prominent, the trademark should be taken as a whole and not piecemeal. The difference between the two marks are
conspicuous and noticeable. While respondent's products are both labeled as banana sauces, that of petitioner Barrio
Fiesta is labeled as lechon sauce.
Moreover, it appears on the label of petitioner's product that the said lechon sauce is manufactured by Barrio Fiesta
thus, clearly informing the public [of] the identity of _the manufacturer of the lechon sauce. As claimed by respondent,
its products have been in commercial use for decades. It is safe to assume then that the consumers are already aware
that "PAPA KETSARAP" and "PAPA BANANA CATSUP" are products of UFC and not of petitioner or the other way
around. In addition, as correctly pointed out by petitioner, if a consumer is in the market for banana sauce, he will not
buy lechon sauce and vice-versa because aside from the fact that the labels of both parties' products contain the kind
of sauce they are marketing, the color of the products is visibly different. An ordinary consumer is familiar with the fact
that the color of a banana sauce is red while a lechon sauce is dark brown. There can be no deception as both products
are marketed in bottles making the distinction visible to the eye of the consumer and the likelihood of acquiring a
wrong sauce, remote. Even if the products are placed side by side, the dissimilarities between the two marks are
conspicuous, noticeable and substantial enough to matter especially in the light of the following variables that must be
factored in.
Lastly, respondent avers that the word "PAPA" was coined after the surname of the person who first created and made
use of the mark. Admittedly, while "PAPA" is a surname, it is more widely known as a term of endearment for one's
father. Respondent cannot, therefore, claim exclusive ownership over and singular use of [the] term. Petitioner was able
to explain that it adopted the word "PAPA" in parallel to the nickname of the founder of Barrio fiesta which is "MAMA
CHIT". "PAPA BOY" was derived from the nickname of one of the incorporators of herein petitioner, a certain Bonifacio
Ongpauco, son of Mama Chit.19 (Emphasis ours, citation omitted.)
THEORY OF PETITIONER
Thus, petitioner came to this Court, seeking the reversal of the questioned decision and resolution of the Court of
Appeals, and the reinstatement of the decision of the IPO Director General affirming the decision of the IPO-BLA.
Petitioner raises the following grounds:
I.
The court a quo erred in applying the "holistic test" to determine whether there is confusing similarity between the
contending marks, and in reversing the IPO-BLA and the Director General's application of the "dominancy test."
II.
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The court a quo erred in holding that there is no likelihood of confusion between the contending marks given that the
"PAPA BOY & DEVICE" mark is used on lechon sauce, as opposed to ketchup products.
III.
The court a quo erred in holding that Petitioner cannot claim exclusive ownership and use of the "PAP A" mark for its
sauce products because "PAPA" is supposedly a common term of endearment for one's father.20
Under the first ground, petitioner submitted the following arguments:
1. The findings of administrative agencies, if supported by substantial evidence, are binding upon the courts. 21
Petitioner alleges that the Court of Appeals should have respected the ruling of the IPO Director General, which was
consistent with the ruling of the IPO-BLA and supported by substantial evidence, instead of substituting its findings of
fact for those of the Director General and the IPO-BLA.
2. The dominancy test should have been applied to determine if there is confusing similarity between the competing
marks.22
Petitioner points out that the Director General and the IPO-BLA found that the dominant feature of the competing
marks is the word "PAP A" and the minor additions to respondent's "PAPA BOY & DEVICE" mark do not negate
likelihood of confusion caused by the latter's use of the dominant word "PAPA." Petitioner claims that even compared
solely to petitioner's "PAPA KETSARAP" mark (Registration No. 34681), which is conceded to have been timely renewed
and to have never expired, respondent's "PAPA BOY & DEVICE" would still create the likelihood of confusion.23
According to petitioner, the Court of Appeals based its decision on Mead Johnson & Co. v. N.V.J. Van Dorp, Ltd.,24 a case
decided almost five decades ago, long before Republic Act No. 8293 or the 1998 Intellectual Property Code was
enforced. Thus, the Court of Appeals erroneously applied the holistic test since given the nature of the products bearing
the competing marks, the dominancy test should have been applied.
Petitioner claims that "[k]etchup and lechon sauce are common and inexpensive household products that are sold in
groceries and regularly encountered by the ordinary or common purchaser who is not expected to examine, scrutinize,
and compare the details of the competing marks."25
Petitioner distinguishes this case from Mead Johnson and claims that the ordinary purchaser of ketchup or lechon sauce
is not likely to closely scrutinize each mark as a whole, for the latter is "undiscemingly rash" and usually in a hurry, and
cannot be expected to take note of the smiling hog-like character or the blue ribbon-like device with the words "Lechon
Sauce." Petitioner argues that under the Intellectual Property Code, it is not necessary for one to colorably imitate the
competing trademark as a whole. It is sufficient that one imitates a "dominant feature" of the mark to constitute
trademark infringement.
Petitioner asserts that as the IPO-BLA and the Director General observed that the ordinary purchaser is most likely to
notice the words "PAPA BOY," which, in turn, may lead him to believe that there is a connection between respondent's
lechon sauce and petitioner's ketchup products.
Under the second ground, petitioner argues that the Court of Appeals seemed to be unmindful that two kinds of
confusion may arise from the use of similar or colorable imitation marks, i.e., confusion of goods (product confusion)
and confusion of business (source or origin confusion). Petitioner claims that it is reasonable to assume that it may
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expand its business to producing lechon sauce, inasmuch as it already produces food sauce products and its Articles of
Incorporation authorizes it to do so.
Petitioner alleges that the IPO-BLA recognized that confusion of business may arise from respondent's use of its "PAPA
BOY & DEVICE" mark for lechon sauce products, and that the Director-General agreed with the IPO-BLA's findings on
this issue.
Petitioner asserts that ketchup and lechon sauce are undeniably related goods; that they belong to the same
class, i.e., Class 30 of the Nice Classifications; that they serve practically the same purpose, i.e., to spice up dishes; and
that they are sold in similar bottles in the same shelves in grocery stores. Petitioner argues that the Court of Appeals
had absolutely no basis for stating that a person who is out to buy ketchup is not likely to buy lechon sauce by mistake,
as this analysis allegedly only applies to "product confusion" and does not consider confusion of business. Petitioner
alleges that "[t]here equally is actionable confusion when a buyer purchases Respondent's 'PAPA BOY' lechon sauce
believing that the said product is related to or associated with the famous 'PAPA KETSUP' makers." Petitioner further
alleges that "it is reasonable and likely for a consumer to believe that Respondent's 'PAPA BOY' lechon sauce originated
from or is otherwise connected with Petitioner's line of sauces" and that this is "the precise evil that recognition of
confusion of business seeks to prevent."26
Petitioner avers that "PAPA" is a well-known mark and that it has been in commercial use as early as 1954 on banana
ketchup and similar goods. The "PAPA" mark is also registered as a trademark and in commercial use in other parts of
the world such as the United States of America and the Middle East. Petitioner claims that "[b ]eing a trademark that is
registered and well-known both locally and internationally, Petitioner's 'PAPA' marks cannot be appropriated by
another person or entity not only with respect to goods similar to those with respect to which it is registered, but also
with respect to goods which are not similar to those for which the 'PAPA' marks are registered."27
Under the third ground, petitioner claims that the fact that the word "PAPA" is a known term of endearment for fathers
does not preclude it from being used as a mark to identify goods. Petitioner claims that their mark falls under a type of
mark known as "arbitrary or fanciful marks," which are "marks that bear no logical relation to the actual characteristics of
the products they represent," are "highly distinctive and valid," and "are entitled to the greatest protection."28
Petitioner claims that the mark "PAPA" falls under this class of arbitrary marks, even if "PAPA" is also a common term of
endearment for one's father. Petitioner states that there is no logical connection between one's father and food sauces,
such as ketchup; thus, with respect to ketchup, food sauces, and their related products, and for the purpose of
identifying its products, petitioner claims exclusive ownership of the term "PAPA" as an arbitrary mark.
Petitioner alleges that if respondent "has a good faith and proud desire to unmistakably and distinctly identify its lechon
sauce product out in the market, it should have coined a mark that departs from and is distinguished from those of its
competitors." Petitioner claims that respondent, with full knowledge of the fame and the decades-long commercial use
of petitioner's "PAPA" marks, opted for "PAPA BOY & DEVICE," which obviously is just a "colorable imitation."29
THEORY OF RESPONDENT
In its Comment,30 respondent claims that petitioner's marks have either expired and/or "that no confusing similarity
exists between them and respondent's "PAPA BOY & DEVICE' mark." Respondent alleges that under Section 15 of
Republic Act No. 166, a renewal application should be filed within six months before the expiration of the period or
within three months after such expiration. Respondent avers that the expiration of the 20-year term for the "PAPA"
mark under Registration No. 32416 issued on August 11, 1983 was August 11, 2003. The sixth month before August 11,
2003 was February 11, 2003 and the third month after August 11, 2003 was November 11, 2003. Respondent claims that
the application that petitioner filed on October 28, 2005 was almost two years late. Thus, it was not a renewal
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application, but could only be considered a new application under the new Trademark Law, with the filing date
reckoned on October 28, 2005. The registrability of the mark under the new application was examined again, and any
certificate issued for the registration of "PAPA" could not have been a renewal certificate.
As for petitioner's other mark "PAPA BANANA CATSUP LABEL," respondent claims that its 20-year term also expired on
August 11, 2003 and that petitioner only filed its application for the new "PAPA LABEL DESIGN" on November 15, 2006.
Having been filed three years beyond the renewal application deadline, petitioner was not able to renew its application
on time, and cannot claim a "continuous existence of its rights over the 'PAPA BANANA CATSUP LABEL."' Respondent
claims that the two marks are different from each other and that the registration of one is independent of the other.
Respondent concludes that the certificate of registration issued for "PAPA LABEL DESIGN" is "not and will never be a
renewal certificate."31
Respondent also avers as follows:
1.3. With regard to the two new registrations of petitioner namely: "PAPA" (Reg. No. 4-2005-010788) and "PAPA LABEL
DESIGN" (Reg. No. 4-2006-012364), these were filed on October 28, 2005 and November 15, 2006, respectively, under
the Intellectual Property Code (RA 8293), which follows the "first to file" rule, and were obviously filed later than
respondent's "PAPA BOY & DEVICE" mark filed on April 4, 2002. These new marks filed much later than the opposed
"PAPA BOY & DEVICE" mark cannot, therefore, be used as basis for the opposition and should in fact, be denied
outrightly.
xxxx
A search of the Online Trademark Database of Intellectual Property Office (IPO) will show that only Registration No.
34681 issued for "PAPA KETSARAP" was properly renewed on August 23, 2005. xx x Clearly, the registrations of "PAPA"
and "PAPA BANANA CATSUP LABEL" marks under registration nos. 32416 and SR-6282 respectively, have already
expired when Petitioner filed its opposition proceeding against Respondent's trademark on December 11, 2006. Having
expired, and therefore, no longer legally existing, the "PAPA" and "PAPA BANANA CATSUP LABEL" marks CANNOT BAR
the registration of respondent's mark. To allow petitioner's expired marks to prevent respondent's distinct "PAPA BOY &
DEVICE" mark from being registered would be the ultimate absurdity.32
Respondent posits that the Court of Appeals did not err in reversing the decisions of the administrative agencies,
alleging that "[while] it is true that the general rule is that the factual findings of administrative bodies deserve utmost
respect when supported by evidence, the same is subject to exceptions,"33 and that the Court of Appeals had justifiable
reasons to disregard the factual finding of the IPO. Here, the Court of Appeals wisely identified certain material facts
that were overlooked by the IPO-BLA and the IPO Director General which it opined, when correctly appreciated, would
alter the result of the case.
Respondent alleges that the IPO-BLA erroneously considered petitioner's marks "PAPA" and "PAPA BANANA CATSUP
LABEL" when it applied the dominancy test in determining whether petitioner's marks are confusingly similar to those of
respondent's mark "PAPA BOY & DEVICE."
Respondent avers that the IPO-BLA absurdly took emphasis on the mark "PAPA" to arrive at its decision and did not
take into consideration that petitioner's mark was already expired when respondent applied for the registration of its
"PAPA BOY & DEVICE" mark. Respondent compares its "PAPA BOY & DEVICE" with the only mark that respondent
allegedly has, "PAPA KETSARAP," and found no confusing similarity between the two.
We quote below respondent's discussion of its application of the dominancy test to the marks in question:
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Applying the Dominancy test, as correctly emphasized by the Court of Appeals, the dominant feature in respondent's
mark is "PAPA BOY" and not "PAPA". It can be gleaned from respondent's mark that the word "PAPA" was written in the
same font, style and color as the word "BOY". There is also the presence of a "smiling hog-like character" which is
positioned very prominently, both in size and location in said mark, at glance (sic) even more dominant than the word
"PAPA BOY".
xxxx
On the other hand, the dominant feature in petitioner's mark is "KETSARAP", not "PAPA". Even an ordinary examiner
could observe that the word "KETSARAP" in petitioner's mark is more prominently printed than the word "PAPA".
xxxx
In a dominancy test, the prominent feature of the competing trademarks must be similar to cause confusion or
deception. x x x.34
Verily, respondent's dominant feature "PAPA BOY" and the smiling hog-like character and petitioner's dominant feature
"KETSARAP", being the word written in a larger font, are neither confusing nor deceiving to the public. In fact, the
differences between their dominant marks are very noticeable and conspicuous to every purchaser.
Furthermore, the Supreme Court in Societe des Produits Nestle, SA. v. Dy [ 641 Phil. 345], applied the dominancy test by
taking into account the aural effects of the words and letters contained in the marks in determining the issue of
confusing similarity. Obviously, petitioners' "PAPA KETSARAP" mark does not in any way sounds (sic) like respondent's
"PAPA BOY" mark. The common prefix "PAPA" does not render the marks aurally the same. As discussed above, the
dominant feature in petitioner's mark is "KETSARAP" and the dominant feature in respondent's mark is "PAPA BOY".
Thus, the words "KETSARAP" and "PAP A BOY" in petitioner's and respondent's respective marks are obviously different
in sound, making "PAPA BOY & DEVICE" even more distinct from petitioner's "PAPA KETSARAP" mark.35
Using the holistic test, respondent further discusses the differences in the marks in this wise:
Even the use of the holistic test x x x takes into consideration the entirety of the marks in question [to] be considered in
resolving confusing similarity. The differences are again very obvious. Respondent's mark has (1) the word "lechon
sauce" printed inside a blue ribbon-like device which is illustrated below the word "PAPA BOY"; (2) a prominent smiling
hog-like character gesturing a thumbs-up sign and wearing a Filipino hat and scarf stands beside the word "PAPA BOY";
and the word "BARRIO FIESTA" conspicuously displayed above the said trademark which leaves no doubt in the
consumer's mind on the product that he or she is purchasing. On the other hand, petitioner's mark is the word "PAPA"
enclosed by a cloud on top of the word "KETSARAP' enclosed by a geometrical figure.
xxxx
In the instant case, the respective marks are obviously different in color scheme, logo, spelling, sound, meaning and
connotation. Thus, yet again, under the holistic test there can be no confusion or deception between these marks.
It also bears stressing that petitioner's "PAPA KETSARAP" mark covers "banana catsup" while respondent's "PAPA BOY
& DEVICE" covers "lechon sauce'', thereby obliterating any confusion of products of both marks as they travel different
channels of trade. If a consumer is in the market for banana catsup, he or she will not buy lechon sauce and vice-versa.
As a result, the margin of error in the acquisition of one for the other is simply remote. Lechon sauce which is liver
sauce is distinct from catsup extracted/ made from banana fruit. The flavor and taste of a lechon sauce are far from
96
those of a banana catsup. Lechon sauce is sauce for "lechon" while banana catsup is apparently catsup made from
banana.36
Respondent also contends that "PAPA BOY & DEVICE" mark is not confusingly similar to petitioner's trademark "PAPA
KETSARAP" in terms of appearance, sound, spelling and meaning. The difference in nature, usage, taste and appearance
of products decreases the possibility of deception among buyers.37
Respondent alleges that since petitioner merely included banana catsup as its product in its certificate, it cannot claim
any further right to the mark "PAPA KETSARAP" on products other than banana catsup. Respondent also alleges that
petitioner cannot raise "international notoriety of the mark" for the first time on appeal and that there is no proof that
petitioner's mark is internationally well-known.38
Furthermore, respondent argues that petitioner cannot claim exclusive ownership over the use of the word "PAPA," a
term of endearment for one's father. Respondent points out that there are several other valid and active marks owned
by third parties which use the word "PAPA," even in classes of goods similar to those of petitioner's. Respondent avers
that petitioner's claim that its "PAPA" mark is an arbitrary mark is belatedly raised in the instant petition, and cannot be
allowed because the "PAPA KETSARAP" mark would immediately bring the consuming public to thinking that the
product involved is catsup and the description of said catsup is "masarap" (delicious) and due to the logical relation of
the petitioner's mark to the actual product, it being descriptive or generic, it is far from being arbitrary or fanciful.39
Lastly, respondent claims that the Court of Appeals correctly ruled that respondent's product cannot be confused as
originating from the petitioner. Since it clearly appears in the product label of the respondent that it is manufactured by
Barrio Fiesta, the public is dutifully informed of the identity of the lechon sauce manufacturer. The Court of Appeals
further took into account the fact that petitioner's products have been in commercial use for decades.40
Petitioner, in its Reply41 to respondent's Comment, contends that respondent cannot invoke a prior filing date for the
"PAPA BOY" mark as against Petitioner's "PAPA" and "PAPA BANANA CATSUP LABEL" marks, because the latter marks
were still registered when respondent applied for registration of its "PAPA BOY" mark. Thus, the IPO-BLA and Director
General correctly considered them in deciding whether the "PAPA BOY" mark should be registered, using the "first to
file" rule under Section 123.l(d) of Republic Act No. 8293, or the Intellectual Property Code (IP Code).
Petitioner reiterates its argument that the Court of Appeals erred in applying the holistic test and that the proper test
under the circumstances is the dominancy test, which was correctly applied by the IPO-BLA and the Director General.42
THIS COURT'S RULING
The petition has merit.
We find that the Court of Appeals erred in applying the holistic test and in reversing and setting aside the decision of
the IPO-BLA and that of the IPO Director General, both of which rejected respondent's application for the mark "PAPA
BOY & DEVICE."
In Dermaline, Inc. v. Myra Pharmaceuticals, Inc.,43 we defined a trademark as "any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or merchant on his goods to
identify and distinguish them from those manufactured, sold, or dealt by others." We held that a trademark is "an
intellectual property deserving protection by law."
The rights of the trademark owner are found in the Intellectual Property Code, which provides:
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Section 147. Rights Conferred. - 147.1. The owner of a registered mark shall have the exclusive right to prevent all third
parties not having the owner's consent from using in the course of trade identical or similar signs or containers for
goods or services which are identical or similar to those in respect of which the trademark is registered where such use
would result in a likelihood of confusion. In case of the use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed.
Section 168. Unfair Competition, Rights, Regulation and Remedies. - 168.1. A person who has identified in the mind of the
public the goods he manufactures or deals in, his business or services from those of others, whether or not a registered
mark is employed, has a property right in the goodwill of the said goods, business or services so identified, which will be
protected in the same manner as other property rights.
The guideline for courts in determining likelihood of confusion is found in A.M. No. 10-3-10-SC, or the Rules of
Procedure for Intellectual Property Rights Cases, Rule 18, which provides:
RULE 18
Evidence in Trademark Infringement and Unfair Competition Cases
SECTION 1. Certificate of Registration. - A certificate of registration of a mark shall be prima facie evidence of:
a) the validity of the registration;
b) the registrant's ownership of the mark; and
c) the registrant's exclusive right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate.
xxxx
SECTION 3. Presumption of Likelihood of Confusion. - Likelihood of confusion shall be presumed in case an identical sign
or mark is used for identical goods or services.
SECTION 4. Likelihood of Confusion in Other Cases. - In determining whether one trademark is confusingly similar to or
is a colorable imitation of another, the court must consider the general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that
class of goods. Visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy
as they are encountered in the realities of the marketplace must be taken into account. Where there are both similarities
and differences in the marks, these must be weighed against one another to see which predominates.
In determining likelihood of confusion between marks used on non-identical goods or services, several factors may be
taken into account, such as, but not limited to:
a) the strength of plaintiffs mark;
b) the degree of similarity between the plaintiffs and the defendant's marks;
c) the proximity of the products or services;
d) the likelihood that the plaintiff will bridge the gap;

98
e) evidence of actual confusion;
f) the defendant's good faith in adopting the mark;
g) the quality of defendant's product or service; and/or
h) the sophistication of the buyers.
"Colorable imitation" denotes such a close or ingenious imitation as to be calculated to deceive ordinary persons, or
such a resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually
gives, as to cause him to purchase the one supposing it to be the other.
SECTION 5. Determination of Similar and Dissimilar Goods or Services. - Goods or services may not be considered as
being similar or dissimilar to each other on the ground that, in any registration or publication by the Office, they appear
in different classes of the Nice Classification.
In this case, the findings of fact of the highly technical agency, the Intellectual Property Office, which has the expertise in
this field, should have been given great weight by the Court of Appeals. As we held in Berris Agricultural Co., Inc. v.
Abyadang44:
R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods (trademark) or services (service
mark) of an enterprise and shall include a stamped or marked container of goods. It also defines a "collective mark" as
any visible sign designated as such in the application for registration and capable of distinguishing the origin or any
other common characteristic, including the quality of goods or services of different enterprises which use the sign under
the control of the registered owner of the collective mark.
On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol, emblem, sign, or device,
or any combination thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by another. A trademark, being a special property, is afforded protection
by law. But for one to enjoy this legal protection, legal protection ownership of the trademark should rightly be
established.
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer. or distributor of the
goods made available to the purchasing public. Section 122 of R.A.. No. 8293 provides that the rights in a mark shall be
acquired by means of its valid registration with the IPO. A certificate of registration of a mark, once issued,
constitutes prima facie evidence of the validity of the registration, of the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. R.A. No. 8293, however, requires the applicant for registration or the registrant to file a
declaration of actual use (DAU) of the mark, with evidence to that effect, within three (3) years from the filing of the
application for registration; otherwise, the application shall be refused or the mark shall be removed from the register.
In other words, the prima facie presumption brought about by the registration of a mark may be challenged and
overcome, in an appropriate action, by proof of the nullity of the registration or of non-use of the mark, except when
excused. Moreover, the presumption may likewise be defeated by evidence of prior use by another person, i.e., it will
controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a
trademark is a creation of use and belongs to one who first used it in trade or commerce.
The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not suffice. One
may make advertisements, issue circulars, distribute price lists on certain goods, but these alone will not inure to the
claim of ownership of the mark until the goods bearing the mark are sold to the public in the market. Accordingly,
99
receipts, sales invoices, and testimonies of witnesses as customers, or orders of buyers, best prove the actual use of a
mark in trade and commerce during a certain period of time.
xxxx
Verily, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation
of the business established on the goods bearing the mark through actual use over a period of time, but also to
safeguard the public as consumers against confusion on these goods. On this matter of particular concern,
administrative agencies, such as the IPO, by reason of their special knowledge and expertise over matters falling under
their jurisdiction, are in a better position to pass judgment thereon. Thus, their findings of fact in that regard are
generally accorded great respect, if not finality by the courts, as long as they are supported by substantial evidence,
even if such evidence might not be overwhelming or even preponderant. It is not the task of the appellate court to
weigh once more the evidence submitted before the administrative body and to substitute its own judgment for that of
the administrative agency in respect to sufficiency of evidence. (Emphasis added, citations omitted.)
In trademark controversies, each case must be scrutinized according to its peculiar circumstances, such that
jurisprudential precedents should only be made to apply if they are specifically in point.45 The cases discussed below are
mentioned only for purposes of lifting the applicable doctrines, laws, and concepts, but not for their factual
circumstances, because of the uniqueness of each case in controversies such as this one.
There are two tests used in jurisprudence to determine likelihood of confusion, namely the dominancy test used by the
IPO, and the holistic test adopted by the Court of Appeals. In Skechers, U.S.A., Inc. v. Inter Pacific Industrial Trading
Corp.,46 we held:
The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause confusion. In
determining similarity and likelihood of confusion, jurisprudence has developed tests - the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it required that the mark sought to be registered suggests an effort
to imitate. Given more consideration are the aural and visual impressions created by the marks on the buyers of goods,
giving little weight to factors like prices, quality, sales outlets, and market segments.
xxxx
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of" the parties are different, the product, the mark of which registration is
applied for by one party, is such as might reasonably be assumed to originate with the registrant of an earlier product,
and the public would then be deceived either into that belief or into the belief that there is some connection between
the two parties, though inexistent.
Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by respondent in its
Strong rubber shoes infringes on the mark already registered by petitioner with the IPO. While it is undisputed that
petitioner's stylized "S" is within an oval design, to this Court's mind, the dominant feature of the trademark is the
stylized "S," as it is precisely the stylized "S" which catches the eye of the purchaser. Thus, even if respondent did not
use an oval design, the mere fact that it used the same stylized "S", the same being the dominant feature of petitioner's
trademark, already constitutes infringement under the Dominancy Test.
100
This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be considered as
highly identifiable to the products of petitioner alone. The CA even supported its conclusion by stating that the letter
"S" has been used in so many existing trademarks, the most popular of which is the trademark "S" enclosed by an
inverted triangle, which the CA says is identifiable to Superman. Such reasoning, however, misses the entire point, which
is that respondent had used a stylized "S," which is the same stylized "S" which petitioner has a registered trademark for.
The letter "S" used in the Superman logo, on the other hand, has a block-like tip on the upper portion and a round
elongated tip on the lower portion. Accordingly, the comparison made by the CA of the letter "S" used in the Superman
trademark with petitioner's stylized "S" is not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font and the
size of the lettering, the stylized "S" utilized by respondent is the very same stylized "S" used by petitioner; a stylized "S"
which is unique and distinguishes petitioner's trademark. Indubitably, the likelihood of confusion is present as
purchasers will associate the respondent's use of the stylized "S" as having been authorized by petitioner or that
respondent's product is connected with petitioner's business.
xxxx
While there may be dissimilarities between the appearances of the shoes, to this Court's mind such dissimilarities do not
outweigh the stark and blatant similarities in their general features.xx x.
Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test, ruled that
there was no colorable imitation, when it cannot be any more clear and apparent to this Court that there is colorable
imitation. The dissimilarities between the shoes are too trifling and frivolous that it is indubitable that respondent's
products will cause confusion and mistake in the eyes of the public. Respondent's shoes may not be an exact replica of
petitioner's shoes, but the features and overall design are so similar and alike that confusion is highly likely.
xxxx
Neither can the difference in price be a complete defense in trademark infringement. In McDonald's Corporation v. L.C
Big Mak Burger, Inc., this Court held:
Modem law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his
goods or business from actual market competition with identical or similar products of the parties, but extends to all
cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source,
as where prospective purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or
when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). xx x.
Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the
market, and at different price levels depending on variations of the products for specific segments of the market. The
purchasing public might be mistaken in thinking that petitioner had ventured into a lower market segment such that it
is not inconceivable for the public to think that Strong or Strong Sport Trail might be associated or connected with
petitioner's brand, which scenario is plausible especially since both petitioner and respondent manufacture rubber
shoes.
Withal, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and
reputation of the business established on the goods bearing the mark through actual use over a period of time, but
also to safeguard the public as consumers against confusion on these goods. While respondent's shoes contain some
dissimilarities with petitioner's shoes, this Court cannot close its eye to the fact that for all intents and purpose,
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respondent had deliberately attempted to copy petitioner's mark and overall design and features of the shoes. Let it be
remembered, that defendants in cases of infringement do not normally copy but only make colorable changes. The
most successful form of copying is to employ enough points of similarity to confuse the public, with enough points of
difference to confuse the courts. (Citations omitted.)
The Court discussed the concept of confusion of business in the case of Societe Des Produits Nestle, S.A. v. Dy, Jr.,47 as
quoted below:
Among the elements, the element of likelihood of confusion is the gravamen of trademark infringement. There are two
types of confusion in trademark infringement: confusion of goods and confusion of business. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, the Court distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion of goods "in which event the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other." In which case,
"defendant's goods are then bought as the plaintiff's, and the poorer quality of the former reflects adversely on the
plaintiff's reputation." The other is the confusion of business: "Here though the goods of the parties are different, the
defendant's product is such as might reasonably be assumed to originate with the plaintiff, and the public would then
be deceived either into that belief or into the belief that there is some connection between the plaintiff and defendant
which, in fact, does not exist."
There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The dominancy test
focuses on the similarity of the main, prevalent or essential features of the competing trademarks that might cause
confusion. Infringement takes place when the competing trademark contains the essential features of another. Imitation
or an effort to imitate is unnecessary. The question is whether the use of the marks is likely to cause confusion or
deceive purchasers.
xxxx
In cases involving trademark infringement, no set of rules can be deduced. Each case must be decided on its own
merits. Jurisprudential precedents must be studied in the light of the facts of each particular case. In McDonald's
Corporation v. MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can
be deduced because each case must be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if they are specifically in point.
In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In recent cases with
similar factual milieus, the Court has consistently applied the dominancy test. x x x.
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In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test in holding that
"MACJOY" is confusingly similar to "MCDONALD'S." The Court held:
While we agree with the CA's detailed enumeration of differences between the two (2) competing trademarks herein
involved, we believe that the holistic test is not the one applicable in this case, the dominancy test being the one more
suitable. In recent cases with a similar factual milieu as here, the Court has consistently used and applied the dominancy
test in determining confusing similarity or likelihood of confusion between competing trademarks.
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xxxx
Applying the dominancy test to the instant case, the Court finds that herein petitioner's "MCDONALD'S" and
respondent's "MACJOY" marks are confusingly similar with each other that an ordinary purchaser can conclude an
association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features.
x x x.
For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and aurally catches the attention of the
consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "Mac Fries," "Mc
Spaghetti," "McDo," "Big Mac" and the rest of the MCDONALD'S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondent's
trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the
petitioner's trademark registration for the MCDONALD'S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent's application.
In McDonald's Corporation v. L. C. Big Mak Burger, Inc., the Court applied the dominancy test in holding that "BIG MAK"
is confusingly similar to "BIG MAC." The Court held:
This Court x x x has relied on the dominancy test rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the
dominant features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and
market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:
x x x It has been consistently held that the question of infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains the
main or essential or dominant features of another, and confusion and deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co. vs. Pflugh
(CC) 180 Fed. 579). The question at issue in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Hanover Rubber Co., 107 F. 2d 588; xx x)
xxxx
The test of dominancy is now explicitly incorporated into law in Section 155.l of the Intellectual Property Code which
defines infringement as the "colorable imitation of a registered mark x x x or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of the "Big Mak" mark results in likelihood of
confusion. First, "Big Mak" sounds exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly the same
as the first word in "Big Mac." Third, the first two letters in "Mak" are the same as the first two letters in "Mac." Fourth,
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the last letter "Mak" while a "k" sounds the same as "c" when the word "Mak" is pronounced. Fifth, in Filipino, the letter
"k" replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."
In Societe Des Produits Nestle, SA. v. Court of Appeals, the Court applied the dominancy test in holding that "FLAVOR
MASTER" is confusingly similar to "MASTER ROAST" and "MASTER BLEND." The Court held:
While this Court agrees with the Court of Appeals' detailed enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are encountered in the realities of the marketplace.
The totality or holistic test only relies on visual comparison between two trademarks whereas the dominancy test relies
not only on the visual but also on the aural and connotative comparisons and overall impressions between the two
trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:
xxxx
The scope of protection afforded to registered trademark owners is not limited to protection from. infringers with
identical goods.1âwphi1 The scope of protection extends to protection from infringers with related goods, and to
market areas that are the normal expansion of business of the registered trademark owners. Section 138 of R.A. No.
8293 states:
Certificates of Registration. - A certificate of registration of a mark shall be prima facie evidence of validity of the
registration, the registrant's ownership of the mark, and of the registrant's exclusive right to use the same in connection
with the goods or services and those that are related thereto specified in the certificate. x x x.
In Mighty Corporation v. E. & J Gallo Winery, the Court held that, "Non-competing goods may be those which, though
they are not in actual competition, are so related to each other that it can reasonably be assumed that they originate
from one manufacturer, in which case, confusion of business can arise out of the use of similar marks." In that case, the
Court enumerated factors in determining whether goods are related: (1) classification of the goods; (2) nature of the
goods; (3) descriptive properties, physical attributes or essential characteristics of the goods, with reference to their
form, composition, texture or quality; and (4) style of distribution and marketing of the goods, including how the goods
are displayed and sold.
xxxx
x x x. However, as the registered owner of the "NAN" mark, Nestle should be free to use its mark on similar products, in
different segments of the market, and at different price levels. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the
Court held that the scope of protection afforded to registered trademark owners extends to market areas that are the
normal expansion of business:
xxxx
Even respondent's use of the "Big Mak" mark on non-hamburger food products cannot excuse their infringement of
petitioners' registered mark, otherwise registered marks will lose their protection under the law.
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The registered trademark owner may use his mark on the same or similar products, in different segments of the market,
and at different price levels depending on variations of the products for specific segments of the market. The Court has
recognized that the registered trademark owner enjoys protection in product and market areas that are the normal
potential expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his
goods or business from actual market competition with identical or similar products of the parties, but extends to all
cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source,
as where prospective purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or
when it forestalls the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Arn. Jur. 576, 577). (Emphases
supplied, citations omitted.)
Again, this Court discussed the dominancy test and confusion of business in Dermaline, Inc. v. Myra Pharmaceuticals,
Inc.,48 and we quote:
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause
confusion or deception. It is applied when the trademark sought to be registered contains the main, essential and
dominant features of the earlier registered trademark, and confusion or deception is likely to result. Duplication or
imitation is not even required; neither is it necessary that the label of the applied mark for registration should suggest
an effort to imitate. The important issue is whether the use of the marks involved would likely cause confusion or
mistake in the mind of or deceive the ordinary purchaser, or one who is accustomed to buy, and therefore to some
extent familiar with, the goods in question. Given greater consideration are the aural and visual impressions created by
the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments. The
test of dominancy is now explicitly incorporated into law in Section 155.l of R.A. No. 8293 which provides-
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the
same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to
deceive xx x.
xxxx
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the product, the mark of which registration is applied
for by one party, is such as might reasonably be assumed to originate with the registrant of an earlier product, and the
public would then be deceived either into that belief or into the belief that there is some connection between the two
parties, though inexistent.
xxxx
We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set rules that can
be deduced as what constitutes a dominant feature with respect to trademarks applied for registration; usually, what are
taken into account are signs, color, design, peculiar shape or name, or some special, easily remembered earmarks of the
brand that readily attracts and catches the attention of the ordinary consumer.
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xxxx
Further, Dermaline's stance that its product belongs to a separate and different classification from Myra's products with
the registered trademark does not eradicate the possibility of mistake on the part of the purchasing public to associate
the former with the latter, especially considering that both classifications pertain to treatments for the skin.
Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the
market, and at different price levels depending on variations of the products for specific segments of the market. The
Court is cognizant that the registered trademark owner enjoys protection in product and market areas that are
the normal potential expansion of his business. Thus, we have held-
Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead
to a confusion of source, as where prospective purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected
with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148
ALR 77, 84; 52 Am. Jur. 576, 577).
Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such that, considering
the current proliferation of health and beauty products in the market, the purchasers would likely be misled that Myra
has already expanded its business through Dermaline from merely carrying pharmaceutical topical applications for the
skin to health and beauty services.
Verily, when one applies for the registration of a trademark or label which is almost the same or that very closely
resembles one already used and registered by another, the application should be rejected and dismissed outright, even
without any opposition on the part of the owner and user of a previously registered label or trademark. This is intended
not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark and
an established goodwill. (Citations omitted.)
Section 123.l(d) of the IP Code provides:
A mark cannot be registered if it:
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(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date,
in respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion[.]
A scrutiny of petitioner's and respondent's respective marks would show that the IPO-BLA and the IPO Director General
correctly found the word "PAPA" as the dominant feature of petitioner's mark "PAPA KETSARAP." Contrary to
respondent's contention, "KETSARAP" cannot be the dominant feature of the mark as it is merely descriptive of the
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product. Furthermore, it is the "PAPA" mark that has been in commercial use for decades and has established
awareness and goodwill among consumers.
We likewise agree with the IPO-BLA that the word "PAPA" is also the dominant feature of respondent's "PAPA BOY &
DEVICE" mark subject of the application, such that "the word 'PAPA' is written on top of and before the other words
such that it is the first word/figure that catches the eyes."49 Furthermore, as the IPO Director General put it, the part of
respondent's mark which appears prominently to the eyes and ears is the phrase "PAPA BOY" and that is what a
purchaser of respondent's product would immediately recall, not the smiling hog.
We quote the relevant portion of the IPO-BLA decision on this point below:
A careful examination of Opposer's and Respondent-applicant's respective marks shows that the word "PAPA" is the
dominant feature: In Opposer's marks, the word "PAPA" is either the mark by itself or the predominant word
considering its stylized font and the conspicuous placement of the word "PAPA" before the other words. In
Respondent-applicant's mark, the word "PAPA" is written on top of and before the other words such that it is the first
word figure that catches the eyes. The visual and aural impressions created by such dominant word "PAPA" at the least
is that the respective goods of the parties originated from the other, or that one party has permitted or has been given
license to the other to use the word "PAPA" for the other party's product, or that there is a relation/connection between
the two parties when, in fact, there is none. This is especially true considering that the products of both parties belong
to the same class and are closely related: Catsup and lechon sauce or liver sauce are both gravy-like condiments used
to spice up dishes. Thus, confusion of goods and of business may likely result.
Under the Dominancy Test, the dominant features of the competing marks are considered in determining whether
these competing marks are confusingly similar. Greater weight is given to the similarity of the appearance of the
products arising from the adoption of the dominant features of the registered mark, disregarding minor differences.
The visual, aural, connotative, and overall comparisons and impressions engendered by the marks in controversy as
they are encountered in the realities of the marketplace are the main considerations (McDonald's Corporation, et al., v.
L. C. Big Mak Burger, Inc., et al., G. R. No.143993, August 18, 2004; Societe Des Produits Nestle, S. A." et al. v. Court of
Appeals, et al., G. R. No. 112012, April 4, 2001). If the competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result, infringement takes place. (Lim Hoa v. Director of
Patents, 100 Phil. 214 [1956]); Co Tiong Sa v. Director of Patents, et al., G. R. No. L-5378, May 24, 1954). Duplication or
imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate (Lim Hoa v.
Director of Patents, supra, and Co Liang Sa v. Director of Patents, supra). Actual confusion is not required: Only likelihood
of confusion on the part of the buying public is necessary so as to render two marks confusingly similar so as to deny
the registration of the junior mark (Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 137
Phil. 838 [1969]).
As to the first issue of whether PAPA BOY is confusingly similar to Opposer's PAPA mark, this Bureau rules in the
affirmative.
The records bear the following:
1. Registration No. 32416 issued for the mark "PAPA" under Class 29 goods was deemed expired as of February
11, 2004 (Exhibit "A" attached to the VERIFIED NOTICE OF OPPOSITION). Application Serial No. 4-2005-010788
was filed on October 28, 2005 for the same mark "PAPA" for Class 30 goods and Registration No. 42005010788
was issued on March 19, 2007;
2. Opposer was issued for the mark "PAPA BANANA CATSUP LABEL" on August 11, 1983 Registration No. SR-
6282 for Class 30 goods in the Supplemental Register, which registration expired in 2003. Application Serial No.
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4-2006-012364 was filed for the mark "PAPA LABEL DESIGN" for Class 30 goods on November 15, 2006, and
Registration No. 42006012364 was issued on April 30, 2007; and
3. Lastly, Registration No. 34681 for the mark "PAPA KETSARAP" for Class 30 goods was issued on August 23,
1985 and was renewed on August 23, 2005.
Though Respondent-applicant was first to file the subject application on April 04, 2002 vis-a-vis the mark "PAP A" the
filing date of which is reckoned on October 28, 2005, and the mark "PAPA LABEL DESIGN" the filing date of which is
reckoned on November 15, 2006, Opposer was able to secure a registration for the mark "PAPA KETSARAP" on August
23, 1985 considering that Opposer was the prior registrant and that its renewal application timely filed on August 23,
2005.
xxxx
Pursuant to [Section 123 .1 (d) of the IP Code], the application for registration of the subject mark cannot be allowed
considering that Opposer was earlier registrant of the marks PAPA and PAPA KETSARAP which registrations were timely
renewed upon its expiration. Respondent-applicant's mark "PAPA BOY & DEVICE" is confusingly similar to Opposer's
mark "PAPA KETSARAP" and is applied to goods that are related to Opposer's goods, but Opposer's mark "PAPA
KETSARAP" was registered on August 23, 1985 per Certificate of Registration No. 34681, which registration was renewed
for a period of 10 years counted from August 23, 2005 per Certificate of Renewal of Registration No. 34681 issued on
August 23, 2005. To repeat, Opposer has already registered a mark which Respondent-applicant's mark nearly
resembles as to likely deceive or cause confusion as to origin and which is applied to goods to which respondent-
applicant's goods under Class 30 are closely related.1âwphi1
Section 138 of the IP Code provides that a certificate of registration of a mark is prima facie evidence of the validity of
the registration, the registrant's ownership of the mark, and of the registrant's exclusive right to use the same in
connection with the goods and those that are related thereto specified in the certificate.50
We agree that respondent's mark cannot be registered. Respondent's mark is related to a product, lechon sauce, an
everyday all-purpose condiment and sauce, that is not subjected to great scrutiny and care by the casual purchaser,
who knows from regular visits to the grocery store under what aisle to find it, in which bottle it is contained, and
approximately how much it costs. Since petitioner's product, catsup, is also a household product found on the same
grocery aisle, in similar packaging, the public could think that petitioner had expanded its product mix to include lechon
sauce, and that the "PAPA BOY" lechon sauce is now part of the "PAPA" family of sauces, which is not unlikely
considering the nature of business that petitioner is in. Thus, if allowed. registration, confusion of business may set in,
and petitioner's hard-earned goodwill may be associated to the newer product introduced by respondent, all because
of the use of the dominant feature of petitioner's mark on respondent's mark, which is the word "PAPA." The words
"Barrio Fiesta" are not included in the mark, and although printed on the label of respondent's lechon sauce packaging,
still do not remove the impression that "PAPA BOY" is a product owned by the manufacturer of "PAPA" catsup, by
virtue of the use of the dominant feature. It is possible that petitioner could expand its business to include lechon sauce,
and that would be well within petitioner's rights, but the existence of a "PAPA BOY" lechon sauce would already
eliminate this possibility and deprive petitioner of its rights as an owner of a valid mark included in the Intellectual
Property Code.
The Court of Appeals likewise erred in finding that "PAPA," being a common term of endearment for one's father, is a
word over which petitioner could not claim exclusive use and ownership. The Merriam-Webster dictionary defines
"Papa" simply as "a person's father." True, a person's father has no logical connection with catsup products, and that
precisely makes "PAPA" as an arbitrary mark capable of being registered, as it is distinctive, coming from a family name
that started the brand several decades ago. What was registered was not the word "Papa" as defined in the dictionary,
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but the word "Papa" as the last name of the original owner of the brand. In fact, being part of several of petitioner's
marks, there is no question that the IPO has found "PAPA" to be a registrable mark.
Respondent had an infinite field of words and combinations of words to choose from to coin a mark for its lechon
sauce. While its claim as to the origin of the term "PAPA BOY" is plausible, it is not a strong enough claim to overrule
the rights of the owner of an existing and valid mark. Furthermore, this Court cannot equitably allow respondent to
profit by the name and reputation carefully built by petitioner without running afoul of the basic demands of fair play.51
WHEREFORE, we hereby GRANT the petition. We SET ASIDE the June 23, 2011 Decision and the October 4,
2011 Resolution of the Court of Appeals in CA-G.R. SP No. 107570, and REINSTATE the March 26, 2008 Decision of the
Bureau of Legal Affairs of the Intellectual Property Office (IPO-BLA) and the January 29, 2009 Decision of the Director
General of the IPO.
SO ORDERED.
G.R. No. 169974 April 20, 2010
SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner,

vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC., Respondents.
DECISION
BRION, J.:
We review in this petition for review on certiorari1 the (1) decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 60777
that reversed the ruling of the Regional Trial Court of Quezon City, Branch 85 (RTC),3 and dismissed the petitioner
Superior Commercial Enterprises, Inc.’s (SUPERIOR) complaint for trademark infringement and unfair competition (with
prayer for preliminary injunction) against the respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and
Distributor, Inc. (SPORTS CONCEPT); and (2) the CA resolution4 that denied SUPERIOR’s subsequent motion for
reconsideration. The RTC decision that the CA reversed found the respondents liable for trademark infringement and
unfair competition, and ordered them to pay SUPERIOR ₱2,000,000.00 in damages, ₱500,000.00 as attorney’s fees, and
costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR5 filed a complaint for trademark infringement and unfair competition with preliminary
injunction against KUNNAN6 and SPORTS CONCEPT7 with the RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company names
and business names8 "KENNEX",9 "KENNEX & DEVICE",10 "PRO KENNEX"11 and "PRO-KENNEX" (disputed
trademarks).12 Second, it also asserted its prior use of these trademarks, presenting as evidence of ownership the
Principal and Supplemental Registrations of these trademarks in its name. Third, SUPERIOR also alleged that it
extensively sold and advertised sporting goods and products covered by its trademark registrations. Finally, SUPERIOR
presented as evidence of its ownership of the disputed trademarks the preambular clause of the Distributorship
Agreement dated October 1, 1982 (Distributorship Agreement) it executed with KUNNAN, which states:
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Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the [sic] Superior in the
Philippines. Whereas, the [sic] Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in
the territory of the Philippines." [Emphasis supplied.]13
In its defense, KUNNAN disputed SUPERIOR’s claim of ownership and maintained that SUPERIOR – as mere distributor
from October 6, 1982 until December 31, 1991 – fraudulently registered the trademarks in its name. KUNNAN alleged
that it was incorporated in 1972, under the name KENNEX Sports Corporation for the purpose of manufacturing and
selling sportswear and sports equipment; it commercially marketed its products in different countries, including the
Philippines since 1972.14 It created and first used "PRO KENNEX," derived from its original corporate name, as a
distinctive trademark for its products in 1976. KUNNAN also alleged that it registered the "PRO KENNEX" trademark not
only in the Philippines but also in 31 other countries, and widely promoted the "KENNEX" and "PRO KENNEX"
trademarks through worldwide advertisements in print media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship agreement with another company,15 KUNNAN
appointed SUPERIOR as its exclusive distributor in the Philippines under a Distributorship Agreement whose pertinent
provisions state:16
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in the Philippines.
Whereas, the Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the territory of
the Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in the
Philippines, and this Agreement could be renewed with the consent of both parties upon the time of expiration.
2. The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects [sic] of its ten (10)
years contract of distributorship, and it is required that the ownership of the said trademark shall be genuine,
complete as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX
PRODUCTS in the Philippines except only to the Superior. If KUNNAN violates this stipulation, the transfer of the
KENNEX trademark shall be null and void.
4. If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the
agent in the Philippines with full power to exercise and granted the power of attorney, to pursue any case of
Pirating, Infringement and Counterfeiting the [sic] KENNEX trade mark in the Philippine territory.
5. The Superior will be granted from [sic] KUNNAN’s approval before making and selling any KENNEX products
made in the Philippines and the other countries, and if this is the situation, KUNNAN is entitled to have a royalty
of 5%-8% of FOB as the right.
6. Without KUNNAN’s permission, the Superior cannot procure other goods supply under KENNEX brand of
which are not available to supply [sic] by KUNNAN. However, in connection with the sporting goods, it is
permitted that the Superior can procure them under KENNEX brand of which are not available to be supplied
by KUNNAN. [Emphasis supplied.]
110
Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of the KENNEX
trademark to KUNNAN, the latter claimed that the Certificate of Registration for the KENNEX trademark remained with
SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIOR’s President and General Manager, misled
KUNNAN’s officers into believing that KUNNAN was not qualified to hold the same due to the "many requirements set
by the Philippine Patent Office" that KUNNAN could not meet.17 KUNNAN further asserted that SUPERIOR deceived it
into assigning its applications for registration of the "PRO KENNEX" trademark in favor of SUPERIOR, through an
Assignment Agreement dated June 14, 1983 whose pertinent provisions state:18
1. In consideration of the distributorship relationship between KUNNAN and Superior, KUNNAN, who is the
seller in the distributorship relationship, agrees to assign the following trademark applications owned by itself in
the Philippines to Superior who is the buyer in the distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is still the real and truthful owner of the abovementioned
trademarks, and shall agree that it will not use the right of the abovementioned trademarks to do anything
which is unfavourable or harmful to KUNNAN.
3. Superior agrees that it will return back the abovementioned trademarks to KUNNAN without hesitation at the
request of KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment of the
abovementioned trademarks shall be compensated by KUNNAN.1avvphi1
4. Superior agrees that the abovementioned trademarks when requested by KUNNAN shall be clean and
without any incumbency.
5. Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to
reassign or license the said trademarks to any other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN filed with
the now defunct Bureau of Patents, Trademarks and Technology Transfer19 separate Petitions for the Cancellation of
Registration Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709,
3710, 3811, 3812, 3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as Inter
Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for Cancellation) involving the KENNEX and PRO KENNEX
trademarks.20 In essence, KUNNAN filed the Petition for Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks; as mere distributor and not as lawful owner, it
obtained the registrations and assignments of the disputed trademarks in violation of the terms of the Distributorship
Agreement and Sections 2-A and 17 of Republic Act No. 166, as amended.21
On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed
SPORTS CONCEPT as its new distributor. Subsequently, KUNNAN also caused the publication of a Notice and Warning
in the Manila Bulletin’s January 29, 1993 issue, stating that (1) it is the owner of the disputed trademarks; (2) it
terminated its Distributorship Agreement with SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive
111
distributor. This notice prompted SUPERIOR to file its Complaint for Infringement of Trademark and Unfair Competition
with Preliminary Injunction against KUNNAN.22
The RTC Ruling
On March 31, 1998, the RTC issued its decision23 holding KUNNAN liable for trademark infringement and unfair
competition. The RTC also issued a writ of preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using
the disputed trademarks.
The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the disputed trademarks in the
Philippines, based on the findings of the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR was
"rightfully entitled to register the mark ‘KENNEX’ as user and owner thereof." It also considered the "Whereas clause" of
the Distributorship Agreement, which categorically stated that "KUNNAN intends to acquire ownership of [the] KENNEX
trademark registered by SUPERIOR in the Philippines." According to the RTC, this clause amounts to KUNNAN’s express
recognition of SUPERIOR’s ownership of the KENNEX trademarks.24
KUNNAN and SPORTS CONCEPT appealed the RTC’s decision to the CA where the appeal was docketed as CA-G.R. CV
No. 60777. KUNNAN maintained that SUPERIOR was merely its distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and Motion praying that the
decision of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the
Consolidated Petitions for Cancellation be made of record and be considered by the CA in resolving the case. 25The BLA
ruled in this decision –
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its rights to the mark
"PRO KENNEX". It was proven that actual use by Respondent-Registrant is not in the concept of an owner but as a mere
distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and "Q-2") and as enunciated in the case of Crisanta Y. Gabriel
vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere distributor of a product bearing a trademark, even if permitted to use said
trademark has no right to and cannot register the said trademark."
WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the prior user and
owner of the trademark "PRO-KENNEX", the consolidated Petitions for Cancellation and the Notices of Opposition are
hereby GRANTED. Consequently, the trademark "PRO-KENNEX" bearing Registration Nos. 41032, 40326, 39254, 4730,
49998 for the mark PRO-KENNEX issued in favor of Superior Commercial Enterprises, Inc., herein Respondent-
Registrant under the Principal Register and SR No. 6663 are hereby CANCELLED. Accordingly, trademark application
Nos. 84565 and 84566, likewise for the registration of the mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative Finance and
Human Resources Development Services Bureau (AFHRDSB) for appropriate action in accordance with this Decision and
a copy thereof be furnished the Bureau of Trademarks (BOT) for information and update of its record.26
On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director General’s decision on
appeal dated December 8, 2004, denying SUPERIOR’s appeal, be given weight in the disposition of the case.27 The
dispositive portion of the decision reads:28
112
WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30 October 2003
rendered by the Director of the Bureau of Legal Affairs. Accordingly, the instant appeal is DENIED and the appealed
decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director General’s ruling before the Court of Appeals on a
petition for review under Rule 43 of the Rules of Court, docketed as CA–G.R. SP No. 87928 (Registration Cancellation
Case). On August 30, 2007, the CA rendered its decision dismissing SUPERIOR’s petition.29 On December 3, 2007, the
CA decision was declared final and executory and entry of judgment was accordingly made. Hence, SUPERIOR’s
registration of the disputed trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside the RTC’s decision of
March 31, 1998.30 It dismissed SUPERIOR’s Complaint for Infringement of Trademark and Unfair Competition with
Preliminary Injunction on the ground that SUPERIOR failed to establish by preponderance of evidence its claim of
ownership over the KENNEX and PRO KENNEX trademarks. The CA found the Certificates of Principal and Supplemental
Registrations and the "whereas clause" of the Distributorship Agreement insufficient to support SUPERIOR’s claim of
ownership over the disputed trademarks.
The CA stressed that SUPERIOR’s possession of the aforementioned Certificates of Principal Registration does not
conclusively establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact
of registration alone;31 at best, registration merely raises a presumption of ownership that can be rebutted by contrary
evidence.32 The CA further emphasized that the Certificates of Supplemental Registration issued in SUPERIOR’s name
do not even enjoy the presumption of ownership accorded to registration in the principal register; it does not amount
to a prima facie evidence of the validity of registration or of the registrant’s exclusive right to use the trademarks in
connection with the goods, business, or services specified in the certificate.33
In contrast with the failure of SUPERIOR’s evidence, the CA found that KUNNAN presented sufficient evidence to rebut
SUPERIOR’s presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the
rightful owner of the disputed trademarks, was merely KUNNAN’s exclusive distributor. This conclusion was based on
three pieces of evidence that, to the CA, clearly established that SUPERIOR had no proprietary interest over the
disputed trademarks.
First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed that SUPERIOR
sought to be the KUNNAN’s exclusive distributor. The CA based this conclusion on the following provisions of the
Distributorship Agreement:
(1) that SUPERIOR was "desirous of [being] appointed as the sole distributor by KUNNAN in the territory of the
Philippines;"
(2) that "KUNNAN will appoint the sole distributorship right to Superior in the Philippines;" and
(3) that "no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except only to
Superior."
The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that "KUNNAN
intends to acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines" without
considering the entirety of the Distributorship Agreement indicating that SUPERIOR had been merely appointed by
KUNNAN as its distributor.
113
Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to
"acknowledge that KUNNAN is still the real and truthful owner of the [PRO KENNEX] trademarks," and that it "shall
agree that it will not use the right of the abovementioned trademarks to do anything which is unfavourable or harmful
to KUNNAN." To the CA, these provisions are clearly inconsistent with SUPERIOR’s claim of ownership of the disputed
trademarks. The CA also observed that although the Assignment Agreement was a private document, its authenticity
and due execution was proven by the similarity of Mr. Tan Bon Diong’s signature in the Distributorship Agreement and
the Assignment Agreement.
Third, the CA also took note of SUPERIOR’s Letter dated November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the "sole and exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX
products." Attached to the letter was an agreement with KUNNAN, identifying the latter as the "foreign manufacturer of
all KENNEX products." The CA concluded that in this letter, SUPERIOR acknowledged its status as a distributor in its
dealings with KUNNAN, and even in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is based on ownership. Citing Section 4 of Republic Act No.
16634 and established jurisprudence,35 the CA held that SUPERIOR – as an exclusive distributor – did not acquire any
proprietary interest in the principal’s (KUNNAN’s) trademark.
The CA denied SUPERIOR’s motion for reconsideration for lack of merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS NOT THE TRUE AND
RIGHTFUL OWNER OF THE TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS A
MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE DECISION
OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-93-14888, LIFTING THE PRELIMINARY
INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT
FOR INFRINGEMENT OF TRADEMARK AND UNFAIR COMPETITION WITH PRELIMINARY INJUNCTION
THE COURT’S RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement

114
We first consider the effect of the final and executory decision in the Registration Cancellation Case on the present case.
This decision - rendered after the CA decision for trademark infringement and unfair competition in CA-G.R. CV No.
60777 (root of the present case) - states:
As to whether respondent Kunnan was able to overcome the presumption of ownership in favor of Superior, the former
sufficiently established the fraudulent registration of the questioned trademarks by Superior. The Certificates of
Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register) for the KENNEX trademark were
fraudulently obtained by petitioner Superior. Even before PROKENNEX products were imported by Superior into the
Philippines, the same already enjoyed popularity in various countries and had been distributed worldwide, particularly
among the sports and tennis enthusiasts since 1976. Riding on the said popularity, Superior caused the registration
thereof in the Philippines under its name when it knew fully well that it did not own nor did it manufacture the
PROKENNEX products. Superior claimed ownership of the subject marks and failed to disclose in its application with the
IPO that it was merely a distributor of KENNEX and PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to Kunnan in
exchange for the appointment by the latter as its exclusive distributor, Superior however breached its obligation and
failed to assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan Bon Diong,
misrepresented to Kunnan that the latter cannot own trademarks in the Philippines. Thus, Kunnan was misled into
assigning to Superior its (Kunnan’s) own application for the disputed trademarks. In the same assignment document,
however. Superior was bound to ensure that the PROKENNEX trademarks under Registration Nos. 40326, 39254, and
49998 shall be returned to Kunnan clean and without any incumbency when requested by the latter.
In fine, We see no error in the decision of the Director General of the IPO which affirmed the decision of the Director of
the Bureau of Legal Affairs canceling the registration of the questioned marks in the name of petitioner Superior and
denying its new application for registration, upon a finding that Superior is not the rightful owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO KENNEX" trademarks should be cancelled because
SUPERIOR was not the owner of, and could not in the first place have validly registered these trademarks. Thus, as of
the finality of the CA decision on December 3, 2007, these trademark registrations were effectively cancelled and
SUPERIOR was no longer the registrant of the disputed trademarks.
Section 22 of Republic Act No. 166, as amended ("RA 166"),36 the law applicable to this case, defines trademark
infringement as follows:
Section 22. Infringement, what constitutes. — Any person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in
connection withthe sale, offering for sale, or advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin
of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably imitate any such
mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods,
business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided.
[Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for infringement. Corollary to this,
Section 19 of RA 166 provides that any right conferred upon the registrant under the provisions of RA 16637terminates
when the judgment or order of cancellation has become final, viz:
115
Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been made out he shall
order the cancellation of the registration. The order shall not become effective until the period for appeal has elapsed,
or if appeal is taken, until the judgment on appeal becomes final. When the order or judgment becomes final, any right
conferred by such registration upon the registrant or any person in interest of record shall terminate. Notice of
cancellation shall be published in the Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the
registrant of protection from infringement from the moment judgment or order of cancellation has become final.38
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of
SUPERIOR’s case has been rendered moot and academic in view of the finality of the decision in the Registration
Cancellation Case. In short, SUPERIOR is left without any cause of action for trademark infringement since the
cancellation of registration of a trademark deprived it of protection from infringement from the moment judgment or
order of cancellation became final. To be sure, in a trademark infringement, title to the trademark is indispensable to a
valid cause of action and such title is shown by its certificate of registration.39 With its certificates of registration over the
disputed trademarks effectively cancelled with finality, SUPERIOR’s case for trademark infringement lost its legal basis
and no longer presented a valid cause of action.
Even assuming that SUPERIOR’s case for trademark infringement had not been rendered moot and academic, there can
be no infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed
trademarks in the Registration Cancellation Case. Even prior to the cancellation of the registration of the disputed
trademarks, SUPERIOR – as a mere distributor and not the owner – cannot assert any protection from trademark
infringement as it had no right in the first place to the registration of the disputed trademarks. In fact, jurisprudence
holds that in the absence of any inequitable conduct on the part of the manufacturer, an exclusive distributor who
employs the trademark of the manufacturer does not acquire proprietary rights of the manufacturer, and a registration
of the trademark by the distributor as such belongs to the manufacturer, provided the fiduciary relationship does not
terminate before application for registration is filed.40 Thus, the CA in the Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its name. Well-
entrenched in our jurisdiction is the rule that the right to register a trademark should be based on ownership. When the
applicant is not the owner of the trademark being applied for, he has no right to apply for the registration of the same.
Under the Trademark Law, only the owner of the trademark, trade name or service mark used to distinguish his goods,
business or service from the goods, business or service of others is entitled to register the same. An exclusive distributor
does not acquire any proprietary interest in the principal’s trademark and cannot register it in his own name unless it is
has been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIOR’s present case for trademark infringement. The
doctrine of res judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39,
Section 47, and the second is "conclusiveness of judgment" under paragraph (c) thereof.
In the present case, the second concept – conclusiveness of judgment – applies. Under the concept of res judicata by
conclusiveness of judgment, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits on points and matters determined in the former suit.41 Stated
differently, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a different cause of action.42 This second branch of the
principle of res judicata bars the re-litigation of particular facts or issues in another litigation between the same parties
on a different claim or cause of action.43
116
Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and
disputing the same trademarks, we are bound to examine how one case would affect the other. In the present case,
even if the causes of action of the Registration Cancellation Case (the cancellation of trademark registration) differs
from that of the present case (the improper or unauthorized use of trademarks), the final judgment in the Registration
Cancellation Case is nevertheless conclusive on the particular facts and issues that are determinative of the present
case.
To establish trademark infringement, the following elements must be proven: (1) the validity of plaintiff’s mark; (2) the
plaintiff’s ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in
"likelihood of confusion."44
Based on these elements, we find it immediately obvious that the second element – the plaintiff’s ownership of the
mark – was what the Registration Cancellation Case decided with finality. On this element depended the validity of the
registrations that, on their own, only gave rise to the presumption of, but was not conclusive on, the issue of
ownership.45
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere
distributor and could not have been the owner, and was thus an invalid registrant of the disputed trademarks.
Significantly, these are the exact terms of the ruling the CA arrived at in the present petition now under our review.
Thus, whether with one or the other, the ruling on the issue of ownership of the trademarks is the same. Given,
however, the final and executory ruling in the Registration Cancellation Case on the issue of ownership that binds us
and the parties, any further discussion and review of the issue of ownership – although the current CA ruling is legally
correct and can stand on its own merits – becomes a pointless academic discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the CA made any factual findings with respect to the issue
of unfair competition. In its Complaint, SUPERIOR alleged that:46
17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to appoint the
defendant Sports Concept and Distributors, Inc. as its alleged distributor for sportswear and sporting goods bearing the
trademark "PRO-KENNEX." For this reason, on January 20, 1993, the plaintiff, through counsel, wrote the defendant
Sports Concept and Distributor’s Inc. advising said defendant that the trademark "PRO-KENNEX" was registered and
owned by the plaintiff herein.
18. The above information was affirmed by an announcement made by the defendants in The Manila Bulletin issue of
January 29, 1993, informing the public that defendant Kunnan Enterprises, Ltd. has appointed the defendant Sports
Concept and Distributors, Inc. as its alleged distributor of sportswear and sporting goods and equipment bearing the
trademarks "KENNEX and "PRO-KENNEX" which trademarks are owned by and registered in the name of plaintiff herein
as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein, were designed to and are of the nature so as to create
confusion with the commercial activities of plaintiff in the Philippines and is liable to mislead the public as to the nature
and suitability for their purposes of plaintiff’s business and the defendant’s acts are likely to discredit the commercial
activities and future growth of plaintiff’s business.
117
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as the goods or business of another with the end and probable
effect of deceiving the public. The essential elements of unfair competition47 are (1) confusing similarity in the general
appearance of the goods; and (2) intent to deceive the public and defraud a competitor.48
Jurisprudence also formulated the following "true test" of unfair competition: whether the acts of the defendant have
the intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary
conditions of the particular trade to which the controversy relates. One of the essential requisites in an action to restrain
unfair competition is proof of fraud; the intent to deceive, actual or probable must be shown before the right to recover
can exist.49
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e.
sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or
fraud imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to
show that KUNNAN by the above-cited acts intended to deceive the public as to the identity of the goods sold or of the
manufacturer of the goods sold. In McDonald’s Corporation v. L.C. Big Mak Burger, Inc.,50 we held that there can be
trademark infringement without unfair competition such as when the infringer discloses on the labels containing the
mark that he manufactures the goods, thus preventing the public from being deceived that the goods originate from
the trademark owner. In this case, no issue of confusion arises because the same manufactured products are sold; only
the ownership of the trademarks is at issue. Furthermore, KUNNAN’s January 29, 1993 notice by its terms prevents the
public from being deceived that the goods originated from SUPERIOR since the notice clearly indicated that KUNNAN is
the manufacturer of the goods bearing the trademarks "KENNEX" and "PRO KENNEX." This notice states in full:51
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks KENNEX and PRO
KENNEX for sportswear and sporting goods and equipment. Kunnan Enterprises Ltd. has registered the trademarks
KENNEX and PRO KENNEX in the industrial property offices of at least 31 countries worldwide where KUNNAN
Enterprises Ltd. has been selling its sportswear and sporting goods and equipment bearing the KENNEX and PRO
KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement with Superior
Commercial Enterprises, Inc. on December 31, 1991. As a result, Superior Commercial Enterprises, Inc. is no longer
authorized to sell sportswear and sporting goods and equipment manufactured by Kunnan Enterprises Ltd. and bearing
the trademarks KENNEX and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its exclusive Philippine distributor
of sportswear and sporting goods and equipment bearing the trademarks KENNEX and PRO KENNEX. The public is
advised to buy sporting goods and equipment bearing these trademarks only from SPORTS CONCEPT AND
DISTRIBUTORS, INC. to ensure that the products they are buying are manufactured by Kunnan Enterprises Ltd.
[Emphasis supplied.]
Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that SUPERIOR
asserts are being unfairly sold by KUNNAN under trademarks registered in SUPERIOR’s name, the latter is left with no
effective right to make a claim. In other words, with the CA’s final ruling in the Registration Cancellation Case,
SUPERIOR’s case no longer presents a valid cause of action. For this reason, the unfair competition aspect of the
SUPERIOR’s case likewise falls.
118
WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.’s petition for review on certiorari for
lack of merit. Cost against petitioner Superior Commercial Enterprises, Inc.
SO ORDERED.

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1

G.R. No. 131522 July 19, 1999

PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,

The facts are as follows:

During the pre-trial conference, the parties agreed to a stipulation of

Done in the City of Manila this 23rd day of April, 1993.

(s/t) MARVIE R. ABRAHAM SINGSON

S. C. Adm. Order No. 124-92 11

xxx xxx xxx

Hence, this petition.

We find the petition impressed with merit.

177.1 Reproduction of the work or substanlial portion of the work;

177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of the

177.5 Public display of the original or copy of the work;

177.6 Public performance of the work; and

177.7 Other communication to the public of the work 19

The law also provided for the limitations on copyright, thus:

xxx xxx xxx

Items in dates and addresses:

He died on Monday, April 15, 1975.

Miss Reyes lives in 214 Taft Avenue,

On page 73 of respondents Book 1 Developing English Today, they wrote:

He died on Monday, April 25, 1975.

Miss Reyes address is 214 Taft Avenue Manila 23

— Edmund Burke, "Speech on Criticism." 24

xxx xxx xxx

Kapunan and Ynares-Santiago, JJ., concur.

Davide, Jr., C.J., I dissent, please see dissenting opinion.

Melo, J., no part, personal reason.

DAVIDE, JR., C.J., dissenting opinion:

I am unable to join the majority view.

177.1 Reproduction of the work or substantial portion of the work;

177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the

177.5 Public display of the original or a copy of the work;

177.6 Public performance of the work; and

177.7 Other communication to the public of the work.

Q So, she did not copy it from yours?

To illustrate, an excerpt from page 21 of CET reads:

The author card is the main entry card. It contains

2. the title of the book, and the subtitle, if there is one;

3. the edition, if it is not the first;

4. the translator or illustrator, if there is any;

7. the subjects with which the book deals [sic];

8. the call number on the upper left-hand corner.

The author card is the main entry card containing:

2. the title of the book, and the subtitle if there is one;

3. the edition, if it is not the first;

4. the translator or illustrator, if any;

7. the subject with which the book deals; and

8. the call number on the upper-left hand corner.

(1) [O] the 23,560 Spanish words in the defendant's

DAVIDE, JR., C.J., dissenting opinion:

I am unable to join the majority view.

177.1 Reproduction of the work or substantial portion of the work;

177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the

177.5 Public display of the original or a copy of the work;

177.6 Public performance of the work; and

177.7 Other communication to the public of the work.

Q So, she did not copy it from yours?

To illustrate, an excerpt from page 21 of CET reads:

The author card is the main entry card. It contains

2. the title of the book, and the subtitle, if there is one;

ATTENTION ALL CLIENTS