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G.R. No.

L-4392 February 17, 1909

PATRICIO UBEDA, plaintiff-appellant,


vs.
AGAPITO ZIALCITA, defendant-appellee.

Kincaid and Hurd for appellant.


Felipe Buencamino for appellee.

ARELLANO, C.J.:

Patricio Ubeda, owner of the registered trade-mark "Ginebra Tres Campanas," claims and alleges
loss and damages by reason of the imitation of his trade-mark by the defendant, who has been
selling gin in bottles bearing said trade-mark, and using a label design that greatly resembles his;
that the only difference between them is that of the defendant, instead of bearing the words "Ginebra
Tres Campanas," reads "Ginebra de Dos Campanas," and in the center thereof, instead of "Patricio
Ubeda," it reads "Gavino Barreto;" that the remainder of the trade-mark is a copy of his own; and
that as the defendant, the plaintiff avers, has thus sold gin to the value of not less than P50,000,
from which he has obtained a profit of P10,000, the plaintiff's sales have been decreased by the
amount and he has failed to receive the said profit of P10,000 which he would have obtained if he
had made such sales. In conclusion he prayed that the defendant be ordered to account for all sales
made by him of gin put up in bottles bearing the trade-mark, design, or any of the distinctive marks
belonging to the plaintiff, and that, after the extent of such sales has been ascertained, the said
defendant thereof as indemnity for loss and damages; that the defendant be forever prohibited from
using the device or trade-mark or design bearing any resemblance to those of the plaintiff, and that
he be sentenced to pay the costs of the proceeding.

The defendant, Agapito Zialcita, opposed the demand for various reasons which he advanced as a
special denial to the complaint, and the Court of First Instance of Manila, after hearing the evidence
adduced at the trial, absolved him from the complaint filed by the plaintiff herein, Patricio Ubeda, with
the costs against the latter. The plaintiff appealed from the judgment and moved for a new trial; his
motion was overruled, to which motion he excepted, and submitted a bill of exceptions to this court
for the purposes of his appeal and a review of the facts and evidence offered in the first instance.

On the appeal it appears:

That the plaintiff is the owner of a trade-mark described in the third clause of his complaint as:

Two concentric circles, the larger fifty millimeters in diameter, and the smaller thirty-three,
eight millimeters apart. In the upper part of the ring formed by the imposition of one circle
over the other, are the words "Ginebra de Tres Companas," and in the lower part, the name
of the plaintiff, "Patricio Ubeda." Inside the smaller or center ring there are three bells, tied
together at the top by a ribbon, and an ear of some cereal, the ends of which fall over the
bells posterior and lateral bells. On the lower part of said bells the words "Extra Superior" are
written. Above the two circles and almost diametrically crossing them, the facsimile of the
signature and rubric of the plaintiff, that is "Patricio Ubeda," is stamped in black ink; said
facsimile commences on the three first letters of the word "Ginebra," and ends at the letter
"P" of the "Campanas," crossing the three bells; the rubric terminates on the lower part of the
bell at the right of the other two, viewed from the front, though skirting it a little at the left.
Outside, and above the larger ring, are the following words in small print: "Para evitar la
falsificacion, nuestras etiquetas se hallan depositadas y llevan nuestra firma."(To prevent
falsification, our labels are registered and bear our signature), and below and also outside is
the word "Manila."

That said mark was registered at the office of the late Direccion General de Administracion Civil of
the Spanish Government on December 24, 1898; that on July 31,1905, the plaintiff cautioned the
defendant to stop using a mark similar to his own, but, notwithstanding the warning, the defendant
continued to use said mark; that the defendant, in addition to a general denial in his answer, alleged
as a special defense: (1) That no similarity or resemblance exists between the trade-marks used by
him and those of the plaintiff; (2) that long prior to 1880, the distinctive device or trade-mark "Ginebra
de la Campana" of Van Den Bergh & Co. was entered and registered in the old Direccion General de
Administracion Civil, at present the division of patents, copyrights, and trade-marks of the Executive
Bureau, which trade-mark is similar to or greatly resembles the one described by the plaintiff in his
complaint; and (3) that the device now used by the plaintiff, which is different from that registered by
him, is also another falsification of that of Van Den Bergh & Co., and which he managed to register
by taking advantage of the first days of American occupation of the city of Manila; said plaintiff has
been using both marks, one after the other, for the purpose of defrauding and deceiving the public
as to the nature, origin, and properties of his gin, mixing it with that of Van Den Bergh & Co., and
thus selling a cheap product at the same price as the gin of Van Den Bergh & Co., which for the
reason that it is imported from Europe, costs more than his.

The imitation charged by the plaintiff to the defendant was the subject of argument and proof, in the
consideration of which the judgment appealed from deals at length; but for the purposes of the law,
the following conclusions contained in the said judgment suffice to determine the question:

First. That the title of ownership of the plaintiff, Exhibit A, was issued to the plaintiff on
December 16, 1898, for a trade-mark which is not exactly the same as the one described in
the complaint, because although the said titles or trade-marks bear the same circular form,
and around the two concentric circles the words "Patricio Ubeda," "Ginebra de Tres
Campanas" and "Extra Superior" appear, and on the outside are the words "para evitar la
falsification nuestras etiquetas se halan depositadas y llevan nuestra firma," and the center
is of gold color, which is the color of the entire label "Tres Campanas," and signature
"Patricio Ubeda" in black yet on the lower part of said label, outside of the larger circle of the
trade-mark is seen the word "Amberes." (Antwerp), whereas on the other, in lieu thereof is
printed as follows the word "Manila," this difference was explained at the trial as follows: That
the said title was issued to the plaintiff to sell gin in this Islands imported from Antwerp, with
the said label, but not manufactured by the plaintiff as stated in his complaint; the difference
between the registered trade-mark and the other is also noticeable because on the latter the
words or legends previously described are not embossed, nor is the gold coloring in the one
of the same shade as in the other.

Second. That on the other hand there appears from the certified copy, Exhibit 8, that a
certificate was issued on the 11th of December, 1873, by the Ministerio de Fomento in Spain
to Van Den Bergh & Co., manufacturers of wines at Antwerp, according them the use of the
mark "Ginebra de la Campana, Van Den Bergh & Co.," with the right to use said trade-mark
in Spanish territory and foreign possession, said mark appears as Exhibit 3, and bears a
great resemblance to Exhibit A, the title of ownership of which, according to said exhibit, was
issued to said plaintiff by the aforesaid Direccion General de Administracion Civil; the only
difference between the two trade-marks being that three bells are printed on that of the
plaintiff, in the center of the two circles, with the signature of Patricio Ubeda in black ink
crossing the two circles, while that of Exhibit 3 has only one bell inside the circles, with the
signature of Van Den Bergh & Co., crossing the said circles; there has been and there still is
on the sale in this market bottled gin bearing the said trade-mark, as was also proven at the
trial; said trade-mark was registered in the Bureau of Archives in November, 1903, in view of
the fact that no record could be found of the registration of the trade-mark "Tres Campanas,"
and for the reason that said trade-mark of Van Den Bergh & Co. had already been registered
in the United States.

Third. That the similarity existing between the trade mark "Ginebra de la Campana, Van Den
Bergh & Co.," and the trade-mark "Ginebra de tres Campanas, Patricio Ubeda," under the
circumstances mentioned with respect to the registration or issuance of the title of ownership
of the second of the said trade-marks in favor of the plaintiff, should be taken into account for
the due appreciation of the acts of the parties herein, and their respective rights in this
litigation, because it all tends to explain in some way the conduct of the defendant . . . and at
the same time shows that all trade-marks bearing more or less bells, familiar to the trade
here on gin bottles, are nothing more than a variation of the mark "Ginebra de la Campana,
Van Den Bergh & Co.," or bear some resemblance thereto, and shows that if it was a matter
of judging simply from the similarity or resemblance between two trade-marks, the plaintiff
has no right to charge the defendant with being a competitor in bad faith for having used the
trade-mark "Dos Campanas."

In effect, the following communication received by the plaintiff on the 12th of December, 1898, from
the Direccin General de Administracin Civil, is one of the documents offered by him as a
preliminary title:

By a resolution of the 5th inst. . . . this Direccion General has been pleased to grant you the
ownership of the inclosed trade-mark for the wines denominated "Tres Campanas," of which
you are the importer in this market, upon payment of the corresponding fees.

But the said trade-mark reads on the lower part, "Amberes," and in diminutive characters toward the
right had bears the lithographer's name, "Litografa Ramrez y Ca., Madrid." So that the license
granted him was for the use of an Antwerp trade-mark, for gin imported into these Islands, while the
trade-mark described in the complaint as being imitated, is one for gin manufactured in these
Islands, for which the license granted was not obtained; and according to a certificate of the Bureau
of Archives of this Government, there is only one entry on file, as follows:

Registro Pblico y General de Comercio. Section 2, folio 3, 8. Under date of December


16, 1898, His Excellency, the Governor-General, issued a title of ownership of a trade-mark
in favor of Don Patricio Ubeda Gallego, as importer in this market of the wine denominated
"Tres Campanas."

This entry is not exactly that of the title, Exhibit A, issued on the 16th of December, 1898, but its
recording in the division of agriculture, industry, and commerce of the said Direccin which actually
appears under entry No. 8 on folio 3 of the second register of industrial and commercial trade-marks,
dated December 24, 1898.

On December 2, 1904, in reply to a communication from Van Den Bergh & Co. of Antwerp, Patricio
Ubeda told the said gentlemen that he was the proprietor of the trade-mark "Ginebra Tres
Campanas" for the Philippine Islands under entry No. 8, folio 3, of the second register of industrial
and commercial trade-marks.

Upon comparing the trade-marks that appears at the foot of the title of ownership presented by the
plaintiff, and which bears the word "Amberes" on the lower outer part thereof, with the real and
undisputed mark of Van Den Bergh & Co., of Antwerp, also bearing the said word upon the lower
part, it is found that the description given in clause 3 of the complaint applies to the salient features
of both, and that when viewed from a distance they appear alike; even to the characters used in the
respective autographs stamped across both marks, the resemblance is perfect, and the type
employed in the legend, the caution, class, and place of origin is the same in both. So that it may be
said of Van Den Bergh & Co.'s trade-mark (Exhibit 3), as of that of Patricio Ubeda's (Exhibit A): Two
concentric circles, the larger of 50 millimeters in diameter and the smaller 33, 8 millimeters apart. On
the lower part of the bell the words "Extra Superior" are written. Above the two circles and almost
diametrically crossing them, the facsimile of the signature and rubric of Van Den Bergh & Co. is
stamped in black ink; said facsimile commences on the first letter of the word "Ginebra" and ends at
the letter "P" of the word "Campana." Outside and above the larger ring and in small letters (identical
in both) are the following words: "Para evitar la falsificacion nuestras etiquetas se hallan depositadas
y llevan nuestra firma." Below, and also outside, is the word "Amberes," of the same type and size
(in both trade-marks), not "Manila," as described in clause 3 of the complaint. The whole of the
substitution consists of "Tres Campanas" for "La Campana," and "Patricio Ubeda" in lieu of "Van
Den Bergh & Co.," both in the text and the signature; all are of the same color, and, viewed from a
certain distance as a whole, of exactly the same appearance; in other words such a mark as is
applied to a bottle of characteristics design as that used for the putting up gin.

The conclusion contained in the judgment appealed from, "that all the labels with more or
less campanas (bells) used in this market on gin bottles are nothing more than a variation of the
trade-mark "Ginebra de la Campana, Van Den Bergh & Co.," or bear a great resemblance thereto,"
is correct.

The plaintiff presents a registered trade-mark which can be seen at the foot of the title of ownership
obtained for imported gin. According to the registered mark existed here, although he says he was
given to understand that the copyright had expired. Ernest Appel, of the firm of C. Heinszen & Co. of
this city, testified that he did not know when the "Ginebra de Una Campana" was first imported in
these Islands, but, according to the books of said firm, which is the importer of it, the latter received
a shipment of 500 cases on the 15th of January, 1892.

The trade-mark of this gin was produced in evidence (Exhibit No. 3) prior to that of the plaintiff which,
as stated by the latter "was registered in Spain," and he believed that it existed in the Islands,
according to his declaration at folio 19 of the record; all the objection raised against its admission
was based, first, in that the plaintiff did not derive any right from the mark of Van Den Bergh & Co.;
second, in that said mark was not valid in the Philippine, because at the time when that of the
plaintiff was registered the defendant had no right therein for the reason that any right which he
might have possessed had expired; and third, in that this matter was foreign to the suit between the
plaintiff and the defendant as res inter alios acta. Thus he assigns as error in the judgment "in
admitting as proof the certificate issued in 1873 by the Ministerio de Fomento of Spain to Van Den
Bergh & Co. for the use of the mark 'Ginebra de la Campana.' "(Brief, 2.) He added:

So that although it be considered that the plaintiff's mark is an imitation of that of Van Den
Bergh & Co., yet from the fact that the mark of the latter had lapsed, it is evident that since
1898 the plaintiff was the only one who could lawfully use the mark "Ginebra Tres
Campanas," and all other variations of the same were illegal . . . In the said year 1898, apart
from the said double expiration (through prescription of ownership and use) of the trade-mark
"Ginebra de la Campana," no one claimed to have any right thereto, and consequently the
plaintiff, like any other person, could ask for, and the ownership could be granted him, not of
a mark similar to that of Van Den Bergh & Co., but one exactly the same as the mark
"Ginebra de la Campana," and the grantee could not be charged with bad faith. (Brief, 7 and
8.)

No action, or suit, or criminal prosecution shall be maintained under the provisions of this Act
. . . in any case where the trade-mark, trade-name, or the indicia of origin, ownership, or
manufacture have been used by the complaining and injured party for the purpose of himself
deceiving the public with respect to the character of the merchandise sold by him or of the
business or profession or occupation carried on by him.

This is one of the defense utilized by the defendant so far as he alleged that a party who had
imitated the trade-mark of another could hardly be entitled to bring an action for an imitation of his
own. If, as claimed by the plaintiff, the mark "Dos Campanas," used by the defendant, is an imitation
and a variation of his own trade-mark "Tres Campanas," it is illegitimate and illegal, and the conduct
of the person using the said imitation is deceitful and fraudulent and subject to an action for unlawful
competition; it follows that the mark "Tres Campanas," of the plaintiff, being an imitation and a
variation of the mark "La Campana" and the conduct of the plaintiff is in turn deceitful and fraudulent
and gives rise to an action for unlawful competition. And being deceitful and fraudulent, that is to
say, inasmuch as the petitioner, who claims to be the injured party, made use of the mark "Tres
Campanas" for the purpose of deceiving the public with respect to the character of the merchandise
sold by him, pretending, under the title of ownership produced in evidence, to cause it to pass as
imported from Antwerp when it was manufactured in Manila, as he testified in this case, he can not,
under the provisions of said section 9, exercise any right of action or sue for what he claims in his
complaint.

Neither through the lack of registration of trade-mark of Van Den Bergh & Co. nor by reason of the
expiration of the copyright for its use, could the plaintiff consider himself at liberty to freely and with
impunity use the same. Section 4 of the said Act reads as follows:

In order to justify recovery for violation of trade-mark rights in the preceding section defined,
it shall not be necessary to show that the trade-marks have been registered under the royal
decree of 1888, providing for registration of trade-marks in the Philippine Islands, in force
during the Spanish sovereignty in these Islands, nor shall it be necessary to show that the
trade-mark if the party complaining shall prove that he has been registered under this Act. It
shall be sufficient to invoke protection of his property in a trade-mark if the party complaining
shall prove that he has used the trade-mark claimed by him and calculated to deceive the
public into the belief that the goods of that other were the goods manufactured or dealt in by
the complaining party.

The fact that both have fraudulently imitated the trade-mark of the third person, one which antedated
both of theirs, and which with variations was copied in order to sell as "La Campana" gin from
Antwerp, those gins which the one and the other have offered the public under the trade-marks of
"Dos Campanas" and "Tres Campanas," can not be considered res inter alios acta for the foundation
of an action between the plaintiff and the defendant. The usurpation of a trade-mark by means of an
imitation is punished by law, and this is what the plaintiff puts forward as his right of action against
the defendant. The latter in turn, in answer to the plaintiff and for the purpose of denying his right of
action sets up the same charge of imitation, and supports his exception by offering in evidence the
trade-mark that was imitated, substituted, and originally usurped; the right of a third person is not
contested except as a defense against the plaintiff, and whatever is legitimate as a cause of action is
equally legitimate as a defense. If the action is a legitimate one, although the usurped trade-mark
was not entered or registered, legitimate must also be the defense, although the mark, usurped in
turn by the complaining and injured party, may not have been recorded or registered. Therefore,
there is no injury to him who in turn appears as guilty of identical usurpation; evidence to this effect
with respect to an act relating to a third person is not res inter alios acta, but necessary proof of the
defense of the defendant. And, inasmuch as the provision of the law must be complied with, it is
needless in order to decide this case to consider the other exceptions or defenses of the defendant;
the lack of right of action stands foremost owing to its conclusive effect.
By virtue of the foregoing and on account of the circumstances as set forth, the judgment appealed
from is hereby affirmed with the costs of this instance against the appellant.

Torres, Mapa, Carson, and Willard, JJ., concur.


2.

G.R. No. L-11937 April 1, 1918

PEDRO SERRANO LAKTAW, plaintiff-appellant,


vs.
MAMERTO PAGLINAWAN, defendant-appellee.

Perfecto Gabriel for appellant.


Felix Ferrer and Crossfield and O'Brien for appellee.

ARAULLO, J.:

In the complaint presented in the Court of First Instance of the City of Manila on February 20, 1915,
it was alleged: (1) That the plaintiff was, according to the laws regulating literary properties, the
registered owner and author of a literary work entitled Diccionario Hispano-Tagalog (Spanish-
Tagalog Dictionary) published in the City of Manila in 1889 by the printing establishment La Opinion,
and a copy of which was attached to the complaint, as Exhibit A; (2) that the defendant, without the
consent of the plaintiff, reproduced said literary work, improperly copied the greater part thereof in
the work published by him and entitled Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary),
a copy of which was also attached to the complaint as Exhibit B; (3) that said act of the defendant,
which is a violation of article 7 of the Law of January 10, 1879, on Intellectual Property, caused
irreparable injuries to the plaintiff, who was surprised when, on publishing his new work
entitled Diccionario Tagalog-Hispano (Tagalog-Spanish Dictionary) he learned of the fact, and (4)
that the damages occasioned to the plaintiff by the publication of defendant's work amounted to
$10,000. The plaintiff therefore prayed the court to order the defendant to withdraw from sale all
stock of the work herein identified as Exhibit B and to pay the plaintiff the sum of $10,000, with costs.

The defendant in his answer denied generally each and every allegation of the complaint and prayed
the court to absolve him from the complaint. After trial and the introduction of evidence by both
parties, the court on August 20, 1915, rendered judgment, absolving the defendant from the
complaint, but without making any special pronouncement as to costs. The plaintiff moved for a new
trial on the ground that the judgment was against the law and the weight of the evidence. Said
motion having been overruled, plaintiff excepted to the order overruling it, and appealed the case to
the Supreme Court upon a bill of exceptions.

The ground of the decision appealed from is that a comparison of the plaintiff's dictionary with that of
the defendant does not show that the latter is an improper copy of the former, which has been
published and offered for sale by the plaintiff for about twenty-five years or more. For this reason the
court held that the plaintiff had no right of action and that the remedy sought by him could not be
granted.

The appellant contends that court below erred in not declaring that the defendant had reproduced
the plaintiff's work and that the defendant had violated article 7 of the Law of January 10, 1879, on
Intellectual Property.

Said article provides:

Nobody may reproduce another person's work without the owner's consent, even merely to
annotate or add anything to it, or improve any edition thereof.
Therefore, in order that said article may be violated, it is not necessary, as the court below seems to
have understood, that a work should be an improper copy of another work previously published. It is
enough that another's work has been reproduced without the consent of the owner, even though it
be only to annotate, add something to it, or improve any edition thereof.

Upon making a careful and minute comparison of Exhibit A, the dictionary written and published by
the plaintiff, and Exhibit B, written and published by the defendant, and, taking into account the
memorandum (fols. 55 to 59) presented by the defendant, in which he enumerates the words and
terms which, according to him, are in his dictionary but not in that of that of the plaintiff, and
viceversa, and the equivalents or definitions given by the plaintiff, as well as the new Tagalog words
which are in the dictionary of the defendant but not in that of the plaintiff; and considering the notes,
Exhibit C, first series, presented by the plaintiff, in which the terms copied by the defendant from the
plaintiff's dictionary are enumerated in detail and in relation to each letter of the alphabet and which
the plaintiff's own words and terms are set forth, with a summary, at the foot of each group of letters,
which shows the number of initial Spanish words contained in the defendant's dictionary, the words
that are his own and the fact that the remaining ones are truly copied from the plaintiff's dictionary
considering all of these facts, we come to a conclusion completely different and contrary to that of
the trial court, for said evidence clearly shows:

1. That, of the Spanish words in the defendant's dictionary, Exhibit B, which correspond to each
letter of the alphabet, those that are enumerated below have been copied and reproduced from the
plaintiff's dictionary, with the exception of those that are stated to be defendant's own.

Letter Words Defendant's


own

"A" 1,184 231

"B" 364 28

"C" 660 261

"CH" 76 10

"D" 874 231

"E" 880 301

"F" 383 152

"G" 302 111

"H" 57 64

"I" 814 328

"J" 113 25

"K" 11 11

"L" 502 94

"LL" 36 2
"M" 994 225

"N" 259 53

"" 6 2

"O" 317 67

"P" 803 358

"Q" 84 11

"R" 847 140

"S" 746 118

"T" 591 147

"U" 107 15

"V" 342 96

"X" 6 6

"Y" 24 4

"Z" 73 17

______ _____

23,560 3,108

Therefore, of the 23,560 Spanish words in the defendant's dictionary, after deducting 17 words
corresponding to the letters K and X (for the plaintiff has no words corresponding to them), 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.

2. That the defendant also literally reproduced and copied for the Spanish words in his dictionary,
the equivalents, definitions and different meanings in Tagalog, given in plaintiff's 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 as may be seen, by comparing both dictionaries and using as a guide or index the
defendant's memorandum and notes, first series, Exhibit C, in which, as to each word, the
similarities and differences between them are set forth in detail.

3. That the 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.

The trial court has chosen at random, as is stated in the judgment appealed from, some words from
said dictionaries in making the comparison on which its conclusion is based, and consequently the
conclusion reached by it must be inaccurate and not well founded, because said comparison was
not complete.

In said judgment some words of the defendant's dictionary are transcribed, the equivalents and
meanings of which in Tagalog are exactly the same as those that are given in the plaintiff's
dictionary, with the exception, as to some of them, of only one acceptation, which is the defendant's
own production. And with respect to the examples used by the defendant in his dictionary, which,
according to the judgment, are not copied from the plaintiff's the judgment referring to the
preposition a (to), in Tagalog sa it must be noted that the defendant, in giving in his dictionary an
example of said preposition, uses the expression "voy a Tayabas" (I am going to Tayabas) instead of
"voy aBulacan" (I am going to Bulacan), as the plaintiff does in his dictionary, or what is the same
thing, that one speaks of Bulacan while the other speaks of Tayabas. This does not show that there
was no reproduction or copying by the defendant of the plaintiffs work, but just the opposite, for he
who intends to imitate the work of another, tries to make it appear in some manner that there is
some difference between the original and the imitation; and in the example referred to, with respect
to the preposition a (to), that dissimilarity as to the province designated seems to effect the same
purpose.

In the judgment appealed from, the court gives one to understand that the reproduction of another's
dictionary without the owner's consent does not constitute a violation of the Law of Intellectual
Property for the court's idea of a dictionary is stated in the decision itself, as follows:

Dictionaries have to be made with the aid of others, and they are improved by the increase of
words. What may be said of a pasture ground may be said also of a dictionary, i. e., that it
should be common property for all who may desire to write a new dictionary, and the
defendant has come to this pasture ground and taken whatever he needed from it in the
exercise of a perfect right.

Such idea is very erroneous, especially in relation to the Law of Intellectual Property. Danvilla y
Collado the author of the Law of January 10, 1879, on Intellectual Property, which was discussed
and approved in the Spanish Cortes, in his work entitled La Propiedad Intelectual (page 362, 1st ed.)
states with respect to dictionaries and in relation to article 7 of said law:

The protection of the law cannot be denied to the author of a dictionary, for although words
are not the property of anybody, their definitions, the example that explain their sense, and
the manner of expressing their different meanings, may constitute a special work. On this
point, the correctional court of the Seine held, on August 16, 1864, that a dictionary
constitutes property, although some of the words therein are explained by mere definitions
expressed in a few lines and sanctioned by usage, provided that the greater part of the other
words contain new meanings; new meanings which evidently may only belonged to the first
person who published them.

Therefore, the plaintiff, Pedro Serrano, cannot be denied the legal protection which he seeks, and
which is based on the fact that the dictionary published by him in 1889 is his property said
property right being recognized and having been granted by article 7, in connection with article 2, of
said law and on the further fact that said work was reproduced by the defendant without his
permission.

This law was published in the Gaceta de Madrid on January 12, 1879. It took effect in these Islands
six months after its promulgation or publication, as provided in article 56 thereof. The body of rules
for the execution of said law having been approved by royal decree of September 3, 1880, and
published in the Gaceta de Madrid on September 6, 1880 and extended to the Philippine Islands by
royal decree of May 5, 1887, it was in turn published in the Gaceta de Manila, with the approval of
the Governor-General of the Islands, on June 15, 1887. Said law of January 10, 1879, and the rules
for its application, were therefore in force in these Islands when the plaintiff's dictionary was edited
and published in 1889.

It appears from the evidence that although the plaintiff did not introduce at the trial the certificate of
registration of his property rights to said work which, according to said rules, was kept in the Central
Government of these Islands, and was issued to him in 1890, the same having been lost during the
revolution against Spain, and no trace relative to the issuance of said certificate being obtainable in
the Division of Archives of the Executive Bureau on account of the loss of the corresponding
records, yet as in the first page of said dictionary the property right of the plaintiff was reserved by
means of the words "Es propiedad del autor" (All rights reserved), taken in connection with the
permission granted him by the Governor-General on November 24, 1889, to print and publish said
dictionary, after an examination thereof by the permanent committee of censors, which examination
was made, and the necessary license granted to him, these facts constitute sufficient proof, under
the circumstances of the case, as they have not been overcome by any evidence on the part of the
defendant, showing that said plaintiff did not comply with the requirements of article 36 of said law,
which was the prerequisite to the enjoyment of the benefits thereof according to the preceding
articles, among which is article 7, which is alleged in the complaint to have been violated by the
defendant.

Even considering that said Law of January 10, 1879, ceased to operate in these Islands, upon the
termination of Spanish sovereignty and the substitution thereof by that of the United States of
America, the right of the plaintiff to invoke said law in support of the action instituted by him in the
present case cannot be disputed. His property right to the work Diccionario Hispano-
Tagalog (Spanish-Tagalog Dictionary), published by him and edited in 1889, is recognized and
sanctioned by said law, and by virtue thereof, he had acquired a right of which he cannot be
deprived merely because the law is not in force now or is of no actual application. This conclusion is
necessary to protect intellectual property rights vested after the sovereignty of Spain was
superseded by that of the United States. It was so held superseded by that of the United States. It
was so held in the Treaty of Paris of December 10, 1898, between Spain and the United States,
when it declared in article 13 thereof that the rights to literary, artistic, and industrial properties
acquired by the subject of Spain in the Island of Cuba and in Puerto Rico and the Philippines and
other ceded territories, at the time of the exchange of the ratification of said Treaty, shall continue to
be respect.

In addition to what has been said, according to article 428 of the Civil Code, the author of a literary,
scientific, or artistic work, has the right to exploit it and dispose thereof at will. In relation to this right,
there exists the exclusive right of the author, who is the absolute owner of his own work, to produce
it, according to article 2 of the Law of January 10, 1879, and consequently, nobody may reproduce it,
without his permission, not even to annotate or add something to it, or to improve any edition
thereof, according to article 7 of said law. Manresa, in his commentaries on article 429 of the Civil
Code (vol. 3, p. 633, 3d ed.) says that the concrete statement of the right to literary properties is
found in the legal doctrine according to which nobody may reproduce another person's work, without
the consent of his owner, or even to annotate or add something to it or to improve any edition
thereof. And on page 616 of said volume, Manresa says the following:

He who writes a book, or carves a statue, or makes an invention, has the absolute right to
reproduce or sell it, just as the owner of land has the absolute right to sell it or its fruits. But
while the owner of land, by selling it and its fruits, perhaps fully realizes all its economic
value, by receiving its benefits and utilities, which are presented, for example, by the price,
on the other hand the author of a book, statue or invention, does not reap all the benefits and
advantages of his own property by disposing of it, for the most important form of realizing the
economic advantages of a book, statue or invention, consists in the right to reproduce it in
similar or like copies, everyone of which serves to give to the person reproducing them all
the conditions which the original requires in order to give the author the full enjoyment
thereof. If the author of a book, after its publication, cannot prevent its reproduction by any
person who may want to reproduce it, then the property right granted him is reduced to a
very insignificant thing and the effort made in the production of the book is no way rewarded.

Indeed the property right recognized and protected by the Law of January 10, 1879, on Intellectual
Property, would be illusory if, by reason of the fact that said law is no longer in force as a
consequence of the change of sovereignty in these Islands, the author of a work, who has the
exclusive right to reproduce it, could not prevent another person from so doing without his consent,
and could not enforce this right through the courts of justice in order to prosecute the violator of this
legal provision and the defrauder or usurper of his right, for he could not obtain the full enjoyment of
the book or other work, and his property right thereto, which is recognized by law, would be reduced,
as Manresa says, to an insignificant thing, if he should have no more right than that of selling his
work.

The reproduction by the defendant without the plaintiff's consent of the Diccionario Hispano-
Tagalog (Spanish-Tagalog Dictionary), published and edited in the City of Manila in 1889, by the
publication of the Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary), published in the
same city and edited in the press El Progreso in 1913, as appears from Exhibit B, which is attached
to the complaint, has caused the plaintiff, according to the latter, damages in the sum of $10,000. It
is true that it cannot be denied that the reproduction of the plaintiff's book by the defendant has
caused damages to the former, but the amount thereof has not been determined at the trial, for the
statement of the plaintiff as to the proceeds he would have realized if he had printed in 1913 the
number of copies of his work which he stated in his declaration a fact which he did not do
because the defendant had reproduced it was not corroborated in any way at the trial and is
based upon mere calculations made by the plaintiff himself; for which reason no pronouncement can
be made in this decision as to the indemnification for damages which the plaintiff seeks to recover.

The plaintiff having prayed, not for a permanent injunction against the defendant, as the plaintiff
himself in his brief erroneously states, but for a judgment ordering the defendant to withdraw from
sale all stock of his work Diccionariong Kastila-Tagalog (Spanish-Tagalog Dictionary), of which
Exhibit B is a copy, and the suit instituted by said plaintiff being proper, we reverse the judgment
appealed from and order the defendant to withdraw from sale, as prayed for in the complaint, all
stock of his work above-mentioned, and to pay the costs of first instance. We make no special
pronouncement as to the costs of this instance. So ordered.

Arellano, C. J., Torres, and Street, JJ., concur.


Carson, and Malcolm, JJ., concur in the result.
3.

G.R. No. 118295 May 2, 1997

WIGBERTO E. TAADA and ANNA DOMINIQUE COSETENG, as members of the Philippine


Senate and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the
House of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R.
MORALES, both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC
PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES,
LIKAS-KAYANG KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION
MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and
PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers and as non-
governmental organizations, petitioners,
vs.
EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON
ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO
HERRERA, JOSE LINA, GLORIA. MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS
OPLE, JOHN OSMEA, SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO
TATAD and FREDDIE WEBB, in their respective capacities as members of the Philippine
Senate who concurred in the ratification by the President of the Philippines of the Agreement
Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his capacity as
Secretary of Budget and Management; CARIDAD VALDEHUESA, in her capacity as National
Treasurer; RIZALINO NAVARRO, in his capacity as Secretary of Trade and Industry;
ROBERTO SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO,
in his capacity as Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of
Foreign Affairs; and TEOFISTO T. GUINGONA, in his capacity as Executive
Secretary, respondents.

PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership
thereto of the vast majority of countries has revolutionized international business and economic
relations amongst states. It has irreversibly propelled the world towards trade liberalization and
economic globalization. Liberalization, globalization, deregulation and privatization, the third-
millennium buzz words, are ushering in a new borderless world of business by sweeping away as
mere historical relics the heretofore traditional modes of promoting and protecting national
economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and
currency controls. Finding market niches and becoming the best in specific industries in a market-
driven and export-oriented global scenario are replacing age-old "beggar-thy-neighbor" policies that
unilaterally protect weak and inefficient domestic producers of goods and services. In the words of
Peter Drucker, the well-known management guru, "Increased participation in the world economy has
become the key to domestic economic growth and prosperity."

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the
establishment of three multilateral institutions inspired by that grand political body, the United
Nations were discussed at Dumbarton Oaks and Bretton Woods. The first was the World Bank
(WB) which was to address the rehabilitation and reconstruction of war-ravaged and later developing
countries; the second, the International Monetary Fund (IMF) which was to deal with currency
problems; and the third, the International Trade Organization (ITO), which was to foster order and
predictability in world trade and to minimize unilateral protectionist policies that invite challenge,
even retaliation, from other states. However, for a variety of reasons, including its non-ratification by
the United States, the ITO, unlike the IMF and WB, never took off. What remained was only GATT
the General Agreement on Tariffs and Trade. GATT was a collection of treaties governing access
to the economies of treaty adherents with no institutionalized body administering the agreements or
dependable system of dispute settlement.

After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the
Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body the
World Trade Organization with the signing of the "Final Act" in Marrakesh, Morocco and the
ratification of the WTO Agreement by its members.1

Like many other developing countries, the Philippines joined WTO as a founding member with the
goal, as articulated by President Fidel V. Ramos in two letters to the Senate (infra), of improving
"Philippine access to foreign markets, especially its major trading partners, through the reduction of
tariffs on its exports, particularly agricultural and industrial products." The President also saw in the
WTO the opening of "new opportunities for the services sector . . . , (the reduction of) costs and
uncertainty associated with exporting . . . , and (the attraction of) more investments into the country."
Although the Chief Executive did not expressly mention it in his letter, the Philippines and this is
of special interest to the legal profession will benefit from the WTO system of dispute settlement
by judicial adjudication through the independent WTO settlement bodies called (1) Dispute
Settlement Panels and (2) Appellate Tribunal. Heretofore, trade disputes were settled mainly through
negotiations where solutions were arrived at frequently on the basis of relative bargaining strengths,
and where naturally, weak and underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and products of
member-countries on the same footing as Filipinos and local products" and (2) that the WTO
"intrudes, limits and/or impairs" the constitutional powers of both Congress and the Supreme Court,
the instant petition before this Court assails the WTO Agreement for violating the mandate of the
1987 Constitution to "develop a self-reliant and independent national economy effectively controlled
by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of
Filipino labor, domestic materials and locally produced goods."

Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade
liberalization and economic globalization? Does it proscribe Philippine integration into a global
economy that is liberalized, deregulated and privatized? These are the main questions raised in this
petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for
the nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the
ratification by the President of the Philippines of the Agreement Establishing the World Trade
Organization (WTO Agreement, for brevity) and (2) for the prohibition of its implementation and
enforcement through the release and utilization of public funds, the assignment of public officials and
employees, as well as the use of government properties and resources by respondent-heads of
various executive offices concerned therewith. This concurrence is embodied in Senate Resolution
No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of The Department of Trade and
Industry (Secretary Navarro, for brevity), representing the Government of the Republic of the
Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay
Round of Multilateral Negotiations (Final Act, for brevity).

By signing the Final Act, 2 Secretary Navarro on behalf of the Republic of the Philippines, agreed:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities, with a view to seeking approval of the Agreement
in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994
from the President of the Philippines, 3 stating among others that "the Uruguay Round Final Act is
hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution."

On August 13, 1994, the members of the Philippine Senate received another letter from the
President of the Philippines 4 likewise dated August 11, 1994, which stated among others that "the
Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby
submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution."

On December 9, 1994, the President of the Philippines certified the necessity of the immediate
adoption of P.S. 1083, a resolution entitled "Concurring in the Ratification of the Agreement
Establishing the World Trade Organization." 5

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which "Resolved, as it is
hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade Organization." 6 The text of the WTO
Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of Multilateral
Trade Negotiations and includes various agreements and associated legal instruments (identified in the
said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral Trade
Agreements, for brevity) as follows:

ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods


General Agreement on Tariffs and Trade 1994
Agreement on Agriculture
Agreement on the Application of Sanitary and
Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Implementation of Article VI of he
General Agreement on Tariffs and Trade
1994
Agreement on Implementation of Article VII of the
General on Tariffs and Trade 1994
Agreement on Pre-Shipment Inspection
Agreement on Rules of Origin
Agreement on Imports Licensing Procedures
Agreement on Subsidies and Coordinating
Measures
Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual


Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing


the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism

On December 16, 1994, the President of the Philippines signed 7 the Instrument of Ratification,
declaring:

NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic


of the Philippines, after having seen and considered the aforementioned Agreement
Establishing the World Trade Organization and the agreements and associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement
which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do
hereby ratify and confirm the same and every Article and Clause thereof.

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the
Agreement Proper and "the associated legal instruments included in Annexes one (1), two (2) and
three (3) of that Agreement which are integral parts thereof."

On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO
Agreement (and its integral annexes aforementioned) but also (1) the Ministerial Declarations and
Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum
dated May 13, 1996, 8 the Solicitor General describes these two latter documents as follows:

The Ministerial Decisions and Declarations are twenty-five declarations and


decisions on a wide range of matters, such as measures in favor of least developed
countries, notification procedures, relationship of WTO with the International
Monetary Fund (IMF), and agreements on technical barriers to trade and on dispute
settlement.

The Understanding on Commitments in Financial Services dwell on, among other


things, standstill or limitations and qualifications of commitments to existing non-
conforming measures, market access, national treatment, and definitions of non-
resident supplier of financial services, commercial presence and new financial
service.

On December 29, 1994, the present petition was filed. After careful deliberation on respondents'
comment and petitioners' reply thereto, the Court resolved on December 12, 1995, to give due
course to the petition, and the parties thereafter filed their respective memoranda. The court also
requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations
stationed in Geneva, Switzerland, to submit a paper, hereafter referred to as "Bautista Paper," 9 for
brevity, (1) providing a historical background of and (2) summarizing the said agreements.

During the Oral Argument held on August 27, 1996, the Court directed:

(a) the petitioners to submit the (1) Senate Committee Report on the matter in
controversy and (2) the transcript of proceedings/hearings in the Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine
treaties signed prior to the Philippine adherence to the WTO Agreement, which
derogate from Philippine sovereignty and (2) copies of the multi-volume WTO
Agreement and other documents mentioned in the Final Act, as soon as possible.

After receipt of the foregoing documents, the Court said it would consider the case submitted for
resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed
copy of the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another
Compliance dated October 24, 1996, he listed the various "bilateral or multilateral treaties or
international instruments involving derogation of Philippine sovereignty." Petitioners, on the other
hand, submitted their Compliance dated January 28, 1997, on January 30, 1997.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:

A. Whether the petition presents a political question or is otherwise not justiciable.

B. Whether the petitioner members of the Senate who participated in the


deliberations and voting leading to the concurrence are estopped from impugning the
validity of the Agreement Establishing the World Trade Organization or of the validity
of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade


Organization contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12,
Article XII, all of the 1987 Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization


unduly limit, restrict and impair Philippine sovereignty specifically the legislative
power which, under Sec. 2, Article VI, 1987 Philippine Constitution is "vested in the
Congress of the Philippines";

E. Whether provisions of the Agreement Establishing the World Trade Organization


interfere with the exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of


discretion amounting to lack or excess of jurisdiction when they voted for
concurrence in the ratification of the constitutionally-infirm Agreement Establishing
the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of


discretion amounting to lack or excess of jurisdiction when they concurred only in the
ratification of the Agreement Establishing the World Trade Organization, and not with
the Presidential submission which included the Final Act, Ministerial Declaration and
Decisions, and the Understanding on Commitments in Financial Services.

On the other hand, the Solicitor General as counsel for respondents "synthesized the several issues
raised by petitioners into the following": 10

1. Whether or not the provisions of the "Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments included in
Annexes one (1), two (2) and three (3) of that agreement" cited by petitioners directly
contravene or undermine the letter, spirit and intent of Section 19, Article II and
Sections 10 and 12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair
the exercise of legislative power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial
power by this Honorable Court in promulgating the rules of evidence.

4. Whether or not the concurrence of the Senate "in the ratification by the President
of the Philippines of the Agreement establishing the World Trade Organization"
implied rejection of the treaty embodied in the Final Act.

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor
General has effectively ignored three, namely: (1) whether the petition presents a political question
or is otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Taada
and Anna Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-
members of the Senate acted in grave abuse of discretion when they voted for concurrence in the
ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus:

(1) The "political question" issue being very fundamental and vital, and being a matter that probes
into the very jurisdiction of this Court to hear and decide this case was deliberated upon by the
Court and will thus be ruled upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively waived it by not pursuing it in any of their pleadings; in any event, this
issue, even if ruled in respondents' favor, will not cause the petition's dismissal as there are
petitioners other than the two senators, who are not vulnerable to the defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be
taken up as an integral part of the disposition of the four issues raised by the Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question the locus
standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They
probably realized that grave constitutional issues, expenditures of public funds and serious
international commitments of the nation are involved here, and that transcendental public interest
requires that the substantive issues be met head on and decided on the merits, rather than skirted or
deflected by procedural matters. 11

To recapitulate, the issues that will be ruled upon shortly are:


(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY?
OTHERWISE STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION
OVER WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE


ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE
XII, OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT,


RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY
CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE


EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES
ON EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND
ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID NOT
INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS,
AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?

The First Issue: Does the Court


Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than political.
The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld." 12 Once
a "controversy as to the application or interpretation of a constitutional provision is raised before this
Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional
mandate to decide." 13

The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly set out in the
1987 Constitution, 15 as follows:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government.

The foregoing text emphasizes the judicial department's duty and power to strike down grave abuse
of discretion on the part of any branch or instrumentality of government including Congress. It is an
innovation in our political law. 16As explained by former Chief Justice Roberto Concepcion, 17 "the
judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials
has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of
discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass
judgment on matters of this nature."

As this Court has repeatedly and firmly emphasized in many cases, 18 it will not shirk, digress from or
abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of
discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or
department of the government.

As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate
remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should
be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of
Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional
issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials.
On this, we have no equivocation.

We should stress that, in deciding to take jurisdiction over this petition, this Court will not review
the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or
pass upon the merits of trade liberalization as a policy espoused by said international body. Neither
will it rule on the propriety of the government's economic policy of reducing/removing tariffs, taxes,
subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its
constitutional duty "to determine whether or not there had been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the Senate in ratifying the WTO Agreement
and its three annexes.

Second Issue: The WTO Agreement


and Economic Nationalism

This is the lis mota, the main issue, raised by the petition.

Petitioners vigorously argue that the "letter, spirit and intent" of the Constitution mandating
"economic nationalism" are violated by the so-called "parity provisions" and "national treatment"
clauses scattered in various parts not only of the WTO Agreement and its annexes but also in the
Ministerial Decisions and Declarations and in the Understanding on Commitments in Financial
Services.

Specifically, the "flagship" constitutional provisions referred to are Sec 19, Article II, and Secs. 10
and 12, Article XII, of the Constitution, which are worded as follows:

Article II

DECLARATION OF PRINCIPLES
AND STATE POLICIES

xxx xxx xxx

Sec. 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.

xxx xxx xxx

Article XII

NATIONAL ECONOMY AND PATRIMONY

xxx xxx xxx


Sec. 10. . . . The Congress shall enact measures that will encourage the formation
and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.

xxx xxx xxx

Sec. 12. The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make them
competitive.

Petitioners aver that these sacred constitutional principles are desecrated by the following WTO
provisions quoted in their memorandum: 19

a) In the area of investment measures related to trade in goods (TRIMS, for brevity):

Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994,


no Member shall apply any TRIM that is inconsistent with the
provisions of Article II or Article XI of GATT 1994.

2. An illustrative list of TRIMS that are inconsistent with the


obligations of general elimination of quantitative restrictions provided
for in paragraph I of Article XI of GATT 1994 is contained in the
Annex to this Agreement." (Agreement on Trade-Related Investment
Measures, Vol. 27, Uruguay Round, Legal Instruments, p. 22121,
emphasis supplied).

The Annex referred to reads as follows:

ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for
in paragraph 4 of Article III of GATT 1994 include those which are mandatory or
enforceable under domestic law or under administrative rulings, or compliance with
which is necessary to obtain an advantage, and which require:

(a) the purchase or use by an enterprise of products of domestic


origin or from any domestic source, whether specified in terms of
particular products, in terms of volume or value of products, or in
terms of proportion of volume or value of its local production; or

(b) that an enterprise's purchases or use of imported products be


limited to an amount related to the volume or value of local products
that it exports.
2. TRIMS that are inconsistent with the obligations of general elimination of
quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994
include those which are mandatory or enforceable under domestic laws or under
administrative rulings, or compliance with which is necessary to obtain an advantage,
and which restrict:

(a) the importation by an enterprise of products used in or related to


the local production that it exports;

(b) the importation by an enterprise of products used in or related to


its local production by restricting its access to foreign exchange
inflows attributable to the enterprise; or

(c) the exportation or sale for export specified in terms of particular


products, in terms of volume or value of products, or in terms of a
preparation of volume or value of its local production. (Annex to the
Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay
Round Legal Documents, p. 22125, emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:

The products of the territory of any contracting party imported into the
territory of any other contracting party shall be accorded treatment no
less favorable than that accorded to like products of national origin in
respect of laws, regulations and requirements affecting their internal
sale, offering for sale, purchase, transportation, distribution or use,
the provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based
exclusively on the economic operation of the means of transport and
not on the nationality of the product." (Article III, GATT 1947, as
amended by the Protocol Modifying Part II, and Article XXVI of GATT,
14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of
the General Agreement on Tariffs and Trade 1994, Vol. 1, Uruguay
Round, Legal Instruments p. 177, emphasis supplied).

(b) In the area of trade related aspects of intellectual property rights (TRIPS, for
brevity):

Each Member shall accord to the nationals of other Members


treatment no less favourable than that it accords to its own
nationals with regard to the protection of intellectual property. . . (par.
1 Article 3, Agreement on Trade-Related Aspect of Intellectual
Property rights, Vol. 31, Uruguay Round, Legal Instruments, p. 25432
(emphasis supplied)

(c) In the area of the General Agreement on Trade in Services:

National Treatment

1. In the sectors inscribed in its schedule, and subject to any


conditions and qualifications set out therein, each Member shall
accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment no
less favourable than it accords to its own like services and service
suppliers.

2. A Member may meet the requirement of paragraph I by according


to services and service suppliers of any other Member, either formally
suppliers of any other Member, either formally identical treatment or
formally different treatment to that it accords to its own like services
and service suppliers.

3. Formally identical or formally different treatment shall be


considered to be less favourable if it modifies the conditions of
completion in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member.
(Article XVII, General Agreement on Trade in Services, Vol. 28,
Uruguay Round Legal Instruments, p. 22610 emphasis supplied).

It is petitioners' position that the foregoing "national treatment" and "parity provisions" of the WTO
Agreement "place nationals and products of member countries on the same footing as Filipinos and
local products," in contravention of the "Filipino First" policy of the Constitution. They allegedly
render meaningless the phrase "effectively controlled by Filipinos." The constitutional conflict
becomes more manifest when viewed in the context of the clear duty imposed on the Philippines as
a WTO member to ensure the conformity of its laws, regulations and administrative procedures with
its obligations as provided in the annexed agreements. 20 Petitioners further argue that these
provisions contravene constitutional limitations on the role exports play in national development and
negate the preferential treatment accorded to Filipino labor, domestic materials and locally produced
goods.

On the other hand, respondents through the Solicitor General counter (1) that such Charter
provisions are not self-executing and merely set out general policies; (2) that these nationalistic
portions of the Constitution invoked by petitioners should not be read in isolation but should be
related to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read
properly, the cited WTO clauses do not conflict with Constitution; and (4) that the WTO Agreement
contains sufficient provisions to protect developing countries like the Philippines from the harshness
of sudden trade liberalization.

We shall now discuss and rule on these arguments.

Declaration of Principles
Not Self-Executing

By its very title, Article II of the Constitution is a "declaration of principles and state policies." The
counterpart of this article in the 1935 Constitution 21 is called the "basic political creed of the nation" by
Dean Vicente Sinco. 22 These principles in Article II are not intended to be self-executing principles ready
for enforcement through the courts. 23 They are used by the judiciary as aids or as guides in the exercise
of its power of judicial review, and by the legislature in its enactment of laws. As held in the leading case
of Kilosbayan, Incorporated vs. Morato, 24 the principles and state policies enumerated in Article II and
some sections of Article XII are not "self-executing provisions, the disregard of which can give rise to a
cause of action in the courts. They do not embody judicially enforceable constitutional rights but
guidelines for legislation."
In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles need legislative
enactments to implement the, thus:

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12


(Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII
and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it
to state also that these are merely statements of principles and policies. As such,
they are basically not self-executing, meaning a law should be passed by Congress
to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be


self-executing principles ready for enforcement through the courts.
They were rather directives addressed to the executive and to the
legislature. If the executive and the legislature failed to heed the
directives of the article, the available remedy was not judicial but
political. The electorate could express their displeasure with the
failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2).

The reasons for denying a cause of action to an alleged infringement of board constitutional
principles are sourced from basic considerations of due process and the lack of judicial authority to
wade "into the uncharted ocean of social and economic policy making." Mr. Justice Florentino P.
Feliciano in his concurring opinion in Oposa vs. Factoran, Jr., 26 explained these reasons as follows:

My suggestion is simply that petitioners must, before the trial court, show a more
specific legal right a right cast in language of a significantly lower order of
generality than Article II (15) of the Constitution that is or may be violated by the
actions, or failures to act, imputed to the public respondent by petitioners so that the
trial court can validly render judgment grating all or part of the relief prayed for. To
my mind, the court should be understood as simply saying that such a more specific
legal right or rights may well exist in our corpus of law, considering the general policy
principles found in the Constitution and the existence of the Philippine Environment
Code, and that the trial court should have given petitioners an effective opportunity
so to demonstrate, instead of aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a


cause of action be a specific, operable legal right, rather than a constitutional or
statutory policy, for at least two (2) reasons. One is that unless the legal right claimed
to have been violated or disregarded is given specification in operational terms,
defendants may well be unable to defend themselves intelligently and effectively; in
other words, there are due process dimensions to this matter.

The second is a broader-gauge consideration where a specific violation of law or


applicable regulation is not alleged or proved, petitioners can be expected to fall back
on the expanded conception of judicial power in the second paragraph of Section 1
of Article VIII of the Constitution which reads:

Sec. 1. . . .

Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government. (Emphasis
supplied)

When substantive standards as general as "the right to a balanced and healthy


ecology" and "the right to health" are combined with remedial standards as broad
ranging as "a grave abuse of discretion amounting to lack or excess of jurisdiction,"
the result will be, it is respectfully submitted, to propel courts into the uncharted
ocean of social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special
technical competence and experience and professional qualification. Where no
specific, operable norms and standards are shown to exist, then the policy making
departments the legislative and executive departments must be given a real
and effective opportunity to fashion and promulgate those norms and standards, and
to implement them before the courts should intervene.

Economic Nationalism Should Be Read with


Other Constitutional Mandates to Attain
Balanced Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles
relating to the national economy and patrimony, should be read and understood in relation to the
other sections in said article, especially Secs. 1 and 13 thereof which read:

Sec. 1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all especially the
underprivileged.

The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country
shall be given optimum opportunity to develop. . . .

xxx xxx xxx

Sec. 13. The State shall pursue a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and
reciprocity.

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic
development, as follows:

1. A more equitable distribution of opportunities, income and wealth;


2. A sustained increase in the amount of goods and services provided by the nation for the benefit of
the people; and

3. An expanding productivity as the key to raising the quality of life for all especially the
underprivileged.

With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by
expressing preference in favor of qualified Filipinos "in the grant of rights, privileges and concessions
covering the national economy and patrimony" 27 and in the use of "Filipino labor, domestic materials
and locally-produced goods"; (2) by mandating the State to "adopt measures that help make them
competitive; 28 and (3) by requiring the State to "develop a self-reliant and independent national economy
effectively controlled by Filipinos." 29 In similar language, the Constitution takes into account the realities
of the outside world as it requires the pursuit of "a trade policy that serves the general welfare and utilizes
all forms and arrangements of exchange on the basis of equality ad reciprocity"; 30 and speaks of
industries "which are competitive in both domestic and foreign markets" as well as of the protection of
"Filipino enterprises against unfair foreign competition and trade practices."

It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et
al., 31 this Court held that "Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive
command which is complete in itself and which needs no further guidelines or implementing laws or rule
for its enforcement. From its very words the provision does not require any legislation to put it in
operation. It is per se judicially enforceable." However, as the constitutional provision itself states, it is
enforceable only in regard to "the grants of rights, privileges and concessions covering national economy
and patrimony" and not to every aspect of trade and commerce. It refers to exceptions rather than the
rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather,
the issue is whether, as a rule, there are enough balancing provisions in the Constitution to allow the
Senate to ratify the Philippine concurrence in the WTO Agreement. And we hold that there are.

All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. 32 In other words, the Constitution did
not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in
the development of the Philippine economy. While the Constitution does not encourage the unlimited
entry of foreign goods, services and investments into the country, it does not prohibit them either. In fact,
it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that
is unfair.

WTO Recognizes Need to


Protect Weak Economies

Upon the other hand, respondents maintain that the WTO itself has some built-in advantages to
protect weak and developing economies, which comprise the vast majority of its members. Unlike in
the UN where major states have permanent seats and veto powers in the Security Council, in the
WTO, decisions are made on the basis of sovereign equality, with each member's vote equal in
weight to that of any other. There is no WTO equivalent of the UN Security Council.

WTO decides by consensus whenever possible, otherwise, decisions of the


Ministerial Conference and the General Council shall be taken by the majority of the
votes cast, except in cases of interpretation of the Agreement or waiver of the
obligation of a member which would require three fourths vote. Amendments would
require two thirds vote in general. Amendments to MFN provisions and the
Amendments provision will require assent of all members. Any member may
withdraw from the Agreement upon the expiration of six months from the date of
notice of withdrawals. 33

Hence, poor countries can protect their common interests more effectively through the WTO than
through one-on-one negotiations with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more decisively than outside the
Organization. This is not merely a matter of practical alliances but a negotiating strategy rooted in
law. Thus, the basic principles underlying the WTO Agreement recognize the need of developing
countries like the Philippines to "share in the growth in international trade commensurate with the
needs of their economic development." These basic principles are found in the preamble 34of the
WTO Agreement as follows:

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should
be conducted with a view to raising standards of living, ensuring full employment and
a large and steadily growing volume of real income and effective demand, and
expanding the production of and trade in goods and services, while allowing for the
optimal use of the world's resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the environment and to enhance
the means for doing so in a manner consistent with their respective needs and
concerns at different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure
a share in the growth in international trade commensurate with the needs of their
economic development,

Being desirous of contributing to these objectives by entering into reciprocal and


mutually advantageous arrangements directed to the substantial reduction of tariffs
and other barriers to trade and to the elimination of discriminatory treatment in
international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral


trading system encompassing the General Agreement on Tariffs and Trade, the
results of past trade liberalization efforts, and all of the results of the Uruguay Round
of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying
this multilateral trading system, . . . (emphasis supplied.)

Specific WTO Provisos


Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic
principles, the WTO Agreement grants developing countries a more lenient treatment, giving their
domestic industries some protection from the rush of foreign competition. Thus, with respect to tariffs
in general, preferential treatment is given to developing countries in terms of the amount of tariff
reduction and the period within which the reduction is to be spread out. Specifically, GATT requires
an average tariff reduction rate of 36% for developed countries to be effected within a period of six
(6) years while developing countries including the Philippines are required to effect an average
tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to
agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to
be effected within ten (10) years.

In regard to export subsidy for agricultural products, GATT requires developed countries to reduce
their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy
by 21% within a period of six (6) years. For developing countries, however, the reduction rate is
only two-thirds of that prescribed for developed countries and a longer period of ten (10) years within
which to effect such reduction.

Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import
surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can
avail of these measures. There is hardly therefore any basis for the statement that under the WTO,
local industries and enterprises will all be wiped out and that Filipinos will be deprived of control of
the economy. Quite the contrary, the weaker situations of developing nations like the Philippines
have been taken into account; thus, there would be no basis to say that in joining the WTO, the
respondents have gravely abused their discretion. True, they have made a bold decision to steer the
ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set
aside on the ground of grave abuse of discretion, simply because we disagree with it or simply
because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction
of this case will not pass upon the advantages and disadvantages of trade liberalization as an
economic policy. It will only perform its constitutional duty of determining whether the Senate
committed grave abuse of discretion.

Constitution Does Not


Rule Out Foreign Competition

Furthermore, the constitutional policy of a "self-reliant and independent national economy" 35 does
not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
"economic seclusion" nor "mendicancy in the international community." As explained by Constitutional
Commissioner Bernardo Villegas, sponsor of this constitutional policy:

Economic self-reliance is a primary objective of a developing country that is keenly


aware of overdependence on external assistance for even its most basic needs. It
does not mean autarky or economic seclusion; rather, it means avoiding mendicancy
in the international community. Independence refers to the freedom from undue
foreign control of the national economy, especially in such strategic industries as in
the development of natural resources and public utilities. 36

The WTO reliance on "most favored nation," "national treatment," and "trade without discrimination"
cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that
apply to all WTO members. Aside from envisioning a trade policy based on "equality and
reciprocity," 37 the fundamental law encourages industries that are "competitive in both domestic and
foreign markets," thereby demonstrating a clear policy against a sheltered domestic trade environment,
but one in favor of the gradual development of robust industries that can compete with the best in the
foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to
compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in
Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under
a policy of laissez faire.
Constitution Favors Consumers,
Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise,
nor does it contain any specific pronouncement that Filipino companies should be pampered with a
total proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims
to make available to the Filipino consumer the best goods and services obtainable anywhere in the
world at the most reasonable prices. Consequently, the question boils down to whether WTO/GATT
will favor the general welfare of the public at large.

Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?

Will WTO/GATT succeed in promoting the Filipinos' general welfare because it will as promised
by its promoters expand the country's exports and generate more employment?

Will it bring more prosperity, employment, purchasing power and quality products at the most
reasonable rates to the Filipino public?

The responses to these questions involve "judgment calls" by our policy makers, for which they are
answerable to our people during appropriate electoral exercises. Such questions and the answers
thereto are not subject to judicial pronouncements based on grave abuse of discretion.

Constitution Designed to Meet


Future Events and Contingencies

No doubt, the WTO Agreement was not yet in existence when the Constitution was drafted and
ratified in 1987. That does not mean however that the Charter is necessarily flawed in the sense that
its framers might not have anticipated the advent of a borderless world of business. By the same
token, the United Nations was not yet in existence when the 1935 Constitution became effective. Did
that necessarily mean that the then Constitution might not have contemplated a diminution of the
absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively
surrendering part of its control over its foreign relations to the decisions of various UN organs like the
Security Council?

It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of
contemporary events. They should be interpreted to cover even future and unknown circumstances.
It is to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but
at the same time bend with the refreshing winds of change necessitated by unfolding events. As one
eminent political law writer and respected jurist 38explains:

The Constitution must be quintessential rather than superficial, the root and not the
blossom, the base and frame-work only of the edifice that is yet to rise. It is but the
core of the dream that must take shape, not in a twinkling by mandate of our
delegates, but slowly "in the crucible of Filipino minds and hearts," where it will in
time develop its sinews and gradually gather its strength and finally achieve its
substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown
from the brow of the Constitutional Convention, nor can it conjure by mere fiat an
instant Utopia. It must grow with the society it seeks to re-structure and march apace
with the progress of the race, drawing from the vicissitudes of history the dynamism
and vitality that will keep it, far from becoming a petrified rule, a pulsing, living law
attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power

The WTO Agreement provides that "(e)ach Member shall ensure the conformity of its laws,
regulations and administrative procedures with its obligations as provided in the annexed
Agreements." 39 Petitioners maintain that this undertaking "unduly limits, restricts and impairs Philippine
sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987 Philippine
Constitution is vested in the Congress of the Philippines. It is an assault on the sovereign powers of the
Philippines because this means that Congress could not pass legislation that will be good for our national
interest and general welfare if such legislation will not conform with the WTO Agreement, which not only
relates to the trade in goods . . . but also to the flow of investments and money . . . as well as to a whole
slew of agreements on socio-cultural matters . . . 40

More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is
lodged in the Congress. 41 And while the Constitution allows Congress to authorize the President to fix
tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, such
authority is subject to "specified limits and . . . such limitations and restrictions" as Congress may
provide, 42 as in fact it did under Sec. 401 of the Tariff and Customs Code.

Sovereignty Limited by
International Law and Treaties

This Court notes and appreciates the ferocity and passion by which petitioners stressed their
arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-
encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily
agreed to by the Philippines, expressly or impliedly, as a member of the family of nations.
Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest
of the world. In its Declaration of Principles and State Policies, the Constitution "adopts the generally
accepted principles of international law as part of the law of the land, and adheres to the policy of
peace, equality, justice, freedom, cooperation and amity, with all nations." 43 By the doctrine of
incorporation, the country is bound by generally accepted principles of international law, which are
considered to be automatically part of our own laws. 44 One of the oldest and most fundamental rules in
international law is pacta sunt servanda international agreements must be performed in good faith. "A
treaty engagement is not a mere moral obligation but creates a legally binding obligation on the parties . .
. A state which has contracted valid international obligations is bound to make in its legislations such
modifications as may be necessary to ensure the fulfillment of the obligations undertaken." 45

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their
voluntary act, nations may surrender some aspects of their state power in exchange for greater
benefits granted by or derived from a convention or pact. After all, states, like individuals, live with
coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree
to limit the exercise of their otherwise absolute rights. Thus, treaties have been used to record
agreements between States concerning such widely diverse matters as, for example, the lease of
naval bases, the sale or cession of territory, the termination of war, the regulation of conduct of
hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims, the
laying down of rules governing conduct in peace and the establishment of international
organizations. 46 The sovereignty of a state therefore cannot in fact and in reality be considered absolute.
Certain restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the
family of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy,
"Today, no nation can build its destiny alone. The age of self-sufficient nationalism is over. The age of
interdependence is here." 47

UN Charter and Other Treaties


Limit Sovereignty
Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented
to restrict its sovereign rights under the "concept of sovereignty as auto-limitation." 47-A Under Article
2 of the UN Charter, "(a)ll members shall give the United Nations every assistance in any action it takes in
accordance with the present Charter, and shall refrain from giving assistance to any state against which
the United Nations is taking preventive or enforcement action." Such assistance includes payment of its
corresponding share not merely in administrative expenses but also in expenditures for the peace-
keeping operations of the organization. In its advisory opinion of July 20, 1961, the International Court of
Justice held that money used by the United Nations Emergency Force in the Middle East and in the
Congo were "expenses of the United Nations" under Article 17, paragraph 2, of the UN Charter. Hence,
all its members must bear their corresponding share in such expenses. In this sense, the Philippine
Congress is restricted in its power to appropriate. It is compelled to appropriate funds whether it agrees
with such peace-keeping expenses or not. So too, under Article 105 of the said Charter, the UN and its
representatives enjoy diplomatic privileges and immunities, thereby limiting again the exercise of
sovereignty of members within their own territory. Another example: although "sovereign equality" and
"domestic jurisdiction" of all members are set forth as underlying principles in the UN Charter, such
provisos are however subject to enforcement measures decided by the Security Council for the
maintenance of international peace and security under Chapter VII of the Charter. A final example: under
Article 103, "(i)n the event of a conflict between the obligations of the Members of the United Nations
under the present Charter and their obligations under any other international agreement, their obligation
under the present charter shall prevail," thus unquestionably denying the Philippines as a member
the sovereign power to make a choice as to which of conflicting obligations, if any, to honor.

Apart from the UN Treaty, the Philippines has entered into many other international pacts both
bilateral and multilateral that involve limitations on Philippine sovereignty. These are enumerated
by the Solicitor General in his Compliance dated October 24, 1996, as follows:

(a) Bilateral convention with the United States regarding taxes on income, where the
Philippines agreed, among others, to exempt from tax, income received in the
Philippines by, among others, the Federal Reserve Bank of the United States, the
Export/Import Bank of the United States, the Overseas Private Investment
Corporation of the United States. Likewise, in said convention, wages, salaries and
similar remunerations paid by the United States to its citizens for labor and personal
services performed by them as employees or officials of the United States are
exempt from income tax by the Philippines.

(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of
double taxation with respect to taxes on income.

(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double
taxation.

(d) Bilateral convention with the French Republic for the avoidance of double
taxation.

(e) Bilateral air transport agreement with Korea where the Philippines agreed to
exempt from all customs duties, inspection fees and other duties or taxes aircrafts of
South Korea and the regular equipment, spare parts and supplies arriving with said
aircrafts.

(f) Bilateral air service agreement with Japan, where the Philippines agreed to
exempt from customs duties, excise taxes, inspection fees and other similar duties,
taxes or charges fuel, lubricating oils, spare parts, regular equipment, stores on
board Japanese aircrafts while on Philippine soil.
(g) Bilateral air service agreement with Belgium where the Philippines granted
Belgian air carriers the same privileges as those granted to Japanese and Korean air
carriers under separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the
Philippines exempted Israeli nationals from the requirement of obtaining transit or
visitor visas for a sojourn in the Philippines not exceeding 59 days.

(i) Bilateral agreement with France exempting French nationals from the requirement
of obtaining transit and visitor visa for a sojourn not exceeding 59 days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that
premises of Special Missions in the Philippines are inviolable and its agents can not
enter said premises without consent of the Head of Mission concerned. Special
Missions are also exempted from customs duties, taxes and related charges.

(k) Multilateral convention on the Law of Treaties. In this convention, the Philippines
agreed to be governed by the Vienna Convention on the Law of Treaties.

(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of


the International Court of Justice. The International Court of Justice has jurisdiction in
all legal disputes concerning the interpretation of a treaty, any question of
international law, the existence of any fact which, if established, would constitute a
breach "of international obligation."

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign
powers of taxation, eminent domain and police power. The underlying consideration in this partial
surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the
same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity
characterizes the Philippine commitments under WTO-GATT.

International treaties, whether relating to nuclear disarmament, human rights, the


environment, the law of the sea, or trade, constrain domestic political sovereignty
through the assumption of external obligations. But unless anarchy in international
relations is preferred as an alternative, in most cases we accept that the benefits of
the reciprocal obligations involved outweigh the costs associated with any loss of
political sovereignty. (T)rade treaties that structure relations by reference to durable,
well-defined substantive norms and objective dispute resolution procedures reduce
the risks of larger countries exploiting raw economic power to bully smaller countries,
by subjecting power relations to some form of legal ordering. In addition, smaller
countries typically stand to gain disproportionately from trade liberalization. This is
due to the simple fact that liberalization will provide access to a larger set of potential
new trading relationship than in case of the larger country gaining enhanced success
to the smaller country's market. 48

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without
violating the Constitution, based on the rationale that the Philippines "adopts the generally accepted
principles of international law as part of the law of the land and adheres to the policy of . . .
cooperation and amity with all nations."

Fourth Issue: The WTO Agreement and Judicial Power


Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 49 intrudes on the power
of the Supreme Court to promulgate rules concerning pleading, practice and procedures. 50

To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate its full text as
follows:

Article 34

Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of
the owner referred to in paragraph 1 (b) of Article 28, if the subject matter of a patent
is a process for obtaining a product, the judicial authorities shall have the authority to
order the defendant to prove that the process to obtain an identical product is
different from the patented process. Therefore, Members shall provide, in at least
one of the following circumstances, that any identical product when produced without
the consent of the patent owner shall, in the absence of proof to the contrary, be
deemed to have been obtained by the patented process:

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was


made by the process and the owner of the patent has been unable
through reasonable efforts to determine the process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in
paragraph 1 shall be on the alleged infringer only if the condition referred to in
subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is
fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in


protecting their manufacturing and business secrets shall be taken into account.

From the above, a WTO Member is required to provide a rule of disputable (not the words "in the
absence of proof to the contrary") presumption that a product shown to be identical to one produced
with the use of a patented process shall be deemed to have been obtained by the (illegal) use of the
said patented process, (1) where such product obtained by the patented product is new, or (2) where
there is "substantial likelihood" that the identical product was made with the use of the said patented
process but the owner of the patent could not determine the exact process used in obtaining such
identical product. Hence, the "burden of proof" contemplated by Article 34 should actually be
understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden,
properly understood, actually refers to the "burden of evidence" (burden of going forward) placed on
the producer of the identical (or fake) product to show that his product was produced without the use
of the patented process.

The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless of
the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence
of the existence of the alleged identical product, the fact that it is "identical" to the genuine one
produced by the patented process and the fact of "newness" of the genuine product or the fact of
"substantial likelihood" that the identical product was made by the patented process.
The foregoing should really present no problem in changing the rules of evidence as the present law
on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a
similar presumption in cases of infringement of patented design or utility model, thus:

Sec. 60. Infringement. Infringement of a design patent or of a patent for utility


model shall consist in unauthorized copying of the patented design or utility model for
the purpose of trade or industry in the article or product and in the making, using or
selling of the article or product copying the patented design or utility model. Identity
or substantial identity with the patented design or utility model shall constitute
evidence of copying. (emphasis supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption
applies only if (1) the product obtained by the patented process in NEW or (2) there is a substantial
likelihood that the identical product was made by the process and the process owner has not been
able through reasonable effort to determine the process used. Where either of these two provisos
does not obtain, members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.

By and large, the arguments adduced in connection with our disposition of the third issue
derogation of legislative power will apply to this fourth issue also. Suffice it to say that the
reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does
not contain an unreasonable burden, consistent as it is with due process and the concept of
adversarial dispute settlement inherent in our judicial system.

So too, since the Philippine is a signatory to most international conventions on patents, trademarks
and copyrights, the adjustment in legislation and rules of procedure will not be substantial. 52

Fifth Issue: Concurrence Only in the WTO Agreement and


Not in Other Documents Contained in the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes but not in
the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions
and the Understanding on Commitments in Financial Services is defective and insufficient and
thus constitutes abuse of discretion. They submit that such concurrence in the WTO
Agreement alone is flawed because it is in effect a rejection of the Final Act, which in turn was the
document signed by Secretary Navarro, in representation of the Republic upon authority of the
President. They contend that the second letter of the President to the Senate 53 which enumerated
what constitutes the Final Act should have been the subject of concurrence of the Senate.

"A final act, sometimes called protocol de cloture, is an instrument which records the winding up of
the proceedings of a diplomatic conference and usually includes a reproduction of the texts of
treaties, conventions, recommendations and other acts agreed upon and signed by the
plenipotentiaries attending the conference." 54 It is not the treaty itself. It is rather a summary of the
proceedings of a protracted conference which may have taken place over several years. The text of the
"Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" is contained
in just one page 55 in Vol. I of the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing
said Final Act, Secretary Navarro as representative of the Republic of the Philippines undertook:

(a) to submit, as appropriate, the WTO Agreement for the consideration of their
respective competent authorities with a view to seeking approval of the Agreement in
accordance with their procedures; and
(b) to adopt the Ministerial Declarations and Decisions.

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act
required from its signatories, namely, concurrence of the Senate in the WTO Agreement.

The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They
were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that
representatives of the members can meet "to give effect to those provisions of this Agreement which
invoke joint action, and generally with a view to facilitating the operation and furthering the objectives
of this Agreement." 56

The Understanding on Commitments in Financial Services also approved in Marrakesh does not
apply to the Philippines. It applies only to those 27 Members which "have indicated in their
respective schedules of commitments on standstill, elimination of monopoly, expansion of operation
of existing financial service suppliers, temporary entry of personnel, free transfer and processing of
information, and national treatment with respect to access to payment, clearing systems and
refinancing available in the normal course of business." 57

On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed
included as its integral parts, 58 as follows:

Article II

Scope of the WTO

1. The WTO shall provide the common institutional frame-work for the conduct of
trade relations among its Members in matters to the agreements and associated
legal instruments included in the Annexes to this Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and


3, (hereinafter referred to as "Multilateral Agreements") are integral parts of this
Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4


(hereinafter referred to as "Plurilateral Trade Agreements") are also part of this
Agreement for those Members that have accepted them, and are binding on those
Members. The Plurilateral Trade Agreements do not create either obligation or rights
for Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A


(hereinafter referred to as "GATT 1994") is legally distinct from the General
Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act
adopted at the conclusion of the Second Session of the Preparatory Committee of
the United Nations Conference on Trade and Employment, as subsequently rectified,
amended or modified (hereinafter referred to as "GATT 1947").

It should be added that the Senate was well-aware of what it was concurring in as shown by the
members' deliberation on August 25, 1994. After reading the letter of President Ramos dated August
11, 1994, 59 the senators
of the Republic minutely dissected what the Senate was concurring in, as follows: 60
THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up
in the first day hearing of this Committee yesterday. Was the observation made by
Senator Taada that what was submitted to the Senate was not the agreement on
establishing the World Trade Organization by the final act of the Uruguay Round
which is not the same as the agreement establishing the World Trade Organization?
And on that basis, Senator Tolentino raised a point of order which, however, he
agreed to withdraw upon understanding that his suggestion for an alternative solution
at that time was acceptable. That suggestion was to treat the proceedings of the
Committee as being in the nature of briefings for Senators until the question of the
submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new . . . is he


making a new submission which improves on the clarity of the first submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be
no misunderstanding, it was his intention to clarify all matters by giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Taada and later on Senator Tolentino since
they were the ones that raised this question yesterday?

Senator Taada, please.

SEN. TAADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is
being submitted to the Senate for ratification is not the Final Act of the Uruguay
Round, but rather the Agreement on the World Trade Organization as well as the
Ministerial Declarations and Decisions, and the Understanding and Commitments in
Financial Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Taada. Can we hear from Senator
Tolentino? And after him Senator Neptali Gonzales and Senator Lina.

SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually
transmitted to us but I saw the draft of his earlier, and I think it now complies with the
provisions of the Constitution, and with the Final Act itself . The Constitution does not
require us to ratify the Final Act. It requires us to ratify the Agreement which is now
being submitted. The Final Act itself specifies what is going to be submitted to with
the governments of the participants.

In paragraph 2 of the Final Act, we read and I quote:

By signing the present Final Act, the representatives agree: (a) to submit as
appropriate the WTO Agreement for the consideration of the respective competent
authorities with a view to seeking approval of the Agreement in accordance with their
procedures.

In other words, it is not the Final Act that was agreed to be submitted to the
governments for ratification or acceptance as whatever their constitutional
procedures may provide but it is the World Trade Organization Agreement. And if
that is the one that is being submitted now, I think it satisfies both the Constitution
and the Final Act itself .

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of
record. And they had been adequately reflected in the journal of yesterday's session
and I don't see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make
any comment on this?

SEN. LINA. Mr. President, I agree with the observation just made by Senator
Gonzales out of the abundance of question. Then the new submission is, I believe,
stating the obvious and therefore I have no further comment to make.

Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are
invoking this Court's constitutionally imposed duty "to determine whether or not there has been grave
abuse of discretion amounting to lack or excess of jurisdiction" on the part of the Senate in giving its
concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorari grounded on
grave abuse of discretion may be issued by the Court under Rule 65 of the Rules of Court when it is
amply shown that petitioners have no other plain, speedy and adequate remedy in the ordinary
course of law.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. 61 Mere abuse of discretion is not enough. It must be grave abuse of
discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to
a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 62 Failure on the part
of the petitioner to show grave abuse of discretion will result in the dismissal of the petition. 63

In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is
one of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself
a constitutional body independent and coordinate, and thus its actions are presumed regular and
done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow
such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted
definition of grave abuse of discretion and the presumption of regularity in the Senate's processes,
this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate's
exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the
Constitution. 64
It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an
independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino
labor, products, domestic materials and locally produced goods. But it is equally true that such
principles while serving as judicial and legislative guides are not in themselves sources of
causes of action. Moreover, there are other equally fundamental constitutional principles relied upon
by the Senate which mandate the pursuit of a "trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign markets," thereby
justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise
of legislative and judicial powers is balanced by the adoption of the generally accepted principles of
international law as part of the law of the land and the adherence of the Constitution to the policy of
cooperation and amity with all nations.

That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the
WTO Agreement thereby making it "a part of the law of the land" is a legitimate exercise of its
sovereign duty and power. We find no "patent and gross" arbitrariness or despotism "by reason of
passion or personal hostility" in such exercise. It is not impossible to surmise that this Court, or at
least some of its members, may even agree with petitioners that it is more advantageous to the
national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute
grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute grave
abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a
valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside
the realm of judicial inquiry and review. That is a matter between the elected policy makers and the
people. As to whether the nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing their policy makers.
After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of
a member.

The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian
Renaissance 65 where "the East will become the dominant region of the world economically, politically
and culturally in the next century." He refers to the "free market" espoused by WTO as the "catalyst" in
this coming Asian ascendancy. There are at present about 31 countries including China, Russia and
Saudi Arabia negotiating for membership in the WTO. Notwithstanding objections against possible
limitations on national sovereignty, the WTO remains as the only viable structure for multilateral trading
and the veritable forum for the development of international trade law. The alternative to WTO is isolation,
stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of the
advantages and disadvantages of globalization with its on-line experience, and endowed with a vision of
the future, the Philippines now straddles the crossroads of an international strategy for economic
prosperity and stability in the new millennium. Let the people, through their duly authorized elected
officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza,
Francisco, Hermosisima, Jr. and Torres, Jr., JJ., concur.

Padilla and Vitug, JJ., concur in the result.

Footnotes
1 In Annex "A" of her Memorandum, dated August 8, 1996, received by this Court on
August 12, 1996, Philippine Ambassador to the United Nations, World Trade
Organization and other international organizations Lilia R. Bautista (hereafter
referred to as "Bautista Paper") submitted a "46-year Chronology" of GATT as
follows:

1947 The birth of GATT. On 30 October 1947, the General


Agreement on Tariffs and Trade (GATT) was signed by 23 nations at
the Palais des Nations in Geneva. The Agreement contained tariff
concessions agreed to in the first multilateral trade negotiations and a
set of rules designed to prevent these concessions from being
frustrated by restrictive trade measures.

The 23 founding contracting parties were members of the Preparatory


Committee established by the United Nations Economic and Social
Council in 1946 to draft the charter of the International Trade
Organization (ITO). The ITO was envisaged as the final leg of a triad
of post-War economic agencies (the other two were the International
Monetary Fund and the International Bank for Reconstruction later
the World Bank).

In parallel with this task, the Committee members decided to


negotiate tariff concessions among themselves. From April to
October 1947, the participants completed some 123 negotiations and
established 20 schedules containing the tariff reductions and bindings
which became an integral part of GATT. These schedules resulting
from the first Round covered some 45,000 tariff concessions and
about $10 billion in trade.

GATT was conceived as an interim measure that put into effect the
commercial-policy provisions of the ITO. In November, delegations
from 56 countries met in Havana, Cuba, to consider the to ITO draft
as a whole. After long and difficult negotiations, some 53 countries
signed the Final Act authenticating the text of the Havana Charter in
March 1948. There was no commitment, however, from governments
to ratification and, in the end, the ITO was stillborn, leaving GATT as
the only international instrument governing the conduct of world
trade.

1948 Entry into force. On 1 January 1948, GATT entered into force.
The 23 founding members were: Australia, Belgium, Brazil, Burma,
Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India,
Lebanon, Luxembourg, Netherlands, New Zealand, Norway,
Pakistan, Southern Rhodesia, Syria, South Africa, United Kingdom
and the United States. The first Session of the Contracting Parties
was held from February to March in Havana, Cuba. The secretariat of
the Interim Commission for the ITO, which served as the ad
hoc secretariat of GATT, moved from Lake Placid, New York, to
Geneva. The Contracting Parties held their second session in
Geneva from August to September.
1949 Second Round at Annecy. During the second Round of trade
negotiations, held from April to August at Annecy, France, the
contracting parties exchanged some 5,000 tariff concessions. At their
third Session, they also dealt with the accession of ten more
countries.

1950 Third Round at Torquay. From September 1950 to April 1951,


the contracting parties exchanged some 8,700 tariff concessions in
the English town, yielding tariff reduction of about 25 per cent in
relation to the 1948 level. Four more countries acceded to GATT.
During the fifth Session of the Contracting Parties, the United States
indicated that the ITO Charter would not be re-submitted to the US
Congress; this, in effect, meant that ITO would not come into
operation.

1956 Fourth Round at Geneva. The fourth Round was completed in


May and produced some $2.5 billion worth of tariff reductions. At the
beginning of the year, the GATT commercial policy course for officials
of developing countries was inaugurated.

1958 The Haberler Report. GATT published Trends in International


Trade in October. Known as the "Haberler Report" in honour of
Professor Gottfried Haberler, the chairman of the panel of eminent
economists, it provided initial guidelines for the work of GATT. The
Contracting Parties at their 13th Sessions, attended by Ministers,
subsequently established three committees in GATT: Committee I to
convene a further tariff negotiating conference; Committee II to
review the agricultural policies of member governments and
Committee III to tackle the problem facing developing countries in
their trade. The establishment of the European Economic Community
during the previous year also demanded large-scale tariff
negotiations under Article XXIV: 6 of the General Agreement.

1960 The Dillon Round. The fifth Round opened in September and
was divided into two phases: the first was concerned with
negotiations with EEC member states for the creation of a single
schedule of concessions for the Community based on its Common
External Tariff; and the second was a further general round of tariff
negotiations. Named in honour of US Under-Secretary of State
Douglas Dillon who proposed the negotiations, the Round was
concluded in July 1962 and resulted in about 4,400 tariff concessions
covering $4.9 billion of trade.

1961 The Short-Term Arrangement covering cotton textiles was


agreed as an exception to the GATT rules. The arrangement
permitted the negotiation of quota restrictions affecting the exports of
cotton-producing countries. In 1962 the "Short Term" Arrangement
became the "Long term" Arrangement, lasting until 1974 when the
Multifibre Arrangement entered into force.

1964 The Kennedy Round. Meeting at Ministerial level, a Trade


Negotiations Committee formally opened the Kennedy Round in May.
In June 1967, the Round's Final Act was signed by some 50
participating countries which together accounted for 75 per cent of
world trade. For the first time, negotiations departed from the product-
by-product approach used in the previous Rounds to an across-the-
board or linear method of cutting tariffs for industrial goods. The
working hypothesis of a 50 per cent target cut in tariff levels was
achieved in many areas. Concessions covered an estimated total
value of trade of about $410 billion. Separate agreements were
reached on grains, chemical products and a Code on Anti-Dumping.

1965 A New Chapter. The early 1960s marked the accession to the
general Agreement of many newly-independent developing countries.
In February, the Contracting Parties, meeting in a special session,
adopted the text of Part IV on Trade and Development. The additional
chapter to the GATT required developed countries to accord high
priority to the reduction of trade barriers to products of developing
countries. A Committee on Trade and Development was established
to oversee the functioning of the new GATT provisions. In the
preceding year, GATT had established the International Trade Centre
(ITC) to help developing countries in trade promotion and
identification of potential markets. Since 1968, the ITC had been
jointly operated by GATT and the UN Conference on Trade and
Development (UNCTAD).

1973 The Tokyo Round. The seventh Round was launched by


Ministers in September at the Japanese capital. Some 99 countries
participated in negotiating a comprehensive body of agreements
covering both tariff and non-tariff matters. At the end of the Round in
November 1979, participants exchanged tariff reductions and
bindings which covered more than $300 billion of trade. As a result of
these cuts, the weighted average tariff on manufactured goods in the
world's nine major industrial markets declined from 7.0 to 4.7 per
cent. Agreements were reached in the following areas: subsidies and
countervailing measures, technical barriers to trade, import licensing
procedures, government procurement, customs valuation, a revised
anti-dumping code, trade in bovine meat, trade in dairy products and
trade in civil aircraft. The first concrete result of the Round was the
reduction of import duties and other trade barriers by industrial
countries on tropical products exported by developing countries.

1974 On 1 January 1974, the Arrangement Regarding International


Trade in Textiles, otherwise known as the Multifibre Arrangement
(MFA), entered into force. It superseded the arrangements that had
been governing trade in cotton textiles since 1961. The MFA seeks to
promote the expansion and progressive liberalization of trade in
textile products while at the same time avoiding disruptive effects in
individual markets and lines of production. The MFA was extended in
1978, 1982, 1986, 1991 and 1992. MFA members account for most
of the world exports of textiles and clothing which in 1986 amounted
to US$128 billion.

1982 Ministerial Meeting. Meeting for the first time in nearly ten years,
the GATT Ministers in November at Geneva reaffirmed the validity of
GATT rules for the conduct of international trade and committed
themselves to combating protectionist pressures. They also
established a wide-ranging work programme for the GATT which was
to lay down the groundwork for a new Round 1986. The Uruguay
Round. The GATT Trade Ministers meeting at Punta del Este,
Uruguay, launched the eighth Round of trade negotiations on 20
September. The Punta del Este Declaration, while representing a
single political undertaking, was divided into two sections. The first
covered negotiations on trade in goods and the second initiated
negotiation on trade in services. In the area of trade in goods, the
Ministers committed themselves to a "standstill" on new trade
measures inconsistent with their GATT obligations and to a "rollback"
programme aimed at phasing out existing inconsistent measures.
Envisaged to last four years, negotiations started in early February
1987 in the following areas tariffs, non-tariff measures, tropical
products, natural resource-based products, textiles and clothing,
agriculture, subsidies, safe-guards, trade-related aspects of
intellectual property rights including trade in counterfeit goods, and
trade-related investment measures. The work of other groups
included a review of GATT articles, the GATT dispute settlement
procedure, the Tokyo Round agreements, as well as the functioning
of the GATT system as a whole.

1994 "GATT 1994" is the updated version of GATT 1947 and takes
into account the substantive and institutional changes negotiated in
the Uruguay Round GATT 1994 is an integral part of the World Trade
Organization established on 1 January 1995. It is agreed that there
be a one year transition period during which certain GATT 1947
bodies and commitments would co-exist with those of the World
Trade Organization.

2 The Final Act was signed by representatives of 125 entities, namely Algeria,
Angola, Antigua and Barbuda, Argentine Republic, Australia, Republic of Austria,
State of Bahrain, People's Republic of Bangladesh, Barbados, The Kingdom of
Belgium Belize, Republic of Benin, Bolivia, Botswana, Brazil, Brunei Darussalam,
Burkina Faso, Burundi, Cameroon, Canada, Central African Republic, Chad, Chile,
People's Republic of China, Colombia, Congo, Costa Rica, Republic of Cote d'Ivoire,
Cuba, Cyprus, Czech Republic, Kingdom of Denmark, Commonwealth of Dominica,
Dominican Republic, Arab Republic of Egypt, El Salvador, European Communities,
Republic of Fiji, Finland, French Republic, Gabonese Republic, Gambia, Federal
Republic of Germany, Ghana, Hellenic Republic, Grenada, Guatemala, Republic of
Guinea-Bissau, Republic of Guyana, Haiti, Honduras, Hong Kong, Hungary, Iceland,
India, Indonesia, Ireland, State of Israel, Italian Republic, Jamaica, Japan, Kenya,
Korea, State of Kuwait, Kingdom of Lesotho, Principality of Liechtenstein, Grand
Duchy of Luxembourg, Macau, Republic of Madagascar, Republic of Malawi,
Malaysia, Republic of Maldives, Republic of Mali, Republic of Malta, Islamic Republic
of Mauritania, Republic of Mauritius, United Mexican States, Kingdom of Morocco,
Republic of Mozambique, Union of Myanmar, Republic of Namibia, Kingdom of the
Netherlands, New Zealand, Nicaragua, Republic of Niger, Federal Republic of
Nigeria, Kingdom of Norway, Islamic Republic of Pakistan, Paraguay, Peru,
Philippines, Poland, Potuguese Republic, State of Qatar, Romania, Rwandese
Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines,
Senegal, Sierra Leone, Singapore, Slovak Republic, South Africa, Kingdom of Spain,
Democratic Socialist Republic of Sri Lanka, Republic of Surinam, Kingdom of
Swaziland, Kingdom of Sweden, Swiss Confederation, United Republic of Tanzania,
Kingdom of Thailand, Togolese Republic, Republic of Trinidad and Tobago, Tunisia,
Turkey, Uganda, United Arab Emirates, United Kingdom of Great Britain and
Northern Ireland, United States of America, Eastern Republic of Uruguay,
Venezuela, Republic of Zaire, Republic of Zambia, Republic of Zimbabwe; see pp. 6-
25, Vol. 1, Uruguay Round of Multilateral Trade Negotiations.

3 11 August 1994

The Honorable Members

Senate

Through Senate President Edgardo Angara

Manila

Ladies and Gentlemen:

I have the honor to forward herewith an authenticated copy of the Uruguay Round
Final Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro
for the Philippines on 15 April 1994 in Marrakesh, Morocco.

The Uruguay Round Final Act aims to liberalize and expand world trade and
strengthen the interrelationship between trade and economic policies affecting
growth and development.

The Final Act will improve Philippine access to foreign markets, especially its major
trading partners through the reduction of tariffs on its exports particularly agricultural
and industrial products. These concessions may be availed of by the Philippines,
only if it is a member of the World Trade Organization. By GATT estimates, the
Philippines can acquire additional export from $2.2 to $2.7 Billion annually under
Uruguay Round. This will be on top of the normal increase in exports that the
Philippines may experience.

The Final Act will also open up new opportunities for the services sector in such
areas as the movement of personnel, (e.g. professional services and construction
services), cross-border supply (e.g. computer-related services), consumption abroad
(e.g. tourism, convention services, etc.) and commercial presence.

The clarified and improved rules and disciplines on anti-dumping and countervailing
measures will also benefit Philippine exporters by reducing the costs ad uncertainty
associated with exporting while at the same time providing means for domestic
industries to safeguard themselves against unfair imports.

Likewise, the provision of adequate protection for intellectual property rights is


expected to attract more investments into the country and to make it less vulnerable
to unilateral actions by its trading partners (e.g. Sec. 301 of the United States'
Omnibus Trade Law).
In view of the foregoing, the Uruguay Round Final Act is hereby submitted to the
Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.

A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is


enclosed.

Very
truly
yours,

(SGD.)
FIDEL
V.
RAMO
S

4 11 August 1994

The Honorable Members

Senate

Through Senate President Edgardo Angara

Manila

Ladies and Gentlemen:

I have the honor to forward herewith an authenticated copy of the Uruguay Round
Final Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro
for the Philippines on 13 April 1994 in Marrakech (sic), Morocco.

Members of the trade negotiations committee, which included the Philippines, agreed
that the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial
Services embody the results of their negotiations and form an integral part of the
Uruguay Round Final Act.

By signing the Uruguay Round Final Act, the Philippines, through Secretary Navarro,
agreed:

(a) To submit the Agreement Establishing the World Trade Organization to the
Senate for its concurrence pursuant to Section 21, Article VII of the Constitution; and

(b) To adopt the Ministerial Declarations and Decisions.

The Uruguay Round Final Act aims to liberalize and expand world trade and
strengthen the interrelationship between trade and economic policies affecting
growth and development.
The Final Act will improve Philippine access to foreign markets, especially its major
trading partners through the reduction of tariffs on its exports particularly agricultural
and industrial products. These concessions may be availed of by the Philippines,
only if it is a member of the World Trade Organization. By GATT estimates, the
Philippines can acquire additional export revenues from $2.2 to $2.7 Billion annually
under Uruguay Round. This will be on top of the normal increase in the exports that
the Philippines may experience.

The Final Act will also open up new opportunities for the services sector in such
areas as the movement of personnel, (e.g., professional services and construction
services), cross-border supply (e.g., computer-related services), consumption abroad
(e.g., tourism, convention services, etc.) and commercial presence.

The clarified and improved rules ad disciplines on anti-dumping and countervailing


measures will also benefit Philippine exporters by reducing the costs and uncertainty
associated with exporting while at the same time providing a means for domestic
industries to safeguard themselves against unfair imports.

Likewise, the provision of adequate protection for intellectual property rights is


expected to attract more investments into the country and to make it a less
vulnerable to unilateral actions by its trading partners (e.g., Sec. 301 of the United
States Omnibus Trade Law).

In view of the foregoing, the Uruguay Round Final Act, the Agreement Establishing
the World Trade Organization, the Ministerial Declarations and Decisions, and the
Understanding on Commitments in Financial Services, as embodied in the Uruguay
Round Final Act and forming and integral part thereof are hereby submitted to the
Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.

A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is


enclosed.

Very
truly
yours,

(SGD.)
FIDEL
V.
RAMO
S

5 December 9, 1994

HON. EDGARDO J. ANGARA

Senate President
Senate Manila

Dear Senate President Angara:

Pursuant to the provisions of Sec. 26 (2) Article VI of the Constitution, I hereby certify
to the necessity of the immediate adoption of P.S. 1083 entitled:

CONCURRING IN THE RATIFICATION OF THE AGREEMENT


ESTABLISHING THE WORLD TRADE ORGANIZATION

to meet a public emergency consisting of the need for immediate membership in the
WTO in order to assure the benefits to the Philippine economy arising from such
membership.

Very
truly
yours,

(SGD.)
FIDEL
V.
RAMO
S

6 Attached as Annex A, Petition; rollo, p. 52. P.S. 1083 is the forerunner of assailed
Senate Resolution No. 97. It was prepared by the Committee of the Whole on the
General Agreement on Tariffs and Trade chaired by Sen. Blas F. Ople and co-
chaired by Sen. Gloria Macapagal-Arroyo; see Annex C, Compliance of petitioners
dated January 28, 1997.

7 The Philippines is thus considered an original or founding member of WTO, which


as of July 26, 1996 had 123 members as follows: Antigua and Barbuda, Argentina,
Australia, Austria, Bahrain, Bangladesh, Barbados, Belguim, Belize, Benin, Bolivia,
Botswana, Brazil, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Canada,
Central African Republic, Chili, Colombia, Costa Rica, Cote d'Ivoire, Cuba, Cyprus,
Czech Republic, Denmark, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt,
El Salvador, European Community, Fiji, Finland, France, Gabon, Germany, Ghana,
Greece, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti, Honduras,
Honkong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan,
Kenya, Korea, Kuwait, Lesotho, Liechtenstein, Luxembourg, Macau, Madagascar,
Malawi, Malaysia, Maldives, Mali, Malta, Mauritania, Mauritius, Mexico, Morocco,
Mozambique, Myanmar, Namibia, Netherlands for the Kingdom in Europe and for
the Netherlands Antilles, New Zealand, Nicaragua, Nigeria, Norway, Pakistan, Papua
New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Romania,
Rwanda, Saint Kitts and Nevis, Saint Lucia, Saint Vincent & the Grenadines,
Senegal, Sierra Leone, Singapore, Slovak Republic, Slovenia, Solomon Islands,
South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Tanzania,
Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab
Emirates, United Kingdom, United States, Uruguay, Venezuela, Zambia, and
Zimbabwe. See Annex A, Bautista Paper, infra.

8 Page 6; rollo p. 261.


9 In compliance, Ambassador Bautista submitted to the Court on August 12, 1996, a
Memorandum (the "Bautista Paper") consisting of 56 pages excluding annexes. This
is the same document mentioned in footnote no. 1.

10 Memorandum for Respondents, p. 13; rollo, p. 268.

11 Cf . Kilosbayan Incorporated vs. Morato, 246 SCRA 540, July 17, 1995 for a
discussion on locus standi. See also the Concurring Opinion of Mr. Justice Vicente V.
Mendoza in Tatad vs. Garcia, Jr., 243 SCRA 473, April 6, 1995, as well as Kilusang
Mayo Uno Labor Center vs. Garcia, Jr., 239 SCRA 386, 414, December 23, 1994.

12 Aquino, Jr. vs. Ponce Enrile, 59 SCRA 183, 196, September 17, 1974, cited in
Bondoc vs. Pineda, 201 SCRA 792, 795, September 26, 1991.

13 Guingona, Jr. vs. Gonzales, 219 SCRA 326, 337, March 1, 1993.

14 See Taada and Macapagal vs. Cuenco, et al., 103 Phil. 1051 for a discussion on
the scope of "political question."

15 Section 1, Article VIII, (par. 2).

16 In a privilege speech on May 17, 1993, entitled "Supreme Court Potential


Tyrant?" Senator Arturo Tolentino concedes that this new provision gives the
Supreme Court a duty "to intrude into the jurisdiction of the Congress or the
President."

17 I Record of the Constitutional Commission 436.

18 Cf . Daza vs. Singson, 180 SCRA 496, December 21, 1989.

19 Memorandum for Petitioners, pp. 14-16; rollo, pp. 204-206.

20 Par. 4, Article XVI, WTO Agreement, Uruguay Round of Multilateral Trade


Negotiations, Vol. 1. p. 146.

21 Also entitled "Declaration of Principles." The nomenclature in the 1973 Charter is


identical with that in the 1987's.

22 Philippine Political Law, 1962 Ed., p. 116.

23 Bernas, The Constitution of the Philippines: A Commentary, Vol. II, 1988 Ed., p. 2.
In the very recent case of Manila Prince Hotel v. GSIS, G.R. No. 122156, February 3,
1997, p. 8, it was held that "A provision which lays down a general principle, such as
those found in Art. II of the 1987 Constitution, is usually not self-executing."

24 246 SCRA 540, 564, July 17, 1995. See also Tolentino vs. Secretary of Finance,
G.R. No. 115455 and consolidated cases, August 25, 1995.

25 197 SCRA 52, 68, May 14, 1991.


26 224 SCRA 792, 817, July 30, 1993.

27 Sec. 10, Article XII.

28 Sec. 12, Article XII.

29 Sec. 19, Art. II.

30 Sec. 13, Art. XII.

31 G.R. No. 122156, February 3, 1997, pp. 13-14.

32 Sec. 1, Art. XII.

33 Bautista Paper, p. 19.

34 Preamble, WTO Agreement p. 137, Vol. 1, Uruguay Round of Multilateral Trade


Negotiations. Emphasis supplied.

35 Sec. 19, Article II, Constitution.

36 III Records of the Constitutional Commission 252.

37 Sec. 13, Article XII, Constitution.

38 Justice Isagani A. Cruz, Philippine Political Law, 1995 Ed., p. 13, quoting his own
article entitled, "A Quintessential Constitution" earlier published in the San Beda Law
Journal, April 1972; emphasis supplied.

39 Par. 4, Article XVI (Miscellaneous Provisions), WTO Agreement, p. 146, Vol. 1,


Uruguay Round of Multilateral Trade Negotiations.

40 Memorandum for the Petitioners, p. 29; rollo, p. 219.

41 Sec. 24, Article VI, Constitution.

42 Subsection (2), Sec. 28, Article VI, Constitution.

43 Sec. 2, Article II, Constitution.

44 Cruz, Philippine Political Law, 1995 Ed., p. 55.

45 Salonga and Yap, op cit 305.

46 Salonga, op. cit., p. 287.

47 Quoted in Paras and Paras, Jr., International Law and World Politics, 1994 Ed., p.
178.
47-A Reagan vs. Commission of Internal Revenue, 30 SCRA 968, 973, December
27, 1969.

48 Trebilcock and Howse. The Regulation of International Trade, p. 14, London,


1995, cited on p. 55-56, Bautista Paper.

49 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.

50 Item 5, Sec. 5, Article VIII, Constitution.

51 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.

52 Bautista Paper, p. 13.

53 See footnote 3 of the text of this letter.

54 Salonga and Yap, op cit., pp. 289-290.

55 The full text, without the signatures, of the Final Act is as follows:

Final Act Embodying the Results of the

Uruguay Round of Multilateral Trade Negotiations

1. Having met in order to conclude the Uruguay Round of Multilateral Trade


Negotiations, representatives of the governments and of the European Communities,
members of the Trade Negotiations Committee, agree that the Agreement
Establishing the World Trade Organization (referred to in the Final Act as the "WTO
Agreement"), the Ministerial Declarations and Decisions, and the Understanding on
Commitments in Financial Services, as annexed hereto, embody the results of their
negotiations and form an integral part of this Final Act.

2. By signing to the present Final Act, the representatives agree.

(a) to submit, as appropriate, the WTO Agreement for the


consideration of their respective competent authorities with a view to
seeking approval of the Agreement in accordance with their
procedures; and

(b) to adopt the Ministerial Declarations and Decisions.

3. The representatives agree on the desirability of acceptance of the WTO


Agreement by all participants in the Uruguay Round of Multilateral Trade
Negotiations (hereinafter referred to as "participants") with a view to its entry into
force by 1 January 1995, or as early as possible thereafter. Not later than late 1994,
Ministers will meet, in accordance with the final paragraph of the Punta del Este
Ministerial Declarations, to decide on the international implementation of the results,
including the timing of their entry into force.

4. the representatives agree that the WTO Agreement shall be open for acceptance
as a whole, by signature or otherwise, by all participants pursuant to Article XIV
thereof. The acceptance and entry into force of a Plurilateral Trade Agreement
included in Annex 4 of the WTO Agreement shall be governed by the provisions of
that Plurilateral Trade Agreement.

5. Before accepting the WTO Agreement, participants which are not contracting
parties to the General Agreement on Tariffs and Trade must first have concluded
negotiations for their accession to the General Agreement and become contracting
parties thereto. For participants which are not contracting parties to the general
Agreement as of the date of the Final Act, the Schedules are not definitive and shall
be subsequently completed for the purpose of their accession to the General
Agreement and acceptance of the WTO Agreement.

6. This Final Act and the texts annexed hereto shall be deposited with the Director-
General to the CONTRACTING PARTIES to the General Agreement on Tariffs and
Trade who shall promptly furnish to each participant a certified copy thereof.

DONE at Marrakesh this fifteenth day of April one thousand nine hundred and ninety-
four, in a single copy, in the English, French and Spanish languages, each text being
authentic.

56 Bautista Paper, p. 16.

57 Baustista Paper, p. 16.

58 Uruguay Round of Multilateral Trade Negotiations, Vol. I, pp. 137-138.

59 See footnote 3 for complete text.

60 Taken from pp. 63-85, "Respondent" Memorandum.

61 Zarate vs. Olegario, G.R. No. 90655, October 7, 1996.

62 San Sebastian College vs. Court of Appeals, 197 SCRA 138, 144, May 15, 1991;
Commissioner of Internal Revenue vs. Court of Tax Appeals, 195 SCRA 444, 458
March 20, 1991; Simon vs. Civil Service Commission, 215 SCRA 410, November 5,
1992; Bustamante vs. Commissioner on Audit, 216 SCRA 134, 136, November 27,
1992.

63 Paredes vs. Civil Service Commission, 192 SCRA 84, 94, December 4, 1990.

64 Sec. 21. No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate."

65 Reader's Digest, December 1996 issue, p. 28.


3.

TANADA v. ANGARA
October 26, 2012 Leave a comment

272 SCRA 18, May 2, 1997

Facts :

This is a petition seeking to nullify the Philippine ratification of the World Trade Organization (WTO)

Agreement. Petitioners question the concurrence of herein respondents acting in their capacities as

Senators via signing the said agreement.

The WTO opens access to foreign markets, especially its major trading partners, through the reduction of

tariffs on its exports, particularly agricultural and industrial products. Thus, provides new opportunities

for the service sector cost and uncertainty associated with exporting and more investment in the country.

These are the predicted benefits as reflected in the agreement and as viewed by the signatory Senators, a

free market espoused by WTO.

Petitioners on the other hand viewed the WTO agreement as one that limits, restricts and impair Philippine

economic sovereignty and legislative power. That the Filipino First policy of the Constitution was taken for

granted as it gives foreign trading intervention.

Issue : Whether or not there has been a grave abuse of discretion amounting to lack or excess of

jurisdiction on the part of the Senate in giving its concurrence of the said WTO agreement.

Held:

In its Declaration of Principles and state policies, the Constitution adopts the generally accepted

principles of international law as part of the law of the land, and adheres to the policy of peace, equality,
justice, freedom, cooperation and amity , with all nations. By the doctrine of incorporation, the country is

bound by generally accepted principles of international law, which are considered automatically part of our

own laws. Pacta sunt servanda international agreements must be performed in good faith. A treaty is not

a mere moral obligation but creates a legally binding obligation on the parties.

Through WTO the sovereignty of the state cannot in fact and reality be considered as absolute because it

is a regulation of commercial relations among nations. Such as when Philippines joined the United Nations

(UN) it consented to restrict its sovereignty right under the concept of sovereignty as autolimitation.

What Senate did was a valid exercise of authority. As to determine whether such exercise is wise,

beneficial or viable is outside the realm of judicial inquiry and review. The act of signing the said

agreement is not a legislative restriction as WTO allows withdrawal of membership should this be the

political desire of a member. Also, it should not be viewed as a limitation of economic sovereignty. WTO

remains as the only viable structure for multilateral trading and the veritable forum for the development of

international trade law. Its alternative is isolation, stagnation if not economic self-destruction. Thus, the

people be allowed, through their duly elected officers, make their free choice.

Petition is DISMISSED for lack of merit.


3.
TANADA VS ANGARA
G.R. No. 118295 May 2, 1997

Wigberto E. Tanada et al, in representation of various taxpayers and as non-governmental


organizations, petitioners,
vs.
EDGARDO ANGARA, et al, respondents.

Facts:
This is a case petition by Sen. Wigberto Tanada, together with other lawmakers, taxpayers, and various NGOs
to nullify the Philippine ratification of the World Trade Organization (WTO) Agreement.

Petitioners believe that this will be detrimental to the growth of our National Economy and against to the
Filipino First policy. The WTO opens access to foreign markets, especially its major trading partners,
through the reduction of tariffs on its exports, particularly agricultural and industrial products. Thus, provides
new opportunities for the service sector cost and uncertainty associated with exporting and more investment in
the country. These are the predicted benefits as reflected in the agreement and as viewed by the signatory
Senators, a free market espoused by WTO.

Petitioners also contends that it is in conflict with the provisions of our constitution, since the said Agreement
is an assault on the sovereign powers of the Philippines because it meant that Congress could not pass
legislation that would be good for national interest and general welfare if such legislation would not conform
to the WTO Agreement.

Issues:

1. Whether or not the petition present a justiciable controversy.


2. Whether or not the provisions of the Agreement Establishing the World Trade Organization and the
Agreements and Associated Legal Instruments included in Annexes one (1), two (2) and three (3) of that
agreement cited by petitioners directly contravene or undermine the letter, spirit and intent of Section 19,
Article II and Sections 10 and 12, Article XII of the 1987 Constitution.
3. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of
legislative power by Congress.
4. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this
Honorable Court in promulgating the rules of evidence.
5. Whether or not the concurrence of the Senate in the ratification by the President of the Philippines of the
Agreement establishing the World Trade Organization implied rejection of the treaty embodied in the
Final Act.

Discussions:

1987 Constitution states that Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government.
Although the Constitution mandates to develop a self-reliant and independent national economy controlled
by Filipinos, does not necessarily rule out the entry of foreign investments, goods and services. It
contemplates neither economic seclusion nor mendicancy in the international community. The WTO
itself has some built-in advantages to protect weak and developing economies, which comprise the vast
majority of its members. Unlike in the UN where major states have permanent seats and veto powers in
the Security Council, in the WTO, decisions are made on the basis of sovereign equality, with each
members vote equal in weight to that of any other. Hence, poor countries can protect their common
interests more effectively through the WTO than through one-on-one negotiations with developed
countries. Within the WTO, developing countries can form powerful blocs to push their economic agenda
more decisively than outside the Organization. Which is not merely a matter of practical alliances but a
negotiating strategy rooted in law. Thus, the basic principles underlying the WTO Agreement recognize
the need of developing countries like the Philippines to share in the growth in international trade
commensurate with the needs of their economic development.
In its Declaration of Principles and State Policies, the Constitution adopts the generally accepted
principles of international law as part of the law of the land, and adheres to the policy of peace, equality,
justice, freedom, cooperation and amity, with all nations. By the doctrine of incorporation, the country is
bound by generally accepted principles of international law, which are considered to be automatically part
of our own laws. A state which has contracted valid international obligations is bound to make in its
legislations such modifications as may be necessary to ensure the fulfillment of the obligations
undertaken. Paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) may intrudes on the power of the Supreme
Court to promulgate rules concerning pleading, practice and procedures. With regard to Infringement of a
design patent, WTO members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.
The alleged impairment of sovereignty in the exercise of legislative and judicial powers is balanced by the
adoption of the generally accepted principles of international law as part of the law of the land and the
adherence of the Constitution to the policy of cooperation and amity with all nations. The Senate, after
deliberation and voting, voluntarily and overwhelmingly gave its consent to the WTO Agreement thereby
making it a part of the law of the land is a legitimate exercise of its sovereign duty and power.

Rulings:

1. In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the
petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously
alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary
to settle the dispute. As explained by former Chief Justice Roberto Concepcion, the judiciary is the final
arbiter on the question of whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting
to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this
nature.
2. While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises,
at the same time, it recognizes the need for business exchange with the rest of the world on the bases of
equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and
trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist
policy. It did not shut out foreign investments, goods and services in the development of the Philippine
economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and
investments into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of
equality and reciprocity, frowning only on foreign competition that is unfair.
3. By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary
act, nations may surrender some aspects of their state power in exchange for greater benefits granted by or
derived from a convention or pact. After all, states, like individuals, live with coequals, and in pursuit of
mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their
otherwise absolute rights. As shown by the foregoing treaties Philippines has entered, a portion of
sovereignty may be waived without violating the Constitution, based on the rationale that the Philippines
adopts the generally accepted principles of international law as part of the law of the land and adheres to
the policy of cooperation and amity with all nations.
4. The provision in Article 34 of WTO agreement does not contain an unreasonable burden, consistent as it is
with due process and the concept of adversarial dispute settlement inherent in our judicial system.
5. The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from
its signatories, namely, concurrence of the Senate in the WTO Agreement. Moreover, the Senate was well-
aware of what it was concurring in as shown by the members deliberation on August 25, 1994. After
reading the letter of President Ramos dated August 11, 1994, the senators of the Republic minutely
dissected what the Senate was concurring in.
4.

FIRST DIVISION

[G.R. No. 114508. November 19, 1999]

PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR


OF PATENTS and the BARBIZON CORPORATION, respondents.

DECISION
PUNO, J.:

The Convention of Paris for the Protection of Industrial Property is a multi-lateral treaty which
the Philippines bound itself to honor and enforce in this country. As to whether or not the treaty
affords protection to a foreign corporation against a Philippine applicant for the registration of a
similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner Pribhdas J.
Mirpuri, filed an application with the Bureau of Patents for the registration of the trademark
"Barbizon" for use in brassieres and ladies undergarments. Escobar alleged that she had been
manufacturing and selling these products under the firm name "L & BM Commercial" since March
3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business under
the laws of New York, U.S.A., opposed the application. It claimed that:

"The mark BARBIZON of respondent-applicant is confusingly similar to the


trademark BARBIZON which opposer owns and has not abandoned.

That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.

That the respondent-applicant's use of the said mark BARBIZON which resembles the trademark
used and owned by opposer, constitutes an unlawful appropriation of a mark previously used in
the Philippines and not abandoned and therefore a statutory violation of Section 4 (d) of
Republic Act No. 166, as amended."[1]

This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of the pleadings,
the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the opposition and
giving due course to Escobar's application, thus:
"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due course.

IT IS SO ORDERED."[2]

This decision became final and on September 11, 1974, Lolita Escobar was issued a certificate
of registration for the trademark "Barbizon." The trademark was "for use in "brassieres and lady's
underwear garments like panties."[3]
Escobar later assigned all her rights and interest over the trademark to petitioner Pribhdas J.
Mirpuri who, under his firm name then, the "Bonito Enterprises," was the sole and exclusive
distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of Use of the
trademark required under Section 12 of Republic Act (R.A.) No. 166, the Philippine Trademark
Law. Due to this failure, the Bureau of Patents cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled trademark. Mirpuri filed
his own application for registration of Escobar's trademark. Escobar later assigned her application
to herein petitioner and this application was opposed by private respondent. The case was docketed
as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:

"(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June
1933 and has then used it on various kinds of wearing apparel. On August 14, 1934,
Opposer obtained from the United States Patent Office a more recent registration of
the said mark under Certificate of Registration No. 316,161. On March 1, 1949,
Opposer obtained from the United States Patent Office a more recent registration for
the said trademark under Certificate of Registration No. 507,214, a copy of which is
herewith attached as Annex `A.' Said Certificate of Registration covers the following
goods-- wearing apparel: robes, pajamas, lingerie, nightgowns and slips;

(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON
and Bee design and used the said mark in various kinds of wearing apparel. On March
15, 1977, Opposer secured from the United States Patent Office a registration of the
said mark under Certificate of Registration No. 1,061,277, a copy of which is herein
enclosed as Annex `B.' The said Certificate of Registration covers the following
goods: robes, pajamas, lingerie, nightgowns and slips;

(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a
Representation of a Woman and thereafter used the said trademark on various kinds of
wearing apparel. Opposer obtained from the United States Patent Office registration
of the said mark on April 5, 1983 under Certificate of Registration No. 1,233,666 for
the following goods: wearing apparel: robes, pajamas, nightgowns and lingerie. A
copy of the said certificate of registration is herewith enclosed as Annex `C.'

(d) All the above registrations are subsisting and in force and Opposer has not
abandoned the use of the said trademarks. In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing
the goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-
applicant's misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie
Corporation is prevented from selling its goods in the local market, to the damage and
prejudice of Opposer and its wholly-owned subsidiary.

(e) The Opposer's goods bearing the trademark BARBIZON have been used in many
countries, including the Philippines, for at least 40 years and has enjoyed international
reputation and good will for their quality. To protect its registrations in countries
where the goods covered by the registrations are being sold, Opposer has procured the
registration of the trademark BARBIZON in the following countries:Australia,
Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada, Chile, Colombia,
Denmark, Ecuador, France, West Germany, Greece, Guatemala, Hongkong,
Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New Zealand,
Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and
Iran, among others;

(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its
products, trademarks and name in various publications which are circulated in the
United States and many countries around the world, including the Philippines;

(g) The trademark BARBIZON was fraudulently registered in the Philippines by one
Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by assignment the `rights' to
the said mark previously registered by Lolita Escobar, hence respondent-applicant's
title is vitiated by the same fraud and criminal act. Besides, Certificate of Registration
No. 21920 has been cancelled for failure of either Lolita Escobar or herein
respondent-applicant, to seasonably file the statutory affidavit of use. By applying for
a re-registration of the mark BARBIZON subject of this opposition, respondent-
applicant seeks to perpetuate the fraud and criminal act committed by Lolita Escobar.

(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON and
Representation of a Woman trademarks qualify as well-known trademarks entitled to protection
under Article 6bisof the Convention of Paris for the Protection of Industrial Property and further
amplified by the Memorandum of the Minister of Trade to the Honorable Director of Patents
dated October 25, 1983 [sic],[4]Executive Order No. 913 dated October 7, 1963 and the
Memorandum of the Minister of Trade and Industry to the Honorable Director of Patents dated
October 25, 1983.

(i) The trademark applied for by respondent applicant is identical to Opposer's BARBIZON
trademark and constitutes the dominant part of Opposer's two other marks namely, BARBIZON
and Bee design and BARBIZON and a Representation of a Woman. The continued use by
respondent-applicant of Opposer's trademark BARBIZON on goods belonging to Class 25
constitutes a clear case of commercial and criminal piracy and if allowed registration will violate
not only the Trademark Law but also Article 189 of the Revised Penal Code and the commitment
of the Philippines to an international treaty."[5]

Replying to private respondent's opposition, petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name "Barbizon
International." Petitioner registered the name with the Department of Trade and Industry (DTI) for
which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a petition for
cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's certificate of
registration, and declared private respondent the owner and prior user of the business name
"Barbizon International." Thus:

"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner and prior
user of the business name "BARBIZON INTERNATIONAL" under Certificate of Registration
No. 87-09000 dated March 10, 1987 and issued in the name of respondent, is [sic] hereby
ordered revoked and cancelled. x x x."[6]

Meanwhile, in IPC No. 2049, the evidence of both parties were received by the Director of
Patents. On June 18, 1992, the Director rendered a decision declaring private respondent's
opposition barred by res judicata and giving due course to petitioner's application for registration,
to wit:

"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED. Accordingly,
Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri
is GIVEN DUE COURSE.

SO ORDERED."[7]

Private respondent questioned this decision before the Court of Appeals in CA-G.R. SP No.
28415. On April 30, 1993, the Court of Appeals reversed the Director of Patents finding that IPC
No. 686 was not barred by judgment in IPC No. 2049 and ordered that the case be remanded to
the Bureau of Patents for further proceedings, viz:
"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director of Patents
in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby remanded to the
Bureau of Patents for further proceedings, in accordance with this pronouncement. No costs."[8]

In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of its
decision.[9] Hence, this recourse.
Before us, petitioner raises the following issues:

"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN


INTER PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C
HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE
THE DIRECTOR OF PATENTS IS CONCERNED;

2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED


THE PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT
BARBIZON'S OPPOSITION TO PETITIONER'S APPLICATION FOR
REGISTRATION FOR THE TRADEMARK BARBIZON, WHICH HAS SINCE
RIPENED TO CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER
16, 1992;

3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE


MERITS' REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED
TO ADDUCE EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE
PARTIES TO A CASE ON THE BASIS OF THEIR RESPECTIVE PLEADINGS
WITHOUT PRESENTING TESTIMONIAL OR DOCUMENTARY EVIDENCE
FALLS WITHIN THE MEANING OF 'JUDGMENT ON THE MERITS' AS ONE
OF THE REQUISITES TO CONSTITUTE RES JUDICATA;

4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND


INDUSTRY CANCELLING PETITIONER'S FIRM NAME 'BARBIZON
INTERNATIONAL' AND WHICH DECISION IS STILL PENDING
RECONSIDERATION NEVER OFFERED IN EVIDENCE BEFORE THE
DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS THE RIGHT
TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF THE BUSINESS
NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC TRADE)
BUT ON THE BASIS OF THE PARIS CONVENTION AND THE TRADEMARK
LAW (R.A. 166) WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE
JURISDICTION OF THE DIRECTOR OF PATENTS."[10]

Before ruling on the issues of the case, there is need for a brief background on the function
and historical development of trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name,
symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer
or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in
by others."[11] This definition has been simplified in R.A. No. 8293, the Intellectual Property Code
of the Philippines, which defines a "trademark" as "any visible sign capable of distinguishing
goods."[12] In Philippine jurisprudence, the function of a trademark is to point out distinctly the
origin or ownership of the goods to which it is affixed; to secure to him, who has been instrumental
in bringing into the market a superior article of merchandise, the fruit of his industry and skill; to
assure the public that they are procuring the genuine article; to prevent fraud and imposition; and
to protect the manufacturer against substitution and sale of an inferior and different article as his
product.[13]
Modern authorities on trademark law view trademarks as performing three distinct
functions: (1) they indicate origin or ownership of the articles to which they are attached; (2) they
guarantee that those articles come up to a certain standard of quality; and (3) they advertise the
articles they symbolize.[14]
Symbols have been used to identify the ownership or origin of articles for several
centuries.[15] As early as 5,000 B.C., markings on pottery have been found by archaeologists. Cave
drawings in southwestern Europe show bison with symbols on their flanks.[16] Archaeological
discoveries of ancient Greek and Roman inscriptions on sculptural works, paintings, vases,
precious stones, glassworks, bricks, etc. reveal some features which are thought to be marks or
symbols. These marks were affixed by the creator or maker of the article, or by public authorities
as indicators for the payment of tax, for disclosing state monopoly, or devices for the settlement
of accounts between an entrepreneur and his workmen.[17]
In the Middle Ages, the use of many kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the compulsory use of identifying marks in certain
trades. There were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's marks,
watermarks on paper, etc.[18] Every guild had its own mark and every master belonging to it had a
special mark of his own. The marks were not trademarks but police marks compulsorily imposed
by the sovereign to let the public know that the goods were not "foreign" goods smuggled into an
area where the guild had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan.[19] For a similar reason, merchants also used merchants'
marks. Merchants dealt in goods acquired from many sources and the marks enabled them to
identify and reclaim their goods upon recovery after shipwreck or piracy.[20]
With constant use, the mark acquired popularity and became voluntarily adopted. It was not
intended to create or continue monopoly but to give the customer an index or guarantee of
quality.[21] It was in the late 18th century when the industrial revolution gave rise to mass
production and distribution of consumer goods that the mark became an important instrumentality
of trade and commerce.[22] By this time, trademarks did not merely identify the goods; they also
indicated the goods to be of satisfactory quality, and thereby stimulated further purchases by the
consuming public.[23] Eventually, they came to symbolize the goodwill and business reputation of
the owner of the product and became a property right protected by law.[24] The common law
developed the doctrine of trademarks and tradenames "to prevent a person from palming off his
goods as another's, from getting another's business or injuring his reputation by unfair means, and,
from defrauding the public."[25] Subsequently, England and the United States enacted national
legislation on trademarks as part of the law regulating unfair trade.[26] It became the right of the
trademark owner to exclude others from the use of his mark, or of a confusingly similar mark
where confusion resulted in diversion of trade or financial injury. At the same time, the trademark
served as a warning against the imitation or faking of products to prevent the imposition of fraud
upon the public.[27]
Today, the trademark is not merely a symbol of origin and goodwill; it is often the most
effective agent for the actual creation and protection of goodwill. It imprints upon the public mind
an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In
other words, the mark actually sells the goods.[28] The mark has become the "silent salesman," the
conduit through which direct contact between the trademark owner and the consumer is assured. It
has invaded popular culture in ways never anticipated that it has become a more convincing selling
point than even the quality of the article to which it refers.[29] In the last half century, the
unparalleled growth of industry and the rapid development of communications technology have
enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions where
the owner does not actually manufacture or sell the product itself. Goodwill is no longer confined
to the territory of actual market penetration; it extends to zones where the marked article has been
fixed in the public mind through advertising.[30] Whether in the print, broadcast or electronic
communications medium, particularly on the Internet,[31]advertising has paved the way for growth
and expansion of the product by creating and earning a reputation that crosses over borders,
virtually turning the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action claiming that
"Barbizon" products have been sold in the Philippines since 1970. Petitioner developed this market
by working long hours and spending considerable sums of money on advertisements and
promotion of the trademark and its products. Now, almost thirty years later, private respondent, a
foreign corporation, "swaggers into the country like a conquering hero," usurps the trademark and
invades petitioner's market.[32] Justice and fairness dictate that private respondent be prevented
from appropriating what is not its own. Legally, at the same time, private respondent is barred
from questioning petitioner's ownership of the trademark because of res judicata.[33]
Literally, res judicata means a matter adjudged, a thing judicially acted upon or decided; a
thing or matter settled by judgment.[34] In res judicata, the judgment in the first action is considered
conclusive as to every matter offered and received therein, as to any other admissible matter which
might have been offered for that purpose, and all other matters that could have been adjudged
therein.[35] Res judicatais an absolute bar to a subsequent action for the same cause; and its
requisites are: (a) the former judgment or order must be final; (b) the judgment or order must be
one on the merits; (c) it must have been rendered by a court having jurisdiction over the subject
matter and parties; (d) there must be between the first and second actions, identity of parties, of
subject matter and of causes of action.[36]
The Solicitor General, on behalf of respondent Director of Patents, has joined cause with
petitioner. Both claim that all the four elements of res judicata have been complied with: that the
judgment in IPC No. 686 was final and was rendered by the Director of Patents who had
jurisdiction over the subject matter and parties; that the judgment in IPC No. 686 was on the merits;
and that the lack of a hearing was immaterial because substantial issues were raised by the parties
and passed upon by the Director of Patents.[37]
The decision in IPC No. 686 reads as follows:
"x x x.

Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records,
have all been carefully considered.

Accordingly, the only issue for my disposition is whether or not the herein opposer
would probably be damaged by the registration of the trademark BARBIZON sought
by the respondent-applicant on the ground that it so resembles the trademark
BARBIZON allegedly used and owned by the former to be `likely to cause confusion,
mistake or to deceive purchasers.'

On record, there can be no doubt that respondent-applicant's sought-to-be-registered


trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged
trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of
presentation. Respondent-applicant's trademark is in bold letters (set against a black
background), while that of the opposer is offered in stylish script letters.

It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the
identical mark BARBIZON by the respondent-applicant. However, the allegation of
facts in opposer's verified notice of opposition is devoid of such material
information. In fact, a reading of the text of said verified opposition reveals an
apparent, if not deliberate, omission of the date (or year) when opposer's alleged
trademark BARBIZON was first used in trade in the Philippines (see par. No. 1, p. 2,
Verified Notice of Opposition, Rec.).Thus, it cannot here and now be ascertained
whether opposer's alleged use of the trademark BARBIZON could be prior to the use
of the identical mark by the herein respondent-applicant, since the opposer attempted
neither to substantiate its claim of use in local commerce with any proof or
evidence. Instead, the opposer submitted the case for decision based merely on the
pleadings.

On the other hand, respondent-applicant asserted in her amended application for


registration that she first used the trademark BARBIZON for brassiere (or 'brasseire')
and ladies underwear garments and panties as early as March 3, 1970. Be that as it
may, there being no testimony taken as to said date of first use, respondent-applicant
will be limited to the filing date, June 15, 1970, of her application as the date of first
use (Rule 173, Rules of Practice in Trademark Cases).

From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly, Application
Serial No. 19010, for the registration of the trademark BARBIZON of respondent Lolita R.
Escobar, is given due course."[38]

The decision in IPC No. 686 was a judgment on the merits and it was error for the Court of
Appeals to rule that it was not. A judgment is on the merits when it determines the rights and
liabilities of the parties based on the disclosed facts, irrespective of formal, technical or dilatory
objections.[39] It is not necessary that a trial should have been conducted. If the court's judgment is
general, and not based on any technical defect or objection, and the parties had a full legal
opportunity to be heard on their respective claims and contentions, it is on the merits although
there was no actual hearing or arguments on the facts of the case.[40] In the case at bar, the Director
of Patents did not dismiss private respondent's opposition on a sheer technicality. Although no
hearing was conducted, both parties filed their respective pleadings and were given opportunity to
present evidence. They, however, waived their right to do so and submitted the case for decision
based on their pleadings. The lack of evidence did not deter the Director of Patents from ruling on
the case, particularly on the issue of prior use, which goes into the very substance of the relief
sought by the parties. Since private respondent failed to prove prior use of its trademark, Escobar's
claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General allege
that IPC No. 686 and IPC No. 2049 also comply with the fourth requisite of res judicata, i.e., they
involve the same parties and the same subject matter, and have identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same subject
matter. Petitioner herein is the assignee of Escobar while private respondent is the same American
corporation in the first case. The subject matter of both cases is the trademark "Barbizon." Private
respondent counter-argues, however, that the two cases do not have identical causes of action. New
causes of action were allegedly introduced in IPC No. 2049, such as the prior use and registration
of the trademark in the United States and other countries worldwide, prior use in the Philippines,
and the fraudulent registration of the mark in violation of Article 189 of the Revised Penal
Code. Private respondent also cited protection of the trademark under the Convention of Paris for
the Protection of Industrial Property, specifically Article 6bis thereof, and the implementation of
Article 6bis by two Memoranda dated November 20, 1980 and October 25, 1983 of the Minister
of Trade and Industry to the Director of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as the
Paris Convention, is a multilateral treaty that seeks to protect industrial property consisting of
patents, utility models, industrial designs, trademarks, service marks, trade names and indications
of source or appellations of origin, and at the same time aims to repress unfair competition.[41] The
Convention is essentially a compact among various countries which, as members of the Union,
have pledged to accord to citizens of the other member countries trademark and other
rights comparable to those accorded their own citizens by their domestic laws for an effective
protection against unfair competition.[42] In short, foreign nationals are to be given the same
treatment in each of the member countries as that country makes available to its own
citizens.[43] Nationals of the various member nations are thus assured of a certain minimum of
international protection of their industrial property.[44]
The Convention was first signed by eleven countries in Paris on March 20, 1883.[45] It
underwent several revisions-- at Brussels in 1900, at Washington in 1911, at The Hague in 1925,
at London in 1934, at Lisbon in 1958,[46] and at Stockholm in 1967. Both the Philippines and the
United States of America, herein private respondent's country, are signatories to the
Convention. The United States acceded on May 30, 1887 while the Philippines, through its Senate,
concurred on May 10, 1965.[47] The Philippines' adhesion became effective on September 27,
1965,[48] and from this date, the country obligated itself to honor and enforce the provisions of the
Convention.[49]
In the case at bar, private respondent anchors its cause of action on the first paragraph of
Article 6bis of the Paris Convention which reads as follows:

"Article 6bis

(1) The countries of the Union undertake, either administratively if their


legislation so permits, or at the request of an interested party, to refuse or to
cancel the registration and to prohibit the use, of a trademark which constitutes
a reproduction, an imitation, or a translation, liable to create confusion, of a
mark considered by the competent authority of the country of registration or use
to be well-known in that country as being already the mark of a person entitled
to the benefits of this Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create
confusion therewith.

(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for a
period within which the prohibition of use must be sought.

(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use of
marks registered or used in bad faith."[50]
This Article governs protection of well-known trademarks. Under the first paragraph, each
country of the Union bound itself to undertake to refuse or cancel the registration, and prohibit the
use of a trademark which is a reproduction, imitation or translation, or any essential part of which
trademark constitutes a reproduction, liable to create confusion, of a mark considered by the
competent authority of the country where protection is sought, to be well-known in the country as
being already the mark of a person entitled to the benefits of the Convention, and used for identical
or similar goods.
Article 6bis was first introduced at The Hague in 1925 and amended in Lisbon in 1952.[51] It
is a self-executing provision and does not require legislative enactment to give it effect in the
member country.[52] It may be applied directly by the tribunals and officials of each member
country by the mere publication or proclamation of the Convention, after its ratification according
to the public law of each state and the order for its execution.[53]
The essential requirement under Article 6bis is that the trademark to be protected must be
"well-known" in the country where protection is sought. The power to determine whether a
trademark is well-known lies in the "competent authority of the country of registration or use."
This competent authority would be either the registering authority if it has the power to decide
this, or the courts of the country in question if the issue comes before a court.[54]
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the Ministry
of Trade issued a Memorandum to the Director of Patents. The Minister ordered the Director that:

"Pursuant to the Paris Convention for the Protection of Industrial Property to which
the Philippines is a signatory, you are hereby directed to reject all pending
applications for Philippine registration of signature and other world-famous
trademarks by applicants other than its original owners or users.

The conflicting claims over internationally known trademarks involve such name
brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian
Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene,
Lanvin and Ted Lapidus.

It is further directed that, in cases where warranted, Philippine registrants of such


trademarks should be asked to surrender their certificates of registration, if any, to
avoid suits for damages and other legal action by the trademarks' foreign or local
owners or original users.

You are also required to submit to the undersigned a progress report on the matter.

For immediate compliance."[55]

Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another
Memorandum to the Director of Patents, viz:

"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the rule-making
and adjudicatory powers of the Minister of Trade and Industry and provides inter alia, that `such
rule-making and adjudicatory powers should be revitalized in order that the Minister of Trade
and Industry can x x x apply more swift and effective solutions and remedies to old and new
problems x x x such as infringement of internationally-known tradenames and trademarks x x x'
and in view of the decision of the Intermediate Appellate Court in the case of LA CHEMISE
LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. SP NO. 13359 (17) June 1983][56] which
affirms the validity of the MEMORANDUM of then Minister Luis R. Villafuerte dated 20
November 1980 confirming our obligations under the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY to which the Republic of the Philippines is a
signatory, you are hereby directed to implement measures necessary to effect compliance with
our obligations under said Convention in general, and, more specifically, to honor our
commitment under Section 6bis[57] thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or is a
mark already belonging to a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office procedures in inter partes
and ex parte cases, according to any of the following criteria or any combination
thereof:

(a) a declaration by the Minister of Trade and Industry that the trademark being
considered is already well-known in the Philippines such that permission for its use by
other than its original owner will constitute a reproduction, imitation, translation or
other infringement;

(b) that the trademark is used in commerce internationally, supported by proof that
goods bearing the trademark are sold on an international scale, advertisements, the
establishment of factories, sales offices, distributorships, and the like, in different
countries, including volume or other measure of international trade and commerce;

(c) that the trademark is duly registered in the industrial property office(s) of another
country or countries, taking into consideration the date of such registration;

(d) that the trademark has long been established and obtained goodwill and
international consumer recognition as belonging to one owner or source;

(e) that the trademark actually belongs to a party claiming ownership and has the right
to registration under the provisions of the aforestated PARIS CONVENTION.

2. The word trademark, as used in this MEMORANDUM, shall include tradenames,


service marks, logos, signs, emblems, insignia or other similar devices used for
identification and recognition by consumers.

3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or imitation of
a trademark owned by a person, natural or corporate, who is a citizen of a country
signatory to the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY.

4. The Philippine Patent Office shall give due course to the Opposition in cases
already or hereafter filed against the registration of trademarks entitled to protection
of Section 6 bis of said PARIS CONVENTION as outlined above, by remanding
applications filed by one not entitled to such protection for final disallowance by the
Examination Division.
5. All pending applications for Philippine registration of signature and other world-
famous trademarks filed by applicants other than their original owners or users shall
be rejected forthwith. Where such applicants have already obtained registration
contrary to the abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to the Philippine Patent
Office for immediate cancellation proceedings.

x x x."[58]

In the Villafuerte Memorandum, the Minister of Trade instructed the Director of Patents to
reject all pending applications for Philippine registration of signature and other world-famous
trademarks by applicants other than their original owners or users. The Minister enumerated
several internationally-known trademarks and ordered the Director of Patents to require Philippine
registrants of such marks to surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate well-
known trademarks but laid down guidelines for the Director of Patents to observe in determining
whether a trademark is entitled to protection as a well-known mark in the Philippines under Article
6bis of the Paris Convention. This was to be established through Philippine Patent Office
procedures in inter partesand ex parte cases pursuant to the criteria enumerated therein. The
Philippine Patent Office was ordered to refuse applications for, or cancel the registration of,
trademarks which constitute a reproduction, translation or imitation of a trademark owned by a
person who is a citizen of a member of the Union. All pending applications for registration of
world-famous trademarks by persons other than their original owners were to be rejected
forthwith. The Ongpin Memorandum was issued pursuant to Executive Order No. 913 dated
October 7, 1983 of then President Marcos which strengthened the rule-making and adjudicatory
powers of the Minister of Trade and Industry for the effective protection of consumers and the
application of swift solutions to problems in trade and industry.[59]
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in the
1984 landmark case of La Chemise Lacoste, S.A. v. Fernandez.[60] This court ruled therein that
under the provisions of Article 6bis of the Paris Convention, the Minister of Trade and Industry
was the "competent authority" to determine whether a trademark is well-known in this country.[61]
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the adoption of
the Paris Convention in 1965. In the case at bar, the first inter partes case, IPC No. 686, was filed
in 1970, before the Villafuerte Memorandum but five (5) years after the effectivity of the Paris
Convention. Article 6bis was already in effect five years before the first case was
instituted. Private respondent, however, did not cite the protection of Article 6bis, neither did it
mention the Paris Convention at all. It was only in 1981 when IPC No. 2049 was instituted that
the Paris Convention and the Villafuerte Memorandum, and, during the pendency of the case, the
1983 Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6bis of the
Convention and the two Memoranda is barred by res judicata has already been answered
in Wolverine Worldwide, Inc. v. Court of Appeals.[62] In this case, petitioner Wolverine, a foreign
corporation, filed with the Philippine Patent Office a petition for cancellation of the registration
certificate of private respondent, a Filipino citizen, for the trademark "Hush Puppies" and "Dog
Device." Petitioner alleged that it was the registrant of the internationally-known trademark in the
United States and other countries, and cited protection under the Paris Convention and the Ongpin
Memorandum. The petition was dismissed by the Patent Office on the ground of res judicata. It
was found that in 1973 petitioner's predecessor-in-interest filed two petitions for cancellation of
the same trademark against respondent's predecessor-in-interest. The Patent Office dismissed the
petitions, ordered the cancellation of registration of petitioner's trademark, and gave due course to
respondent's application for registration. This decision was sustained by the Court of Appeals,
which decision was not elevated to us and became final and executory.[63]
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the
Trademark Law, its subsequent petition was based on a new cause of action, i.e., the Ongpin
Memorandum and E.O. No. 913 issued in 1983, after finality of the previous decision. We held
that the said Memorandum and E.O. did not grant a new cause of action because it did "not amend
the Trademark Law," x x x "nor did it indicate a new policy with respect to the registration in the
Philippines of world-famous trademarks."[64] This conclusion was based on the finding that
Wolverine's two previous petitions and subsequent petition dealt with the same issue of ownership
of the trademark.[65] In other words, since the first and second cases involved the same issue of
ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not raised in IPC
No. 686. Private respondent's opposition therein was merely anchored on:

(a) "confusing similarity" of its trademark with that of Escobar's;

(b) that the registration of Escobar's similar trademark will cause damage to private
respondent's business reputation and goodwill; and

(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a


mark previously used in the Philippines which act is penalized under Section 4 (d) of
the Trademark Law.

In IPC No. 2049, private respondent's opposition set forth several issues summarized as
follows:

(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products
such as robes, pajamas, lingerie, nightgowns and slips;

(b) that the trademark "BARBIZON" was registered with the United States Patent
Office in 1934 and 1949; and that variations of the same trademark, i.e.,
"BARBIZON" with Bee design and "BARBIZON" with the representation of a
woman were also registered with the U.S. Patent Office in 1961 and 1976;

(c) that these marks have been in use in the Philippines and in many countries all over
the world for over forty years. "Barbizon" products have been advertised in
international publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based
on fraud; and this fraudulent registration was cancelled in 1979, stripping Escobar of
whatsoever right she had to the said mark;

(e) Private respondent's trademark is entitled to protection as a well-known mark


under Article 6bis of the Paris Convention, Executive Order No. 913, and the two
Memoranda dated November 20, 1980 and October 25, 1983 of the Minister of Trade
and Industry to the Director of Patents;

(f) Escobar's trademark is identical to private respondent's and its use on the same
class of goods as the latter's amounts to a violation of the Trademark Law and Article
189 of the Revised Penal Code.

IPC No. 2049 raised the issue of ownership of the trademark, the first registration and use of the
trademark in the United States and other countries, and the international recognition and reputation
of the trademark established by extensive use and advertisement of private respondent's products
for over forty years here and abroad. These are different from the issues of confusing similarity
and damage in IPC No. 686. The issue of prior use may have been raised in IPC No. 686 but this
claim was limited to prior use in the Philippines only. Prior use in IPC No. 2049 stems from private
respondent's claim as originator of the word and symbol "Barbizon,"[66] as the first and registered
user of the mark attached to its products which have been sold and advertised worldwide for a
considerable number of years prior to petitioner's first application for registration of her trademark
in the Philippines. Indeed, these are substantial allegations that raised new issues and necessarily
gave private respondent a new cause of action.Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute separate or distinct
causes of action and were not put in issue in the former action.[67]
Respondent corporation also introduced in the second case a fact that did not exist at the time
the first case was filed and terminated. The cancellation of petitioner's certificate of registration
for failure to file the affidavit of use arose only after IPC No. 686. It did not and could not have
occurred in the first case, and this gave respondent another cause to oppose the second
application. Res judicata extends only to facts and conditions as they existed at the time judgment
was rendered and to the legal rights and relations of the parties fixed by the facts so
determined.[68] When new facts or conditions intervene before the second suit, furnishing a new
basis for the claims and defenses of the parties, the issues are no longer the same, and the former
judgment cannot be pleaded as a bar to the subsequent action.[69]
It is also noted that the oppositions in the first and second cases are based on different
laws. The opposition in IPC No. 686 was based on specific provisions of the Trademark Law, i.e.,
Section 4 (d)[70]on confusing similarity of trademarks and Section 8[71] on the requisite damage to
file an opposition to a petition for registration. The opposition in IPC No. 2049 invoked the Paris
Convention, particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister
of Trade and Industry. This opposition also invoked Article 189 of the Revised Penal Code which
is a statute totally different from the Trademark Law.[72] Causes of action which are distinct and
independent from each other, although arising out of the same contract, transaction, or state of
facts, may be sued on separately, recovery on one being no bar to subsequent actions on
others.[73] The mere fact that the same relief is sought in the subsequent action will not render the
judgment in the prior action operative as res judicata, such as where the two actions are based on
different statutes.[74] Res judicata therefore does not apply to the instant case and respondent Court
of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple property cases. Trademarks deal
with the psychological function of symbols and the effect of these symbols on the public at
large.[75]Trademarks play a significant role in communication, commerce and trade, and serve
valuable and interrelated business functions, both nationally and internationally. For this reason,
all agreements concerning industrial property, like those on trademarks and tradenames, are
intimately connected with economic development.[76] Industrial property encourages investments
in new ideas and inventions and stimulates creative efforts for the satisfaction of human
needs. They speed up transfer of technology and industrialization, and thereby bring about social
and economic progress.[77] These advantages have been acknowledged by the Philippine
government itself. The Intellectual Property Code of the Philippines declares that "an effective
intellectual and industrial property system is vital to the development of domestic and creative
activity, facilitates transfer of technology, it attracts foreign investments, and ensures market
access for our products."[78] The Intellectual Property Code took effect on January 1, 1998 and by
its express provision,[79] repealed the Trademark Law,[80] the Patent Law,[81] Articles 188 and 189
of the Revised Penal Code, the Decree on Intellectual Property,[82] and the Decree on Compulsory
Reprinting of Foreign Textbooks.[83] The Code was enacted to strengthen the intellectual and
industrial property system in the Philippines as mandated by the country's accession to the
Agreement Establishing the World Trade Organization (WTO).[84]
The WTO is a common institutional framework for the conduct of trade relations among its
members in matters related to the multilateral and plurilateral trade agreements annexed to the
WTO Agreement.[85] The WTO framework ensures a "single undertaking approach" to the
administration and operation of all agreements and arrangements attached to the WTO
Agreement. Among those annexed is the Agreement on Trade-Related Aspects of Intellectual
Property Rights or TRIPs.[86] Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need to promote effective and adequate
protection of intellectual property rights, and to ensure that measures and procedures to enforce
intellectual property rights do not themselves become barriers to legitimate trade." To fulfill these
objectives, the members have agreed to adhere to minimum standards of protection set by several
Conventions.[87] These Conventions are: the Berne Convention for the Protection of Literary and
Artistic Works (1971), the Rome Convention or the International Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organisations, the Treaty on Intellectual
Property in Respect of Integrated Circuits, and the Paris Convention (1967), as revised in
Stockholm on July 14, 1967.[88]
A major proportion of international trade depends on the protection of intellectual property
rights.[89] Since the late 1970's, the unauthorized counterfeiting of industrial property and
trademarked products has had a considerable adverse impact on domestic and international trade
revenues.[90] The TRIPs Agreement seeks to grant adequate protection of intellectual property
rights by creating a favorable economic environment to encourage the inflow of foreign
investments, and strengthening the multi-lateral trading system to bring about economic, cultural
and technological independence.[91] The Philippines and the United States of America have
acceded to the WTO Agreement. This Agreement has revolutionized international business and
economic relations among states, and has propelled the world towards trade liberalization and
economic globalization.[92] Protectionism and isolationism belong to the past. Trade is no longer
confined to a bilateral system. There is now "a new era of global economic cooperation, reflecting
the widespread desire to operate in a fairer and more open multilateral trading
system."[93] Conformably, the State must reaffirm its commitment to the global community and
take part in evolving a new international economic order at the dawn of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 28415 are affirmed.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

[1]
Decision No. 804 dated June 18, 1974 of the Director of Patents, Rollo, p. 36.
[2]
Rollo, p. 38.
[3]
Certificate of Registration No. 21920, Annex "E" to Memorandum of Petitioner, Rollo, p. 211.
[4]
The Memorandum of the Minister of Trade to the Honorable Director of Patents should have been dated 20
November 1980-- Memorandum of the Private Respondent, p. 11, Rollo, p. 227.
[5]
Comment of the Solicitor General, pp. 5-8, Rollo, pp. 116-119.
[6]
CA Decision, p. 4, Rollo, p. 27.
[7]
Id.
[8]
CA Decision, p. 31. The decision was penned by Justice Fidel Purisima, now a member of this Court, and concurred
in by Justices Jesus M. Elbinias and Angelina S. Gutierrez.
[9]
Rollo, pp. 34-35.
[10]
Petitioner, pp. 5-6, Rollo, pp. 11-12.
[11]
Sec. 38, par. 2, R.A. 166.
[12]
Sec. 121.1, Part III, R.A. 8293.
[13]
Gabriel v. Perez, 55 SCRA 406, 417 [1974] citing 52 Am Jur, p. 508; Etepha v. Director of Patents, 16 SCRA 495,
497 [1966]; see also Phil. Refining Co., Inc. v. Ng Sam, 115 SCRA 472, 476-477 [1982]; also cited in Agpalo,
Trademark Law and Practice in the Philippines, p. 5 [1990].
[14]
Dissenting Opinion of Justice Florentino Feliciano in Philip Morris, Inc. v. Court of Appeals, 224 SCRA 576, 624
[1993]; see William Jay Gross, The Territorial Scope of Trademark Rights, Univ. of Miami Law Review, vol 44:1075
[March 1990]; see also Rudolf Callmann, The Law of Unfair Competition and Trademarks, vol. 2, pp. 804-814 [1945].
[15]
Harry D. Nims, The Law of Unfair Competition and Trademarks, 4th ed., pub. by Baker, Voorhis & Co., Inc., vol.
1, p. 509 [1947].
[16]
Frank H. Foster and Robert L. Shook, Patents, Copyrights, and Trademarks, pub. by John Wiley & Sons, Inc., 2d
ed. p. 19 [1993].1
[17]
Stephen P. Ladas, Patents, Trademarks, and Related Rights, National and International Protection (Harvard
University Press), vol. 1, pp. 3-4 [1975].
[18]
Foster and Shook, supra, at 20.
[19]
Id., at 20-21; Ladas, supra, vol. 1, at 4-5; see Frank I. Schechter, The Rational Basis of Trademark Protection, 40
Harvard Law Review, 813, 814 [1927]; Callmann, supra, vol. 2, p. 807; see also Richard Wincor and Irving Mandell,
Copyright, Patents and Trademarks: The Protection of Intellectual and Industrial Property, at 72 [1980].
[20]
Foster and Shook, supra, at 20; Schechter, supra, at 814.
[21]
Callmann, supra, vol. 2, at 808.
[22]
Foster and Shook, supra, at 22-23; Nims, supra, at 511.
[23]
Callmann, supra, vol. 2, at 809-910.
[24]
Foster and Shook, supra, at 21-22.
[25]
Justice Holmes in Chadwick v. Covell, 151 Man 190, 23 NE 1068, 1069 [1890]; also cited in Nims, supra, at 37.
[26]
Ladas, supra, vol. 1, at 8.
[27]
See also Dissenting Opinion of Justice Feliciano in Philip Morris, supra, at 624-625.
[28]
Schechter, supra. Trademarks have become products in their own right, valued as status symbols and indicators of
the preferences and aspirations of those who use them - Alex Kozinski, Trademarks Unplugged, New York University
Law Review, vol. 68: 960, 965-966 [Oct. 1993].
[29]
Kozinski, supra, at 965-966; Callmann, supra, vol. 2, at 881-812 [1945], citing Schechter, The Historical
Foundations of the Law Relating to Trademarks [1925], Note 15, p. 64.
[30]
Gross, supra, at 1099-1100; see also Dissenting opinion of Justice Feliciano in Philip Morris, supra, at 625-626.
[31]
The Internet is a decentralized computer network linked together through routers and communications protocols
that enable anyone connected to it to communicate with others likewise connected, regardless of physical
location. Users of the Internet have a wide variety of communication methods available to them and a tremendous
wealth of information that they may access. The growing popularity of the Net has been driven in large part by the
World Wide Web, i.e., a system that facilitates use of the Net by sorting through the great mass of information available
on it. Advertising on the Net and cybershopping are turning the Internet into a commercial marketplace.-- Maureen
O'Rourke, Fencing Cyberspace: Drawing Borders in a Virtual World, Minnesota Law Review, vol. 82: 609-611, 615-
618 [Feb. 1998].
[32]
Petition, pp. 9-10, Rollo, pp. 15-16.
[33]
Id.
[34]
46 Am Jur 2d, "Judgments," Sec. 394 [1969 ed.].
[35]
Section 49 (b), Rule 39 of the Revised Rules of Court-- now Section 47 (b), Rule 39 of the 1997 Rules of Civil
Procedure; Gabuya v. Layug, 250 SCRA 218, 221 [1995]; Vda. de Cruzo v. Carriaga, Jr., 174 SCRA 330, 338 [1989].
[36]
De Knecht v. Court of Appeals, 290 SCRA 223, 237-238 [1998]; De Ramos v. Court of Appeals, 213 SCRA 207,
214-215 [1992]; American Inter-Fashion Corp. v. Office of the President, 197 SCRA 409, 417 [1991]; Wolverine
Worldwide, Inc. v. Court of Appeals, 169 SCRA 627, 630 [1989].
[37]
Petition, pp. 8-10, Rollo, pp. 14-16; Comment of the Solicitor General, pp. 15-19, Rollo, pp. 126-130.
[38]
Rollo, pp. 37-38.
[39]
Mendiola v. Court of Appeals, 258 SCRA 492, 500 [1996].
[40]
Mendiola v. Court of Appeals, supra, at 500-501; Nabus v. Court of Appeals, 193 SCRA 732, 740 [1991] citing 50
C.J.S. 51-53.
[41]
Article 1, Paris Convention, 61 O.G. 8010 [1965].
[42]
R. Agpalo, Trademark Law and Practice in the Philippines, p. 200 [1990].
[43]
Agpalo, supra, at 200-201.
[44]
Rudolf Callmann, The Law of Unfair Competition and Trade-Marks, vol. 2, p. 1723 [1945].
[45]
Belgium, Brazil, France, Guatemala, Italy, the Netherlands, Portugal, Salvador, Serbia, Spain and Switzerland.
[46]
61 O.G. 8011.
[47]
Note 18, Dissenting Opinion of Justice Florentino Feliciano in Philip Morris, Inc. v. Court of Appeals, 224 SCRA
599, 615 [1993]. The President of the Philippines signed the instrument of adherence on July 21, 1965-- Agpalo, supra,
at 201.
[48]
Id; see also Note 9, Smith Kline & French Laboratories, Ltd. v. Court of Appeals, 276 SCRA 224, 236 [1997];
Converse Rubber Corp. v. Universal Rubber Products, 147 SCRA 154, 165 [1987].
[49]
La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373, 389 [1984].
[50]
As revised under the Lisbon Act of 1958. At the time the Philippines ratified the Paris Convention in 1965, the last
revision was the Lisbon Act. At present, the latest revision is the Stockholm Act passed on July 14, 1967 and amended
on October 2, 1979. The Philippines acceded to the Stockholm Act on March 25, 1980 but only with respect to Articles
13-30. The Stockholm Act took effect in the Philippines on July 16, 1980, except as to its Articles 1-12-- Esteban B.
Bautista, The TRIPS Agreement and the Philippines' Existing Treaty Obligations on Intellectual Property, The World
Bulletin, pub. by the Institute of International and Legal Studies, UP Law Center, vol. 12:50 [Jan-June 1996];
Intellectual Property in the Phil., A Compilation of Phil. Laws and International Documents Pertaining to Intellectual
Property, ed. by Aniano L. Luzung, pub. by Rex Bookstore, p. 416 [1995]. With the Philippines' adhesion to the WTO
and the TRIPS Agreement in 1995, however, the country obligated itself to comply with Articles 1-12 and 19 of the
Paris Convention-- Article 2(1), TRIPs Agreement.
[51]
Stephen P. Ladas, Patents, Trademarks, and Related Rights, National and International Protection, pub. by the
Harvard University Press, vol. 2, at 1251-1252 [1975].
[52]
The Paris Convention has 3 classes of provisions: (1) provisions obligating members of the Union to create and
maintain certain national law or regulations; (2) provisions merely referring to the national law of each country and
making it applicable or permitting each country to pass such legislation as it may choose; and (3) provisions
establishing common legislation for all members of the Union and obligating them to grant to persons entitled to the
benefits of the Convention the rights and advantages specified in such provisions, notwithstanding anything in their
national law to the contrary-- Ladas, supra, at 209; see also Callman, supra, vol. 2, at 1723-1724. Provisions under
the third class are self-executing and Article 6bis is one of them-- Ladas, supra, vol. 1, at 209.
[53]
Ladas, supra, vol.1, p. 233.
[54]
Ladas, supra, vol. 2, pp. 1252-1254.
[55]
Also quoted in La Chemise Lacoste, S.A. v. Fernandez, supra, at 389-390.
[56]
This CA decision, penned by then CA Justice Vicente V. Mendoza, now a member of this Court, was the same
decision affirmed by the Supreme Court in La Chemise Lacoste v. Fernandez, G.R. Nos. L-63796-97 and L-65659,
129 SCRA 373 [1984].
[57]
Should have been "Article" 6bis.
[58]
Also quoted in La Chemise Lacoste, S.A. v. Fernandez, supra, at 401-403.
[59]
E.O. No. 913 is entitled "Strengthening the Rule-Making and Adjudicatory Powers of the Minister of Trade and
Industry in Order to Further Protect Consumers."
[60]
129 SCRA 373 [1984].
[61]
Id. at 396; see also Ignacio S. Sapalo, Background Reading Material on the Intellectual Property System of the
Philippines, revised ed., pub. by World Intellectual Property Office (WIPO), p. 76 [1994]. I. Sapalo was the Director
of the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), Department of Trade and Industry (DTI)
from 1987 to 1996.
[62]
169 SCRA 627 [1989].
[63]
Id. at 631.
[64]
Id. at 633.
[65]
Id. at 634.
[66]
Private respondent presented evidence before the Director of Patents showing that the word "Barbizon" was derived
from the name of a village in France. In this village, a mid-19th century school of French painting developed an art
style depicting landscape and rural genre subjects from a direct observation of nature, with much attention to the
expression of light and atmosphere. "Barbizon" was appropriated as a trademark in 1933 by Garfinkle and Ritter,
private respondent's predecessor, to identify its goods with the same soft and warm atmosphere depicted in the
barbizon style of painting-- Exhibits "B" and "I," see Petition for Review, Court of Appeals Rollo, p. 3.
[67]
Caina v. Court of Appeals, 239 SCRA 252, 264 [1994] citing Lord v. Garland, 168 P. 2d 5 [1946]; see also
Martinez v. Court of Appeals, 139 SCRA 558, 564 [1985].
[68]
Caina v. Court of Appeals, supra, at 263 [1994]; see also Guevara v. Benito, 247 SCRA 570, 573 [1995].
[69]
Id., citing Lord v. Garland, 168 P. 2d [1946]; Rhodes v. Van Steenberg, 225 F. Supp. 113 [1963]; Cowan v. Gulf
City Fisheries, Inc., 381 So. 2d 158 [1980]; see also 46 Am Jur 2d, "Judgments," Secs. 443, 444 [1969 ed.]
[70]
Section 4 (d), R.A. 166 reads:
"Sec. 4. Registration of trademarks, tradenames and servicemarks on the principal register.-- There is hereby
established a register of trademarks, tradenames and servicemarks which shall be known as the principal
register. The owner of a trademark, tradename or servicemark used to distinguish his goods, business or services
from the goods, business or services of others shall have the right to register the same on the principal register,
unless it:
xxx
(d) Consists of or comprises a mark or tradename which so resembles a mark or tradename registered in the
Philippines or a mark or tradename previously used in the Philippines by another and not abandoned, as to be likely,
when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or
mistake or to deceive purchasers; x x x."
[71]
Section 8, R.A. 166 reads:
"Sec. 8. Opposition.-- Any person who believes that he would be damaged by the registration of a mark or tradename
may, upon payment of the required fee and within thirty days after the publication under the first paragraph of section
7 hereof, file with the Director an opposition to the application. x x x."
[72]
The Paris Convention became part of the Trademark Law only by reference in Section 37 of the latter. Of and by
itself, the Paris Convention is a separate legal covenant.
[73]
Nabus v. Court of Appeals, 193 SCRA 732, 743, 746 [1991]; see also 50 C.J.S. "Judgments, Sec. 674-- also cited
in Nabus, at 743.
[74]
Nabus, supra, at 743; see also 50 C.J.S. "Judgments," Secs. 649, 655-- also cited in Nabus.
[75]
Mishawaka R. & W. Mfg. Co. v. S. S. Kresge Co., 86 L ed 1381, 316 U.S. 203, 205 [1942]; see also Gordon
V. Smith, Trademark Valuation, pub. by John Wiley & Sons, Inc., pp. 38-39 [1997].
[76]
Ladas, supra, vol. 1, at 13.
[77]
Id.
[78]
Section 2, R.A. 8293, the Intellectual Property Code of 1998.
[79]
Section 239, R.A. No. 8293.
[80]
R.A. No. 166.
[81]
R.A. No. 165.
[82]
Presidential Decree (P.D.) No. 49.
[83]
P.D. No. 285.
[84]
Emma C. Francisco, The Policy of Intellectual Property Protection in the Philippines, The World Bulletin, pub. by
the UP Law Center, vol. 12:1 [Jan-June 1996]-- Ms. Francisco was the Director of the BPTTT in 1996.
[85]
Michael Blakeney, Trade Related Aspects of Intellectual Property Rights: A Concise Guide to the TRIPs
Agreement, pub. by Sweet & Maxwell Ltd, at 37 [1996]; The WTO was created at the Uruguay Round of multilateral
trade negotiations sponsored by the General Agreement on Tariffs and Trade (GATT) in 1994. The GATT was
established in 1947 to promote a multilateral trading system among countries through non-discriminatory trade
liberalization, and through fair and effective rules and disciplines. The GATT was composed of 120 contracting parties
and observers that account for about 90% of the world trade. It, however, dealt with trade in tangible goods alone. As
successor of the GATT, the WTO also covers trade in services, intellectual property rights and provides for an effective
mechanism for dispute settlement-- Growth Opportunities Into the 21st Century, A Question and Answer Primer
Prepared by the Bureau of International Trade Relations, Department of Trade and Industry, pp. 1, 37 [1994],
hereinafter referred to as DTI-BITR Primer ; see News of the Uruguay Round of Multilateral Trade Negotiations,
issued by the Information and Media Relations division of the GATT, Geneva, p. 5 [5 April 1994]; see also
Tanada v. Angara, 272 SCRA 18 [1997].
[86]
The TRIPS Agreement is said to be the most comprehensive multilateral agreement on intellectual property. It
addresses not only and more explicitly the primary regimes of intellectual property, viz., patent including the protection
of new varieties of plants, trademarks including service marks, and copyright and its related rights; but also the non-
traditional categories of geographical indications including appellations of origin, industrial design, lay-out design of
integrated circuits, and undisclosed information including trade secrets. It also establishes standards of protection and
rules of enforcement and provides for the uniform applicability of the WTO dispute settlement mechanism to resolve
disputes among member states. -- Anita S. Regalado, WTO Dispute Settlement Procedure: Its Impact on Copyright
Protection, The Court Systems Journal, vol. 3: 67, 78 [March 1998].
[87]
Ma. Rowena R. Gonzales, Optimizing Rome in TRIPs: Finding the Appian Way, World Bulletin, pub. by the UP
Law Center, vol. 12: 13, 18 [Jan.-June 1996].
[88]
TRIPS Agreement, Article 1, par. 3.
[89]
As acknowledged in the Uruguay Round of the GATT-- DTI-BITR Primer, supra, at p. 34.
[90]
Id.; Blakeney, supra, at 1; Investors abandoned or postponed their investments in countries that did not afford
protection from intellectual piracy (DTI-BITR Primer, supra, at 34); Worse, inadequate intellectual protection in
certain countries gave rise to trade retaliation unilaterally imposed by rich trading partners--DTI-BITR Primer, supra,
at 36; Blakeney, supra, at 4-6. The United States, in the 1984 amendment to Section 301 of the Trade Act of 1974,
and later, Special 301 of the Omnibus Trade and Competitiveness Act of 1988, authorized the U.S. Trade
Representative (USTR) to identify priority foreign countries which deny adequate protection of intellectual property
rights to U.S. traders. Those countries were placed on a watchlist, with a view to fast-track investigation, followed by
trade retaliation in the form of increased duties and import restrictions. Trade restrictions were imposed on Korea and
Brazil in 1985, Brazil again in 1988 and India in 1992 --Blakeney, supra, at 4-6. By these acts, any trading partner of
the U.S. became vulnerable to unilateral pressure-- The GATT, the Uruguay Round and the Philippines, Speech of J.
Antonio Buencamino, Director, Bureau of International Trade Relations, DTI, p. 4.
[91]
Speech of J. Antonio Buencamino, Director, DTI-BITR, supra, at 4-5; DTI-BITR Primer, supra, at 34-36.

[92]
Tanada v. Angara, 272 SCRA 18, 28 [1997].
[93]
Blakeney, supra, at 36-37-- citing The Marrakesh Declaration of 15 April 1995, par. 2.
4.

Mirpuri vs CA, GR No. 114508, 19 November 1999, 318


SCRA 516
30 AM00000010000005331 2012

FACTS
Lolita Escobar applied with the Bureau of Patents for the registration of the trademark Barbizon, alleging
that she had been manufacturing and selling these products since 1970. private respondent Barbizon Corp opposed
the application in IPC No. 686. The Bureau granted the application and a certificate of registration was issued for the
trademark Barbizon. Escobar later assigned all her rights and interest over the trademark to petitioner Mirpuri. In
1979, Escobar failed to file with the Bureau the Affidavit of Use of the trademark. Due to his failure, the Bureau
cancelled the certificate of registration. Escobar reapplied and Mirpuri also applied and this application was also
opposed by private respondent in IPC No. 2049, claiming that it adopted said trademark in 1933 and has been using
it. It obtained a certificate from the US Patent Office in 1934. Then in 1991, DTI cancelled petitioners registration
and declared private respondent the owner and prior user of the business name Barbizon International.

ISSUE
Whether or not the treaty (Paris Convention) affords protection to a foreign corporation against a Philippine
applicant for the registration of a similar trademark.

HELD
The Court held in the affirmative. RA 8293 defines trademark as any visible sign capable of distinguishing
goods. The Paris Convention is a multilateral treaty that seeks to protect industrial property consisting of patents,
utility models, industrial designs, trademarks, service marks, trade names and indications of source or appellations
of origin, and at the same time aims to repress unfair competition. In short, foreign nationals are to be given the
same treatment in each of the member countries as that country makes available to its own citizens. Nationals of the
various member nations are thus assured of a certain minimum of international protection of their industrial
property.
4.

MIRPURI V. CA (G.R. NO. 114508)


Facts:
Lolita Escobar applied for the registration of the trademark Barbizon for her
products such as brassieres and ladies undergarments. Respondent Barbizon
Corporation, an American corporation, opposed alleging that petitioners mark
is confusingly similar to its own trademark Barbizon. Escobars application
was given due course and her trademark was registered. Later, Escobar
assigned all her rights to petitioner Mirpuri who failed to file an Affidavit of
Use resulting in the cancellation of the trademark. Petitioner then applied for
registration of the trademark to which respondent Barbizon again opposed,
now invoking the protection under Article 6bis of the Paris Convention. The
Director of Patents declaring respondents opposition was already barred,
petitioners application was given due course. CA reversed the judgment.
Issue:
Whether or not respondent may invoke the protection under Article 6bis of the
Paris Convention.
Ruling: YES.
The Convention of Paris for the Protection of Industrial Property, otherwise
known as the Paris Convention, is a multilateral treaty that seeks to protect
industrial property consisting of patents, utility models, industrial designs,
trademarks, service marks, trade names and indications of source or
appellations of origin, and at the same time aims to repress unfair competition.
The Convention is essentially a compact among various countries which, as
members of the Union, have pledged to accord to citizens of the other member
countries trademark and other rights comparable to those accorded their own
citizens by their domestic laws for an effective protection against unfair
competition. Art. 6bis is a self-executing provision and does not require
legislative enactment to give it effect in the member country. It may be applied
directly by the tribunals and officials of each member country by the mere
publication or proclamation of the Convention, after its ratification according
to the public law of each state and the order for its execution.
The Philippines and the United States of America have acceded to the WTO
Agreement. Conformably, the State must reaffirm its commitment to the global
community and take part in evolving a new international economic order at the
dawn of the new millennium.
5.

THIRD DIVISION

[G.R. No. 154342. July 14, 2004]

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,


INC. petitioners, 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 decision[1] 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
reconsideration[4] and (c) the aforesaid Makati RTC decision itself.
I.

The Factual Background

Respondent Gallo Winery is a foreign corporation not doing business in the


Philippines but organized and existing under the laws of the State of California, United
States of America (U.S.), where all its wineries are located. Gallo Winery produces
different kinds of wines and brandy products and sells them in many countries under
different registered trademarks, including the GALLO and ERNEST & JULIO GALLO wine
trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winerys exclusive
wine importer and distributor in the Philippines since 1991, selling these products in its
own name and for its own account.[5]
Gallo Winerys GALLO wine trademark was registered in the principal register of the
Philippine Patent Office (now Intellectual Property Office) on November 16, 1971 under
Certificate of Registration No. 17021 which was renewed on November 16, 1991 for
another 20 years.[6] 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
100s 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 manufacturers sworn statement as basis for BIRs 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 Campanas 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 Corporations use of
GALLO 100s cigarette brand, under licensing agreement with Tobacco Industries, on May
18, 1988, and GALLO SPECIAL MENTHOL 100s cigarette brand on April 3, 1989. [14]
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 circa 1974 within the then U.S. military
facilities only. By 1979, they had expanded their Philippine market through authorized
distributors and independent outlets.[16]
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.
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 30[21] (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 Winerys GALLO and ERNEST & JULIO GALLO trademarks established reputation
and popularity, thus causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST & JULIO GALLO
trademarks with Gallo Winerys wines. Respondents prayed for the issuance of a writ of
preliminary injunction and ex parte restraining order, plus P2 million as actual and
compensatory damages, at least P500,000 as exemplary and moral damages, and at
least P500,000 as attorneys fees and litigation expenses.[23]
In their answer, petitioners alleged, among other affirmative defenses, that:
petitioners GALLO cigarettes and Gallo Winerys wines were totally unrelated products;
Gallo Winerys GALLO trademark registration certificate covered wines only, not
cigarettes; GALLO cigarettes and GALLO wines were sold through different channels of
trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols,
were low-cost items compared to Gallo Winerys high-priced luxury wines which cost
between P98 to P242.50; the target market of Gallo Winerys wines was the middle or
high-income bracket with at least P10,000 monthly income while GALLO cigarette buyers
were farmers, fishermen, laborers and other low-income workers; the dominant feature
of the GALLO cigarette mark was the rooster device with the manufacturers name clearly
indicated as MIGHTY CORPORATION while, in the case of Gallo Winerys wines, it was
the full names of the founders-owners ERNEST & JULIO GALLO or just their surname
GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel;
and petitioners acted with honesty, justice and good faith in the exercise of their right to
manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993,[24] the Makati RTC denied, for lack of merit,
respondents prayer for the issuance of a writ of preliminary injunction, [25] holding that
respondents GALLO trademark registration certificate covered wines only, that
respondents wines and petitioners cigarettes were not related goods and respondents
failed to prove material damage or great irreparable injury as required by Section 5, Rule
58 of the Rules of Court.[26]
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 RTCs 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 & Js
registered trademark GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with other words, designs
or emblems and other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark.

b. ordering defendants to pay plaintiffs

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

(ii) exemplary damages in the amount of PHP100,000.00;

(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;

(iv) the cost of suit.

SO ORDERED.[29]

On June 24, 1999, the Makati RTC granted respondents motion for partial
reconsideration and increased the award of actual and compensatory damages to 10%
of P199,290,000 or P19,929,000.[30]
On appeal, the CA affirmed the Makati RTC decision and subsequently denied
petitioners motion for reconsideration.
III.

The Issues
Petitioners now seek relief from this Court contending that the CA did not follow
prevailing laws and jurisprudence when it held that: [a] RA 8293 (Intellectual Property
Code of the Philippines [IP Code]) was applicable in this case; [b] GALLO cigarettes and
GALLO wines were identical, similar or related goods for the reason alone that they were
purportedly forms of vice; [c] both goods passed through the same channels of trade and
[d] petitioners were 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 CAS 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 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 & 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 competitors unfairness or fraud.Conduct constitutes unfair competition if the
effect is to pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end. [44]
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

Article 6bis of the Paris Convention,[46] an international agreement binding on the


Philippines and the United States (Gallo Winerys country of domicile and origin) prohibits
the [registration] or use of a trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark considered by the competent authority of
the country of registration or use to be well-known in that country as being already the
mark of a person entitled to the benefits of the [Paris] Convention and used for identical
or similar goods. [This rule also applies] when the essential part of the mark constitutes
a reproduction of any such well-known mark or an imitation liable to
create confusion therewith. There is no time limit for seeking the prohibition of the use of
marks used in bad faith.[47]
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
use[48] to be well-known in that country and is already the mark of a person
entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for
infringement when, among others, he uses without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename
in connection with the sale, offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to cause confusion or mistake or
to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or colorably imitate any such
mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation
to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to
be used upon or in connection with such goods, business or services. [49] Trademark
registration and actual use are material to the complaining partys cause of action.
Corollary to this, Section 20 of the Trademark Law[50] considers the trademark
registration certificate as prima facie evidence of the validity of the registration, the
registrants ownership and exclusive right to use the trademark in connection with the
goods, business or services as classified by the Director of Patents[51] and as specified in
the certificate, subject to the conditions and limitations stated therein. Sections 2 and 2-
A[52] of the Trademark Law emphasize the importance of the trademarks actual use in
commerce in the Philippines prior to its registration. In the adjudication of trademark rights
between contending parties, equitable principles of laches, estoppel, and acquiescence
may be considered and applied.[53]
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,
(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 registrants express or implied consent to anothers use of its trademark or a colorable
imitation thereof. This is why acquiescence, estoppel or laches may defeat the registrants
otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent
to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.

By respondents own judicial admission, the GALLO wine trademark was registered
in the Philippines in November 1971 but the wine itself was first 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 manufacturers sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed been using and selling GALLO
cigarettes in the Philippines since 1973 or before July 9, 1981.[56]
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 use of a trademark in the Philippines prior
to its registration, notwithstanding the provisions of the Paris Convention:

xxx xxx xxx

In addition to the foregoing, we are constrained to agree with petitioner's contention


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

Actual use in commerce in the Philippines is an essential prerequisite for the


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

xxx xxx xxx

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

xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks


regarding the requirement of actual use in the Philippines must subordinate an
international agreement 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 in Kabushi Isetan vs. Intermediate Appellate Court (203 SCRA 583
[1991]) we declared:

xxx xxx xxx

A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite in the acquisition
of the right of ownership over a trademark.

xxx xxx xxx

The credibility placed on a certificate of registration of one's trademark, or its weight


as evidence of validity, ownership and exclusive use, is qualified. A registration
certificate serves merely as prima 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.
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 Winerys
exclusive right to use the GALLO trademark should be limited to wines, the only product
indicated in its registration certificates. This strict statutory limitation on the exclusive right
to use trademarks was amply clarified in our ruling in Faberge, Inc. vs. Intermediate
Appellate Court:[64]

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.

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 defendants goods are then bought as
the plaintiffs and its poor quality reflects badly on the plaintiffs reputation. The other is
confusion of businesswherein the goods of the parties are different but the defendants
product can reasonably (though mistakenly) be assumed to originate from the plaintiff,
thus deceiving the public into believing that there is some connection between the plaintiff
and defendant which, in fact, does not exist.[66]
In determining the likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants
express or implied consent and other fair and equitable considerations.
Petitioners and respondents both use GALLO in the labels of their respective
cigarette and wine products. But, as held in the following cases, the use of an identical
mark does not, by itself, lead to a legal conclusion that there is trademark infringement:

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

(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,[68] we
upheld the Patent Directors registration of the same trademark CAMIA for
Ng Sams ham under Class 47, despite Philippine Refining Companys prior
trademark registration and actual use of such mark on its lard, butter,
cooking oil (all of which belonged to Class 47), abrasive detergents,
polishing materials and soaps;

(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
Liong,[69] we dismissed Hickoks petition to cancel private respondents
HICKOK trademark registration for its Marikina shoes as against
petitioners earlier registration of the same trademark for handkerchiefs,
briefs, belts and wallets;

(d) in Shell Company of the Philippines vs. Court of Appeals,[70] in a minute


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

(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,[71] we dismissed ESSOs
complaint for trademark infringement against United Cigarette Corporation
and allowed the latter to use the trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum products, and

(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,[72] we affirmed the rulings of the Patent Office and the CA
that NSR Rubber Corporation could use the trademark CANON for its
sandals (Class 25) despite Canon Kabushiki Kaishas prior registration and
use of the same trademark for its paints, chemical products, toner and
dyestuff (Class 2).

Whether a trademark causes confusion and is likely to deceive the public hinges on
colorable 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
Appeals[76] and other cases,[77] and

(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals[78] 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 confuse[82] and the commercial impression likely to be conveyed by the trademarks if
used in conjunction with the respective goods of the parties.[83]
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the
GALLO cigarette trademark is the device of a large rooster facing left, outlined in black
against a gold background. The roosters color is either green or red green for GALLO
menthols and red for GALLO filters. Directly below the large rooster device is the word
GALLO. The rooster device is given prominence in the GALLO cigarette packs in terms
of size and location on the labels.[84]
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 Winerys wine and brandy labels are diverse. In many of
them, the labels are embellished with sketches of buildings and trees, vineyards or a
bunch of grapes while in a few, one or two small roosters facing right or facing each other
(atop the EJG crest, surrounded by leaves or ribbons), with additional designs in green,
red and yellow colors, appear as minor features thereof.[87] Directly below or above these
sketches is the entire printed name of the founder-owners, ERNEST & JULIO GALLO or
just their surname GALLO,[88] which appears in different fonts, sizes, styles and labels,
unlike petitioners uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words VINTED AND
BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA.[89]
The many different features like color schemes, art works and other markings of both
products drown out the similarity between them the use of the word GALLO a family
surname for the Gallo Winerys wines and a Spanish word for rooster for petitioners
cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS

Confusion of goods is evident where the litigants are actually in competition; but
confusion of business may arise between non-competing interests as well.[90]
Thus, apart from the strict application of Section 20 of the Trademark Law and Article
6bis of the Paris Convention which proscribe trademark infringement not only of goods
specified in the certificate of registration but also of identical or similar goods, we have
also uniformly recognized and applied the modern concept of related goods. [91] Simply
stated, when goods are so related that the public may be, or is actually, deceived and
misled that they come from the same maker or manufacturer, trademark infringement
occurs.[92]
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:

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

(b) the class of product to which the goods belong

(c) the product's quality, quantity, or size, including the nature of the package,
wrapper or container [97]

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

(e) the descriptive properties, physical attributes or essential characteristics with


reference to their form, composition, texture or quality

(f) the purpose of the goods[99]

(g) whether the article is bought for immediate consumption,[100] that is, day-to-
day household items[101]

(h) the fields of manufacture[102]

(i) the conditions under which the article is usually purchased[103] 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 purchasers character, attitude, habits, age, training and education. [111]
Applying these legal precepts to the present case, petitioners use of the GALLO
cigarette trademark is not likely to cause confusion or mistake, or to deceive the ordinarily
intelligent buyer of either wines or cigarettes or both as to the identity of the goods, their
source and origin, or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do
they belong to the same class of goods. Respondents GALLO wines belong to Class 33
under Rule 84[a] 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 respondents
products apart from the goods of petitioner. He opined and we quote:

I have taken into account such factors as probable purchaser attitude and habits,
marketing activities, retail outlets, and commercial impression likely to be conveyed
by the trademarks if used in conjunction with the respective goods of the parties, I
believe that ham on one hand, and lard, butter, oil, and soap on the other are
products that would not move in the same manner through the same channels of
trade. They pertain to unrelated fields of manufacture, might be distributed and
marketed under dissimilar conditions, and are displayed separately even though
they frequently may be sold through the same retail food
establishments. Opposers products are ordinary day-to-day household items whereas
ham is not necessarily so. Thus, the goods of the parties are not of a character which
purchasers would likely attribute to a common origin.

The observations and conclusion of the Director of Patents are correct. The particular
goods of the parties are so unrelated that consumers, would not, in any probability
mistake one as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing and
are totally unrelated products not likely to cause confusion vis--vis the goods or the
business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons
or packages and smoked. There is a whale of a difference between their descriptive
properties, physical attributes or essential characteristics like form, composition, texture
and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines
are patronized by middle-to-high-income earners while GALLO cigarettes appeal only to
simple folks like farmers, fishermen, laborers and other low-income workers.[116] 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-
sari stores 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 Winerys exclusive contracts with a
domestic entity, which is currently Andresons. By respondents own testimonial evidence,
GALLO wines are sold in hotels, expensive bars and restaurants, and high-end grocery
stores and supermarkets, not through sari-sari stores or ambulant vendors.[119]
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), affd, 222 F. 2d 460
(5th Cir. 1955), wherein the court enjoined the use of the mark JOHNNIE WALKER
on cigars because the fame of the plaintiffs mark for scotch whiskey and because the
plaintiff advertised its scotch whiskey on, or in connection with tobacco products. The
court, in John Walker & Sons, placed great significance on the finding that the
infringers use was a deliberate attempt to capitalize on the senior marks
fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip Morris, Inc., 297
F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court enjoined the defendants
use of the mark BLACK LABEL for cigarettes because it was likely to cause
confusion with the plaintiffs well-known mark BLACK LABEL for beer.
xxx xxx xxx

Those decisions, however, must be considered in perspective of the principle that


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

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

xxx xxx xxx

Of equal significance, it is undisputed that S & M Brands had no intent, by adopting


the family name Baileys as the mark for its cigarettes, to capitalize upon the fame of
the BAILEYS mark for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will
be discussed below, and as found in Mckesson & Robbins, the survey evidence
refutes the contention that cigarettes and alcoholic beverages are so intimately
associated in the public mind that they cannot under any circumstances be sold
under the same mark without causing confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.

Taken as a whole, the evidence here demonstrates the absence of the special
circumstances in which courts have found a relationship between tobacco and alcohol
products sufficient to tip the similarity of goods analysis in favor of the protected
mark and against the allegedly infringing mark. It is true that BAILEYS liqueur,
the worlds best selling liqueur and the second best selling in the United States, is
a well-known product. That fact alone, however, is insufficient to invoke the
special circumstances connection here where so much other evidence and so
many other factors disprove a likelihood of confusion. The similarity of products
analysis, therefore, augers against finding that there is a likelihood of
confusion. (Emphasis supplied).

In short, tobacco and alcohol products may be considered related only in cases
involving special circumstances which exist only if a famous mark is involved and there is
a demonstrated intent to capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS

First, the records bear out that most of the trademark registrations took place in the
late 1980s and the 1990s, that is, after Tobacco Industries use of the GALLO cigarette
trademark in 1973 and petitioners use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor
related goods, a requisite element under both the Trademark Law and the Paris
Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in
the Philippines. Respondents do not dispute the documentary evidence that aside from
Gallo Winerys GALLO trademark registration, the Bureau of Patents, Trademarks and
Technology Transfer also issued on September 4, 1992 Certificate of Registration No.
53356 under the Principal Register approving Productos Alimenticios Gallo, S.As April
19, 1990 application for GALLO trademark registration and use for its noodles, prepared
food or canned noodles, ready or canned sauces for noodles, semolina, wheat flour and
bread crumbs, pastry, confectionery, ice cream, honey, 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
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;

(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of another
who has identified such services in the mind of the public;

(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the
goods, business or services of another.

The universal test question is whether the public is likely to be deceived. Nothing less
than conduct tending to pass off one mans goods or business as that of another
constitutes unfair competition. Actual or probable deception and confusion on the part of
customers by reason of defendants practices must always appear. [125] 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.
Vitug, (Chairman), and Sandoval-Gutierrez, JJ., concur.
Carpio-Morales, J., no part.

[1]
Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Conchita
Carpio Morales (now Associate Justice of the Supreme Court) and Sergio L. Pestano of the Ninth Division.
[2] Penned by Acting Presiding Judge Bonifacio Sanz Maceda.
[3] Penned by Judge Reinato O. Quilala.
[4]
Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Conchita
Carpio Morales (now Associate Justice of the Supreme Court) and Sergio L. Pestano of the former Ninth
Division.
[5] Complaint, Exhibits D to D-1, Records, pp. 1-2; TSN, June 9, 1997, Records, pp. 951-956.
[6] Exhibits B to B-6, Records, pp. 80-86.
[7] Records, pp. 29-31.
[8]
Answer, Records, pp. 255 and 264-266; TSN, April 13, 1993, Records, pp. 767, 780-796; TSN, October
27, 1997, Records, pp. 993-1000.
[9] Exhibits 9 to 12, Records, pp. 89-95, 267-268; TSN, October 27, 1997, Records, pp. 1005-1007.
[10] Records, pp. 255-256, 269 and 271.
[11] Records, pp. 256, 270.
[12] Exhibit 15, Records, pp. 104, 256, 272.
[13] Records, p. 256.
[14] Exhibits 13 and 14, Records, pp. 96-98.
[15]
TSN, April 13, 1993, Records, pp. 780-796; TSN, December 14, 1993, Records, pp. 420-422; TSN,
October 27, 1997, Records, pp. 993-1000.
[16] Complaint, Exhibit D-2, Records, pp. 3, 110 and 328.
[17]
Exhibit A, Complainants Memorandum, Records, p. 127; TSN, December 14, 1993, Records, pp. 326,
432-433.
[18]
CONVENTION OF PARIS FOR THE PROTECTION OF INDUSTRIAL PROPERTY of 20th March, 1883
revised at BRUSSELS on 14th December, 1900, at WASHINGTON on 2nd June, 1911, at THE HAGUE on
6th November, 1925, at LONDON on 2nd June, 1934, and at Lisbon on 31st October, 1958
xxxxxxxxx
ARTICLE 6bis
(1) The countries of the Union undertake, either administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark
which constitutes a reproduction, 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 present Convention and used for identical or
similar goods. These provisions shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for seeking the cancellation
of such a mark. The countries of the Union may provide for a period within which the prohibition of use must
be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the use of marks registered
or used in bad faith.
[19] Republic
Act No. 166 is entitled An Act To Provide For The Registration And Protection Of Trademarks,
Trade Names And Servicemarks, Defining Unfair Competition And False Marking And Providing Remedies
Against The Same, And For Other Purposes.
[20]SEC. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant,
any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection
with the sale, offering for sale, or advertising of any goods, business or services on or in connection with
which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source
or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy 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, shall be liable to a civil action by the registrant for any
or all of the remedies herein provided.
SEC. 23. Actions, and damages and injunction for infringement. Any person entitled to the exclusive use of
a registered mark or tradename may recover damages in a civil action from any person who infringes his
rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining
party would have made, had the defendant not infringed his said rights, or the profit which the defendant
actually made out of the infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty, then the court may award as damages a reasonable percentage
based upon the amount of gross sales of the defendant of the value of the services in connection with which
the mark or tradename was used in the infringement of the rights of the complaining party. In cases where
actual intent to mislead the public or to defraud the complaining party shall be shown, in the discretion of
the court, the damages may be doubled.
The complaining party, upon proper showing, may also be granted injunction.
[21]SEC. 29. Unfair competition, rights and remedies. 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 mark
or tradename 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. Such a person shall have
the remedies provided in section twenty-three, Chapter V hereof.
Any person who shall employ deception or any other means contrary to good faith by which he shall pass
off the goods manufactured by him or in which he deals, or his business, or services for those of the one
having established such goodwill, or who shall commit any acts calculated to produce said result, shall be
guilty of unfair competition, and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed
guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they
are contained, or the devices or words thereon, or in any other feature of their appearance, which would be
likely to influence purchasers to believe that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate trade, or any subsequent vendor of such goods or
any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the
false belief that such person is offering the services of another who has identified such services in the mind
of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall commit any other
act contrary to good faith of a nature calculated to discredit the goods, business or services of another.
Chapter VII
FALSE DESIGNATION OF ORIGIN AND FALSE
DESCRIPTION
SEC. 30. False designation of origin and false description forbidden. Any person who shall affix, apply,
annex or use in connection with any goods or services, or any container or containers for goods, a false
designation of origin, or any false description or representation, including words or other symbols tending
falsely to describe or represent the same, and shall cause such goods or services to enter into commerce,
and any person who shall with knowledge of the falsity of such designation of origin or description or
representation cause or procure the same to enter into commerce, shall be liable to a civil action for
damages and injunction provided in section twenty-three, Chapter V hereof, by any person doing business
in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any
person who believes that he is or is likely to be damaged by the use of any such false description or
representation.
[22] Chapter XI
PROVISIONS IN REFERENCE TO FOREIGN INDUSTRIAL PROPERTY
SEC. 37. Rights of foreign registrants. Persons who are nationals of, domiciled in, or have a bona fide or
effective business or commercial establishment in any foreign country, which is a party to any international
convention or treaty relating to marks or tradenames, or the repression of unfair competition to which the
Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act to the
extent and under the conditions essential to give effect to any such convention and treaties so long as the
Philippines shall continue to be a party thereto, except as provided in the following paragraphs of this
section.
No registration of a mark or tradename in the Philippines by a person described in the preceding paragraph
of this section shall be granted until such mark or tradename has been registered in the country of origin of
the applicant, unless the applicant alleges use in commerce.
For the purposes of this section, the country of origin of the applicant is the country in which he has bona
fide and effective industrial or commercial establishment, or if he has no such an establishment in the
country in which he is domiciled, or if he has not a domicile in any of the countries described in the first
paragraph of this section, the country of which he is a national.
An application for registration of a mark or tradename under the provisions of this Act filed by a person
described in the first paragraph of this section who has previously duly filed an application for registration
of the same mark or tradename in one of the countries described in said paragraph shall be accorded the
same force and effect as would be accorded to the same application if filed in the Philippines on the same
date on which the application was first filed in such foreign country: Provided, That
(a) The application in the Philippines is filed within six months from the date on which the application was
first filed in the foreign country; and within three months from the date of filing or within such time as the
Director shall in his discretion grant, the applicant shall furnish a certified copy of the application for or
registration in the country of origin of the applicant, together with a translation thereof into English, if not in
the English language;
(b) The application conforms as nearly as practicable to the requirements of this Act, but use in commerce
need not be alleged;
(c) The rights acquired by third parties before the date of the filing of the first application in the foreign
country shall in no way be affected by a registration obtained on an application filed under this paragraph;
(d) Nothing in this paragraph shall entitle the owner of a registration granted under this section to sue for
acts committed prior to the date on which his mark or tradename was registered in this country unless the
registration is based on use in commerce; and
(e) A mark duly registered in the country of origin of the foreign applicant may be registered on the principal
register if eligible, otherwise, on the supplemental register herein provided. The application thereof shall be
accompanied by a certified copy of the application for or registration in the country of origin of the applicant.
(As added by R.A. No. 638.)
The registration of a mark under the provisions of this section shall be independent of the registration in the
country of origin and the duration, validity or transfer in the Philippines of such registration shall be governed
by the provisions of this Act.
Tradenames of persons described in the first paragraph of this section shall be protected without the
obligation of filing or registration whether or not they form parts of marks.
Any person designated in the first paragraph of this section as entitled to the benefits and subject to the
provisions of this Act shall be entitled to effective protection against unfair competition, and the remedies
provided herein for infringement of marks and tradenames shall be available so far as they may be
appropriate in repressing acts of unfair competition.
Citizens or residents of the Philippines shall have the same benefits as are granted by this section to
persons described in the first paragraph hereof.
[23] Complaint, Exhibits D-1 to D-9, Record, pp. 1-10.
[24] Penned by Judge Francisco X. Velez.
[25] Records, pp. 159-160.
[26]Sec. 5. Preliminary injunction not granted without notice; issuance of restraining order. No preliminary
injunction shall be granted without notice to the defendant. If it shall appear from the facts shown by
affidavits or by the verified complaint that great or irreparable injury would result to the applicant before the
matter can be heard on notice, the judge to whom the application for preliminary injunction was made, may
issue a restraining order to be effective only for a period of twenty days from the date of its issuance. Within
the said twenty-day period, the judge must cause an order to be served on the defendant, requiring him to
show cause, at a specified time and place, why the injunction should not be granted, and determine within
the same period whether or not the preliminary injunction shall be granted, and shall accordingly issue the
corresponding order. In the event that the application for preliminary injunction is denied, the restraining
order is deemed automatically vacated.
Nothing herein contained shall be construed to impair, affect or modify in any way any rights granted by, or
rules pertaining to injunctions contained in, existing agrarian, labor or social legislation. (As amended by
B.P. Blg. 224, approved April 16, 1982).
[27] Penned by Judge Velez; Records, pp. 302-304.
[28]
Penned by Associate Justice Ramon Mabutas, Jr. and concurred in by Associate Justices Nathanael P.
De Pano, Jr. and Artemon D. Luna of the Special First Division; Records, pp. 449-465.
[29] Penned by Judge Maceda; Records, pp. 651-652.
[30] Penned by Judge Quilala; Records, pp. 727-728.
[31] Petition; Rollo, pp. 18-19.
[32] Rule 45, Section 2.
[33]
Ramos vs. Pepsi-Cola Bottling Co. of the P.I., 19 SCRA 289, 292 [1967]; Medina vs. Asistio, Jr., 191
SCRA 218, 223 [1990]; Caia vs. People, 213 SCRA 309, 313 [1992].
[34] Moomba Mining Exploration Company vs. Court of Appeals, 317 SCRA 338 [1999].
[35] Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420 [1990].
[36]
Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437, 443 [1993]; Philippine Nut Industry Inc. vs.
Standard Brands, Inc., 224 SCRA 437, 443 [1993]; Reynolds Philippine Corporation vs. Court of Appeals,
169 SCRA 220, 223 [1989] citing Mendoza vs. Court of Appeals, 156 SCRA 597 [1987]; Manlapaz vs. Court
of Appeals, 147 SCRA 238 [1987]; Sacay vs. Sandiganbayan, 142 SCRA 593, 609 [1986]; Guita vs. Court
of Appeals, 139 SCRA 576 [1985]; Casanayan vs. Court of Appeals, 198 SCRA 333, 336 [1991]; also Apex
Investment and Financing Corp. vs. IAC, 166 SCRA 458 [1988] citing Tolentino vs. De Jesus, 56 SCRA
167 [1974]; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734 [1980]; Manero vs. Court
of Appeals, 102 SCRA 817 [1981]; and Moran, Jr. vs. Court of Appeals, 133 SCRA 88 [1984].
[37] Sec. 241, Intellectual Property Code of the Philippines.
[38] Rollo, p. 191.
[39] Rollo, p. 71.
[40]
Tolentino, CIVIL CODE OF THE PHILIPPINES COMMENTARIES AND JURISPRUDENCE, Volume I,
p. 19; See Articles 2 to 4 of the Civil Code of the Philippines.
[41] Ibid.
[42] Laws may be given retroactive effect only if they are:
(a) procedural statutes which prescribe rules and forms of procedures of enforcing rights or obtaining
redress for their invasion (Subido vs. Sandiganbayan, 266 SCRA 379 [1997]; Primicias vs. Ocampo, 93
Phil. 446 [1953]; Bustos vs. Lucero, 81 Phil. 640 [1948]; Lopez vs. Gloria, 40 Phil. 26 [1919]; People vs.
Sumilang, 77 Phil. 764 [1946])
(b) remedial or curative statutes which cure errors and irregularities and validate judicial or administrative
proceedings, acts of public officers, or private deeds and contracts that otherwise would not produce their
intended consequences due to some statutory disability or failure to comply with technical rules
(Government vs. Municipality of Binalonan, 32 Phil. 634 [1915]; Subido vs. Sandiganbayan, supra; Del
Castillo vs. Securities and Exchange Commission, 96 Phil. 119 [1954]; Santos vs. Duata, 14 SCRA 1041
[1965]; Development Bank of the Philippines vs. Court of Appeals, 96 SCRA 342 [1980]; Alunan III vs.
Mirasol, 276 SCRA 501 [1997])
(c) laws interpreting others
(d) laws creating new rights (Bona vs. Briones, 38 Phil. 276 [1918]; Intestate Estate of Bustamante vs.
Cayas, 98 Phil. 107 [1955])
(e) penal statutes insofar as they favor the accused who is not a habitual criminal (Article 22, Revised Penal
Code) or
(f) by express provision of the law, (Art. 4, Civil Code of the Philippines; Alba Vda. De Raz vs. Court of
Appeals, 314 SCRA 36 [1999]), except in cases of ex post facto laws (U.S. vs. Diaz Conde, 42 Phil. 766
[1922]; U.S. vs. Gomez, 12 Phil. 279 [1908]) or impairment of obligation of contract. (Asiatic Petroleum vs.
Llanes, 49 Phil. 466 [1926]).
[43] Sec. 239, Intellectual Property Code of the Philippines.
[44] E. Spinner & Co. vs. Neuss Hesslein Corporation, 54 Phil. 225, 231-232 [1930].
[45] 181 SCRA 410, 415 [1990].
[46]
The Paris Convention is a compact among various member countries to accord in their own countries
to citizens of the other contracting parties trademarks and other rights comparable to those accorded their
own citizens by their domestic laws. The underlying principle is that foreign nationals should be given the
same treatment in each of the member countries as that country makes available to its citizen. (Emerald
Garden Manufacturing Corp. vs. Court of Appeals, 251 SCRA 600 [1995]).
[47] See footnote 18 for full text.
[48]
conditions for the filing and registration of trademarks shall be determined in each country of the Union
by its domestic law. (Art. 6[1], Paris Convention).
[49] See footnote 20 for full text.
[50]SEC 20. Certificate of registration prima facie evidence of validity. A certificate of registration of a mark
or trade-name shall be prima facie evidence of the validity of the registration, the registrant's ownership of
the mark or tradename, and of the registrant's exclusive right to use the same in connection with the goods,
business or services specified in the certificate, subject to any conditions and limitations stated therein.
[51]
SEC. 6. Classification of goods and services. The Director shall establish a classification of goods and
services, for the convenience of the Patent Office administration, but not to limit or extend the applicants
rights. The applicant may register his mark or tradename in one application for any or all of the goods or
services included in one class, upon or in connection with which he is actually using the mark or
tradename. The Director may issue a single certificate for one mark or tradename registered in a plurality
of classes upon payment of a fee equaling the sum of the fees for each registration in each class.
[52]
SEC. 2. What are registrable. Trademarks, tradenames, and servicemarks owned by persons,
corporations, partnerships or associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domiciled in any foreign country may be registered in accordance with the
provisions of this Act; Provided, That said trademarks, tradenames, or servicemarks are actually in use in
commerce and services not less than two months in the Philippines before the time the applications for
registration are filed. And provided, further, That the country of which the applicant for registration is a
citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially
certified, with a certified true copy of the foreign law translated into the English language, by the government
of the foreign country to the Government of the Republic of the Philippines. (As amended by R.A. 865).
SEC. 2-A. Ownership of trademarks, tradenames and servicemarks; how acquired. Anyone who lawfully
produces or deals in merchandise of any kind or engages in any lawful business, or who renders any lawful
service in commerce, by actual use thereof in manufacture or trade, in business, and in the service
rendered, may appropriate to his exclusive use a trademark, a tradename, or a servicemark not so
appropriated by another, to distinguish his merchandise, business or service from the merchandise,
business or service of others. The ownership or possession of a trademark, tradename, servicemark
heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the
same manner and to the same extent as are other property rights known to the law. (As amended by R.A.
638).
[53]
SEC. 9-A. Equitable principles to govern proceedings. In opposition proceedings and in all other inter
partes proceedings in the Patent Office under this Act, equitable principles of laches, estoppel, and
acquiescence where applicable, may be considered and applied. (As added by R.A. No. 638).
[54] Philip Morris, Inc. vs. Court of Appeals, 224 SCRA 576 [1993].
[55] Exhibits Q to R-2, Records, pp. 2075-2078.
[56] Exhibits 9 to 14, Records, pp. 90-98.
[57] 251 SCRA 600, 619 [1995].
[58] 118 SCRA 526 [1982].
[59] 147 SCRA 154 [1987].
[60] 27 SCRA 1214 [1969].
[61] 203 SCRA 583 [1991].
[62] 224 SCRA 576 [1993].
[63] TSN, April 13, 1993, Records, p. 783; TSN, June 9, 1997, Records, p. 959.
[64] 215 SCRA 316, 325 [1992].
[65] Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336, 341 [1982].
[66]
Sterling Products, International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, 27 SCRA 1214, 1227
[1969] citing 2 Callman, Unfair Competition and Trademarks, 1945 ed., p. 1006.
[67] 38 SCRA 480 [1971].
[68] 115 SCRA 472 [1982].
[69] 116 SCRA 388 [1982].
[70] G.R. No. L-49145, May 21, 1979.
[71] 116 SCRA 336 [1982].
[72] 336 SCRA 266 [2000].
[73] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[74] Ruben Agpalo, TRADEMARK LAW AND PRACTICE IN THE PHILIPPINES [1990], p.41.
[75] Ibid.
[76] 224 SCRA 437 [1993].
[77]
Co Tiong vs. Director of Patents, 95 Phil. 1 [1954]; Lim Hoa vs. Director of Patents, 100 Phil. 214 [1956];
American Wire & Cable Co. vs. Director of Patents, 31 SCRA 544 [1970]; Phil. Nut Industry, Inc. vs.
Standard Brands, Inc., 65 SCRA 575 [1975]; Converse Rubber Corp. vs. Universal Rubber Products, Inc.,
147 SCRA 154 [1987].
[78] 181 SCRA 410 [1990].
[79]
Mead Johnson & Co. vs. N.V.J. Van Dorp, Ltd., 7 SCRA 771 [1963]; Bristol Myers Co. vs. Director of
Patents, 17 SCRA 128 [1966]; Fruit of the Loom, Inc. vs. Court of Appeals, 133 SCRA 405 [1984].
[80] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[81] Ibid.
[82] Ibid.
[83] Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115 SCRA 472 [1982].
[84] Exhibits 1 to 4; Records 2095-2097.
[85] TSN, October 27, 1997, Records, pp. 995-1000.
[86] Reply, Records, p. 293.
[87] Exhibits N to Q.
[88] TSN, December 14, 1993, Records, pp. 414, 421 and 442.
[89] Exhibits 1 to 4.
[90] Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336,341 [1982].
[91]
Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982]; Arce vs. Selecta, 1 SCRA 253
[1961]; Chua Che vs. Phil. Patents Office, 13 SCRA 67 [1965]; Ang vs. Teodoro, 74 Phil. 50 [1942]; Khe vs.
Lever Bros. Co., 49 O.G. 3891 [1941]; Ang Si Heng & Dee vs. Wellington Dept. Store, 92 Phil. 448 [1953];
Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA 480 [1971].
[92] Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982].
[93] Ibid.
[94] Ibid.
[95]
I CALLMAN 1121 cited in Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115
SCRA 472 [1982].
[96]
It has been held that where the products are different, the prior owners chance of success is a function
of many variables, such as the:
(a) strength of his mark
(b) degree of similarity between the two marks
(c) reciprocal of defendants good faith in adopting its own mark
(d) quality of defendants product
(e) proximity of the products
(f) likelihood that the prior owner will bridge the gap
(g) actual confusion, and
(h) sophistication of the buyers. (Polaroid Corp. vs. Polaroid Elecs. Corp., 287 F. 2d 492, 495 (2d Cir.), cert.
denied, 368 U.S. 820, 82 s. Ct. 36, 7 L. Ed. 2d 25 [1961]).
[97]
Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995]; Del Monte
Corporation, vs. Court of Appeals, 181 SCRA 410 [1990]; Asia Brewery, Inc. vs. Court of Appeals, 224
SCRA 437 [1993].
[98] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[99] Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982].
[100] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[101] Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115 SCRA 472 [1982].
[102] Ibid.
[103] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[104] Esso Standard Eastern, Inc. vs. Court of Appeals, 116 SCRA 336 [1982].
[105] Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115 SCRA 472 [1982].
[106] Thompson Medical Co. vs. Pfizer, Inc. 753 F. 2d 208, 225 USPQ 124 (2d Cir.) 1985.
[107]
Kiki Undies Corp. vs. Promenade Hosiery Mills, Inc., 411 F. 2d 1097, 1099 (2d Cir. 1969), cert. denied,
396 U.S. 1094, 90 S. Ct. 707, 24 L. Ed. 698 [1970]; Lever Bros. Co. vs. American Bakeries Co., 693 F. 2d
251, C.A. N.Y., November 3, 1982.
[108]
Mushroom Makers, Inc. vs. R.G. Barry Corp., 580 F. 2d 44, 47 (2d Cir. 1978), cert. denied, 439 U.S.
1116, 99 s. Ct. 1022, 59 L. Ed. 2d 75 [1979].
[109] Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995].
[110] Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190 [1921].
[111]Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995]; Del Monte
Corporation, et al. vs. Court of Appeals, 181 SCRA 410 [1990]; Asia Brewery, Inc. vs. Court of Appeals, et
al., 224 SCRA 437 [1993]; Philippine Refining Co., Inc. vs. Ng Sam and the Director of Patents, 115 SCRA
472 [1982].
[112] Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 115 SCRA 472 [1982].
[113]
Emerald Garment Manufacturing Corporation vs. Court of Appeals, 251 SCRA 600 [1995]; Del Monte
Corporation, vs. Court of Appeals, 181 SCRA 410 [1990]; Asia Brewery, Inc. vs. Court of Appeals, 224
SCRA 437 [1993].
[114]
California Fruit Growers Exchange vs. Sunkist Baking Co., 166 F. 2d 971, 76 U.S.P.Q. 85 (7th Cir.
1947); Hot Shot Quality Products, Inc. vs. Sifers Chemicals, Inc. 452 F.2d 1080, 172 U.S.P.Q. 350 (10th Cir.
1971); Federated Foods, Inc. vs. Ft. Howard Paper Co., 544 F.2d 1098, 192 U.S.P.Q. 24; Faultless Starch
Co. vs. Sales Producers Associates, Inc., 530 F. 2d 1400, 189 U.S.P.Q. (C.C.P.A. 1976); Lever Bros.
Co. vs. American Bakeries Co., 693 F. 2d 251, 216 U.S.P.Q. 177 (2d Cir. 1982); Nestle Co. vs. Nash-Finch
Co., 4 U.S.P.Q. 2d 1085 (T.T.A.B.).
[115] 115 SCRA 472, 478 [1982].
[116]
Answer, Records, p. 258; TSN, December 14, 1993, Records, p. 420; TSN, June 9, 1997, Records, p.
958; TSN, September 8, 1997, Records, p. 965-967.
[117]
Emerald Manufacturing, 251 SCRA 600 [1995]; Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA
480 [1981]; Field Enterprises Educational Corp. vs. Grosset & Dunlap, Inc. 256 F. Supp. 382, 150 U.S.P.Q.
517 (S.D.N.Y. 1966); Haviland & Co. vs. Johann Haviland China Corp., 269 F. Supp. 928, 154 U.S.P.Q.
287 (S.D.N.Y. 1967); Estee Lauder, Inc. vs. The Gap, Inc., 108 F. 3d. 1503, 42 U.S.P.Q. 2d 1228(2nd Cir.
1997).
[118]
Answer, Records, p. 257; TSN, April 13, 1993, Records, pp. 783; TSN, December 14, 1993, Records,
p. 420; TSN, September 8, 1997, Records, pp. 966, 971-972.
[119] TSN, June 9, 1997, Record, pp. 952-958; TSN, December 14, 1993, Records, p. 432.
[120] 297 F. Supp. 1330, 160 USPQ 303.
[121] 26 F. Supp. 2d 815 (E.D. Va. 1998).
[122] Exhibit 18, Records, pp. 107-108.
[123] 366 SCRA 266 [2000].
[124] 52 Am. Jur. 577.
[125] Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd., 120 Phil. 434, 439 [1964].
5.

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